• Jose Arrieta

Google as a Pay per View Service

The auction mechanism employed is marvelous (see my fanboy meltdown about it here). Basically, infinite ad Firma bid for your attention and which ever bids the most has the chance of time and cognitive power from you for a few seconds before you can enjoy your free content. Importantly, the advertiser pays just as much as the second highest bidder bids.

I would dare imagine that their attention, time, and cognitive power is more personally valuable for many WEIRD HENRYs than for any advertiser. That is, if Google allowed many of us to partake in the auction, I might feel comfortable outbidding all Advertisers all the time.

I say.might because Google makes about 7 US$ per user per month , for a total of around 150 B$US a year of Ad revenue. If we assume that the top 10% reigns in 50% of their Ad revenue, then it would cost around 33 US$ per month for a WEIRD HENRY to use Google as a pay per view service.

Just as a check. Google currently sells freemium packages for removing ads from YouTube for a cost of 10 US$ a month, thus this estimate seems to be in the right ballpark.

Now. let's consider why this pay per view service is not available. Sure, 33 US$ a month seems a lot, one could get Netflix, Spotify, and Amazon Prime for that amount. But cost is just a variable to consider. For Google, a pay per view service would directly increase Ad revenue because we are technically outbidding the top bidding advertisers all the time.

Similarly, it is plausible to imagine that advertisers bid more the more value they expect you are worth, if we assume they are somewhat accurate (if not they would be out of business) then the cost for using the pay per view service would costs more for people with a higher income and less for people with a lower income. Please add many grains of salt here, but broadly speaking this idea does not sound too unfair to the user. So, this solution seems fair both Google and it's users would be better off. At least from the start.

The advertiser would lose though. If some users automatically outbid them, then, their costs will increase. However, as long as only a small percentage of users employ the pay per view service, then their business model would continue unchanged. Their problem rises when a large proportion of users employ the service as they would basically need a new route to access Google's users.

The need for a new route is problematic. Since www-cookies exist, then advertisers would prefer to focus their ad budget to places where users do not outbid them. This would lead to lower bids in Google's AdSense and thus lower costs for the user to pay per use of Google services. But the new routes would lead to an explosion of ad showing services that would start to populate our websites.

Therefore, im the short run both the user and Google would be better off by investing in a pay per view business model. But in the long term Google would hurt it's monopolist position and lower total revenues. The users might be worse off as well, because new routes for grabbing their attention will emerge.

Yet, if we believe a user's attention has a finite value. Then if all platforms used a pay per view payment system for the user, then WEIRD HERNYs could still live an ad-free life for around 33 US$ a month. They would just need to send small chunks of those dollars to a myriad of services and not just Google.

Strategy is indeed a complex science.

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