By Editor Morten B. Reitoft

Online advertising is decreasing, and the consequences are already seen among some content creators on YouTube. The payout from YouTube has reduced by 2.6%, vs. Google Advertising dropped as much as 8.3%

Online advertising, in general, has 2023 seen a decline, and the result is diverse. The many YouTubers and content creators relying on income from online advertising are changing strategies - and will most likely see more product placement, endorsements, and income that can be controlled by themselves. Others talk about an increasing number of competing channels saturating the advertising revenue and, therefore, losing up to 50% of their income in 2022. Some YouTubers we follow discuss changing their business to support income from non-Internet-based revenue.

One quite popular YouTube channel is the 8-bit Guy. In this New Year's film, he talks about the declining revenue's consequences and how he will change his business. This is, of course, only one of many.
With Google, YouTube, Meta, and other services dependent on online advertising, this is not good news, but for now, they are not very much influenced. However, this can have enormous consequences on the so-called 'free Internet' and the YouTubers. The Free Internet is a term that came along with the inception of the Internet, where the content was free and accessible (eventually supported by advertising), and the way it was organized enabled services accessible to everybody. In the link above, Sid Dani writes about how Subscription and other business models thrived along with the free Internet, but today is damaging the concept. We (INKISH) believe it's good to have a mix of business models, and as content can't be free without subsidizing business models, we think it's good to have a mix - but it raises many questions like news. In the old times, most people relied on news from mass media and had a more balanced access to information and news. Today, even the once-huge news media are fighting for revenue and inventing new business models to survive - with many consequences - in a broader democratic context.

In the paper 'Global Transition to the Subscription Economy: Literature Review on Business Model Changes in the Media Landscape,' Alenka Lena Klopčič, JanaHojnik, ŠtefanBojnec, and DragoPapler from two Slovenian Universities discuss the consequences of the subscription economy about democracy - and as we don't have a common understanding of topics - as we had from cheap/free newspaper supported by advertising - the essence of the democratic conversation is threatened.

Going to a subscription economy is also something we see among trade media in our industry. The reason is simple: creating content costs money, and advertisers realize that advertising spending has a doubtful ROI - ergo, media must find other ways to subsidize content.

Harvard Business Review said this elegantly: "Too often, ads target people who would buy the product anyway. The effectiveness of digital ads is wildly oversold. A large-scale study of ads on eBay found that brand search ad effectiveness was overestimated by up to 4,100%. A similar analysis of Facebook ads threw up a number of 4,000%"

That doesn't mean the content in trade media isn't worth subsidizing for other reasons, but subscription walls are steep. Singlegrain.com writes the following based on "Understanding Free to Paid Conversion Rates."

"Free trial to paid conversion rate: 25-50% Website visitor to free trial conversion rate: 7.1-8.5% Freemium conversion rate: 1-10% Lead to customer conversion rate: 2.35-5.31%" - which shows the challenge and the disadvantage of subscription economy - especially if your media is based on news and bringing news to the forefront of an audience :-/

The trend you see on YouTube and Google has been ongoing for some time, and as you know, YouTube has for years offered advertising-free subscriptions, the question is how long people will continue creating great content if all the business models we know of disappear.

Whether this will be a new opportunity for our industry I doubt. People are essentially sick and tired of advertising. You are ALWAYS exposed to a commercial message, and the result is reluctance, resistance, or blind to commercials. We tried researching consumers' acceptance of online advertising. As expected, all search and ChatGPT results favored online advertising - however, when asking about the development in YouTube Premium subscribers, the number is today 80 million paid subscriptions - which means 80 million users (and their families) less serving ads. Just ask yourself - you don't want them, and you don't want your kids to be exposed to all the shitty products - right?

But the future is for the most unknown - and it WILL be interesting to see how advertisers will react when value is zero or limited - because the same questions also indicate (as you can see above) that people would have bought the product anyway - so what will happen to content creation and the Internet - interesting!