How Cryptocurrency Could Save Us From Advertising
Remember the good old days of ad-free video platforms and pre-pay wall media sites? Would you let a website mine cryptocurrency using your computer if it meant you didn’t have to pay it any subscription or usage fees, or see any ads?
Some websites, including publicly traded news and feature publisher Salon, have been experimenting with the idea as a way to claw back some of the cash lost to the decline of print media and the dominance of Google and Facebook, who between them hoover up some 57% of the US digital advertising market, according to eMarketer research. Many believe this — or something that looks a lot like it — could be the future of media revenue, a way of charging for content those users who would prefer not to see ads or pay a fee.
Back then Bitcoin could still be mined with a normal CPU, something that every computer harnesses to varying degrees of power. CPU mining quickly became unprofitable as Bitcoin miners began to adopt powerful, specialized mining chips known as ASICs. More recently new cryptocurrencies, such as privacy-focused Monero, have kept CPU mining alive. They’ve also sparked a resurgence of interest in in-browser mining for coins.
Piracy websites have tried out browser mining, and US cable network Showtime claimed it was unaware it had been using in-browser mining after it was discovered to be doing so. Early experiments with large-scale commercial browser mining have been largely unsuccessful, however.
Coinhive — an in-browser cryptocurrency mining service which mines Monero — is one of the biggest operators and was found to have made US$7.69 from 11,000 websites over a three month period, according to a March report from Concordia University and independent researcher Troy Mursch and Jeremy Clark.
In February, Salon began using Coinhive software to mine the cryptocurrency Monero, citing the high number of its visitors who use ad-blocking software as reason for doing so — which is as high as 25% of those using its website, according to Salon’s managing editor Jordon Hoffner.
“My experience working for Google left me with the desire to try new things like this,” Hoffner told LongHash. “We found people do turn off ad-blockers when they become aware we can’t survive if they’re using them. Some opted for the crypto mining. Though it didn’t generate vast sums of money, we didn't really expect it to. It was an experiment.”
Hoffner is confident some form of cryptocurrency mining could become a viable option if there are advances in technology, both on the publisher’s side and for the user, and as people become used to the idea. “The process needs to be smoother, which can be done by improvements in technology. People were put off by things like our warning that their computer cooling fans might come on.”
Brave Software, the US company behind the open source ad-blocking Brave browser and cryptocurrency Basic Attention Token (BAT), is trying to make this possible. The Brave browser blocks ads and website trackers but is developing a feature that allows users to opt in to receiving ads it’s sold, promising to pay content publishers 55% of the replaced ad revenue. Brave has this week extended that system to people who post on Twitter and Reddit.
In November, Brave expanded BAT payments to YouTubers. Brave boasts some 3.25 million monthly active users and 20,000 publishers using its software and rewards them with its BAT, based on user attention — time spent viewing ads and content. Brave users who agree to receive ads will be rewarded with BAT; the tokens can be passed to publishers as support for their sites. Alternately, Brave envisions users trading their tokens for premium content or advanced site features.
The established adtech industry, an umbrella term for companies that automate and facilitate the buying and selling of digital advertising, has been criticized for its high costs and fraud. Last year the Financial Times revealed it had found “jaw-dropping” levels of fraud on ad exchanges using bot fraud and domain spoofing. Digital advertisers lost US$19 billion to fraud in 2018, according to UK-based Juniper Research.
“People are tired of the current system’s inefficiencies and abuses and are turning to blockchain and cryptocurrency as an alternative,” Brave’s chief executive and co-founder Brendan Eich told LongHash. “However, the kind of mining Salon tried, using site visitors’ CPU, is not a good use of power and a terrible generator of waste heat and saturated computer cores. The math does not work even if one assumes the user has free electric power.”
Brave’s BAT, an ERC20 token on the Ethereum blockchain, is not mined; rather, 1.5 billion BAT tokens were created up front. Eich claims it can reduce fraud and prices the user back in: paying the user as big a revenue share as Brave itself takes for BAT ads.
BAT currently has a market cap in the neighborhood of US$154 million and hit highs of US$0.86 per coin in January of this year before falling back to around 23 cents as of early August 2018, according to CoinMarketCap data. When publishers and Brave users receive the tokens they can convert them into ordinary money automatically — meaning they should not be affected by the fluctuating price if they don’t want to be.
Some are unconvinced that blockchain and cryptocurrency will be adopted by the media and publishing industry, however. “If you're making a premium service why not just charge users regular money?” said Nicholas Williams, a media analyst with Enders Analysis in London. “The use of cryptocurrencies here adds a whole unnecessary and complex element when perfectly good ways to pay online for content online already exist.”
According to Williams, the barriers to entry are too high. “It's far easier to just persuade people to turn off their ad-blocker than try to get them to buy into your cryptocurrency or let you mine using your CPU,” Williams added.
Salon’s Hoffner has heard these complaints and is still trying to find a workable solution — he thinks it will use blockchain technology. “There's so much fraud and middleware in the advertising industry and it's really inefficient to the advertiser. The ecosystem we’re currently using isn’t the right one but there’s a new system forming for how ads will appear on media companies websites.”
Earlier this year Salon teamed up with computer industry giant IBM to iron out weak link intermediaries between advertisers, publishers and consumers in a bid to get a grip on bot fraud and domain spoofing. According to Hoffner, “the advertiser knows his message is getting in front of the intended audience because it’s verified on the blockchain that the ad is appearing on the website.” The collaboration also follows on from a similar blockchain experiment IBM conducted with consumer goods giant Unilever.
Even with the power of a peer-to-peer blockchain network, fixing the digital advertising industry won’t be easy. Writing in AdWeek, IBM’s advertising chief Chad Andrews warned: “Ensuring [the scheme’s] success will require the entire industry, including advertisers, ad tech providers, publishers and agencies to coalesce around a shared, auditable version of truth” — something far easier said than done.
Billy Bambrough is a London-based writer.