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Adgate in France: Free (ISP) vs Google, Business World vs Net Neutrality
Posted on January 4th 2013
It might appear pretty amazing for non-French readers, but Free - one of the most important internet providers in France - is now blocking ads to subscribers thanks to an opt-out system. To change it, users need to change their router's settings themselves - something not really easy for any customer. It might sound like another French whim, but it could potentially be the beginning of a strong bomb, challenging the current digital business, at least in France. 5 million users who are not generating CPM or CTR per se are not random.
There's a current bone of contention between Free vs Google because of the growing video consumption in France; roughly, Free would like that Google pays for cables in order to support the massive amount of data coming from YouTube. In the meantime, Free is supposed to allegedly downgrade YouTube traffic, potentially violating net neutrality.
But that's not the most interesting part of the story - sorry Libertarian freaks - as it's all about big money. For one of the very first times in France, a major stakeholder of digital industry and culture (Free has always been provocative and aggressive vs other ISPs, undercutting competition through cheaper -and better offers) is clearly saying that there might be other routes than advertising to generate money online. It might be potentially true: when you look at how online media generate revenue (except when you're one - very - big player) you don't have enough critical mass of readers or viewers to earn enough money. Google, on its side, has managed to create some dependency with niche media, specialized in very specific topics. If you don't enter the Google ad value chain, you can't really live.
The reactions in France illustrate our unbalanced and unfair internet world: specialized publishers accuse Free to leave them behind and to dismantle Net Neutrality (how funny to invoke Net Neutrality when your ads don't work anymore on your pages...); some other observers say that adblock systems are not new so as it doesn't matter if an ISP blocks ads (how arrogant they are versus John Q. Public digital literacy...); finally, other activists are glad to attack the giant Google (but we're all happy to play with Gmail right?).
There are some expected scenari which can be imagined after this fight:
- Free owns an interesting mass of customers; it can be possible to maintain to a certain extent this ad-block policy; Xavier Niel (the boss of Free) has been investing in diverse media and content producers during the last few years; we can imagine that Free establishes a sort of "Free-approved sites" (which would be allowed to diffuse advertising for...free) vs paying or shared revenue options (ie: a site pays or allocates a part of revenue to Free for letting their customers be targeted by ad networks). It might be utterly complicated for DSL / home solutions, but if we think long-term, it might be - very - easy to implement for mobile internet offers, in terms of business solutions. A drastic change for publishers...and another move to a closed-system (thank you Apple).
- It might just be a call-to-revolt for other ISPs to challenge Google hegemony. In Europe, every country tries to make Google pay more taxes. It's interesting to see the debate on where the real value of internet lies: in cables? in contents? in users?
- Free thinks that the the current main digital business models for publishers are dead; after all, most of the money is now present not in the "front" experience of websites but in what happens in the "back". And that's where the money is not generated yet in France. It might be a way to accelerate the adoption of new monetization platforms
At the end, I'm not sure that we customers are going to find a real value at this stage. It's a war. And there cannot be a net neutrality if the diverse internet stakeholders aren't equal. Which is paradoxical: Net Neutrality, which was supposed to be an internet condition sine qua non now seems to become a future objective. I sometimes miss early 2000s.