Advertising and elasticity

Enrique Dans
Enrique Dans
3 min readJun 27, 2016

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A survey of 1,200 Netflix subscribers shows that an impressive 90 percent of them prefer to pay more for the service rather than put up with advertising.

Asked how much more, most customers talked in terms of a few dollars, but a quarter said they were prepared to pay more than four dollars to avoid advertisements, while some even said they would cancel their subscription to the service rather than have advertising.

Despite the limited validity of the survey, carried out at Reddit and thus subjected to a strong sample bias, the conclusions would seem to reflect a growing trend whereby advertising becomes a deal breaker. The spread of ad-blockers, which has already prompted some publications such as Forbes, to try blocking the blockers, illustrates how tired many people are of advertising.

For decades, advertising has been accepted as the way to finance content: it reduces costs for the user, in return for distracting our attention. Years and years of television shows that the formula worked reasonably well, although contrary to what Maurizio Carlotti believes, such programming is anything but free. When the vice-president of Spain’s Atresmedia group, which owns Antena 3 TV, says in a tweet that he “gives away” his programs for free, while Netflix “sells” its content,

“They are different businesses: Netflix sells its…

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Enrique Dans
Enrique Dans

Professor of Innovation at IE Business School and blogger (in English here and in Spanish at enriquedans.com)