The BBC and Advertising

Just read this article:

BBC confirms plans to make over-75s pay TV licence fee

This article was linked to on twitter and many on there are saying the licence fee should be abolished and the BBC should show adverts. That people can skip the adverts or get a cup of tea, go to the toilet and so on during the adverts if they don't like them.

I think they're failing to grasp the bigger picture. If the BBC get paid for showing the adverts, then who is paying for these programmes?  It'll be the ones that finance the BBC, the companies whose goods and services are advertised. So where do they get the money from? They take a hit on their profits? Unlikely, I imagine they'll increase the prices of their goods and services to cover the cost. Meaning we all pay anyway, but on average more than the license fee (as the programmes AND the adverts now need to be paid for) and we have to suffer the adverts to boot!

And to what avail? The total amount spent on goods and services is unlikely to change significantly as a result of adverts, the money spent just gets shifted to those products that are the most heavily advertised. So other companies have to spend more on advertising to compete, resulting in higher prices still. It's all just so irrational.

The world would be much better if there were no adverts on TV and we just paid for it all directly.

Edited to add (30 mins after posting the above):

Someone mentioned to me on twitter that my misgivings about adverts are met by the fact that one can have either a free service with adverts, or we can pay for the service and have an ad-free experience.  He appeared to suggest that this happens with some apps on smartphones (I don't know since I don't possess a smartphone).

If this is true then we need to be aware that those who are paying for a service, rather than a "free" service with adverts, are paying twice over.  They are paying directly for an ad-free experience and they are also paying the same amount as everyone else for the goods and services that are advertised.  But, as I point out, the price of goods and services are inflated so as to allow companies to recuperate the cost of adverts.