Wall Street Journal columnist Holman Jenkins has a terrific, wide-ranging interview with Google CEO Eric Schmidt in today’s paper that is well worth reading. One thing worth highlighting is Schmidt’s comments on the “economic disaster that is the American newspaper.” He argues that, “The only way the problem [of insufficient revenue for news gathering] is going to be solved is by increasing monetization, and the only way I know of to increase monetization is through targeted ads.”
Absolutely correct. It’s a point that Berin Szoka, Ken Ferree and I tried to make in PFF’s mega-filing in the FCC’s “Future of Media” proceeding in early May, and Berin and I stressed it in even more detail in our piece on”Chairman Leibowitz’s Disconnect on Privacy Regulation & the Future of News.” The key takeaway: If Washington goes to war against advertising — and targeted advertising in particular — then there will be no future for private news. As we stated there:
The reason for the indispensability of advertising is simple: Information (including news and other forms of “content”) has “public good” characteristics that make it is very difficult (and occasionally impossible) for information-publishers to recoup their investments. Simply put, they quite literally lack pricing power: Whatever they charge, someone else will charge less for a close substitute, inevitably leading to “free” distribution of the content, even though the content is anything but free to produce. Advertising is the one business model that has traditionally saved the day by rewarding publishers for attracting the attention of an audience.
Thus an attack on advertising is an attack on media / news itself. And yet Washington is currently engaged in an all-out assault on advertising, marketing, and data collection efforts / business models.
Incidentally, Google recently submitted comments with the Federal Trade Commission in reaction to its Staff Discussion Draft about the future of journalism and laid out their views on many of these issues. More importantly, as summarized on pg. 30 (of the pdf) of this Newspaper Association of America filing to the FTC, Google has proposed an interesting monetization model that utilizes Google Search, Google Checkout and DoubleClick ad server, “to build a premium content system for newspapers.” Worth checking out. Kudos to Google for taking these steps and to Schmidt for again stressing the importance of targeted advertising for the future of media.
Working in any field of public policy is a bit like living in a haunted house: You spend most of your day dodging bogeymen, ghosts, phantasms, phantoms and specters of imagined harms, frauds, invasions and various conspiracies supposedly perpetrated by evil companies against helpless consumers, justice, God, Gaia, small woodland creatures and every sort of underserved, disadvantaged and/or underprivileged group of man, animal, vegetable and mineral imaginable.
But Internet policy—particularly online privacy—tends to be haunted by such groundless imaginings far more than most other areas of policy, largely because it manifests itself in ways that are far more real and immediate to ordinary users. For example, as outraged as any of us might feel about the Gulf oil spill, how many of us have the slightest clue what’s really involved (beyond what we’ve learned watching TV anchors stumble through a vocabulary they don’t understand)?
By contrast, huge numbers of Americans have daily interaction with web services like those provided by Google, Microsoft, Yahoo, Twitter and Facebook. That doesn’t mean we necessarily understand how these technologies work. Indeed, quite the contrary! As Arthur C. Clark said, “Any sufficiently advanced technology is indistinguishable from magic.” But we often think we know how these technological marvels work, and certainly sound much more informed when we spout off (pun intended) about these things than, say, “top kills” on the bottom of the ocean floor. In short, we know just enough web services to be dangerous when we ground strong policy positions in our unsophisticated understanding of how things really work online.
There are few better examples of this than the constantly repeated bugaboo that “Facebook sells your data to advertisers!” Or “Facebook only wants you to share more information with more people for advertising purposes!” These myths bear no relation to how advertising on social networking sites actually works, as Facebook CEO Sheryl Sandberg explains beautifully in a short tutorial video. Here’s the key portion: Continue reading →
“Don’t turn COPPA into a sweeping age verification mandate for the Internet!” That was essentially the core message of joint comments (below) Adam Thierer and I today filed with the Center for Democracy & Technology and the Electronic Frontier Foundation on the FTC’s Implementation Review of the rules that implement the Children’s Online Privacy Protection Act of 1998 (which requires verifiable parental consent for kids under 13 to use most interactive sites and services if those sites are “directed to” them or if the site has “actual knowledge” it might be collecting personal information from such kids or allowing them to share such information through the site).
Specifically, we counsel the Commission against expanding COPPA beyond its original, limited purposes and scope, or calling on Congress to enact an expansion. In a techno-functional sense, COPPA is already “expansive,” since it is essentially device- and technology- neutral—essentially applying to any site or service that uses the Internet. That flexibility should allow the FTC to apply the statute in a changing landscape without further legislative changes. But we explain why COPPA is necessarily narrow in its age scope and the “directed to” and “actual knowledge” concepts that actually trigger COPPA’s requirements—and why changing any one of these three critical parts would inevitably lead to unconstitutional restrictions on the speech rights of adults, minors, and site operators, while actually reducing online privacy but without enhancing the online safety of children.
We call instead for the agency (i) to use the breadth and flexibility already given to it by Congress in the COPPA statute to enforce the statute in a manner consistent with the rapidly changing technical landscape and (ii) to supplement enforcement of that existing law with increased educational efforts and promotion of parental empowerment solutions.
Adam and I certainly have our differences with CDT and EFF on some issues, but this is not one of them! I’m deeply proud to join with these organizations in pointing out the unintended consequences of expanding regulation in an area where all too many people stop thinking carefully about the effects of regulation because, they seem to think, “We can never do enough for the children!” As we point out in our comments, the trade-offs here aren’t just between “The Children” and anyone’s narrow economic interests, but run far, far deeper. Adam & I did our best to succinctly capture the true, complex cluster of issues at stake with the title of the paper we released last summer about COPPA expansion: “COPPA 2.0: The New Battle over Privacy, Age Verification, Online Safety & Free Speech.”
The stakes here for our digital future could hardly be higher, yet more subtle. Continue reading →
I’m late to the party, but I wanted to say a few things about the District Court’s decision in the Viacom v. YouTube case this week and. This will be a four-part post, covering:
1. The holding
2. The economic principle behind it
3. The next steps in the case
4. A review of the errors in legal analysis and procedure committed by reporters covering the case
Continue reading →
So, I’m sitting here at today’s Federal Trade Commission (FTC) workshop, “Will Journalism Survive the Internet Age?” and several panelists have argued that private “professional” media is toast, not just because of the rise of the Net and digital media, but also because the inherent cross-subsidy that advertising has traditionally provided is drying up. It very well could be the case that both statements are true and that private media operators are in some trouble because of it. But what nobody seems to be acknowledging is that our government is currently on the regulatory warpath against advertising and that this could have profound impact on the outcome of this debate.
As Berin Szoka and I noted in a recent paper, “The Hidden Benefactor: How Advertising Informs, Educates & Benefits Consumers,” the FTC, the FCC, the FDA, and Congress are all considering, or already imposing, a host of new rules that will seriously affect advertising markets. This article in AdAge today confirms this:
The advertising industry is heading for a “tsunami” of regulation and is at a “tipping point” of greatly increased scrutiny, warned a panel on social media and privacy at the American Advertising Federation conference here [in Orlando].
The reason this is so important for the ongoing debate about the future of media and journalism is because, as Berin and I argued in our paper: Continue reading →
For the past month, online companies have considered the privacy legislation discussion draft from Rep. Boucher and Stearns. The legislation is a broad attempt to set privacy defaults for the collection, use and sharing of information on the Internet.
Last Friday, NetChoice submitted comments to Rep. Boucher and Stearns.
While there are some aspects of the bill to like (eg. no private right of action), we’re worried that the bill does too much, too soon, to set opt-in or opt-out defaults. We explored in a previous post why flexibility in setting user defaults is important for continued social network innovation.
Fortunately, open and thoughtful consideration of this matter can continue without undue pressures to find a quick fix for privacy. Because while there have been state legislative proposals on privacy, there is not now a patchwork of state laws creating unworkable compliance challenges for interstate e-commerce. In other words, we can take our time and get this right.
Our comments discuss how the draft bill would interfere with four commonplace scenarios for collecting and using information. Here’s one of ’em:
1. The Operational Purpose exemption in this draft legislation is too narrow, in that it does not permit use of covered information for marketing or advertising to existing customers.
Case 1: A consumer buys a new washer and dryer and writes her email address on a product registration card. That’s an Operational Purpose, so no consent is required to collect the info.
But if the retailer later wants to send an email offering an extended service contract, he has to first obtain consent to send the email, since that’s a use of covered information for marketing purposes.
Continue reading →
Companies often promote consistent and reliable customer experiences. KLM touts itself as “the reliable airline” while Michelin touts its dependability “because so much is riding on your tires.” And now we have Yahoo, who announced that it will be increasing the social networking functionality in Yahoo Mail. Yahoo has the ability to promote consistency in determining user defaults for sharing information.
But social networking is a product much different than most – it is participatory. Passengers can’t fly airplanes and drivers don’t design tire tread, but social networking users control what and with whom they share information.
So what happens when a social networking service changes functionality or adds new features? How does a company be consistent in carrying-over a user’s preference from the prior version to the new one? What assumptions should it make on user privacy preferences for new features?
These considerations matter whenever an online service tries to increase its social networking functionality. Last week, Facebook unveiled new privacy controls, and we blogged that it was a welcome response to clear-up confusion. In the coming weeks Yahoo will change how status updates work in Yahoo Mail. Michael Arrington’s TechCrunch article describes it well:
[C]urrently to see status updates for others in Yahoo Mail, you have to have a mutual follow, meaning both people have agreed to be “friends.” You can then see that user’s Yahoo status updates as well as updates on third party services that they have added to their Yahoo profile as well. In the new version there will no longer be a requirement for a mutual follow. So, like on Twitter, users can follow whomever they choose. This isn’t actually a dramatic change for Yahoo, since users can follow others in this way already on Yahoo Messenger.
Like Google and Facebook before it, Yahoo is adding features to make its service more “social.” And because of the scrutiny over the changes by Google and Facebook, Yahoo seems to be going out of its way to assure users that they can rely and depend on Yahoo. According to the Yahoo Corporate Blog: Continue reading →
Yesterday, the Federal Trade Commission (FTC) hosted an all-day workshop on “Protecting Kids’ Privacy Online,” which looked into the Children’s Online Privacy Protection Act of 1998 (COPPA) and challenges posed to its enforcement by new technological developments. The FTC staff did a nice job bringing together and moderating 5 panels worth of participants, all of whom had plenty of interesting things to say about the future of COPPA. But I was more struck by what was not said yesterday. Namely, there was:
- ZERO explanation of the supposed harms of advertising, marketing, and data collection. Advertising-bashing is an old sport here in Washington, so I guess I should not have been surprised to hear several panelists yesterday engaging in teeth-gnashing and hand-wringing about advertising, marketing, and the data collection methods that make it possible. But this grousing just went on and on without any explanation by the critics of the supposed harms that would result from it.
- ZERO appreciation of the benefits of advertising, marketing, and data collection. Not once yesterday — NOT ONCE — did anyone pause to ask what it is that makes all these wonderful online sites, services and content free (or dirt cheap) to consumers. Everyone at this show was guilty of the “manna fallacy” (that all this stuff just falls magically to Earth from the Net Gods above). Well, back here in the real world, something has to pay for all those goodies, and that something is advertising and marketing, which are facilitated by data collection! Or would you like to pay $19.95 a month for each of those currently free sites and services? Yeah, I didn’t think so.
Continue reading →
In a nod to the popular Dos Equis commercials, Steve DelBianco blogs about the new Facebook privacy controls and says “Stay thirsty, Facebook. We need you guys to keep innovating.”
Right now you might not care much about Facebook’s ad revenue. But you might start caring if falling ad revenue forced Facebook to cut spending on things like server capacity and speed, content vetting, quality control, or development of new features and access for mobile devices.
You’d also start caring if Facebook over-reacted to privacy critics by slowing-down its innovation. I’m talking about innovations like “instant personalization“, which helps selected websites customize your content based on your Facebook profile. And innovation like a social plugin for content websites, which makes it so easy for you to refer articles or news to your Facebook friends. Both of these innovations help create a personal, social Internet experience, and they do it though sharing of information.
As I’ve previously blogged, we’re just at the tip of the iceberg when it comes to socializing the web. Whether it’s over beers or on the Internet, users want to be social — even if we’re not the most interesting guy in the world. So keep innovating, Facebook.
Today, Facebook announced significant improvements to its privacy management tools. As explained in the new Privacy Guide, this upgrade allows users to exercise greater and easier choice over sharing of their information on the site and through the site to third party applications and external websites.
By giving users powerful new tools to further protect their privacy, Facebook has employed a potent weapon to deal with marketplace apprehensions: self-regulation. Government intervention stands little chance in acting as swiftly or as effectively to tackle such matters. Rather than short-circuiting the self-regulatory process, we should trust that users are capable of choosing for themselves if given the right tools, and that companies like Facebook will respond to reputational pressure to develop, and constantly improve, those tools. That approach is far more likely to move us towards the ideal of user empowerment than is heavy-handed government regulation, which would override marketplace experimentation and have many unintended consequences for free online sites and services like Facebook.
Today’s announcement represents a major leap forward for privacy controls, but of course the company will have to keep innovating in this area as it does in others. In particular, I hope Facebook and other social networking services like MySpace, Buzz, LinkedIn and Flickr will all work on the next logical step forward: building Applications Programming Interfaces (API) that will allow third party tools to tap into each site’s unique privacy settings so that users can have a single “dashboard” for controlling how they share data across platforms. Continue reading →
The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology.