Fred Wilson published a blog post last week in which he argues that “low-priced subscription offering[s] that remove ads” are a good monetization model for free apps.
I tend to disagree.
The best subscription offerings add value in form of extra functionalities or content. “Remove ads”-subscriptions don’t add value – they remove a disadvantage. Adding something positive is a better sales pitch than removing something negative.
Additionally, most users don’t mind ads. Music apps are the only exception that I can think of since audio ads are more intrusive, but even these companies don’t use ad removal as their only subscription benefit. Instead they list it together with premium features that add value such as offline listening, multi-device support or exclusive content (see Soundcloud, Pandora).
That being said, I do agree that it can make sense to offer a no-ads subscription tier as an irrelevant alternative (or decoy price) alongside other subscription packages, to positively influence the price/value perception of more lucrative subscription offers.