Generally, these services are free because they have a low market value. Most users would not be willing to pay for them. So, they have to finance themselves by other means like ad income.
My guess is it's more that advertisers want paying customers the most, so they pay extra or otherwise pressure services to include ads into paid services.
I appreciate the option to pay more to go ad free. Though I also understand offering with ads to widen the audience at a free or lower price.
Free is NOT the problem. Free is the “business model” of the internet. Just because some people want to monetize it doesn’t mean we need to give up and just let them do what they want. Selling ads is not the purpose of the internet. Content created to sell ads is most of the time garbage. No chicken, no egg no puzzle to resolve.
Well in that case the answer is super simple: The same reason Google provides any other free service, whether it be Maps, Gmail, Photos, Search, Hangouts, Meet, Pay, whatever. The more Google services you use and the more time you spend using them, the more you can be monetized.
2. Data collection (after all if you are not paying you are the product) There is monetary value in collection, observation, and tracking of a vast amount of internet traffic.
3. Education. If you get people just starting out in their careers using your product or service for they hobby, personal project, etc then when they have a business need for some like your product or service they will just naturally choose you. Adobe and MS has been doing this for decades with low or no cost education licensing
Let me ask you a question: the Free Basics is targeted to people that can't afford another way to get internet. What will showing ads to these people accomplish?
Probably because it's easier to quickly grow a free product/platform and then add monetization on top, than have users pay for access or endure a worse ad-cramped experience.
Because you get the value of the content created by other users. You are absolutely free to not contribute anything or even visit if you don't get any value from it, but someone is providing the service in the first place and there is nothing wrong with monetizing that service with advertising.
Problem is, people expect things to be free. By restricting yourself only to people willing to pay money, you've cut out most of the internet population. You might be restricting yourself to a small business.
There's also a heap of other reasons... for example, if you create X, and sell it to users, you're only selling one thing. By advertising other peoples products, you can be selling 1,000 different things. The chances of success are vastly increased. Also, if you sell directly, your users are likely only to purchase once from you. If you run advertising, they are more likely to generate continuous revenue for you, from multiple products.
Free content & free services existed on the web before the online advertising economy did. Plus, it's stupidly cheap to host stuff now compared to back then.
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