Tech This Week | Advertising a tax on the poor, pandemic going to exacerbate it

Many don’t have jobs now but the book Poor Economics says they could trade off a little food for entertainment. So they’ll bear the brunt.

Since the lockdown, our work lives and personal lives have meshed together. For a lot of us, a direct consequence has been saving time on the commute to and from the office. Theoretically, this should add hours to our day. For better or worse, data tells us that we have been spending a significant portion of that extra time streaming content. So there is a high chance that instead of feeling like you have more time on your hands, you feel like there is too much content to consume and too little time. Why else would streaming platforms like Netflix and Hotstar lower their default video quality? Added usage made the infrastructure supporting their systems creak. 

Supply of endless addictive content is a feature and a bug of the attention economy. However, much like its traditional counterpart, the attention economy is harsher on the poor than on the rich. And the pandemic is likely going to make it worse. Your attention has a monetary value for streaming platforms. Given by the current monthly prices, Netflix values your time at ₹26.2/day, Prime Video at ₹4.2/day, Hotstar at ₹9.8 a day, and YouTube (Premium) at ₹4.2/day. Roughly the per capita income of an Indian is ₹1,35,048. A yearly subscription to Netflix would cost 7.1% of that figure; Prime Video would be 1.1%, Hotstar at 2.65%, and YouTube at 1.14%. 

Should you be privileged enough for those numbers (and the supplementary data costs) to not make a significant difference on your bank account, you can trade time for money. A subscription to each of those services will help you finance the time you might have otherwise spent looking at ads on these different services. We do not know how much time ads on Netflix (or Hotstar) would have consumed if they were a part of those platforms. However, we do have a rough idea about YouTube, which is a pretty good barometer. In a pre-coronavirus world, the average Indian spent two days a month on YouTube. If we take a conservative 2% of that time being spent on ads, that is an hour a month and roughly half a day in a year. 

Depending on where you stand, that trade-off might make sense. But enter lockdowns and coronavirus, and that trade-off begins to look a whole lot worse for the poor. Firstly, the nationwide lockdown leads people to spend a lot more time at home. People in the formal sector (who can afford to work from home) gain an hour or two. However, the majority of people in the informal sector who do not have a job anymore, suddenly have a lot more time and attention to spare. Inevitably, more than a significant part of this goes to streaming content. 

I make this assumption based on my reading of Poor Economics, which tells us that the poor may be willing to trade off a little less food to buy a television. Entertainment is an integral part of the poor’s lives, and now even more so, given the pandemic and easier access to content through platforms like YouTube. 

Without the data, it is impossible to accurately estimate how much more time the poor are going to spend streaming content and ads. But given increased consumption rates, and limited resources to buy data plans, ads are going to become more of a tax for the poor (in terms of data used and number of hours spent per month). My prediction is that this situation can act as a boom for the Indian podcasting industry. I realise that it seems out of touch with reality, to the point of sounding like Marie Antoinette, but hear me out. 

Theoretically, this situation seems like a low hanging fruit for podcasts. As a medium, podcasts do well to mitigate concerns regarding data consumption, as they are audio files with smaller download sizes. Also, podcasts are a rare medium that is still free and not riddled with ads (Spotify might want to change that, but as of now it remains a distant prospect). Both these conditions are well adapted for the market. Yes, there are concerns regarding awareness of the product itself, even amongst the urban elite. Besides, there is a general lack of content available in regional languages. However, given the minimal costs of producing podcasts and how long the effects of the pandemic will last, both those hurdles do not seem impossible to overcome.  Historically, the attention economy has been after pricing your attention and selling it for profit. This disproportionately impacts the poor as they cannot afford to trade money for time. Unfortunately, the pandemic is going to exacerbate this trend. Advertising is about to become more of a tax than ever before, and short of turning to podcasts, there is not a lot that they can do about it.