More than 20 years ago, a buzzy startup called AllAdvantage was gearing up to float on the stock exchange. Backed by tens of millions in venture capital (from SoftBank among others), it paid ordinary people to surf the web, offering $5-20 a month to put up with an extra ad bar while browsing.
Funded by advertisers looking for eyeballs, people were offered even more money when they recommended friends, leading some to earn upwards of $1,000 a month from the company.
But AllAdvantage’s plans for an initial public offering soon turned sour when the dotcom bubble burst. With it, the company folded and the idea of being “paid to surf” went out of fashion.
Today, however, the business model is being given a new lease of life by a number of new tech startups. One of them is UK-based startup Gener8, founded last year, which has created a browser extension that tailors the ad displays that people see and pays them in vouchers for the privilege.
After downloading the extension, users are asked to provide some data on themselves and their interests, such as whether they like fashion. From there, they are paid in tokens, which can be converted into vouchers, products or donations to charity.
“We only want to show you what you’re interested in,” said Gener8 chief executive Sam Jones. All people have to do is put up with a limited selection of ads based on their stated preferences, and they receive tokens worth the equivalent of £5-25 a month. This figure will go up over time, according to Jones, after he brings on more advertising partners.
Gener8 funds its payments to users via partnerships with advertisers, who in turn can use the data provided to target customers with ads relevant to them.
Just like AllAdvantage, Gener8’s model is centred around getting its users to bring friends onboard — users can cash in their tokens only if they recommend two friends.
As it stands, the startup has 67,000 UK users, but this is growing by around 10-15,000 each month, according to Jones. The startup already has over a million pounds in funding from angels but is gearing up for a much bigger raise.
Gener8 is not the only company that is rewarding people to browse the web. In the US, a search engine called Brave has recently started offering people the option to earn crypto-tokens called Basic Attention Tokens (BATs) in exchange for allowing ads.
Its users are paid BATs worth 70% of all revenue earned from the ads, which amounts to around $5 a month. As it stands, BATs can’t be exchanged for cash, but the company says that this will change at some point soon.
While Gener8’s ads take the form of banner ads, Brave’s ads appear as desktop notifications that pop up at the corner of the screen, like email alerts.
Both startups are tapping into a broader sense of frustration over the hold that the big tech companies have over revenue streams based on people’s personal data, with campaigners and regulators alike arguing that the status quo doesn’t give people enough say over how their data is used.
A recent report by the UK’s Competition and Markets Authority, for instance, said: “In a well-functioning market, consumers might be paid for their engagement online, or offered a choice over the amount of data they provide.”
This time it’s different
While AllAdvantage crashed, the hope for startups like Brave and Gener8 is that its demise was simply a case of bad timing, rather than a flaw in the model itself (when the dotcom bubble burst it hit advertising revenue extremely hard).
But the big difference this time around is a newfound emphasis on privacy, with both startups pitching themselves as a way to give people ownership of their data online.
“For us, it’s about putting the power back in the hands of people,” said Jones, who explained that he was inspired to create the startup after seeing first hand the “dark, shady” ways that people’s personal data is used by advertisers, having previously worked in marketing.
“As people become more aware that their data is inherently valuable, they will want to have more control or they want to be able to make money from it,” he said.
But arguably the focus on privacy comes at a cost. According to Can Cetinyilmaz, a researcher at Enders Analysis, AllAdvantage’s disregard for people’s data privacy may have been precisely what made it a viable business model.
“AllAdvantage was actually the precursor to spyware and adware… Its plug-in would just track everything you did.” This created a rich pool of data on its users, which advertisers could tap into for targeted marketing — all this at a time when the idea of advertisers tracking people’s movements online was relatively new.
“That was AllAdvantage’s advantage, if you will, that they brought something extra,” said Cetinyilmaz.
According to Cetinyilmaz, this is where Gener8 could fall down. Given it only has access to a select few data points on each person, advertisers may see little incentive to partner with them.
Adding to this problem is the fact that advertisers need to create a large number of impressions to make it worth their while. By offering access to just a few tens of thousands of users, or even a few hundreds of thousands of users, Gener8 will struggle to get the attention of advertisers, said Cetinyilmaz.
“For advertisers, [partnering with Gener8] is just not the most efficient way of reaching a large number of people,” said Cetinyilmaz. “If you have scale, that’s different, but they don’t have scale.”
But Jones is hoping that the promise of free money and improved online privacy will win people over in their droves. He says the current goal is to reach a million UK users, and from there he hopes to move abroad too.
Taking on Google
Another possible stumbling block is Google, which may not be happy to see another company sucking up its ad revenue. In its current iteration, Gener8 works as a plug-in hosted via Chrome, giving Google the power to take it down at any time.
For now, the tech giant may be happy to host the plug-in (indeed, Jones says the startup has a “great relationship” with Google). But it currently only has a few thousand users and this amicable relationship may change if the company actually starts attracting millions of users.
“Changing the status quo is disruptive,” said Jones, who agrees that if the business succeeds it could “ruffle the feathers” of the big tech companies. The question is whether the idea in its current format has enough fire-power to change the status quo.