This spring we announced XDA Ad-Free, which lets you remove all the sucky ads from XDA if you pay a little. Not only does ad-free give you a higher density of content, but the site becomes faster without ads.
Over the past few months, we’ve received a lot of questions relating to ads, the pricing of ad-free, how much money we actually make from this, etc, so we thought we’d answer the most common questions.
Why do ads suck so much?
Over the past several months, we’ve made numerous changes to make the ads on XDA less crappy. We’ve reduced ad “bulk” by limiting the number of large-size ads that can show. We’ve eliminated flash video ads that endlessly load. We’ve made it so that all ads load *after* the page, so you’re not waiting for endless external server connections. This has increased the speed of the site, which you may or may not have noticed.
That said, because we rely on third-party ad networks, including Google, we don’t have complete control over what ads show on the site. So, sometimes crappy auto-sound virus-warning stuff makes it through the cracks. And then we yell and scream at everyone we can until it goes away. We monitor the intrusive ads thread, so feel free to post your ad complaints there. We really do listen to all channels.
We get calls, almost on a daily basis, from ad networks peddling more and more intrusive ad types. Video on mobile is a big thing these days, which is awful for so many reasons. You would think that the entire web publishing industry would learn that users are sick and tired of this crap, but it has not. As long as some sites are willing to accept these more in-your-face ad units, those sites will make more money while everyone else makes less and less–and eventually those making less give in so they can survive. See: prisoner’s dilemma.
Also, XDA Labs, our official mobile app, has no ads at all. So you should go ahead and get that if you don’t already have it. Plus it’s also really slick.
How did you set the price? Why is it so expensive? Isn’t $3.49 per month more than you’d make from me if I leave ads turned on?
How much XDA generates in ad revenue from a single user depends on many things– most importantly where that user is from, how many pages he views, and (obviously) whether he uses ad-blocking software. But yes, all the people pointing out that an ad-free subscription costs more (much more) than what XDA makes from the same user viewing ads are correct. So, why don’t we charge less for ad-free?
First, there are significant transaction costs. On a $3.49 monthly payment, PayPal takes approximately $0.44 in fees (12.6%), netting us $3.05. If we charged $1.99, PayPal would take 18% – 20%. If we charged $0.99, those fees would be over 30%. At some point it’s ridiculous, and just far too expensive to accept small payments.
Second, there are significant free-rider problems. The vast majority of people just won’t pay anything, regardless of price. Lowering the price would not net significantly more sign-ups, and so yes, the people who are nice enough to subscribe to (or gift!) ad-free are subsidizing those who don’t.
Third, many people get lots of value from XDA and are happy to pay a little extra to help the site.
Isn’t there a way for XDA to accept payments without paying such high fees?
Yes, there are services like Dwolla that offer lower fees, but very few people use them. Bitcoin is also great, but we have only received seven total bitcoin payments in 5+ months. A credit card merchant account, which is is the only other “universal” payment mechanism outside of PayPal, would be just as bad as PayPal.
How much revenue does XDA make from ad-free?
XDA has taken in between $840 and $1,548 each month since we launched ad-free. This includes everything we collect, including payments for one year subscriptions that are, obviously, still ongoing. That’s probably less than you have guessed, and there are a few reasons for that.
For example we know that over 40% of our users use AdBlock. That’s a bigger percentage than what’s seen on other sites, largely due to our tech-savvy demographic. So this means that a huge amount of XDA users are already living with ad-free nirvana, fo’ free. If you choose to use adblock and don’t want to whitelist us, we’d appreciate if you contribute your help and expertise to the community because in that way, you’re making the site better. But we know even that is a lot to ask in some cases. The internet doesn’t owe us anything.
Another thing contributing to the low take-rate of ad-free is that we are among a very small number of sites that accept payment to block ads. It’s new, it’s different, but we expect it to become more acceptable over time and thus more people will do it to support their favorite sites.
What do you do with the money?
All money is fungible, so the subscription revenue goes into an account with our ad revenue, which we use to run the site– pay for servers (we have 15 of them now), employees, hookers, blow, etc. No, seriously, XDA is a real company with an office and multiple full-time employees plus a small army of writers, video producers, forum administrators, and more. Revenue is important to keep the wheels turning.
You used to accept donations. What happened to that?
You can still find the donation page somewhere, but instead of donating, you can buy ad-free for yourself or go ahead and gift ad-free credits to other users who provide value to your existence! It’s a great way to show your appreciation to other members. Or, you can always donate to your favorite developer.
I can’t afford ad-free but still want to help XDA. What can I do?
This is a great question. The best thing you can do is get involved in the forums–respond to user questions, write useful guides, and have interesting discussions. XDA thrives as a site when users are engaged and excited. Also, tell your friends and family about the site!
Has the ad-free “experiment” worked out for XDA?
We would be lying if I said that ad-free makes a huge dent in our budget, as $950 – $1,600 per month really just isn’t very much. But, we’re still very happy that we launched ad-free because the users who pay for it are often our most important and valuable members. We’re thrilled that they can support the site and get rid of the crappy ads.
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