The Case for Netflix to Add an Ad-Based Tier

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.

The affluent, early-adopter users who are mostly likely to pay $ᵤ are also those users with highest $ₐ, as advertising to them commands a premium. Unless you enforced discriminatory subscription pricing to users, based on the counterfactual of their potential ad revenue, you’d still be better off advertising to the people willing to drop $10/month ... See more