I highly recommend this analysis of the Federal Trade Commission’s (FTC) new “Do Not Track” proposal by Ben Kunz over at Bloomberg Businessweek. In his essay, Kunz, the director of strategic planning at Mediassociates, a media planning and Internet strategy firm, hits many of the major themes we have developed here at the TLF when critiquing the FTC’s plan and privacy regulation more generally. Namely, we live in a world of trade-offs and regulation can have unintended consequences. Kunz argues that, “while the [FTC] may have consumers’ best interests at heart… the idea has two huge problems”:
1. It won’t stop online ads. While Do Not Call lists kept telemarketers at bay, you’ll still see tons of banners and videos everywhere online. They’ll simply be less relevant.
2. Do Not Track will send billions of dollars to the big online publishers, hurting the little sites you might find most interesting.
The second point is painful. It could really harm you, too, dear consumer, if you read things online other than The New York Times, Bloomberg, or iVillage.com. Why? The “Long Tail” of niche content is going to get crushed. Let’s follow the money. More than $25 billion was spent on U.S. online ads in 2010, according to eMarketer. About $1 billion of this went to behaviorally targeted ads tied closely to user data; nearly $8 billion overall is in some way related to online tracking.
That $8 billion has posed horrible problems for publishers of major websites, such as Bloomberg (this column’s host, for which we don’t work, so we’ll be equally critical of it) or The New York Times. Before tracking came along, such publishers were the only means of reaching a known type of audience. Business people read Businessweek.com while moms read O magazine online and iVillage.com. Like the publications of the past century, a given website has always been a proxy for an audience target. Alas for the big publishers, good data on audiences has meant that smart marketers could leave big, expensive sites behind. So in perhaps the biggest revolution of Internet marketing, the more data you can collect about today’s customers, the cheaper online advertising gets.
He continues on to argue that:
If Do Not Track moves forward, you’ll still see banner ads everywhere. They’ll be untargeted, with more off-kilter offers because no data about your preferences will be deployed to give you a golf ad, say, if you’ve been reading a lot of golfing articles. You’ll feel better about your privacy, despite the fact that website marketers could never track you individually, but rather could make wild approximations of the type of person you are. Thousands of small websites may disappear as dollars flow to consolidated publishing centers.
Is this too extreme? Surely, hobbyists will continue to write blogs and build sites out of love. But with $8 billion or more moving to the ivory towers of mainstream content, you’ll have fewer choices. There will be less innovation online. The Mashables and Huffington Posts of tomorrow may never get off the ground. Add video and soon the Web will be like turning on TV—perhaps with a few major networks, just like the 1960s.
Go ahead with Do Not Track if you must. It will stop marketers from serving up ads for products you may actually want. If you don’t like what’s left, you can always buy an online subscription.
Again, that’s the key point I’ve tried to stress in my recent essays here. Namely, something’s gotta give, and it could be that paywalls will go up and subscriptions will be required to access content that we now enjoy free of charge thanks to advertising and data collection.
Anyway, read Kunz’s entire piece here. I hope policymakers take it seriously and stop pretending that regulation is a free lunch.