My most recent Forbes column is entitled, “We All Hate Advertising, But We Can’t Live Without It.” It’s my attempt to briefly (a) defend the role advertising has traditionally played in sustaining news, entertainment, and online service, and (b) discuss some possible alternatives to advertising that could be tapped if advertising starts failing us a media cross-subsidy.
What got me thinking about this issue again was the controversy over satellite video operator DISH Network offering its customers a new “Auto Hop” capability for its Hopper whole-home HD DVR system. Auto Hop will give viewers the ability to automatically skip over commercials for most recorded prime time programs shown on ABC, CBS, FOX and NBC when viewed the day after airing. It makes the viewing experience feel like the ultimate free lunch. Alas, something still must pay the bills. As innovative as that technology is, we can be certain that it will not make content consumption cost-free. We’ll just pay the price in some other way. The same is true for online services since it’s never been easier to use technology to block ads.
So, what is going to pay the bills for content as ad-skipping becomes increasingly automated and effortless? Stated differently, what are the other possible methods of picking up the tab for content creation? Here’s a rough taxonomy: Continue reading →
Freelance journalist Laurence Cruz was kind enough to call me recently looking for comment on whether broadband should be considered a human right. Well, actually, he probably didn’t have many options. If you do a quick search on the topic, you’ll find an endless stream of essays in favor of the proposition. Then, somewhere in the mix, you’ll find a few dissenting rants I’ve penned here in the past. So I’m getting used to playing the baddie in this drama.
Cruz’s essay is now up over at “The Network,” which is Cisco’s technology news site. Here’s what I had to say in opposition to the proposition:
Continue reading →
Yesterday, the Federal Trade Commission (FTC) released its long-awaited proposed revisions to the Children’s Online Privacy Protection rule (the “COPPA Rule”). Below I offer a few brief thoughts on the draft document. My remarks assume a basic level of knowledge about COPPA so that I don’t have to spend pages explaining the intricacies of this complex law and regulatory regime. If you need background on the COPPA law and rule, please check out this paper by Berin Szoka and me: “COPPA 2.0: The New Battle over Privacy, Age Verification, Online Safety & Free Speech.”
Dodging the COPA / Mandatory Age Verification Bullet
The most important takeaway from yesterday’s proposal involves something the FTC chose
not to do: They agency very wisely decided to ignore some requests to extend the coverage of COPPA’s regulatory provisions from children under 13 all the way up to teens up to 18. An effort to expand COPPA’s “verifiable parental consent” requirements to all teens would have raised thorny First Amendment issues as well as a host of practical enforcement concerns. In essence, it would have required Internet-wide age verification of children and adults in order to ensure that everyone was exactly who they claimed to be online. We already had an epic decade-long legal battle over that issue when the constitutionality of the Children’s Online Protection Act (COPA), another 1998 law sometimes confused with COPPA, was tested many times over and always found to be in violation of the First Amendment.
Regardless, the FTC didn’t go there yesterday, so this concern is off the table for now. The agency deserves credit for avoiding this constitutional thicket. Continue reading →
We’ve said it here before too may times to count: When it comes to the future of content and services — especially online or digitally-delivered content and services — there is no free lunch. Something has to pay for all that stuff and increasingly that something is advertising. But not just any type of advertising — targeted advertising is the future. We see that again today with Skype’s announcement that it is rolling out an advertising scheme as well as in this Wall Street Journal story (“TV’s Next Wave: Tuning In to You“) about how cable and satellite TV providers are ramping up their targeted advertising efforts.
No doubt, we’ll soon hear the same old complaints and fears trotted out about these developments. We’ll hear about how “annoying” such ads are or how “creepy” they are. Yet, few will bother detailing what the actual harm is in being delivered more tailored or targeted commercial messages. After all, there’s actually a
benefit to receiving ads that may be of more interest to us. Much traditional advertising was quite “spammy” in that it was sent to the mass market without a care in the world about who might see or hear it. But in a diverse society, it would be optimal if the ads you saw better reflected your actual interests / tastes. And that’s a primary motivation for why so many content and service providers are turning to ad targeting techniques. As Skype noted in its announcement today: “We may use non-personally identifiable demographic data (e.g. location, gender and age) to target ads, which helps ensure that you see relevant ads. For example, if you’re in the US, we don’t want to show you ads for a product that is only available in the UK.” Similarly, the Journal article highlights a variety of approaches that television providers are using to better tailor ads to their viewers.
Some will still claim it’s too “creepy.” But, as I noted in my recent filing to the Federal Trade Commission on its new privacy green paper: Continue reading →
Today I filed roughly 30 pages worth of comments with the Federal Trade Commission (FTC) in its proceeding on “Protecting Consumer Privacy in an Era of Rapid Change: a Proposed Framework for Businesses and Policy Makers.” [Other comments filed in the proceeding can be found here.] Down below, I’ve attached the Table of Contents from my filing so you can see the major themes I’ve addressed, and I’ve also attached the entire document in a Scribd reader. In coming days and weeks, I’ll be expanding upon some of these themes in follow-up essays.
In my filing, I argue that while it remains impossible to predict with precision the impact a new privacy regulatory regime will have the Internet economy and digital consumers, regulation
will have consequences; of that much we can be certain. As the FTC and other policy makers move forward with proposals to expand regulation in this regard, it is vital that the surreal “something-for-nothing” quality of current privacy debate cease. Those who criticize data collection or online advertising and call for expanded regulation should be required to provide a strict cost-benefit analysis of the restrictions they would impose upon America’s vibrant digital marketplace.
In particular, it should be clear that the debate over Do Not Track and online advertising regulation is fundamentally tied up with the future of online content, culture, and services. Thus, regulatory advocates must explain how the content and services supported currently by advertising and marketing will be sustained if current online data collection and ad targeting techniques are restricted. Continue reading →
Today the Mercatus Center has released a short new paper I have authored on “Unappreciated Benefits of Advertising and Commercial Speech.” I begin the piece by noting that:
Federal policy makers, state legislators, and state attorneys general have recently shown interest in regulating commercial advertising and marketing. Several new regulatory initiatives are being proposed, or are already underway, that could severely curtail or restrict advertising or marketing on a variety of platforms. The consequences of these stepped-up regulatory efforts will be profound and will hurt consumer welfare both directly and indirectly.
I go on to note that “advertising can be an easy target for politicians or regulatory activist groups who make a variety of (typically unsubstantiated) claims about its negative impact on society,” but then continue on to explain how “the role of commercial speech in a free-market economy is often misunderstood or taken for granted.” I outline how, despite regulators’ concerns, consumers actually derive three important types of benefits from advertising and marketing: (1) Informational / Educational Benefits; (2) Market Choice / Pro-Competitive Benefits; and (3) Media Promotion / Cross-Subsidization. After discussing each benefit, I conclude that:
For these reasons, a stepped-up regulatory crusade against advertising and marketing will hurt consumer welfare since it will raise prices, restrict choice, and diminish marketplace competition and innovation—both in ad-supported content and service markets, and throughout the economy at large. Simply stated, there is no free lunch.
Read the entire 1,800-word essay here. I have also embedded the document down below in a Scribd reader.
Continue reading →
This morning, the Federal Trade Commission (FTC) released its eagerly-awaited Preliminary FTC Staff Report on Protecting Consumer Privacy in an Era of Rapid Change: A Proposed Framework for Businesses and Policymakers. As expected, the agency has generally endorsed an expanded regulatory regime to govern online data collection and advertising efforts in the name of protecting consumer privacy. More specifically, the agency endorsed a so-called “Do Not Track” mechanism that would supposedly help consumers block unwanted data collection or advertising. Here’s how the agency describes it:
Such a universal mechanism could be accomplished by legislation or potentially through robust, enforceable self-regulation. The most practical method of providing uniform choice for online behavioral advertising would likely involve placing a setting similar to a persistent cookie on a consumer’s browser and conveying that setting to sites that the browser visits, to signal whether or not the consumer wants to be tracked or receive targeted advertisements. To be effective, there must be an enforceable requirement that sites honor those choices. (p. 66)
I’m sure we’ll have plenty more to say here about the issue in coming weeks and months (comments on the FTC report are due by Jan. 31), but we’ve already commented on this proposal here before. See 1, 2, 3. To briefly summarize a few of those concerns: Continue reading →
Beyond the fact that the Federal Communications Commission (FCC) decided to release the executive summary of its long awaited National Broadband Plan via a PDF of a scanned printed copy, there are other reasons to be concerned about the agency’s ability to centrally plan one of the most important, fast-moving sectors of our economy. In this video clip, I discussed some of my general reservations with the idea of a gargantuan government industrial policy for the broadband sector, and in this essay I noted how, from what we’ve see of the plan thus far [Executive Summary], the FCC appears to be engaged in some creative accounting techniques to fund the scheme.
Not everything in The Plan troubles me, however, and I hope to touch on some of the more sensible elements in a future post. But, as I was reading through it, I flagged 5 regulatory hot potatoes in the plan that threaten to derail the entire thing. In this regard, the parallels between the National Broadband Plan and the debate over health care “reform” are really quite striking. Indeed, it appears the Administration has once again settled upon a “go for broke” (potentially quite literally!) strategy. In both cases, they appear hell-bent and trying to do it all in the form of One Big Plan. Now, I won’t lie to you; such everything-plus-the-kitchen-sink public policy gambits make me nervous based simply on the sheer scale of the undertaking. When Washington tries to regulate massive chunks of the economy using bloated bills and bureaucracies inside the Beltway, it troubles me greatly. But even if the sound of Big Government on Steroids doesn’t raise your blood pressure, one would hope that the prospect of political gridlock and litigation hell would force advocates to scale back their ambitions a tad bit. After all, what good is a plan that can never pass or be implemented?
That’s why I was rather surprised to see these 5 regulatory initiatives teed up in the National Broadband Plan:
(1) Return of the Forced Access Regulatory Nightmare? The Plan says the FCC will, “Undertake a comprehensive review of wholesale competition rules to help ensure competition in fixed and mobile broadband services.” As my friend Randy May of the Free State Foundation notes: Continue reading →
After working my way through the Executive Summary of the Federal Communications Commission’s (FCC) National Broadband Plan, there are a number of things I find troubling that I will get to in a subsequent post. But here’s the thing about “The Plan” that I found most surprising — even audacious — in its arrogance: The FCC wants us to believe the whole scheme is costless. The agency bases this astonishing claim on the following assumptions:
Given the plan’s goal of freeing 500 megahertz of spectrum, future wireless auctions mean the overall plan will be revenue neutral, if not revenue positive. The vast majority of recommendations do not require new government funding; rather, they seek to drive improvements in the government efficiency, streamline processes and encourage private activity to promote consumer welfare and national priorities. The funding requests relate to public safety, deployment to unserved areas and adoption efforts. If the spectrum auction recommendations are implemented, the plan is likely to offset the potential costs.
Let me translate: ”
Pay no attention to all the bills we are racking up, because spectrum revenues shall set us free!”
Perhaps that logic works in the reality-free zone we call the Beltway, but back in the real world this simply doesn’t add up. Regardless of how well-intentioned any of these goals and proposals may be, it should be equally clear that there is no free lunch, even with spectrum auction proceeds fueling the high-tech gravy train. The proposals and programs the FCC sets forth will impose serious economic costs that shouldn’t be so casually dismissed, especially using the weak reasoning that “improvements in the government efficiency” will magically manifest themselves thanks to massive new government intervention in the field. (If you think you’ve heard this one before, you have. See: The current health care debate.)
Moreover, if everything really does hang on the promise of spectrum auction revenues covering the broadband spending binge, well, bad news: The agency is
never going to bring in enough to cover what they’ve proposed here. The reason is simple: Most of the spectrum they want to grab is currently occupied by someone else! Continue reading →
Details are starting to trickle out about the Federal Communications Commission’s (FCC) National Broadband Plan, which is due out tomorrow. Someone just posted the Executive Summary here. I haven’t had a chance to go through it all yet, but I’m looking forward to learning more about what the agency’s plans are on this front.
On Friday (again, before seeing any details), I offered some fairly mushy comments about the idea of national “plan” to the gang over at the excellent new site, FiveQsOnTech.com. The site has a great format: Five questions on technology and policy asked and answered (usually on tape) by technology policy wonks. I’m honored to be among the first couple of experts featured on the site, along with Markham Erickson of the Open Internet Coalition and Rob Atkinson of ITIF.
In the first 3 minutes of this second of the two videos I appear in, I offered some thoughts about “The Plan”:
http://www.youtube.com/v/sBRL2RfdMk4&rel=0&color1=0xb1b1b1&color2=0xcfcfcf&hl=en_US&feature=player_embedded&fs=1
The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology.