Complete Story
10/10/2017
If ads don't work, can publishers strike subscription gold?
Tony Haile spent seven years trying to save the internet from click-based hell. As CEO of Chartbeat, a software and data provider to publishers, he showed editors, in real time, which stories were “trending” on their sites. He hoped the information would convince media companies and advertisers that their primary way of doing business online—through banner ads, sold through split-second digital auctions for fractions of pennies—could not last. At industry conferences, he presented chart after chart showing the emerging duopoly of Facebook and Google, the commoditization of quality journalism, and the perils of clickbait content strategies.
It was hard to disagree. Analysts estimate that Google and Facebook captured all, or virtually all, of the growth in digital ads last year. Elsewhere, readers don’t look at display ads, let alone click on them. The average clickthrough rate is a measly 0.05 percent, so publishers covered their sites with increasingly obtrusive ads. In 2016, the use of ad blockers increased by 30 percent, according to PageFair, which tracks the data. Meanwhile, advertisers are increasingly concerned about paying for fraudulent clicks from bots or seeing their ads next to offensive content. Despite these challenges, Chartbeat’s solution—selling ads based on metrics like time spent and engagement—failed to catch on.
"Change is remarkably slow," Haile says of the publishing industry. "[It] was like I saw someone on the street having a heart attack and I was going up and telling them to eat vegetables. It's a good long-term plan, but it wasn't going to get us where we needed to go fast enough." In 2016, he stepped down as CEO of Chartbeat.
Now Haile is back with a new company that’s tackling the same problem very differently. Rather than lobby advertisers to pay more to appear near quality content, he wants to convince media consumers to pay. Scroll, his subscription-based startup, plans to launch early next year. "I guess I'm a glutton for punishment," he says.
Scroll is part of a growing class of venture-backed companies that see subscriptions as a way to absolve the internet of its original sin, advertising. Many are aimed at smaller publishers. But these newcomers arrive as major media brands, including Spotify, The New York Times, and The Washington Post report growing revenue streams from subscriptions.
