In less than a month, Brave Software plans to open a bitcoin wallet on behalf of major content creators around the world so those publishers can receive micropayments in exchange for viewing specially curated ads.
Launched in 2015, Brave has raised $2.5m from private investors to build a browser that automatically blocks ads and gives users the option to replace some of those ads with those of Brave's partners as part of a revenue share program that pays both the content creator and the reader.
The problem is, many of the biggest publishers in the US, including The New York Times, The Washington Post and The Wall Street Journal, want nothing to do with it.
On 7th April, the Newspaper Association of America published a cease-and-desist letter on behalf of those companies addressed to Brave's CEO Brendan Eich, and threatened legal action if he continued to build his product.
Representatives of 1,200 members of the Newspaper Association of America posted the 1,000-word letter directly to the site, describing Brave's business model as "indistinguishable from a plan to steal our content to publish on your own website". The publishers threatened legal action if Eich continued his work.
But in a conversation with CoinDesk, Eich said that not only has he not given up hope on someday working with those very same publishers, but that his plans to create bitcoin wallets on their behalf are unchanged.
"We'll try to get it set up so that people who have bitcoin can transfer it into the wallets we create and will be able to micropay for an ad-free experience. That's independent of this ad-replacement idea and the legalities there of. We're full steam ahead on that."
Later that same day, Eich posted his own letter addressing what he called the signatories' "false assertions" and "misconcpetions about the product", inviting the organization to have a discussion.
Eich told CoinDesk he's yet to receive a formal response to the invitation, adding:
"The model that they seem to have in their minds is ink on paper. It's as if you get The New York Times delivered to your doorstep and then Brave sneakily comes up before you open your door and pick up your newspaper and we've cut out the ads that they've carefully arranged to make money."
Instead, Eich says Brave is building a tool that gives power to people who are already blocking ads to voluntarily turn some ads back on in exchange for increased power over their personal information, and what the CEO describes as a higher-quality advertising experience.
How it will work
Brave plans to replace only those ads that use third-party tracking technology that learns a user's behavior and sells that information to advertisers — a practice Eich describes as "dehumanizing", adding that "it makes the user feel like a serf, or an animal being bred for meat".
In place of those ads, Brave plans to insert material from its own partners who don't track personal information. For those ads, Brave plans to disperse between 55% and 70% of the revenue directly to the publishers.
The remaining funds are to be dispersed to Brave, the ad-matching partner, and if the user chooses, he or she is entitled to an optional 15% share of the advertising revenue, dispersed directly to their Brave Ledger bitcoin wallet built using technology from wallet provider BitGo.
Hierarchically deterministic, the Brave wallet can be shared with multiple systems. In this case, BitGo keeps one signature, Brave Software keeps another signature, and the third is sent to the BTC backup key provider, keytern.al.
Though Eich did briefly consider using a digital currency other than bitcoin, he decided the currency's resiliency against attack gave it a clear advantage.
The big picture
Last year, ad blocking technology cost publishers an estimated $22bn in revenue, according a report published in partnership with Adobe by PageFair, a startup that has raised $1.2m venture capital to help counter ad blocking technology. Around the world, there are now 198 million active ad-block users, an increase of 41% over the 12 months preceding the report.
While the publishers may be understandably upset about technology designed to block the advertisements they use to pay the bills, a legal precedent is already taking shape around the world, according to a NetworkWorld report published earlier this month.
Eyeo, the company behind Adblock Plus has been sued five times in Germany and never lost.
Meanwhile, the techniques employed by some major publishers to side-step ad-blocking are also coming under increasing scrutiny.
Last month, advertisements on websites including the New York Times, the BBC, and AOL were hijacked in a form of "malvertising" that asked readers to pay a ransom to have their computers unlocked. In January, when Forbes asked its users to disable Adblock Plus to view the publication's content, the site inadvertently exposed people to similar attacks.
"Something is really out of control if these news organizations in particular can't control the ads that get onto the user's browser," said Eich.
The long road ahead
To Eich's perspective, not only is Brave not a threat to the publishing industry, it may be its savior.
"As long as the payments were sufficient, I think we might actually be not in their sights," he said. "They might actually be happy, and they might even partner with us."
Though Eich says he's still not received a formal acceptance of his offer to meet with the publishers, he tells CoinDesk he has "various back-channels" going and is optimistic that someday the publishers might actually view him as a partner.
Eich told CoinDesk:
"I have some lines of communication open and I'll just leave it at that. We're hopeful that things will continue, that things will improve from there."
However, the president and CEO of the Newspaper Association, David Chavern, is less optimistic. In a statement sent to Coindesk, Chavern wrote that his organization continues to support its members' interests as laid out in the cease-and-desist letter.
"While we appreciate Brave's interest in defending its business model, and would not have expected otherwise. We continue to view their proposition as crossing legal boundaries."
Setting a micropayment precedent
There's more at stake in this dispute than just advertising revenue for the publishing industry.
As far back as 2009 Satoshi Nakamoto, the pseudonym used by the person or people who created bitcoin listed micropayment fees as a way to limit the number of emails one receives and as a means for subscription sites to ensure that free trials don't "cannibalize" their revenue.
In 2010 Nakamoto wrote:
"While I don't think bitcoin is practical for smaller micropayments right now, it will eventually be as storage and bandwidth costs continue to fall. If bitcoin catches on on a big scale, it may already be the case by that time."
While it's still widely debated if bitcoin has hit critical mass as Nakamoto put it, the digital currency has been on a steady uptick for the past couple months, currently worth about $460 each.
Last June, we wrote about how some developers hoped micropayments could be used to further increase bitcoin adoption through such products as the Lightning Network and Duplex Micropayments Channels.
Then, last month, 21 Inc launched its own Micropayments Marketplace where users can buy services ranging from speech tagging services to email verification for $0.0274 and $0.0091 respectively.
If successfully integrated into the online economy, mircopayments could be a $925bn industry by 2025, according to a Wedbush Securities report.
What's already in place
At the moment, Eich isn't sharing the exact number of users who have downloaded the browser. The micropayments feature isn't yet activated and its ad-replacement service only shows placeholder ads featuring Brave's logo and the words, "Faster, safer ads coming soon to this place."
On Friday, Brave launched version 0.9.2 with support for Windows 32-bit, support for 1Password integration, defenses against browser fingerprinting and the ability to set Brave as the default browser within the Control Panel on Windows.
While the 17 companies that signed the cease-and-desist letter represented 1,200 publications, the NAA's total membership represents nearly 2,000 companies, and not all publishers are so vehemently against Brave's business model.
Though Eich wouldn't say which company, he told CoinDesk he is currently in discussions with an agency that he said has "existing brand relationships" and is interested in working with Brave. He expects the fully functioning system will be active in the next 12-to-18 months.
According to Brave's GitHub page, bitcoin wallets will automatically be created for each publisher on 20th May so they can receive ad revenue from the company's partners and micropayments from readers.
Eich told CoinDesk:
"When we turn it on and test it and prove that it works with some very early test wallets, then bring it open to the public, people can start using bitcoin to sponsor sites by dropping money on them in exchange for ad-blocking instead of simply using a sheer ad-blocker."
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