it's not 'just like cable'
Advertising on digital streaming platforms is more nefarious than on cable and paying more to not see ads won't necessarily mean you're not still being taken advantage of.
There has been considerable smirking on social media after Amazon announced that its Prime Video product would be introducing advertisements starting in February. Customers in Canada may choose to pay an additional $2.99/month to avoid these promotional interruptions. The butt of most jokes seems to be the inevitable revelation that the presumed disruption and innovation of online streaming platforms was mere aspiration. Instead, they are now ‘just like cable’ - Netflix similarly introduced ads and subsequently increased their pricing in fall 2022.
Amazon’s introduction of advertising is only superficially like cable in terms of the basic similarity: seeing advertisements of specific lengths at specific breaks. There are important differences that are obscured by this observation re: the nature of digital advertising and potential implications for competition and the subsequent sponsor-fication of the media they offer because their advertising ecosystem is so much more sophisticated. They are the closest to offering reliable ‘attribution’ - being able to tell an advertiser whether (and when) their ad ‘worked,’ because they can link datasets across their other verticals (like their flagship ecommerce platform). This activity of attribution is sometimes referred to as ‘campaign verification.’
On one hand, that prospect is awesome and cool for businesses that want to advertise, since on other digital platforms (like Facebook), their ad money is basically just a dressed up game of roulette.
On the other hand, it can wind up increasing prices for consumers when firms need to start to build in substantial advertising spends, that are then passed onto people. It’s happening!
It is also worth noting just how profitable advertising has already been for Amazon online: advertising earns more money for Amazon than Amazon Prime, Prime Video, and audio and e-book subscriptions combined. In the future, it has been speculated that Amazon could sell advertiser access to its gaming platform Twitch, to live sporting events that are streamed, and audio ads on Amazon music. Their streaming TV service Freevee is already ad-supported, but that is only available in the US.
Another reason why Amazon Prime’s ads aren’t ‘just like cable’ has to do with the nature of the information that streaming platforms are able to gather from us in order to target and calibrate subsequent advertising. They collect and analyse information on what we watch, when, and for how long - as well as what we stop watching, what we linger on - basically any passive consumptive activity as you engage. This knowledge is a little different from ‘cable’ days, since broadcasters didn’t know what else you were anticipating in their schedule, or when you rented a video at Blockbuster, the company didn’t have a way to know or categorise every DVD box you gazed at or picked up. Amazon Prime, Netflix, Apple, ETC know what trailers we watch and what shows we ‘save for later,’ all proxies of demand/anticipation that can influence how they price ads.
Streaming platforms use all of the information in their closed ecosystem to their own benefit. We are already seeing artificial intelligence applied to trailers, in an effort to highlight different features of a show more aligned with a viewer’s preferences. The streaming platforms can also use the information we volunteer to inform what content they might create themselves, purchase, or licence. Amazon is primed to be a juggernaut in this space: they own Goodreads, which lets them know what books people like, and why. They own the platform IMbD, which lets them know which actors and directors people like, and why. They own Kindle, which lets them know which parts of books people like, are anticipating through pre-order, and how fast they are being read. They own the smart speaker Alexa, which listens in. And of course, the company knows a whole lot about what we buy online from the everything store.
Presuming that seeing an advertisement offered during an Amazon Prime viewing sesh is a rerun of cable’s heyday also ignores other ways that they already advertise to us. Digital product placement is a practice that has gone under-the-radar, and is rather blurry. We currently place more of a legislative onus on Instagram influencers to disclose sponsored content that we do film and television - a significant imbalance.
Unlike cable, video streaming platforms also algorithmically control the content that we can find, the order in which we see it, what is elevated, and what is buried. They can nudge us towards consuming content that they have produced, a tactic (“self-preferencing”) that Amazon has already come under antitrust fire for in other jurisdictions.
It’s worth asking what it means for a customer to signal that they are willing to pay modestly more in order to avoid a specific kind of advertising. You may be able to pay that near-negligible premium to opt-out of seeing ads, but it won’t protect you from these other practices. You’ll still be contributing your consumptive data and endowing each firm with competitive advantages, and you’ll still be seeing super subtle product placement without ever knowing. So the question becomes: are we willing to pay much more to avoid advertising of all kinds, and how can policy help us opt-out of this kind of data collection?
Jeff Bezos once said, “advertising is the price you pay for having an unremarkable product or service.” It’s doubtful he appreciated what Amazon could achieve through advertising when he threw that shade in 2009. A Bank of America analysis suggests that the push into video will boost Amazon’s revenue by as much as $5B USD.
We shouldn’t equate streaming with cable, because that thinking obscures how sprawling a company like Amazon is, and how it can out-compete + change the landscape. It’s nothing to smirk at.