Is An Ad-Supported Web 2.0 Inevitable? Let’s Hope Not

Four or five years ago, a single mentality dominated the world of web startups: build a service, amass as many users as you could and then – and only then – either figure out a way to make money, or simply get acquired.

Then 2009 happened: the economy tanked, the advertising biz took a nosedive and nobody was quite sure what to do. Venture capital funds dried up, and startups that had coasted on business plans that amounted to “eventually,we’ll work something out” suddenly ran out of money.

Part of the reason for this was a desire on the part of many Web 2.0 services to remain ad-free. It’s not that they didn’t want to make money, mind you. Instead, it’s that they wanted to do so without unfairly impacting their users’ experiences. Insert ads into what was previously an ad-free zone, and users often revolt. Popular companies like Twitter swore they’d stay away from ads because they weren’t terribly interesting and because they’d interfere with the feeling that social network belonged to its users first.

Yet, look at where we are today. Go to Twitter right now and search for the word ‘coffee’ and the first thing that comes up is a ‘Promoted Tweet’ from Starbucks. Advertising has arrived on Twitter and it looks like it’s here to stay.

There are debates as to how successful Promoted Tweets will be. Some argue that it just won’t produce enough revenue, while others are concerned with how users will react. But what’s clear is that Twitter is reacting to the cold hard reality that such large services need revenue – and they need it now.

But there are still hold-outs when it comes to the inevitability of ad-supported services. David Karp, founder of hipster-friendly blogging service Tumblr, recently told the L.A. Times that they’re “pretty opposed to advertising“.

And, though it may be naive, it’s hard not to sympathize. After all, advertising changes a service. While Twitter once felt like an open conversation with half the world, you have to wonder whether that feeling of openness and freedom will remain when your stream is full of messages from companies you may or may not like. Let’s say you search for ‘small coffee shop’ because you’re interested in finding an independent mom ‘n pop shop to get your java fix – do you really want to get hit with Starbucks advertising talking about their latest half-caf double-shot latte with soy? (Though, to be fair, Twitter currently restricts promoted tweets to search results.)

The problem is, few startups have made the ad-free thing work. Flickr have gotten the freemium model down pretty well, but they are the exception and not the rule. By contrast, Facebook, the web’s most recent success story, relies almost exclusively on ads on the millions and millions pageviews it gets per day.

But ad-supported sites also have their downsides, especially on those that rely on their users. If McDonald’s sponsors a site, can you still write a post that will be critical of their business practices, or will it get taken down? When the choice arises between revenue and openness, what does a company choose?

What’s worse, ad-supported sites change the idea of voting with your dollars. Previously, if you didn’t like a company, you didn’t support them with your hard-earned cash. Dislike Kraft Foods? All you had to was not buy their slices of cheese and buy some other brand instead. But if you don’t like what Facebook stands for, well then what? Do you get all your friends to migrate over to a different service that may or may not last? Do you just quit and miss out on all those invites and conversations? The stakes are different because of the networked nature of the web.

True, ad-supported media has been around for a long time. But on social networks and user-generated sites, having ads means that you’re monetizing conversations between people, not just TV shows or newspaper stories. And by doing so, the capacity for companies to encroach on everything we do and say increases.

That’s not always a bad thing – I like getting ads about things that interest me as much as the next person – but when those ads either prevent open dialogue or change the tone and nature of a service, it’s unfortunate. And maybe it’s inevitable too. But that doesn’t mean we can’t feel a little sad about our networks no longer being our own.