10/17/17 – UPDATE: The practice has now spread to mainstream players, with CBS’ Showtime reportedly using the very mining tool discussed below. I believe many more websites will soon follow, as alternatives to CoinHive start coming up and offer much more attractive commission rates.

A few weeks ago, The Pirate Bay made the news again in the deep web community. Some users noticed that TPB was running a hidden script that hijacked visitors’ CPU to mine a cryptocurrency called Monero. 1

The Pirate Bay responded to users and declared that they were experimenting the script for some time as a potential alternative to ads.2 Here are some figures to give you some perspective on the amount of money we are talking about here: The Pirate Bay gets about 250M to 300M visits per month, pocketing an estimated $227M in ads revenues every year.

That’s about how much The Pirate Bay think they can get from that script, assuming of course that their actual plan is not to simply add an extra revenue source while keeping ads online (which seems to be the most likely scenario to me though, more on that below).

It starts to get interesting when one figures out that the guys behind the script have nothing to do with The Pirate Bay. It’s a separate company called CoinHive. They will let anyone use their script for free, in exchange for an eye-popping 30% commission on all earnings generated by the script.

This is really exciting! Think about it: their solution effectively creates a completely new revenue source that online services can leverage.

Consequently, many argue that online ads are soon to be replaced by mining scripts. Here, I’ll be making the opposite point. I believe that online ads are here to stay, due to simple mechanics of supply and demand. Yet, mining scripts could indeed bring interesting changes to the digital space, mainly by allowing players who failed to monetize so far, despite being popular, to finally turn a profit.

Replotting online traffic monetization

So far, online traffic monetization typically came in three flavours: selling products/services, selling ad space and selling recommendations (i.e., affiliation).

Content publishers and curators though, were mainly restricted to the selling ads bit. Yes, a few of them managed to monetize their audiences by selling products (e.g., The Next Web’s Deals section) or services (e.g., The New York Times earns 6x more with subscriptions than it does with online ads). However, this clearly isn’t the majority.

Consequently, their revenues typically depend on how many people visit their website, and how many ads are shown and/or clicked. Buzzfeed, Slate, Business Insider and the like succeeded online because they focused on doing just that: creating clickbait-ish articles that get many people to click and watch whatever ads they show.

Mining scripts imply a different logic. They earn publishers money based on the amount of time spent by each user on the website, not on the amount of people that visited the website and were shown ads to and/or clicked those ads. What it means, is that a website that gets 1,000 visitors spending 40mn each, could potentially earn more than a website with 10,000 visitors spending 15 seconds each.

This creates an interesting plot: businesses that failed to monetize through advertising, but that nonetheless get decent traffic could finally find relief (I’m looking at you, Twitter and newspapers of the world).

For now, it’s especially relevant for websites offering content that is typically browsed for somewhat extensive period of time, and ideally from desktop3 (e.g., music and movie streaming, forum boards, “free” online tools such as SmallPDF, etc.).

Yet, as CPUs becoming more powerful and cryptocurrencies gain broader acceptance, it will become increasingly likely that these scripts will spread online, and potentially go beyond the services mentioned above.

Online Ads Are Here to Stay

Now, you might have noticed that mining scripts and ads share the same fundamentals. Both are about exchanging an attention window for money. This might have to do with why so many people are excited about mining scripts replacing ads.

From RSA: “[Mining scripts are] a legitimate capability that we expect to see gain significant traction (over ads in many cases) across all types of verticals that rely on web-presence.”

To my mind, those making the point that mining scripts have the potential to kill ads are missing the following points though:

  • Online ads work. The reason why they’re around is because they typically have a positive ROI. The demand for ad space can consequently either grow or remain constant in the near future. Simple economics dictate that if the supply of ad space decreases due to many websites dropping ads, the price of ad space will rise and attract new (or former) sellers in that business.
  • Site owners have no incentive to remove ads altogether. It makes much more sense for them to diversify their revenue sources, and simply add mining scripts as an additional revenue generator rather than a full replacement. Who would turn down extra money?
  • Mining scripts are as easy to block as ads. There are already a few plugins online that block CoinHive, like NoCoin. Looking forward, it seems very likely that web browser developers and app stores gatekeepers will consider blocking content that boasts mining scripts which can be very damageable to the user experience if used improperly.

All that doesn’t mean that many websites are not going to start using these scripts. Rather, it means that they will start using them not as an alternative to ads, but as a complementary revenue source. And it’s a good thing! If properly configured, these scripts no noticeable impact on the user experience and create a fair, painless, way of paying for whatever content is being provided: earnings are correlated to time spent using a service.

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  1. Monero (XMR) is a super cool Bitcoin-like project that aims to provide enhanced privacy to its users. Unlike Bitcoin though, Monero can be mined using solely CPU power, which makes it a good candidate for such a script. For a quick 101 on blockchain, cryptocurrencies and mining, read this.

  2. 10/17/17 – UPDATE: They reportedly discontinued the experiment due to user complaints

  3. The desktop part is just temporary though, soon mobile devices are likely to boast CPUs that are powerful enough to deliver on crypto-mining.