I’ve been floating around in conservative policy circles for 30 years and I have spent much of that time covering media policy and child safety issues. My time in conservative circles began in 1992 with a 9-year stint at the Heritage Foundation, where I launched the organization’s policy efforts on media regulation, the Internet, and digital technology. Meanwhile, my work on child safety has spanned 4 think tanks, multiple blue ribbon child safety commissions, countless essays, dozens of filings and testimonies, and even a multi-edition book.

During this three-decade run, I’ve tried my hardest to find balanced ways of addressing some of the legitimate concerns that many conservatives have about kids, media content, and online safety issues. Raising kids is the hardest job in the world. My daughter and son are now off at college, but the last twenty years of helping them figure out how to navigate the world and all the challenges it poses was filled with difficulties. This was especially true because my daughter and son faced completely different challenges when it came to media content and online interactions. Simply put, there is no one-size-fits-all playbook when it comes to raising kids or addressing concerns about healthy media interactions.

Something Must Be Done!

My personal approach, as I summarized in my book on these issues, was to first and foremost do everything in my power to (a) keep an open mind about new media content and platforms, and (b) ensure an open line of ongoing communication with my kids about the issues they might be facing. Shutting down conversation or calling for others to come in and save the day were the worst two options, in my opinion. As I summarized in my book, “At the end of the day, there is simply no substitute for talking to our children in an open, loving, and understanding fashion about the realities of-this world, including the more distasteful bits.” This was my Parental Prime Directive, if you will. I just always wanted to make sure that my kids felt like they could talk to me about their issues, no matter how varied, horrible, or heart-breaking those problems might be.

When talking with other parents through the years, I’ve heard about their own unique concerns and struggles. Every family faces different challenges because no two kids or situations are alike. Moreover, the challenges can feel overwhelming in our modern world of information abundance, which is flush with ubiquitous communications and media options. Sometimes these parental frustrations can fester and grow into a sort of rage until you finally hear folks utter that famous phrase: Something must be done! And that “something” is often some sort of government regulation “for the children.”

Again, I get it. When all your best efforts to help or protect your kids don’t seem to work according to plan, it’s only natural to call for help. But there are very serious problems associated with calling on government for that help. When legislators and regulators are asked to play the role of National Nanny, it comes with all the same baggage that accompanies many other efforts by the government to intervene in our lives or control what people or organizations can say or do.

Conservative Contradictions

These are particularly sensitive issues for many conservatives, both because conservatives tend to have more heightened concerns about media content and online safety issues, and also because the steps they often recommend to address these issues can quickly come into conflict with their own first principles.

Let me run through six ways that support for media content controls and child safety regulations can sometimes run afoul of conservative principles.

1) It’s a rejection of personal responsibility

Again, I understand all too well how hard parenting can be. But that does not mean we should abdicate our parental responsibilities to the State. Conservatives have spent decades fighting government when it comes to broken schools and the supposed brainwashing many kids get in them. The rallying cry of conservatives has long been: Let us have a greater say in how we raise and educate our children because the State is failing us or betraying our values.

Thus, when conservatives suggest that the State should be making decisions for us as it pertains to anything the government says is a “child safety” issue, there is some serious cognitive dissonance going on there. In his humorous Devil’s Dictionary, Ambrose Bierce jokingly defined responsibility as, “A detachable burden easily shifted to the shoulders of God, Fate, Fortune, Luck or one’s neighbor. In the days of astrology it was customary to unload it upon a star.” For parental responsibility to actually mean something, it has to be more than a “detachable burden” that we unload upon government.

2) It’s an embrace of the administrative state & arbitrary rule by unelected bureaucrats

Beyond the classroom, conservatives have long been concerned about the specter of massive administrative agencies and armies of unelected bureaucrats controlling our lives from the shadows. I’ve spent decades working with conservative organizations and scholars trying to get the administrative state under some control to scale back its enormous power, arbitrary edicts, and costly burdens. Over-criminalization has become such a problem that, according to the Heritage Foundation, “regulatory offenses… have proliferated to the point that, literally, nobody knows how many federal criminal regulations exist today.” We’re all criminals of some sort in the eyes of the modern regulatory state.

Yet, when conservatives advocate the expansion of the administrative state through new “online safety” regulations, they are just making the over-criminalization problem worse, including by treating our own children as guilty parties for simply trying to access the primary media platforms of their generation and interact with their friends there. For example, calls to ban all teens from social media until they’re 18 would result in the most massive “forbidden fruit” nightmare in American history, with every teen suddenly becoming a criminal actor and working together to tunnel around bans using the same sort of VPNs and evasion technologies people in China and other repressive nations use to get around over-bearing speech policies. [See: “Again, We Should Not Ban All Teens from Social Media”]

Needless to say, all this regulation and bureaucratic empowerment would have massive negative externalities for online freedom more generally as the era of “permissionless innovation” is replaced by a new age of permission-slip regulation.

3) It’s a rejection of the First Amendment & free speech rights

Conservatives have spent many decades pushing for greater First Amendment-based freedoms as it pertains to religious liberty and or organizational/corporate speech issues. Thus, when conservatives seek to undermine free speech principles and jurisprudence in the name of child safety, it could undo everything conservatives have been fighting to accomplish in those other contexts.

Conservatives are understandably upset with some social media platforms for being too over-zealous with certain types of speech takedowns or de-platformings. But two wrongs don’t make a right, and they should not be calling on Big Government to be imposing its own editorial judgments in place of private actors. [See: “The Great Deplatforming of 2021“ and “When It Comes to Fighting Social Media Bias, More Regulation Is Not the Answer.“]

4) It’s a rejection of property rights and freedom more generally

Related to the previous two points, conservatives have long upheld the sanctity of property rights in many different contexts. This includes the property rights that private establishments enjoy under the Constitution to generally decide how to structure their operations, who they will do business with, and how they will do so. Private organizations and religious institutions possess not only free speech rights in this regard, but property and contractual rights, too.

But when it comes to “child safety” mandates, some conservatives would toss all this out the window and undermine those rights, replacing them with burdensome regulatory mandates that tell private parties how to conduct their affairs. Again, there’s a lot of cognitive dissonance going on here and it could have serious blowback for conservatives when the property / contractual rights of other people or organizations are undermined on similar grounds.

5) It’s an embrace of frivolous lawsuits & the trial lawyers that bring them

The last time I checked, trial lawyers were not exactly the most conservative-friendly constituency. For many decades, conservatives have looked to advance tort reform, limit junk science and frivolous lawsuits, and make sure that the courts don’t engage in excessive judicial activism.

Unfortunately, many of the child safety regulations being proposed today would empower the regulatory state and trial lawyers at the same time. Many of the bills being floated open the door to open-ended litigation and potentially punishing liability for private platforms — and not just against deep-pocketed “Big Tech” companies. The fact is, once conservatives open the litigation floodgates based on amorphous accusations of potential online safety harms, they will be empowering the tort bar (one of the biggest supporters of the Democratic Party, no less) to launch a legal jihad against any and every media platform out there. Good luck putting that genie back in the bottle once you unleash it.

6) It’s an embrace of the same moral panic arguments your parents leveled against you

How quickly we forget the accusations our own parents and others leveled against us as children. Remember when video games were going to make us a lost generation of murderous youth? Or when rap and rock-and-roll music were going to send us straight to hell? Today, those kids are all grown up and trying to tell us that they are fine but it’s this latest generation that is doomed. It’s just an endless generational cycle of moral panics. [See: “Why Do We Always Sell the Next Generation Short?” and “Confessions of a ‘Vidiot’: 50 Years of Video Games & Moral Panics”] Today’s conservatives need to remember that they, too, were once kids and somehow muddled through to adulthood.

The “3-E” Approach Is the Better Answer

At this point, some of the people who’ve read this far are screaming at the screen: “So, are you saying we should just do nothing!?”

Absolutely not. But it is important that we consider less onerous and more practical ways to address these challenging issues without falling prey to Big Government gimmicks that would undermine other important principles. We should start by acknowledging that there are no easy fixes or silver-bullet solutions. The plain truth of the matter is that the best solutions here can seem messy and unsatisfying to many because they require enormous ongoing efforts to mentor and assist our kids at a far deeper level than some folks are comfortable with.

For example, it is just insanely uncomfortable to have to speak with your kids about online bullying or harassment, pornography, violence in movies and games, hate speech, and so on. And I haven’t even mentioned the hardest things to talk to kids about: The daily news of the real world: wars, violence, tragic accidents, famines, etc. Honestly, the hardest conversations I’ve had to have with my kids were those about school shootings. By comparison, many other discussions about online content and interactions were much easier. To the extent that we’re attempting to measure and address negative media affects, I firmly believe that there a few things in this world more horrifying to kids — or harder to talk with them about — than the first 10 minutes of what’s on cable news each hour of the day.

Regardless, whether we’re talking about the potential “harms” or mass media or online content, we cannot pretend there exists a simple solution to any of it. Here’s the better approach.

I recently authored a study for the American Enterprise Institute on, “Governing Emerging Technology in an Age of Policy Fragmentation and Disequilibrium.” It was my attempt to sketch out a flexible, pragmatic, bottom-up set of governance principles for modern technology platforms and issues. In that report, I noted how “[t]he First Amendment constitutes a particularly high barrier to the use of hard law in the United States,” and that court challenges were likely to continue to block many of the regulatory efforts being floated today, just as been the case countless times before in recent decades. Thus, we need to have backup approaches to online safety beyond one-size-fits-all regulatory Hail Mary passes.

I have described that backup plan as the “3-E” approach or “layered approach” to online safety:

• Empowerment of parents: Parental controls cannot solve all the world’s problems. It’s better to view them as helpful speed bumps or emergency alerts for when things are going badly for your child. In the old days, we placed a lot of faith in filtering, and that still has a role along with other tools that help place some reasonable limits not only on content but also overall consumption. But the best types of parental empowerment are those that force conversations between parents and kids by allowing reasonable monitoring to happen that is scaled by age (as in more limits for younger kids until they are gradually relaxed over time). And other carrot-and-stick tools and approaches are incredibly useful in helping parents place smart limits on youth activity and overall consumption.
• Education of youth: Education is the strategy with the most lasting impact for online safety. Education and digital literacy provide skills and wisdom that can last a lifetime. Specifically, education can help teach both kids (and adults!) how to behave in — or respond to — a wide variety of situations. Building resiliency and encouraging healthy interactions is the goal.
• Enforcement of existing laws: There are many sensible and straightforward laws already in place that address more concrete types of harm and harassment. And we have lots of laws pertaining to fraud and unfair and deceptive practices. Sometimes these rules can be challenging (and time-consuming) to enforce, but they constitute an existing backstop that can handle most worst-case scenarios when other less-restrictive steps fall short. And we should certainly tap these existing remedies before advancing unworkable new regulatory regimes.

I noted in my AEI study that, between 2000 and 2010, six major online-safety task forces or blue-ribbon commissions were formed to study online-safety issues and consider what should be done to address them. Each of them recommended some variant of the “3-E” approach as they encouraged a variety of best practices, educational approaches, and technological-empowerment solutions to address various safety concerns. Self-regulatory codes, private content-rating systems, and a wide variety of different parental-control technologies all proliferated during this period. Many multi-stakeholder initiatives and other organizations were also formed to address governance issues collaboratively. There are countless groups doing important work on this front today, including my old friends at the Family Online Safety Institute (FOSI) among many others.

These organizations push for a layered approach to online safety and work closely with educators, child development experts, and other academics and activists to find workable solutions to new online safety challenges as they arise. Their work is never done, and at times it can feel overwhelming. But, again, it’s the nature of the task at hand. We all must work together to continuously devise new and better approaches to addressing these challenges, because they will be endless. But let’s please not expect that we can unload these responsibilities on government and expect regulators to somehow handle it for us.

Do the Ends Justify the Means When it Comes to Media & Content Control?

I could be wasting my breath here because I’ve been attempting to appeal to conservative principles that may be rapidly disappearing from the modern conservative movement. Donald Trump radically disrupted everything in American politics, but especially the Republican Party. Many so-called national conservatives now live by Trump’s central operating principle: The ends justify the means. The ends are “owning the libs” in any way possible. And “the libs” include not only anyone on the Left of the political spectrum, but even those individuals and institutions that Trumpian conservatives believe are “the enemy” and controlled by “liberal interests.” By their definition, this now includes virtually all large media and technology companies and platforms. Thus, when we turn to the means, it’s increasingly the case that just about anything goes — including many traditional conservative principles.

To see how far we’ve come, recall what President Ronald Reagan said 35 years ago when vetoing an effort to reinstate the Fairness Doctrine. “History has shown that the dangers of an overly timid or biased press cannot be averted through bureaucratic regulation, but only through the freedom and compe­tition that the First Amendment sought to guarantee,” he said. At the time, President Reagan was confronted with some of the same arguments we hear today about media being too biased or conservatives not getting a fair shake. But he called upon his fellow conservatives to reject the idea that Big Government was the solution to such problems.

Unfortunately, Mr. Trump and some of his most loyal followers and even some major conservative groups today have largely given up on this logic and instead embraced regulation. While Trumpian conservatives love to decry everyone they oppose as “communists,” ironically it is this same group that is embracing a sort of communications collectivism as it pertains to modern media control. In the Trumpian worldview, media and tech platforms are useful only to the extent they carry out the will of the party — or at least the man on top of it.

These national conservatives have made a horrible miscalculation. Feeling aggrieved by Big Tech “bias,” or just feeling overwhelmed by things they don’t like about online platforms, they’ve decided that two wrongs make a right. In reality, two political wrongs never make a right, but they almost always combine to make government a lot bigger and more powerful.

It’s an incredibly naïve gamble almost certainly destined to fail, but they should ask themselves what it means if it works. This endless ratcheting effect will result in comprehensive state control of most channels of communications and information dissemination. Is this a game that you really think you can play better than the Lefties?

I’ll close by returning to one of Reagan’s favorite jokes. He always used to say that, “The nine most terrifying words in the English language are: I’m from the government and I’m here to help.” I would suggest that an even scarier version of that line would be, “We’re from the government and we’re here to help you parent your kids.”

Don’t let it be you uttering that line.

______________

Additional Reading

· Adam Thierer, “Again, We Should Not Ban All Teens from Social Media”

· Adam Thierer, “Why Do We Always Sell the Next Generation Short?”

· Adam Thierer, “The Classical Liberal Approach to Digital Media Free Speech Issues”

· Adam Thierer, “Confessions of a ‘Vidiot’: 50 Years of Video Games & Moral Panics”

· Adam Thierer, “Left and right take aim at Big Tech — and the First Amendment“

· Adam Thierer, “When It Comes to Fighting Social Media Bias, More Regulation Is Not the Answer“

· Adam Thierer, “Ongoing Series: Moral Panics / Techno-Panics”

· Adam Thierer, “No Goldilocks Formula for Content Moderation in Social Media or the Metaverse, But Algorithms Still Help”

· Adam Thierer, “FCC’s O’Rielly on First Amendment & Fairness Doctrine Dangers“

· Adam Thierer, “Conservatives & Common Carriage: Contradictions & Challenges“

· Adam Thierer, “The Great Deplatforming of 2021“

· Adam Thierer, “A Good Time to Re-Read Reagan’s Fairness Doctrine Veto“

· Adam Thierer, “Sen. Hawley’s Radical, Paternalistic Plan to Remake the Internet“

· Adam Thierer, “How Conservatives Came to Favor the Fairness Doctrine & Net Neutrality“

· Adam Thierer, “Sen. Hawley’s Moral Panic Over Social Media“

· Adam Thierer, “The White House Social Media Summit and the Return of ‘Regulation by Raised Eyebrow’“

· Adam Thierer, “The Surprising Ideological Origins of Trump’s Communications Collectivism“

· Adam Thierer, Parental Controls & Online Child Protection: A Survey of Tools and Methods (2009).

[Cross-posted from Medium.]

In an age of hyper-partisanship, one issue unites the warring tribes of American politics like no other: hatred of “Big Tech.” You know, those evil bastards who gave us instantaneous access to a universe of information at little to no cost. Those treacherous villains! People are quick to forget the benefits of moving from a world of Information Poverty to one of Information Abundance, preferring to take for granted all they’ve been given and then find new things to complain about.

But what mostly unites people against large technology platforms is the feeling that they are just too big or too influential relative to other institutions, including government. I get some of that concern, even if I strongly disagree with many of their proposed solutions, such as the highly dangerous sledgehammer of antitrust breakups or sweeping speech controls. Breaking up large tech companies would not only compromise the many benefits they provide us with, but it would undermine America’s global standing as a leader in information and computational technology. We don’t want that. And speech codes or meddlesome algorithmic regulations are on a collision course with the First Amendment and will just result in endless litigation in the courts.

There’s a better path forward. As President Ronald Reagan rightly said in 1987 when vetoing a bill to reestablish the Fairness Doctrine, “History has shown that the dangers of an overly timid or biased press cannot be averted through bureaucratic regulation, but only through the freedom and competition that the First Amendment sought to guarantee.” In other words, as I wrote in a previous essay about “The Classical Liberal Approach to Digital Media Free Speech Issues,” more innovation and competition are always superior to more regulation when it comes to encouraging speech and speech opportunities.

Can Government Get Things Just Right?

But what about the accusations we hear on both the left and right about tech companies failing to properly manage or moderate online content in some fashion? This is not only a concern for today’s most popular social media platforms, but it is a growing concern for the so-called Metaverse, where questions about content policies already surround activities and interactions on AR and VR systems.

The problem here is that different people want different things from digital platforms when it comes to content moderation. As I noted in a column for The Hill late last year:

there is considerable confusion in the complaints both parties make about “Big Tech.” Democrats want tech companies doing more to limit content they claim is hate speech, misinformation, or that incites violence. Republicans want online operators to do less, because many conservatives believe tech platforms already take down too much of their content.

Thus, large digital intermediaries are expected to make all the problems of the world go away through a Goldilocks formula whereby digital platforms will get content moderation “just right.” It’s an impossible task with billions of voices speaking. Bureaucrats won’t do a better job refereeing these disputes, and letting them do so will turn every content spat into an endless regulatory proceeding.

What Algorithms Can and Cannot Do to Help

But we should be clear on one thing: These disputes will always be with us because every media platform in history has had some sort of content moderation policies, even if we didn’t call them that until recently. Creating what used to just be called guidelines or standards for information production and dissemination has always been a tricky business. But the big difference between the old and new days comes down to three big problems:

#1- the volume problem: There’s just a ton of content online to moderate today compared to the past.

#2- the subjectivity problem: Content moderation always involves “eye of the beholder” questions, but now there’s even more of those problems because of Problem #1.

#3- the crafty adversaries problem: There are a lot of people bound and determined to get around any rules or restrictions platforms impose, and they’ll find creative ways to do so.

These problems are nicely summarized in an excellent new AEI report by Alex Feerst on, “The Use of AI in Online Content Moderation.” This is the fifth in a series of new reports from the AEI’s Digital Platforms and American Life project. The goal of the project is to highlight how the “democratization of knowledge and influence comes with incredible opportunities but also immense challenges. How should policymakers think about the digital platforms that have become embedded in our social and civic life?” Various experts have been asked to sound off on that question and address different challenges. The series kicked off in April with an essay I wrote on “Governing Emerging Technology in an Age of Policy Fragmentation and Disequilibrium.” More studies are coming.

In Feerst’s new report, the focus is squarely on the issue of algorithmic content moderation policies and procedures. Feerst provides a brilliant summary of how digital media platforms currently utilize AI to assist their content moderation efforts. He notes:

The short answer to the question “why AI” is scale — the sheer never-ending vastness of online speech. Scale is the prime mover of online platforms, at least in their current, mainly ad-based form and maybe in all incarnations. It’s impossible to internalize the dynamics of running a digital platform without first spending some serious time just sitting and meditating on the dizzying, sublime amounts of speech we are talking about: 500 million tweets a day comes out to 200 billion tweets each year. More than 50 billion photos have been uploaded to Instagram. Over 700,000 hours of video are uploaded to YouTube every day. I could go on. Expression that would previously have been ephemeral or limited in reach under the existing laws of nature and pre-digital publishing economics can now proliferate and move around the world. It turns out that, given the chance, we really like to hear ourselves talk.

So that’s the scale/volume problem in a nutshell. Algorithmic systems are absolutely going to be needed to help do some sifting and sorting, therefore.

What Do You Want to Do about Man-Boobs?

But then we immediately run into the subjectivity problem that pervades so many content moderation issues. When it comes to topics like hate speech, “There will be as many opinions as there are people. Three well-meaning civic groups will agree on four different definitions of hate speech,” Feerst notes.

Indeed, these eye-of-the-beholder judgment calls are ubiquitous and endlessly frustrating for content moderators. Let me tell you a quick story I told a Wall Street Journal reporter who asked me in 2019 why I gave up helping tech companies figure out how to handle these content moderation controversies. I had spent many years trying to help companies and trade associations figure this stuff out because I had been writing about these challenges since the late 1990s. But then finally I gave up. Why? Because of man boobs. Yes, man boobs. Here’s the summary of my story from that WSJ article:

Adam Thierer, a senior research fellow at the right-leaning Mercatus Center at George Mason University, says he used to consult with Facebook and other tech companies. The futility of trying to please all sides hit home after he heard complaints about a debate at YouTube over how much skin could be seen in breast-feeding videos.

While some argued the videos had medical purposes, other advisers wondered whether videos of shirtless men with large mammaries should be permitted as well. “I decided I don’t want to be the person who decides on whether man boobs are allowed,” says Mr. Thierer.

No, seriously. This has been one of the many crazy problems that content moderators have had to deal with. There are scumbag dudes with large mammaries who not only salaciously jiggle them around on camera for the world to see, but then even put whipped cream on their own boobs and lick it off. Now, if a woman does that and posts it on almost any mainstream platform, it’ll get quickly flagged (probably by an algorithmic filter) and probably immediately blocked. But if a dude with man boobs does the same thing, shouldn’t the policy be the same? Well, in our still very sexist world of double standards, policies can vary on that question. And I didn’t want any part of trying to figure out an answer to that question (and others like it), so I largely got out of the business of helping companies do so. Not even King Solomon could figure out a fair resolution to some of this stuff.

Algorithms can only help us so much here because, at some point, humans must tell the machines what to flag or block using some sort of subjective standard that will lead to all sorts of problems later. This is one reason why Feerst reminds us of another important rule here: “Don’t confuse a subjectivity problem for an accuracy problem, especially when you’re using automation technology.” As he notes:

If the things we’re doing are controversial among humans and it’s not even clear that humans judge them consistently, then using AI is not going to help. It’s just going to allow you to achieve the same controversial outcomes more quickly and in greater volume. In other words, if you can’t get 50 humans to agree on whether a particular post violates content rules, whether that content rule is well formulated, or whether that rule should exist, then why would automating this process help?

So Many Troublemakers (Sometimes Accidental)

The man boobs moderation story also reminds us that the crafty adversary problem will always haunt us, too. There are just so many bastards out there looking to cause trouble for whatever reason. “There will never be ‘set it and forget it’ technologies for these issues,” Feerst argues. “At best, it’s possible to imagine a state of dynamic equilibrium — eternal cops and robbers.”

That is exactly right. It’s a never-ending learning/coping process, as I noted in my earlier paper in the AEI series: “There is no Goldilocks formula that can get things just right” when it comes to many tech governance issues, especially content moderation issues. Muddling through is the new normal. And the exact same process is now unfolding for Metaverse content moderation. Algorithmic moderation helps us weed out the worst stuff and gives us a better chance of letting humans — with their limited time and resources — deal with the hardest problems (and problem-makers) out there.

Sometimes the content infractions may even be accidental. Here’s another embarrassing story involving me. I was asked last year to sit in on a VR meeting about content moderation in the Metaverse. I was wearing my headset and sitting at a virtual table with about 8 other people in the room. Back in my real-world office, I had my coffee mug sitting far to the right of me on a side table. After about 45 minutes of discussion, I realized that every time I reached way over to my right to grab my coffee mug in the real-world, my virtual self’s hand was reaching over and touching the crotch of the guy sitting next to me in the Metaverse! It looked like I was fondling the dude virtually! What a nightmare. I’m surprised someone didn’t report me for virtual harassment. I would have had to plead the coffee mug defense and throw myself on the mercy of the Meta-Court judge or jury.

Ok, so that’s a funny story, but you can imagine little mistakes like this happening all throughout the Metaverse as we slowly figure out how to interact normally in new virtual environments. We’ll have to rely on users and algorithms flagging some of the worst behaviors and then have humans evaluate the tough calls to the best of their abilities. But let’s not be fooled into thinking that humans can handle all these questions because the task at hand is too overwhelming and expensive for many platform operators. “Ten thousand employees here, ten thousand ergonomic mouse pads there, and pretty soon we’re talking about real money,” Feerst notes. “This is what the cost of running a platform looks like, once you’ve internalized the harmful and inexorable externalities we’ve learned about the hard way over the past decade.”

The Problem with “Explainability”

The key takeaway here is that content moderation at scale is messy, confusing, and unsatisfying. Do platforms need to be more transparent about how their algorithms work to do this screening? Yes, they do. But perfect transparency or “explainability” is impossible.

It’s hard to perfectly explain how algorithms work for the same reason it’s hard for your car mechanic to explain to you exactly how your car engine works. Except it’s even harder with algorithmic systems. As Feerst notes:

AI outputs can be hard to explain. In some cases, even the creators or managers of a particular product are no longer sure why it is functioning a particular way. It’s not like the formula to Coca-Cola; it’s constantly evolving. Requirements to “disclose the algorithm” may not help much if it means that companies will simply post a bunch of not especially meaningful code.

And if explainability was mandated by law, it’d instantly be gamed by still other troublemakers out there. A mandate to make AI perfectly transparent is an open invitation to every scam artist in the world to game platforms with new phishing attacks, spammy scams, and other such nonsense. Again, this is the “crafty adversaries” problem at work. Endless cat-and-mouse or, as Feerst says “eternal cops and robbers.”

So, in sum, content moderation — including algorithmic content moderation — is a nightmarishly difficult task, and there is no Goldilocks formula available to us that will help us get things just right. It’ll always just be endless experimentation and iteration with lots and lots of failures along the way. Learning by doing and constantly refining our systems and procedures is the key to helping us muddle through.

And if you think government will somehow figure this all out through some sort of top-down regulatory regime, ask yourself how well that worked out for Analog Era efforts to create “community standards” for broadcast radio and television. And then multiply that problem by a zillion. It cannot be done without severely undermining free speech and innovation. We don’t want to go down that path.

____________

Additional Reading

· “Again, We Should Not Ban All Teens from Social Media”

· “The Classical Liberal Approach to Digital Media Free Speech Issues”

· “AI Eats the World: Preparing for the Computational Revolution and the Policy Debates Ahead”

· “Left and right take aim at Big Tech — and the First Amendment“

· “When It Comes to Fighting Social Media Bias, More Regulation Is Not the Answer“

· “FCC’s O’Rielly on First Amendment & Fairness Doctrine Dangers“

· “Conservatives & Common Carriage: Contradictions & Challenges“

· “The Great Deplatforming of 2021“

· “A Good Time to Re-Read Reagan’s Fairness Doctrine Veto“

· “Sen. Hawley’s Radical, Paternalistic Plan to Remake the Internet“

· “How Conservatives Came to Favor the Fairness Doctrine & Net Neutrality“

· “Sen. Hawley’s Moral Panic Over Social Media“

· “The White House Social Media Summit and the Return of ‘Regulation by Raised Eyebrow’“

· “The Not-So-SMART Act“

· “The Surprising Ideological Origins of Trump’s Communications Collectivism“

After a slight delay, Jurimetrics has finally published my latest law review article, “Soft Law in U.S. ICT Sectors: Four Case Studies.” It is part of a major symposium that Arizona State University (ASU) Law School put together on “Governing Emerging Technologies Through Soft Law: Lessons For Artificial Intelligence” for the journal. I was 1 of 4 scholars invited to pen foundational essays for this symposium. Jurimetrics is a official publication of the American Bar Association’s Section of Science & Technology Law.

This report was a major undertaking that involved dozens of interviews, extensive historic research, several events and presentations, and then numerous revisions before the final product was released. The final PDF version of the journal article is attached.

Here is the abstract:

Traditional hard law tools and processes are struggling to keep up with the rapid pace of innovation in many emerging technologies sectors. As a result, policy­makers in the United States rely increasingly on less formal “soft law” governance mech­anisms to address concerns surrounding many newer technologies. This Article explores four case studies from different information technology areas where soft law mechanisms have already been utilized to address governance concerns. These four sectoral case stud­ies include domain name management, content oversight, privacy policy, and cyberse­curity matters. After considering the various soft law mechanisms used to address those issues, the Article concludes with some general thoughts about the effectiveness of those approaches and what lessons those case studies might hold for the use of soft law in other emerging technology sectors and contexts.

I have been covering telecom and Internet policy for almost 30 years now. During much of that time – which included a nine year stint at the Heritage Foundation — I have interacted with conservatives on various policy issues and often worked very closely with them to advance certain reforms.

If I divided my time in Tech Policy Land into two big chunks of time, I’d say the biggest tech-related policy issue for conservatives during the first 15 years I was in the business (roughly 1990 – 2005) was preventing the resurrection of the so-called Fairness Doctrine. And the biggest issue during the second 15-year period (roughly 2005 – present) was stopping the imposition of “Net neutrality” mandates on the Internet. In both cases, conservatives vociferously blasted the notion that unelected government bureaucrats should sit in judgment of what constituted “fairness” in media or “neutrality” online.

Many conservatives are suddenly changing their tune, however. President Trump and Sen. Ted Cruz, for example, have been increasingly critical of both traditional media and new tech companies in various public statements and suggested an openness to increased regulation. The President has gone after old and new media outlets alike, while Sen. Cruz (along with others like Sen. Lindsay Graham) has suggested during congressional hearings that increased oversight of social media platforms is needed, including potential antitrust action.

Meanwhile, during his short time in office, Sen. Josh Hawley (R-Mo.) has become one of the most vocal Internet critics on the Right. In a shockingly-worded USA Today editorial in late May, Hawley said, “social media wastes our time and resources” and is “a field of little productive value” that have only “given us an addiction economy.” He even referred to these sites as “parasites” and blamed them for a long list of social problems, leading him to suggest that, “we’d be better off if Facebook disappeared” along with various other sites and services.

Hawley’s moral panic over social media has now bubbled over into a regulatory crusade that would unleash federal bureaucrats on the Internet in an attempt to dictate “fair” speech on the Internet. He has introduced an astonishing piece of legislation aimed at undoing the liability protections that Internet providers rely upon to provide open platforms for speech and commerce. If Hawley’s absurdly misnamed new “Ending Support for Internet Censorship Act” is implemented, it would essentially combine the core elements of the Fairness Doctrine and Net Neutrality to create a massive new regulatory regime for the Internet.

The bill would gut the immunities Internet companies enjoy under 47 USC 230 (“Section 230”) of the Communications Decency Act. Eric Goldman of the Santa Clara University School of Law has described Section 230 as the “best Internet law” and “a big part of the reason why the Internet has been such a massive success.” Indeed, as I pointed out in a Forbes column on the occasion of its 15^th anniversary, Section 230 is “the foundation of our Internet freedoms” because it gives online intermediaries generous leeway to determine what content and commerce travels over their systems without the fear that they will be overwhelmed by lawsuits if other parties object to some of that content.

The Hawley bill would overturn this important legal framework for Internet freedom and instead replace it with a new “permissioned” approach. In true “Mother-May-I” style, Internet companies would need to apply for an “immunity certification” from the FTC, which would undertake investigations to determine if the petitioning platform satisfied a “requirement of politically unbiased content moderation.”

The vague language of the measure is an open invitation to massive political abuse. The entirety of the bill hinges upon the ability of Federal Trade Commission officials to define and enforce “political neutrality” online. Let’s consider what this will mean in practice.

Under the bill, the FTC must evaluate whether platforms have engaged in “politically biased moderation,” which is defined as moderation practices that are supposedly, “designed to negatively affect” or “disproportionately restricts or promote access to … a political party, political candidate, or political viewpoint.” As Blake Reid of the University of Colorado Law School rightly asks, “How, exactly, is the FTC supposed to figure out what the baseline is for ‘disproportionately restricting or promoting’? How much access or availability to information about political parties, candidates, or viewpoints is enough, or not enough, or too much?”

There is no Goldilocks formula for getting things just right when it comes to content moderation. It’s a trial-and-error process that is nightmarishly difficult because of the endless eye-of-the-beholder problems associated with constructing acceptable use policies for large speech platforms. We struggled with the same issues in the broadcast and cable era, but they have been magnified a million-fold in the era of the global Internet with the endless tsunami of new content that hits our screens and devices every day. “Do we want less moderation?” asks Sec, 230 guru Jeff Kosseff. “I think we need to look at that question hard.  Because we’re seeing two competing criticisms of Section 230,” he notes. “Some argue that there is too much moderation, others argue that there is not enough.”

The Hawley bill seems to imagine that a handful of FTC officials will magically be able to strike the right balance through regulatory investigations. That’s a pipe dream, of course, but let’s imagine for a moment that regulators could somehow sort through all the content on message boards, tweets, video clips, live streams, gaming sites, and whatever else, and then somehow figure out what constituted a violation of “political neutrality” in any given context. That would actually be a horrible result because let’s be perfectly clear about what that would really be: It would be a censorship board. By empowering unelected bureaucrats to make decisions about what constitutes “neutral” or “fair” speech, the Hawley measure would, as Elizabeth Nolan Brown of Reason summarizes, “put Washington in charge of Internet speech.” Or, as Sen. Ron Wyden argues more bluntly, the bill “will turn the federal government into Speech Police.” “Perhaps a more accurate title for this bill would be ‘Creating Internet Censorship Act,'” Eric Goldman is forced to conclude.

The measure is creating other strange bedfellows. You won’t see Berin Szoka of TechFreedom and Harold Feld of Public Knowledge ever agreeing on much, but they both quickly and correctly labelled Hawley’s bill a “Fairness Doctrine for the Internet.” That is quite right, and much like the old Fairness Doctrine, Hawley’s new Internet speech control regime would be open to endless political shenanigans as parties, policymakers, companies, and the various complainants line up to have their various political beefs heard and acted upon. “That’s the kind of thing Republicans said was unconstitutional (and subject to FCC agency capture and political manipulation) for decades,” says Daphne Keller of the Stanford Center for Internet & Society. Moreover, during the Net Neutrality holy wars, GOP conservatives endlessly blasted the notion that bureaucrats should be determining what constitute “neutrality” online because it, too, would result in abuses of the regulatory process. Yet, Sen. Hawley’s bill would now mandate that exact same thing.

What is even worse is that, as law professor Josh Blackman observes, “the bill also makes it exceedingly difficult to obtain a certification” because applicants need a supermajority of 4 of the 5 FTC Commissioners. This is public choice fiasco waiting to happen. Anyone who has studied the long, sordid history of broadcast radio and television licensing understands the danger associated with politicizing certification processes. The lawyers and lobbyists in the DC “swamp” will benefit from all the petitioning and paperwork, but it is not clear how creating a regulatory certification regime for Internet speech really benefits the general public (or even conservatives, for that matter).

Former FTC Commissioner Josh Wright identifies another obvious problem with the Hawley Bill: it “offers the choice of death by bureaucratic board or the plaintiffs’ bar.” That’s because by weakening Sec. 230’s protections, Hawley’s bill could open the floodgates to waves of frivolous legal claims in the courts if companies can’t get (or lose) certification. The irony of that result, of course, is that this bill could become a massive gift to the tort bar that Republicans love to hate!

Of course, if the law ever gets to court, it might be ruled unconstitutional. “The terms ‘politically biased’ and ‘moderation’ would have vagueness and overbreadth problems, as they can chill protected speech,” Josh Blackman argues. So it could, perhaps, be thrown out like earlier online censorship efforts. But a lot of harm could be done—both to online speech and competition—in the years leading up to a final determination about the law’s constitutionality by higher courts.

What is most outrageous about all this is that the core rationale behind Hawley’s effort—the idea that conservatives are somehow uniquely disadvantaged by large social media platforms—is utterly preposterous. In May, the Trump Administration launched a “tech bias” portal which “asked Americans to share their stories of suspected political bias.” The portal is already closed and it is unclear what, if anything, will come out of this effort. But this move and Hawley’s proposal point to the broader trend of conservatives getting more comfortable asking Big Government to redress imaginary grievances about supposed “bias” or “exclusion.”

In reality, today’s social media tools and platforms have been the greatest thing that ever happened to conservatives. Mr. Trump owes his presidency to his unparalleled ability to directly reach his audience through Twitter and other platforms. As recently as June 12, President Trump tweeted, “The Fake News has never been more dishonest than it is today. Thank goodness we can fight back on Social Media.” Well, there you have it!

Beyond the President, one need only peruse any social media site for a few minutes to find an endless stream of conservative perspectives on display. This isn’t exclusion; it’s amplification on steroids. Conservatives have more soapboxes to stand on and preach than ever before in the history of this nation.

Finally, if they were true to their philosophical priors, then conservatives also would not be insisting that they have any sort of “right” to be on any platform. These are private platforms, after all, and it is outrageous to suggest that conservatives (or any other person or group) are entitled to have a spot on any other them.

Some conservatives are fond of ridiculing liberals for being “snowflakes” when it comes to other free speech matters, such as free speech on college campuses. Many times they are right. But one has to ask who the real snowflakes are when conservative lawmakers are calling on regulatory bureaucracies to reorder speech on private platform based on the mythical fear of not getting “fair” treatment. One also cannot help but wonder if those conservatives have thought through how this new Internet regulatory regime will play out once a more liberal administration takes back the reins of power. Conservatives will only have themselves to blame when the Speech Police come for them.

Addendum: Several folks have pointed out another irony associated with Hawley’s bill is that it would greatly expand the powers of the administrative state, which conservatives already (correctly) feel has too much broad, unaccountable power. I should have said more on that point, but here’s a nice comment from David French of National Review, which alludes to that problem and then ties it back to my closing argument above: i.e., that this proposal will come back to haunt conservatives in the long-run:

when coercion locks in — especially when that coercion is tied to constitutionally suspect broad and vague policies that delegate immense powers to the federal government — conservatives should sound the alarm. One of the best ways to evaluate the merits of legislation is to ask yourself whether the bill would still seem wise if the power you give the government were to end up in the hands of your political opponents. Is Hawley striking a blow for freedom if he ends up handing oversight of Facebook’s political content to Bernie Sanders? I think not.

Additional thoughts on the Hawley bill:

Josh Wright

Daphne Keller

Blake Reid

TechFreedom

Josh Blackman

Sen. Ron Wyden

Jeff Kosseff

Eric Goldman

CCIA

NetChoice

Internet Association

David French at National Review

John Samples

[This essay originally appeared on the AIER blog on May 28, 2019. The USA TODAY also ran a shorter version of this essay as a letter to the editor on June 2, 2019.]

In a hotly-worded USA Today op-ed last week, Senator Josh Hawley (R-Missouri) railed against social media sites Facebook, Instagram, and Twitter. He argued that, “social media wastes our time and resources,” and is “a field of little productive value” that have only “given us an addiction economy.” Sen. Hawley refers to these sites as “parasites” and blames them for a litany of social problems (including an unproven link to increased suicide), leading him to declare that, “we’d be better off if Facebook disappeared.”

As far as moral panics go, Sen. Hawley’s will go down as one for the ages. Politicians have always castigated new technologies, media platforms, and content for supposedly corrupting the youth of their generation. But Sen. Hawley’s inflammatory rhetoric and proposals are something we haven’t seen in quite some time.

He sounds like those fire-breathing politicians and pundits of the past century who vociferously protested everything from comic books to cable television, the waltz to the Walkman, and rock-and-roll to rap music. In order to save the youth of America, many past critics said, we must destroy the media or media platforms they are supposedly addicted to. That is exactly what Sen. Hawley would have us do to today’s leading media platforms because, in his opinion, they “do our country more harm than good.”

We have to hope that Sen. Hawley is no more successful than past critics and politicians who wanted to take these choices away from the public. Paternalistic politicians should not be dictating content choices for the rest of us or destroying technologies and platforms that millions of people benefit from.

Addiction Panics: We’ve Been Here Before

Ironically, Sen. Hawley isn’t even right about what the youth of America are apparently obsessed with. Most kids view Facebook and Twitter as places where old people hang out. My teenage kids laugh when I ask them about those sites. Pew Research polling finds that many younger users are increasingly deleting Facebook (if they used it at all) or flocking to other platforms, such as Snapchat or YouTube.

But shouldn’t we be concerned with kids overusing social media more generally? Yes, of course we should—but that’s no reason to call for their outright elimination, as Sen. Hawley recommends. Such rhetoric is particularly concerning at a time when critics are proposing a “break up” of tech companies. Sen. Hawley sits on the U.S. Senate Judiciary Committee’s Subcommittee on Antitrust, Competition Policy and Consumer Rights. It is likely he and others will employ these arguments to fan the flames of regulatory intervention or antitrust action against at least Facebook.

Forcing social media sites to “disappear” or be broken up is one of the worst ways to deal with these concerns. It is always wise to mentor our youth and teach them how to achieve a balanced media diet. Many youths—and many adults—are probably overusing certain technologies (smartphones, in particular) and over-consuming some types of media. For those truly suffering from addiction, it is worth considering targeted strategies to address that problem. However, that is not what antitrust law is meant to address.

Moreover, concerns about addiction and distraction have popped up repeatedly during past moral panics and we should take such claims with a big grain of salt. Sociologist Frank Furedi has documented how, “inattention has served as a sublimated focus for apprehensions about moral authority” going back to at least the early 1700s. With each new form of media or means of communication, the older generation taps into the same “kids-these-days!” fears about how the younger generation has apparently lost the ability to concentrate or reason effectively.

For example, in the past century, critics said the same thing about radio and television broadcasting, comparing them to tobacco in terms of addiction and suggesting that media companies were “manipulating” us into listening or watching. Rock-and-roll and rap music got the same treatment, and similar panics about video games are still with us today.

Strangely, many elites, politicians, and parents forget that they, too, were once kids and that their generation was probably also considered hopelessly lost in the “vast wasteland” of whatever the popular technology or content of the day was. The Pessimists Archive podcast has documented dozens of examples of this reoccurring phenomenon. Each generation makes it through the panic du jour, only to turn around and start lambasting newer media or technologies that they worry might be rotting their kids to the core. While these panics come and go, the real danger is that they sometimes result in concrete policy actions that censor content or eliminate choices that the public enjoys. Such regulatory actions can also discourage the emergence of new choices.

Missed Opportunity, or Marvelous Achievement?

Sen. Hawley makes another audacious assertion in his essay when he suggests that social media has not provided any real benefit to American workers or consumers. He says the rise of the Digital Economy has “encouraged a generation of our brightest engineers to enter a field of little productive value,” which he regards as “an opportunity missed for the nation.”

This is an astonishing statement, made more troubling by Hawley’s claim that all these digital innovators could have done far more good by choosing other professions. “What marvels might these bright minds have produced,” Hawley asks, “had they been oriented toward the common good?”

Why is it that Sen. Hawley gets to decide which professions are in “the common good”? This logic is insulting to all those who make a living in these sectors, but there is a deeper hubris in Sen. Hawley’s argument that social media does not serve “the common good.” Had some benevolent philosopher kings in Washington stopped the digital economy from developing over the past quarter century, would all those tech workers really have chosen more noble-minded and worthwhile professions? Could he or others in Congress really have had the foresight to steer us in a better direction?

In reality, U.S. tech companies produce high-quality jobs and affordable, collaborative communications platforms that are popular across the globe. In response to Sen. Hawley’s screed, the Internet Association, which represents America’s leading digital technology companies, noted that, in Sen. Hawley’s home state of Missouri alone, the Internet supports 63,000 jobs at 3,400 companies and contributed $17 billion in GDP to the state’s economy. Presumably, Sen. Hawley would not want to see those benefits “disappear” along with the social media sites that helped give rise to them.

But the Internet and social media have an equally profound impact on the entire U.S. economy, adding over 9,000 jobs and nearly 570 businesses to each metropolitan statistical area. The Digital Economy is a great American success story that is the envy of the world, not something to be lamented and disparaged as Sen. Hawley has.

For someone who believes that Facebook is a “drug” and a “parasite,” it is curious how active Sen. Hawley is on Facebook, as well as on Twitter. If he really believes that “we’d be better off if Facebook disappeared,” then he should lead by example and get off the sites. But that is a decision he will have to make for himself. He should not, however, make it for the rest of us.

A decade ago, a heated debate raged over the benefits of “a la carte” (or “unbundling”) mandates for cable and satellite TV operators. Regulatory advocates said consumers wanted to buy all TV channels individually to lower costs. The FCC under former Republican Chairman Kevin Martin got close to mandating a la carte regulation.

But the math just didn’t add up. A la carte mandates, many economists noted, would actually cost consumers just as much (or even more) once they repurchased all the individual channels they desired. And it wasn’t clear people really wanted a completely atomized one-by-one content shopping experience anyway.

Throughout media history, bundles of all different sorts had been used across many different sectors (books, newspapers, music, etc.). This was because consumers often enjoyed the benefits of getting a package of diverse content delivered to them in an all-in-one package. Bundling also helped media operators create and sustain a diversity of content using creative cross-subsidization schemes. The traditional newspaper format and business is perhaps the greatest example of media bundling. The classifieds and sports sections helped cross-subsidize hard news (especially local reporting). See this 2008 essay by Jeff Eisenach and me for details for more details on the economics of a la carte.

Yet, with the rise of cable and satellite television, some critics protested the use of bundles for delivering content. Even though it was clear that the incredible diversity of 500+ channels on pay TV was directly attributable to strong channels cross-subsidizing weaker ones, many regulatory advocates said we would be better off without bundles. Moreover, they said, online video markets could show us the path forward in the form of radically atomized content options and cheaper prices.

Flash-forward to today. As this Wall Street Journal article points out, online video providers are rejecting a la carte and recreating content bundles to keep a diversity of programming flowing. This happened in unregulated markets without any FCC rules. YouTube, Hulu, PlayStation, and many other online video providers are creating new bundles and monetization schemes.

It is also worth noting that this same sort of “re-bundling” of content is happening with online news sources and other digital platforms as various sites struggle to find content monetization schemes that can sustain diverse, high-quality content in the Digital Era. Content bundling and various paywall schemes are helping them do so.

The lesson here is that the economics of content creation and delivery are quite dynamic, challenging, and extremely hard to predict. Mandating “a la carte” unbundling of content sounded smart and well-intentioned to many people a decade ago, but it proved to be problematic even in highly competitive online markets. Thankfully, we did not mandate unbundling by law. We waited and watched to see how it naturally played out in various markets. We now have a better feel for how big of a mistake mandatory a la carte would have likely been in practice.

Congress is considering reforming television laws and solicited comment from the public last month. On Friday, I submitted a letter encouraging the reform effort. I attached the paper Adam and I wrote last year about the current state of video regulations and the need for eliminating the complex rules for television providers.

As I say in the letter, excerpted below, pay TV (cable, satellite, and telco-provided) is quite competitive, as this chart of pay TV market share illustrates. In addition to pay TV there is broadcast, Netflix, Sling, and other providers. Consumers have many choices and the old industrial policy for mass media encourages rent-seeking and prevents markets from evolving.

Dear Chairman Upton and Chairman Walden:

Thank you for the opportunity to respond to the Committee’s December 2014 questions on video regulation.

…The labyrinthine communications and copyright laws governing video distribution are now distorting the market and therefore should be made rational. Congress should avoid favoring some distributors at the expense of free competition. Instead, policy should encourage new entrants and consumer choice.

The focus of the committee’s white paper on how to “foster” various television distributors, while understandable, was nonetheless misguided. Such an inquiry will likely lead to harmful rules that favor some companies and programmers over others, based on political whims. Congress and the FCC should get out of “fostering” the video distribution markets completely. A light-touch regulatory approach will prevent the damaging effects of lobbying for privilege and will ensure the primacy of consumer choice.

Some of the white paper’s questions may actually lead policy astray. Question 4, for instance, asks how we should “balance consumer welfare and the rights of content creators” in video markets. Congress should not pursue this line of inquiry too far. Just consider an analogous question: how do we balance consumer welfare and the interests of content creators in literature and written content? The answer is plain: we don’t. It’s bizarre to even contemplate.

Congress does not currently regulate the distribution markets of literature and written news and entertainment. Congress simply gives content producers copyright protection, which is generally applicable. The content gets aggregated and distributed on various platforms through private ordering via contract. Congress does not, as in video, attempt to keep competitive parity between competing distributors of written material: the Internet, paperback publishers, magazine publishers, books on tape, newsstands, and the like. Likewise, Congress should forego any attempt at “balancing” in video content markets. Instead, eliminate top-down communications laws in favor of generally applicable copyright laws, antitrust laws, and consumer protection laws.

As our paper shows, the video distribution marketplace has changed drastically. From the 1950s to the 1990s, cable was essentially consumers’ only option for pay TV. Those days are long gone, and consumers now have several television distributors and substitutes to choose from. From close to 100 percent market share of the pay TV market in the early 1990s, cable now has about 50 percent of the market. Consumers can choose popular alternatives like satellite- and telco-provided television as well as smaller players like wireless carriers, online video distributors (such as Netflix and Sling), wireless Internet service providers (WISPs), and multichannel video and data distribution service (MVDDS or “wireless cable”). As many consumers find Internet over-the-top television adequate, and pay TV an unnecessary expense, “free” broadcast television is also finding new life as a distributor.

The New York Times reported this month that “[t]elevision executives said they could not remember a time when the competition for breakthrough concepts and creative talent was fiercer” (“Aiming to Break Out in a Crowded TV Landscape,” January 11, 2015). As media critics will attest, we are living in the golden age of television. Content is abundant and Congress should quietly exit the “fostering competition” game. Whether this competition in television markets came about because of FCC policy or in spite of it (likely both), the future of television looks bright, and the old classifications no longer apply. In fact, the old “silo” classifications stand in the way of new business models and consumer choice.

Therefore, Congress should (1) merge the FCC’s responsibilities with the Federal Trade Commission or (2) abolish the FCC’s authority over video markets entirely and rely on antitrust agencies and consumer protection laws in television markets. New Zealand, the Netherlands, Denmark, and other countries have merged competition and telecommunications regulators. Agency merger streamlines competition analyses and prevents duplicative oversight.

Finally, instead of fostering favored distribution channels, Congress’ efforts are better spent on reforms that make it easier for new entrants to build distribution infrastructure. Such reforms increase jobs, increase competition, expand consumer choice, and lower consumer prices.

Thank you for initiating the discussion about updating the Communications Act. Reform can give America’s innovative telecommunications and mass-media sectors a predictable and technology neutral legal framework. When Congress replaces industrial planning in video with market forces, consumers will be the primary beneficiaries.

Sincerely,

Brent Skorup Research Fellow, Technology Policy Program Mercatus Center at George Mason University

Aereo’s antenna system is frequently characterized perjoratively as a Rube Goldberg contraption, including in the Supreme Court oral arguments. Funny enough, Preston Padden, a veteran television executive, has characterized the legal system producing over-the-air broadcast television–Aereo’s chief legal opponents–precisely the same way. It’s also ironic that Aereo is in a fight for its life over alleged copyright violations since communications law diminishes the import of copyright law and makes copyright almost incomprehensible. Larry Downes calls the legal arguments for and against Aereo a “tangled mess.” David Post at the Volokh Conspiracy likewise concluded the situation is “pretty bizarre, when you think about it” after briefly exploring how copyright law interacts with communications law.

I agree, but Post actually understates how distorted the copyright law becomes when TV programs pass through a broadcaster’s towers, as opposed to a cable company’s headend. In particular, a broadcaster, which is mostly a passive transmitter of TV programs, gains more control over the programs than the copyright owners. It’s nearly impossible to separate the communications law distortions from the copyright issues, but the Aereo issue could be solved relatively painlessly by the FCC. It’s unfortunate copyright and television law intertwine like this because a ruling adverse to Aereo could potentially–and unnecessarily–upend copyright law.

This week I’ve seen many commentators, even Supreme Court justices, mischaracterize the state of television law when discussing the Aereo case. This is a very complex area and below is my attempt to lay out some of the deeper legal issues driving trends in the television industry that gave rise to the Aereo dispute. Crucially, the law is even more complex than most people realize, which benefits industry insiders and prevents sensible reforms.

The FCC, and Congress to a lesser extent, has gone to great lengths to protect broadcasters from competition from other television distributors, as the Copyright Office has said. There is nothing magical about free broadcast television. It’s simply another distribution platform that competes with several other TV platforms, including cable, satellite, IPTV (like AT&T U-Verse), and, increasingly, over-the-top streaming (like Netflix and Amazon Prime Instant Video).

Hundreds of channels and thousands of copyrighted programs are distributed by these non-broadcast distributors (mostly) through marketplace negotiations.

Strange things happen to copyrights when programs are delivered via the circuitous route 1) through a broadcast tower and 2) to a cable/satellite operator. Namely, copyright owners, by law, lose direct control over their intellectual property when local broadcasters transmit it. At that point, regulators, not copyright holders, determine the nature of bargaining and the prices paid.

Distribution of non-local broadcast programming

Right away, an oddity arises. Copyright treatment of local broadcasts differs from distant (non-local) broadcasts. Cable and satellite companies have never paid copyright royalties for signals from a local broadcast. (This is one reason the broadcast lawyer denied that Aereo is a cable company during Supreme Court oral arguments–Aereo merely transmits local broadcast signals.) But if a cable or satellite company retransmits signals from a non-local (“distant”) broadcaster, the company pays the Copyright Office for a copyright license. However, this license is not bargained for with the copyright holder; it is a compulsory license. Programmers are compelled to license their program and in return receive the price set by the panel of Copyright Office officials.

The Copyright Office has asked Congress for over 30 years to eliminate the compulsory license system for distant broadcasts. There are few major distant broadcasters carried by cable companies but the most popular is WGN, a Chicago broadcaster that is carried on many cable systems across the country. The programmers complain they’re underpaid and the Copyright Office has the impossible task of deciding a fair price for a compulsory copyright license. Alleged underpayment is partly why TBS, in 1998, converted from a distant broadcast network to a pure cable network, where TBS could bargain with cable and satellite companies directly.

Distribution of local broadcast programming

Yet things get even stranger when you examine how local broadcasts are treated. Copyright is, as best as I can tell, a nullity when a program is broadcast by a local broadcaster and then retransmitted by a cable company. Until 1992, no payments passed from cable companies to either the broadcaster or copyright holder of broadcast programs. Congress made the retransmission of locally-broadcasted programs royalty-free. Cable companies captured the free over-the-air signals and sold those channels along with cable channels to subscribers.

Why would broadcasters and programmers stand for this? They tolerated this for decades because the FCC requires broadcasts to be “free”–that is, funded by ads. Local broadcasters and programmers benefited from cable distribution because cable TV reaches more viewers that broadcasters can’t reach.

Then in 1992, as cable TV grew, Congress decided to rebalance the competitive scales. Congress created a new property right that ensured local broadcasters got paid by cable companies–the retransmission right. Congress did not require a copyright royalty payment. So cable (and later satellite) still didn’t pay copyright royalties for local broadcasts. The “retransmission right” is held by, not the copyright owner, but the owner of the broadcast tower. This is a bizarre situation where, as the Copyright Office says, Congress accords a “licensee of copyrighted works (broadcasters) greater proprietary rights than the owner of copyright.”

Welcome to the bizarro world of broadcast television that Aereo finds itself. On the bright side, perhaps the very public outcry over Aereo means the laws that permitted Aereo’s regulatory arbitrage will be scrutinized and rationalized. In the short term, I’m hoping the Supreme Court, as Downes mentions, punts the case to a lower court for more fact-finding. Aereo is a communications law case disguised as a copyright case. These issues really need to be before the FCC for a determination about what is a “cable operator” and an “MVPD.” A finding that Aereo is either one would end this copyright dispute.

It appears that Federal Communications Commission (FCC) Chairman Tom Wheeler is returning to a competition-based approach to communications regulation. Chairman Wheeler’s emphasis on “competition, competition, competition” indicates his intent to intervene in communications markets only when it is necessary to correct a market failure.

I expect most on both sides of the political spectrum would welcome a return to rigorous market analysis at the FCC, but you can’t please all of the people all of the time. The American Television Alliance (ATVA), whose FCC petition wouldn’t withstand even a cursory market power analysis, is sure to be among the displeased.

The ATVA petition asks the FCC to regulate prices for retransmission consent (the prices video service providers (VSPs) pay for the rights to provide broadcast television programming to pay-TV subscribers) because retransmission fees and competition among VSPs are increasing. Though true, this data doesn’t indicate that TV stations or broadcast television networks have market power — it indicates that legislative and policy efforts to increase competition among VSPs are working.

The increase in retransmission consent fees is the natural consequence of the increase in competition among VSPs. When incumbent cable companies were the dominant VSPs, they could use the threat of a blackout to force broadcasters to grant retransmission consent at extremely low prices (or even for free). If a TV station balked, it risked losing substantial advertising revenue because there was no other VSP to retransmit the station’s signal.

As a result of increasing competition among VSPs, broadcasters are finally in a position to negotiate fairer prices for their content. When a VSP threatens a blackout today, a broadcaster has the option of calling the VSP’s bluff, as Wall Street observed when Time Warner yanked CBS off the air during a dispute about wireless distribution rights last fall. Now that there are competitive VSPs in most markets, cable operators have something to lose from a blackout too — their subscribers.

VSPs have responded to increasing market competition by asking the government for special treatment. ATVA has cloaked their rent-seeking request in the language of market power, but haven’t provided any analysis supporting their contention that retransmission consent fees are “too high.” They appear to be hoping that, if they cry wolf loud enough, they can avoid paying a fairer price for television programming.

If retransmission fees were really “too high,” one would expect that they would be significantly higher than the fees VSPs charge for their own content. According to the data, however, VSPs charge significantly more for their affiliated content than broadcasters charge for retransmission consent. In 2012, VSPs paid an average of $1.50 for the top ten channels affiliated with cable networks. In comparison, VSPs paid an average of $0.58 in 2012 for the right to retransmit the channels of the top ten TV station companies (e.g., Sinclair) — sixty one percent (61%) less than VSPs were willing to pay for their affiliated content. (Sources: Kagan and SNL)

Are the significantly higher prices cable networks charged for their programming in 2012 driven by consumer ratings? No. Kagan data indicates that, in 2012, VSPs paid approximately the same amount — $0.57 per subscriber — for CNN (CNN en Español sold for $0.58) as the average for the top ten TV stations. Despite its similar price, however, CNN averaged only about 600,000 daily viewers during primetime whereas each of the national broadcast network news programs averaged over 8 million evening viewers daily. This viewership data, albeit limited, indicates that broadcasters are charging ten times less for their programming than VSPs charge for similar programming.

The premium VSPs pay for their own content reflects the economics of the video programming market. Though competition among VSPs has increased, there is still significantly greater concentration and market power in the video distribution market than in the video programming market. According to the FCC’s most recent video competition report, only about one-third (35%) of homes had access to at least four VSPs in 2011. (See Fifteenth Report at Table 2) The FCC found that, even in areas with four VSPs, the Herfindahl-Hirschman Index (HHI), a common measure of horizontal market concentration, was over 2,500 (a highly concentrated marketplace). (See id. at ¶ 37) In comparison, there were more than twenty national video programming networks. (See id. at App. B)

Even a cursory review of the data indicates that recent increases in retransmission consent fees are a sign of market success, not a failure. It should be no surprise that, as competition among VSPs has increased, the price of retransmission consent has increased with it. It is the predictable result of cable’s decreasing monopsony power.

CBS and Time Warner Cable have been embroiled in a heated contractual battle over the past week that has resulted in viewers in some major markets losing access to CBS programming. When disputes like these go nuclear and signal blackouts occur, it is inevitable that some folks will call for policy interventions since nobody likes it when the content they love goes dark.

While some policy responses are warranted in this matter, policymakers should proceed with caution. Heated contractual negotiations are a normal part of any capitalist marketplace. We shouldn’t expect lawmakers to intervene to speed up negotiations or set content prices because that would disrupt the normal allocation of programming by placing a regulatory thumb too heavily on one side of the scale. This is why I am somewhat sympathetic to CBS in this fight. In an age when content creators struggle to protect their copyrighted content and get compensation for it, the last thing we need is government intervention that undermines the few distribution schemes that actually work well.

On the other hand, Time Warner Cable deserves sympathy here, too, since CBS currently enjoys some preexisting regulatory benefits. As I noted in this 2012 Forbes oped, “Toward a True Free Market in Television Programming,” many layers of red tape still encumber America’s video marketplace and prevent a truly free market in video programming from developing. The battle here revolves around the “retransmission consent” rules that were put in place as part of the Cable Act of 1992 and govern how video distributors carry signals from TV broadcasters, which includes CBS.

But those “retrans” rules are not the only part of the regulatory mess here. There are many related federal rules that tip the scales toward broadcasters and content creators, such as the requirement that video distributors carry broadcast signals even if they don’t want to (“must carry”); rules that prohibit distributors from striking deals with broadcasters outside their local communities (“network non-duplication” and “syndicated exclusivity” rules); regs specifying where broadcast channels appear on the cable channel lineup; and prohibitions against carrying sporting events on cable when the local stadium doesn’t sell all its seats on game day (“sports blackout rule”).

As they say on TV.. ” But Wait, There’s More!” Working in the favor of video distributors are the compulsory licensing requirements of the Copyright Act of 1976, which essentially forced a “duty to deal” upon broadcasters. Broadcasters have to let cable operators and other video distributors retransmit local stations, though the system at least ensures they get compensated for it. As I noted in my old Forbes essay, along with must carry rules, “Compulsory licensing is the original sin of video marketplace regulation. We could have avoided most of the regulatory mess of the past quarter century if Congress had simply left these rights and contractual negotiations alone. Once Congress forced broadcasters to share their programming, however, marketplace manipulation was off and rolling.”

Of course, the more primal and problematic intervention came decades before in the 1920s and ’30s when the government decided to nationalize spectrum management. Once mandates instead of markets where chosen as the primary allocation agent, America was off and running with a grand experiment in spectrum central planning. We’re still living with the results today. The very fact that spectrum is licensed and can only be used and sold for very narrow purposes as detailed in meticulous FCC regulations is a sign of just how far-removed we are from a pure free market here.

The question now is, what are we going to do about this fine mess? And is there any chance we can get it done?

The problem in this debate is that there are multiple layers of interventions that have built up over the years and created constituencies that are wedded to their preservation. Broadcasters, networks, independent content creators, big cable companies, small cable companies, satellite companies, sports leagues, and viewing consumers themselves — they all have conflicting interests and a stake in how this debate turns out. In his 2012 Mercatus Center working paper, “Consumer Welfare and TV Program Regulation,” media economist Bruce M. Owen noted that “What distinguishes TV programs from other mass media content, including both traditional print and new online media, is the extreme eagerness of Washington to engage in efforts to prevent markets from working freely, often in response to interest group pressures and opportunities for political advantage and with almost complete indifference to the welfare of consumers.”

As a result, if you talk to almost anyone involved in this debate, they will all insist that only their very specific reforms are the ones that can or should be implemented. Consequently, comprehensive reform will be challenging precisely because of all the conflicting interests and layers of law and regulation that must be eradicated.

But at least there is a blueprint for how to get the job done right. Many times here before I have written about “The Next Generation Television Marketplace Act,” which was floated last session by Rep. Steve Scalise (R-LA) and then-Senator Jim DeMint (R-SC). It proposed wiping off the books all the archaic rules outlined above. Alas, the bill never went anywhere in the last Congress and now that Sen. DeMint has left to lead the Heritage Foundation, there is no supporter in the Senate this session. Instead, we have some lawmakers floating bad ideas like S.912, the “Television Consumer Freedom Act of 2013,” which just proposes more regulatory gaming of an already over-gamed system.

We instead need policy reforms like the old DeMint-Scalise bill that clean up the regulatory mess of the past. But there just isn’t much appetite for such a house-cleaning. Most parties affected by these rules want very specific outcomes and deregulation won’t give them any such guarantees. After all, there will still be blackouts after deregulation. And the cost of some content may continue to go up in response to demand. And there will still be fights over sports programming. And there’s no certainty that all local broadcasters or small video distributors will survive. And so on, and so on.

But it is also true that a deregulatory environment is more likely to lead to even more experimentation and innovation with new business models, technologies, and methods of content creation and delivery. We already see much innovation in this marketplace despite all the red tape that exists. Just look at what’s been going on recent years with alternative video delivery platforms, including: Netflix, Hulu, XBox Live, Vudu, Roku, Redbox, Boxee, Amazon, Apple TV, Aereo, Google Chromecast, and so on. And don’t forget the strides that the old broadcast and cable giants have made here, too. CBS is actually a pretty good model for how content can be re-purposed online in creative ways on a firm’s own digital platform. Likewise, cable companies like Time Warner Cable are slowly but surely adapting to consumers’ demand for video to be delivered to multiple devices.

Of course, there there will always be hiccups along the road to video nirvana. Some regulatory activists seemingly expect that all content can be delivered effortless and cheaply to consumers without giving a thought in the world to just how complicated it is to get that content financed and distributed in the first place. Great content and great delivery platforms don’t just happen by magic or the good intentions of activists or policymakers. Those platforms happen because new markets and monetization mechanisms develop to facilitate them. If we cut back the regulatory deadwood in our modern information marketplace, we’d likely get even more experimentation and innovation that would likely produce all new ways of financing, creating, and delivering content to consumers. But we’ll never know unless we are willing to embrace change and kill all those old regulatory weeds that continue to grow in our information garden.

Alas, if Congress can’t muster the courage to do that, then lawmakers ought to at least consider asking the broadcasters to return all that juicy spectrum they are sitting on. After all, the current retrans racket gives the broadcasters an increasingly lucrative revenue stream when they deliver content on cable and satellite systems (in addition to the advertising revenues they already receive). No good reason exists to give them preferential treatment relative to any other cable channel out there today. Don’t forget, there are all sorts of garden-variety cable carriage disputes that happen outside the regulated retrans system today. (Remember last year’s big spats between AMC vs. Dish and Viacom vs. DirecTV?) There are no special rules that either side can rely on in those instances. So why should special rules be applied to other content companies simply because some of their properties are broadcast channels? Answer: they shouldn’t.

But if no other reforms occur and if companies like CBS still want to be more like a cable mega-channel — albeit, a very handsomely compensated cable channel — then by all means go for it. In the meantime, however, they can return all that spectrum for re-auction for some better purpose. In fact, back early 2009, CBS Corp. President and CEO Les Moonves told an investor conference that moving all CBS network programming to cable and satellite platforms would be “a very interesting proposition.” I agree! But, absent other reforms, it might be time to make that “interesting proposition” a mandatory one.

Ian Brown and Christopher T. Marsden’s new book, Regulating Code: Good Governance and Better Regulation in the Information Age, will go down as one of the most important Internet policy books of 2013 for two reasons. First, their book offers an excellent overview of how Internet regulation has unfolded on five different fronts: privacy and data protection; copyright; content censorship; social networks and user-generated content issues; and net neutrality regulation. They craft detailed case studies that incorporate important insights about how countries across the globe are dealing with these issues. Second, the authors endorse a specific normative approach to Net governance that they argue is taking hold across these policy arenas. They call their preferred policy paradigm “prosumer law” and it envisions an active role for governments, which they think should pursue “smarter regulation” of code.

In terms of organization, Brown and Marsden’s book follows the same format found in Milton Mueller’s important 2010 book Networks and States: The Global Politics of Internet Governance; both books feature meaty case studies in the middle bookended by chapters that endorse a specific approach to Internet policymaking. (Incidentally, both books were published by MIT Press.) And, also like Mueller’s book, Brown and Marsden’s Regulating Code does a somewhat better job using case studies to explore the forces shaping Internet policy across the globe than it does making the normative case for their preferred approach to these issues.

Thus, for most readers, the primary benefit of reading either book will be to see how the respective authors develop rich portraits of the institutional political economy surrounding various Internet policy issues over the past 10 to 15 years. In fact, of all the books I have read and reviewed in recent years, I cannot think of two titles that have done a better job developing detailed case studies for such a diverse set of issues. For that reason alone, both texts are important resources for those studying ongoing Internet policy developments.

That’s not to say that both books don’t also make a solid case for their preferred policy paradigms, it’s just that the normative elements of the texts are over-shadowed by the excellent case studies. As a result, readers are left wanting more detail about what their respective policy paradigms would (or should) mean in practice. Regardless, in the remainder of this review, I’ll discuss Brown and Marsden’s normative approach to digital policy and contrast it with Mueller’s since they stand in stark contrast and help frame the policy battles to come on this front.

Governing Cyberspace: Mueller vs. Brown & Marsden

Mueller’s normative goal in Networks and States was to breathe new life into the old cyber-libertarian philosophy that was more prevalent during the Net’s founding era but which has lost favor in recent years. He made the case for a “cyberliberty” movement rooted in what he described as a “denationalized liberalism” vision of Net governance. He argued that “we need to find ways to translate classical liberal rights and freedoms into a governance framework suitable for the global Internet. There can be no cyberliberty without a political movement to define, defend, and institutionalize individual rights and freedoms on a transnational scale.”

I wholeheartedly endorsed that vision in my review of Mueller’s book, even if he was a bit short on the details of how to bring it about. But it is useful to keep Mueller’s paradigm in mind because it provides a nice contrast with the approach Brown and Marsden advocate, which is quite different.

Generally speaking, Brown and Marsden reject most forms of “Internet exceptionalism” and certainly reject the sort of “cyberliberty” ethos that Mueller and I embrace. They instead endorse a fairly broad role for governments in ordering the affairs of cyberspace. In their self-described “prosumer” paradigm, the State is generally viewed as benevolent actor, well-positioned to guide the course of code development toward supposedly more enlightened ends.

Consistent with the strong focus on European policymaking found throughout the book, the authors are quite enamored with the “co-regulatory” models that have become increasing prevalent across the continent. Like many other scholars and policy advocates today, they occasionally call for “multi-stakeholderism” as a solution but they do not necessarily mean the sort of truly voluntary, bottom-up multi-stakeholderism of the Net’s early days. Rather, they are usually thinking of multi-stakeholderism as what is essentially pluralistic politics; it’s the government setting the table, inviting the stakeholders to it, and then guiding (or at least “nudging”) policy along the way. “We are convinced that fudging with nudges needs to be reinforced with the reality of regulation and coregulation, in order to enable prosumers to maximize their potential on the broadband Internet,” they say. (p. 187)

Meet the New Boss, Same as the Old Boss?

Thus, despite the new gloss, their “prosumer law” paradigm ends up sounding quite a bit like a rehash of traditional “public interest” law and common carrier regulation, albeit with a new appreciation of just how dynamics markets built on code can be. Indeed, Brown and Marsden repeatedly acknowledge how often law and regulation fails to keep pace with the rapid evolution of digital technology. “Code changes quickly, user adoption more slowly, legal contracting and judicial adaptation to new technologies slower yet, and regulation through legislation slowest of all,” they correctly note (p. xv). This reflects what Larry Downes refers to as the most fundamental “law of disruption” of the digital age: “technology changes exponentially, but social, economic, and legal systems change incrementally.”

At the end of the day, however, that insight doesn’t seem to inform Brown and Marsden’s policy prescriptions all that much. Theirs is a world in which policy tinkering errors will apparently be corrected promptly and efficiently by still more policy tinkering, or “smarter regulation.” Moreover, like many other Internet policy scholars today, they don’t mind regulatory interventions that come early and often since they believe that will help regulators get out ahead of the technological curve and steer markets in preferred directions. “If regulators fail to address regulatory objects at first, then the regulatory object can grow until its technique overwhelms the regulator,” they say (p. 31).

This is the same mentality that is often on display in Tim Wu’s work, which I have been quite critical of here and elsewhere. For example, Wu has advocated informal “agency threats” and the use of “threat regimes” to accomplish policy goals that prove difficult to steer though the formal democratic rulemaking process. As part of his “defense of regulatory threats in particular contexts,” Wu stresses the importance of regulators taking control of fast-moving tech markets early in their life cycles. “Threat regimes,” Wu argues, “are best justified when the industry is undergoing rapid change — under conditions of ‘high uncertainty.’ Highly informal regimes are most useful, that is, when the agency faces a problem in an environment in which facts are highly unclear and evolving. Examples include periods surrounding a newly invented technology or business model, or a practice about which little is known,” Wu concludes.

This is essentially where most of the “co-regulation” schemes that Brown and Marsden favor would take us: Code regulators would take an active role in shaping the evolution of digital technologies and markets early in its life cycle. What are the preferred regulatory mechanisms? Like Wu and many other cyberlaw professors today, Brown and Marsden favor robust interconnection and interoperability mandates bolstered by antitrust actions as well. And, again, they aren’t willing to wait around and let the courts adjudicate these issues in an ex post fashion. “Essential facilities law is a very poor substitute for the active role of prosumer law that we advocate, especially in its Chicago school minimalist phase” (p. 185). In other words, we shouldn’t wait for someone to bring a case and litigate it through the courts when preemptive, proactive regulatory interventions can sagaciously steer us to a superior end.

More specifically, they propose that “competition authorities should impose ex ante interoperability requirements upon dominant social utilities… to minimize network barriers” (p. 190) and they model this on traditional regulatory schemes such as must-carry obligations, API interface disclosure requirements, and other interconnection mandates (such as those imposed on AOL/Time Warner a decade ago to alleviate fears about instant messaging dominance). They also note that “Effective, scalable state regulation often depends on the recruitment of intermediaries as enforcers” to help achieve various policy objectives (p. 170).

The Problem with Interoperability Über Alles

So, in essence, the Brown-Marsden Internet policy paradigm might be thought of as interoperability über alles. Interoperability and interconnection in pursuit of more “open” and “neutral” systems is generally considered an unalloyed good and most everything else is subservient to this objective.

This is a serious policy error and one that I address in great detail in my absurdly long review of John Palfrey and Urs Gasser’s Interop: The Promise and Perils of Highly Interconnected Systems. I’m not going to repeat all 6,500 words of that critique here when you can just click back and read it, but here’s the high level summary: There is no such thing as “optimal interoperability” that can be determined in an a priori fashion. Ongoing marketplace experimentation with technical standards, modes of information production and dissemination, and interoperable information systems, is almost always preferable to the artificial foreclosure of this dynamic process through state action. The former allows for better learning and coping mechanisms to develop while also incentivizing the spontaneous, natural evolution of the market and market responses. The latter (regulatory foreclosure of experimentation) limits that potential.

More importantly, when interoperability is treated as sacrosanct and forcibly imposed through top-down regulatory schemes, it will often have many unintended consequences and costs. It can even lock in existing market power and market structures by encouraging users and companies to flock to a single platform instead of trying to innovate around it. (Go back and take a look at how the “Kingsbury Commitment” — the interconnection deal from the early days of the U.S. telecom system — actually allowed AT&T to gain greater control over the industry instead of assisting independent operators.)

Citing Palfrey and Gasser, Brown and Marsden do note that “mandated interoperability is neither necessary in all cases nor necessarily desirable” (p. 32), but they don’t spend as much time as Palfrey and Gasser itemizing these trade-offs and the potential downsides of some interoperability mandates. But what frustrates me about both books is the almost quasi-religious reverence accorded to interoperability and open standards when such faith is simply not warranted after historical experience is taken into consideration.

Plenty of the best forms of digital innovation today are due to a lack of interoperability and openness. Proprietary systems have produced some of the most exciting devices (iPhone) and content (video games) of modern times. Then again, voluntary interoperable and “open” services and devices thrive, too. The key point here — and one that I develop in far greater detail in my book chapter, “The Case for Internet Optimism, Part 2 – Saving the Net From Its Supporters” — is that the market for digital services is working marvelously and providing us with choices of many different flavors. Innovation continues to unfold rapidly in both directions along the “open” vs. “closed” continuum. (Here are 30 more essays I have written on this topic if you need more proof.)

Generally speaking, we should avoid mandatory interop and openness solutions. We should instead push those approaches and solutions in a truly voluntary, bottom-up fashion. And, more importantly, we should be pushing for outside-the-box solutions of the Schumpeterian (creative destruction / disruptive innovation) variety instead of surrendering so quickly on competition through forced sharing mandates.

The Case for Patience & Policy Restraint

But Brown and Marsden clearly do not subscribe to that sort of Schumpeterian thinking. They think most code markets tip and lock into monopoly in fairly short order and that only wise interventions can rectify that. For example, they claim that Facebook’s “monopoly is now durable,” which will certainly come as a big surprise to the millions of us who do not use it all. And the story of MySpace’s rapid rise and equally precipitous fall has little bearing on this story, they argue.

But, no matter how you define the “social networking market,” here are two facts about it: First, it is still very, very young. It’s only about a decade old. Second, in that short period of time, we have already witnessed the entire first generation of players fall by the wayside. While the second generation is currently dominated by Facebook, it is by no means alone. Again, millions like me don’t use it at all and get along just fine with other “social networking” technologies, including Twitter, LinkedIn, Google+, and even older tech like email, SMS, and yes, phone calls! Accusations of “monopoly” in this space strain credulity in the extreme. I invite you to read my Mercatus working paper, “The Perils of Classifying Social Media Platforms as Public Utilities,” for a more thorough debunking of this logic. (Note: The final version of that paper will be published in the CommLaw Conspectus shortly.)

Such facts should have a bearing on the debate about regulatory interventions. We continue to witness the power of Schumpeterian rivalry as new and existing players battle in a race for the prize of market power. Brown and Marsden fear that the race is already over in many sectors and that it is time to throw in the towel and get busy regulating. But when I look around at the information technology marketplace today, I am astonished just how radically different it looks from even just a few years ago, and not just in the social media market. I have written extensively about the smartphone marketplace, where innovation continues at a frantic pace. As I noted in my essay here on “Smartphones & Schumpeter,” it’s hard to remember now, but just 6 short years ago:

• The iPhone and Android had not yet landed.
• Most of the best-selling phones of 2007 were made by Nokia and Motorola.
• Feature phones still dominated the market; smartphones were still a luxury (and a clunky luxury at that).
• There were no app stores and what “apps” did exist were mostly proprietary and device or carrier-specific; and,
• There was no 4G service.

It’s also easy to forget just how many market analysts and policy wonks were making absurd predictions at the time about how the telecom operators at the time had so much market power that they would crush new innovation without regulation. Instead, in very short order, the market was completely upended in a way that mobile providers never saw coming. There was a huge shift in relative market power flowing from the core of these markets to the fringes, especially to Apple, which wasn’t even a player in that space before the launch of the iPhone.

As I noted in concluding that piece last year, these facts should lead us to believe that this is a healthy, dynamic marketplace in action. Not even Schumpeter could have imagined creative destruction on this scale. (Just look as BlackBerry). But much the same could be said of many other sectors of the information economy.  While it is certainly true that many large players exist, we continue to see a healthy amount of churn in these markets and an astonishing amount of technological innovation.

Public Choice Insights: What History Tells Us

One would hope these realities would have a greater bearing on the policy prescriptions suggested by analysts like Brown and Marsden, but they don’t seem to. Instead, the attitude on display here is that governments can, generally speaking, act wisely and nudge efficiently to correct short-term market hiccups and set us on a better course. But there are strong reasons to question that presumption.

Specifically, what I found most regrettable about Brown and Marsden’s book was the way — like all too many books in this field these days — the authors briefly introduce “public choice” insights and concerns only to summarily dismiss them as unfounded or overblown. (See my review of Brett Frischmann’s book, Infrastructure: The Social Value of Shared Resources for a more extended discussion of this problem as it pertains to discussions about not just infrastructure regulation by the regulation of all complex industries and technologies.)

Brown and Marsden make it clear that their intentions are pure and that their methods would incorporate the lessons of the past, but they aren’t very interested in dwelling on the long, lamentable history of regulatory failures and capture in the communications and media policy sectors. They do note the dangers of a growing “security-industrial complex” and argue that “commercial actors dominate technical actors in policy debates.” They also say that the “potential for capture by regulated interests, especially large corporate lobbies, is an essential insight” that informs their approach. The problem is that it really doesn’t. They largely ignore those insights and instead imply that, to the extent this is a problem at all, we can build a better breed of bureaucrats going forward who will craft “smarter regulation” that is immune from such pressures. Or, they claim that “multi-stakeholderism” — again, the new, more activist and government-influenced conception of it — can overcome these public choice problems.

A better understanding of power politics that is informed by the wisdom of the ages would instead counsel that minimizing the scope of politicization of technology markets is the better remedy. Capture and cronyism in communications and media markets has always grown in direct proportion to the overall scope of law governing those sectors. (I invite you to read all the troubling examples of this that Brent Skorup and I have documented in our new 72-page working paper, “A History of Cronyism and Capture in the Information Technology Sector.” Warning: It makes for miserable reading but proves beyond any doubt that there is something to public choice concerns.)

To be clear, it’s not that I believe that “market failures” or “code failures” never occur, rather, as I noted in this debate with Larry Lessig, it’s that such problems are typically “better addressed by voluntary, spontaneous, bottom-up, marketplace responses than by coerced, top-down, governmental solutions. Moreover, the decisive advantage of the market-driven approach to correcting code failure comes down to the rapidity and nimbleness of those response(s).” It’s not just that traditional regulatory remedies cannot keep pace with code markets, it’s that those attempting to craft the remedies do not possess the requisite knowledge needed to know how to steer us down a superior path. (See my essay, “Antitrust & Innovation in the New Economy: The Problem with the Static Equilibrium Mindset,” for more on that point.)

Regardless, at a minimum, I expect scholars to take seriously the very real public choice problems at work in this arena. You cannot talk about the history of these sectors without acknowledging the horrifically anti-consumer policies that were often put in place at the request of one industry or another to shield themselves from disruptive innovation. No amount of wishful thinking about “prosumer” policies will change these grim political realities. Only by minimizing chances to politicize technology markets and decisions can we overcome these problems.

Conclusion

For those of us who prefer to focus on freeing code, Brown and Marsden’s Regulating Code is another reminder that liberty is increasingly a loser in Internet policy circles these days. Milton Mueller’s dream of decentralized, denationalized liberalism seems more and more unlikely as armies of policymakers, regulators, special interests, regulatory advocates, academics, and others all line up and plead for their pet interest or cause to be satisfied through pure power politics. No matter what you call it — fudging, nudging, coregulation, smart regulation, multistakeholderism, prosumer law, or whatever else, — there is no escaping the fact that we are witnessing the complete politicization of almost every facet of code creation and digital decisionmaking today.

Despite my deep reservations about a more politicized cyberspace, Brown and Marsden’s book is an important text because it is one of the most sophisticated articulations and defenses of it to date. Their book also helps us better understand the rapidly developing institutional political economy of Internet regulation in both broad and narrow policy contexts. Thus, it is worth your time and attention even if, like me, you are disheartened to be reading yet another Net policy book that ultimately endorses mandates over of markets as the primary modus operandi of the information age.

Additional Resources about the book:

• the official MIT Press website for Regulating Code
• shorter Brown & Marsden paper on “Prosumer Law” (via SSRN)
• Little Atoms podcast featuring Brown & Marsden discussing Regulating Code
• Ian Brown edited this beefy Research Handbook On Governance Of The Internet, which makes a nice complement to Regulating Code. It offers even more detailed case studies on the major issues featured in the book. A terrific resource (if you can afford it!)
• a video of Brown & Marsden discussing the book at the Oxford Internet Institute (also embedded below):

Other books you should read alongside “Regulating Code” (links are for my reviews of each):

• Milton Mueller’s Networks and States: The Global Politics of Internet Governance
• John Palfrey & Urs Gasser’s Interop: The Promise and Perils of Highly Interconnected Systems
• Rebecca MacKinnon’s Consent of the Networked: The Worldwide Struggle for Internet Freedom
• David G. Post’s In Search of Jefferson’s Moose: Notes on the State of Cyberspace
• Christopher Yoo’s The Dynamic Internet: How Technology, Users, and Businesses are Transforming the Network
• Larry Lessig’s Code (my 2-part exchange with Lessig upon Code’s 10^th anniversary: Part 1, Part 2)

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:

I.     CHARGES

A.     Direct Fees (Periodic billing / Pay-per-view)

B.    Indirect Charges (Tiers / Bundles / Package pricing)

II.     ADVERTISING

A.    General / Mass market ads (Billboards / Banner ads / Pop-up online ads)

B.     Targeted ads (Directed pitch)

C.     Integrated (Product placement / Payola)

D.     Sponsorship / Underwriting

III.     PHILANTHROPIC

A.     Individual  (ex: Arts & opera funding)

B.     Foundational (ex: Knight Foundation)

C.     Governmental  (ex: CPB / BBC model)

IV.     INTERNAL CROSS-SUBSIDY  (Profitable division subsidizes unprofitable / “loss leader” strategies)

There are probably other ways of subsidizing content creation, but those are the primary methods. I have no idea what combination of strategies will sustain content going forward, but I think advertising is likely to play a diminished role in the mix as it becomes increasingly easy for us to filter it out of the mix. But the content creators will just shift costs elsewhere and raise the prices for programming through direct and indirect pricing techniques. Do you like HBO’s pricing model? Pay-per-view? Paywalls? Well, it doesn’t make a difference whether you do or not because you’ll likely be seeing a lot more of those models in your life in coming years if advertising fades as a subsidization method.

Alternatively, as I also note in my Forbes piece, “we could see a lot more Texaco Star Theaters in our future, with major companies essentially owning specific shows or networks.” Such program sponsorship and content underwriting has always been with it, but it could really explode as a cross-subsidy method if traditional advertising starts failing. “But it will be challenging for every show or website to find its own corporate benefactor, and it will also raise issues about undue influence and bias,” I note in my essay.

I hope no one seriously believes that philanthropic models can fill the gaps. Even if we saw a significant uptick in voluntary charitable giving or even taxpayer support for the arts and media, there’s no way in hell it will possibly begin to cover the the bill for what advertising support covers today.

In the end, I can’t help but think how great we’ve had it when it comes to advertising. As I also noted in my essay, advertising has been “the great subsidizer of the press, entertainment, and online services” historically and benefited us tremendously even if we haven’t appreciated that fact. “It’s possible that no single industry — not newspapers nor search engines nor anything else — has done as much to advance the storehouse of accessible human knowledge in the 20th century as advertisers,” argues Washington Post columnist Ezra Klein. Klein is exactly right, yet it doesn’t really make a difference how important advertising has been to us if we fail to appreciate that fact and increasingly take steps to exclude it from our lives.

As that becomes easier and easier to accomplish, we shouldn’t bitch and whine when the bills (literally) come due for the content we all desire. As always, there is no free lunch. We’ll pay the price one way or another.

Additional Reading:

• my recent Charleston Law Review article on “Advertising, Commercial Speech & First Amendment Parity”
• Ezra Klein on the Importance of Advertising to Media
• The Hidden Benefactor: How Advertising Informs, Educates & Benefits Consumers
• There is No Free Lunch! No Advertising, No Media
• PFF’s Mega-Filing in the FCC’s “Future of Media” Proceeding

I’ve written two articles on the Protect IP Act of 2011, introduced last week by Sen. Leahy (D-Vt.).

For CNET, I look at some of the key differences, better and worse, between Protect IP and its predecessor last year, known as COICA.

On Forbes this morning, I have a long meditation on what Protect IP says about the current state of the Internet content wars.  Copyright, patent, and trademark are under siege from digital technology, and for now at least are clearly losing the arms race.

The new bill isn’t exactly the nuclear option in the fight between the media industries and everyone else, but it does signal increased desperation.

I’m not exactly a non-combatant here.  Increasingly, everyone is being dragged into this fight, including search engines, ISPs, advertisers, financial transaction processors, and, in Protect IP is passed, anyone who uses a hyperlink.

But as someone who earns his living from information exchanges–what the law anachronistically calls “intellectual property”–I’m not exactly an anarchist either (or as one recent commenter on CNET called me, a complete anarchist!).

The development of an information economy will stabilize and mature at some point, and, I believe, the new supply chain will be richer, more profitable, and give a greater share of the value than the current one does to those who actually create new content.  (Most of the cost of information products and services today is eaten up by middlemen, media, and distribution.)

But it’s not an especially smooth or predictable trajectory.  Joseph Schumpeter didn’t call it creative destruction for nothing.

I’ve posted a long article on Forbes.com this morning on the Global Network Initiative. A non-profit group aimed at improving human rights though the agency of information technology companies, GNI has never really gotten off the ground.

Since its formal launch in 2008, following two years of negotiations among tech companies, human rights groups and academics, not a single company has agreed to join beyond the original members–Google, Yahoo and Microsoft.

This despite considerable pressure from supporters of GNI, including Senator Richard Durbin (D-IL), Chair of the Senate Judiciary’s Subcommittee on Human Rights.  Indeed, in the wake of uprisings in Tunisia, Egypt, Libya and elsewhere and the seminal role played by social media and other IT, a full-court press has been launched against Facebook and Twitter in particular for failing to sign up.

The tone of the criticism hardly seems designed to encourage new members to join.  (In The Huffington Post, Amy Lee asks simply, “Why won’t Twitter and Facebook sign on for free speech on the Internet?”)

Why indeed.

The article reviews the troubled history of GNI and its complex, incomplete, and worrisome organizational structure, which gives considerable power to NGOs to shape the policies and practices of participating companies.  (That features is especially worrisome, as many of the NGOs are traditional human rights organizations with little or no experience dealing with IT.)

Participating companies, among other commitments, must submit to bi-annual “assessments” of their compliance with GNI principles, conducted by assessors certified by GNI’s board.

Details aside, there is a more fundamental question worth asking here.  Why are technology companies being asked to influence (one might say interfere with) public policy and local laws of other countries?   GNI requires not only that participants resist efforts by repressive governments to censor content or to force disclosure of private information of their citizens, but also that they actively lobby these governments, to “engage government officials to promote the rule of law and the reform of laws, policies and practices that infringe on freedom of expression and privacy.”

Freedom of expression and privacy are worthwhile goals, but isn’t it the job of a country’s own citizens to petition their governments for change?  And if those citizens are suppressed, isn’t it the job of the global community, operating through political and trade organizations such as the U.N. and the WTO, to lobby for change?  Why is foreign policy being outsourced to Facebook and Twitter?

Perhaps it’s because national governments won’t do it.  But the demur by tech companies to take on the job is hardly a reason for Sen. Durbin to criticize and threaten them.  If he’s looking for someone to blame for the poor human rights record of some governments, perhaps he should look a little closer to home.

It seems peculiar to me that some of the same individuals and groups who so vociferously opposed a “broadcast flag” technological mandate in past years are now in a mad rush to have federal policymakers mandate a “Do Not Track” regulatory regime for privacy purposes. The broadcast flag debate, you will recall, centered around the wisdom of mandating a technological fix to the copyright arms race before digitized high-definition broadcast signals were effectively “Napster-ized.” At least that was the fear six or seven years ago. TV broadcasters and some content companies wanted the Federal Communications Commission (FCC) to recognize and enforce a string of code that would have been embedded in digital broadcast program signals such that mass redistribution of video programming could have been prevented.

Flash forward to the present debate about mandating a “Do Not Track” scheme to help protect privacy online. As I noted in my filing last week to the Federal Trade Commission, at root, Do Not Track is just another “information control regime.” Much like the broadcast flag proposal, it’s an attempt to use a technological quick-fix to solve a complex problem. When it comes to such information control efforts, however, there aren’t many good examples of simple fixes or silver-bullet solutions that have worked, at least not for very long. The debates over Wikileaks, online porn, Internet hate speech, and Spam all demonstrate how challenging it can be to put information back into the bottle once it is released into the digital wild.

To be clear, I am not opposed to technological solutions like broadcast flag or Do Not Track, but I am opposed to forcing them upon the Internet and digital markets in a top-down, centrally-planned fashion. While I am skeptical that either scheme would work well in practice (whether voluntary or mandated), my concern in these debates is that forcing such solutions by law will have many unintended consequences, not the least of which will be the gradual growth of invasive cyberspace controls in these or other contexts. After all, if we can have “broadcast flags” and “Do Not Track” schemes, why not “flag” mandates for objectionable speech or “Do Not Porn” browser mandates?

From 2002-2005, when the broadcast flag wars were really raging, groups like the Electronic Frontier Foundation and Center for Democracy & Technology made several legitimate legal and practical arguments against a mandatory broadcast flag regime. But their principled case against broadcast flag mandates came down to an underlying fear about government encroachment on the Internet and the specter of more far-reaching regulation of cyberspace. For example, in a December 2003 report, CDT noted that even if other details could be worked out, “the [broadcast] flag approach will still pose unresolved concerns regarding technical regulation of computers and the Internet by the government [and] the impact of regulations on innovation and future consumer uses” was also problematic.

Importantly, EFF and CDT hammered broadcast flag proponents on the question of jurisdictional authority. They rightly asked where the FCC  got the authority to impose such rules at all and worried about the spillover effects of such arbitrary mandates in other Internet contexts. (The broadcast flag scheme was eventually tossed out by the D.C. Court of Appeals because of the FCC’s lack of authority.)

So, why wouldn’t these same concerns and arguments apply to Do Not Track regulation? CDT and EFF seem to care little that the Federal Trade Commission is aggressively pushing this new information control regime on the Internet.  Indeed, CDT and EFF are two of the biggest cheerleaders for FTC action in this regard.  Sorry, but I just don’t get it.  If it was misguided for regulators to push a broadcast flag regime upon cyberspace, isn’t it just as misguided for them to be pushing Do Not Track? I suspect this inconsistency has something to do with CDT and EFF being inherently skeptical of the benefits of most online copyright protection schemes while being more sympathetic to legal efforts aimed at protecting personal privacy online. Simply stated, they think there’s something to the notion of privacy “rights” and will bend over backward to engineer an information control regime to protect against the “unauthorized” flow of personal information online. When it comes to the “unauthorized” flow of copyrighted bits of information online, however, they aren’t nearly as interested in inviting the code cops in.

But even if one sympathizes with that distinction — absolute privacy “rights”  vs. minimal copy-“rights” — all the same concerns and criticisms that CDT and EFF raised earlier about the broadcast flag regulatory scheme would seemingly apply to the Do Not Track regime. Both regimes face formidable enforcement challenges and raise the specter of broader government control of cyberspace. There’s just no getting around that reality, and Do Not Track defenders who deny it are basically hiding from the ugly truth that they are greasing the skids for future information control efforts and regimes — both here and abroad.

I suppose that they might also argue that regulation is justified where it ensures more “choice” for consumers.  But forcing “choice” upon online markets isn’t exactly the same thing as allowing it evolve in a natural, non-destructive fashion. As I noted in my filing, many others besides me are concerned about what mandatory Do Not Track would mean for the online ecosystem of mostly “free” content and services. Lauren Weinstein, co-founder of People For Internet Responsibility (PFIR), worries that the “ability [of Do Not Track concepts] to cause major collateral damage to the Internet ecosystem of free Web services is being unwisely ignored or minimized by many Do Not Track proponents.” And in a brilliant Huffington Post column this week about the rise of a privacy techno-panic, Jeff Jarvis said, “I also worry that efforts to bring in a ‘Do Not Track’ list and other demonization of ad targeting could cripple the revenue of the media and news industries even as they struggle to find sustainability; it could kill news outlets and reduce journalism.”

Weinstein and Jarvis are right. There is no free lunch. While groups like EFF and CDT who support Do Not Track regulation are well-intentioned in their aims, the reality is that government regulation that attempts to create a cost-free opt-out for data collection and targeted online advertising will likely have damaging consequences for the future provision of online content and services. In terms of direct costs to consumers, Do Not Track could result in higher prices for service as paywalls go up or, at a minimum, advertising will become less relevant to consumers and, therefore, more “intrusive” in other ways.

Which leads to my final point. What is perhaps most perplexing about this is how many of the advocates of Do Not Track argue that such a regulatory scheme will slow the “arms race” in the privacy arena. For example, EFF has said “The header-based Do Not Track system appeals because it calls for an armistice in the arms race of online tracking.” And my favorite frenemy Chris Soghoian argues that “opt out mechanisms… [could] finally free us from this cycle of arms races, in which advertising networks innovate around the latest browser privacy control.”  At best, this is highly wishful thinking. At worst, it’s outright deceit aimed at sugar-coating the hard truth: If anything, a Do Not Track mandate will speed up the technological arms race and have many other unintended consequences. Online advertising will almost certainly become more “annoying” and even invasive as a result of such regulation.  And “tracking” techniques aren’t going to be stopped or even slowed as a result of Do Not Track. (Hello DPI!) Again, check out my filing to the FTC for more details.

The important point here is that one intervention will simply beget another and another in an attempt to address the “arms race” and to refine and rework Do Not Track to cover more and more online information flows. One wonders how expansive this new regulatory regime will need to be to deal with the growing scale and volume of online information flows. Really, does anyone think there will be less personal information online in coming years?  Unless we stop the unprecedented voluntary information-sharing and self-revelation of personal data that takes place on social networking sites and via user-generated content sites, there is simply no way in hell this problem is going to be curtailed. When 600 million people use Facebook as an open diary to the world (among many other examples I could cite), it’s hard to imagine we’ll ever be able to stop the mercurial flow of personal information across the Internet. Do Not Track certainly won’t stop it, but the cost of putting such a regulatory regime in place in an attempt to put the genie back in the bottle could be profound for the future of the Internet and online content and culture.

Again, this is essentially the same argument previously set forth against a broadcast flag mandate. As EFF once noted, “the technology mandate proposed… is unnecessary, ineffective, and unwise.”  I agree, and I invite Do Not Track defenders at CDT and EFF (or anyone else) to explain why, conceptually speaking, Do Not Track isn’t just broadcast flag in drag.

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.

The possibility of regulation also retarding vigorous marketplace competition—especially new innovations and entry—is also very real. Consequently, the Commission bears the heavy burden of explaining how such results would be consistent with its long-standing mission to protect consumer welfare and promote competition. Importantly, the “harm” that critics claim online advertising or data collection efforts gives rise to must be shown to be concrete, not merely conjectural. Too much is at stake to allow otherwise.

Finally, as it pertains to solutions for those who remain sensitive about their privacy online, education and empowerment should trump regulation. Regulation would potentially destroy innovation in this space by substituting a government-approved, “one-size-fits-all” standard for the “let-a-thousand-flowers-bloom” approach, which offers diverse tools for a diverse citizenry. Consumers can and will adapt to changing privacy norms and expectations, but the Commission should not seek to plan that evolutionary process from above.

Download my comments here or just scroll down and read them below.

Contents

I.       Introduction

II.      No Showing of Harm or Market Failure Has Been Made

1. How Do We Conduct Cost-Benefit Analysis When “Creepiness” Is the Alleged Harm?
2. Privacy Regulation & the Precautionary Principle.
3. On “Informed Consent” & Information as Currency
4. On “Commonly Accepted Practices”
5. The Mythical Harm of Consumer “Walk Aways”

III.    Privacy Regulation Is an Information Control Regime That Faces Formidable Enforcement Challenges

1. Media & Technological Convergence
2. Decentralized, Distributed Networking
3. Unprecedented Scale of Networked Communications
4. Explosion of the Overall Volume of Information
5. Unprecedented Individual Information Sharing Through User-Generation of Content and Self-Revelation of Data

IV.    The Commission’s Proposed “Do Not Track” Regime Creates Potential Risks to Consumers, Culture, Competition, and Global Competitiveness

1. Potential Direct Cost to Consumers
2. Potential Indirect Costs / Impact on Content & Culture
3. Competition & Market Structure
4. International Competitiveness
5. “Silver-Bullet” Solutions Rarely Adapt or Scale Well
6. Implications of This New Regime in Other Contexts

V.     Privacy Regulation Raises Serious Free Speech & Press Freedom Issues

VI.    Better, Less-Restrictive Solutions Exist to Privacy-Related Concerns

1. Education, Empowerment & Self-Regulation
2. Simplified” Privacy Policies, Enhanced Notice & “Privacy by Design”
3. Increased Sec. 5 Enforcement, Targeted Statutes & the Common Law

VII.  Conclusion

Comment in FTC Do Not Track Proceeding (Adam Thierer – Mercatus Center) http://d1.scribdassets.com/ScribdViewer.swf

In his essay today, “Go On, Opt Out. Just Don’t Come Cryin’ To Me …,” John Battelle has some very sensible thinking on the “Do Not Track” idea and privacy regulation more generally:

Look, if you want to, you can put yourself on a “do not track” list in the Real World. As you walk around in our Real World, where small shopkeepers and Starbucks alike attempt to lure you into their stores, you can simply decide to ignore their come ons. You can refuse to get a grocery card, and forego the discounts they offer. You can forego the countless coupons, come ons, and catalogs that come through your newspaper, browser, or your community mailer, and if you work at it, you can even opt out through some specialized services (with more coming soon, if the FTC gets its way). And you can turn off your television (cause lord knows even the shows are trying to influence you now), and you can ignore your friends when they talk about the latest, coolest promotion that Verizon or ATT has pushed them through their cell phones. If folks insist on talking about stuff that might smack of someone selling you something, heck, you can start to dress like the Unabomber and withdraw entirely from our obviously commercial culture. You might look weird, but at least folks will leave you alone. And if you do, your world will either be better, or it will suck more. Your call. But don’t come crying to me when you realize that in opting out of our marketing-driven world, you’ve also opted out of, well, a pretty important part of our ongoing cultural conversation, one that, to my mind, is getting more authentic and transparent thanks to digital platforms. And, to my mind, you’ve also opted out of being a thinking person capable of filtering this stuff on your own, using that big ol’ bean which God, or whoever you believe in, gave you in the first place.   Life is a conversation, and part of it is commercial. We need to buy stuff, folks. And we need to sell stuff too.

Amen, brother.  This is a point Berin Szoka and I have made repeatedly here in the past: The debate over privacy regulation is fundamentally tied up with the future of online content and culture. The idea of a cost-free opt-out model for the all online data collection / advertising may sound seductive to some, but we must take into account the opportunity costs of regulation.  The real world is full of trade-offs and, despite what the Federal Trade Commission seems to think, there is no such thing as a free lunch.

Today, the U.S. Supreme Court will hear arguments in Schwarzenegger v. EMA, a case that challenges California’s 2005 law banning the sale of “violent” video games to minors. The law has yet to take effect, as rulings by lower federal courts have found the law to be an unconstitutional violation of the First Amendment.

There’s little doubt that banning the sale of nearly any content to adults violates the protections of Free Speech, including, as decided last year, video depictions of cruelty to animals.

But over the years the Court has ruled that minors do not stand equal to adults when it comes to the First Amendment. The Court has upheld restrictions on the speech of students in and out of the classroom, for example, in the interest of preserving order in public schools.

And in the famous Pacifica case, the Court upheld fines levied against a radio station for airing the famous George Carlin monologue that, not-so-ironically, satirizes the FCC for banning seven particular words from being uttered over the public airwaves.

The basis for that decision was that children could be negatively influenced from hearing such language. And children have easy access to radio and TV, while parents had no effective way to keep particular broadcasts out of the house.

In today’s argument, California’s legal arguments center largely on another case, the Supreme Court’s 1968 decision in Ginsberg. There, the Court upheld state restrictions on the sale of pornography to minors, even though the material was protected speech for adult purchasers.

In Schwarzenegger v EMA, California is urging the Court to extend Ginsberg’s reasoning to include content that meets it definition for violent video games. The statute defines “violent video games” as those “in which the range of options available to a player includes killing, maiming, dismembering, or sexually assaulting an image of a human being, if those acts are depicted” in a manner that “[a] reasonable person, considering the game as a whole, would find appeals to a deviant or morbid interest of minors,” that is “patently offensive to prevailing standards in the community as to what is suitable for minors,” and that “causes the game, as a whole, to lack serious literary, artistic, political, or scientific value for minors.”

Ginsberg, the state argues in its brief, upheld a ban the sale of sexual content to minors because such content is dangerous to their development. So too, they argue here, with violent video games. (Parents and other adults, of course, could still buy the games for minors if the statute were to go into effect.)

Indeed, the state argues that such material has as much if not more of a negative impact on the development of children than does sexual material.

That, of course, is a question open to considerable debate. After the fact, the state cites a number of academic studies that find a correlation between violent video game exposure (including games, such as Super Mario Brothers, well outside the the California definition) and anti-social behavior. But, as excellent reply briefs from the Entertainment Merchants Association and a joint brief from the Progress and Freedom Foundation and the Electronic Frontier Foundation point out, the methodology in these studies has been roundly criticized.

Moreover, California doesn’t seem to understand that the statistical significance of a correlation does not necessarily translate to real-world behavior—correlation is not the same as causation, no matter how strong the statistics. And even the authors of the studies most relied on by the state recognize that it isn’t clear in which direction the correlation moves—are children who play violent video games more likely to have violent thoughts because they played the game, or are pre-existing violent thoughts what attracts them to the games?

Why Video Games? Why Now?

The Court may focus on those studies in its decision, but I have a different question. Why are California and other states picking on video games, and why now? That, to me, is the more interesting problem, one that gets little attention in the briefs and, I would guess, in the Court’s eventual decision.

Perhaps the why is obvious: as EMA’s brief points out, similar attacks have accompanied the rise in popularity of every new form of media to emerge throughout U.S. history.

The California statute … is the latest in a long history of overreactions to new expressive media. In the past, comic books, true-crime novels, movies, rock music, and other new media have all been accused of harming our youth. In each case, the perceived threat later proved unfounded. Video games are no different.

The PFF/EFF brief goes farther, accusing California legislators of succumbing to “moral panic, as lawmakers have so often done when confronted with the media of a new generation.”

Examples as varied as Greek classics, the Bible, the Brothers Grimm and Star Wars all suggest, EMA points out, that extreme–even gruesome–violence has always been a favorite subject of literature, often aimed specifically at children. As federal appellate judge Richard A. Posner wrote in rejecting a similar Indiana law, “Self defense, protection of others, dread of the ‘undead,’ fighting against overwhelming odds—these are all age-old themes of literature, and ones particularly appealing to the young.”

But why now? The answer is, not surprisingly, Moore’s Law. Laws regulating the content or distribution of video games are a classic example of the conflict I described in The Laws of Disruption.

As technology has made video game graphics more realistic and lifelike, they have captured the attention—and here the nightmares—of regulators in the real world who equate what they see on the screen with behaviors that would clearly violate laws and norms of the real world. They don’t like what they see in games including Grand Theft Auto and Resident Evil, and their impulse is to find a way, somehow, to stop it, even if it’s only a simulation.

It was not that long ago—in my life time, in any case—that video games were still in their Neolithic Era. Consider Pong, the first home video game from Atari in 1975. It would take an imagination greater than mine to think of the batting of a block of monochrome pixels by a bar of pixels to be violent enough to corrupt youth; likewise the breaking of a wall of pixels one at a time in the follow-on game Breakout.

But a few years later, consider the commercial (courtesy of YouTube) for Activision’s ice hockey game.

The game promises to be one of the “roughest” video games ever, “battling for the puck” with “fierce body checking” and “ruthless tripping.” Just watching the players fight it out drives a meek-looking Phil Hartman into a frenzy; within a few seconds he seems ready to attack the clerk who teases him that he’s not yet ready for it.

But despite an ad that explicitly suggests a connection between playing (or even watching the game) and becoming violent, the actual graphical quality of the violence is so disconnected from visual reality that it never occurred to any state legislature to ban or otherwise restrict it.

Now fast-forward just a few short decades later to the imminent release of Xbox 360’s Kinetics and one of the games that takes advantage of it called Kinectimals.

Using Microsoft’s new sensor technology, realistically-rendered animals can be controlled simply by issuing voice commands or by mimicking the desired movements by standing in front of the images. It hardly seems possible that the same beings who invented Pong could have advanced to Kinectimals within the span of one human lifetime. But we did.

Coupled with new 3D technology and increasingly large, high-fidelity displays, video games have in the course of only a few decades and a few cycles of Moore’s Law, advanced to the point of challenging the cinematic qualities of movies. Indeed, games and films are converging, and now use much of the same technology to produce and to display. A new sub-genre of user-produced content involves taking the cinematic interludes within the games and using them to produce original films. After all, video game users today not only control game play but also lighting, camera angles, and point of view.

Why not? As Nicholas Negroponte would say, bits are bits.

So now that video games offer fidelity in imagery and movement that is comparable to film, the law has awakened to both their positive and negative impacts on those who interact with them. Since the First Amendment clearly doesn’t allow interference with the sale of violent content to adults, California focused on children. But it’s clear from the tone of the state’s brief that they just plain don’t like certain video games, just as they didn’t like certain movies and certain books in an early age of mass-market technologies. As before, they would like, if they could, to turn the clock back.

Of course that is always the response of the law to new technologies that challenge our conceptions of reality. The only difference between the comic book burnings of the 1950’s and the emotional responses of legislators today is the speed with which those new technologies are arriving. The killer apps come faster all the time. And with them, the counter-revolutionaries.

Frozen in Time, Lost in Relevance

Which is why the California statute suffers from another common and fatal flaw of laws attempting to hold back new technologies: early obsolescence. Even if the Supreme Court upholds the law, its effect will be minimal at best.

Why? Lost in the legal arguments (and reduced to a mere footnote in the EMA brief) is the impending anachronism of the California statute. It assumes a world, disappearing almost as quickly as it arrived, in which video games are imported into California as physical media in packages, and sold in retail stores.

Consider, for example, Section 1746.2:

Each violent video game that is imported into or distributed in California for retail sale shall be labeled with a solid white “18” outlined in black. The “18” shall have dimensions of no less than 2 inches by 2 inches. The “18” shall be displayed on the front face of the video game package.

But sales of video games in media form are rapidly declining as broadband connections make it possible for game developers and platform manufacturers to transport the software over the Internet. So even if the law is ruled constitutional, it will apply to an ever-shrinking portion of the video game market. There will soon be no “retail sale” and no “front face” of a “package” onto which to put a label in the first place.

These industry changes, of course, aren’t being made to evade laws like California’s. Digital distribution reduces costs and eliminates middlemen who add little or no value (the retailers, the packagers, the truckers). More to the point, they allow the companies to establish on-going relationships with their customers, which can be leveraged to selling add-on chapters and levels, on-line play, and the sale of related product and content, including films and movies.

The industry, in other words, is not only evolving in terms of sophistication and realism of the product. The same technologies are also scrambling its supply chain. And what is emerging as the new model for “games” is something in which California and other states have almost no regulatory interest.

So it seems an odd time to target legislation at a particular and disappearing version of the industry’s content and retail channels. Even if the Court upholds the California law, it will likely have little impact on the material at which it is aimed.

But that’s often the case with laws trying to manage the unpleasant social side effects of new technologies just as they become visible to the outside world. The pace of legal change can’t hope to keep up with the pace of technological change, making this law, like many others, out-of-date even before the ink is dry.

Which is not to say that the Supreme Court’s decision in this case won’t matter. Another feature of statutes like this, unfortunately, is a high likelihood of unintended consequences. The potential for the Court’s decision—pro or con–to do mischief in the future, however, to unrelated industries and dissimilar content, is legion.

For example? As the PFF/EFF brief points out, California and other states may try to extend the ban on sales to minors to online channels. But it isn’t so easy to determine the age of an online buyer as someone in your brick-and-mortar store. “Applying the law online would likely require mandatory age verification of all online gamers because the law prohibits any sale or rental to a minor,” PFF/EFF argues, “even if the vendor had no evidence that the buyer was a minor.” That feature of an earlier federal effort to control pornography online was the undoing of the statute.

But in the Supreme Court, and the lower courts who interpret its decisions, anything can happen, and usually does.

As a cyber-libertarian, I’ve been lucky enough to work with people of all ideological stripes in pursuit of various public policy objectives.  I’ve made selective alliances with people on the Right on economic policy issues (like opposing Net Neutrality regulation, Internet taxes, etc) and also worked closely with folks on the Left on speech and culture issues (content controls, anonymity, online safety concerns, etc).

While engaging with with people on both sides of the political fence, I’m often struck by some of their internal inconsistencies.  Conservatives, for example, talk about a big game about personal responsibility on some issues, but quickly abandon that notion when they claim media content or online speech should be regulated by the State (typically “for the children.”)  In this essay, I’d like to discuss interesting inconsistencies on the political Left, especially among advocates of strong privacy regulation (most of whom tend to be Left-leaning in their worldview).  In particular, here are the two things I find most interesting about modern privacy advocates:

(1) Most privacy advocates are vociferous First Amendment supporters, yet they abandon their free speech values and corresponding constitutional tests when it comes to privacy regulation.  When it comes to proposals to regulate media content or online speech, most folks on the Left have a very principled, clear-cut position: people (or parents) should take responsibility for unwanted information flows in their lives (or the lives of their children). In particular, they rightly argue that the many user empowerment tools on the market (filters, monitoring software, other parental control technologies) constitute a so-called “less-restrictive means” of controlling content when compared to government regulation.

Advocacy groups that I have a great deal of respect for and work with quite closely on these issues–such as EFF, CDT and ACLU—all take this position.  Generally speaking, they argue that, when it comes to speech regulation, “household standards” (user-level controls) should trump “community standards” (government regulation). And in Court—where I frequently file joint amicus briefs with them—they repeatedly employ the “less-restrictive means” test to counter government efforts to regulate information flows.

But when it comes to privacy, they throw all this out the window!  For some reason, when the topic of debate shifts from concerns about potentially objectionable content to the free movement of personal information, personal responsibility and self-regulation become the last option, not the first.  What’s most troubling about this is the way these advocates of privacy regulation are unwittingly undermining the power of the “less-restrictive means” test, which is a vitally important barrier to greatly enhanced government control of cyberspace.  That is, when privacy advocates ignore, downplay, or denigrate user-empowerment tools, they are essentially saying self-help is the right answer in one context, but not the other.

That’s a shame because self-help tool work well in both contexts.  Indeed, I’ve spent years documenting the wide variety of user-empowerment tools on the child safety front, and more recently I have worked with colleagues at PFF to provide a similar inventory of “privacy solutions” that can help users control personal information flows.  Can privacy tools be confusing at times or difficult to set up? Yes, they can. But no more so that parental control tools.  Are privacy tools as effective as parental control tools?  I think they are actually more effective because in the case of parental controls, the person you are trying to “protect” (namely, kids) often have a stronger incentive to evade / defeat those tools.  Moreover, privacy-enhancing controls can be very effective—perhaps even too effective—at shutting down unwanted information flows.  Whether it’s ad-blocking tools, cookie controls, or encryption techniques, these tools can actually be far more effective blocks on information flows than, say, Internet filters meant to block porn or hate speech, which is also more subjective by nature.

Of course, no tool is perfect. But as the Supreme Court held in United States v. Playboy, empowerment tools need not be perfect to be preferable to government regulation. “Government cannot ban speech if targeted blocking is a feasible and effective means of furthering its compelling interests,” the Court held.  Moreover, “It is no response that voluntary blocking requires a consumer to take action, or may be inconvenient, or may not go perfectly every time.  A court should not assume a plausible, less restrictive alternative would be ineffective; and a court should not presume parents, given full information, will fail to act.”

So, then, why doesn’t the exact same principle hold for privacy regulation?  I believe it should, and because of that I get in some pretty heated fights with friends at EFF, CDT and ACLU when they abandon the user-empowerment regime on the privacy front and instead invite the government to come in and establish an information control regime.  Which leads to the second thing I find interesting about advocates or privacy regulation…

(2) Most privacy advocates bash copyright and claim it is an information control regime, yet privacy regulation would constitute a stronger information control regime by creating the equivalent of copyright law for personal information (which would, in turn, conflict mightily with the First Amendment).

While many libertarians oppose any form of copyright protection, I still find much worth praising in America’s copyright system.  Nonetheless, I do admit to my libertarian friends, as well as anti-copyright advocates on the Left, that copyright places limits on the flow of certain types of information.  After all, quite literally, copy-right deals with rights to copy information.  Of course, that’s the nature of all property rights—they foreclose and constrain alternative uses. But there’s typically a good reason for that: In the case of intangible property, it’s because we want to promote the creation of content/information in the first place.

For many copyright critics, however, this is an intolerable trade-off. Any limits on reproduction/reuse—even if those rights incentivize artistic/scientific creativity—are regarded as an unjust form of information control.  But if they believe that to be the case for copyright, why do they not feel the same of privacy rights?  After all, there are some striking similarities between the regimes.

In his new book, Skating on Stilts, Stewart Baker reminds us that the famous 1890 Brandeis and Warren Harvard Law Review essay on “The Right to Privacy“–which is like a sacred text to many modern privacy advocates–was heavily influenced by copyright law.  As Baker explains:

Brandeis wanted to extend common law copyright until it covered everything that can be recorded about an individual. The purpose was to protect the individual from all the new technologies and businesses that had suddenly made it easy to gather and disseminate personal information: “the too enterprising press, the photographer, or the possessor of any other modern device for rewording or reproducing scenes or sounds.”  […] Brandeis thought that the way to ensure the strength of his new right to privacy was to enforce it just like state copyright law. If you don’t like the way “your” private information is distributed, you can sue  everyone who publishes it.

Incidentally, it’s important to recall that the Brandeis and Warren’s call for such a regime was essentially driven by their desire to control the press. In their article, they argued that:

The press is overstepping in every direction the obvious bounds of propriety and of decency. Gossip is no longer the resource of the idle and of the vicious, but has become a trade, which is pursued with industry as well as effrontery. To satisfy a prurient taste the details of sexual relations are spread broadcast in the columns of the daily papers. To occupy the indolent, column upon column is filled with idle gossip, which can only be procured by intrusion upon the domestic circle.

So angered were Brandeis and Warren by reports in daily papers of specifics from their own lives that they were led to conclude that:

man, under the refining influence of culture, has become more sensitive to publicity, so that solitude and privacy have become more essential to the individual; but modern enterprise and invention have, through invasions upon his privacy, subjected him to mental pain and distress, far greater than could be inflicted by mere bodily injury.

Let’s ignore their hyperbolic claim that invasions of privacy could cause more harm than “mere bodily injury.”  No, wait, let’s not!  Seriously, can you believe men of this stature could utter such nonsense?  I’d love to hear a modern privacy advocate defend this notion and explain how, exactly, one could have greater “pain and distress” inflicted by words than “by mere bodily injury.”  That’s a doozy of a claim.  Nonetheless, they said it—in the law review article that quite literally gave birth to American privacy law.  And it only follows, then, that they would want fairly draconian controls on free speech / press rights if they felt this strongly.

Taken to the extreme, however, giving such a notion the force of law would put privacy “rights” on a direct collision course with the First Amendment and freedom of speech/communication.  As Eugene Volokh argued in a 2000 law review article entitled, “Freedom of Speech, Information Privacy, and the Troubling Implications of a Right to Stop People from Speaking About You“:

The difficulty is that the right to information privacy — the right to control other people’s communication of personally identifiable information about you — is a right to have the government stop people from speaking about you. And the First Amendment (which is already our basic code of “fair information practices”) generally bars the government from “control[ling the communication] of information,” either by direct regulation or through the authorization of private lawsuits.

Indeed, how could a journalist even conduct their business in such a world? By their very nature, good reporters are nosy and disregard the privacy rights of the people and institutions they report on. But in a world where privacy “rights” trump other rights, free speech would be forced to take a back seat.

To be clear, I’m not opposed to all privacy “rights.” But as I noted in my lengthy review of Daniel Solove’s Understanding Privacy, we need to begin with a theory of rights and then figure out what privacy “harms” we are trying address/rectify.  Generally speaking, I am skeptical of most claims about harms coming from people talking about us or knowing more about us and I believe that freedom of speech / communications should trump such rights claims. But that’s because I subscribe to a libertarian theory of rights/justice that–as the name implies–places human liberty at the core of that theory of rights.  If liberty isn’t your cup of tea, I can see how “privacy” might be viewed as co-equal in your theory of rights.  Nonetheless, I would hope such people would acknowledge that, at the end of the day, such a theory requires trade-offs and that, much like making an allowance for copyright in a libertarian system, information flows might be limited by these assertion of privacy rights.   What I’m asserting here, however, is that privacy regulation would entail far greater restrictions on liberty–especially freedom of speech/communication–than copyright law. After all, as Volokh notes, we are talking about “a right to have the government stop people from speaking about you.”

Addendum: I failed to mention that my fellow TLF blogger Tom Bell has said all of this much more elloquently in his 2001 Cato white paper, “Internet Privacy and Self-Regulation: Lessons from the Porn Wars.”

The Progress & Freedom Foundation today filed comments in the Federal Communication Commission’s (FCC) “Future of Media” proceeding. Berin Szoka, Ken Ferree, and I urged the FCC to “reject Chicken Little-esque calls for extreme media ‘reform’ solutions,” and counseled policymakers to move cautiously so that media reform can be “organic and bottom-up, not driven by heavy-handed, top-down industrial policies for the press.”

Our 79-page filing covers a wide range of ideas being examined by Washington policymakers to help struggling media outlets and unemployed journalists, or to expand public media / “public interest” content and regulation. Among the major issues explored in our filing:

• First Amendment concerns implicated by government subsidies;
• The pitfalls of imposing new “public interest” obligations on media operators;
• How advertising restrictions could harm the provision of media and news;
• Taxes, fees and other regulations to be avoided;
• The limited role in reform that public media subsidies can play; and
• Positive steps government could take.

We note that as “With many operators struggling to cope with intensifying competition, digitization, declining advertising budgets, and fragmenting audiences, some pundits and policymakers are wondering what the ‘future of media’ entails. The answer: Nobody knows.”  While this uncertainty has put concerned policymakers at the ready to “help” the press, we warn that: “There is great danger in rash government intervention.” Instead, policymakers should be “careful to not inhibit potentially advantageous marketplace developments, even if some are highly disruptive.” Marketplace meddling, or government attempts to tinker with private media business models in the hopes that something new and better can be created, are misguided. Moreover, “Our constitutional traditions warn against it, history suggests it would be unwise, and practical impediments render such meddling largely unworkable, anyway.”

We address several specific proposals to use public coffers to prop up the media—such as media vouchers, taxing broadcast spectrum, and expanding postal subsidies, among others. They believe that most of these stand on shaky ground, especially as they relate to press independence; First Amendment values; political strings, pressure and meddling; taxpayer promotion of failed models; and taxpayer-compelled funding of unwanted or offensive content.

The PFF comments also focus on the integral role advertising plays in supporting free media: “Advertising has been the hidden, unappreciated benefactor that has sustained a free press historically and policymakers should understand that an attack on advertising is tantamount to an attack on media itself.” Accordingly, if Washington wages a war on advertising, media providers will suffer greatly.

We examine non-commercial media options, too. Though limited support can work at the margins, “policymakers should not view public media as a substitute for private media operations.” If the government truly wants to help ailing media outlets and journalism, policymakers could relax media ownership regulations; allow non-profit status for media enterprises; and provide far greater transparency into its own affairs.

We conclude that the Commission should ignore sky-is-falling rhetoric and avoid “destroy[ing] the important wall between State and Press.”  Instead of imposing an industrial policy on the press, we urge policymakers to exercise patience and let creative destruction in the media marketplace play out.

While working on our FCC filing, we released a series of essays over the last month entitled “The Wrong Way to Reinvent Media” (see Parts 1, 2, 3, 4 and 5).You can find all those papers, our big filing, and other related materials on this new PFF page dedicated to “Future of Media” issues.

Also, on May 20th, PFF will host an event covering these and competing ideas, called “Can Government Help Save the Press?” That event will be keynoted by the FCC’s Ellen Goodman.  RSVP here today. Comments of Progress and Freedom Foundation in FCC Future of Media Proceeding (GN Docket No 10-25) http://d1.scribdassets.com/ScribdViewer.swf

C-SPAN is really quite incredible when you think about it.  When I was growing up in the 70s, there was nothing like it. Like most other Americans, my informational inputs about national news and politics were limited to what a couple of old white dudes in bad suits delivered each night around 6:30 on the three VHF channels I had access to. And no national newspapers were delivered to my small town in rural Illinois, so I had to rely on crummy local papers to fill the void via whatever national reporting they offered, which wasn’t much.

And then came C-SPAN.  C-SPAN alone covers more political and civic-minded activity in the course of a week than most of us probably came into contact with in our entire lives just 30 years ago. Consider these data points, which Peter Kiley, Vice President of C-SPAN Networks was kind enough to help me aggregate. In the 2009 calendar year, C-SPAN provided the following amount of first run programming across their three channels:

• 8,438 overall hours of programming;
• 2,709 hours of House & Senate floor activity; and,
• 1,222 hours of House & Senate committee hearings.

Moreover, C-SPAN recently created the C-SPAN Video Library, which archives 23 years worth (1987-on) of fully searchable (and free) video content, including:

• 161,000 overall hours of programming;
• 56,600 hours of House & Senate floor activity; and,
• 20,152 of House & Senate committee hearings.

That’s incredible. But here’s what’s more impressive: Many people fail to realize that C-SPAN is a private, non-profit company that is provided as a public service by cable industry contributions. It receives no government or taxpayer contributions. From 1979-2009, total license fees paid by cable & satellite companies to support C-SPAN totaled $922 million. That’s what brings you this amazing, unprecedented civic resource.

OK, let me step back and explain why I started thinking about C-SPAN.  I’ve been invited to testify at a Federal Communications Commission hearing this Thursday on “Serving the Public Interest in the Digital Era.” I suspect that one of the laments we’ll hear from some of the participants is the old “deliberative democracy is dead” line. Debates about public interest regulation often take on a mythical tone as regulatory advocates wax nostalgic about some supposedly Golden Era of Civic Engagement when we were all better informed and publicly active. It’s pure rubbish, as I showed in my 2005 book, Media Myths: Making Sense of the Debate over Media Ownership. (See chapter 4, “Democracy, Civic Discourse, and the ‘Public Interest.'”)

Nonetheless, the myth persists and often leads to calls for aggressive regulation of media markets in the name of serving “the public interest.” Regulatory advocates typically claim that government must intervene and layer on regulatory mandates if citizens are to have access to the requisite amount of political programming or civic-minded content necessary for deliberative democracy to survive.

But is there really any shortage political programming or civic-minded content from which to choose today? C-SPAN’s existence alone seems to prove the contrary, but it’s hardly the only platform through which such content is available. Let’s not forget about what the Internet has made available to us. It has given us unprecedented access to public affairs information—local, state, national, and international.

But here’s the thing that a lot of “public interest” advocates always seem to ignore: Regardless of how much beneficial civic content is out there, you can’t make people watch, listen, or read it if they don’t want to. “Today, the scarce resource is attention, not programming,” notes Ellen P. Goodman of the Rutgers-Camden School of Law. “Given the proliferation of consumer filtering and choice, these kinds of interventions are of questionable efficacy. Consumers equipped with digital selection and filtering tools are likely to avoid content they do not demand no matter what the regulatory efforts to force exposure.” [Ellen P. Goodman, “Proactive Media Policy in an Age of Content Abundance,” in Philip M. Napoli, ed., Media Diversity and Localism: Meaning and Metrics (2007) at 370, 374.]

And there is no reason to believe this situation has ever been different or will ever change. Writing in 1922, famed journalist Walter Lippmann noted that, “it is possible to make a rough estimate only of the amount of attention people give each day to informing themselves about public affairs,” but “the time each day is small when any of us is directly exposed to information from our unseen environment.” [Walter Lippmann, Public Opinion (1922), p. 53, 57.]  Of course, in Lippmann’s day, one could have reasonable argued that was because such content simply wasn’t available to the masses. Today, by contrast, the content is available, it’s just that we have a lot of other informational and entertainment outputs vying for our attention.

Absent truly repressive measures to limit choices or forcibly alter consumer media consumption patterns, it will be impossible for policymakers to force the masses to pay attention to what they want them to see or hear in an age of abundant media content and unrestricted choice. “[R]egulation cannot, in a liberal democracy, force viewers to consumer media products they do not think they want in the name of the public interest,” argues Goodman.

Luckily, public officials need not resort to such repressive steps. Even if we only access C-SPAN on rare occasions, or browse political information on the Net at random intervals in the days leading up to an election, that’s more information than we ever had at our disposal in those mythical “good ‘ol days.” We should be celebrating this fact, but I suspect a lot of people at the FCC’s hearing on Thursday will be bemoaning it instead.

By Berin Szoka & Adam Thierer

This morning, The Progress & Freedom Foundation (PFF) and the Electronic Frontier Foundation (EFF) filed joint comments with the Federal Communications Commission (FCC) in the inquiry “Empowering Parents and Protecting Children in an Evolving Media Landscape.” (MB Docket No. 09-194)  As Adam summarized here before, the stated purpose of this FCC Notice of Inquiry is to:

seek information on the extent to which children are using electronic media today, the benefits and risks these technologies bring for children, and the ways in which parents, teachers, and children can help reap the benefits while minimizing the risks [and] to gather data and recommendations from experts, industry, and parents that will enable us to identify actions that all stakeholders can take to enable parents and children to navigate this promising electronic media landscape safely and successfully.

In our joint comments with Lee Tien and Seth David Schoen of EFF, we warned that the FCC should tread carefully when considering taking action on areas described in their inquiry. The agency simply has no authority to act on many of the topics discussed throughout the NOI, and it should not attempt to preempt successful private sector solutions. Congress never authorized the Commission to regulate Internet media, nor asked the agency to consider doing so.  In fact, Congress plainly declared that the Internet should be kept “unfettered by Federal or State regulation.”

Any regulation of online media would also fail to pass First Amendment scrutiny, as there are less restrictive means than government regulation to control minors’ access to objectionable content.  In addition, any mandate on content creators or access providers to rate or tag content would constitute compelled speech.

In response to the agency’s request for comments on the awareness and adoption of parental control technologies, we catalog the diverse array of tools and methods available to parents to tailor their exposure to potentially objectionable media and advertising, but advise that only a small percentage of U.S. households potentially need such technologies.  We also warn against a government-run content ratings system because of the overwhelming volume of content available online and because content outside the U.S. would be outside the government’s jurisdiction but just as easily accessible.

Finally, we also respond to the agency’s questions concerning children and advertising, explaining that, in addition to jurisdictional and First Amendment concerns, increased regulation of advertisements could have a negative impact on the production of children’s programming and content, since the majority of this content is supported by advertising or, on the Internet, flows over platforms like YouTube and Facebook that are supported by advertising.

In light of such concerns, “the Commission should continue what it began with its Child Safe Viewing Act Notice by expanding information and education about existing tools and ratings systems and encouraging parents to use these tools and methods and to talk to their children about appropriate media use,” we conclude.  “Beyond that narrow Congressionally-sanctioned mission, the Commission should tread cautiously.”

Read the entire filing here or down below in the Scribd reader.

PFF-EFF Response to FCC Empowering Parents Protecting Children NOI MB 09-194 http://d1.scribdassets.com/ScribdViewer.swf

by Adam Thierer & Berin Szoka, Progress Snaphot 6.1

Stephanie Clifford of the  New York Times posted a very interesting article this week summarizing a recent “on-the-record chat” the Times staff had with Federal Trade Commission (FTC) chairman Jon Leibowitz and FTC Bureau of Consumer Protection chief David Vladeck.  The interview [discussed by Braden here] is profoundly important in that it reveals an alarming disconnect regarding the relationship between “privacy” regulation and the future of media, which were the subjects of their discussion with Times staff.  Namely, Leibowitz and Vladeck apparently fail to appreciate how the delicate balance between commercial advertising and journalism is at risk precisely because of the sort of regulations they apparently are ready to adopt.  Because the value of online advertising depends on data about its effectiveness and consumers’ likely interests, and because advertising is indispensable to funding media, what’s ultimately at stake here is nothing short of the future of press freedom.

The “Day of Reckoning” Is Upon Us

Leibowitz and Vladeck spend the first half of The Times interview wringing their hands about “privacy policies,” the declarations made by websites and advertising networks about their data collection and use practices (for which the FTC can and must hold them accountable).  But the two feel that privacy policies don’t adequately inform consumers.  Chairman Leibowitz claims that online companies “haven’t given consumers effective notice, so they can make effective choices.”  And Mr. Vladeck states that advise-and-consent models “depended on the fiction that people were meaningfully giving consent.” But he and the FTC seem ready to abandon the notice and choice model because the “literature is clear” that few people read privacy policies, Vladeck told the Times.  He and Leibowitz continue:

“Philosophically, we wonder if we’re moving to a post-disclosure era and what that would look like,” Mr. Vladeck said. “What’s the substitute for it?” He said the commission was still looking into the issue, but it hoped to have an answer by June or July, when it plans to publish a report on the subject. Mr. Leibowitz gave a hint as to what might be included: “I have a sense, and it’s still amorphous, that we might head toward opt-in,” Mr. Leibowitz said.

This clearly foreshadows the regulatory endgame we have long suspected was coming.  When the FTC released its “Self-Regulatory Principles for Online Behavioral Advertising” eleven months ago, we asked: “What’s the Harm & Where Are We Heading?”  Their answers to both questions have become clearer with each new calculated comment—all apparently intended to slowly “turn up the heat” on the advertising industry so that the proverbial frog will stay in the pot until the water finally boils.  Leibowitz’s FTC has simply dodged the “harm” question with a four-part strategy:

1. Cobble together a “record” full of sympathy-evoking anecdotes submitted by advocates of regulation in comments and the FTC’s ongoing “Exploring Privacy” Roundtables;
2. Let the most extreme Chicken Littles fulminate about the grand conspiracy of “neuromarketing manipulation” and the like (and sometimes even shout down FTC staff in panel discussions) in order to redefine the “reasonable center” of the debate;
3. Define-down “harm” as purely a matter of “consumer expectations” or consumers’ “dignity interests” (whatever that vague and infinitely elastic term means); and
4. Attack the effectiveness of “consent” itself by suggesting that consumers cannot be trusted to understand privacy policies or be expected to make any effort to protect their own privacy.

Conveniently, this strategy leads right back to the “day of reckoning” Chairman Leibowitz threatened was coming last February: We are heading precisely where he told us we would be—to full-on, opt-in regulation.  The writing on the wall becomes more apparent every day: Leibowitz set out to bring online advertising to heel even before becoming Chairman, and his Commission is reprising almost precisely the same approach that led to the passage of the Children’s Online Privacy Protection Act (COPPA) of 1998: building a case for new authority, dismissing industry self-regulation as ineffective, and finally presenting a report to Congress intended to produce a rapid legislative response.  After the FTC presented its report on the need for regulation in congressional testimony in June 1998, it took Congress just four months to pass COPPA—and much of that time was consumed by the summer recess.  In short, Leibowitz is mounting a carefully choreographed campaign for increased regulation.

The only real question is whether Leibowitz will somehow try to use the FTC’s existing authority over “unfair or deceptive” trade practices or wait for expanded authority from Congress.  While most observers typically assume that such expanded authority would come in the form of a privacy-specific bill—be it a broad “baseline” privacy bill or one specifically focused on online data collection for advertising purposes—the authority Leibowitz yearns for could just as easily come in the form of increased rulemaking authority as part of a broader bill that allows the FTC to preemptively regulate practices that are not deceptive but merely deemed “unfair.”

This would take the agency “ Back to the Future”—to the late 1970s, when the agency reached the height of its efforts to regulate purely on “unfairness” grounds by trying to ban advertising to children.  The agency’s behavior earned it the moniker “National Nanny” from the Washington Post, hardly a bastion of regulatory skepticism.[1] That outpouring of popular resentment caused a heavily Democratic Congress to cut-off the Democratic-led agency’s regular funding and prohibit it from regulating advertising merely on the grounds of “unfairness.”  In essence, they told the agency to “go back to its knitting” and focus on protecting consumers from demonstrated harms.^[2] Duly chastened (and actually shut down for several days), the FTC formulated a meaningful legal standard for “unfairness,” which Congress codified in 1994: for a practice to be unfair, the injury it causes must be (1) substantial, (2) without offsetting benefits, and (3) one that consumers cannot reasonably avoid.

Under this statutory standard, as FTC Commissioner Thomas Rosch has argued, the commission must carefully consider:

[the] legitimate pro-consumer and pro-competitive benefits that result from [targeted advertising]. Absent hard data weighing these benefits against the limited “invasion of privacy interests” involved, it would seem difficult to conclude that treating that practice as an actionable violation of the “unfairness” prong of Section 5 will pass muster.[3]

So Leibowitz and Vladeck either need to get serious about weighing the costs and benefits of targeted advertising—or, in the absence of such actually measuring these trade-offs, get Congress to give them the authority to regulate.  But one thing is clear from their past statements: they are in a hurry to do  something. As Vladeck told The Times last August, “There is a sense of urgency around here… Consumers, I don’t think are sufficiently protected under the current regime.”  Apparently, the case is closed in their minds.

“Left Hand, Meet Right Hand”

The second half of the  Times interview concerns the future of news. Chairman Leibowitz is not optimistic:

“There are some areas where you clearly see positive creative destruction,” Mr. Leibowitz said, giving the example of travel agents who were replaced by Orbitz and other online-booking systems. The news, he said, was not one of those. “When you’re dealing with something as critical as news is to a democracy, you need to ensure, certainly, that it’s independent, but also that it’s vibrant going forward,” he said. Areas like investigative reporting, foreign and domestic bureaus, and state-house reporting, he said, would likely falter under blog operations because of “economies of scale.”

He said he wasn’t sure what the solution was, but threw out a few ideas discussed at the conference: maybe special tax treatment for newspapers, a Corporation for Public Broadcasting-like fund, or for the newspaper industry to charge fees for the re-use of its content, similar to the model that the American Society of Composers, Authors and Publishers uses. [emphasis added]

Mr. Chairman, with all due respect, haven’t you forgotten about the solution that has powered private media for a few centuries in this country?  You know— advertising!  Indeed, what’s stunning about these comments is the complete disconnect with what Leibowitz and Vladeck said earlier in the interview.  It certainly may be the case that they said more on the subject than what The Times has reported, but given their escalating rhetoric, it seems likely that significantly increased FTC regulation is on the horizon.  And, yet, as Chairman Leibowitz marches us into this brave new world of regulating Internet media through their key funding source, he and Mr. Vladeck seem to have little appreciation of the vital role played by advertising in sustaining a truly free and vibrant press.

An Attack on Advertising Is an Attack on Media Itself

Let’s step back and revisit Media Economics 101.  Almost every serious scholar in the field acknowledges this truism: Advertising cross-subsidizes media platforms and the creation of valuable information—especially news.  “Advertising is the mother’s milk of all the mass media,”  Wall Street Journal technology columnist Walt Mossberg has noted.  Similarly, Harold L. Vogel, author of Entertainment Industry Economics, the leading text in the field, has noted, “Advertising is the key common ingredient in the tactics and strategies of all entertainment and media company business models.  Indeed, it might further be said that advertising has substantively subsidized the production and delivery of news and entertainment throughout the last century.”[4] Mossberg agrees and notes, “Without ads, most editorial products and other programming would be either unavailable or prohibitively expensive.”

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.

Which raises another under-appreciated point: Private advertising promotes press independence.  “Newspapers, magazines, radio, television, and many websites all receive their primary income from advertising,” notes William F. Arens, author of  Contemporary Advertising, another leading textbook in the field. “This facilitates freedom of the press and promotes more complete information” he concludes.[5] Why?  Because, contrary to what some critics claim, advertising and marketing help keep private media providers independent of the need for taxpayer subsidies or private patrons.  This begs an even more profound question: If not advertising, then what else?

A “Public Option” for the Press?

What’s most troubling about Chairman Leibowitz’s comments to the Times is that he has apparently found his alternative to advertising: a “public option” for the press! He mentions special tax treatment for newspapers or a new CPB-like fund (don’t we already have one?) as two possibilities.  That certainly will be music to the ears of radical, pro-regulatory activist groups like the ironically-named “Free Press,” which wants to see a massive “public works” program for the media sector.

Free Press recently filed comments with the FTC in the agency’s recent workshop, “Can Journalism Survive the Internet Age?” and proposed a far-reaching industrial policy for “saving the news.”  They call for over $50 billion in subsidies for the Corporation for Public Broadcasting and other bureaucracies, a “journalism jobs program” for that would be part of AmeriCorps, a variety of new tax incentives for struggling media operations or individuals who support favored institutions, and an assortment of government incentives to encourage local ownership and media divestiture (by handing over control to smaller operators or minority-owned groups).  Ironically, “Free Press” has also floated the concept of “a small tax on advertising” as one way to pay for a press bailout.

The organization’s founder Robert W. McChesney, the prolific neo-Marxist media scholar, penned an essay with John Nichols of The Nation last year, claiming that saving journalism essentially requires that media become an appendage of the State.  Although advertising has supported journalism as a “public good” for centuries, the only way they can conceive to provide a public good is to socialize its means of production.  Thus, journalism, like education and national defense, requires constant government oversight and support: “A moment has arrived at which we must recognize the need to invest tax dollars to create and maintain news gathering, reporting and writing with the purpose of informing all our citizens.”  They ask us to consider the $60 billion in government spending they propose as a “free press ‘infrastructure project,’” which would “keep the press system alive.”

Some in Congress seem willing to listen.  The Senate has already held hearings about the future of journalism.  And Senator Benjamin L. Cardin (D-MD) recently introduced what he has called the “Newspaper Revitalization Act,” which would allow newspapers to become nonprofit organizations in an effort to help them stay afloat.  Importantly, however, the bill would also disallow political endorsements on newspaper editorial pages—which, like campaign finance restrictions, would be a boon for incumbent politicians.  That bill should serve as fair warning to journalists about the sort of strings lawmakers will attach to press-welfare efforts going forward.  What other “golden shackles” might come with media subsidies?

To be clear, Chairman Leibowitz hasn’t called for a complete press takeover along the lines of the Free Press plan.  Yet, he hasn’t answered a key question in this debate: Who pays for news?  He appears ready to endorse a bold new regulatory scheme for the Internet and online media that, in the name of “protecting privacy” would put at risk the one traditionally successful method of supporting private media operations—advertising.  As the Pew Research Center’s Project for Excellence in Journalism noted in its latest State of the News Media report, “The problem facing American journalism is not fundamentally an audience problem or a credibility problem.  It is a revenue problem—the decoupling… of advertising from news.”  There’s probably no way policymakers can stop this process, nor should they try.  But they shouldn’t be creating new obstacles to the survival of traditional media creators, either.

Unfortunately, that’s exactly what Chairman Leibowitz’s new regulatory scheme would do.  The revenue “delta” between “smart” advertising (tailored to consumers’ likely interests and measured for effectiveness in producing clicks, purchases, etc.) and “dumb advertising” (based purely on surrounding keywords or demographics of users presumed to visit the site) is difficult to measure but potentially enormous—even 10 times as great for some sites.[6] The difference between opt-in and opt-out could be nearly as dramatic, because it’s difficult to get consumers to opt-in for anything, especially for small players—which means that opt-in regulation could, perversely, force consolidation in the online advertising and content markets.  If the FTC cares about its statutory responsibility to safeguard competition, they should take this dynamic seriously and be hyper-cautious about heavy-handed mandates that could derail smarter advertising.

Finally, to be fair, in his interview, the Chairman also suggests the newspaper industry might want to find new way “to charge fees for the re-use of its content.”  We’re certainly not opposed to the notion and think that, if it could somehow be made to work (especially by removing antitrust obstacles), it could part of a diverse revenue mix for digital journalism.  But, there’s the rub.  Micropayments inevitably face the problem of “mental transaction costs”  that likely swamp the perceived value of most content and, like pay-walls, have generally worked only in media environments characterized by a scarcity of providers and a uniqueness of a sufficiently valuable product.  These cold, hard economic realities are why advertising remains indispensable.

The Principled Alternative to Regulation

Convinced that privacy policies simply don’t work, Leibowitz and Vladeck are asking what a “post-disclosure era” would look like.  We appreciate the continued sensitivities expressed by certain groups and individuals about online privacy and data use more generally.  But there is another way forward.  We have proposed the following “5-E” layered approach to concerns about online privacy, focusing on restraining government access to data as a clear harm, rather than crippling the private sector uses of data that directly benefit consumers:

1. Erect a higher “Wall of Separation between Web and State” by increasing Americans’ protection from government access to their personal data—thus bringing the Fourth Amendment into the Digital Age.
2. Educate users about privacy risks and data management in general as well as specific practices and policies for safer computing.
3. Empower users to implement their privacy preferences in specific contexts as easily as possible.
4. Enhance self-regulation by industry sectors and companies to integrate with user education and empowerment.
5. Enforce existing laws against unfair and deceptive trade practices as well as state privacy tort laws.

Such a layered approach would not only be a “less restrictive” alternative to top-down, one-size-fits-all government regulation, but also potentially more effective in key respects than government data use/collection mandates.  In an ideal world, adults would be fully empowered to tailor privacy decisions, like speech decisions, to their own values and preferences (“household standards”).  Consumers would have (1) the information necessary to make informed decisions and (2) the tools and methods necessary to act upon that information. Importantly, those tools and methods would give them the ability to block the things they don’t like—annoying ads or the collection of data about them, as well as objectionable content—while also helping them find the information and content they desire.

But of course, the devil’s in the details.  Leibowitz and Vladeck would set the bar so high as to what constitutes “effective” consumer choice that current privacy policies necessarily fail their test—if only because most users don’t care enough to make the “right” privacy choices.  Privacy policies, even if read by relatively few consumers, nonetheless allow privacy advocates, journalists and watchdog-bloggers to scrutinize what companies say they’re doing—promises to which the FTC should hold companies stringently.  That’s clearly not good enough for Leibowitz and Vladeck, who want to give up on “notice and choice” and move on to “opt-in” mandates.  But why not first try to make “notice” more effective?  The advertising industry is currently developing standardized interfaces that could communicate key information about privacy practices in a single icon, label or other easily-digested “consumer touch point.”

More radically, why focus on tinkering with consumer interfaces, when standardized data disclosure formats like the Protocol for Privacy Preferences (P3P) could distill legalistic privacy policies into “machine-readable” code?  Such disclosures could provide a powerful form of “notice” that the ordinary consumer could “use”: simply setting their own privacy preferences in a browser tool that automatically implements those preferences by blocking tracking that users object to.  Such a privacy disclosure format could also allow the FTC to automate enforcement of its existing authority to punish unfair or deceptive trade practices.

Conclusion

And so we return to the question the FTC asked in its recent workshop, “Can Journalism Survive the Internet Age?”  Answer: Not if the FTC kills the golden goose that lays the golden eggs through onerous advertising regulations and data controls in the name of “privacy.”  Chairman Leibowitz and Bureau Chief Vladeck shouldn’t foreclose the possibility that advertising can play a central role in the future of a free press in the Digital Age—just as it has done historically in the United States.  Indeed, they would be wise to remember that advertising has always been with us.  As the Supreme Court noted in its 1996 decision, 44 Liquormart, Inc. v. Rhode Island.

Advertising has been a part of our culture throughout our history. Even in colonial days, the public relied on “commercial speech” for vital information about the market. Early newspapers displayed advertisements for goods and services on their front pages, and town criers called out prices in public squares. Indeed, commercial messages played such a central role in public life prior to the founding that Benjamin Franklin authored his early defense of a free press in support of his decision to print, of all things, an advertisement for voyages to Barbados.[7]

Of course, for advertising to continue to play the role as sustainer of the press, it must be allowed to evolve.  Media operators—large and small alike—must be allowed to craft new strategies, some of which may require data collection and marketing practices that will make some privacy-sensitive users uncomfortable, but will also ensure that the goose keeps on laying golden eggs for them and everyone else.

While Chairman Leibowitz may decry the creative destruction at work in the news sector and information industries today, that shakeup will continue and, no doubt, be painful for incumbent players.  Advertising alone may not “save the day” for media as it has in the past, but it will likely remain essential to sustaining private media platforms and providers going forward— if federal policymakers allow it.  The alternative—massive government intervention into the news and media sectors—is too horrifying to think about.

[1] Washington Post, March 1, 1978.

[2] Congress terminated the FTC’s efforts to prohibit advertising to children, and barred the agency from issuing any advertising regulation predicated solely on unfairness for three years.  FTC Improvements Act, Pub. L. No. 96-252, § 11 (May 1980).  See generally J. Howard Beales, Director of the Bureau of Consumer Protection, Federal Trade Commission, The FTC’s Use of Unfairness Authority: Its Rise, Fall, and Resurrection, www.ftc.gov/speeches/beales/unfair0603.shtm.

[3] Thomas Rosch, Some Reflections on the Future of the Internet: Net Neutrality, Online Behavioral Advertising, and Health Information Technology, Remarks at U.S. Chamber of Commerce Telecommunications & E-Commerce Committee Fall Meeting, October 26, 2009, 13, www.ftc.gov/speeches/rosch/091026chamber.pdf.

[4] Harold L. Vogel, Entertainment Industry Economics (Cambridge, MA: Cambridge University Press, 7th Edition, 2007), at 46.

[5] William F. Arens, Contemporary Advertising (McGraw-Hill Irwin, 10^th Ed., 2006) at 50.

[6] See Berin Szoka & Mark Adams, The Benefits of Online Advertising & Costs of Privacy Regulation, PFF Working Paper, Nov. 8, 2009, www.scribd.com/doc/22445754/Benefits-of-Online-Advertising-Paper.

[7] 517 U.S. 484, 495 (1996), http://www.law.cornell.edu/supct/html/94-1140.ZO.html

______________________________

Related PFF Publications

• Privacy Trade-Offs: How Further Regulation Could Diminish Consumer Choice, Raise Prices, Quash Digital Innovation & Curtail Free Speech, Berin Szoka, Comments to the Federal Trade Commission “Exploring Privacy” Roundtable, November 10, 2009.
• Online Advertising & User Privacy: Principles to Guide the Debate, Berin Szoka & Adam Thierer, Progress Snapshot 4.19, Sept. 2008.
• Targeted Online Advertising: What’s the Harm & Where Are We Heading?, Berin Szoka & Adam Thierer, Progress on Point 16.2, April 2009.
• Privacy Polls v. Real-World Trade-Offs, Berin Szoka, Progress Snapshot 5.10, Oct. 2009.
• The Benefits of Online Advertising & Costs of Privacy Regulation, Berin Szoka & Mark Adams, PFF Working Paper, Nov. 8, 2009.
• Benefits of Online Advertising, Berin Szoka, Mark Adams, Howard Beales, Thomas Lenard & Jules Polonetsky, PFF Capitol Briefing, July 2009.
• Public Option for Press Should Get the Red Pen, Adam Thierer, The Daily Caller, Jan. 12, 2010.

One of the themes you come across again and again in public policy debates about privacy, advertising, marketing, or even free speech battles, is the notion that the public at large is made up of mindless sheep being duped at every turn.  And, as Berin Szoka and I noted in our paper “What Unites Advocates of Speech Controls & Privacy Regulation?” if you buy into the argument that consumers are basically that stupid then it logically follows that people cannot be trusted or left to their own devices. Thus, government must intervene and establish a baseline “community standard” on behalf of the entire citizenry to tell them what’s best for them.

But there are good reasons to question the premise that consumers are blind to efforts to persuade or influence them — regardless of what type of media content or communications efforts we are talking about.  I was recently reading Communication Power by Manuel Castells and liked what he had to say about how so many media critics make this false assumption. Castells rightly notes:

Interestingly enough, critical theorists of communication often espouse [a] one-sided view of the communications process. By assuming the notion of a helpless audience manipulated by corporate media, they place the source of social alienation in the realm of consumerist mass communication. And yet, a well-established stream of research, particularly in the psychology of communications, shows the capacity of people to modify the signified of the messages they receive by interpreting them according to their own cultural frames, and by mixing the messages from one particular source with their variegated range of communicative practices. (p. 127)

That’s exactly right, and it is even more true in an age of ubiquitous, interactive communications technologies. “The people formerly known as the audience” have the unprecedented ability to talk back, to compare notes, to collectively criticize and hold accountable those who previously held all the cards in the mass media age of the past.  Most consumers are perfectly capable of judging the merits of advertising, commercial messages, or other content on their own; they cast a skeptical eye toward most claims but process those claims alongside other counter-claims, independent judgments, informational inputs, and “cultural frames,” as Castells rightly argues.  We need to give the public some credit.

I’ve always generally agreed with the conventional wisdom about micropayments as a method of funding online content or services: Namely, they won’t work.  Clay Shirky, Tim Lee, and many others have made the case that micropayments face numerous obstacles to widespread adoption.  The primary issue seems to be the “mental transaction cost” problem: People don’t want to be diverted–even for just a few seconds–from what they are doing to pay a fee, no matter how small.  [That is why advertising continues to be the primary monetization engine of the Internet and digital services.]

That being said, I keep finding examples of how micropayments do work in some contexts and it has kept me wondering if there’s still a chance for micropayments to work in other contexts (like funding media content).  For example, I mentioned here before how shocked I was when I went back and looked at my eBay transactions for the past couple of years and realized how many “small-dollar” purchases I had made via PayPal (mostly dumb stickers and other little trinkets). And the micropayment model also seems to be doing reasonably well in the online music world. In January 2009, Apple reported that the iTunes Music Store had sold over 6 billion tracks.

And then there are mobile application stores.  Just recently I picked up a Droid and I’ve been taking advantage of the rapidly growing Android marketplace, which recently hit the 20,000 apps mark. Like Apple’s 100,000-strong App Store, there’s a nice mix of paid and free apps, and even though I’m downloading mostly freebies, I’ve started buying more paid apps. Many of them are “upsells” from free apps I downloaded. In most cases, they are just 99 cents. A few examples of paid apps I’ve downloaded or considered buying: Stocks Pro, Mortgage Calc Pro, Currency Guide, Photo Vault, Weather Bug Elite, and Find My Phone. And there are all sorts of games, clocks, calendars, ringtones, heath apps, sports stuff, utilities, and more that are 99 cents or $1.99.  Some are more expensive, of course.

I don’t have any idea how big this marketplace is in the aggregate, but according to AndroLib, “fully 62.2% of the apps available are completely free, compared to just 37.8% that are paid apps. That’s in stark contrast to the [Apple] App Store, which now has over 100,000 individual apps, of which (by some recent counts) a hefty 77% are paid applications — although only 30% of total App Store downloads are for paid apps.” That suggests that micropayments are doing quite well in mobile marketplaces. And this Wall Street Journal piece I was reading just yesterday, “Mobile-Payment Services Grow,” suggests there are lots of innovative things are happening in this space right now.

Of course, this gets into the semantic issue of, “what is a micropayment”? Does 99 cents qualify? I don’t know. I’ve never found any widely accepted definition of the term. Moreover, even if it’s true that a lot of people are buying “small-dollar” apps in mobile marketplaces, that doesn’t mean micropayments can fund all media going forward. It’s unlikely, for example, that we can fund quality journalism one micropayment at a time. People are just not going to pay a quarter (or even a penny) every time they want to read an article.  They might, however, be willing to pay a small monthly or annual access fee for some sites or services.  But with the exception of The Wall Street Journal and a handful of other media services, that model just doesn’t seem to have legs right now. [Although take a look at Dale Jefferson’s amazing newspapers app in the Android marketplace. Very cool. Perhaps media providers will learn from aggregation efforts like that and find a way to charge a small fee for access. But at less that one British pound — the cost of Jefferson’s app — I can’t imagine that funding a lot of content. They’ll need plenty of ads and other revenue streams to make up for what they are losing.]

Anyway, I’m not saying I have any answers here, just that my mind is still open regarding the possibility of micropayments as a method of funding online services and content. It may end up being easier for the former rather than the latter, however.

One of the more troubling aspects of the contentious debate over Net neutrality regulation is the way some proponents have sought to cast Net neutrality as “the Internet’s First Amendment.” As a die-hard free speech advocate, I find this truly outrageous and a complete contortion of the true purpose of the First Amendment.  As I have argued here before, it is incredibly dangerous thinking that puts our real First Amendment liberties at stake by empowering a regulatory agency with more means of controlling online speech and expression. Simply stated, the Internet’s First Amendment is the First Amendment, not some new, top-down, heavy-handed regulatory regime that puts the Federal Communications Commission in control of the Digital Economy.

On this point, I wanted to bring two things to your attention. The first is an outstanding address delivered today by Kyle McSlarrow, President & CEO of the National Cable & Telecommunications Association, at a Media Institute event here in Washington, DC.  And the second is this new paper by my PFF colleague Barbara Esbin.

McSlarrow’s speech was entitled, “Net Neutrality: First Amendment Rhetoric in Search of the Constitution” and it squarely addressed the fundamental fallacy set forth by the Net neutralitistas when it comes to the First Amendment. “Whatever our present-day policy disagreements about net neutrality, or even differing politics, let’s not forget that the First Amendment is framed as a shield for citizens, not a sword for government,” he argued. “By its plain terms and history, the First Amendment is a limitation on government power, not an empowerment of government,” McSlarrow said. “And… if there’s one thing the Supreme Court has made clear, it’s that rules that directly restrict protected speech cannot be justified by a government interest that is merely hypothetical.”

Absolutely correct. And these views are buttressed by the comments of Barbara Esbin in her new paper, in which she argues that “Net Neutrality is not the First Amendment for the Internet.”  She continues:

Today we live in a world with no FCC-imposed network neutrality rules. Can anyone seriously maintain that the Internet’s potential for commercial, political, artistic, and social expression has been hobbled in this country? Or that diversity is lacking? It is far more likely that the Internet has thrived, as Congress has stated, in the absence of federal or state regulation.

“Nor has the evidence, amassed after years of trying, painted a picture of persistent market failure or consumer harms,” she argues.

Turning the First Amendment on Its Head

Both she and McSlarrow note that twisted rationales for Net neutrality “turn First Amendment protections on their head” by making private platforms and actors in the enemies of speech instead of the government, which has traditionally acted to curtail speech liberties and freedom of expression. And it has succeeded at times because the government has the coercive ability to imprison, fine or otherwise punish speakers in ways that no private media or communications platform can.

There’s also the question of whether Net neutrality regulation might constitute a form of “compelled speech.” As Barbara notes, “Under traditional First Amendment jurisprudence, the government compelling a speaker to speak or transmit a message that it does not wish to transmit is just as much a free speech infringement as it is to prevent a speaker from transmitting or posting messages it wishes to transmit or post.” She cites remarks delivered at a 2007 Progress & Freedom Foundation event by noted First Amendment scholar Lawrence Tribe on this issue, in response to a question about broadband ISP control of content delivered over their networks:

The general question that raises is the extent to which the government can, in effect, force media to act as common carriers, to be transparent, to force them simply to convey whatever content comes along. To the extent that someone, or an entity, is a content provider engaging in discretion is not simply an empty pipeline. It has the fundamental right of editorial discretion. For the government to tell that entity that it cannot exercise that right in a certain way, that it must allow the projection of what it doesn’t want to include, is a violation of its First Amendment rights.

The Madness of “Media Access” Theory

All this should seem logical to anyone who has taken a look at the plain language of the First Amendment. It could not be more clear when it says, “Congress shall make no law…”  There aren’t any caveats or footnotes. And the First Amendment most certainly was not intended as a tool for government to control the editorial discretion of private individuals or institutions. It was about restricting the power of the government to curtail speech and expression.

So how did this twisted theory of the First Amendment gain currency in Net neutrality circles? To answer that you need to go back to the 1960’s when a handful of liberal legal scholars began concocting a new theory of the First Amendment that eventually came to be known as the “media access” school of thinking. George Washington University law professor Jerome A. Barron’s 1967 Harvard Law Review article, “Access to the Press — a New First Amendment Right,” as well as the work of Yale University law professor Owen Fiss, gave rise to this new intellectual movement. Its goal, in essence, was to convert the First Amendment into a club to beat demands out of private media providers. Basically, these theorists wanted to expand “Fairness Doctrine”-like right-of-reply notions to newspapers, and simultaneously grant the government more leeway to use the First Amendment to alter media structures and outputs. As Fiss argued in a 1986 law review article, under the “media access” approach, a proper reading of the First Amendment requires “a change in our attitude about the state” such that we learn “to recognize the state not only as an enemy, but also as a friend of speech… [that should act] to enhance the quality of public debate.” (Iowa Law Review, Vol. 71, 1986, p. 1416).

Other left-leaning intellectuals and activists groups would come to integrate that logic into their work and public policy proposals. Now you know, for example, where the Media Access Project gets their name!  But many other regulatory-minded groups — Free Press, Public Knowledge, the Center for Digital Democracy, MoveOn.org, New America Foundation, and others — trace much of their intellectual heritage back to Barron, Fiss, and the other media access theorists. [Read my lengthy debunking of media access theory here.]

And now we have books being written with titles like Virtual Freedom: Net Neutrality and Free Speech in the Internet Age, by Dawn Nunziato of George Washington University. I’ll have a review of Nunziato’s disturbing new book up shortly, but suffice it to say, she has taken media access theory, put it on steroids, and brought it into the Information Age.  At least the media access old-timers could more reasonably use “media scarcity” as an excuse for their regulatory machinations. But Nunziato just dispenses with all that and instead conditions all the new regulation on “democratic participation” and other amorphous theories.

Will the Real Big Brother Please Stand Up

Indeed, with Nunziato’s book, we see how the seeds of misguided intellectual thinking sometimes spring into wild gardens in which the weeds slowly take over everything in sight.  This twisted conception of the First Amendment is so thoroughly ingrained in leftist media policy thinking today that even an abundant medium like the Internet is not exempt from potential regulations based on it despite the death of media scarcity. And that’s how we got to the point we are at today in the net neutrality regulatory debate, with many policymakers and activists groups painting private broadband operators as the supposed real Big Brother problem that the First Amendment must address.

Consider, for example, the comments then-Sen. Hillary Clinton made in 2006 regarding why she supports net neutrality regulation: “Each day on the Internet views are discussed and debated in an open forum without fear of censorship or reprisal.” As I noted at the time, when I read her statement I practically fell off my chair. It’s not just that Mrs. Clinton was asking us to believe in some asinine conspiracy theory about how broadband companies are supposedly out to censor our thoughts or engage in reprisals. (”Reprisals”? For what?) No, what really blew my mind here was the fact that Sen. Clinton had the chutzpah to declare that the private sector was somehow the real threat to online speech. After all, as I inventoried in that old essay, Sen. Clinton has led several notable efforts over the past decade to expand government regulation of television, video games, and even the Internet.

Where’s the Evidence? And How Would They Even Do It?

And yet Clinton and many other Net neutrality advocates continue to insist that it is the private sector, not the government, that is the real threat to our free speech rights. Practically speaking, these advocates of Net neutrality regulation have little to fear in this regard. It is almost impossible to believe that any Internet operator could limit speech or expression in the ways these regulatory advocates fear.  Unlike the government, which possesses the coercive power to completely foreclose all speech under threat of fine or imprisonment, the private sector lacks the ability to use force to bottle up speech or speakers. And even if private operators tried it, there would be hell for them to pay with the press, industry watchdogs, and their even subscribers. More importantly, there’s just no good business angle to censorship; they make more money by delivering more bits, not fewer. Finally, any attempt by one actor to stifle something becomes a prime incentive for another to offer it.

Tim Lee nailed all these points in an excellent paper from last year, “The Durable Internet: Preserving Network Neutrality without Regulation.” Tim noted:

Concerns that network owners will undermine free speech online are particularly misguided. Network owners have neither the technology nor the manpower to effectively filter online content based on the viewpoints being expressed, nor do profit-making businesses have any real incentive to do so. Should a network owner be foolish enough to attempt large-scale censorship of its customers, it would not only fail to suppress the disfavored speech, but the network would actually increase the visibility of the content as the effort at censorship attracted additional coverage of the material being censored.

I think that’s exactly right and, later in his paper (between pgs 22-3), Tim nicely elaborates about the “Herculean task” associated with any attempt by a broadband provider to “manipulate human communication.” Not only is it true, as Tim argues, that “no widescale manipulation would go unnoticed for very long,” but he is also correct in noting that the public and press backlash would be enormous.

Shield from Government or Sword for the Government?

But let’s get back to the principle of the matter at stake here because, for those of us who cherish the real First Amendment and seek to protect it, it is essential we not let regulatory advocates get away with their effort to convert it into something it isn’t and was never meant to be.  Jonathan Emord, author of the brilliant 1991 book, Freedom, Technology and the First Amendment, put his thumb on the real threat here: “In short, the [media] access advocates have transformed the marketplace of ideas from a laissez-faire model to a state-control model.” The ultimate danger of this twisted conception of the First Amendment, he noted, is that, “It fundamentally shifts the marketplace of ideas from its private, unregulated, and interactive context to one within the compass of state control, making the marketplace ultimately responsible to government for determinations as to the choice of content expressed.”  Or as Kyle McSlarrow noted in his speech today, these regulatory advocates are essentially saying that the First Amendment “a sword for government” instead of “a shield for citizens” from coercive government actions that would infringe our legitimate rights of free speech and expression.

In sum, “media access” philosophy and the regulatory approach its adherents counsel  is completely at odds with a proper understanding of the First Amendment.  Government — not the private sector — remains the true threat to our liberties.  And, most horrifyingly of all, empowering the state to use the First Amendment to regulate private actors will almost certainly backfire and result in more, not less, regulation of speech online.

The Internet is massive. That’s the ‘no-duh’ statement of the year, right?  But seriously, the sheer volume of transactions (both economic and non-economic) is simply staggering.  Consider a few factoids to give you a flavor of just how much is going on out there:

• In 2006, Internet users in the United States viewed an average of 120.5 Web pages each day.
• There are over 1.4 million new blog posts every day.
• Social networking giant Facebook reports that each month, its over 300 million users upload more than 2 billion photos, 14 million videos, and create over 3 million events. More than 2 billion pieces of content (web links, news stories, blog posts, notes, photos, etc.) are shared each week. There are also roughly 45 million active user groups on the site.
• YouTube reports that 20 hours of video are uploaded to the site every minute.
• Amazon reported that on December 15, 2008, 6.3 million items were ordered worldwide, a rate of 72.9 items per second.
• Every six weeks, there are 10 million edits made to Wikipedia.

Now, let’s think about how some of our lawmakers and media personalities talk about the Internet.  If we were to judge the Internet based upon the daily headlines in various media outlets or from the titles of various Congressional or regulatory agency hearings, then we’d be led to believe that the Internet is a scary, dangerous place. That ‘s especially the case when it comes to concerns about online privacy and child safety. Everywhere you turn there’s a bogeyman story about the supposed dangers of cyberspace.

But let’s go back to the numbers. While I certainly understand the concerns many folks have about their personal privacy or their child’s safety online, the fact is the vast majority of online transactions that take place online each and every second of the day are of an entirely harmless, even socially beneficial nature.  I refer to this disconnect as the “problem of proportionality” in debates about online safety and privacy. People are not just making mountains out of molehills, in many cases they are just making the molehills up or blowing them massively out of proportion.

Go back to those Facebook numbers, for example. 300 million users uploading 2 billion pieces of content each week, plus 45 million user groups.  Now, how many “incidents” do you hear about in the course of an entire year involving privacy and child safety on Facebook? A couple? A dozen?  I doubt it’s that many, but for the sake of argument, let’s be preposterous and say the number of incidents is 10,000.  Doing some quick math: 10,000 “incidents” divided by 2 billion pieces of content shared each week = 0.001%   In other words, there would need to be hundreds of thousands of privacy or child safety “incidents” taking place on Facebook each week before one could legitimately claim the trend was statistically significant in proportion to the total volume of transactions.

Of course, there’s no way to be scientific about this since I can’t crunch the numbers to get an exact calculation for Facebook or the entire Internet since it’s hard to even define or collect info about online “incidents.” And this is not to say there are never any incidents online where some harm might come to an individual or a child.  Defining “harm” can be contentious, however, especially when it comes to what I regard as the conjectural theories about advertising or provocative media content “harming” us or our kids.

Of course, others could claim that the sheer volume of information that we put online about ourselves is problematic for a variety of other reasons. The best argument about potential harm coming of all this information being online is that the sheer volume of data sharing and collection opens up the door to identify theft, or that some government agencies could get their hands on it and use it to do nasty stuff to us.  That first problem can be a legitimate one, and deserves more attention and greater consumer education. But that latter problem should be addressed by putting more constraints on our government(s), not by imposing more regulations on the Internet. Government powers should be tightly limited when it comes to monitoring the habits of websurfers or collecting information about them.

Nonetheless, it is my contention that an infinitesimal percentage of all daily online transactions and interactions involve serious privacy violations or harm to children.  Until they can prove otherwise, we need to demand that our policymakers and folks in the press put these issues into some perspective before they jump to conclusion about online life.  Enough of the fear-mongering and techno-panics!

On Friday, the Federal Communications Commission (FCC) released a new Notice of Inquiry entitled, “Empowering Parents and Protecting Children in an Evolving Media Landscape” (MB Docket No. 09-194).  The purpose of this investigation is to:

seek information on the extent to which children are using electronic media today, the benefits and risks these technologies bring for children, and the ways in which parents, teachers, and children can help reap the benefits while minimizing the risks. (p. 2)… Our goal with this NOI is to gather data and recommend-ations from experts, industry, and parents that will enable us to identify actions that all stakeholders can take to enable parents and children to navigate this promising electronic media landscape safely and successfully. (p. 3)

This Notice builds on the FCC’s August 31st Report to Congress (“Implementation of the Child Safe Viewing Act; Examination of Parental Control Technologies for Video or Audio Programming”) that was required pursuant to the “Child Safe Viewing Act of 2007,” which Congress passed last year and President Bush signed last December. The goal of that bill and the FCC’s proceeding (MB Docket No. 09-26) was to study “advanced blocking technologies” that “may be appropriate across a wide variety of distribution platforms, including wired, wireless, and Internet platforms.” [I filed 150+ pages worth of comments in that proceeding, and here’s my analysis of why the bill and the FCC’s proceedings are worth monitoring. In previous posts here, I also listed all the major filings and reply comments that were submitted to the FCC in the matter.]

While the FCC’s new Notice outlines several positive impacts that media use may have for children, it then goes on to itemize a variety of concerns about media exposure:

While we recognize that electronic media technologies offer these potential benefits to children, we also explore the risks of harm that media use presents. As discussed below, these risks include (i) exposure to exploitative advertising; (ii) exposure to inappropriate content (such as offensive language, sexual content, violence, or hate speech); (iii) impact on health (for example, childhood obesity, tobacco use, sexual behavior, or drug and alcohol use); (iv) impact on behavior (in particular, exposure to violence leading to aggressive behavior); (v) harassment and bullying; (vi) sexual predation; (vii) fraud and scams; (viii) failure to distinguish between who can and who cannot be trusted when sharing information; and (ix) compromised privacy. We seek comment on these risks, whether parents, teachers, and children are aware of them, and what can be done to protect children from them.

It’s not really clear to me where the FCC finds the jurisdictional authority to investigate some of these things (hate speech? bullying?), but let’s not worry about that here. The question a lot of folks — especially those with strong First Amendment leanings — will be asking is: Where is the FCC heading with this in terms of new speech controls or content regulation?

In my earlier work on the “Child Safe Viewing Act,” I worried that the bill and resulting FCC investigation might be the beginning of “convergence-era content regulation.” I was pleasantly surprised, however, with the FCC’s final Report to Congress about the Child Safe Viewing Act, which did a very nice job highlighting the amazing diversity of parental control tools and methods on the market today.  That being said, the proceeding noted that “no single parental control technology available today works across all media platforms” and might have left the impression in minds of some critics that it was somehow possible to create a “universal” parental control or rating mechanism to deal with content across platforms.

Not only is it highly unlikely that such a silver-bullet solution is possible, but it’s unclear that it is even desirable.  I spent some time addressing this issue in my big filing to the FCC earlier this year.  If you jump to pg. 98 of my filing, you will find a section on “The Perils of Mandatory Controls, Restrictive Defaults or ‘Universal’ Ratings.” In it I argue:

the search for technological silver?bullet solutions and “universal” ratings or controls represents a quixotic, Holy Grail?like quest. Simply stated, if it sounds too good to be true, it probably is. There are no simple solutions or quick fixes to concerns about objectionable media content or online child safety. Only a “layered” approach—involving many tools, methods, and strategies—can get the job done right. And technological blocking controls are probably the least important part of that mix. Education and mentoring are far more important. Moreover…  any move to force “universal,” top?down solutions could destroy future innovation in this space. [There are] unforeseen downsides to mandating controls and defaults as well as efforts to create universal rating or labeling schemes.

Again, to be clear, the FCC’s final report to Congress did not recommend any such thing, and the agency is to be commended for that.  But, at the end of the Child Safe Viewing Act report to Congress, the agency also noted that another Notice of Inquiry would dig a little deeper into possible solutions, and now here it is.  But it still remains unclear where the FCC might take this in terms of concrete steps. I was pleased to see a strong focus on the importance of education and media literacy in the agency’s latest notice, so that’s very good news. But there’s also plenty of hand-wringing about the supposed negative impacts of media throughout the report, which leads one to believe that the agency isn’t going to just settle for education-based solutions.

Importantly, there’s also a lot of talk about the supposed dangers of advertising to children in the new Notice:

Exposure to excessive and exploitative advertisements is a significant risk children face from electronic media. Advertisements of particular concern for children include: (i) those that promote products specifically to children; (ii) those that promote unhealthy food, thereby contributing to childhood obesity, and (iii) those that contain inappropriate content, such as offensive language, sexual content, and

This is actually one area where the FCC does have a little jurisdictional authority under the Children’s Television Act of 1990. But I don’t see how the agency can read that statute, which was intended for broadcast television, too broadly.  Regardless, if I had to bet on one thing we are certain to see come out of this proceeding, I’d say some expanded advertising restrictions are in the works.  But, again, the agency’s limited jurisdiction makes it hard for me to understand where they plan to go with this or how it would pass muster in the courts once challenged.

Anyway, stay tuned. Comments in the matter are due to the FCC by late December.  Meanwhile, one wonders how long it will be before Sen. Rockefeller and others up on Capitol Hill start to engage more on content-related issues.  They’ve been fairly silent so far this year.  In light of Sen. Rockefeller’s past efforts on this front, it seems likely he’ll eventually engage in this debate — and likely in a very pro-regulatory fashion.

I’ve been meaning to say something about this new paper by Renee Newman Knake of Michigan State University College of Law, which calls for a new paradigm to analyze, and then likely regulate, video game content. Knake’s paper is entitled, “From Research Conclusions to Real Change: Understanding the First Amendment’s (Non)Response to Negative Effects of Mass Media on Children by Looking to the Example of Violent Video Game Regulations.” In it, she proposes to extend an emerging legal philosophy known as “ecogenerism” to the field of video games and the First Amendment treatment thereof. “Ecogenerism” is largely the creation of Barbara Bennett Woodhouse and the theory argues that we should apply lessons or legal frameworks from the field of environmental law to the area of media and children. “Under an ecogenerist model,” states Knake, “media harm decisions should prioritize concern about the level of ‘toxic’ media which children are exposed over free speech interests.”  Simply stated, we should treat “toxic media” like toxic chemicals.

There have been other efforts to get courts to relax the legal scrutiny applied to video game content from “strict” to something more relaxed or intermediate in character. For example, there is the “violence as obscenity” approach proposed by Kevin Saunders, who, like Knake, is also with the Michigan State University College of Law. But whereas Saunders has proposed applying an adjacent legal theory or framework (obscenity law) to legal analysis of the constitutionality of regulation of video game content, Woodhouse and now Knake propose a much broader, and more radical, reformulation of First Amendment law along the lines of entirely different body of jurisprudence — again, environment law and regulation.

Of course, this is nuts. The notion that words or images are as “toxic” as chemicals is preposterous, and yet that is exactly what Knake and Woodhouse want us to accept. We can determine with a great deal of certainly the physiological impact of too much mercury or lead on the development of the human brain or body. Generally speaking, we know what dose would kill or deform. The same cannot possibly be said of media, and the very allusion to toxic materials or chemicals is ludicrous to begin with since words and images have never directly killed anyone. EVER!

Another problem with the analogy: Video game content, like many other forms of content, can also have profound societal value even when it is of a sexual or violent nature.  Even heavy “doses” of such media can be entirely acceptable (even beneficial) for some even if they are not for others. The same would not be said of toxic chemicals. Too much of a dose would be lethal to all.  In his latest “Law of the Game on Joystiq” column, Mark Methenitis does a nice job picking apart this paper in more detail and he really nails what’s wrong with this analogy between games and harmful chemicals, dangerous diseases, or potential deadly weapons:

A video game is not meningitis or AIDS, where occasional, isolated, or incidental exposure can lead to serious injury or death. Nor is a video game anything like a handgun, where exposure can lead to someone being seriously wounded, maimed or killed. Spending an hour with Halo or Borderlands at a friend’s house isn’t even in the same galaxy of potential harm as a kid having a gun or a serious illness at school.

Indeed, he rightly points out that many of the video games most likely to be regulated under an ecogenerist approach, like “Grand Theft Auto” or “Metal Gear Solid 4,”  have “a significant storyline with the same kind of political statement as the average Scorsese film.” Thus, he notes, “these [ecogenerist] restrictions would be impacting political speech, which is the most sacred and the most protected form of speech under the First Amendment.”  He also takes the authors of these theories to task for failing to seriously investigate the content they seek to censor.  “It is this lack of a true knowledge of the content that continually appears in so many arguments for video game regulation,” he notes.  Quite right.

Finally, we have better ways of dealing with objectionable media content, including video games, than to ban them outright or have regulators curtail content they don’t like. There is a rich mosaic of parental control tools and methods available to parents and guardians to deal with content they find unacceptable, and video game ratings and parental control tools are among the very best of any of those tools and rating systems.  As I have pointed out here far too many times to mention, we are at the stage now where our traditional reliance upon “community standards” regulation can give way to a “household standard” approach when it comes to “regulating” content.  Here’s how I put it in a recent paper I presented at Oxford University:

If it is the case that families now have the ability to effectively tailor media consumption and communications choices to their own preferences—that is, to craft their own “household standard”—then the regulatory equation can and should change.  Regulation can no longer be premised on the supposed helplessness of households to deal with content flows if families have been empowered and educated to make content determinations for themselves.  Luckily, that is the world we increasingly live in today. Parents have more tools and methods at their disposal to help them decide what constitutes acceptable media content in their homes and in the lives of their children. Going forward, our goal should be to ensure that parents or guardians have (1) the information necessary to make informed decisions and (2) the tools and methods necessary to act upon that information.  Optimally, those tools and methods would give them the ability to not only block objectionable materials, but also to more easily find content they feel is appropriate for their families.

And, luckily, that’s the direction most free speech jurisprudence has been turning in the U.S. in recent years. It’s the right approach for a nation that values freedom of speech and expression.  The ecogenerist approach, by contrast, would open the floodgates to unprecedented censorship of speech in this country.  It would leave lawmakers and regulators free to play the role of national nanny and censor any sort of content they found personally objectionable by equating it with toxic chemicals or dangerous weapons.  That’s lunacy and it must be rejected as antithetical to our nation’s rich First Amendment history.

[Below is an old slide show presentation I did at Penn State University about “Video Games & Public Policy.” Thought it made sense to repost it here.]

I’ll be heading to Oxford University this week to participate in an Oxford Internet Institute (OII) forum on the subject of “Child Protection, Free Speech and the Internet: Mapping the Territory and Limitations of Common Ground.”  It’s being led by several experts from the OII as well as my good friends John Morris and Leslie Harris of the Center for Democracy & Technology (CDT).  The aims of this forum are:

• To facilitate a dialogue between NGOs campaigning to protect respectively, child protection and children’s rights online, and freedom of speech and other civil liberties online.
• To promote a better understanding of each others’ positions, to share perspectives and information with a view to identifying areas of common ground and areas of disagreement.
• To identify any shared policy goals, and possible tools to support the achievement of those goals.
• To publicize the findings of the forum in international policy debates about Internet governance and regulation.

Conference participants were asked to submit a 2-3 pg summary of their views on a couple of questions that will be discussed at this event.  I have listed those questions, and my answers, down below the fold.  It’s my best attempt to date to succinctly outline my views about how to balance content concerns and free speech issues going forward. 

What is the nature of your interest or experience in this field?

I have spent the last 18 years covering the intersection of child safety concerns and free speech issues at four different think tanks.  In recent years, I have tied together all my research in a constantly updated Progress & Freedom Foundation special report entitled, “Parental Controls & Online Child Protection: A Survey of Tools & Methods.” The 4^th edition of this 250-page report was released in August.

Are there particular values or principles which underlie your work?

The goal of my research has been to explore the tension between free speech and child protection and to identify methods of striking a sensible balance between these two important values.   It is my hope and belief that we are now in a position to more fully empower parents such that government regulation of content and communications will be increasingly unnecessary.

In the past, it was thought to be too difficult for families to enforce their own “household standard” for acceptable content. Thus, many believed government needed to step in and create a baseline “community standard” for the entire citizenry.  Unfortunately, those “community standards” were quite amorphous and sometimes completely arbitrary when enforced through regulatory edicts.  Worse yet, those regulatory standards treated all households as if they had the same tastes or values—which is clearly not the case in most pluralistic societies.

If it is the case that families now have the ability to effectively tailor media consumption and communications choices to their own preferences—that is, to craft their own “household standard”—then the regulatory equation can and should change.  Regulation can no longer be premised on the supposed helplessness of households to deal with content flows if families have been empowered and educated to make content determinations for themselves.  Luckily, that is the world we increasingly live in today. Parents have more tools and methods at their disposal to help them decide what constitutes acceptable media content in their homes and in the lives of their children.

Going forward, our goal should be to ensure that parents or guardians have (1) the information necessary to make informed decisions and (2) the tools and methods necessary to act upon that information.  Optimally, those tools and methods would give them the ability to not only block objectionable materials, but also to more easily find content they feel is appropriate for their families. In my work, I refer to this as the “household empowerment vision.”

Will we ever be able to achieve a world of perfect parental control over all online content and communications?  That is unlikely since both content and technology will continuously evolve and make that goal elusive. But government regulation of speech should yield where less restrictive alternatives such as household-based controls and strategies exist.  Given the value associated with free speech and the danger of government censorship, these alternatives need not be perfect to be preferable to government regulation.

What are the issues/policies or laws which you see as most problematic in terms of creating or illustrating a conflict between online child protection and free speech?

It is essential that policymakers resist the temptation to extend traditional broadcast industry regulatory statutes and standards to new media outlets and digital technologies.  In a world of media convergence and increasing user empowerment, traditional regulatory rationales make increasingly less sense.  Nonetheless, many ongoing social problems and challenges remain to achieving the “household empowerment vision” I outlined above, including:

• The “lack of awareness” problem: Some parents remain unaware of empowerment tools.
• The “bad parent” problem: Some parents don’t use tools even when aware of them.
• The “bad neighbor” problem: “Good” parents fear what happens when their kids visit other kids with more permissive parents.
• The “generation gap” problem: Kids sometimes know more about new digital technologies than their parents.
• The “technological surprise” problem: Rapid emergence and diffusion of new digital technologies can catch some parents by surprise.
• The “bad corporate actor” problem: Most companies self-regulate, but a handful push the boundaries of good taste in ways that create social concerns that reflect on industry generally.
• The “user-generated content” problem: Even when “professional” content can be managed, it is difficult to control “amateur” expression and creations.
• The “peer-on-peer bullying” problem: While many are concerned about predators, the real online safety problem turns out to be cyber-bullying among peers.

Because of these ongoing social challenges or concerns, legal and regulatory proposals will continue to be put forward. But each has serious downsides:

• Future of filtering: Centralized, network-based or decentralized, user-based?  The former creates serious censorship threats, as we see in China and other repressive states. The latter is more consistent with the household empowerment vision.
• Middleman deputization: Should online intermediaries be required to police the Net for various social ills?  If so, as hand-maidens of the state, they could become over-zealous speech regulators.
• Universal content ratings: Can policymakers mandate unified (or “scientific”) content media ratings?  Doing so puts regulators in a position to dictate content standards—for better or worse.  Moreover, this does nothing to address user-generated “amateur” content.
• Mandatory online age / identity verification: Potentially threatens anonymity, privacy, and free speech rights.  Moreover, to the extent “bad guys” continue to get into “secured” environments it creates a false sense of security for parents and kids.
• Expanded data retention: Although it would help facilitate some law enforcement goals, it also gives rise to new privacy and data breach risks.

Might any of these conflicts be avoidable, e.g. through the use of improved legislative instruments or greater clarity and accountability in processes of self-regulation?

For the above reasons, it makes more sense to put our energies into finding new self-regulatory mechanisms, social norms, and user empowerment strategies to solve ongoing social problems instead of focusing on regulatory solutions or mandates.  Instead of providing greater clarity, legislative instruments are more likely to instead create greater ambiguity, or at least uncertainty, for content creators and consumers alike. This is because, as was noted above, “community standards” are notoriously subjective; they are ham-handed attempts to gloss over the diverse needs and values of a diverse citizenry. By contrast, self-regulation, social norms, and empowerment strategies are evolutionary in character and more responsive to differences among cultures and households.

What are the issues where you think there might be most scope for finding some common ground?

In two words: empowerment and education. Because reliance on legislation is perilously difficult and enforcement of regulatory mandates is complicated (and sometimes impossible in an increasingly borderless world), efforts to better empower families and educate both kids and parents offer the most sensible path forward.  All stakeholders involved in child safety and free speech debates can generally agree that empowerment efforts, media literacy programs, awareness-building programs, and so on, are both effective and unobjectionable.

At the international level, are there certain key principles which we ought to be defending above all others?

Because of the “values clash” at the international level, it’s hard to imagine we’ll ever achieve consensus on some of these issues.  Countries vary widely in their sensitivities about speech, making any attempt to devise “universal principles” complicated.  For example, Europeans generally deride America’s prudish ways when it comes to matters of sexuality or “indecency.”  By contrast, most Americans cannot understand European concerns about “hate speech” or violently-themed media.  Meanwhile, governments in many other parts of the world are still busy trying to quell political or religious dissent.  “Harmonization” among those competing cultural norms remains complicated, therefore, and it would be a mistake if international harmonization was accomplished by sacrificing free speech rights for countries and cultures who cherish them.