Internet traffic is growing at an alarming rate. Given the amount of total IP traffic growth that will occur over the next 5-10 years (we’re supposed to hit the zettabyte threshhold by the end of 2015), I think it’s safe to say we’ll see a lot of reinvestment in network infrastructure to help alleviate some of the costs of delivering all this data. In order to pay for all this, I suspect it’s also likely that we may see some companies buck the trend of “unlimited bandwidth" in favor of tiered pricing, much like AT&T has already done with their iPhone pricing plans. If this is the case, users will start indirectly paying for even the “free" services that they use on a monthly basis.
For those products that rely on serving ads as part of their business model, any sort of tiered data pricing model could be problematic (especially in data heavy verticals like the video market). Most consumers aren’t happy when you show them ads that aren’t relevant to them, but imagine CHARGING them for these kinds of ads. This could affect consumer internet behavior pretty substantially, even if the pricing model changes only slightly. There are certainly arguments in favor of legislation to help curb this sort of change, and while it’s not my intention to get into a net neutrality discussion, I’m in agreement with a bunch of people who are a lot smarter than me about most of that topic.
Where am I going with all of this? Well, I signed up for Spotify’s free trial to spend some time testing out the service, and while I’ve been enjoying it enough, I had a rather jarring experience yesterday with the advertising. I was in a groove listening to some rather brutal death metal (don’t judge) when an audio ad interrupted my blast-beat-ridden-Nile-fest to tell me that some mediocre indie band I had no interest in had exclusive content available on Spotify. Pretty much every subsequent ad on the service was equally uninteresting to me and totally interrupted the flow of my zen-like death metal trance.
I understand that Spotify’s free model probably isn’t how they’re making the bulk of their money and that the goal is to drive me toward being a paid subscriber, but serving me ads like these is NOT helping. Google does a pretty good job of serving up relevant and unobtrusive advertising in the text/search world, but they’re still struggling with highly relevant ads on YouTube and elsewhere. If the ad-based model is to survive in the future of the internet, we need to do a whole lot better job at delivering engaging ads to users (especially if they’re going to pay for them indirectly through tiered bandwidth plans).