Working Paper: CEPR ID: DP7729
Authors: Simon P. Anderson; Joshua Gans
Abstract: Content providers rely on advertisers to pay for content. TiVo, remote controls, and pop-up ad blockers are examples of ad-avoidance technologies that allow consumers to view content without ads, and thereby siphon off the content without paying the ?price.? We examine the content provider?s reaction to such technologies, demonstrating that their adoption increases advertising clutter (leading to a potential downward spiral), may reduce total welfare and content quality, and can lead to more mass-market content. We cast doubt on the profitability of using subscriptions to counter the impact of ad-avoidance.
Keywords: ad avoidance; advertising; bypass; death spiral; media economics; siphoning; two-sided markets
JEL Codes: L82; L86; M37
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| AAT penetration (F15) | advertising clutter (M37) |
| advertising clutter (M37) | total welfare (D69) |
| AAT penetration (F15) | content quality (L15) |
| AAT penetration (F15) | advertising levels (M37) |
| advertising levels (M37) | viewer aversion (D11) |
| advertising levels (M37) | content provider strategy (L17) |
| content provider strategy (L17) | mass-market content (L82) |
| AAT penetration (F15) | user fees (H29) |