

Ad Revenue on the Web? No Sure Bet - jwt
http://www.nytimes.com/2009/05/25/technology/start-ups/25startup.html?adxnnl=1&hpw=&adxnnlx=1243220561-BTMyyQSZk9uTQWjwen/LDQ

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patio11
_“Ads are an inefficient business model, making indirect revenue as a result
of behavior and advertising to people who don’t want to see them or for whom
they’re irrelevant,” said Jeff Bonforte, Xobni’s chief executive. “Premium is
a very direct and efficient model.”_

I wish more people understood this: if ads are working on your site it is
because _someone has figured out how to monetize your users_. (At a _multiple_
of how much you get from the ads!) Why isn't that someone you?

Conversely: if you are not charging money because your users are just piss-
poor at actually paying for things (like most apps focused on music -- where
most of the cool crowd hums "yar har diddlee dee, being a pirate is alright to
be, do what you want 'cause a pirate is free, you are a pirate" under their
breath), then ads aren't going to succeed either, because no one wants to buy
ads targeting people who don't spend money. (Well, OK, Madison Avenue loves
selling those ads and chalking it up to "branding", but advertisers are
gradually learning to actually measure ROI on those spends, too, and they're
terrible.)

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swolchok
Freemium has its own problem: you have to be careful that your free service is
not perceived as "neutered", while still leaving a reason for users to pay you
for the premium service. (Expect to see at least two blog posts on HN in the
next two days on this topic.)

