[iAMAGuest]

I think the problem behind this is that ad revenue is not the same as a subscription revenue. You cannot assume that if a user was worth $3 a month in ad revenue that that would translate to a $3 a month subscription.

For example, I would have no doubt the the customer acquisition cost for an "free" application with advertising is a lot lower than trying to sell that same user a membership.

When it comes to social networks I would suggest that the stickiness is because your friends/family etc are on the same network. It's not if you are willing to pay, it is only really worth it, if your friends are willing to pay.

If you are talking more about a paid and free version, then there are already services out there like YouTube Red (available in some areas for $9.99+ USD). There are always options out there.

[snovv_crash]

What about all the work that goes into maintaining the ad network and distribution, advertiser acquisition etc? That isn't free either.