Brave

What if online ads weren't the distracting, privacy-invading, malware-laced, battery-gobbling mess they've become? What if they could even fund worthy websites?

That's what startup Brave hopes to accomplish with a major new phase of its browser business.

Brave began its existence three years ago by blocking all ads by default. On Tuesday, it'll start offering anyone using the developer version of Brave the option of seeing privacy-respecting ads. And, in a few weeks, when Brave 1.0 arrives on personal computers, Brave will give those users 70 percent of the ad revenue.

"We think we can make advertising great," Brave co-founder and Chief Executive Brendan Eich said in an exclusive interview with CNET about the new phase of the company's business.

It's a tall order. A respectable 5.5 million people use Brave each month, but that's a tiny fraction of the billion-plus who use the dominant web browser, Google's Chrome. To be successful, Brave will not only have to attract a lot more people to use its browser and to embrace its ads, it'll also have to convince partners in the advertising and publishing industries that the complications of the technology are worth it. Advertisers are expected to spend $132.32 billion on US digital ads this year, according to tracking firm eMarketer. It's a vast, entrenched industry.

Plenty of online companies -- Facebook and Google to name two -- have offered consumers real value for free by showing ads. So fixing ad tech is a worthy goal. But many of us have lost faith in ads, and hundreds of millions of us now block them altogether.

Separately, ads and ad trackers take their toll on computing power, battery life and network usage. And then some ads are just plain bad. About one in 200 ads is a form of malware, and more than one in 100 video ads is fraudulent, according to a December report from security company Confiant.

Sure, we could pay our way to a healthier internet. Spending money on paywalls and subscriptions is a great way to get online video, news and music without ads' downsides. But honestly, how many services are you going to pay for on top of your phone bill, broadband, Netflix, HBO Now, Spotify and Amazon Prime? We don't generally bristle at ads in magazines and newspapers, and some of us even tune into the Super Bowl to watch them.

How Brave's ad system works

The first phase of Brave's ad system won't actually pay anybody anything, but instead will just get the system on its feet. Actual payments are scheduled to arrive in several weeks with the release of Brave 1.0. When it kicks in, you'll get 70 percent of the ad revenue. Brave collects the rest. A slider will let you pick how many ads to see each day, from one to 20. Just seeing an ad generates a bit of revenue, but clicking on it generates more.

How much money? As a lower bound, perhaps $5 per month if you see 120 ads, Eich estimated. "We aim higher," he added Tuesday on Twitter.

Brave

It's an opt-in system. So unless you enable it, you'll just keep getting the regular ad-blocking Brave.

"If enough opt in, that could become the main revenue of the company," Eich said, adding that he thinks it's possible that 40 percent of users could sign up.

Initially, Brave's ads will target you based on website context, inferring your interest in ad-related subjects by the content of websites you visit. In coming months, Brave plans more sophisticated targeting, based on things like the text you type into search engines.

"Search queries are still a hot intent signal," Eich said, meaning they're a good predictor of where you might be spending money.

What's different about Brave's system is that all the targeting is done inside the browser. Publishers and advertisers don't know anything about you; they aim for particular keywords that the browser can match internally. All the outside parties see is confirmation that people saw their ads.

This first phase of Brave's ads is just between the advertisers and you. Later this year, Brave plans another phase in partnership with publishers. There, ads will appear on the websites you visit, not just in separate tabs. In that phase, publishers will get 70 percent of the ad revenue, you'll get 15 percent and Brave will get 15 percent, Eich said.

"We're trying to align interests with a transparent fee schedule," Eich said. "That takes a lot of the fear out of it."

For now, the system works only on Brave for personal computers. Phone users will get it, but Brave doesn't have the necessary payment plumbing yet. The next step on that path will be the inclusion of a digital wallet in the Android version of Brave, scheduled for this month, Eich said.

Catering to the crypto crowd

Brave's initial ads are supplied by networks, including BuySellAds and TAP Network, and by three cryptocurrency-focused companies that might be interested in Brave's techie audience: AirSwap, Fluidity and Uphold.

Why the crypto connection? Because Brave relies on it and already used it successfully to raise startup funding for the company in 2017.

Brave created a payment system called Brave Rewards that uses a cryptocurrency-like payment technology called the basic attention token (BAT) that enables low-cost financial transactions between advertisers, publishers, Brave and you. Bitcoin, the highest profile cryptocurrency, hasn't fared well over the past year, but BAT is intended to facilitate payments, not to be some kind of hype-pumped investment vehicle.

Already, Brave can be used to send BAT payments to website publishers, Twitch game streamers and YouTubers. By default, if you've opted into the system, Brave sends the funds monthly based on how often you spend time with the various creators. But you can also tip specific people or assign fixed contributions to creators and publishers you like.

Today, Brave sends monthly BAT grants to Brave users that then are distributed to creators who've signed up to receive them. The idea with Brave's ad system is that the ad revenue will substitute for the grants, Eich said. For now, only creators can convert their received BAT into real-world money, but later Brave plans to let ordinary Brave users do so as well.

Screenshot by Stephen Shankland/CNET

Brave also hopes to let people use BAT for premium content like a news article you'd like to read without having to pull out your credit card for a subscription. Some have signed up to receive contributions if not necessarily to show Brave's ads. The most notable names are news sites such as The Washington Post, The Guardian, Vice and Slate.

Tough sell

Convincing people to sign up for the whole system is one of Brave's challenges. If nothing else, it's a lot to digest. Big publishers will have to learn to accept a very different ad system, and Brave will have to convince creators and publishers to sign on. Tens of thousands have joined up so far, though.

One example of the difficulties arose in December when YouTuber Tom Scott, who has 1.4 million subscribers, objected to Brave's ways. Brave users can contribute BAT to publishers and creators even if they haven't signed up for Brave, holding the tokens in escrow for a year in case they do sign up. Otherwise, the tokens return to the user growth pool Brave uses to generate interest in the BAT system.

Scott didn't like the system. "I don't ask for donations or crowdfunding on any platform ... If someone's asking you for money or suggesting that you can donate to me, it's not true and you should stay well clear," he tweeted.

"This warning is prompted by a company called Brave, who've been taking cryptocurrency donations 'for me,' using my name and photo, without my consent," he added in a follow-up tweet.

Brave scrambled to make changes after the concern. Two days after Scott's complaint, Brave issued an update to "clearly indicate which publishers and creators have not yet joined Brave Rewards so users can better control how they donate and tip," the company said. "Moreover, creators that have not verified with Brave will no longer have their YouTube or Twitch channel images appear within Brave Rewards."

And last week, it made another change: Contributions and tips to unverified publishers are now held in the browser and transferred if the recipient signs up within 90 days -- or otherwise returned.

Scott tweeted Tuesday that he's mollified: "These are good changes, and they fix the complaints I had!"

But evidently it's not a simple matter to try to rebuild online advertising. Eich hopes for the best.

"It's going to be a bumpy ride," Eich said. "We can make a better world."

First published Jan. 15, 9 a.m. PT.

Update, 10:54 a.m. PT: Adds Twitter response to Brave changes from Tom Scott. Update, 1:13 p.m. PT: Adds estimate for how much money you could expect to earn. Update, 3:09 p.m. PT, clarifies that ad keyword matching doesn't send information outside the browser.

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