German Federal Supreme Court Approves Ad Blockers, Free Press Bleeds

Publishers find it difficult or impossible to generate sufficient income through their online news platforms. Ads do generate some profit, but the battle against ad blockers is lost.

MB

The free and high-quality press is essential for the functioning of modern democracies. Unfortunately, it seems to lose the battles for its survival in the online sphere one by one. The surprising solution comes from a Frankfurt-based Startup using the blockchain technology.

Yields are dropping

The free press used to make a living by selling newspapers. The papers contained advertisements that generated additional income.

When the migration from traditional media to the Internet began, the press began to spread news via the Internet and prices for advertisement in printed editions started falling. The publishers set up information portals that spread messages via PCs or mobile devices, free of charge. They require considerable journalistic and technical effort, yet they trigger losses.

Any system needs power from outside to function: A car cannot drive without fuel. The online news industry can’t survive without income. However, it is in danger because so far it has not been able to mobilize sufficient financial resources for its functioning:

  • Publishers were not able to win a sufficient number of paying subscribers for the online editions of newspapers and magazines.
  • Publishers could not convince the readers of free news sites on the Internet to pay individually for higher-quality articles (“paywalls”).
  • The business with advertising, which is placed alongside free news on the Internet, is now starting to melt like butter in a hot pan.

Ad blockers threaten the publishers’ last bastion

Publishers rightly perceive so-called ad blockers as a danger. Ad blockers are software tools which allow the user of a browser to choose between advertisements which she or he allows to pop up and advertisements which are automatically left outside the door (“black list” and “white list”). Ad blockers literally block one of the last sources of revenue for publishers. The new Brave browser even blocks any advertisement unless the user has explicitly allowed it to be visible. The use of this browser is a pleasure, but the user does not notice a terrible fact: This tool is another stab in the heart of the news industry.

Counterattack through the courts

Publishers argue that ad blockers kill their business. They feel that they are entitled to place advertisements as they deem appropriate, for they need the income for their survival. Therefore, Springer, a leading German publisher, started a legal battle and lost it. Given that this is not just a German issue, the debate aroused international interest. On 19 April 2018 the German Federal Court ruled that the suing publisher does not have the right to stop the business of ad blocker firms by way of a court order. Industry representatives are shocked:

The court decision is a slap in the face for the digital economy and independent journalism. It endangers the proven business models and the diversity of the media landscape, the consequences are hardly foreseeable„.

The decision is plausible, for the publisher’s argument is weak: While browsers are needed for access to readers of news, there can be no doubt that the browsers are not the publishers’ territory. The browsers may be open source or privately owned, but the publishers are merely beneficiaries with no privileges. The impact of the ad blockers feels like an expropriation but is isn’t one.

Repercussions

Despite the generally accepted commitment to the free press, it is not likely that courts in other countries will come to different conclusions. To win sovereignty in the critical area, publishers would need to develop their own browsers and make them prevail. We won’t see this happening soon.

The solution

The solution is the forthcoming blockchain based “Multra app” which consolidates customized free news content, rewards readers with tokens and gently nudges them to transition to high-value chargeable content. The classic “appetite comes with eating” principle applies in the online economy as well. Publishers will not need to act and yet they will reap the benefit. => Handshakes with the free press!

Dr. Martin Bartels, LightFin

 

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