Back when my day job involved worrying about such things, I didn’t much like the online advertising market. As a publisher, it’s quite hard to love.
Advertising works for publishers when they can charge a premium price for their ads, establish and defend a meaningful market share, turn a larger audience into higher yields and more revenue. None of these things are easy, or even possible, for most publishers in the online advertising market.
That’s why huge sites with massive audiences (by publishing standards anyway) are unable to be profitable, and it’s why cutting costs is better than investing in product.
Enter the ad-blocker
Recently, ad blocking has entered the mainstream thanks to players like Apple and Three, and everyone is up in arms. The publishing industry is crying foul, demanding that something be done, predicting dire consequences if they are cut off from their income source.
Now I’m not defending or celebrating ad-blocking. Some of it does indeed, as John Whittingdale said, seem like a protection racket.
But from the point of view of a publisher shouldn’t it be more a call-to-action than a call-to-whinge?
The truth is that the advertising income stream has never been enough to sustain them, and the situation has got worse not better over time. Ad blocking potentially accelerates but doesn’t fundamentally change the ultimate consequence of this.
So now, surely, is the time to start to focus industry thinking not on how to preserve the starvation regimen offered by online advertising, but how move past it? To tap into the much richer, much bigger, much fairer and more sustainable opportunities offered by the content itself rather than the annoying, uncontrollable and, as more and more users now know, block-able ads around the edges of it.
Can’t pay, won’t pay
Ah, I can hear the chorus of groans already.
“Consumers won’t pay” it rumbles.
“You can’t compete with free, subscriptions don’t work, paywalls go against the grain of the internet, micro-payments are impossible”.
It’s as if people actually take comfort from defeatist aphorisms, as an alternative to actually trying to change anything. It certainly makes life easier: if everybody expects the worst then it’s hard to disappoint them.
But it’s nonsense, and it’s feeble, and it leaves one the cultural and creative industries, together many times bigger than the advertising market, marooned by their own despair.
Perhaps one of the reasons people won’t pay, is because they can’t pay.
I don’t mean they can’t afford it. I mean there’s no simple way of handing over money. They literally can’t pay. That’s at least partly why they won’t.
Obviously, even if they could, they would have to want to – the challenge would be to make products good enough and to price them right.
That’s a creative challenge: know your user, make something that strongly appeals to them, charge a price they’re willing to pay without much thought. The same challenge which defines, effectively, the whole of the creative sector whether making films, music, books, newspapers, photography, games or anything else.
Can every page pay?
OK stop for a moment before you start groaning. Think about it. Don’t get defeated by the frustration of the years of trying to make micro-payments and subscriptions work. Look past that.
Imagine a world where every time your creative product or its content gets consumed you benefit. On terms which you have set. Imagine if every page could pay. What would it do to products, to revenues, to relationships with users?
When I ask content producers this question, most of them get quite excited. They see a world in which their focus becomes clearer. Pleasing their readers, viewers, listeners and players rather than the robots which deliver people to ad-serving systems. More consumption. More revenue. More investment in product leading to more popularity. What management consultants call a virtuous circle.
“Be popular” is the goal. The more popular, the more successful. Every page pays, predictably. Investing in creativity and creative products becomes rational again, innovating to better serve your audience becomes a key imperative, beating your competition drives the urgent need to keep evolving.
But what about the masters in the middle?
Of course there are lots of intermediaries on the internet, sitting in various places in between the content owners and the users. Search engines, ISPs, ad networks, mobile companies, aggregators, countless others.
Very often they’re the gatekeepers as well. To get to users you have to go through them, and on the way through they limit the rewards you can hope for.
But they’re also the people who can provide an answer to the payment conundrum. They are retailers. Many of them are already collecting money from your users for various things.
Just as newspaper publishers never tried to collect 25p individually from every person buying their papers, but instead got newsagents to do it in return for a share of the money, the solution to the payment problem might lie in getting other people to do it for you. As long as what’s good for them is also good for you, and vice versa, there are lots of reasons to work together.
Aligning incentives
The key, as the creative sector has known for centuries, is to have control over the terms under which you offer your work. The law has given creators this control ever since the advent of copyright.
Making this possible requires some new technical plumbing, to allow copyright to work as efficiently as advertising and websites themselves.
After that it’s down to the innovators, the creative companies and anyone who doesn’t want to rely on a failing ad-driven business model, to come up with a much more rapid evolution and new ways to please consumers and share rewards.
Since what we’re talking about her is supplementing ad revenues, not replacing them this doesn’t need to involve huge controversy. For the creative industries to win, the ad industry doesn’t have to lose (they’re doing that on their own anyway). New opportunity is something everyone can move towards
Never waste a good crisis
What’s needed is a spark to trigger all this movement. I think ad-blocking might be it. Something to move away from, a failing model for ad-based revenues. Projects like The Copyright Hub and the Linked Content Coalition are creating the basis for building a new value layer for the internet. This will lead to the emergence of new players who will make it easier for everyone to find new sources of revenue from users and others.
Who will these new players be?
Watch this space.
Copyright Blog 