Can We Replace Ads?

Bozhidar Bozhanov
Jan 8, 2017 · 5 min read
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I was wondering — can we replace all advertising with paywalls and subscriptions. Flexible, user-friendly, one-click subscribe/pay, paywalls. Paywalls that are “Spotify for news”, let’s say.

First — why was I wondering? Because current ad-supported online media turns into clickbait, just any eyeball is worth more than an in-depth reader, because ads are not enough to support quality journalism. Meanwhile many quality news outlets are subsidized by their wealthy owners. And I was wondering — could there be a way to support quality journalism not “for the sake of it”, but because of supply and demand — one offers quality content, the other one pays for it.

The New York Times (one of the biggest news websites) ad pricing starts at $8 per 1000 impressions (CPM). Which isn’t much different from the facebook average of 7.34. In the UK the figure (for the MPUs — the “main banners”) is higher — ranging from £12 to £80.

What about the revenues — we constantly hear that ad revenues are not what they used to be, and news outlets barely make any money (especially the smaller ones). The New York Times, for example, has an ad-based revenue of around $132 million. And that’s based on 650 million monthly reads by 72 million monthly unique readers. For the Washington post the figures are similar — 730 million reads by 69 million unique readers. That makes roughly 10 pages per user. Now I won’t try to calculate their ad-revenue in regard to the monthly reads, because there’s a mix of subscription revenue and ad revenue, but let’s just have these numbers lying around.

We have to mention the serious technical issues with paywalls. There’s no proper solution — relying on cookies is defeated by browsers’ incognito-mode, relying on any custom parameter based on the source (e.g. social media, search engines) can be spoofed, and content has to be indexed by search engine, which means one has to follow the “first click free” rule — if you’ve landed on a page via a search engine, you must be able to read. So any browser add-on can pretend to be a googlebot (or perform a search by exact title and open the first result from the requested site) and bypass any “clever” paywall. The Wall Sreet Journal has the only technically sound solution — it provides a short intro of its paywalled artices to both readers and search engines. They don’t follow the “first click free” rule, and they don’t rely on cookies —the content is strictly paywalled. The downside is — I doubt their search engine score is good, given that Google only indexes the first paragraph.

But even if there was a technical way to do paywalls right, the incentives for readers are doubtful. If you want to replace your ad revenue by subscription revenue, your readers have to pay everything that your advertisers have paid so far (and more). Which sounds counter-intuitive (the advertiser has more money and has the right incentive to give them to you).

However, there are attempts in precisely this direction —replacing advertisers’ money with readers’ money. A few example are:

  • Google Contributorusers pledge a certain amount of money per month which are then used to automatically bid for ad space. If the user wins (against the advertisers), no ad is displayed. Currently an upgrade is pending, and we don’t know whether the first two years of the experiment have been successful
  • — a single account for subscribing to multiple websites. You don’t have to manage subscriptions per-site — this is handled for you. This was actually the idea I started my research with. It seems there isn’t that much adoption, though.
  • FlattrPlus — similar concept, different implementation. It uses flattr for micro-donations, and AdBlock Plus to block the adds. A bit more ad-hoc than the other methods, but potentially with higher impact (because of the popularity of AdBlock Plus)
  • Brave browser — similar to FlattrPlus, but requires a separate browser. Unlikely to see much adoption because of that, but who knows — browsers today are so slow and bloated that a new competitor may actually stay afloat.
  • Patreon — a means to support “freelance” authors. But that doesn’t mean it can’t technically be used in bigger outlets (each author will have his Patreon account associated with each of their pieces). It also doesn’t mean “freelance” journalism isn’t real — on the contrary, we have to embrace that more and more journalism will be done outside if big brands.

All of these are based on the same idea —have a single gateway to subscribe and/or pay for content on multiple sites. The details matter, of course — whether it uses adblock, or whether the website owner has to do additional integration. Whether privacy is preserved, or (in the case of Google) all the behavioral profiling is still being done. Whether there is an actual paywall, or it’s just a drop-in replacements for ads. But the overall idea — to ask readers for money, instead of showing them ads, in order to support journalism, is there.

And it hasn’t worked so far. The only partial subscription successes have been those of big outlets like WSJ. And even there it’s not a smooth sail. Remember those 10 pages per user for WP and NY times — well, 10 pages here, 10 pages there, 10 pages coming from facebook, 10 from google, 10 sent in common chats. The stream of information is endless and any deterrent — like entering a credit card — just means rushing to the close button.

We could get improvements to the services listed above —ability to refund payments after an article turns out to be “clickbait”; paying $0.10 per article, until a limit is reached; counting the time to read an article in order to determine whether money should be subtracted; categorize subscriptions (e.g. I only subscribe to “sports”, show me ads on everything else); bet on story virality and show the article for free for the first few days, and only day charge for it; target AdBlock users first, with a free trial of a paywall, to gain their trust; provide a WordPress plugin, so that integration for many news sites is easy. But these details would matter after a certain level of adoption, I think.

I started by wondering “can we replace ads with paywalls, subscriptions or micropayments”. I hope such models gain traction, but that will require effort in re-educating readers. And I’m starting to wonder — can we replace ads with … anything else?

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