Don’t Fear The Reaper — Online Advertising Is Doomed & Based On A Lie

by Shelton Bumgarner
@bumgarls

As I’ve written before, online advertising is based on a lie and as such it’s all going to come tumbling down soon enough. The lie it’s based on is that it, like, works and stuff. It just doesn’t. Online advertising is pointless and moot and soon enough it will be burned to the ground as its supplemented by what actually makes money — subscription services. It’s just a matter of when, why and how. As I understand it, online advertising — as predicted 20 years ago — is now larger than any type of media advertising. And it is, as we currently conceive of it, doomed.

What I mean is, very, very soon — I say no later than the beginning of the 2020 presidential campaign in early 2020 — there is going to be a fundamental shift in how people interact with online content. The switch over is going to suck massively for consumers used to — essentially — getting a lot of stuff for free, but as the Net matures, it’s all but inevitable at this point.

What’s going to happen is, because of the end of Net neutrality, essentially, the old concept of content aggregation found in online services such as AOL and Yahoo will come back. So, the missing link of the business plan of online media will finally arrive: how to actually make money.

So, when you’re stressing out about how Trump is going to win re-election in 2020, you’ll probably read that information via a portal of some sort that gives you a wide swath of content for $24.95 in the context of whatever Net access plan you might have figured out you want. Hence, there might be a Netflix and Chill bundle for some ridiculous amount, but as part of that for the low-low price of $24.95, you get free access to a wide-swath of video options in addition to Netflix, such as CNN, MSNBC & YouTube.

Or, put another way, it seems pretty obvious to me that the major Internet companies like Google, Netflix, Facebook and Twitter (and maybe even Amazon) will have a vested interest in subsidizing people’s access to content with the major broadband ISPs. That, in essence, is how consumers will be able to do the same stuff they do for free now, just they’re going to have to pay some for a wide-selection of content.

The endgame of all of this, is, of course, everyone makes a lot of money. Consumers get milked dry — there may even be some regulation (after the Republicans all commit mass suicide, of course ). The point is, we’re in later stages of one of the epoch of the Internet and once we lurch into a new one, the change will likely be rather dramatic.

One issue I honestly don’t know the answer to is what happens to content providers in general. Once all content of note behind a paywall, does that spell the final death knell of newspapers, or do they rebound? That’s a real tricky question. One scenario is newspaper Websites get into any number of $24.95 monthly bundles and or do they just fade away because people will only be willing to subscribe to The New York Times or The Washington Post? That’s a real quandary. I keep expecting someone to come out with an uber for newspapers, but it hasn’t happened yet.

My best guess is sometime between now and 2020, but anything could happen. We’ll see.

Of course, by 2024, all of this is moot because of VR/AR (MX). The whole thing gets reset as MX companies struggle to get people to actually use the services. And that doesn’t even begin to address how, like, uh, you would interact with a MX newspaper in the first place.

The upside of all of this is online content providers will FINALLY start to make something akin to the money they used to in the print era, even though in a dramatically different context.

A Deep Dive Into The Immediate Fate Of Online Advertising

by Shelton Bumgarner
@bumgarls

Let’s take a serious look at what comes next when it comes to funding online content. Pretty much, the entire business plan of online content is based on a 25-year-old lie. It’s a fundamental, systemic lie that will be extremely painful to overcome. First, we have to get a few things out of the way — first, with the rise of AR/VR the very nature of online content is about to change dramatically. A back-of-the-envelope guess is that within about 5 years, yet another major shift in the consumption of online content will have occurred and everything will be rebooted in the sense that we’ll be talking more about the battle to the death between the video game industry and the movie industry, not the fact that the newspaper industry — other than The New York Times and The Washington Post — faded into nothingness.

The lie that online business plans are based on started in about 1994 when three things happened. One is, Wired Magazine under the guise of Hotwired produce the first banner ad. The stakes were pretty low and so no one really gave much thought to the basic fact no one, but no one cared about online advertising. Online advertising is a lie, pure and simple. And, really, the only metric you can base it on is engagement and maybe a half-assed amount of general mindspace and branding. In short, online advertising is useless and has been since its inception. Now, this did not happen in a vacuum. At the same time, Netscape revolutionized pretty much everything when it gave its signature product, Netscape Navigator, away for free. (Yes, I know that “free” came with conditions, but to the average consumer it was free.) That established in the consumer’s mind the idea that you could get something for nothing online. About this same time, in the rush to make money in the dot.com bubble, content companies — using the lie established by Hotwired and facilitated by Netscape Navigator being free — gave away their most valuable product, their content, for free as well, hoping to make money off of online advertising.

So here we are, 25 years later, and the little white lie of Hotwired is now the basis for an enormous online advertising industry. The whole thing is shit. It’s complete and total bullshit. And that’s why I would suggest that sometime in the next five years three datapoints will crash into each other in a pretty dramatic fashion.

First is, the end of net neutrality. Soon enough, the potential fiduciary upside of bleeding consumers dry will simply be too much and there will be a never-ending mixture of plans for speeds and content. So you’ll have the option of a Netflix & Chill plan that gives you great speeds for video, but at the expense of shitty speeds for, well, everything else. And the list goes on. This will strike horror in the hearts of New York City media people, so there will be a lot of wheeling and dealing to piggy back on different plans. So just for subscribing to Xfinity, you’ll get, say, a limited-time subscription to The New York Times, or whatever. Another aspect of this I suspect will be in their craven desire to squeeze every last drop of blood from consumers may at some point market a plan for “super fast email” that will be the first step towards a de facto tax on email which, given how Republicans have completely screwed us over by cutting taxes on the wealthy, Congress may at some point have no other option than to actually officially put a tax on email of some sort. (That’s kind of hazy and iffy, but it’s something to think about.)

Meanwhile, there’s the problem of abuse of data on the part of Facebook. Facebook may eventually come under enormous strain to at least give people the option to op-out of Facebook’s original business model and as such that will be a huge turning point in how consumers interact with the main utility of the Internet — Facebook. The ripple effect of this can not be overstated. If Facebook starts a subscription option — even if it initially is just an option — all bets are off. The very nature of how people interact with online content in a very basic fashion will change and what would have happened in 1994 had Netscape charged for Navigator will happen now — people will be conditions to pay for any any every service they interact with online.

Now, at some point these other two things will come crashing down on the lie at the center of online advertising — it doesn’t work. So, with these two other things swirling around, what should have happened 25 years ago, will finally happen. Various subscription models — in the context of the end of net neutrality — will spring up and what you’ll likely see is something very akin to AOL et al in the 1990s. Once you establish that consumers have to pay for online content for each and every Website they access, content providers and service providers have a vested interest in working together to promote content. So, in one scenario, when you sign up to Verizon’s Internet, you would have many, many speed and content plans to choose from. So many, the average person not only will be extremely confused, they will be screwed over unless they read the many explainer articles produced by the now thriving online media industry. So, in other words, what happens is — there might be a profit sharing program between smaller Websites that would piggy back on the plans thought up by the big boys. That might be, maybe, how a lot of smaller Websites will survive in the first place.

I would go so far as to suggest that it’s even remotely possible that portals like Yahoo might suddenly become relevant again for no other reason than it would make a lot of sense to pay $24.99 a month for access to aggregated content found within a portal than be nickle and dimmed to death subscribing to dozens of small Websites. Maybe. That’s a possibility.

Again, let me be absolutely clear — this is just a back of the envelope guess for the next five years. Anything beyond that and we’re talking about AR/VR and a completely different way of interacting with online content. We’re going to be fighting over the idea of “immersive media” and if the “gaming killed the movie star.” Once you have immersive media in a meaningful manner, all of this fighting over how to fund traditional text media online is rather quaint. Once you are all but forced to engage with advertising in an immersive media environment, well, what’s the point of what I just talked about in the first place?

But immersive media is a little bit down the road and the exact nature of it is very much up to debate. I do think, however that very soon, things we’ve all taken for granted about online content will fall by the way side in a pretty abrupt manner.

Shelton Bumgarner is a writer and photographer living in Richmond, Va. He is working on his first novel. He may be reached at migukin (at) gmail (dot) com.