The Internet still thinks it can live without ads

The advertising industry has hit a bit of stride with online ads. Ad supported content has been, for the moment, the most used model for this, clearly ahead of freemiums and paywalls. (Though, the NYT’s paywall’s recent performance is worth noting).

Payment as pain, from a user’s perspective, isn’t the ideal experience. There are reports of slight shifts in attitudes on paywalls, but still far from mass acceptance. However, the number of paywall workarounds are only rivaled by the amount of ad filtering software. Both are an indication that maybe still need to think about a third way more in tune with the culture of the web.

“Altruistic” models have been in development for a while. I remember getting my Flattr account in 2010 thinking it was a great idea: a pay-what-you-can system to reward content creators for putting their work out there. Essentially it feels more like tipping than paying… though, in all honesty, I never used it.

Two developments to Flattr frame the promise and limits of this model in practical terms, though:
1. It was banned from being used on Twitter as it muddied the definition of what is an ad and what is a tweet, which is a key definition for Twitter’s own monetizing scheme.
2. It’s added Bitcoin funding to its deposit function (but critically not its withdrawal).

This last one is spurred on by the Bitcoin community’s campaign to spread integration of Bitcoin to as many services as possible in the search of becoming mainstream. It is safe to say this will be a boost to the usage rates of Flattr.

There are probably few communities more primed for micropayments than the ones actively supporting digital currencies, since they’ve instituted it as a low-risk/high-volume way of getting the currency moving like currency instead of a commodity. Bitcoin users have been tipping on Reddit since October 2012. Dogecoin users followed suit last December.

Dogecoin users have now embarked on a route that will test if another social giant’s ad model can coexist with social micropayments: Facebook tipping. Since last week, a Facebook application is being tested by the community that allows users to tip other users in Facebook in Dogecoins. While it will probably clash with promoted content guidelines, Facebook has other advertising options that can coexist peacefully with this feature.

And from the tipping system’s perspective, I’d argue that Facebook seems like has ideal conditions for this venture: it can display different types of content (better than Twitter), it broadcasts actions (making tipping activity noticeable) and it has the biggest user base.

Now comes the point in the text where I address the elephant in the room: digital currencies aren’t hype. Bitcoin, while still clearing a few hurdles, has had a relatively stable growth and continues to spread it’s use beyond the fringe (Google is reportedly testing Wallet support). Also, as Bill Gates pointed out in his recent Reddit AMA, digital currencies, like Vodafone’s M-Pesa, are thriving in Africa (and now moving into India).

And closer to home, Bitwall has shown that a hybrid model of “social payment” (pay-with-a-tweet) and micropaywall, where interactions are Bitcoin based, can have positive results.

Looking at these developments, there seem to be patterns emerging that offer a few takeaways:

  • Digital currencies and social tipping are successful practices as long as they target specific communities first. Trying to compare it to national currencies is seeing the forrest for the trees.
  • Supporting digital currencies gives access to passionate and savvy communities of users willing to promote and test. However, remember the savvy part before you peddle.
  • From users, there’s a need for alternatives to pay for content. You won’t make everyone happy, but you need to think about the best fit for your users/costumers and their mode of consumption.
  • Thinking outside online ads can be scary for ad agencies. The trend show that it’s not time to panic, but it’s probably best not to fire content creators yet.