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I've been online since 1971 and I like to smoothe the way for everyone else. Among other things I co-founded Sympatico, the world's first easy-to-use Internet service (and Canada's largest).

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Friday, June 09, 2006

Universality and Advertising

Here in Canada we frequently have debates about “universality”. For example, should the government give money to all elderly people (i.e. be a “universal” program), or just those who need it? Obviously the latter is cheaper. But it has this downside:  if a government program isn’t used by people who are fairly well off, then it will have little involvement from those members of society with the greatest impact and influence, who could keep the program healthy. The program will likely deteriorate because of the lack of powerful support from vested interests.

Now consider advertising on television. Here in North America, more and more people are watching programs other than through advertising-supported broadcast. The Sopranos initially airs on ad-free subscription channels (i.e. that the viewer must pay to see), then becomes available on ad-free DVD (that the viewer must pay to rent or buy), and then finally airs on advertising-supported broadcast (that the viewer pays nothing for). In the past, everyone watching a popular program like Friends would see the ads. Over time it will just be those who can’t or won’t pay to see the program ad-free. This audience will have less disposable income, and therefore be less valuable to advertisers, so that the advertisers won’t be willing to pay as much to have their ads shown. Ultimately this could threaten the very existence of ad-supported television.

(Diverting the most desirable customers from a market is known as cream-skimming.)

So how to solve this problem?

One way is to have ads be fairly innocuous. I don’t mind all the ads in the newspaper because I don’t have to read them unless I want to. Many ads on web pages also qualify as not particularly annoying. On free television today, by contrast, ads are inescapable unless you record the program on a VCR or DVR and watch it later. Video blog Rocketboom has lately incorporated advertising occasionally, but puts it at the end of the show so that viewers watch it only if they want to.

I think ad-supported television is going to have to try some new ways of making ads less annoying. A good start would be to cease the practice of having the audio louder than that of the surrounding program. But it would have to go a lot further than that.

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