Richard Gillis

69 posts

Music as tap water

Spotify for Sport anyone?

This is from something Jimmy Iovine said on a podcast.

Since the labels lost control of the formats, tech companies commoditised the product.

Look at the video streaming wars. Netflix, HBO Max, Disney Plus are in a bloodbath. But they have a distinct weapon: Differentiation. If you want to watch Stranger Things, you need Netflix. If you want The Last of Us, you need HBO. Yet, if you look at music: Spotify, Apple Music, Amazon Music, and Tidal all offer the exact same product: A library of 100 million songs. As Jimmy points out in the podcast, this lack of differentiation turns music into a utility. Music is now indistinguishable from tap water or electricity. “Right now, music streaming is a utility,” he says. “All the services are exactly the same, they do the same trick. If one of them lowered their price the rest are toast, because there’s no unique offering.”

So music as utility. Collapse of intangible value (until you get back on the vinyl).

This next bit is on the crappy economics of Spotify:

Here is the financial reality that Wall Street has historically hated about standalone DSPs like Spotify.

In a normal tech business (like SaaS or Netflix), as you gain more subscribers, your profit margins increase exponentially because your fixed costs stay relatively stable. Once Netflix pays $20 million to produce an original movie, that cost is fixed. Whether 1 million or 100 million people watch it, the cost doesn’t change. The margin expands.

Streaming music operates in reverse. Because DSPs pay out roughly 70% of every dollar earned back to rightsholders (labels and publishers), their costs scale linearly with their user base. Every time a song is streamed, a fraction of a cent leaves the building.

Iovine put it bluntly: “The streaming services have a bad situation, there’s no margins, they’re not making any money.”

This model only works for Apple, Amazon, and Google, because they don’t needtheir music platforms to be wildly profitable. Amazon uses music as a loss-leader to keep you paying for Prime. Apple uses it to sell $1,000 iPhones. As for Spotify, or any standalone music streaming company, they’re kind of screwed.

From mass audience to micro communities: The conclusion will resonate with the sports biz.

If Streaming Isn’t the Endgame, What Is?

What if Jimmy is right? If the DSPs are “minutes away from obsolete,” what replaces them? Well, I’m not sure the DSPs are going to disappear overnight, but if you’re an artist or a manager trying to sustain yourself in this evolving music economy, the answer is direct ownership.

The artists who will survive the next five years are the ones who are quietly shifting their focus away from the “ATM Machine.” They are building their own cultural hangars.

They are capturing phone numbers on Laylo. They are driving fans to private Discord servers. They are focusing on ARPF (Average Revenue Per Fan) through high-margin merch, vinyl, and hard tickets, rather than begging for fractions of a penny from a playlist placement.

We are witnessing the death of the “Mass Audience” and the birth of the “Micro-Community.”

The music industry has spent a decade obsessing over how to get a million people to listen to a song once. The next decade will be defined by artists figuring out how to get 1,000 people to care forever.

Jump to: Upside down pyramids

Nice post from Luis.

🧵Prediction markets

Betting

'This is a bad idea. It is a very, very, very bad idea'.

Substack just did a deal with Polymarket.

From that link to Brian Moritz:

Imagine for a second that instead of Polymarket, this was FanDuel announcing an exclusive partnership with Substack. Or Draft Kings. What would your reaction be? What would everyone’s reaction be?

'Not Holy Grail truth'. I've been reading feature interviews with people from the prediction market firms. A comms playbook is emerging. Specifically, they talk a lot about truth. Kalshi co-founder and CEO Tarek Mansour defined markets as 'making the world a little bit smarter about the future', not 'Holy Grail truth, but better than the alternatives'. This explains the above Substack deal, and others with news outlets, which place odds in to news stories. See previous note re Truth as Commodity. Mansour's co-founder Luana Lopes Lara said 'Kalshi is trying to be a newspaper in a world of op-eds'.
Financialise everything. This clip shows Mansour saying “The long-term vision is to financialise everything and create a tradable asset out of any difference in opinion". He told the FT: 'Some of it could the future of, like, climate change and the future of our politics, and others can be, like, sports because a lot of people care about that'. The word Kalshi is derived from Arabic, meaning 'everything'. Mansour grew up in Lebanon. The push back is that few things in life have a yes/no answer, so it's hard to work out when something should be paid out.
Don't look here, look over there. The news strategy is a way of saying Kalshi and Polymarket are not (just) sports betting, despite a lot - most - of the money coming from football bets. The FT says 90% of all fees Kalshi has ever collected have been sports related. News, elections, Taylor Swift, these are markets that talk to the financialise everything mantra. It's about competitive positioning, but also gives legal wriggle room against US legislators seeking to clamp down on online sports betting.

Did you just feel that? It was jeopardy

The Product

Today's podcast is about how product innovation has changed cricket's audience and the problems that has created for a game wedded to a 20th century economic model.

'You watching this?'

There’s been an unusual feel to the current ICC T20 World Cup in India and Sri Lanka, one you don't often get during the early rounds of a major global sports event: Uncertainty.

England felt it against Nepal in their first game. ‘You watching this?’ was the gist on WhatsApp last week. In Colombo, Pakistan were 119 for seven in the 18th over, being dragged to the edge of elimination by the Netherlands. In Mumbai, the United States had defending champions India at 77 for six. That’s before we mention Australia; cricket’s big swinging dicks are already out.

For a so-called conservative sport, cricket is ahead of the game when it comes to product innovation

Compact, volatile, accessible to anyone with three hours and a phone signal, T20 has done something fifty-over cricket never managed: it compressed the development timeline for nations outside the traditional power base.

Franchise leagues, often derided for creating calendar chaos, have been a useful training ground for players locked out of the test playing arena.

Afghanistan reached a World Cup semi-final. Nepal fills grounds in Darwin. Italy qualified for the first time. The format works as a competitive leveller in ways that simply weren’t available to previous generations of associate nations, for whom the pathway to relevance was measured in decades.

But what now?

A brilliant product and a functional structure are not the same thing. Cricket has the former. It is still negotiating its way toward the latter.

The financial architecture of the game remains almost entirely oriented toward the previous world. Ninety-six associate nations split eleven percent of a $600 million annual pool.

Good piece by Sukhman Singh

The appeal of the format and the product has been there for years: associate teams generating the kind of moments that fill highlight reels, win hearts, sell broadcast windows and give tournaments their most unpredictable headlines.

Yet the commercial logic remains circular. Those moments generate attention, attention drives broadcast value, and broadcast value produces revenue. Most of that revenue flows back to the traditional powers, who advance deepest in the tournaments and collect the largest shares of the prize. The teams that supply much of the tournament’s early drama see little of its financial reward.

The calendar, controlled by the boards with the most commercial power, is built to protect bilateral series revenues rather than to create the repetition that turns tournament performances into sustainable programmes.

Under the International Cricket Council’s 2024-27 revenue distribution model, the 12 Full Members — Afghanistan, Australia, Bangladesh, England, India, Ireland, New Zealand, Pakistan, South Africa, Sri Lanka, West Indies, and Zimbabwe — are the national boards that control Test cricket and hold full voting rights. They share 88.8 per cent of an annual pool of roughly $600 million. The BCCI, which runs Indian cricket, takes 38.5 per cent, around $231m a year, the largest share of any member.

A small team can cause a sensation in February and not face comparable opposition until the next qualification cycle.

This is the paradox every major sport is approaching, whether it recognises it yet or not. The global fan has arrived. Digital platforms have made geography largely irrelevant to consumption. A Pakistani cricket fan in Houston, a Nepali fan in Tokyo, a Brazilian fan discovering the sport through Portuguese highlights on YouTube — they are already there, already watching, already invested.

Who's leading who? And the Public-Private Question

The race for the global fan is typically framed as a distribution problem: how do we get our content in front of more people in more places? Cricket’s data from this tournament suggests the question is already out of date.

The content is finding the audience. The harder problem, the one cricket is living through in real time, and the one football, rugby, and basketball each face in turn, is whether the commercial and governance structures can reorganise around an audience that is dispersed, passionate, and no longer located where the product was designed to go.

Twenty20 proved that the right product can rewrite competitive hierarchies. The next proof of concept is harder: whether the right structure can follow.

America is the microcosm, host of the last World Cup and of cricket's return to the Olympics in LA.

As discussed on the podcast, the US cricket fan has been signalling their obsession for a long time now, to little response from the suppliers.

That latent demand will be filled by public money, in the form of the governing bodies voting for Christmas, or private money, in the form of the franchise leagues and their owners seeking to build team brand followings.

Or there's a third way, cricket interested people living in 'dark markets' go largely unserved by the sport they love. And find something else to do with their time.

Idea dump

Data

The tyranny of targets - how we've allowed quantifiable metrics to seep in to every aspect of our life, and the consequences of that. Source: The Score by C Thi Nguyen. Builds on Charles Goodhart of 'Goodhart rule' fame, that suggests metrics become corrupted when 'pressed in to service' as targets. The problem is not just that we contort our behaviour a bureaucratic incentive, it's that we cease to realise that we're contorting our behaviour at all. All metrics are reductive by design and the simplicity changes how we judge what matters and what can be cast aside. The outcome is that nuance and subtlety and personal values are abandoned in favour of what can be conveniently measured. There are four reasons this happens: portability, accessibility, interchangeability and co-ordination. Modern life, politics, science, tech, education...etc etc are dependent on these four variables, so are our love lives, sleep and exercise patterns and our view of what is good and bad. Each has a trade off. Usually the trade off is the swap of consistency and comparability with the loss of context. Decision making becomes more rigid, outliers are rejected, averages promoted. Netflixification: An ongoing example is the impact of Netflix on Korean cinema. The incentive to please the global entertainment market's gatekeeper has made Korean culture less interesting. The edges get smoothed. What worked before is tried again. The thing becomes a parody of itself. A caricature of Korean film is an average of what Netflix's algorithm deems 'a good show'. Supported by inarguable data. Gamification as prison: Games have rules and a score. The difference between games and life is that the goals are endlessly challenging and utterly unimportant. Games are fun because they are hard but can be played again. Rules as scaffolding for mastery. Gamified lives turn rules in to scaffolding for productivity, or a cage for poor players.
It's hard to get rich doing something fun. From Janan Ganesh in FT. An explanation of the Epstein affair. There are two types of elite. The private 1% and the public 1%. Rich people want social status that comes with the arts, politics, journalism, the vibe. Intellectuals, politicians, actors etc want money they think should come with their social status. The traditional ways of making big money, banking, business, tech for example, are not intrinsically interesting. Some buy a football team or sponsor the arts to compensate. 'The public 1% are vulnerable to doing bad things for money, and the rich know it. Mandelson 'adored the public game but chafed at its penury'. Good line.
Is the audience following or leading? Something I've been trying to articulate but not quite getting to the nub. I've had a few conversations recently about the assumption of the sports marketing industry that the product leads the audience: as in, you get your sports property on telly or YouTube or wherever, and the audience grows from there. Cricket and golf make me think something less obvious, or less linear, is happening. Golf is booming at grass roots level despite the shit show at the tour level, where the snafu between LIV and the PGA etc has bored golfers rigid. They are playing, club rates are soaring. Golf as TV product is a sideshow for those interested in that sort of thing. Cricket outside the formal economy is also an example, talked about in this week's podcast on the T20 World Cup. What has driven the audience for the game in Nepal, US, Netherlands etc? It isn't bilateral test cricket on television, which still pays for the 600million annual ICC revenue pool. You quickly get to a public v private frame, with governing bodies as government, and franchises as private money. The free market lobby will say that the associates have benefited from franchise leagues, which goes against the usual story of 'too much cricket confusing the audience' you tend to get from the governing bodies, who want to sell their thing. It's not binary. But it's also not linear.

Sent by Coventry

Communications

Almost a good headline.

The IOC boss throws her comms team under the bus. Tough day for James Pearce, the former BBC reporter who now heads up Olympic PR.

@dwnews
IOC President Kirsty Coventry has lashed out at her PR team during a press conference about not being properly informed about a series of controversial topics. Coventry expressed her frustration after being questioned about Gianni Infantino's involvement with Donald Trump's Board of Peace, Germany's reluctance to host the 2036 Olympic games and a New York Times story on Russian doping.
♬ Originalton - DW News - DW News

Questions arising:

The first bounce reaction, particularly from the sports PR industry, is that this was bad form, that it showed a lack of leadership, the sign of a weak president etc.

The counter is that she was right, that she should've been briefed and what is the PR team is paid for anyway?

You then get to a to-and-fro on the relative use of media training, which I've personally taken against after years of interviewing people who have been media trained. This can be bracketed with the general rise of PR as machiavelli, the elevation of a service provider to that of master strategist. 'PR at the top table', beware people bearing 'talking points' etc. If in doubt, blame Alastair Campbell, and Peter Mandelson, just to give this blog post the illusion of topicality.

🧵 OpenAI's ad pivot

ChatUP

You'll have seen the Anthropic Super Bowl ad.

I did a quick data scrape of this FT article.

Main bits:
'I would just disclose, as a personal bias, that I hate ads, they would be like a last resort for us as a business model. Advertising had its place as a way for the early internet to make money...'but i think they sort of somewhat fundamentally misalign a user's incentives with the company providing the service'

That was Sam Altman in 2024.

OpenAI has asked advertisers to commit an initial £200k in order to appear in ChatGPT results. The CPM is quoted around $60 per 1000 impressions.

Is this the creation of a whole new ad market? Comparisons are made with Netflix launching an ad-tier. The revenue from this was $1.5billion in 2025.

More than half of customers will find brands through AI generated summary by end of 2027.

Questions arising:

Is this enshittification in real time? Do ads in the chat undermine confidence in the results?

See 🤖 note on Enshittification here

Enshittification and Sports Media: A Cautionary AnalysisThe Strategic Bet

Sports rights holders increasingly view YouTube/Google as a growth engine for digital reach. The logic seems sound: massive built-in audience, sophisticated recommendation algorithms, global distribution, and revenue share from advertising. Free hosting for highlights. Live streaming infrastructure without capital expenditure.

Applying Doctorow's framework, this strategy deserves serious scrutiny.

Stage One: The Seduction

YouTube's initial offer to sports rights holders mirrors Facebook's pitch to publishers circa 2010:

"Come over to my platform... I know you're all using [traditional broadcast] but... we will never spy on you"

The platform offer is genuinely attractive:

Free distribution at global scale
Algorithmic amplification that surfaces your content to new audiences
Monetisation infrastructure without building your own ad sales team
Analytics and data on viewing behaviour
Lower friction than building direct-to-consumer products

Sports organisations pile in. They build subscriber bases. They train fans to expect content there. The audience grows.

The Lock-In Mechanism

Here's where Doctorow's collective action problem becomes critical for sports:

"You love your friends but like even the six people in your group chat can't agree on where you're going to go for a beer on Friday"

Translate this to sports fandom:

Fans follow their team's YouTube channel because that's where the highlights are
The team posts to YouTube because that's where the fans are
Fan communities form in comments sections and around YouTube content
Third-party creators build audiences reacting to and discussing official content
The algorithm learns what fans want and serves them more

The audience becomes YouTube's asset, not the rights holder's. The subscriber count, the watch history, the engagement data, the recommendation graph - all of this sits on Google's servers, governed by Google's terms.

Sports organisations face the same trap as publishers:

"Publishers meanwhile they found that they had to put more and more of their content on Facebook just to have it show up for the people who'd actually subscribe to their feeds"

Stage Two: Turning the Screws

Once dependency is established, the platform's incentives shift. Doctorow describes how Facebook treated publishers:

"You couldn't even have a link back to your own website because maybe that's a dangerous link right a deceptive link... eventually it's got to be the whole substitutive content no link back to your website"

For sports, the screws might look like:

Algorithm manipulation: Your content's reach becomes a function of how well it serves YouTube's goals, not yours. Doctorow cites Amazon's search manipulation:

"The top result on an Amazon search results page is there because they paid more than everyone else it's not because it's the best match for your search"

YouTube already operates this way. Reach is increasingly pay-to-play. Organic distribution declines. You must buy ads on the platform to reach the audience you built on the platform.

Revenue share erosion: The 55/45 split that seemed generous becomes 50/50, then 45/55. Ad rates fluctuate based on Google's priorities, not yours. Doctorow notes:

"Advertising prices go way up advertising fidelity goes through the floor advertising ad fraud explodes"

Direct competition: YouTube has already bought NFL Sunday Ticket and MLS rights. The platform that was your distribution partner is now your competitor for the same inventory. They have perfect information about what your content is worth because they've been measuring it for years.

The Monopsony Problem

This is perhaps the most under-appreciated risk. Doctorow explains:

"A 20% share as a monopsinist is basically dispositive it gives you total control 20% share as a monopolist is just an inconvenience for your customers"

If YouTube becomes where a significant portion of sports fans consume digital content, the power dynamic inverts completely. Rights holders must be on YouTube to reach fans. YouTube knows this. Every negotiation happens with that leverage.

The sports parallel to Doctorow's coffee shop analogy:

"Imagine you know there's a block with like five coffee shops on it... that coffee shop has an office building next door like this one and 20% of their gross receipts come from the people in the office building and one day that business goes under... the coffee shop is probably out of business"

What happens when YouTube changes its algorithm and your highlights reach drops 40%? What happens when they decide live sports should be behind YouTube Premium? What happens when they renegotiate revenue share?

You're the coffee shop. They're the office building.

The Economy-Wide Tax

Doctorow describes how Amazon's practices raise prices everywhere:

"Because of most favored nation they have to raise prices at Target at Walmart at the factory store and at your local convenience store so this is an economywide tax"

In sports media, the equivalent might be:

If YouTube's ad rates set the benchmark for digital sports content value, they set it for everyone
If fans are trained to expect free content on YouTube, they resist paying elsewhere
If YouTube's recommendation engine determines what content gets made (because that's what gets views), editorial independence erodes
If YouTube takes a significant cut of digital revenue, that cost gets passed through the entire sports media ecosystem

What History Tells Us

Doctorow is explicit about what happened to publishers who followed this path:

"This is what destroyed the media industry"

The pattern was:

Free distribution and traffic seemed like a gift
Publishers became dependent on platform reach
Platforms changed the rules (pivot to video, algorithm shifts, news feed changes)
Publishers who had hollowed out their direct distribution capabilities had no fallback
Value flowed to platforms, publishers collapsed

The ad fraud revelation is particularly stark:

"Proctor and Gamble in 2017 they zeroed out their annual $200 million spend on programmatic advertising surveillance advertising they saw a zero drop in sales that is such a wild stat it's like to a first approximation no one saw the ads it just disappeared down the fraud hole"

If P&G's $200 million in digital advertising produced zero measurable effect, what confidence should sports rights holders have that their YouTube strategy is building real, transferable value?

The Counter-Arguments (And Why They May Be Wrong)

Sports rights holders might argue they're different:

"Live sports is appointment viewing, not disposable news"

But the valuable content being given to YouTube isn't live rights - it's highlights, behind-the-scenes, shoulder programming. This is precisely the content that trains fans where to find your brand. And increasingly, live rights are going to platforms too.

"We have contractual protections"

Publishers had contracts too. Contracts expire. Leverage shifts. And contracts don't protect against algorithm changes, revenue share adjustments within agreed ranges, or the platform deciding to compete directly for your rights.

"Our brand loyalty is stronger than news publishers"

This may be true for the core fan. But the growth audience - the casual viewer, the new market, the next generation - their loyalty is to convenience. If they learned to find you on YouTube, that's where they'll look. You didn't build loyalty to your brand; you built loyalty to the platform experience.

"We need to be where the audience is"

This was Facebook's pitch to publishers verbatim. Doctorow's response:

"It's just not you're not going to shop your way out of a monopoly right that's like saying you're going to like recycle your way out of the wildfires"

The Brittle Equilibrium

Perhaps most troubling is the instability of the current arrangement. Doctorow describes the precariousness:

"The difference between god I hate Facebook but I can't seem to stop logging into it and god I hate Facebook I'm never going back again it's very thin"

YouTube's dominant position in digital video isn't guaranteed. Regulatory action, a competitor (TikTok before bans, whoever comes next), a scandal, or simply a strategic pivot by Google could reshape the landscape overnight.

If that happens, what do sports rights holders own?

Not the subscriber relationships (those are YouTube accounts)
Not the viewing data (that's on Google's servers)
Not the recommendation graph (that's YouTube's algorithm)
Not the payment relationships (that's YouTube Premium, YouTube TV)

You own the rights. But you've trained a generation of fans to consume those rights through infrastructure you don't control, can't influence, and could lose access to.

What Would Doctorow Advise?

Based on his framework, the answer is about adversarial interoperability and owning your relationship with the audience:

"Why is Facebook in charge of what you see when you look at Facebook"

Translated to sports: Why is YouTube in charge of what fans see when they look for your content?

The strategic imperative would be:

Build direct-to-consumer infrastructure even if it's smaller than platform reach
Capture first-party data on every fan interaction possible
Use platforms for acquisition, not retention - get fans onto owned channels
Diversify platform presence so no single platform has monopsony power
Retain premium content for owned distribution, give platforms only what drives traffic elsewhere
Negotiate data rights as aggressively as revenue share

The question for sports executives is whether the short-term reach gains from YouTube are worth the long-term strategic dependency.

Conclusion

Doctorow's enshittification framework suggests that giving valuable sports content to YouTube is not a growth strategy - it's a value transfer strategy. The growth accrues to the platform. The lock-in traps the rights holder. The extraction phase hasn't arrived yet, but the infrastructure for it is being built with every subscriber gained, every highlight posted, every fan trained to expect content there.

"These are like the foreseeable and foreseen outcomes of specific policy choices made in living memory by named individuals who were warned at the time that this would happen"

Sports executives making platform distribution decisions today are those named individuals. The question is whether they're listening to the warning.

The counter argument - 'Ads are why we have nice things'

Yeah but.

🤖 Summary of the Andressen Horowitz position

The Pro-Advertising Argument for ChatGPT

Source Context

This article is from a16z (Andreessen Horowitz), a major investor in OpenAI. The conflict of interest is material: a16z needs OpenAI to find sustainable monetisation to justify their investment and generate returns. The article should be read with this lens.

Key Arguments Summarised.

Ads as Public Good

The central framing positions advertising as democratising rather than extractive:

"Ads are why we have nice things... the internet has always run on ads and most people like it that way."

The argument: charging subscriptions limits access to those who can afford $20-200/month. Ads enable universal access.

2. The "Luxury Beliefs" Dismissal

Critics of advertising are characterised as performative rather than principled:

"For all the moralistic hand-wringing over 'Selling data!' or 'Tracking!' or 'Attention harvesting' and other bingo words... People who pretend this is a bad thing usually are trying to prove something to you."

This rhetorical move attempts to delegitimise structural criticism as mere status signalling.

3. The Long Tail Problem

The core business case: most users won't pay because most use cases don't justify payment.

"Most people use AI for personal productivity: things like writing emails, searching for information, and tutoring or advice. Meanwhile, higher value pursuits, like programming, make up a very small percentage of overall queries."

The data cited: 5-10% of 800M weekly active users convert to paid (40-80M people). But to reach "a billion people and beyond" requires an alternative to subscriptions.

4. Users "Actually Like" Targeted Ads

"Ask the average Instagram user, and they'll probably tell you that the ads they get are ridiculously useful: they get served products they actually want and need, and make purchases that actually make their lives better."

5. Historical Inevitability

The article frames advertising as the natural endpoint of all consumer internet products:

"Any internet history buff knows that ads are a core part of how platforms eventually monetize: Google, Facebook, Instagram, and TikTok all started free, and then figured out monetization with targeted ads."

For giggles, I put the A16Z rationale through Claude (see Super Bowl ad above...), and asked it to critique the pro-advertising arguments through the lens of enshittification.

🤖 Critique: Is This Enshittification?

Applying Doctorow's framework to the a16z argument reveals a textbook case of enshittification logic - the article essentially describes the transition from Stage One to Stage Two while framing it as benevolent.

The Three Stages Applied

Stage One (Complete): Attract Users

OpenAI offered a genuinely remarkable product for free. ChatGPT's initial launch was subsidised by investor capital, offering capabilities that felt magical. Users arrived in hundreds of millions.

Stage Two (In Progress): Lock Users In

The lock-in mechanisms are now firmly established:

Memory: ChatGPT remembers your preferences, past conversations, context about your life
Workflow integration: Users have built habits, processes, and expectations around the tool
Skill atrophy: Users who rely on ChatGPT for writing, research, or coding have reduced those muscles
Switching costs: Moving to Claude, Gemini, or Llama means losing conversation history, retraining preferences, rebuilding context

The a16z article implicitly acknowledges this lock-in when discussing the 800M WAU base as an asset to be monetised.

Stage Three (Announced): Extract Value

The article is explicitly a roadmap for value extraction:

"If you want to get ChatGPT to a billion people (and beyond) for free you need to introduce a product other than subscriptions."

Translation: the current user base will now be monetised through advertising, regardless of whether this serves user interests.

Deconstructing the Article's Claims

Claim: "Ads are why we have nice things"

Doctorow's counter:

"This is what destroyed the media industry"

The publishing industry also believed platform advertising would fund quality content at scale. Instead, it transferred value to platforms while hollowing out the publishers who created content.

Claim: Critics have "luxury beliefs"

This is a rhetorical dismissal that avoids engaging with structural criticism. Doctorow addresses this directly:

"It's just not you're not going to shop your way out of a monopoly right that's like saying you're going to like recycle your way out of the wildfires"

The criticism of advertising isn't aesthetic preference - it's about power dynamics and value extraction.

Claim: "People actually like ads"

The article cites Instagram as evidence. But Doctorow would note the selection bias: people who hated the ads left. Those who remain are either tolerating them or have been successfully habituated. User satisfaction surveys of captive populations don't measure the counterfactual.

More critically, the P&G revelation:

"Proctor and Gamble in 2017 they zeroed out their annual $200 million spend on programmatic advertising surveillance advertising they saw a zero drop in sales"

If $200M in targeted advertising produced no measurable effect, the "people like useful ads" claim deserves scrutiny.

Claim: This is historical inevitability

"Any internet history buff knows that ads are a core part of how platforms eventually monetize"

This frames a policy choice as natural law. Doctorow's response:

"These are like the foreseeable and foreseen outcomes of specific policy choices made in living memory by named individuals who were warned at the time that this would happen"

Google and Facebook chose advertising. They could have chosen other models. The outcomes - surveillance capitalism, attention harvesting, algorithmic manipulation - were not inevitable but designed.

The Conflict of Interest Problem

The article never discloses that a16z is an OpenAI investor, though this is widely known. The entire argument serves a16z's financial interests:

OpenAI needs to monetise to justify its $150B+ valuation
Subscriptions have plateaued at 5-10% conversion
Advertising unlocks the remaining 90%+ of users as revenue sources
Higher revenue justifies higher valuation
a16z's investment returns depend on this

When Doctorow describes how platforms "drain the value off of them to harvest it all for the shareholders and the executives," this article is the shareholders explaining why draining value is actually good for everyone.

What the Article Admits

Perhaps most tellingly, the article concedes several points that undermine its own thesis:

Admission 1: Most queries are low-value

"Why would they pay for an answer to questions like 'why is the sky blue'... when previously a Google search would direct you to a good-enough answer for free"

If most AI queries are Google-substitutes, and Google already has advertising, what's the differentiated value? The admission suggests ChatGPT's advantage may be temporary convenience rather than structural superiority.

Admission 2: Power users don't want ads

"Programmers are some of the most committed users of LLMs, with some even calibrating their sleep schedules to optimize for daily usage limits. For these users, a $20 or $200/month subscription doesn't feel exorbitant"

The most valuable users - the ones who generate the most engagement, provide the most training signal, and demonstrate the most transformative use cases - are precisely the ones who will pay to avoid ads. Advertising optimises for the long tail of casual users while potentially degrading the experience for power users.

Admission 3: The ad experience problem is unsolved

"Can you transpose a more 'lean-back' ad experience on Instagram or TikTok into the more engagement-heavy model of using ChatGPT? It's a much harder problem"

The article acknowledges that conversational AI advertising is fundamentally different from feed-based advertising, without a proven model for doing it well.

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