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Oct. 3, 2018, 10:34 a.m.
Business Models

Is publishers’ next life preserver crypto-mining on smartphones? Maaaybe

“I would love to see us as a broader journalism community, people who care about sustainable and quality journalism, harness the power of new technologies rather than be the victims of it.”

“It’s one of the smartest, most clever startups I’ve ever, ever, ever seen.”

That was how Amy Webb lauded Honeycomb, a new blockchain startup, at this year’s ONA conference during her annual tech trends presentation. She highlighted two groups of special guests — one being the leadership of Civil, another (but very different in scope) blockchain startup that we’ve written about, and the other represented by cofounder Orlando Watson.

After seeing journalism raked over the coals of 2018, the tittering ONA audience members were ready for this potential magic Band-Aid. When Watson began explaining his project, the audience seemed to collectively grin/raise an eyebrow/droop half of one’s mouth in confusion.

Could a news organization actually convince users of its app to offer their phones’ dormant power to mine cryptocurrency — currently at a rate of around $3/user/month, according to Honeycomb’s own “impact calculator” — and donate it to said organization?

“The numbers might seem small, but this is new revenue that never existed before now going to support an investigative journalist for a year or coverage of a really important environmental story,” Watson told me later in September. “Any new revenue is worth it for a news organization.”

Beyond the six-minute-long pitch he gave at ONA, Watson is a former Republican National Committee spokesman, founder of a hyperlocal news site, executive director of a local business alliance in D.C., and now cofounder of this cryptocurrency-earning toolkit. His cofounder, Luke Mroz, is a software engineer and former coworker of Watson’s in Sen. Rand Paul’s D.C. office.

Blockchain is one of the media industry’s buzzwords in 2018, with the launch of the startup Civil pledging to create (and partially fund) a marketplace of newsrooms through its own cryptocurrency tokens, inviting interested folk to jump a few hoops to buy into the concept. Jarrod Dicker also left The Washington Post’s R&D group this year to join a different blockchain startup, Po.et, focusing on the “immutable and distributed ledger” component for individual content creators.

What Watson and Mroz are proposing with Honeycomb is a little more straightforward than launching a whole network — but still a little far-fetched.

“What the mobile app user sees is an explicit user agreement that essentially says by turning on or opting into this feature, when your phone is plugged in at night it will be crypto-mining…We’re sending computing power and electricity to maintain and secure that particular blockchain or specific blockchain,” Watson said. “As a reward for that, we receive a piece of each transaction. That reward we exchange for dollars and ultimately send to the publisher.”

Essentially, Honeycomb allows publishers with a mobile app to do what Salon and a few others been doing in a desktop web browser. Users consent to allowing their phone’s battery power to be utilized while plugged in at night (currently based on the schedule of someone who’s not on the graveyard shift) to crunch some blockchain in the form of the digital currency Monero. (The duo selected Monero over different blockchain-based cryptocurrency like Bitcoin partially because of its privacy features.)

Watson became familiar with cryptocurrency as an aide to the libertarian Paul — “a lot of his supporters were interested in Bitcoin, mostly for philosophical reasons” — and he entered the journalism realm while building a now-defunct hyperlocal news site, DC Bulletin. He also spent the past year as a Tow-Knight Entrepreneurial Journalism fellow, refining the idea for Honeycomb and drawing more insights from the media industry, he told me. Honeycomb officially launched in March.

The team is currently looking for testers for the startup’s next phase. “The most important characteristic of publisher for us is one that’s willing to experiment with a relatively new technology,” Watson said, adding that local independent publishers, nonprofit newsrooms, and international organizations have already expressed interest. Testers will also need to have a news app. (In local news, only 27 percent of news outlets maintain a news app, according to recent research.)

Blockchain has indeed been a buzzword, but Watson said he’s hoping this specific idea helps bring it, tangibly, into the mainstream for publishers. “We want to make sure users not only comprehend what we’re asking of them but also opt in and consciously choose to use this feature,” he said.

It’s not hard to think of potential roadblocks here. First, not many people actually use news apps! This year’s Digital News Report found that only 19 percent of Americans surveyed said they had received even a single news alert on their phones in the previous week. (And given that aggregator apps or native apps like Apple News can also send news alerts, the share using an app from an actual publisher is likely much lower.) And the apps that are installed are highly likely to be from national news outlets, not local ones.

Beyond that, most of the mobile news audience in the United States is using iPhones, not Android phones. And Apple explicitly banned apps that do what Honeycomb proposes, crypto mining on the device, this June. (“Apps, including any third party advertisements displayed within them, may not run unrelated background processes, such as cryptocurrency mining.”)

Google followed suit a few weeks later; while the more open nature of Android means that crypto-mining apps could be sideloaded onto phones, they’re banned from the Google Play Store, where the overwhelming number of apps get discovered and downloaded.

And finally, should mobile crypto mining ever become a thing — if phone owners ever decide they want to let some third-party control their phone’s processor all night — publishers would have to convince their readers to allocate their computing power to the news industry instead of, for example, the presidential campaign fund of Rand Paul or UNICEF Australia, the latter of which has also been experimenting with the concept (not with Honeycomb, whose primary target consumer is news publishers, Watson says). There’s nothing written on the Ten Commandment tablets that says users have to consent to their phone’s power to be used for mining on behalf of a media organization specifically (though if Moses had gotten that memo, that’d be impressive). If a news app can mine crypto on your phone, so can games or any other app; it wouldn’t take long for someone to come along and say, “Hey, we’ll use your phone’s battery to generate $3 a month — and then give you $2.50 of that!”

Watson also said he didn’t know what the team would do if two competing organizations wanted to run on the same device: “It does create an incentive for people to be the first movers or adopters in this space,” he said. “I would love to see us as a broader journalism community, people who care about sustainable and quality journalism, harness the power of new technologies rather than be the victims of it. This technology exists and there’s still an opportunity for us to claim it as our own.”

Blockchain might end up being the kind of Next! Big! Thing! that behooves news organizations to get there early — as long as you don’t trip over yourself while chasing it.

Screenshot of Honeycomb’s impact calculator on its website.

POSTED     Oct. 3, 2018, 10:34 a.m.
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