The hidden price of free

Great Debates
1

Netflix has a $17 tier where you get an ad free version of their streaming service. They also offer a reduced cost $8 tier where you have to watch 12 or 13 minutes of ads per hour. When people select a subscription, they’re choosing: what’s more important, my time and attention or $9?

So let’s examine that decision. Let’s say the average Netflix subscriber watches 1 hour a day of Netflix. I think you’ll agree that’s a reasonable number and quite possibly conservative. They’re watching 12 minutes per day of ads. That’s 360 minutes per month, 6 hours. So they are watching 6 hours worth of ads to save $9 per month. They have valued their time at less than $1.50 per hour.

This becomes obvious if I take the exact same choice and I flip it around. If I say “I’ll pay you $1.50 an hour for you to watch ads”, you’d laugh at me. You’d say that’s ridiculous. Of course you’re not going to do it. But that’s what Netflix is offering you, and many of you take that deal. So why are you making such an obvious mistake?

Because you’re not valuing your time or frustration. It’s easy to mentally count the cost of money. You’re paying $9 for ad free. That’s a real cost, a hard number, and it comes out of your bank account every month. What’s your time worth? Time is literally the most valuable thing any of us have, and paradoxically we often value it at zero. We can make a rational time-value calculation if someone is offering to pay us. We can say “no, I’m not willing to clean up trash for $12 dollars an hour”, but when it comes to something like Netflix, we price our own time and attention at $0, and so when we do the mental calculation, the $9 we’re saving per month with the ad free plan is greater than the $0 per month that we’re (erroneously and problematically) valuing our own time at. So we make the decision that it’s better to save the $9.

I already know people are going to nitpick. They’re gonna say “but I already pay the full price” or “I refuse to pay for any subscriptions” – fine, you’re not my target audience. But I bet you make this exact mistake in another domain. Some people will say “I go do something else while the ads are on” and fair enough, but it’s still a disruption. You get frustrated when you’re absorbed in the show and then it pauses for an ad break. You get taken out of the moment. Now you have to go do something else for a while. Even if you aren’t paying the “full” cost of watching the ads, you’re still paying a cost in reduced enjoyment for that disruption. You’re not fully relaxing and sitting there engaging with a show or a movie. You’re engaging half-way with several activities to manage your own frustration at having your show or movie paused for ads. That’s not zero cost no matter how you slice it.

Let’s examine another issue. There’s a search engine called Kagi. It offers a fair deal. You pay them $5 or $10 per month, they give you the best search results they can. They give you no ads. They respect your privacy and don’t build a profile on you. They don’t manipulate you and steer you to their sponsors. They don’t deliberately give you weak results up front so that you have to keep searching (and see more ads in the process). Those things are all things that google does.

And I already know how most of you are going to react. “But google is free! I’m not going to pay for a search engine!” – and think for a moment. Is this a realistic assessment of what’s really going on here? Why is google free? Google isn’t free. You don’t pay in cash. You pay in data. You pay in creating an extremely elaborate profile on you that they track over decades. You pay in looking at ads. You pay when google gives you worse results on purpose because it keeps you looking for longer, engaging with their site for longer, building up more data, and seeing more ads. Google wins when they give you worse service. They try to give you the worst service they can without having you quit. Their incentive is to ride that line perfectly. Kagi wins when they give you better service.

These tech companies run really fucked up business models. We’ve gotten so used to it that we don’t see how problematic it really is. They subsidized their growth by burning venture capital to provide you with a subsidized or free product, capture as much market share as they can, drown out competitors who are giving a more honest deal but requiring users pay for their product, and then once they’ve taken over the whole market, they have the freedom to enshittify. And this distorted commerce model is something you’ve internalized. You now think that something like internet search should be free and you automatically feel like paying for it is fundamentally wrong. But what’s wrong with giving money to a provider who gives you a genuinely valuable service and they’re trying their best to please you and give you the best service, versus one that’s giving you a “free” service but doing its best to manipulate you and frustrate you just enough that you don’t leave.

Kagi at $5 or $10 a month is an amazing deal. Genuinely useful search features. Lets you prioritize and deprioritize different types of results. You can look for the “old web” sites like internet forums and individual people’s webpages in a way that google now basically filters out in favor of only linking to giant internet companies. Kagi isn’t trying to give you bad results so you stay longer and keep looking at ads. Kagi is trying to get it right in the first place, give you the best results you’ll be happy with, because then their job is done. They’re not trying to manipulate you to spend more time on their service to build more data on you or make you see more ads. And for a service as valuable as internet search, how can that not be worth 17 cents per day? And yet Kagi has 70,000 subscribers, and google search is used by billions every day.

Now let’s examine mobile gaming. Traditional gaming (console, pc mostly) said: we’re going to make the most fun game we can and sell it to you for $30-60. You buy our game, you have fun, and you come back and buy the next game we make. It’s a fair deal. They’re trying to give you the best product they can. You enjoy their product. You give them money.

There’s something called the principal-agent problem in behavioral economics and game theory. The ideal transaction is when the provider/seller (the agent) and the customer (the principal) have the same incentives. The provider makes the best product they can so the customer will be happy with what they receive and keep coming back. In exchange, the customer pays the provider. It’s a fair deal, the kind that has driven 99% of human commerce since the beginning of civilization until giant tech companies have rewritten the deal.

When incentives of the principal and the agent are lined up, that gets the best result. A service that wants to give you the best service they can because then you’ll be a happy customer is working in the customer’s interest. But what happens when this is reversed?

When mobile gaming hit the scene with smartphones around 2010, there were a lot of fun, high quality mobile games that asked people to pay a buck or two. A completely fair deal. More than fair. And people genuinely enjoyed these games. And billions of people said “pay?! for games!? on my phone!? no, that doesn’t seem right” – so what did we get? Manipulative f2p games that tried to hook whales to pay big money to account for the fact that most of the players won’t pay a cent. Whereas buying the latest Mario game from Nintendo means Nintendo is giving you the most fun version of the game they have, that is not so for F2P games. F2P games want to give you just enough fun, or something fun-adjacent, so that when they get in your way, you’ll pay them to take away that roadblock that they just placed in front of you. You’re having a good time playing the game, and oh, you used up your moves for this 2 hour block. Do you want to pay some green emeralds to continue instead of waiting for more moves? Their incentive is the opposite of Nintendo. They want to have you ALMOST have fun and then block you from achieving that fun so they can charge you to get past the barrier they put between you and fun. The principal’s incentives are the opposite of the agent’s incentives. They’re manipulative, they deliberately ride the line of being just not quite frustrating enough that most users will quit their app. And they use addictive strategies like loot boxes to hook vulnerable people into paying them most of the money they’ll make.

The world we live in is a shittier world because of this constant miscalculation people are making about their own time, their own attention, their own enjoyment, the quality of the products they get, and the misalignment in incentives between principal and agent.

Pay for ad-free Netflix. Pay for Kagi over google search. Buy your games and stop playing manipulative free ones. Treat your time and attention and enjoyment like it has value. Stop being a voluntary cog in this dynamic that tech companies have manipulated us into. Spend your time and your attention and your money wisely. Free is not really free. The costs of “free” have never been more apparent than they are now.

2

I think you’re correct, but it’s all part of two old tropes:

“You get what you pay for.”

and

“If you’re not paying for it, you’re the product.”

Humans in general tend to think in the short term - it’s not what something is costing you down the line, it’s about what it’s costing you right now. So of course, looking to a free/cheaper option is going to make sense to most. OTOH, we tend to undervalue our own leisure time (exactly as you said) because we don’t tend to quantify it in $$$ figures.

A personal example, because hell no, I’m not immune to it. I spent quite a lot of time in World of Warcraft farming gold (the in game currency) which I use to pay for the game expansions and my own subscription (generally around $70 every few years and $15 per month). Looking at it objectively, doing ONE hour of OT a month would pay for a combination of the above, yet I was throwing a couple of hours a week to be “free”.

Since I got enjoyment out of making my numbers bigger (gold in this case), it wasn’t a one-to-once value, but it wasn’t fully rational either.

One of the more insidious corporate tricks you didn’t mention is how many services can be bundled for you. Again, speaking from personal experience, I have T-Mobile as a cellular provider (for several reasons). One of the “perks” is that I get ad-tier Hulu and Netflix for “free” as a benefit.

Free subs! Hooray! Except that hidden price - loosing something, even (or especially if it’s free) creates dissonance. So even if I watch less than the 1 hour a day myself, now I value what I’d loose if I changed carriers. And so on and so forth with every perk or bundled discount. It helps lock you in, even when prices go up, or services enshittify.

And that’s leaving out the related topic of not OWNING anything. That show you enjoyed? Ooops, 6 months later, now you can’t see it anymore. Or it’s an exclusive - if you leave you can’t watch it again.

So yeah - the engagement teams behind all of this know who and what their consumers are. And they exploit it. And that’s why when people try to circumvent it (adblockers, shared accounts, etc) they get up in arms because even if you paid for it, or were given it for free, you’re hurting their profits, because it was never just about the upfront money.

3

I’ll pay for the ad-free option every time. Netflix, YouTube, Hulu…If I had to point to the number one lifestyle improvement over my lifetime, it would be that I now have the ability to avoid 90% of the advertising I endured during the first 50 years of my life.

4

This is a reasonable point of view.

I, like many of us, grew up in the era when almost all of what I watched on TV had ads. It was the normal way of things that the “price” of getting to watch TV was being exposed to commercials, and if we wanted to watch our shows, we had no choice in the matter.

Although, of course, we weren’t forced to pay attention to the commercials. We could use that time to go to the bathroom, or grab a snack, or do something else. (And, at their best, the commercials were themselves entertaining and gave us something to talk about.)

5

Nope. I will not pay for ad removal, any more than I will watch ads. It’s my computer or phone, and I have every right to control anything I view on it.

The reason why is actually that same as I don’t play F2P games. Those are about making you unhappy so you will pay for more time. Ads are about trying to make you unhappy so you’ll buy their product. And ad-free tiers are about having ads make you unhappy so you’ll pay for higher tiers. It lets them increase the price on the ad-free tier.

I’m not at all a fan of the whole “valuing time as money” concept. My time isn’t worth money. Now, I will sometimes pay for a convenience, but that’s not super common. I save money because I value having some extra for other things. My time? It’s the same time whether I’m watching something or not.

I just don’t think in this monetary way. It actually makes me feel rather uncomfortable. I can’t remember the thread, but one of them referred to ROI when not talking about money, and it felt bad.

Money is money. Time is time. I spend most of my day ignoring thinking about the former.

6

I rarely pay extra for ad-free media. A big factor is the often high effort required to cancel subscriptions. I read a while back that Dropbox (which I’ve only used the free version of) requires you to resign by snail mail. Which is basically an honor system on their part. Unless you are willing to send a registered letter.

If I think the time/money cost is too high I’ll go somewhere else.

7

I’m not sure what I’m doing right, but I get way less than that. In an episode of Stranger Things (pretty close to an hour), I’ll get maybe 5 ad breaks, of no more than a minute each.

8

Bullshit. It’s like three mouse clicks to cancel Dropbox.

9

Yep, this is exactly what I thought of as soon as I started reading the OP. Everything we search for online, everything we view, even if we just hover briefly over a YouTube thumbnail…it’s all being tracked and added to an assessment of who we are, and more importantly, what else we might want to buy.

I get what the OP is saying. It’s too late for me; they already know my every every interest, taste, things I might want to buy next, info related to my age, and possible medical issues. I know by the shockingly accurate videos and ads I get served.

All I can do is ignore the noise, take what pleasure I can from the cloud without letting it manipulate me too much, and carry on. I also click on stuff I really have no interest in, just to try to confuse the algorithm bots. Spitting into the ocean, I know. But it does sometimes visibly change what I get served in my YouTube feed, and I consider that a small win.

10

I was really excited about Kagi when I first heard about it (probably here). You get a bunch of searches for free. I somewhat appreciate that I’m not being tracked but I wasn’t impressed with the results compared to Google. It’s very much YMMV

11

Yeah I am with you on this. Time is just time, it passes at the same rate whatever I am doing.

When I was a kid a learned from my dad’s example. When the ads came on during a TV show he would strike up a conversation, pick up his crossword puzzle or book or paper. He didn’t sit and watch the ads and I have watched them very rarely since. I barely even register the ads that I cannot block online.

The other element of this that irks me is people telling me that, “You could automate that weekly job and save yourself 5 minutes every week.” Yeah, I know that. I automate jobs all the time. It’s part of my job. I like having a few that I do manually so that I have a nice mindless starting point for the week. I get going by running these few jobs. By choice.

And if I did automate the job and save the 5 minutes a week I don’t get 260 minutes added on to my year in a lump. I get 5 minutes at a time. To do what specifically. I don’t imagine for instance that anyone getting ad free streaming is using the time saved to cure cancer.

12

That’s a fair assessment if you disagree about the usefulness of each product. I’ve only recently started to use Kagi so I haven’t thoroughly explored it. But I want to ask seriously if you’re comparing it against what Google is today or your own mental model of how good Google used to be. Because I think Google search in 2018 or so was basically a perfect tool. It still had the downsides of building profiles on you and lack of privacy and whatnot but the actual search results were magnificent. If there was a good answer to my question Google would almost always find it and put it at the top.

But they’ve changed significantly since then. It seems to me like it has been degrading as a tool consistently and significantly since then. I’m not sure that a single change they’ve made since then has been for the better. Now when I ask Google a very specific question it almost never gives me the right answer on the first page or two. It essentially says oh so you want to answer specific question X. Well here are some generic SEO optimized pages that are roughly adjacent to the topic of x but don’t answer your question at all. I find that when I want to conduct a real search I have to use llm to sort through the shit for me to actually get a real result because Google is just that useless. And you could almost feel sorry for them that they’re dealing with a legitimate problem which is that so many companies have dedicated themselves to SEO and breaking their algorithm and generating a ton of low effort AI content that dilutes the quality of the internet. Except Google was complicit in this because they would basically give SEO companies the keys to the castle by letting them know how to game the algorithm. This also seem to be a change around that time when they initially tried to fight SEO companies and maintaining the quality and objectivity of their search system and at some point they flip the switch and just decided to embrace them.

So I don’t think Kagi is necessarily better than 2018 Google but I think it’s pretty clearly better overall than 2026 Google. It’s also got some cool customizability. Like one of the things that Google never does anymore is to give you forum results even though forum discussions are almost always the best place to find things like obscure error codes and are often a treasure trove of niche knowledge. That’s why a lot of people automatically append “Reddit” after their Google search. But that’s only a partial solution because Reddit is only one form on the internet and even with that modification Google still ignores the rest. Whereas Kagi actually embraces this. They have a search lens that focuses on prioritizing forum results if you choose it or academic results or other modifications you can set yourself. They even have an emphasize old web feature which focuses on smaller websites run by individual people instead of giant corporations sort of how the internet was 15 or 20 years ago compared to how it is now. Kagi legitimately still tries to fight that fight and deprioritize SEO low quality slop from the search results.

But I’m not a Kagi evangelist. There are other options like Perplexity but offer you a better deal than Google does depending on how you feel about AI. Perplexity is sort of like leaning into the workflow to just start asking AI for search results. It’s really good at them and it synthesizes them well. It’s more expensive than Kogi though. But since Google’s already basically forcing a shitty AI result on you anyway it’s probably better to use a very well crafted AI result like Perplexity offers.

13

I think I was comparing it to today’s Google which I agree sucks compared to older Google. I’ll give it another try.

14

It seems a bit odd for the original post to blame tech companies for an ad-supported model that goes back to television, radio, magazines and newspapers.

My experience: in our household we have (Canadian) ad-supported Netflix and ad-supported Amazon Prime Video.

  • Netflix has around 3 minutes of ads per hour (a far cry from the 12 minutes of ads mentioned above) with an average ad break of 30 seconds which I find pretty harmless; I’m often playing a game on my tablet while I watch TV so it’s not like I’m sitting there twiddling my thumbs impatiently.
  • On the other hand, Amazon Prime Video has way more ads (probably more like the 12 minutes quoted above) with 2 minute ad breaks which I find excruciating; I would never pay for it a la carte, but my wife likes having an Amazon Prime account and the streaming service comes with it.
15

When I’m watching an ad-free show these days, ironically I find myself yearning for a commercial break, so I can Google this or check on that. I’m not leaving the couch, so I’m not “going to do something else.”

When I’m watching an ad-filled show, and a commercial break starts, I put the TV on Mute and go on the internet, often prompted by what I’m watching.

Now, listening to music that abrutply stops to play an ad is something that makes me murderous. Adblockers for the win here.

16

Can’t you pause the show?

17

Just a mention, but the number of commercials seems to depend on the recency of the released show (some older shows/movies have very few, some have a great deal more, especially newer options) and if it’s a channel exclusive, which seems to me in the middle. I’ll say that the Worst for me is Hulu (about 3-4 commercial breaks of 90 second per half hour), with Netflix being a distant second and Amazon Prime generally close behind.

This makes sense to me, at least for the Last. Amazon wants you invested in their ecosystem (as I mentioned above), since they can keep selling you stuff, similar to why they sell their tablets at cut rate prices (and then the sales!) because you are so much less likely to leave the walled garden and look other places for everything under the sun. I suspect Netflix, per the OP, is instead pushing it’s commercial load to push you into the ad-free tier, which is of course fine if you’re watching a substantial amount of their content.

And of course, the more “free” options (Pluto TV, Tubi, FreeVee, Roku Channel, etc.) have nearly broadcast level ad breaks.

I do wonder on other options not discussed so far, how much the old paradigm of “I’m getting something free, so I should also buy something” that worked in the days of yore for Publisher’s Clearing house still works. I mean, as an example not yet discussed, we have an entire thread on “Free Video game titles”, involving giveaways from GOG, Epic and Amazon (for subscribers). We recently discussed that they’re giving it away to force you to click through all their sales and releases to suck you in. And OFTEN they’re giving away content that serves as a virtual Chapter One of a longer experience, so you get hooked and buy the rest.

Or Steam’s frequent free weekends/week for a game to encourage you to enjoy the Skinner box long enough to want the full experience. Or heck, giving away an older title in a series just before the new, full priced expansion/sequel comes out.

18

Do those ads come at scripted breaks in the story like where you would expect the ads to come if you were watching on old time broadcast tv? Or do they just shove in the ads wherever and whenever like in the middle of a chase scene or a conversation?

Also, if you can tell, is there a difference in when the ad breaks are between a show that was edited with scripted ad breaks and a show that was originally on, say, HBO and therefore wasn’t necessarily filmed to include scripted story breaks for ads?

I’m sure I’m in the minority, but unthoughtful ad placement would probably eventually make me go all Elvis and shoot the screen.

19

I bet you for content that was designed for broadcast TV / ads from the start, they choose the intended scene break to run the ads. for content that wasn’t, like netflix originals… some random intern probably picks what they think is the right point. But since the show wasn’t written with scene breaks and act breaks with ads in mind, it’s less organic.

But I don’t actually know, because I won’t watch ads. In pretty much any context. I drive with a blindfold on just so I don’t see billboards. I do my best to have an ad-free life. I have had hulu free with my spotify premium subscription for like 3 years but I won’t even use it cause it’s the version with ads.

My estimate of 12 min/hr was based on what I’ve heard from people on reddit and that it sounds sane because that’s the traditional broadcast TV number.

20

Ditto, I use that commercial time to go pee or get something to drink, like God intended =)

I mean, been doing it since i was old enough to toddle over and turn a TV on [mom used to just put me into the library for nap time, she had a run in in the mid 60s with pneumonia for about 8 months and needed to nap in the afternoon, and she knew I wsn’t going to nap so to avoid stress, she let me use the tv and library while she was asleep]

I honestly don’t mind adverts, grew up with commercial breaks. I can deal with them sliding the commercials back in to [IDK, Veronica Mars? Can’t remember the last thing we watched on Amazon] as I learned to basically ignore the ads and use hte time for other stuff.