The End Of The Free Web

The rise of ad-blocking will force us to confront the fact that the free lunch provided by advertising is not long for this world. The good news is that the ensuing crisis will compel us finally to look for what we should have invented decades ago, namely sustainable business models for the web. For example, it’s possible that cryptocurrencies might enable the “micro-payments” that would make users to pay a tiny amount for any article they read. We need more ideas like that, and I’m sure we’ll get them. Necessity is the mother of invention.

What about a monthly subscription ?

Let’s say that for 10 bucks a month you’d get access to several websites without having to deal with specific subscriptions, just a single one : the service. The service would gets a cut for its own profitability, then split variable revenues accros the differents publishers affiliated based on the pageviews of the reader/subscriber.

If the reader only opens a link per month, the 10 bucks minus the service‘s cut goes to that single publisher, and so on.

This idea has already been put in place in a rather confidential way by Elinea, a Dutch company, and more recently by another one — though I can’t remember its name. Both are based on the all-you-can-read model.

This could possibly gain momentum if indie publications with strong names jump onboard. But as of now, I bet they’re reluctant to get rid of The Deck and native ads, which they seem fine with.

Last week, the content-blocker Crystal announced a partnership with Eyeo, a service that whitelist website using ads considered as acceptable. The promise is that Crystal will indeed show ads that have been approved by the members of the organization, based on several criterias. 

From now on, I think this is a good trade of between cleaning big websites, which are imposing a shitload of ads (but also rely on subscriptions) and supporting indies (who don’t offer subscription for the most part). I encourage you to read more about Crystal’s initiative.

→ The Guardian

All Credit To Them

On consumer lending :

The most creditworthy customers, it turns out, are the least keen to splurge when extra credit is offered. For every dollar their credit limits increase, they boost their borrowing by $0.23. Even that is an exaggeration: by further digging through the data, the researchers establish that the borrowers with the best credit records are only shifting their borrowing from card to card to take advantage of improved terms—not borrowing any more in aggregate. At the other end of the scale, those with the muckiest credit histories borrow an extra $0.58 for every $1 hike in their credit limit.

But that is not the whole story. The researchers then take a bank’s perspective, and ask to whom it makes most sense to lend. Boosting credit limits draws in extra interest payments and charges, but there are costs too. If it is mainly the highest-risk borrowers who take advantage of higher limits, or if the higher limits encourage more reckless borrowing in general, then default rates will climb, eating away at profit margins.

→ The Economist

Is It Time To Get Serious About Electric Cars ?

Following VW’ scandal, here is Jean-Louis Gassée on a necessary transition :

Filling up the cars as described represents 1.3 terawatts pulsing through the grid to the electric filling stations. The Syracuse University page pegs the entire US electric supply at about 1 terawatt. Again, I’m not vouching for exact numbers, just the orders of magnitude. Now, add an uncomfortable twist to those numbers: Transmission loss in the electric grid is more than 7%; compare this to the less than .1% for the transportation and evaporation of gasoline.

The result is that we have more than just the science problem of replacing gasoline with electric energy storage. We also face an infrastructure challenge to, first, generate the electricity and, second, transport it to the filling stations at home or on roadsides. It will take a very long time, huge amounts of money, and interesting politics to solve these two problems. And, while I’m not a diehard GM fan, it should (but won’t) kill the “General Motors killed the electric car” myth.

→ Monday Note

Brad Katsuyama’s Next Chapter

 
In the summer of 2014, Puzz had another puzzle to solve. From March to July, the frequency with which an IEX customer could have gotten a better price less than 10 milliseconds after a trade posted rose from about 3 percent to as much as 10 percent. This wasn’t meant to happen. IEX was supposed to protect investors from what’s known as stale quote arbitrage; that’s when a high-frequency trader takes advantage of milliseconds-long delays in how markets update prices to reflect movements on other exchanges. These tiny delays allow high-speed traders to see a price fluctuation on one exchange and then quickly send an order to another market—often a dark pool—that it knows updates its prices more slowly, hoping to pick off the orders resting there at stale prices. It’s a bit like betting on yesterday’s horse race against someone who doesn’t know the result.

IEX prevents stale quote arbitrage with its “magic shoe box,” a metal container in its data center in Weehawken, New Jersey. Crammed into it are 38 miles (61 kilometers) of coiled fiber-optic wire, creating IEX’s speed bump of 350 microseconds (about one one-thousandth of the time it takes to blink). The idea of countering super-fast traders by creating a slower market might seem like a paradox. It’s not. IEX uses the same high-speed data feeds as HFT firms do to monitor other exchanges for price changes. But because IEX didn’t want to be in a technological arms race with the high-frequency traders to process this information faster than they do, it uses the speed bump to slow down all new orders—just enough to ensure IEX has time to update its prices to reflect any movements on public exchanges. This prevents orders on IEX from being traded against at stale prices.

So how, Aisen wondered, could HFT firms be picking off IEX orders despite the magic shoe box? It didn’t take Puzz long to solve the riddle. He discovered that some HFT algorithms could predict price changes—like surfers sitting out past the break, scanning the swell for their next ride—and target orders before the magic shoe box’s speed bump could protect them.

→ Bloomberg

Projecting the Ad Revenue Effect of iOS 9 Content Blocking

The effect of the iOS content blocker. Worst case scenario is an 11% decrease in revenue :

We invented a hypothetical mid-size publisher based in the United States and reliant on exchange banner ads, using private data from a variety of sources and industry data reviewed in the report, including adoption models that predict equal or greater adoption compared to desktop ad blockers.


Eight months from now, our hypothetical publisher could see a 3.7% drop in ad revenue. With astronomical content blocker adoption (3x desktop rates) driven by App Store visibility and media coverage, that number could be as high as 11%. A potentially severe setback for businesses with thin margins.

And Ben Ilfeld to predict :

A trend toward native advertising will accelerate.

But I couldn’t disagree with Ben Brooks’ position on native ads. For the most part, ads feel impersonal and unrelated to the website bearing them, as they are supposed to be tailored to the reader by Google’s algorithms. On the other side, native ads are selected and delivered by the publisher himself (here, the website or blog) based on its perceived relevance to the reader. The issue is that the reader might sense a conflict of interest or being fooled by the publisher if the product or service doesn’t delivers what is promised by the trusted pen or voice of the publisher, putting himself at unnecessary risk. 

And if [John Gruber] does accept the [Apple] ad, even knowing that the has more than a decade of history for being objective about Apple — how does a reader look at Gruber’s praise of Apple now? It’s potentially devastating for the writers authenticity, and for reader trust. The entire system could crumble. Even though it seems like a logical sponsor for his site.

→ 10up