Business Model 2.0 – Advertising vs Subscription

Something that had until recently passed me by was that the New York Times has stopped charging for access to their website. Most of the site will now be open to the public without a subscription, including the majority of the archives section. The site will now be funded by advertising, an option that, since the success of Google, has become the standard business model for many sites.

On the flip side of this, in an August 2007 Alert Box, everyone’s favourite usability guru Jakob Nielsen has written about an in-depth study that proves web users suffer from “banner blindness” – that is, they never even look at the areas of the page that banners are placed on.

Nielsen says there are 2 or 3 exceptions to this – firstly, search adverts do get seen, meaning Google et al are probably safe. Secondly, classified ads, such as eBay, are looked at and seen. Finally, he talks about in-page, in-context advertisements – ads made to look like normal content that appear in the content area of the page. Whilst Nielson – rightly – considers them unethical, they are very effective, and you can now see this style of advertising appearing online (Facebook being probably the highest-profile example).

Other than this however, most banner advertising doesn’t even get looked at, making them deeply inefficient. As Nielson says

“Marketing managers won’t remain clueless forever. Sooner or later they’ll discover that Web advertising offers almost no ROI.”

I wonder if Nielson is right. If so, then we’re looking at heading back towards a subscription-style model that the New York Times has just left behind.