Notebookcheck

The Prodigious Dream: Free Internet without Ads

The reason why Notebookcheck has ads, and the alternatives the media industry is currently considering.

 

For the original German article, see here.

Reviews are written quickly

Notebookcheck authors know how much work they put into their articles. Junk can't be published under this logo.

Readers generally associate the name Notebookcheck with laptop reviews and the like. It is truly about quality and popular content, but the production of this content is complex. Many believe that manufacturers and shops pour products for review right into our lap, which certainly would be sensible, seeing as they profit greatly from our reviews. Nevertheless, finding and organizing opportunities to borrow products is laborious.

Once we have the device we have to do all sorts of extensive measurements, then text (about 4,000 words per review) and photos are produced and uploaded to the Content Management System. After that, the content needs to be edited, and finally distributed for translation. It takes about 30 hours of work for each text released in two languages. Some reviews are released in up to 11 languages, all of which are accessible online at Notebookcheck. Since the authors are paid per assignment, there is no reason for them to dawdle -- it simply takes that much time to do the work. Currently about 40 reviews and related articles are released per month, but there is also all sorts of other editorial content. The website also has to be maintained -- the webmaster of an online magazine updated on a daily basis constantly has work to do. Income has to be put in order. Even if we use external marketers, we still have to rack our brains all the time over ad space, campaigns, costs per thousand visits, click rates, etc. Notebookcheck is not spared from unavoidable bureaucratic overhead, accounting must be done and absurd legal regulations of all kinds must be satisfied. The more people work for the company, the more extensive management becomes. Finally, the whole editorial staff has to be coordinated in many different ways. No one knows exactly how many people are working on the website at once, but there are regularly over 40. In short, tens of thousands of hours of work per year go into what you see on Notebookcheck.

Money can't buy happiness

No, that's not company headquarters.

Many bloggers and website operators have so much fun posting that they don't even think about the commercial aspects of Internet magazines. Notebookcheck's three founders also started the site as a side activity in their free time -- in the first year there was hardly any money in it. In the second year, too, none of them could live off their earnings from the site. In the US, founders of IT companies use something they call the "Ramen profitability level" to measure a company's level of success: When a company can provide the funds necessary to feed its employees with the Japanese Instant Ramen Noodles then it has become "Ramen profitable." Most blogs, forums and other websites never reach this level. Operators of smaller IT sites are geeks, often students, who use their free time to publish interesting information on the Internet. When these people start families or get otherwise involved, time runs short. Without a financial perspective, most sites simply disappear. The number of people who want to work for free over long periods of time is understandably very small. In short, our writers and translators want to be paid.

How much money is reasonable for employees to be earning per hour: 10, 20, 30 Euros (~$13, $26, $39), or more? Everyone may determine their own answer to that question and then multiply it by thousands of hours of work. That is then Notebookcheck's yearly service expenses and the numbers are in the six-digit range. Are we especially lavish? No, similarly sized online branches of magazine publishers usually burn yearly expenses in the seven-digit range, because publishers from the golden era of print are used to very different company structures. For instance, unlike many print publishers, Notebookcheck does not have a single office property.

What do you do with mountains of money?

No, those aren't Notebookcheck profits either.

Some will now think when media companies earn more money they probably spend it on rubbish like dizzying manager salaries. What do I care about a new luxury company car for Notebookcheck? My car is a 12-year-old Twingo; my brother even remarked that his lawnmower has more PS. Usually I prefer to use my 20-year-old bike, which thieves have twice left behind out of pity...

In the last few years, we have spent more of our growing income on new content -- for instance, we now publish many more reviews than before, and they are much more elaborate than they were in our humble beginnings. On the other hand, we would have to reduce the amount of new editorial content if our earnings were to sink long-term.

Objective reporting and money - fire and water

Entrepreneurs swim in money, that's a common public misconception.

The German consumer's magazine Stiftung Warentest requires a subscription and thus completely dispenses with advertisements, emphasizing that they can only ensure total independence by imposing that subscription cost. We don't offer this radical approach, currently we are financed exclusively through advertisements, but we only tolerate ads that can be clearly recognized as ads by any lucid reader. Time and again individual readers accuse us of allowing manufacturers to pay us to give them good ratings in our reviews. Grotesquely, these accusations often concern a large, very well-known US manufacturer, who has never advertised on our site in any sort of appreciable way. Let me emphasize that we never accept any kind of contribution from manufacturers or shops for the content of our articles. With great concern, we observe that the lines between content and ads are becoming blurred by many other media sources.

It worries me even more that a large number of Internet users cannot discern the objectives of other informational sites. How objective is a corporate blog, for instance a notebook review, published by a notebook retailer? How believable is the report of an excited customer's experience? We are partly talking about consumers who buy a new notebook every 1-2 years without being able to take their own measurements and who have not held all sorts of comparable current devices in their hands. However, we are also partly talking about anonymous writers who, disturbingly, often are actually retailers of the same or similar products, or who have been motivated by retailers to write about their "customer experience". I am especially "happy" to hear that other media sites have recently started to request readers to contribute reports of their experiences, which are then given to an advertising customer to select for publishing. We all know those are not critical reviews. Notebookcheck has ad banners, which admittedly are annoying, but that is our clearly defined, identifiable source of finance. Allowing advertising customers to influence the content of our editorial articles would not be tolerated, nor will it ever be.

Where the problem now lies

Well-paid large-format ads on ever-smaller cellphone displays -- people are trying especially hard to block ads.

Currently Notebookcheck has no financial problems. Quite the opposite, the last few years our finances have steadily risen -- in the range of percentages in the double digits each year. Nevertheless we are watching the media landscape, and there we see dark clouds brewing across the whole Western world; clouds that are hardly recognized by the public.

Companies pine for the 80s and 90s. An advertiser paid for a spot in a newspaper or a TV commercial so that consumers would see the ad. The profitability of an ad could only be estimated indirectly. For print media and television that has not changed, though each year print media are losing consumers who favor the Internet. Many people responsible for marketing long for the simple world of newspaper advertisements. The number of editions and the size of the ad were considered, then voilà you had the price. The number of print publications was also easy enough to grasp. Usually advertisers knew their points of contact well. But the Internet is a gigantic behemoth with innumerable technical options for the optimization of advertisements.

Over time, a bad habit has snuck into relationships between advertisers and website managers. In Internet advertising, the advertising customer only wants to pay after they have looked at how often their link is clicked, or how often a customer lands on their website and consequently buys their product. In print media or television that is simply not possible. These new options to evaluate the relevance of an online ad are fundamentally positive, but the problem lies in the fact that advertisers are motivated to blur the lines between ads and content, and advertising effectiveness is completely ignored. Since ads are rarely clicked, the prices of ads have steadily dropped. Companies have released numbers indicating that advertisers pay in the range of 7(!) times less for the same breadth of customers reached online vs. through printed newspapers and magazines. Whereas before people only held papers in their hands, now they consume news in the same volume on the computer. However, advertising expenses have not followed those factors. Advertising customers don't keep their advertising budgets the same for print and online expenses, so they reduce the price they're willing to pay for Internet ads. But that's not the only problem.

Making bothersome ads invisible -- a customer-friendly concept

To advertise for a big mac on a notebook site is probably going to be an epic fail. Unfortunately it's not completely avoidable from the side of the site operator.

Years ago, an advertising specialist tried to convince me that certain studies showed web surfers considered ads (especially the marketer's own ads) an enrichment of their Internet experience. In reality, advertising has always been unpopular with consumers. People do not want to see ads and certainly do not want to click on them. Only one out of 100 or 1000 promotional ads on the Internet is clicked. It is more and more common now that web surfers simply run software to make ads invisible. One provider of such software said in an interview that only obtrusive ads would be blocked. I have yet to see a website on which ad-eliminating software performs its job as thoroughly as it can. In the interview, the provider said that they had a list of website operators who followed certain guidelines for customer-friendly ads, and after an application process the operators' ads could be spared. How convenient it is for the ad-blocker providers that big companies have to pay to get on this list.  Ad-blockers are made a further nuisance for site owners as there are literally dozens of ad-blocking software for owners to consider. There was a virus scanner preinstalled on my laptop, and I installed another on top of it. Both block ads without being asked. I didn't know a thing about it, it was probably mentioned in tiny print in the "Terms and Conditions" text that no human being actually reads. When I tried to shut off this function, my virus scanner repeatedly urged me to refrain from following through with my intended purpose, claiming that my computer's security would be endangered by these ads.

Let's not ignore what may be a common occurrence -- if ad-blocking is preinstalled, very few people deactivate it; according to the aforementioned interview the number is around 1%. One Internet provider in France went a step further. All customers who gained access to the Internet through this provider would have all Internet ads blocked automatically. The French media cried out and in the end, the French government "convinced" the provider to take a step backwards, even though the provider had done nothing illegal. This clarifies for us the possible scope of effective ad-blocking systems. On IT sites especially, where technically savvy readers are browsing, the quota for blocked ads comes to 25% or sometimes up to 50%. Those who use ad-blockers on a site financed by ads are freeloaders -- they utilize the service without any kind of payment in return. In regards to the use of ad-blockers on such a site, the act can be compared with fare dodging in public transportation or dining-and-dashing at a restaurant. The only difference is that the Internet surfer cannot be legally obligated to click on advertisements.

There's no advertising in paradise

Formerly valuable websites simply don't exist anymore if they can't be financed.

It's true that the Bible doesn't tell us that the snake used a billboard to convince Adam and Eve to eat the apple. But if one were to dare to call the Internet paradise, what would happen to this Internet paradise without ads and without a financial replacement for ads? I believe most Internet users underestimate the tremor this would cause. If advertisements in the broader sense (so price comparisons included, for instance) were completely abolished without a replacement, innumerable business models would cease to function and websites would disappear in rapid succession. That includes all publishing media, all blogs that entertain the hopes of earning money, search engines, price comparison sites, social media, YouTube, even Internet mail providers.

What would still work? Websites that serve as digital business cards for companies or private individuals, and online stores. Unfortunately, those stores would be hard to find without advertisements, and there would not be any search engines to fall back on, since they also live off of ads. Simple, self-explanatory domain names would become extremely important, since stores and private sites could only be reached via domain names or bookmarks. There would also still be informational sites, run on the one hand by government agencies and on the other by businesses wanting to attract visitors, like tax advisers, lawyers, doctors, etc. But there can be no doubt: Without advertisements and without an alternative model to finance websites the Internet would become a wasteland. Independent high-quality journalism, as we now know it, would shrink to a minimum. And that would provoke even sluggish governments to action.

Alternative financing on the Internet, evil prospers

The notorious paywall - some say it's not popular with readers. How can that be?

Cumbersome words like "Paywall" and "ancillary copyright," also called "Lex Google" by those opposed, are wandering like ghosts around the Internet.

The German Institute for Public Opinion (das Institut für Demoskopie) recently published a survey in which 5% of all Internet users said they would be willing to pay for news on the Internet. Taking the "the glass is half empty" approach, we can deduce that 95% are not willing. I do not think we really need a survey to discover the answer to that question; moreover, a verbal agreement with the concept of paying for Internet without any real commitment is very different from the prospect of constantly watching funds pulled out of your credit card. Informed surfers would be able to get around imperfect paywalls easily. If paywalls were effective, many people who were not ready to pay for Internet would simply disappear from the service, greatly reducing the scope of users. Moreover, those willing to pay for the medium certainly would not want to be bothered by ads galore. One question is whether Paywall could compensate for the finances lost due to the disappearance of advertisements. Most people doubt it could, but publishing houses are currently practicing calculated optimism, which sounds like a motivating slogan. Supposedly, successful examples are mentioned. In the German controversy there is talk about Stiftung Warentest (a consumer magazine), which has been using a restrictive paywall on their website for years. The magazine has released extensive circulation and economic data. The circulation of their printed material has sunk 3.5% from 2010 to 2011, but their online paywall revenue has risen by 8%. That sounds like things are going uphill, but there is an important catch. Print revenue is 15% higher than online revenue, which means the increased paywall revenue cannot compensate for the losses in the print arena. If I were to guess at how much Stiftung Warentest could currently be earning with advertisements, I have no doubt whatsoever that test.de could earn more with ads.

So, Internet surfer, the central question: If you had to pick between ads and a subscription charge for Internet, which is the lesser evil? Those who choose ads should accept them and give them due respect.

Call the cavalry, the legislators

This is what the devil looks like for some executives of publishing companies. Envy is often the director of drama.

Somehow the publishing houses don't seem to believe in the continued success of online ads nor paywalls, so they have worked out something called an ancillary copyright. There are concise and understandable explanations as to what that is. But if the explanation seems simple, something's wrong, because different players understand ancillary copyright to be different things.

The fundamental argument is that copyright and media law should be reformed, above all to adapt to the Internet. Copyright law is especially unclear in some areas, for example, whose rights should be protected and to what extent. Here publishers and authors are better protected. Possibly even simultaneously. I've never come across anyone who's railed against this. But in the same way that a computer virus latches on to a program to make its way on to another computer, so are the legislators supposed to create a new, more explicit formulation of citation rights to piggyback on a copyright protection law. Now, the computer virus metaphor is a very negative one, and I don't want to express my opinion quite so negatively -- it is true that more explicit laws regarding citation (i.e. what can be quoted in what context, how long the quote can be, etc.) would indeed be useful for copyright protection. So powerful German publishers sent lobbyists to their government to assert their interests, which brought an actual legislative proposal into German parliament. Those who never heard about it don't need to feel ashamed -- the whole thing was very discreet and unusually quick. But the publisher's interests were not so much the improvement of legal security, their interests were rather money-related.

Specifically, the Internet giant Google was targeted. Google developed a very successful business model for the Internet over the years, but the publishing companies hadn't. Google links editorial contributions together with cited text and thus brings visitors to the publishers. In this way Google uses visitors as monetary tender by means of advertisements. Due to their gigantic scope of visitors the ad concept works for Google too. This means publishers and Google are in a sort of symbiotic relationship, though things are going more and more poorly for one side. For this reason the publishers want Google to pay them within the framework of ancillary copyright to even out the balance of power. The key here is citation rights. The publishers argue that Google quotes too much text, deterring web surfers from even visiting their sites. Officially, it's not all about Google: Anyone who cites too much text and earns money doing so should have to pay for a license. The argument has zeroed in on Google News, where Google doesn't even display ads. So far I haven't figured out where the publishers want the legal boundary line for Google's conventional search results to be drawn. Supposedly Google includes more text on their Google News page. I pulled up a few samples to test this theory. Not including the caption, I found that Google used about 135 characters on Google News and 125 in their Google search results. If Google were to shorten their citations by a few characters on Google News, how could you legally treat Google News and Google search results differently?

War of the worlds

If lawyers are called to help on the Internet, it's an equation of unknowns. Often enough the variable turns out to be an expensive wave of lawsuits.

Google defends itself for example with the argument that every website operator is able to put themselves on a list to prevent Google from accessing their site. But the publishers are fully aware of the benefit they gain from Google's links; yet Google should pay. Google could just throw media sites off of their search hit lists, but the publishers are gambling with the EU competition law. On the basis of Google's power position -- after years of legal proceedings -- this could work out for the publishers.

But if Google loses the antitrust suit, how can Google be stopped from just moving the media sites to lower positions so they are not seen as much? To stop that Google would have to disclose their constantly changing algorithms to the authorities. These algorithms are worth billions -- whether cynic or realist, we have to assume that there would be leaks from the authorities.

While the general public hardly received any details about the cumbersome special material that only lawmakers can truly understand, a downright war between the media began to rage. The war on the front lines was above all between online media and print publishers. The online media side was angered because politics tried to have it simple and squirm like an eel in the mud between the front lines. The government admitted that draft bills involved diverse ambiguities that jurisdiction needs to clear up. In plain language that just means waves of lawsuits.

Outside of Germany the media war is raging just as heavily. The Irish publishing association triggered international astonishment when they sent a charitable organization a four-digit bill because the charity linked to their publishing content a few times. The emphasis was on "linked," there wasn't even any cited text, unlike Google. The Irish paddled backwards after that, but I have some questions. Do those responsible for the Irish publishing association know how the Internet works? Do they even want Internet, or do they long for the pre-Internet era? PR action? Then it ended with a foreseeable slap in the face.

In France and Belgium there was an agreement between Google and the publishing companies. In France Google is investing 60 million in a fund to support digital projects. As far as anyone knows, the only applications have been from print publishers. An "independent commission" decides who wins, made up of Google associates, government representatives (though the politicians are dependent on the goodwill of the publishing companies), as well as representatives from publishers. Again, publishers bring forth proposals and publishers decide on the proposals... The precise details of the deal are not disclosed.

In Belgium there was an agreement, but the exact details of that agreement haven't been made public either. When big media companies cooperate and smaller media don't know anything about it (hundreds of bloggers and other site operators weren't sitting at the negotiation table), then somehow I have a suspicion that the concerns of big publishers get the better end of the deal. That would make sense for Google too -- make the dangerous opposition happy, and you can ignore the weaker adversaries.

In Germany there has yet to be an agreement; the publishers emphasize that the French and Belgian agreements aren't applicable to the situation in Germany. If there isn't a ceasefire, it might come to what happened in Brazil. Google banished the publishers. That's by no means optimal for the Internet users either -- in reality it's not good for anyone. But as is almost always true in war, there are many losers.

A full bottle feeds a hungry child

Not only hard drives, but also all sorts of other electronic devices are now raised over their delivery price. The customer doesn't notice, because the price doesn't show how much the merchant is giving to the collecting societies. Of course the societies are trying hard to raise the prices further and further without anyone noticing.

That child is the collecting society, called the VG Wort in Germany. It collects money and distributes it to authors and publishers. Or so goes the theory. This collecting society already exists and it already has money. In reality, Notebookcheck editors and even the Notebookcheck company could get money from the VG Wort. We're trying to do that right now, but the first signs are anything but encouraging. The child is flailing its fists at bureaucracy. The cost of getting to the money seems not to be very related to the usefulness of the society. Typically enough, I heard from a VG Wort employee that the bureaucratic cost is too high for Notebookcheck's claim to be viable. Other media and experienced authors have also had substantial problems trying to get money from VG Wort. Whether the bonanza reaches its targeted audience remains to be seen. Where else the money is trickling away is not a topic I want to speculate over.

The bottle is either Google (as I outlined) or, as is already the case, the consumer. Like in the music industry, buyers of storage media for various devices pay a contribution that flows to collecting societies. If Google, paywalls and online ads weren't sufficient, the club would then hammer taxpayers -- of that I'm pretty certain. Publishers still have power and influence, and that's the only way to stop Internet users from defending themselves.

To cut a long story short

Internet users still have the chance to choose the lesser evil. I personally recommend ad banners -- any other alternatives smell like chaos to me. Those who don't appreciate advertisements at all or even use ad blockers to eliminate them are free riders, and they're conjuring up all sorts of evil.

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Short and sweet

Well-crafted editorial content takes a lot of work -- our hundreds of Notebookcheck reviews take about 30 hours of work per article. Together with other unavoidable expenses, Notebookcheck's expenditures are in the six-digit range each year. Higher revenue in the past has enabled us to continue adding more popular content.

Creating website content that web surfers enjoy is definitely hard work.

 

Notebookcheck doesn't accept any kind of contributions from manufacturers or stores for our editorial content. Ads have to be clearly distinguishable from content, otherwise our credibility is diminished. Because we take this view, many alternatives to standard ad banners simply don't come into consideration for us.

 

Although Notebookcheck currently doesn't have any financial problems, we keep a watchful eye on various current developments in media-related financing. Many media companies complain about sinking click-rates, the forward-march of ad-blockers and the steady fall of prices for standard ads. Publishing corporations are asking more and more frequently if ads will continue to be enough to finance a company's expenditures.

 

This sign on a gray background often appears instead of an ad. Is this the solution to the problem of annoying ads?

 

Without ads or an alternative financing model, the Internet would turn into a desert. The populous underestimates the grand-scale effect that would have on websites -- countless sites would go extinct. Options like paywalls and performance rights or making search engines pay are very controversial and their effects are questionable, especially for smaller media companies.

 

This is how the Internet could look if ads and alternative financing models disappear.

 

It lies in the hands (well, the mouse-hands) of Internet users whether media content like reviews will continue to be available free-of-charge, or whether more Internet content will have to be paid for by subscription. Notebookcheck will resist making users pay as long as possible. In the long-term, ignoring or removing ads with the use of ad-blockers could endanger the continued generation of high-quality content on the Internet.

 

Above all it's in the hands of Internet users how websites will look in the future.

Photos

The following images are taken from Flickr:
Desert picture by Moyan Brenn
Gold bars by Covilha
Bundles of money by Cooperweb

Other image material:
Treasure vault by brandls.info

> Notebook / Laptop Reviews and News > Reviews > Archive of our own reviews > The Prodigious Dream: Free Internet without Ads
Author: Stefan Hinum, 2013-03- 4 (Update: 2013-03- 7)