The moment that we, as a culture, decided that we wanted to stop paying for art and information, we implicitly invited more advertising into our lives. That may not have been what we had intended, but in any nation where business pays the bills, that’s just part of the deal. Somebody, after all, has gotta pay for all of this stuff.
Today, online ads are just about everywhere – Even on this site. When all upfront costs to the consumer are zero, there are only a handful of ways to keep the lights on for any meaningful stretch of time: Patronage, small donations, government grants and ads. That’s pretty much it.
Sure, we could quibble and try to add “day job” or “trust fund” to the list, but what are those things if not forms of “self-patronage”? Meanwhile, sales of merch like “t-shirts” and “mugs” would fall under the category of “upfront costs to the consumer.” (In which case, they’re the product and the music or the blog or whatever else functions as the “ad.” Kind of scary, right?) Either that, or you could call those purchases “donations.” Take your pick.
At Scientist, we started accepting ads 6 months ago today, and they’ve kept us going, allowing us to justify the time and human costs of putting out a new issue every month. At first, I was wary of the idea of accepting ads and pushed for a community-supported model. But the response from readers was overwhelming: They wanted the ads. It turns out that by and large, music and audio nerds like hearing about new music and audio products. Who would have guessed?
I still have some concerns about 100% ad-supported models, and we’ll get into that in a moment, but in our case it has not yet compromised our values or led to crappier work. In fact, the some of our most well-received and widely shared stories have come out in these past 6 months. (It also helps that we only accept advertisers whose stuff we like.)
Depending on how they’re handled, digital ads can be invasive or supportive, compromising or indispensable. But whichever way they turn out on any given site, there’s no denying that ads have become a central feature of today’s art and media landscape. Google, which is easily the most successful company on the web and dominates almost half the market for online ads, earned revenues of $50 billion last year. About 95% of that came from advertising.
No matter how you feel about ads, it’s good to be aware of how they work, how much they pay, and what our reliance on them means for us – both as creators and consumers.
A Case Study in Print
As consumers, all of us gripe about ads from time to time. This is especially true when they reach that mind-shearing point at which they become invasive, boring and irrelevant all at once. But that’s not always the case.
When I think about ads done well, I remember when I first started receiving Tape Op Magazine over a decade ago. At the time, the very idea that you could get a complete, timely and relevant publication delivered to your home – for free – was still a novelty. As quaint as that may sound now, back in the year 2000 it seemed almost too good to be true.
Tape Op was and still is an audio magazine that’s supported almost entirely by the advertising dollars of gear manufacturers. Yet somehow, it never seemed commercial. It spoke in a voice that was so authentic, so sincere and “zine-y”, that it was hard to see it as anything but an ally and an honest information hub. It was a magazine that invited not just your readership, but your friendship.
To make a free magazine work for so long, Tape Op published about one page of ads for every page of content. For many readers, those ads weren’t just the price of admission – They were also half the point.
In a hopping economy, and when information about new and esoteric audio products was harder to find, each ad in Tape Op felt something like a PSA. Ads also lent the magazine sense of legitimacy, featured some stunning photo spreads, and added yet another reason to peruse. The magazine was part equipment catalog, part cross-section of voices from the industry.
In many ways, Tape Op was a precursor for what would become of information on the web. It was free, but it was kept that way by people who had something else to sell; It was a bit of an open forum, where any one opinion seemed just about as important or valid as any other. In a very real sense, it felt progressive and unifying to its fans.
But from another perspective, it’s hard not to ignore that the magazine was kept free by keeping human costs low. The pages largely featured Q&As instead of articles, and drew on amateur writers and musicians who would work for a token sum and the chance to interview their audio heroes. It also relied heavily on reviews that were written for little more compensation than access to free or discount gear.
There are a lot of ways for this to go wrong, but Tape Op, under the leadership of one Larry Crane, has managed to balance these challenges well.
Of course, not every company is so noble. For contrast, we can look across the globe to the Times of India to see what can happen when ads drive information. In just a moment, we’ll look at what happens to music.
When Ads Attack
Times of India is currently the biggest English language newspaper in the world. Despite a shrinking newspaper industry in the west, the story in India has been one of huge growth and unprecedented success. But it is a success that has come with hidden costs. According to The New Yorker’s Ken Auletta, this achievement has stemmed largely from “dismantling the wall between the newsroom and the sales department.” That’s all too easy of a thing to do when ad sales are your only meaningful source of revenue.
“Celebrities and advertisers pay the paper to have its reporters write advertorials about their brands in its supplementary sections,” Auletta writes. “The newspaper enters into private-treaty agreements with some advertisers, accepting equity in the advertisers’ firms as partial payment…Critics point to a decline in journalistic quality…one critic, a former editor at the Times of India named Darryl D’Monte, says the paper is ‘the most serious threat to journalism not only in this country but in the entire developing world’.”
Even the paper’s owners proudly attribute their growth to the chillingly rationally calculation that their real customer is not the consumer, but the advertiser. They fully acknowledge that the product they have to sell is not information at all: It’s the reader.
It’s all to easy to see how all this could go wrong when we have the distance of continents to help instill some objectivity. But the real threat is far closer to home than we may realize. If we’re speaking of developing worlds, there’s no need to look any further than our own computer screens.
The Developing World at Your Doorstep
Companies like Google, Facebook, and Pandora may have too much class and savvy to admit it out loud, but they’ve performed this same calculus as well. They know well that their only significant paying customers are their advertisers. And what’s being bought and sold is your attention.
Ryan Holiday, a self-confessed “Media Manipulator” and author of the book Trust Me, I’m Lying, says: “Think about it. From their perspective, if they make you click, they’ve won. You can’t subtract your click, or retract it after you’ve done it. The don’t really care why you read their story. They just want you to read it, they want their ads to load, and they’re kind of done.”
“When people start paying for the news, a lot of these things become less effective. Because, if I’m paying for Gawker, and they print a bunch of [manipulative] headlines, I’m not going to want to read them anymore. And that means that that our interests are aligned. They want to produce good stuff, I want to read good stuff, which is different from how it is now.”
Rise of the Paywalls
After nearly a decade of “free” as the going price for digital media, a tidal shift is underway. Consumers have woken up to the idea that there are hidden costs to any deal that may seem to good to be true and that sometimes a clear, upfront cost is the one worth paying.
A few years ago, observers from the tech and marketing sectors hemmed and hawed when outlets like The New York Times and The Wall Street Journal began erecting paywalls around their stories, often predicting catastrophic failure. But despite anyone’s best guesses – even their proponents’ – these paywalls have been hugely effective. They also essentially change the relationship between readers and the paper. The Times no longer has to care about increasing “traffic” for the mere sake of traffic. Instead, they can focus on delivering stories that keep their customers satisfied, interested, and more likely to subscribe.
Similarly, companies like Netflix have been doing a tremendous job with paywalls that allow them to focus on delivering quality content rather than sheer numbers of “impressions.” If anything, it’s actually better for their business if you’re so deeply satisfied by what you’ve just watched that you choose to spend the remaining precious hours of your day soaking up the sun or spending time with your family. It saves them on streaming fees.
And isn’t that the entire point of good art anyway? That it leaves you feeling more whole, more ready to engage with the world, rather than forcing you into a hamster wheel of clickbait?
Even in our little industry, Sound on Sound has put up paywalls around some content. They’ve also become one of the best magazines in the industry from a consumer advocacy perspective, publishing no-holds-barred shootouts and exposés that are unafraid of putting a little pin-prick into misleading marketing hype when it’s warranted.
Of course, there are free magazines that do this as well (the one you’re reading right now comes to mind.) But unless they’re non-profits, they tend to be exceptions, run by total weirdos, like myself. A completely ad-supported magazine can be run ethically and well, just like Tape Op. It’s just playing against a stacked deck.
And in case you’re wondering: No. We don’t plan on charging for Scientist anytime soon. It just doesn’t make sense for us, or you, at this stage. That said: Hey, would you ever think about buying a T-Shirt?
Do Ads Work, and Do They Pay?
The answer here is yes and yes.
Despite what I had long heard about how banner ads “don’t deliver” or “have lousy clickthrough rates”, it turns out that they’re actually pretty effective investments for a lot of companies. That’s why there are so damn many of them in the world.
If a person tries to convince you that digital ads are bad news from a business perspective, then chances are that they’re trying to sell you something far more expensive — like poorer-performing print and TV ads, effective-yet-invasive “interstitial” ads, video ads, or maybe even some “branded content.” (i.e., “news” stories that are paid for by a particular sponsor.)
It’s true that some more invasive forms of advertising are even more effective than banner ads. However, since they go for an even higher rate and turn some readers off, it can’t be said that they’re a definite upgrade for anybody, advertiser, publisher or consumer.
Of course, any of these types of ads can be done ethically and well – branded content included. For evidence of that, see The Onion. (Of course, they can also crash and burn, like when The Atlantic took payment to run a planted pro-scientology piece alongside their editorial content.)
But regardless of how ethical or questionable any one ad may be, the fact remains that when you crunch the numbers, the simple banner ads you’ll find all over the web are actually more effective than just about any type of legacy ad. This includes print, TV and real-life billboard ads. In fact, of all the old-school formats, only radio advertisements outperform digital banner ads, and even then, just barely.
When you combine this with the fact that banner ads are often far less expensive to produce than TV, radio or print ads, it means that they are extremely efficient by any recent historical standards. Still, despite their tremendous growth in the past few years, some digital ads are still priced lower than they are worth. This can sometimes be great for advertisers and technology companies, not always so great for creatives or consumers.
The Economics of Art and Online Ads
The law of supply and demand operates everywhere, including online.
If we have cheap ads, it means there will have to be a lot of them. If there are a lot of them, it means there’s less pressure for any one to be effective, well-targeted, or even remotely enjoyable. So basically: the cheaper digital ads are, the more of them we’ll have, and the crappier and more irrelevant they’ll be.
This is one of the reasons the subscription/paywall model has been such a boon to some companies. It allows them to turn down advertisers and negotiate higher rates for access to their fans. Whenever consumers get their skin in the game it means higher ad prices, which means fewer, better and more relevant ads whenever they do appear.
But that isn’t only good for content creators and consumers. It’s good for the advertisers too. One of the best ways to make sure your ads are effective is to display them in a place where consumers have demonstrated that they don’t mind… you know… paying for things.
It also helps when your ads are displayed in outlets where people aren’t inundated with them. When readers are in a place where they know the publisher cares about their attention and their time, they’re much more likely to look at the few decent ads like an interesting and relevant like a perk, rather than a shameless cash-grab.
It’s the exact opposite of say, the way that creepy, cookie-tracking Google Ads are used on many websites, where the plan seems to be something along the lines of: “OMFG PUT THEM EVERYWHERE!!! LOTS OF ADS LOTS OF CLICKS!!!!! Wait! You have an empty square over there, for the love of God, fill it with something!!!”
Can Ads Sustain Your Music?
We’ve talked a bit about how ads work when it comes to information. But what about art?
There’s been tremendous amounts of discussion in recent years about how Google ads effectively funnel money into pirate websites that hurt musicians. But can ads also make or sustain careers?
MP3 blogs almost never shelled out any dough for the traffic they got from bands. Through most of its history, YouTube paid nothing. (After a while, the rates went up and it paid next-to-nothing for quite some time instead.) But all that’s beginning to change.
The ad rates on some of the more coveted YouTube videos now reportedly range anywhere from $0.10 to $0.30 per view, of which YouTube keeps about third. That means if you force viewers to watch a full-length ad before your videos, you might earn anywhere from $60 to $200 per thousand views, which is nothing to sneeze at. (That’s more than we currently make per thousand views, for sure.)
The averages of course, are far lower. Anita Hamilton writes for Bloomberg that “[T]he rates for the most lucrative, “pre-roll” video ads that appear right before the featured video dropped from an average of $9.35 per 1,000 views in June of 2012 to $6.33 in March of this year.” That drop is mostly due to an increase in the number of channels serving up ads.
Some video ads earn less still. YouTube’s “TrueView” ads (which only incur a fee if the viewer doesn’t hit the “skip” button) rake in less per view. Of course, it’ll also take a lot longer to get to that same thousand ad views when your visitors can skip through ads. Industry estimates are that anywhere between 15% and 45% of ads get skipped, depending on how interesting they are and how impatient the viewer is.
In any event, to earn the median US income of $50,000 on YouTube, you’d need at least a half-million views each year, even at a super-optimistic rate like $.10 for each and every view. That boils down to about 40,000 views a month, 10,000 views a week or close to a 1,000 views every day, all year long. If we take the average rate of skippable “TrueView” videos (estimated at $.04 per ad view) you’d need between 1.5 and 2.5 million views per year, or 4,000 – 7,000 views each day. This is not easy, but it’s achievable.
Of course, this doesn’t account for any costs incurred while making the videos, which is why production values from the very biggest accounts on YouTube often look a little something like this:
It’s also why the few successful YouTube channels tend to put out tons of content, often weekly, rather than banking on the chance of a single big hit. (Unless they have the unparalleled marketing resources of say, a Rihanna or a Psy.)
Still, if you like the idea of making music into a super-regular, low-cost, online event — and the idea of getting financial support directly from advertisers doesn’t turn you off — then it’s feasible that with a lot of patience (and even more luck) you could eek out a living. (Or at least supplement your other work.)
However, if your goal is to take time in creating one-off lasting works of art, such as books or full-length albums, then your best bet is still to get real fans and customers to help pay for what you have to offer, whether that’s through purchases, subscriptions or other means.
And, if you find that others are monetizing your work without your consent? Well, there’s an app for that.
(Figuratively speaking. Although, yeah: Someone should totally make that. Unfortunately, the name “Fakeblock” is already taken.)
Chapter by Chapter
An advertising economy can allow artists to earn a living. But it’s an economy that rewards constant content — shiny and sensational new things all quickly and cheaply produced to serve short attention spans.
There’s something to be said for that. All of us enjoy fleeting, even brainless pleasures some of the time. But if you pursue the ad-based route, be mindful of its tradeoffs, its limitations, and who the “real” customers can become.
Although, perhaps there’s a silver lining in this system: When Charles Dickens wrote his great works, they were serialized in newspapers before they ever became “books.” When Frank Sinatra first began recording, his songs were released as one-off singles before they ever found their way into “albums.”
There’s a possibility that if you don’t try to create a great work for all the ages – that if you instead sit down, put your nose to the grindstone and try to create something that a good handful of people care about, right now, one entry at a time – then you might just look back in many years and find that a great work for the ages emerged from your effort nonetheless.
There’s no guarantee of that. But stranger things have happened. We live in a world where a chubby 30-something performer who sings in Korean earned one billion views and millions of dollars by dancing on an imaginary horse. Anything is possible.
Justin Colletti is a producer/engineer, a journalist and an educator. He masters records at JLM, tracks and mixes all over Brooklyn, Teaches for CUNY, writes for SonicScoop, and runs Trust Me, I’m a Scientist.
PS – If you ever wanted to see what music would sound like and ads would look like if technologists ran the show, we are happy to introduce you to Microsoft Songsmith. (Yes, this is a real, actual thing that somebody thought was a good idea):