There are many pros and cons when it comes to using the advertising revenue model for a product. Starting with the pros, it’s easy (relatively!) It was the business model that the author used to initially fund his company. It is easy for a web based start-up to implement and it is easy to pitch to investors as a consistent way to achieve revenue. In many scenarios in which there is not enough revenue growth to cover the costs of providing the content or service, consistent users interacting with the advertisements creates a steady stream of income. In our case scenario, this applies directly. As we have several high costs to account for (music labels in order to stream large and diverse range of content, livestream platform costs, app development, AI technology to curate playlists, etc.) we are in a need of using advertising revenue to cover the costs that are associated with using our app. The app itself is free and if a user is not subscribed to the app, we achieve a bit of income just from the interactions of them using the app.
Now for the cons, as mentioned in the article in order to “demonstrate that you’re going to target more and better than Facebook requires moving deeper into the world of surveillance”. Since we are constantly inundated with digital ads, they often do not translate to a high conversion rate when it comes to sales. In order to create the most targeted ads for the companies that are paying to have their content displayed on your platform, one needs to track the users data across other platforms and apps to properly “trade information”. This brings up the larger conversation surrounding issues relating to user privacy, surveillance, data tracking which in some ways feel inevitable in the direction that digital advertising is headed. For our app specifically, using this model can discourage users from using the app altogether. Ads are competing for the attention of the user and at some point if the user is not interested in subscribing/purchasing the app then one will often lose users from increased ads. We in some ways are combating some of these issues by creating a “premium” version of our app similar to Reddit mentioned in the article. In this way we are allowing users to turn off these ads and create more user centered experiences.
