You Can't Compete With Free - But Ad-Supported Content Isn't Free

Sarah Gray   ·   2017-07-04

When someone who wants a product or service has the choice of paying for it or getting it for free, then they'll always choose free.

In that sense, it is impossible to compete with "free":

All else being equal (even roughly equal), free always wins.

Ad-Supported Content Isn't "Free"

Ad-supported content is often called "free," even by people who know it isn't.

"Free" content takes payment in many forms, including:

• Time
• Quality of experience
• Mental energy
• Bandwidth
• Privacy

The prices that people pay for "free content" are rarely quantified, but they're real - and can be pretty steep.

For example, time and quality of experience are the most noticed prices: closing popups, hunting down autoplay video ads to shut them up, waiting for 30 ads to load before the content loads, recognizing clickbait, sitting through pre-roll ads, fielding requests to turn off adblockers, etc.

Each payment is relatively minor (a 1/2 second here, 3 seconds there), but they add up quickly.

Similarly, bandwidth is a direct price of ad-supported content; studies suggest that ads can consume 18% to 79% of the consumer's monthly data plan.

The Financial Consequences of Calling Ad-Supported Content "Free"

This casual misrepresentation implies a significant conclusion:

You can't compete with free.
Ad-supported content is free.
Therefore, you can't compete with ad-supported content.

The argument's validity depends on the truth of the premise - and the premise ("ad-supported content is free") is false.

This misrepresentation of ad-supported content as "free" leads content owners to dismiss the idea of pursuing paid business models to generate revenue - even when the ad-supported business model isn't profitable for them.

Considering the size of the ad-supported content industry, and the fact that revenue from an ad is often lower than the value of the content to consumers... this casual, incorrect claim that ad-supported content is "free" could easily cost content owners billions of dollars.

Of Course Paid Content Can Compete With Ad-Supported Content

Consumers absolutely pay for content; they just don't pay in the traditional sense of exchanging money for product.

A paid business model for content simply introduces an option for consumers to pay with money, instead of with their time, privacy, etc.

It's hard to compete on price when the competition doesn't come with a clear price tag, but it's entirely possible.

The key to competing with ad-supported content is understanding and leveraging the consumer's perception of the price they currently pay for "free" content.

As consumers become more aware of, and sensitive to, the price of "free" content, the opportunity for new business models to compete with ad-supported content is growing.

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