Karen McGrane

The Three Party Market


Part of a longer piece on measuring the value of the “free” economy. He separates ad-supported out from “real free” (not paid for with ad clutter) but I think the distinction is not so clear cut, and I suggest that more and more “freemium” services will enable opting out of ads for a cost.

The second form of free is the “three-party market”, which is to say the world of advertising-supported free media. That’s most radio and broadcast television, most web media, and the proliferation of free print publications, from newspapers to “controlled circulation” magazines. For the top 100 US media firms alone, in 2006 radio and TV not including cable advertising revenues were $45 billion.

Online, almost all media companies make their offerings free and ad-supported, as do many non-media companies such as Google, so I’ll include the entire online ad market in the “paying for content to be free to consumers” category. That’s another $21-$25 billion. Free paper newspapers and magazine are probably a billion more, and there are no doubt some other smaller categories I’m omitting and a lot of independents not included in the numbers above. Let’s call the total of offline and online ad-driven content and services $80-$100 billion.

The Long Tail: How big is the free economy?.