Ad blockers and the future of the internet

YouTube has gotten a lot of notice recently. They have set procedures to ... discourage ... the use of ad blockers. Viewers with ad blockers are limited to three videos. The internet is up in arms, of course, because their favorite free video site is no longer free. (Views who subscribe to YouTube premium and pay a monthly fee are not shown ads and are not limited to three videos.)

But I think YouTube may be showing us the future.

Some thoughts on advertisements:

There are two reasons to use ads: one is to present an image to the viewer, the other is to get the viewer to click (or tap) on the link and go to the sponsor's web site. (I will ignore the installation of malware.)

Displaying the image is desired. Image-only advertisements are similar to ads in newspapers and magazines (the old, paper format of newspapers and magazines).

Users clicking on ads is also desired, as it presents products or services or subscriptions to the viewer, with the ability to complete the sale.

Advertisements are useful to the web site because they provide revenue. The advertiser pays the hosting web site a small fee for each display of the ad (each "impression") or each click-though, or each click-through that results in a sale. (Or some combination of those.)

I understand the use of advertisements. They provide revenue to the host web site, and the company running that web site needs to pay for the operation and upkeep of the site. Even a small, simple, static web site must be hosted on a server somewhere, and that server costs money to buy (or rent) and needs electricity and a network connection.

There are, of course, other ways to pay for a web site. One can limit content to subscribers who pay a monthly or annual fee. (The subscription model.) One can get a grant from a patron. One can ask viewers for contributions. (The public broadcast model.) One can run the web site as a hobby, paying for it oneself. Those methods are all valid but not always feasible.

A description of ad blockers: 

Ad blockers work in one of two configurations: a plug-in to a browser, and a process on a separate device that monitors network traffic and drops requests to web sites deemed to be "ad servers".

The browser plug-in is the most common. It sits in the browser and watches each outbound request. The plug-in has a list of "known ad servers" and requests to those servers are intercepted. The request is never made, and therefore the ad is not retrieved or displayed.

Browser-based ad blockers can be configured to allow some web pages to display ads. The user can establish an "allowed" list of web sites; these web sites are allowed to display ads and the plug-in will let requests from those web pages (or rather web pages loaded from those web sites) through to their destination servers.

The other form of ad blocker is a separate device, one that sits on the network but in its own server. It does not live in a browser (useful for browsers that don't allow ad blocking plug-ins) and other devices such as tablets and phones. The ad block server, like a browser plug-in, monitors outbound requests and intercepts those going to known ad servers.

The advantage of the ad block server is that it blocks ads to all devices on your local network. (Note that when you use a device on a different network, like at a coffee shop, the ad block server does not intercept requests and you will see advertisements.) An ad block server can be configured to allow requests to certain destinations, which is not quite the same as allowing requests for pages loaded from certain web sites. The ad block server knows only the destination address, not the web page that made the request, or even the application that made it.

Both types of ad blockers can let some advertisements through, even unwanted advertisements. Ad blockers use a list of "known ad servers"; requests to destinations on the list are intercepted. A new ad server, at a new address, won't be blocked -- at least not until the list of ad servers is updated. The provider of the ad blocker usually is the one to make that update.

Ad blockers don't block ads from the host web site. A web page can request additional text and images from its origin web site (and they usually do). Those requests can bring text and images useful to the viewer, or they can bring text and images that are advertisements. The ad blocker cannot examine the additional text and images and decide which is useful and which is advertisement. Therefore, all requests to the origin site are allowed.

So ad blockers work, but they are not perfect.

Now we get to the interesting question: Are ad blockers ethical? Are they moral? Is it wrong to use an ad blocker?

Some thoughts:

One argument is that they are ethical. The web browser lives on my computer (so the argument goes) and I have the right to choose what is and what is not displayed on my computer.

The counter argument is that advertisers pay for the display of ads, and if ads are not displayed (in significant numbers), then the advertisers will stop paying and the web site will lose revenue and possibly go out of business.

(A counter, counter argument runs along the lines of: Display ads all you want, I don't look at them and I never click on them, so the web page is merely wasting their time and effort by displaying ads. By using an ad blocker, I am saving the web site the effort of sending the advertisement to me. The argument is  tenuous at best.)

Where do we go from here?

I think YouTube is showing us the future. In its fight against ad blockers, YouTube acts in two ways. First, it limits the number of videos that any one person (using an ad blocker) may view. (Some have accused YouTube of deliberately slowing videos or reducing resolution, but these effects may have been accidental. Let's ignore them.)

YouTube also encourages viewers to subscribe to its premium level, which removes the ads. Some videos on YouTube have built-in advertisements much like the native ads of web pages. YouTube does not remove those, and ad blockers cannot detect and disable them. Overall, the number of ads is greatly reduced.

Web sites cost money to run, and that money must come from somewhere. If viewers block ads, then money will not come from ads, and the money must come from another source. Web sites without revenue from advertising must use a different revenue model.

Future historians may point to YouTube switching from advertisement revenue to subscription revenue and say "Here. Here is where the change from advertising to subscription revenue started. YouTube was the first."

Google raises prices, which may be a good thing

Google has raised prices for several of its services. The annual rates for Workspace, YouTube Premium, and Nest are all going up. The internet is not happy, of course. Yet I see a benefit in these price increases, and not just to Google. I think consumers may benefit from them.

It does sound odd. How can consumers -- who pay these prices -- benefit from increases? Wouldn't they benefit more from decreases in prices?

My answer is: not necessarily.

My thinking is this:

While Google is a large company, with many products and services, most of its revenue comes from advertising.  One could say that Google is an advertising company that has a few side projects that are supported by advertising revenue.

The model was: make a lot of money in advertising and offer other services.

Google was -- and is -- wealthy enough that it could give away e-mail and storage. When Google first offered it's GMail service, it allowed up to one Gigabyte of storage to each user, an amount that was unheard-of at the time.

It's tempting to want this model to continue. It gives us "something for nothing". But letting advertising pay for everything else has a downside.

When a service depends on revenue from advertising, it is natural for the company to expect that service to help advertising. If the service doesn't, then that service is either changed or discontinued. (Why continue to offer a service that costs money to maintain but doesn't help with revenue?)

Google has a reputation for cancelling projects. Perhaps those projects were cancelled because they did not provide revenue via advertising -- or didn't help the advertising group gain customers, or better market data, or something else.

When a service is funded by advertising, that service is beholden to advertising.

In contrast, when a service has its own revenue -- enough revenue to generate a profit -- then that service is somewhat isolated from the advertising budget. If YouTube Premium costs $X to run and brings in $Y in revenue (and Y is greater than X) then YouTube Premium has a good argument to continue, despite what the folks in advertising want.

The same goes for other services like Nest and Google's cloud storage.

I expect that no one enjoys increasing prices. I certainly don't. But I recognize the need for services to be independent, and free of the influence of other lines of business. Higher revenue leads to services that are stronger and longer-lasting. (Or so I like to think.)

I may grumble about the increase in prices for services. But I grumble with restraint.