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The rise of a new era in the monetization of digital content

TechCrunch TechCrunch 4/05/2016 S. Brian Mukherjee

Digital content is one of the most consumed “goods” in the online marketplace. However, buyers and sellers still can’t seem to agree on a fair price for these goods.

Consumers realize that, regardless of the platform, content is valuable and there are costs involved. So when they block ads, it’s not because they are freeloaders, or because they are intent on blowing up publishers’ business models. Ad blockers are consumers’ only way of telling us that something isn’t right, that they are sacrificing too much of their time, money, privacy and user experience in order to get the content they really want.

Ad blocking is the obvious symptom of a misalignment at the heart of the content access value exchange. But what can bring it back into alignment?

The trends are promising. We are seeing more transparency from publishers about how consumers pay for content, more meaningful and substantive branded content, more flexible pricing models and more ways for consumers to control their personal information. Taken together, I believe there is an elegant and sustainable alternative for this ecosystem to thrive, one which is respectful of consumer choice, impactful for advertisers, sustainable for publishers and effective at scale.

Transparency and choice

Many publishers that detect ad blocking will now ask users to whitelist their site or subscribe. To regain consumer trust, publishers should take this as an opportunity to go further and have a transparent discussion about the value exchange.

The truth is, consumers pay with more than their attention; they pay with their information, as Ghostery users know all too well. And the plethora of pixels and trackers don’t stop tracking consumers behind a paywall — the concern for privacy certainly factors in the perception of value.

Detecting when a consumer is using an ad blocker is only the first step. Engaging consumers in an honest conversation about the value exchange is the real work. An increasing number of publishers are doing it, and the more upfront they are about the real trade-offs, the better off everyone is. That’s true whether or not the call to action is a subscription, a whitelist or one of many other options.

Ad quality and sustainability

Consumers block ads because of frustrations over a bad user experience. The logic follows that advertisers can address the underlying causes of ad blocking with better, less intrusive ads, or by publishers showing ads only when they have earned the right to do so. Consequently, branded content and native advertising have come to play even more significant roles in the broader advertising ecosystem — although even these can be blocked by crowdsourcing and blocking the ad tag or ad zone.

We need more options and a better solution.

In-feed native and video are among the fastest growing areas within the industry. Mobile is another huge driver of this trend, where smaller screens and scrolling are better suited for in-app and in-feed ad formats. As a result, audio-off, auto-play and in-view ads that are appropriately targeted and performance-priced have been a key driver of Facebook’s growth — and a reflection of what it will take to succeed in the digital economy.

Frictionless payment options

If I click on a link to read an article on FT.com or WSJ.com, my only option to finish it is to have a subscription of some sort and login. The inherent friction within this exchange is simply not compelling for most readers, who will not want to subscribe to every publication they may encounter. We need more options and a better solution.

Micropayments have long been discussed as that potential middle ground between paywall subscriptions and intrusive advertising. However, despite decades of debate and promising starts, no model has successfully gained traction. But as ad blocking rates continue to rise, we may finally see that begin to change. The key to making micropayments viable is to make the entire process frictionless.

That, historically, has been a challenge, because of the reality of payment processing costs. But new solutions are on the horizon, although the friction remains to be elegantly solved. Blendle is a promising early example. The Dutch startup, which has the financial backing of publishers like Axel Springer and The New York Times, allows consumers to pay a la carté at around 20¢ per article. Their early pilot in Germany has been successful, and their U.S. pilot is already underway.

Surprisingly, another example comes from an ad blocker. Israeli-based Stands, which calls itself the “Fair Adblock,” provides a unique and worthwhile example of how to bring consumers directly into the value exchange and engage them. Stands gives consumers the option to share ad revenues with a nonprofit of their choice, with the majority still going to the publisher.

The next iteration of this model is to show just one high-value ad that presumably drives much higher impact for the advertiser. The fact that an ad blocker can get 90 percent of its users to see ads suggests that consumers are not averse to ads; rather, they just want some say in how they are delivered.

We are going to figure this out

The solution to ad blocking will not come from a technical workaround, a ruthless prosecution of the ad blockers or through forcing a subscription on users. It will come from providing greater transparency and choice in the free content value exchange. The solutions are out there as worthy foundational examples on which to model new options across the media economy. If executed well, there is a real opportunity to rise above all the noise and clutter and revitalize the ecosystem — one which is respectful of consumer choice, impactful for the advertiser, sustainable for the publisher and effective at scale.

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