The Pivot to Advertising Has Begun

The pivot to paid is, in most ways, a positive development in the search for sustainable media models. That’s not to say ad-dependent media is dead, not by a long shot. But too often in the excitement around subs the attention goes to acquisition vs retention. And the latter is where the true health of a subscriptions business is gauged.

Subscriptions or advertising. The pivot to paid is overall a healthy trend for many publishers, but subscriptions aren’t a savior. Ads still have a role, sometimes as the main plank of media business models. The success of Axios, Morning Brew and Dotdash prove that. And ads can work with subscriptions -- look at the success Bloomberg is having in t... See more

Stepping back, though we should probably ask where all these ad budgets are coming from, and, more importantly, where the growth for internet advertising will come from next. The obvious answer is television: print is mostly already gone, but ‘TV’ viewing is now finally unlocking, with US pay TV subscriptions now down by over a third 

The apparent limitation of the ad-supported media business model is that there will never be enough traffic to satisfy the beast. But while subscription revenue is stickier and gives creators more runway and short-term security, eventually the flame that started any new project will be extinguished. A new muse will need to be found.

With prices like $5 / month or $8 / month for a commodity mobile platform, the concern is that pricing will soon shift to a “first year free” model or be entirely free, shifting the economic model to one that emphasizes broadcast advertising sales patterns. While this could bolster early acquisition, it degrades Hollywood’s trust in the platform. W... See more

Netflix, which is now spending $17 billion a year on programming, has added another 100 million customers since then, thanks to successes such as Bridgerton and Squid Game , as well as a crackdown on password sharing and the introduction of a cheaper, ad-supported plan. Netflix increased its profit through the first half of 2024 by 60% from a year ... See more

With the above dynamics in mind, we believe that there is going to be tremendous near-term innovation in the pay TV distribution business. The internet has made it possible for new entrants to innovate quickly and materially. Consumers will have more choice and convenience going forward. This competition will drive prices and margins down in pay TV... See more