It can be argued that next to atomic weapons, the internet is the most powerful creation humans have ever developed. Wikileaks helped uncover top secrets held by different governments, Twitter assisted in revolutions in the Middle East, and millions of websites provide information a person is looking for in any subject at any time so long as a connection can be made. The internet is another example of humans creating something greater than themselves. Now, imagine if this information behemoth started to disappear; if websites and information you love started falling by the wayside or online magazines started shaking you down for expensive subscriptions in order to visit their portal. Our access to the online universe slowly starts to go dark. Website providers like Ken Fisher fear that this may become a reality.
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Fisher is the co-creator of the technology news and information website, Ars Technica. In 2010, he sparked a heated online debate when he published an article titled “Why Ad Blocking is devastating to the sites you love.” Within the piece, his argument is simple; when people use ad-blocking tools while they surf the net, the publishers are hurt in the long run by lost revenue.
In order to fully understand his argument, it is best to understand the basic principles of online advertising. The majority of revenue earned by advertising on websites is paid for on a CPM (cost per mille) basis. This is calculated by impressions served on each ad unit. When a user visits a website and an advertisement comes within their field of vision, this counts as one impression. For every one thousand impressions fired, the website provider earns a certain amount of revenue depending on the type of ad unit is running. Since certain publishers receive tens of millions of visitors a day, this could lead to some serious scratch, which, in turn, enables them to continue to provide premium content.
Since Fisher’s website earns revenue based off of impressions, he fears that ad blockers are damaging his business. When ads are not loaded on a page, impressions aren’t fired; when impressions aren’t fired, the content Fisher and his team create are being viewed for free. He explains that this leads to people on his team losing their jobs and the quality of the content throughout Ars Technica to diminish.
“Imagine running a restaurant where 40 percent of the people who came and ate didn’t pay,” Fisher says, “In a way, that’s what ad blocking is doing to us. Just like a restaurant, we have to pay to staff, we have to pay for resources, and we have to pay when people consume those resources.”
Ars Technica does offer different options for their devoted readers to continue visiting the site without hurting the business. A user can pay to become a subscriber, which, among other things, enables them to participate in real-time conversations with the editors, download the articles in PDF form and visit the website with zero advertisements. They also published an article explaining how to add sites to a white-list since most users were not aware that their blocking software could be damaging to the websites they visit. The sites within this list are free to run ads while an ad blocker is still being used.
Soon after the publication of Fisher’s ad blocking article, other major website publishers offered a retort to his argument. Mike Masnick, founder of technology blog, Techdirt, disagrees with Fisher’s overall argument. Masnick does concede that the use of ad blocking can lower the revenue of the business providing the content, but this problem is not the reader’s responsibility to fix. He claims that if the business model is failing because of ad blocking software, the model should change into something that works.
Since TD noticed that certain ad units were not working on the site, they expanded the ways they advertised. Masnick started using custom sponsorship advertising where he created new content that was endorsed by a certain advertiser. In late 2009, TD teamed up with UPS to create a series of videos where Masnick was recorded discussing different topics in the world of technology. The ad campaign was a success as viewers raved about the videos and gave positive feedback to UPS.
“If you run a company, it’s your responsibility to put together a business model that works. And if people are somehow figuring out ways to do what they want where you don’t get paid, then it means you’re doing something that needs to change,” Masnick argues.
No matter which side of the argument a person leans towards, one thing can be agreed upon; businesses need to constantly adapt to their environment. If that means asking people to subscribe to a website – just as The New York Times did – in order to survive, they should push towards that business model. Ad-blockers have impacted many sites and some may have gone belly-up because of this, but there are plenty of other sites that thrive off advertising or find new ways to incorporate companies willing to pay to get their name in front of the publisher’s readership. Whatever the source of revenue, in order for the information atomic bomb to continue to spread its mushroom cloud over the masses, publishers need to find different sources of revenue that work for both them and their readers.