💻 computer science

Online Advertising is a Regrettable Necessity: On the Dangers of Pay-Walling the Web

This paper argues that the shift toward paywalling the web threatens the open, inclusive model funded by online advertising by creating digital segregation and excluding billions of people globally, thereby necessitating policy interventions to ensure a sustainable and accessible internet.

Original authors: Yonas Kassa

Published 2026-03-25

📖 4 min read☕ Coffee break read

CC BY 4.0

Original authors: Yonas Kassa

Original paper licensed under CC BY 4.0 (http://creativecommons.org/licenses/by/4.0/). ✨ This is an AI-generated explanation of the paper below. It is not written or endorsed by the authors. For technical accuracy, refer to the original paper. Read full disclaimer

Imagine the internet as a massive, bustling Global Public Library.

For decades, this library has been free to enter. You can walk in, read any book, watch any movie, or learn any skill without paying a single cent at the door. But here's the catch: the library isn't free because it's a charity. It's free because the shelves are lined with billboards.

The Deal: You Pay with Your Attention

In this paper, author Yonas Kassa explains a simple truth: You are already paying for the "free" internet.

Think of it like a grocery store. The store doesn't charge you for the air you breathe while you shop, but they make money by selling you the products. On the internet, the "products" are the websites and videos you love. The "money" comes from advertisers.

Kassa argues that when you see an ad, you are the one paying for it, just not with cash. The cost of that ad is baked into the price of the products you buy (like a new phone or a pair of shoes). The company selling the phone pays the website to show you an ad, and that cost is part of the phone's price tag. So, in a way, you are paying for the ads you see every time you buy something.

The Problem: The "VIP Section" is Closing

Recently, many of these websites have started putting up paywalls. This is like the library suddenly locking the doors to the most important books and saying, "If you want to read the news, watch the sports, or learn about science, you must buy a VIP membership."

The paper argues this is a terrible idea for two main reasons:

1. The "Rich vs. Poor" Library (Digital Segregation)

Imagine a library where the rich people can buy a VIP pass to read the best books, while the poor people are left standing outside, only allowed to read the tattered, outdated magazines left on the sidewalk.

Kassa does the math: If you had to pay for a subscription to just 250 popular websites (news, social media, entertainment, etc.), the average cost would be around $27,000 a year.

The Reality: Most of the world's population (6.56 billion people across 135 countries) earns less than that in an entire year.
The Result: If we go fully paywalled, the internet becomes a club for the wealthy. The rest of us get cut off from vital information, education, and opportunities. This creates a "digital segregation" where the rich get smarter and richer, and the poor get left behind.

2. The Billboards Will Vanish

Here is the twist: If the rich people buy VIP passes to avoid ads, the advertisers get angry.

The Logic: Advertisers want to sell luxury cars, expensive watches, and high-end phones. They need to see the rich people to sell to them.
The Crash: If the rich people are hiding behind paywalls where no ads are shown, the advertisers will stop paying. They will say, "Why pay for ads if we can't see our customers?"
The Collapse: If the advertisers stop paying, the websites lose their money. They can't afford to keep the "free" section open for the poor people anymore. The whole system collapses, and suddenly, nobody gets free access.

The Conclusion: Fix the Billboards, Don't Lock the Doors

The author isn't saying ads are perfect. He admits they can be annoying, creepy, and sometimes dangerous (like tracking your every move).

However, he argues that locking the internet behind paywalls is a dead end. It hurts the poor and eventually kills the business model that keeps the internet free for everyone.

The Solution?
Instead of building walls, we should fix the billboards. We need better rules and technology to make ads less creepy and more respectful, while keeping the library doors open. We need a system where:

The internet remains free for everyone.
Ads are ethical and don't invade our privacy.
The "Global Public Library" stays open for the most vulnerable among us, not just the VIPs.

In short: The internet is a public good. Paying for it with our attention (ads) is a "regrettable necessity," but locking it behind a paywall is a disaster that will leave billions of people in the dark.

1. Problem Statement

The paper addresses the tension between the open, ad-supported web model and the emerging trend of pay-walling content and services.

The Open Web: Historically, the web's exponential growth and inclusivity have been driven by an open model where information is free, financed by online advertising. This model has been crucial for the economically vulnerable and for achieving global development goals (e.g., UN SDGs).
The Threat: There is a shifting trend toward paywalls and "premium" subscription models (hybrid models) to monetize content.
The Core Issue: The author argues that a fully pay-walled web is economically unsustainable for the majority of the global population. Furthermore, hybrid models (free + premium) create digital segregation, where the wealthy can bypass ads and access high-quality content, while the poor are left with degraded experiences or no access at all. This threatens the entire advertising ecosystem, as advertisers rely on reaching broad audiences, including the affluent who might opt out of ad-supported tiers.

2. Methodology

The paper employs a combination of theoretical economic modeling, data analysis, and system architecture review to demonstrate the unsustainability of paywalls.

Ad-Supported Cost Model Re-visualization:
- The author revisits the standard architecture of online advertising (Advertiser $\leftrightarrow$ Ad System $\leftrightarrow$ Publisher $\leftrightarrow$ User).
- A mathematical model is proposed to demonstrate that end users effectively pay for the ads they see.
- Formulas:
  - Let $R$ be Gross Revenue.
  - Let $C_a$ be the advertising cost.
  - Let $C_{ps}$ be the target cost after advertising.
  - $C_{ps} = R - C_a$
  - Total Cost ($TC$) paid by the user = $C_{ps} + C_a$ .
- Conclusion of Model: The advertising budget ( $C_a$ ) is embedded in the final price paid by the consumer. Therefore, users are already paying for the "free" content via the products/services they buy.
Income-Paywall Expenditure Gap (IPEG) Analysis:
- Data Sources: World Bank Gross National Income per capita (GNIpc) and median paywall costs derived from previous research (Papadopoulos et al., 2023).
- Assumptions:
  - A user requires access to approximately 250 representative websites (based on SimilarWeb categories) to satisfy general information needs.
  - The median annual cost per site is $108 USD.
  - Total estimated annual paywall cost per user = $108 \times 250 = \$ 27,000$.
- Metric Definition:
  $IPEG = GNI_{pc} - PWA C$
  Where $PWA C$ is the Paywall Access Cost ($27,000).
- Analysis: The author calculates the IPEG for countries globally. A negative IPEG indicates that the cost of a fully pay-walled web exceeds the average pre-tax income of a citizen.
Hybrid Model Impact Analysis:
- The paper analyzes the "Hybrid Model" (e.g., YouTube, X/Twitter) where users can pay to remove ads.
- It argues that if affluent users opt out of ad-supported tiers, advertisers lose their target demographic, leading to reduced ad spending, which in turn degrades the quality of free content for the poor.

3. Key Contributions

Reframing the User-Ad Relationship: The paper provides a formal economic argument that users already pay for online advertising through the markup on goods and services, challenging the notion that "free" content is costless.
Quantification of Digital Exclusion: It introduces the IPEG metric to quantify the affordability gap of a pay-walled internet.
Identification of Systemic Risk: It demonstrates that the shift to paywalls is not just an access issue but a threat to the sustainability of the advertising ecosystem itself, as it fragments the audience and reduces the pool of potential customers for advertisers.
Policy Direction: It advocates for refining the existing ad-supported infrastructure (improving privacy, transparency, and ethics) rather than abandoning it for paywalls.

4. Results

Global Affordability Crisis: Based on the IPEG calculation, 135 countries have a negative IPEG.
Population Impact: These 135 countries represent approximately 6.56 billion people (roughly 80% of the global population).
Economic Impossibility: For these populations, the estimated annual cost to access a standard set of 250 pay-walled websites ($27,000) exceeds their average annual income.
Digital Segregation: The hybrid model creates a two-tier internet:
- Tier 1 (Affluent): Ad-free, high-quality content.
- Tier 2 (Vulnerable): Ad-heavy, lower quality, or inaccessible content.
Ecosystem Collapse Risk: If the wealthy move to premium tiers, advertisers (e.g., luxury goods, automotive) will withdraw budgets from ad-supported platforms, causing a revenue collapse for publishers serving the poor.

5. Significance

Sustainability of the Open Web: The paper argues that paywalls are a "regrettable necessity" that, if adopted universally, will lead to the collapse of the open information ecosystem.
Digital Divide: It highlights that paywalls exacerbate the "second-level digital divide" (inequality in access to quality content), not just the first-level divide (access to connectivity).
Policy Implications: The findings suggest that regulators and researchers should focus on ethical advertising frameworks (e.g., better privacy, ad-profit sharing, transparency) rather than accepting paywalls as the only alternative to "bad" ads.
Global Development: The paper aligns with UN Sustainable Development Goals, emphasizing that an open, ad-supported web is essential for education, poverty reduction, and social development for the most vulnerable populations.

6. Limitations & Future Work

Generous Baseline: The IPEG calculation assumes the entire GNI is available for paywalls, ignoring other living expenses (rent, food, etc.), making the "negative" result even more severe in reality.
Categorization Simplification: The assumption of 250 representative websites is a simplification; a more granular analysis might change the exact number but likely not the conclusion.
Future Directions: The author calls for research into ethical advertising systems that balance stakeholder needs without resorting to exclusionary paywalls.