I don’t really see my POV represented in the comments here, so I will add my 2c.
I have two strong beliefs:
Ads are net bad for people watching the ads.
It’s really bad to create business models that involve creating a substantial marginal price for something that has little or no marginal cost, like models where you invest a bunch of money to build something and then charge people in money or attention to have it. Ads are just a different kind of price.
1 seems extremely obvious to me and I’m sort of confused why people think differently. It’s true that sometimes if I see an ad, it will communicate helpful information to me. However, this is obviously not even close to commensurate with the value of my time. If I have a problem, and I want to solve the problem, I will never, ever look for ads to help inform me about solutions to the problem, because there are much, much more efficient sources of information about solutions to all problems I ever have. This is a natural consequence of the fact that advertiser incentives are grossly misaligned with my preferences, and incidentally the fact that ads are produced by random marketing professionals who are usually not actually foremost experts on my problem. (This is also true if I want to just serendipitously learn unexpected new things.)
If the guy who writes the bottom line about the diamond in the box wants to tell you five minutes of crap about why the box has a diamond, why would you listen to him for five minutes, unless you are a masochist? That’s an insane way to try to learn true things. The world is filled with people who aren’t specifically trying to convince you of a particular self-interested bullshit conclusion. Why not spend your time listening to them, instead?
Regarding 2, if you create a business model like this, unless it’s perfect at price discrimination, it’s going to produce a deadweight loss in the form of people who are not willing to pay your price, and who then will not benefit from your product, even though you could give it to them for free. Since price discrimination is hard, this is usually a gigantic loss. In addition, with digital media, you have a huge enforcement problem, so tons of resources will be burned all over to try to extract the price from thieves, and then to work around the enforcers, and so on.
We should create coordinated investment systems where people who desire a product pay in advance in accordance to how much they desire it, and the product is then given away for free to anyone. Patreon (and clones) and Kickstarter (and clones) are clearly successful examples of this, and we should try to move more and more consumer spending into that model.
We should create coordinated investment systems where people who desire a product pay in advance in accordance to how much they desire it, and the product is then given away for free to anyone. Patreon (and clones) and Kickstarter (and clones) are clearly successful examples of this, and we should try to move more and more consumer spending into that model.
This really doesn’t work at equilibrium though. Why would I pay in advance instead of free-riding? Why would the amount I’m willing to pay reflect the value I get? That only happens if I believe that my contribution is 100% responsible for bringing about the good, but it’s not clear to me how to ever get more than 1/N. The whole thing seems to rely on charity (which I do like, but for stuff that’s charitably supported you don’t need ads anyway).
I agree that problem #2 is bad, but I don’t think we really have an alternative right now. I don’t really like ads but still think it’s plausible that they are better than charging if you aren’t good at price discrimination.
(I think this is probably the most salient problem with capitalism after distributional issues. Wei Dai and I independently proposed this scheme.)
This really doesn’t work at equilibrium though. Why would I pay in advance instead of free-riding? Why would the amount I’m willing to pay reflect the value I get? That only happens if I believe that my contribution is 100% responsible for bringing about the good, but it’s not clear to me how to ever get more than 1/N. The whole thing seems to rely on charity (which I do like, but for stuff that’s charitably supported you don’t need ads anyway).
I’m sure you’ve thought about it more than me, and I agree that it’s not clear this will work at mega-scale as a “literally everything that requires an initial investment runs on this” strategy. However, it also really looks to me like it can work for a lot of things. Some things working in its favor:
Humans have a lot of intuitively operating cooperation machinery. People understand the idea of pitching in. It makes them feel like they did a good deed.
People respond well to social prestige as a reward for pitching in, which these platforms are getting very good at providing, through mechanisms like special badges, public credits, and access to special preview content (technically this is a loss to not to provide to everyone, but it’s tiny compared to the usual model.)
Removing so much waste creates a huge amount of slack for people to defect and still get results of the quality they are accustomed to.
Pay-in-advance models typically make visible the option to price-discriminate upwards, allowing people with huge amounts of money or grantmakers to pay for more warm fuzzies, more prestige, and more choice over what gets funded. This seems to happen often enough to make a substantial difference—you can see examples of whales on Patreon if you look at higher tier rewards that have “N of M remaining” visible.
Your scheme is also interesting and is clearly in some sense a “less hacky” approach than trying to get people to altruistically do things which are economically irrational. (Although—sometimes it’s a lot easier to get humans to do things that seem like the socially acceptable thing to do than to get them to do the economically rational thing to do.) I would like to see that tried, too.
I don’t really see my POV represented in the comments here, so I will add my 2c.
I have two strong beliefs:
Ads are net bad for people watching the ads.
It’s really bad to create business models that involve creating a substantial marginal price for something that has little or no marginal cost, like models where you invest a bunch of money to build something and then charge people in money or attention to have it. Ads are just a different kind of price.
1 seems extremely obvious to me and I’m sort of confused why people think differently. It’s true that sometimes if I see an ad, it will communicate helpful information to me. However, this is obviously not even close to commensurate with the value of my time. If I have a problem, and I want to solve the problem, I will never, ever look for ads to help inform me about solutions to the problem, because there are much, much more efficient sources of information about solutions to all problems I ever have. This is a natural consequence of the fact that advertiser incentives are grossly misaligned with my preferences, and incidentally the fact that ads are produced by random marketing professionals who are usually not actually foremost experts on my problem. (This is also true if I want to just serendipitously learn unexpected new things.)
If the guy who writes the bottom line about the diamond in the box wants to tell you five minutes of crap about why the box has a diamond, why would you listen to him for five minutes, unless you are a masochist? That’s an insane way to try to learn true things. The world is filled with people who aren’t specifically trying to convince you of a particular self-interested bullshit conclusion. Why not spend your time listening to them, instead?
Regarding 2, if you create a business model like this, unless it’s perfect at price discrimination, it’s going to produce a deadweight loss in the form of people who are not willing to pay your price, and who then will not benefit from your product, even though you could give it to them for free. Since price discrimination is hard, this is usually a gigantic loss. In addition, with digital media, you have a huge enforcement problem, so tons of resources will be burned all over to try to extract the price from thieves, and then to work around the enforcers, and so on.
We should create coordinated investment systems where people who desire a product pay in advance in accordance to how much they desire it, and the product is then given away for free to anyone. Patreon (and clones) and Kickstarter (and clones) are clearly successful examples of this, and we should try to move more and more consumer spending into that model.
This really doesn’t work at equilibrium though. Why would I pay in advance instead of free-riding? Why would the amount I’m willing to pay reflect the value I get? That only happens if I believe that my contribution is 100% responsible for bringing about the good, but it’s not clear to me how to ever get more than 1/N. The whole thing seems to rely on charity (which I do like, but for stuff that’s charitably supported you don’t need ads anyway).
I agree that problem #2 is bad, but I don’t think we really have an alternative right now. I don’t really like ads but still think it’s plausible that they are better than charging if you aren’t good at price discrimination.
(I think this is probably the most salient problem with capitalism after distributional issues. Wei Dai and I independently proposed this scheme.)
I’m sure you’ve thought about it more than me, and I agree that it’s not clear this will work at mega-scale as a “literally everything that requires an initial investment runs on this” strategy. However, it also really looks to me like it can work for a lot of things. Some things working in its favor:
Humans have a lot of intuitively operating cooperation machinery. People understand the idea of pitching in. It makes them feel like they did a good deed.
People respond well to social prestige as a reward for pitching in, which these platforms are getting very good at providing, through mechanisms like special badges, public credits, and access to special preview content (technically this is a loss to not to provide to everyone, but it’s tiny compared to the usual model.)
Removing so much waste creates a huge amount of slack for people to defect and still get results of the quality they are accustomed to.
Pay-in-advance models typically make visible the option to price-discriminate upwards, allowing people with huge amounts of money or grantmakers to pay for more warm fuzzies, more prestige, and more choice over what gets funded. This seems to happen often enough to make a substantial difference—you can see examples of whales on Patreon if you look at higher tier rewards that have “N of M remaining” visible.
Your scheme is also interesting and is clearly in some sense a “less hacky” approach than trying to get people to altruistically do things which are economically irrational. (Although—sometimes it’s a lot easier to get humans to do things that seem like the socially acceptable thing to do than to get them to do the economically rational thing to do.) I would like to see that tried, too.