Platform Siphoning: Ad-Avoidance and Media Content

Abstract

Content providers rely on advertisers to pay for content. TiVo, remote controls, and popup 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 adavoidance.

Keywords: Two-sided markets, advertising-finance, media economics, siphoning, bypass, death spiral

JEL Classification: L82, L86, M37