Something’s Gotta Give: The Perils of Dominant Business Models in Online Environments

The general consensus seems to be that the current online advertising system is broken. People don’t like online ads (based on views and/or clicks), so AdBlock Plus is extorting publishers and content creators like some kind of digital mafia boss, with those who rely on ad revenue helpless to stop it. This makes actually making any money very difficult, especially when we tend to pass on the responsibility of dealing with the current broken advertising model, and then use the excuse of “neutral” platforms, software and extensions to explain why it is not our job to fix them/why they cannot be fixed. Of course, no platform, software, or extension is neutral. At some point in the process, a biased human being is on the other side of the screen making very biased human decisions about how things are designed, and how they operate. If we want to fix the system, we shouldn’t “[…] build systems that let us pass the buck to someone else, in exchange for passing them a few bucks”; we should demand and take responsibility for the things that affect us. Or, at least, that’s Anil Dash’s argument.

I think this is easier said than done.

The problem with a single business model becoming dominant in an online environment, and in fact in any environment, is that no one model is infallible. Being completely reliant on a single revenue stream makes you vulnerable should that stream dry up. Furthermore, when a business model becomes dominant, it limits the incentive for business owners to create or build new models or go looking for other revenue streams—if it ain’t broke, don’t fix it! This stagnancy and lack of creativity makes the model vulnerable as the market evolves, until everyone is in crisis because, say, traditional online advertising no longer works as effectively (if at all) in a digital environment. This “panic mode” either forces creativity and an evolution of the model, or demands its replacement with something more sustainable—and the cycle continues. This loop can be seen in the evolution of TV and radio advertising: forced to compete with Netflix and rapidly changing social climate, TV advertisers have been forced to become clever in their ads.

With the rise of ad blockers, it looks like we’ll soon be seeing the same shift in online advertising—though if advertising will change, or if business models will shift to remove it from their revenue streams completely still remains to be seen. Either way, something’s gotta give.

2 Replies to “Something’s Gotta Give: The Perils of Dominant Business Models in Online Environments”

  1. Hi Alex,

    You got straight to the point in this piece and outlined all of your points very clearly. This is a well thought out stand alone blog post!

    The only real feedback I can really think of is to maybe connect the first part about online advertising being broken and the second half about one business model being dominant.

    I agree that one dominant model will at some point leave people in crisis, another possible outcome is that a company gets bought out by Facebook and completely changes the service you once knew.

    Do you think that this cyclical evolution is necessarily a bad thing as it does eventually drive creativity and better products for people?

    Thanks for your post! :)

  2. Hello Alex!

    This is a well-written and a clear blog post. I enjoyed reading it as well as the video ads links there are on the list of my favorite ads.

    In the second paragraph, I agree with that “panic mode” brings out the creativity in the creators. Though it was hard for me to make a connection with the TV ads as a loop with the online ads /ads blocker. I recall seeing them on the internet rather than the TV, in fact, the links provided are on youtube where millions of people watched the ads.

    Do you think that the “panic mode” for ad blocking has been there considerably for a long time, yet not that much has changed?

    Thank you!

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