Who would ever think that an 80’s disk jockey would come to be known as the inventor of the Site/Day Pass model for online publishers? Saving Salon.com out of near death, Dana Jones, president of Ultramercial has spent the last few years competing with the pre-roll, battling video ad misconceptions, and keeping consumers actually tuned in to online ads. Discovering the challenges music lovers had in the slow download days of dial-up and the high cost of singles, Jones sought out a way to not only drop the cost, but give advertisers a way to get through to tech savvy consumers who have become blind to advertisements. We sat down with the man himself to chat about the future of Ultramercial, how it’s taking on the ever popular video-on-demand and how the company’s getting the advertiser to pick up the tab.
ADOTAS: First, tell me a little bit of where you’re from, and how you got here.
Dana Jones: I started in the media business by actually being a disc jockey at a very well-known radio station here in Los Angeles called KROQ. I worked there for a number of years, and during that time got to understand the music business pretty well. Fast forward—I start my own ad agency [in the 80’s called Dana Jones Advertising]… which I started making ads for broadcast and that morphed into print.
And then Napster comes out…business had morphed [so] I started building websites for clients. I was very fascinated with the Internet when the Internet came along. And then Napster comes out and of course I’m there, poaching songs and feeling some amount of guilt, but not a lot, and then thinking—’geez, I remember when working at KROQ we had to write down the songs that we wrote for BMI and twice a year or something they’d figure out licensing and we’d pay them money.’ And we did the same thing for ASCAP.
So, I knew there was lost revenue here—equally on the publisher/writer side and probably on the artist side. Is there any way to make Napster legal? And that’s where I got the idea—this is back in the dial-up days of the Internet when Napster just came out. Very few people had broadband. And I’d sit there for three, four, five, ten minutes—just watching the progress bar go to download.
That’s when I kicked everything. I thought, ‘hey, what if an ad runs during this down time, and you’re watching an ad.’ And it’s a real rich, full-screen ad, and the person watching the progress bar has got nothing but time because they want to get the next song downloaded. This would be a long-form commercial, and the advertiser would be paying on behalf of the viewer for the rights to the music.
Back then, singles were $3.99 online. And then, it was a big deal when they went down to $1.99–all pre-iTunes, of course. There was no way that—even though I could sort of on paper prove that the value of the ad might be worth a couple of bucks a play—there are no advertisers out there that are going to pay that kind of money, especially on a mass market basis.
I went to some record company execs, and I said ‘Listen, I know for the BMI/ASCAP folks, it’s a couple of pennies a play. It’d certainly bring that kind of money… maybe a dime and no interest.” All they were interested in was [RIAA CEO] Hilary Rosen suing everybody. I felt that the idea was good, so I decided to start the company anyway. Also at that point I was well aware of all these lawsuits having to do with patents, so I filed patents right away. So we went to start it with a couple friends and went forward to Salon.com…and I believe it was April of 2000.
A: How did Salon.com come into the picture?
DJ: Then we thought this doesn’t have to be for music, this could be for anything that’s premium online. And Salon—I had been reading a lot in the press how they were on death’s door and they had tried everything—they were willing to try anything. They tried the subscription model where 30 percent of their content was behind a wall. So we approached them with the idea of taking their premium content and allowing people to come in after they watched an ad instead of paying $38/year for a subscription. And they were amenable to that. It took us a long time to make the first sale, which was Mercedes Benz. And that was launched in the middle of November in 2002. And within a couple of weeks, the management at Salon—Michael O’Donnell, [who was] the CEO then—made the decision to go all premium with an Ultramercial alternative to get it. They’ve held that business model ever since.
A: It’s amazing Salon took the chance with something new.
DJ: Well, they were really close to going out of business. That’s why we picked them, because of the press that we read. They’re running out of money, nobody wants to put any more money in, they’re going to be a dot-gone. We figured if this could save them, it would be a heck of a proof of godsend for us. And that’s what happened.