First court hearing of broadcasters and Adblock Plus

German and French incumbent media companies have a new enemy: advertisement blocking software company Eyeo. Eyeo offers whitelisting their ads for a 30 percent revenue share through its Adblock Plus service. While French publisher and advertising organisation Geste and the French Internet Advertisement Board (IAB) were still busy preparing their next move, on 17 December 2014 a Munich civil law chamber heard the oral arguments in a case brought by German broadcasters Pro Sieben Sat 1 and RTL interactive. Their hope? Protect their ad-funded content business model from Eyeo’s business model of paid whitelisting.

“Ad-blocking goes mainstream“ titled the PageFair 1 and Adobe AdBlock Report 2014, writing that the number of people with adblock software installed had increased by 69 percent in one year (between September 2013 and September 2014). According to the report, 144 million people are active adblock users - 4.9% of all internet users, with Poland, Sweden, Denmark, and Greece taking the lead (24 percent of users are adblockers). Consumers asked for the purpose of the study did confirm that they prefer not to pay (80 percent) and “become irritated when shown advertisements.“ And here lies one root of the problem.

Broken deal

There had been a deal for years, the lawyer of SevenOne Media (subsidiary of the Pro Sieben Sat1 broadcasting company), Stefan Engels, complained during the first of two oral hearings before the Munich District Court. “You get high quality content, for which you do not have to pay, but you have to accept advertisement.“

It is not necessary that users click or even look at the ads, but they should allow his client to recoup investment for the content offered, so his reasoning. How much there is in lost revenue when users block especially the video ads placed by SevenOne Media, became one of the hot debates before the court. Geste, according to French newspaper Les Echos, calculates a reduction of 20 to 40 percent of advertisement revenue.

The German judge hearing the arguments in Munich this week considered the possibility that enabling access to free content - which could only be free because it is ad supported, and then helping to block the ads, might be considered as an “indirect obstruction“ to the business of the complainants. But there is a problem, as users never formally agreed to the “deal“.

“Robber barons“ against providers of “obnoxious“ and “content interfering“ ads

The main focus of the complaint in Munich is not ad-blocking, because it is difficult to bring free software installed by users before a court, but it is Eyeo's own business model. It offers to help “adblocked“ companies like the German broadcasters to regain penetration through re-designing their ads according to acceptable criteria. The catalogue of criteria for acceptable ads is developed by Eyeo – together with users, Eyeo underlines - just by the company, the furious broadcasters say.

“First the defendant erects a gate by providing users with free software and then it offers to open the gate of blocked ads if they pay,“ the lawyer of RTL interactive and its ad company IP Deutschland, Wolfgang Freiherr Raitz von Frentz thundered before the Munich Court. The offers to unblock ads checked for acceptance by Eyeo staff comes for a 30 percent revenue share, but users still can block. Eyeo acts like medieval “robber barons“, Engels concurred.

“And not everybody has to pay“, Raitz von Frentz added. Companies like Google, who dominated the text based advertisement market were courted instead. Eyeo on the other hand argued that there just was no link between users' interest in getting rid of enervating ads using Eyeo's free Adblock Plus software and Eyeo's offer to the advertising companies to raise their media penetration again.

German judge sceptical about claims

The presiding judge in Munich was sceptical about several of the claims made by the complainants, especially that Eyeo had a dominant market position. With the software open source there were and could be many new competitors. Freedom of information was not touched, she said.

The claims that the blocking technology was violating copyright law and the German Federal Data Protection Act still have to be evaluated by the Court, which announced it would decide the two cases on 25 March 2015. Additional cases in Germany are pending before the Courts of Cologne (Springer) and Hamburg (Die Zeit). With the March ruling, she would make one party unhappy, the judge said, and she did expect that the case would end up at higher court instances.

Sean Blanchfield, CEO of PageFair, according to an AFP report from earlier this month compared the campaign against ad blockers to the music industry's takedown of the file-sharing programme Napster a decade ago. "They should instead learn from the Napster story that the users will ultimately get what they want," said Blanchfield. PageFair in a similar way as Eyeo works with publishers to devise ads that "respect users' privacy".

Answers to the blocking

Meanwhile, advertising publishers and broadcasters look for relief. French sports daily l'Equipe for example tried to put pressure on users. Users with ad-blocking software who try to watch videos are served a message: "Unauthorised access. L'Equipe.fr is funded by advertising, which allows us to offer you free content."

There were also attempts by the German complainants to “go around“ the blocking, which so far did not really work well, the parties reported. But the advertisers could, the judge pondered, find a technological way to circumvent the software.

Ad giant Google has come up with an alternative to support content by ads. Google Contributor asks users to pay a monthly fee between one and three dollars to get ad free pages. The idea is new only for the web. In the 1980s and 1990s there have been attempts to spare readers of daily newspapers in Germany from the flood of advertisement leaflets added to the papers to help fund them. The idea flopped.