Creative Destruction: What Happens When Online Advertising Finally Fails

by Shelton Bumgarner

I have been using the Internet since about 1994. I remember when using e-mail was a novel concept, one that was difficult to explain to the average person. Anyway, over 20 years later, we finally have come to a crossroads. After experimenting with video and after Facebook has gotten into a huge amount of trouble because of its systemic abuse of users’ data, it’s slowly becoming obvious that we might be about to enter a new age in online media.

One where you have to, like, pay, to consume it.

Before I got any farther, let me make some observations. One, I’m aware that there’s a growing trend towards paywalls for online media. Two, nothing I’m about to write would indicate that in the short term newspapers are going to rebound. Newspapers — except The New York Times and The Washington Post — are doomed unless they do something really, really, really radical. I’ve proposed they put all their content into an app, but no one listens to me.

Anyway, the point is, there may come a point when what is self-evident — that online advertising isn’t a viable business model — will become so glaringly obvious that what probably should have been done, what would have been done but for Netscape in 1994, will happen: virtually every website, be in social media or otherwise, will have some sort of subscription model.

What would be the consequences of this?

Well, if you throw in the death of net neutrality in the coming days, it seems pretty obvious that agreements will spring up between the telecoms who provide Internet access and the content providers. So, a complex — meant to confuse — series of plans will spring up with the explicit point of screwing the consumer over to the greatest existent possible. But gradually there’s at least the possibility that content providers and service providers will figure out some sort of sweet spot for access to content. Probably what will happen is sometime between now and 2020 there will be a tipping point and all hell will break loose. I would suggest it will be when for various reasons Facebook finally converts to some sort of subscription model. Initially, this will hurt Facebook a great deal, with a similar, free service coming at it — and doing quite well. But after the shock wears off, I would predict there will be something of a gold rush on the part of content providers and service providers as they squeeze every nickle they can out of hapless consumers.

So, by about 2020, not only will you be paying for different speed levels, you also be paying for 99% of the content you want to access on the Internet. This will, in itself, create a new, more mature ecosystem for the media industry. Having a subscription-based economy is something that media companies can understand.

But, like I said, I just don’t see newspapers being able to take advantage of this opportunity. Other than The New York Times and The Washington Post, I see most newspapers will gradually grow either completely based on the AP or vanish altogether. But a new breed of online content provider — one built from the ground up on the assumption you’ll pay, say, $5-$19.99 a month (year?) for access to their content — will arise. It may take a few years, but it’s going to happen the way things are going.

This, of course, doesn’t even begin to address how AR/VR will influence things. It could be that just about the moment when subscription services take off, AR/VR will slam into it and make everything I’ve just written painfully moot.

Author: Shelton Bumgarner

I am the Editor & Publisher of The Trumplandia Report

Leave a Reply