The Old Reader announced on Tuesday that it would soon be showing ads to its free users.
TOR has a growing number of paid premium users, but they report that they just aren't making enough money to cover their costs. As a result, they've decided to go the route of sponsored content, i.e. advertising.
So we’re taking a cue from some publishers that we really admire (such as Daring Fireball) and introducing Sponsored Content. Premium users will never see sponsored content, but all other users will see up to 1 sponsored post per week in their RSS feeds. That’s it. It’s an exclusive program and we believe we’ll be able to make the program beneficial to both users and sponsors.
The Old Reader is also going to be displaying a banner ad on the web interface. It won't be shown to premium users, who currently pay $3 a month for the service.
TOR may be breaking past promises to avoid advertising, but as I see it they don't really have a choice.
I know we've all gotten spoiled by Google and other tech companies offering free services ranging from Gmail to the late Google Reader to Google Docs, but let's not forget that in the case of Google those services are funded by advertising, and in the case of its competitors the free services are funded via the sale of paid services and apps.
Smaller companies like The Old Reader don't have a rich corporate parent to pay the bills, which leaves them with few choices.
TOR did launch a premium offering last February. They can try to make the premium service more attractive, but as we can see from Feedly that probably wouldn't generate much revenue. Feedly, which has millions of users and is the king of this market, boasted recently that they reached 50,000 paying users.
That is fifty thousand out of nearly 20 million. I'll let you do the math.
Another option would be to start kicking users off the service in order to cut costs. TOR's previous owners tried that option shortly after the Readerpocalypse, and the move proved so unpopular (even the owners hated it) that TOR was instead sold.
But in spite of the inevitability, of this move, it's still rubbing some users the wrong way. While the news has inspired some users to fork over the $36 a year, it's also made some rethink whether they want to use TOR an more - free or paid. "This is a sad day for The Old Reader," wrote one premium user, adding that "Even though I will not be affected (yet...) by this decision, I am tempted to cancel my premium membership and take my feeds somewhere else."