No Ads for You!
Now he says he wants to help online publishers — by blocking ads.
Now imagine someone told you about another startup, dedicated to “Building a Better Web” by making online ads smaller, faster to download, and more respectful of user privacy. It would help publishers make more money than they currently get from the dirt-cheap “programmatic ads” sold in real-time auctions, plus give readers an easy way to pay for content. Publishers might wonder if it’s too good to be true.
Here’s the tricky part: These two startups are the same company.
The company in question is Brave, which makes a web browser of the same name that by default blocks tracking “cookies” and most online ads. (Users have the option to un-block them.) Brave, which is based in San Francisco, officially releases its browser in September — it has been available in beta at Brave.com. If the browser attracts enough users, the company plans to start selling its own ads, which it will display to users who opt in to seeing them.
Naturally, Brave prefers to be seen as a force for reform. “The big idea isn’t ad blocking — that’s already a thing,” says Brave CEO and co-founder Brendan Eich. “It’s the users owning their own data.”
Eich says Brave will help publishers, but his argument is more than the usual Silicon Valley blather about how piracy can save the music business. Brave won’t block the ads publishers serve themselves, which generally sell for high rates. It will only block the third-party ads, which typically sell for peanuts. And while it might sound outrageous to pay publishers a percentage of the revenue generated by ads inserted into their sites, most online publications already pay “ad tech taxes” to a variety of middlemen.
Eich isn’t doing this simply to help other websites, of course — Brave is a business. In August, the company announced it had raised a $4.5 million seed round of venture capital and angel financing to bring its funding total to $7 million so far. And since running a browser doesn’t require the staff of a search engine or social network, Eich says his company can be profitable with “millions of users — not tens of millions.”
Originally, Brave planned to unilaterally replace the ads the browser would block with ones it sold itself. In August, though, Brave announced that its browser will block ads by default, but not replace them with new ones without permission from the websites they would run on. To many publishers, though, a choice between accepting money from Brave and having ads blocked for some users isn’t much of a choice at all.
“What Brave is saying is that they can take your content — which you spent money developing, editing, and curating — and replace the ads and give you a certain amount of money,” said Dan Jaffe, group executive vice president of the Association of National Advertisers, when Brave first announced its plan. In April, the Newspaper Association of America sent Brave an open letter threatening a lawsuit.
Eich says Brave didn’t change its policy because of the legal threat. “We’re trying to get publishers on our side,” he says. He adds that he’s already had some encouraging meetings.
Whatever ads Brave does run will only be seen by users willing to see them. “We’re not going to foist this on our user base,” Eich says. Brave will display different ads according to what sites users visit, he explains, but in order to protect users’ privacy, it will store all of this information not on its own servers, as most online companies do, but on users’ computers, where it can’t be seen by Brave or anyone else.
Brave also plans to spread around the money it makes selling ads: It will give 55 percent of the resulting revenue to online publishers and 15 percent to ad partners and take a 15 percent fee for itself. That leaves 15 percent for Brave to give to consumers who view ads on the browser — who will be paid for their attention. For most users, this won’t be enough to get excited about: Even at a very high CPM of $25, for example, someone who looked at a web page with an online ad every minute would only make 22 cents an hour. But it gives Brave a marketing hook — one that could make some users wonder why no other browsers are paying them.
Brave is also introducing Brave Ledger, a way to let users divide this money, or any other amount that they transfer to a virtual wallet, among the websites they visit. Those sums will hardly be sufficient to fund most online publications. But they could add up to something — and they’ll certainly help assuage the guilt users feel for blocking publishers’ ads.
It’s the only topic Eich shies away from. Over the course of two hour-long phone interviews, Eich offers fast and digressive game-theory analyses of computer security, the inevitability of monopolistic online platforms, and why Brave will solve the “principal-agent problem” inherent to the web browser business. The concept describes the tension that occurs when a representative, or agent, has interests that differ from the entity he’s representing. Online, Eich says, most companies that make browsers have no incentive to protect user privacy because they’re essentially appendages of the advertising business. It’s all very heady stuff from the CEO of a company that many media executives believe is essentially running a digital-media extortion racket.
For some mix of these reasons, the use of ad-blocking software is growing fast. A report by Adobe and PageFair estimates that such software is used by 45 million internet users a month, which costs online publishers as much as $10 billion a year in lost revenue. (PageFair is in the business of helping publishers solve the ad-blocking problem, so some executives take these numbers with a grain of salt.) Although media and advertising executives disagree about the severity of the problem, they agree that ad blocking is significantly more common in Europe — where concerns about online privacy are more common — and that no one has figured out a reliable solution.
“The ad community is increasingly concerned because if enough people block ads, it’s going to undermine the economic foundation of internet advertising — and the internet,” Jaffe says. Overall, ad blocking is considered enough of a problem that the Internet Advertising Bureau, the Association of National Advertisers, and the American Association of Advertising Agencies set aside their May joint board meeting to discuss it — the first time the event has focused on a single issue.
In January, the IAB, which represents online publishers and ad companies, pointedly disinvited Eyeo, the German company that runs the market-leading Adblock Plus, from its annual leadership meeting in Palm Desert, California. There, IAB President and CEO Randall Rothenberg essentially accused ad-blocking companies of censorship and extortion, suggesting that Adblock Plus lets certain ads through in exchange for payment. (Adblock Plus “whitelists” and doesn’t block ads that meet certain criteria; it charges big companies, but not small ones, to review the suitability of their ads, but says these payments don’t affect its decisions.)
“Randall is an angry man,” Eich says. “There’s denial, anger, bargaining, depression and
acceptance — and he’s stuck on anger.” There has also been some bargaining: In October, the IAB admitted that online advertisers had “lost track of the user experience” and announced an initiative to limit the intrusiveness of ads. The organization introduced its LEAN Ads program (light, encrypted, ad choice supported, non-invasive), a set of advertising principles aimed at reducing consumers’ incentive to block. It’s a smart move — albeit an overdue one.
A few online ad executives agree with Eich. In November, TrueX founder Joe Marchese wrote an op-ed for the Wall Street Journal about how he wanted to “go door to door and help people install ad blockers.” Once that happens, he wrote, it will easier to build an online ad business based on an implicit agreement between publishers and consumers — content for attention, in a way everyone understands.
Eich, like Marchese, believes that ad blocking is inevitable. But it takes a certain Silicon Valley chutzpah to believe that Brave is a solution rather than just part of the problem. “They say they want to help publishers,” says Paul Boyle, the NAA’s senior vice president of public policy, “but they want to do it without our consent.”
Any debate over the morality of ad blocking skirts a more immediate question: Is what Brave wants to do legal?
In its April letter, the NAA suggested “it would be blatantly illegal for one company to hijack all the content on the web for its own benefit,” and that publishers could sue for copyright infringement. But copyright law isn’t that simple. Most newspaper web pages can be accessed with any browser, although online publishers could take steps to block users running Brave.
It’s also unclear whether Brave would infringe copyright by blocking or replacing ads. Although copyright covers most of the individual elements on a typical newspaper web page — articles, photos, even ads — it’s unclear if it would also cover the web page itself. Normally, compilations can be registered as “literary works,” according to the U.S. Copyright Office. But what about a web page that loads with dynamic advertising sold by separate companies and targeted to individual users? It’s unclear how copyright would apply when so many users get so many different ads — and web pages essentially become different compilations.
Newspapers could take technical measures to prevent users running Brave from reading their content, much as some websites ask users to turn off ad blockers now. And they would have a stronger legal case against Brave if the company deliberately found ways around those measures. Publications could also sue Brave for misappropriation, under state laws aimed at preventing companies from taking advantage of the work of others for their own gain. But such a legal battle would be long, complicated, and expensive for both sides.
Brave’s hardest challenge could be finding an audience. Consumers don’t seem particularly dissatisfied with the browsers currently available — and if that changes, Apple (Safari), Microsoft (Internet Explorer), Google (Chrome) and Mozilla (Firefox) have resources that Brave, with a dozen employees, can’t hope to match. The vast majority of internet users conduct their online lives as though they don’t care much about privacy, and those who really don’t want to be tracked can add plugins to the browsers they already use.
Even so, Brave is the only company that plans to pay users for looking at ads — an idea that will appeal to some consumers on principle even if there isn’t much money in it. The beta version of the Brave browser has been downloaded 300,000 times so far, and Eich says “our average monthly users are a high portion of that.”
Whatever happens to Brave, Eich is right about one thing: Ad blocking is growing more popular, and no one has a realistic plan to stop it. In fact, some powerful companies arguably have an interest in fueling it — including phone manufacturers like Apple (which began allowing users to install mobile ad-blocking software last year), mobile network operators who want to reduce their data traffic, and anyone else who wants to enter the browser market. Other browser companies might even respond to Brave by promoting their own ad-blocking capabilities. It’s never been easier to build an ad-based business on the internet — or harder to make one last. Just ask the online publishers whose ads Brave plans on replacing.