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Online Advertising is a Regrettable Necessity: On the Dangers of Pay-Walling the Web

Yonas Kassa

TL;DR

This paper questions the sustainability of a growing paywalled web and analyzes how the ad-supported open web underpins global access. It revisits the ad-supported monetization model and formalizes the income-paywall expenditure gap, $IPEG = GNIpc - PWAC$, to assess affordability across countries. Using $GNIpc$ data and paywall costs, the authors show that $135$ countries representing about $6.56$ billion people cannot afford a fully paywalled web, signaling potential digital segregation and undermining ad ecosystem viability. The work argues for refining ethical, desirable advertising practices rather than abandoning the open web to paywalls, and calls for policy and research efforts to achieve a sustainable, inclusive advertising-supported information ecosystem.

Abstract

The exponential growth of the web and its benefits can be attributed largely to its open model where anyone with internet connection can access information on the web for free. This has created unprecedented opportunities for various members of society including the most vulnerable, as recognized by organizations such as the UN. This again can be attributed to online advertising, which has been the main financier to the open web. However, recent trends of paywalling information and services on the web are creating imminent dangers to such open model of the web, inhibiting access for the economically vulnerable, and eventually creating digital segregation. In this paper, we argue that this emerging model lacks sustainability, exacerbates digital divide, and might lead to collapse of online advertising. We revisit the ad-supported open web business model and demonstrate how global users actually pay for the ads they see. Using data on GNI (gross national income) per capita and average paywall access costs, we established a simple income-paywall expenditure gap baseline. With this baseline we show that 135 countries with a total population estimate of 6.56 billion people cannot afford a scenario of a fully paywalled web. We further discuss how a mixed model of the so-called "premium services" creates digital segregation and poses danger to online advertising ecosystem. Finally, we call for further research and policy initiatives to keep the web open and more inclusive with a sustainable business model.

Online Advertising is a Regrettable Necessity: On the Dangers of Pay-Walling the Web

TL;DR

This paper questions the sustainability of a growing paywalled web and analyzes how the ad-supported open web underpins global access. It revisits the ad-supported monetization model and formalizes the income-paywall expenditure gap, , to assess affordability across countries. Using data and paywall costs, the authors show that countries representing about billion people cannot afford a fully paywalled web, signaling potential digital segregation and undermining ad ecosystem viability. The work argues for refining ethical, desirable advertising practices rather than abandoning the open web to paywalls, and calls for policy and research efforts to achieve a sustainable, inclusive advertising-supported information ecosystem.

Abstract

The exponential growth of the web and its benefits can be attributed largely to its open model where anyone with internet connection can access information on the web for free. This has created unprecedented opportunities for various members of society including the most vulnerable, as recognized by organizations such as the UN. This again can be attributed to online advertising, which has been the main financier to the open web. However, recent trends of paywalling information and services on the web are creating imminent dangers to such open model of the web, inhibiting access for the economically vulnerable, and eventually creating digital segregation. In this paper, we argue that this emerging model lacks sustainability, exacerbates digital divide, and might lead to collapse of online advertising. We revisit the ad-supported open web business model and demonstrate how global users actually pay for the ads they see. Using data on GNI (gross national income) per capita and average paywall access costs, we established a simple income-paywall expenditure gap baseline. With this baseline we show that 135 countries with a total population estimate of 6.56 billion people cannot afford a scenario of a fully paywalled web. We further discuss how a mixed model of the so-called "premium services" creates digital segregation and poses danger to online advertising ecosystem. Finally, we call for further research and policy initiatives to keep the web open and more inclusive with a sustainable business model.
Paper Structure (9 sections, 5 equations, 2 figures, 1 table)

This paper contains 9 sections, 5 equations, 2 figures, 1 table.

Table of Contents

  1. Introduction
  2. Related Work
  3. Revisiting ad-supported Internet
  4. Pay-Walling the Internet Exacerbates Digital Segregation
  5. Conclusion
  6. We Need More Desirable and Ethical ads
  7. Limitations and Future Work
  8. Acknowledgments
  9. Appendix A: premium costs of some of the popular platforms

Figures (2)

  • Figure 1: Diagram Revisiting ad-supported Web: First, advertiser assigns a total cost (TC) to a product/service by adding the advertising dollar (Ca) to the initial cost of a product/service. When a user visits ad-supported publisher/platform (arrow A), the platform contacts ad-system (arrow B), which in turn performs RTB (arrow B') that leads to winning advertiser sending back ads and a dollar amount (arrow C'). the advertising system then sends the winning ad along with a fraction of the dollar amount to the ad-slot on the platform (arrow C). The ad is presented to the user (arrow D). Up on conversion, user eventually pays the dollar amount for ad they saw (arrow E) plus Cps, finally product/service is delivered to user (arrow F).
  • Figure 2: IPEG, income paywall expenditure gap (blue indicates IPEG value $>$ 0, dark red indicates IPEG$<$0) demonstrating majority of countries having negative IPEG value indicating that paywall budget cost is already higher than the average before tax income of a country's citizens.