Sourcepoint Raises $16 Million Series B From Spotify Investors

Ben BarokasSourcepoint, whose technology lets publishers encourage ad-block users to whitelist their sites, revealed Wednesday it has raised $16 million in Series B funding led by early Spotify investor Northzone. Existing investors also contributed to the round.

Sourcepoint, which has raised a total of $26 million, will use this round to accelerate product development as it adds subscriptions to its product offering.

The subscription program, which lets publishers ask readers for payments to view content, will launch in the first half of 2017. The second phase of the program will bundle content from groups of publishers into uber-subscriptions.

Northzone general partner Pär-Jörgen Pärson will join the board as part of his firm’s investment, providing insight into how to aggregate content and create payment systems.

“PJ [Pärson], one of the early investors in Spotify, saw the opportunity of large-scale subscriptions early on,” said Sourcepoint CEO Ben Barokas. “He will be able to accelerate where we want to be because he understands the trials and tribulations they went through with payment processing and scaling.”

Barokas described Sourcepoint’s development of a “value exchange” system as a “moonshot” to help sustain digital content.

“Provide users choice, advertisers real engagement and publishers real profitability,” he said. “This is not something that can be done by creating an ad network for ad blockers.”

Sourcepoint hopes its subscription product helps it find a perch in a rapidly changing media ecosystem. Consumer impatience with ads has led even advertising-led companies like Hulu and Google’s YouTube to launch ad-free subscriptions. But while The New York Times and Slate Plus saw a boost in subscriptions post-election, many consumers still prefer to view ads instead of paying.

“We are going to be riding that wave of user choice,” Barokas said. “The vast majority of content will be ad-supported, but there will be those individuals that are more than willing to pay for subscriptions to large swaths of content.”

The payment system means Sourcepoint will need to develop a consumer-facing business in addition to selling its tech to publishers. Barokas acknowledged that will be an expensive, difficult direction to take.

“If we are going to be a successful brand, we will need to raise even more money,” he said.

In the 18 months since it raised $10 million in Series A funding, Sourcepoint signed up 100 publishers with 5 billion page views a month to its messaging tech, Dialogue. Dennis Publishing, Gruner & Jahr, AOL, and Nyheter24 were among those who signed up.

Besides its tech, Sourcepoint helps publishers A/B test anti-ad-blocking messages or find other ways to create a new value exchange with the reader.

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