Comment by patentatt

Same with streaming services, ad-free services seem to be unusually higher priced than the ad-supported tiers. Netflix for example charges $10 for ad-free over the ad support tier ($18 vs. $8). I’ve seen estimates that ad revenue per subscriber is less than that, maybe $4-$8. And there’s a cost to that revenue as well, so their profit is even lower. Why go through all that trouble? Maybe the economics works out somehow, in that users willing to pay to get rid of ads are so price insensitive they may as well squeeze them for more money? Or the lower subscription cost opens up enough new subscribers to make it worthwhile to tolerate a much lower margin. I am very suspicious though and wonder if there is a more insidious or otherwise opaque motivation behind it. Is there some kind of ‘soft power’ benefit to being in the ad business?