Sourcepoint closes $16m funding round, preps payment solution for publishers

Sourcepoint will use the funds to scale its footprint and payment technologies

Sourcepoint, a company that positions itself as a solution for publishers to help ease the ever-growing problem of adblocking has announced a $16m investment round as it prepares the roll out of an online payment solution that means publishers can limit the amount of ads they serve but still generate revenue.

The Series B funding is led by new investor Northzone, with support from existing investors, including Spark Capital, Foundry Group, Accel Partners, and Greycroft Partners, and brings its total investment to $26m since its launch in 2015.

Pär-Jörgen Pärson, general partner at Northzone led the investment and will also join Sourcepoint’s board of directors as a result of the move, noting that he was enthused by the outfit’s ambitions to popularize premium subscriptions online.

​Pärson, also holds a role in a similar capacity at online music streaming service Spotify, with Sourcepoint regularly voicing its ambition to become “the Spotify for digital content”, by creating a “cross-publisher subscription service”.

“We are particularly excited about their work in creating subscription offerings for the digital content environment as it is no longer assumed that audiences must pay for content with their eyeballs by viewing ads,” he said.

Led by ex-AdMeld duo Ben Barokas (chief executive) and Brian Kane (chief operating officer) Sourcepoint works with publishers including Dennis Publishing and AOL to identifiy monetization challenges – including the use of adblockers – and then suggests offering audiences a “compensation choice”.

Barokas said the funding round would be used to scale the company’s growth – in particular it hopes to build its European footprint outside of its New York City base – and added that with the onset of the European Union’s General Data Protection Regulations (GDPR) that “data compliance, open communications, and transparency are top of mind for publishers”.

He added: “This second round of funding is critical to Sourcepoint’s next phase of growth; as the industry moves from compensation awareness – brought about in part by the increasing understanding of ad block usage – to compensation consent, our aim is to deliver the best compensation experience for publishers and consumers.”

Utilizing the investment, Sourcepoint plans to accelerate future product development – building on 2016’s Dialogue launch – improving and increasing the variety of communications options and funding mechanisms publishers can access to ensure consumers can select methods that suit their unique needs and preferences.

Speaking earlier with The Drum, Sourcepoint’s Kane spoke about the company’s ambition for the online payments system as well as the philosophy behind it, specifically that: “we view adblocking as a symptom, not necessarily the problem.”

Below are edited highlights of the conversation:

‘Keeping the internet free’ came with it an untold cost

“The problem is that really when you go back to the early days of online advertising, companies always came in and talked about their mission of ‘keeping the internet free’, and enabled content consumption, as well as enabled content creators to get paid,” he says.

“However, through the years, publishers did not do a great job of communicating that to consumers, and over time as publishers became more reliant upon online ads to fund their content creation efforts, and they became more aggressive with their advertising, and the easily accessible programmatic ad dollars that came in after 2008/09 led publishers to take some of that incremental revenue, and make sure that each and every page view is monetized.”

‘Over-aggressive ad experiences’?

“As a consumer, if you’re faced with that very aggressive ad experience, and then you have this [adblocking] tool that allows you to very easily create a very different browsing experience [without being aware of the value exchange] then it’s very easy to see how some consumers are going to give it a shot,” adds Kane.

“So once the over-aggressive ad experiences of publishers have gone away, then it’s easy to see why consumers would give it a shot, and one of the things that we do is create a dialogue product to give publishers the tools to reconnect with consumers, by helping them to explain to a consumer the value exchange. And that content has to be paid for. If we can give publishers the option on how to do it, such as the option of whitelisting a website from their adblockers, or to telling them they can opt to see a number of ads [from a more targeted group of advertisers], and we do think that down the road there will be additional payment options.

“This is where a payment option will be on the table for publishers that work with Sourcepoint.

This will give publishers the ability to offer consumers subscription payments – be it for a singe website, or a cohort of digital publishers that could participate in that sort of offering – the dialogue framework that’s used for those sorts of choices to consumers.”

Payment option roadmap via way of Sourcepoint’s soon-to-launch ‘content pass’

He goes on to add: “We’re rolling out the dialogue product today and any publisher that already has their own subscription offering available, we enable them to offer that as part of the dialogue with a consumer. If you think about premium publishers – be they the New York Times, or a publication like that – they can also offer that in this choice moment [ie when a user is served with a message explaining its business model and the benefits to readers].

However, Sourcepoint is the the final phase of introducing an additional string to its bow, with a paid-for content option that publishers can use, although the publisher-compensation outfit’s view that the prevailing ‘paywall model’ is broken may pose publishers with some serious questions as to how to take their businesses.

Timings and philosophy behind Sourcepoint 'content pass'

The next step Sourcepoint is working on is a multi-publisher subscription offering, which they call Content Pass, which enables publishers the ability to offer their consumers to offer opt-in to an ad-free, or ad-lite experience, that gives them not just the ability to subscribe their own content, but to other publishers’ content as well.

"Ultimately, when we look at the subscription space, we think that the value proposition to a consumer is not there these days when a publisher has to pay to a subscribe to a single site," says Kane.

"We think that much like when you type into music, in the case of Spotify, to video content in the case of Netflix, we think that the winning strategy here is to bring together publishers of multiple titles, and then offer them cross-publisher subscription that allows the consumer to pay a single fee to get access to multiple titles."

Similarities to AdBlock Plus’ Flattr?

Those following the adblocking debate with any degree of granularity over the past 18 months would be forgiven for thinking that this sounds similar to the paid-for content option discussed earlier in the year by none other than Adblock Plus-owner Eyeo itself.

Kane goes on to add his take on the comparison: “Conceptually, the idea of a publisher participating in a subscription-orientated business with the same party that is causing the need for the subscription business is particularly problematic. I’m not going to be judgmental, and it has prompted us as an ecosystem to focus on things that make the consumer-experience better. But their tactical approach is not necessarily going to lead to a winning strategy,” he says.

“Publishers, and that Flattr-Plus is based on the notion of traffic being siphoned from the publisher, and they’re starting a relationship of distrust, and from a consumer-perspective, it’s like a tip jar, and that might work for a smaller publisher, but for a larger outfit that might want more predictable revenue, then I don’t think that’s going to fly.

“The ones that we feel are going to make a compelling offer to consumers are big branded sites, with premium content, who have been unjustly punished by adblockers. Adblockers are an extremely blunt instrument … let’s say you go to a gaming site and you are overwhelmed by ads, so you install an adblocker, but then go back to The Guardian, or FT, or New York Times, and even though those titles have done nothing to drive the user to install the adblocker, they’re being punished by the use of the tool Our perspective is that large publishers will never participate in a Flattr-Plus.”

Opinions on AdBlock Plus

“When you think about AdBlock Plus launching an SSP … we built arguably the world’s first SSP [with AdMeld, which eventually sold to Google’s DoubleClick] that gave publishers control, and technology and services that allow them to make money, predictably so, in order for them to build a sustainable business,” says Kane. “That’s not what AdBlock Plus is doing … they’re not giving publishers control; instead they’re siphoning inventory off from publishers, and then going out to market, and in return offering publishers pennies on the dollar for the inventory that was theirs in the first place, I don’t think that’s going to work.

"Our approach to publishers is that they can make as much, if not more money by offering consumers choice. We think a very large percentage of users in this world will opt for some sort of approach for consumers that will see them opt for some sort of advertising-supported experience … advertising is going to continue to be a huge part of the digital media ecosystem, but we think that as a publisher that you will do more and better by offering a choice, and one of those will be content pass. My belief is that if we cannot make the publishers more money, and make their users happy, and I don’t think that AdBlock Plus is thinking in that way."

How will the Content Pass be displayed/pitched to consumers?

"There would be a carpet pass option, but some of the details are still being worked out, but we’re envisaging a monthly fee that will be subscription-orientated that will renew every month for up to ‘X’ number of properties," explains Kane. "And then you as a consumer will have the option to have various properties into your wallet, and over time that wallet can be expanded to include five, 10, or whatever number of properties are meaningful to you. So you can think of it sort of like a wallet, but you can manage through this choice moment.

How will Content Pass funds be distributed among publishers among a collective?

Some questions remain as the compensation model publishers that sign up to it will be compensated; basically: how will the spoils be shared out?

"Some of those things have to be worked out, and the way we’re going to do that is through conversations with publishers. Ultimately, we’re not going to take a vendor-orientated approach," he adds. "Our initial launch partners will have the same say in how the financials are worked out, and to us it’s all solvable. Our ambition is that publishers will make more money now, than they were before.

"Publishers have been under pressure to make money for a long time, but it’s almost as if there’s a new problem every year that they’re wrestling with. We want to be able to show them that you can do better with this across desktop, mobile and even if it’s with connected TV (and if that’s important to our customers) then we want to help them to do it."

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