Here’s the first of two essays I’ve recently penned making “The Case for Internet Optimism.” This essay was included in the book, The Next Digital Decade: Essays on the Future of the Internet (2011), which was edited by Berin Szoka and Adam Marcus of TechFreedom.  In these essays, I identify two schools of Internet pessimism: (1) “Net Skeptics,” who are pessimistic about the Internet improving the lot of mankind; and (2) “Net Lovers,” who appreciate the benefits the Net brings society but who fear those benefits are disappearing, or that the Net or openness are dying.  (Regular readers of this blog will be familiar with these themes since I sketched them out in previous essays here such as, “Are You an Internet Optimist or Pessimist?” and “Two Schools of Internet Pessimism.”) The second essay is here.

This essay focuses on the first variant of Internet pessimism, which is rooted in general skepticism about the supposed benefits of cyberspace, digital technologies, and information abundance. The proponents of this pessimistic view often wax nostalgic about some supposed “good ‘ol days” when life was much better (although they can’t seem to agree when those were). At a minimum, they want us to slow down and think twice about life in the Information Age and how it’s personally affecting each of us.  Occasionally, however, this pessimism borders on neo-Ludditism, with some proponents recommending steps to curtail what they feel is the destructive impact of the Net or digital technologies on culture or the economy.  I identify the leading exponents of this view of Internet pessimism and their major works. I trace their technological pessimism back to Plato but argue that their pessimism is largely unwarranted. Humans are more resilient than pessimists care to admit and we learn how to adapt to technological change and assimilate new tools into our lives over time. Moreover, were we really better off in the scarcity era when we were collectively suffering from information poverty?  Generally speaking, despite the challenges it presents society, information abundance is a better dilemma to be facing than information poverty.  Nonetheless, I argue, we should not underestimate or belittle the disruptive impacts associated with the Information Revolution.  But we need to find ways to better cope with turbulent change in a dynamist fashion instead of attempting to roll back the clock on progress or recapture “the good ‘ol days,” which actually weren’t all that good.

Down below, I have embedded the entire chapter in a Scribd reader, but the essay can also be found on the TechFreedom website for the book as well as on SSRN.  I have also includes two updated tables that appeared in my old “optimists vs. pessimists” essay.  The first lists some of the leading Internet optimists and pessimists and their books. The second table outlines some of the major lines of disagreement between these two camps and I divided those disagreements into (1) Cultural / Social beliefs vs. (2) Economic / Business beliefs.

The Case for Internet Optimism Part 1 – Saving the Net From Its Detractors (Adam Thierer) http://d1.scribdassets.com/ScribdViewer.swf

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Andrew Keen recently asked me to sit down and chat with him as part of a new series of video interviews he is conducting for Arts + Labs called “Keen on Media.” You can find the discussions with me here (or on Vimeo here). Keen asked me to talk about a wide variety of issues, but this first video features some thoughts about the tensions between the free culture movement and those that continue to favor property rights and proprietary business models as the foundation of the economy. Consistent with what I have argued in the past, I advocated a mushy middle-ground position of preserving the best of both worlds. I believe that free and open source software has produced enormous social & economic benefits, but I do not believe that it will or should replace all proprietary business models or methods.  Each model or mode of production has its place and purpose and they should continue to co-exist going forward, albeit in serious tension at times.

http://vimeo.com/moogaloop.swf?clip_id=10260819&server=vimeo.com&show_title=1&show_byline=1&show_portrait=0&color=&fullscreen=1 Adam Thierer (part 1) from andrewkeen on Vimeo.

[I’ve been working on an outline for a book I hope to write surveying technological skepticism throughout history. I first started thinking about this topic two years when I noticed that a great number of recent books about Internet policy could generally be grouped into one of two camps: Internet optimists vs. Internet pessimists. I subsequently penned an essay on the subject that generated a fair bit of attention. So, I figured I must be on to something, and the more Net policy books I read, the more I realized that the divisions between these two camps were growing wider and increasingly heated. Thus, I thought I would share this very rough draft (much of it still in outline form) of the opening chapter of that book I want to write about this great intellectual war over the impact of technology on society. I invite reader input. Update Jan. 2011: I finally published a full-length essay on this topic. You can find it here. ]

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The impact of technological change on culture, learning, and morality has long been the subject of intense debate, and every technological revolution brings out a fresh crop of both pessimists and pollyannas. Indeed, a familiar cycle has repeat itself throughout history whenever new modes of production (from mechanized agriculture to assembly-line production), means of transportation (water, rail, road, or air), energy production processes (steam, electric, nuclear), medical breakthroughs (vaccination, surgery, cloning), or communications techniques (telegraph, telephone, radio, television) have appeared on the scene.

The cycle goes something like this. A new technology appears. Those who fear the sweeping changes brought about by this technology see a sky that is about to fall. These “techno-pessimists” predict the death of the old order (which, ironically, is often a previous generation’s hotly-debated technology that others wanted slowed or stopped).  Embracing this new technology, they fear, will result in the overthrow of traditions, beliefs, values, institutions, business models, and much else they hold sacred.

The pollyannas, by contrast, look out at the unfolding landscape and see mostly rainbows in the air. Theirs is a rose-colored world in which the technological revolution du jour is seen as improving the general lot of mankind and bringing about a better order.  If something has to give, then the old ways be damned! For such “techno-optimists,” progress means some norms and institutions must adapt—perhaps even disappear—for society to continue its march forward.

Our current Information Revolution is no different. It too has its share of techno-pessimists and techno-optimists. Indeed, before most of us had even heard of the Internet, people were already fighting about it—or at least debating what the rise of the Information Age meant for our culture, society, and economy.

Web 1.0 Fight: Postman vs. Negroponte

In his 1992 anti-technology screed Technopoly: The Surrender of Culture to Technology, the late social critic Neil Postman greeted the unfolding Information Age with a combination of skepticism and scorn.  Indeed, Postman’s book was a near-perfect articulation of the techo-pessimist’s creed.  “Information has become a form of garbage,” he claimed, “not only incapable of answering the most fundamental human questions but barely useful in providing coherent direction to the solution of even mundane problems.”  If left unchecked, Postman argued, America’s new technopoly—“the submission of all forms of cultural life to the sovereignty of technique and technology”—would destroy “the vital sources of our humanity” and lead to “a culture without a moral foundation” by undermining “certain mental processes and social relations that make human life worth living.”

Postman opened his polemic with the well-known allegorical tale from Plato’s Phaedrus about the dangers of the written word.  Postman reminded us how King Thamus responded to the god Theuth, who boasted of how his invention of writing would improve the wisdom and memory of the masses relative to the oral tradition of learning.  King Thamus shot back, “the discoverer of an art is not the best judge of the good or harm which will accrue to those who practice it.”  King Thamus then passed judgment himself about the impact of writing on society, saying he feared that the people “will receive a quantity of information without proper instruction, and in consequence be thought very knowledgeable when they are for the most part quite ignorant.”

And so Postman—fancying himself a bit of a modern King Thamus—cast judgment on today’s comparable technological advances and those who would glorify them:

we are currently surrounded by throngs of zealous Theuths, one-eyed prophets who see only what new technologies can do and are incapable of imagining what they will undo. We might call such people Technophiles. They gaze on technology as a lover does on his beloved, seeing it as without blemish and entertaining no apprehension for the future. They are therefore dangerous and to be approached cautiously. … If one is to err, it is better to err on the side of Thamusian skepticism.

Nicholas Negroponte begged to differ. An unapologetic Theuthian technophile, the former director of the MIT Media Lab responded on behalf of the techno-optimists in 1995 with his prescient polemic, Being Digital.  It was a paean to the Information Age, for which he served as one of the first high prophets—with Wired magazine’s back page frequently serving as his pulpit during the many years he served as a regular columnist.

Appropriately enough, the epilogue of Negroponte’s Being Digital was entitled “An Age of Optimism” and, like the rest of the book, it stood in stark contrast to Postman’s pessimistic worldview.  Although Negroponte conceded that technology indeed had a “dark side” in that it could destroy much of the old older, he believed that was inevitable, but also not cause for much concern. “Like a force of nature, the digital age cannot be denied or stopped,” he insisted, and we must learn to appreciate the ways “digital technology can be a natural force drawing people into greater world harmony.” (This sort of techno-determism is a theme we would see on display in many of the works by other Internet optimists that followed in Negroponte’s footsteps.)

To Postman’s persistent claim that America’s technopoly lacked a moral compass, Negroponte again conceded the point but took the glass-is-half-full view: “Computers are not moral; they cannot resolve complex issues like the rights to life and to death. But being digital, nevertheless, does give much cause for optimism.”  His defense of the digital age rested on the “four very powerful qualities that will result in its ultimate triumph: decentralizing, globalizing, harmonizing, and empowering.” Gazing into his techno-crystal ball in 1995, Negroponte forecast the ways in which those qualities would revolutionize society:

The access, the mobility, and the ability to effect change are what will make the future so different from the present. The information superhighway may be mostly hype today, but it is an understatement about tomorrow. It will exist beyond people’s wildest predictions. As children appropriate a global information resource, and as they discover that only adults need learner’s permits, we are bound to find new hope and dignity in places where very little existed before.

In many ways, that’s the world we occupy today; a world of unprecedented media abundance and unlimited communications and connectivity opportunities.

But the great debate about the impact of digitization and information abundance would not end with Postman and Negroponte. Theirs would only be Act I in a drama that continues to unfold, and it is growing more heated and complex with each new character that comes on the stage.

Web War II

The disciples of Postman and Negroponte are a colorful, diverse lot. The players in Act II of this drama occupy many diverse professions—journalists, technologists, business consultants, sociologists, economists, lawyers, etc.—and they are disagreeing even more vehemently and vociferously about the impact of the Internet and digital technologies than Postman and Negroponte did.

In Exhibit 1, I have listed the Internet optimists and pessimists and list their key works.

In Exhibit 2, I have sketched out the major lines of disagreement between these two camps and divided those disagreements into (1) Cultural / Social beliefs vs. (2) Economic / Business beliefs.

When you boil it all down, there are two major points of contention between the optimists and pessimists:

1. The impact of technology on learning & culture & the role of experts vs. amateurs in that process.
2. The promise—or perils—of personalization.

The Debate over Learning & Culture

• Internet optimists and pessimists have engaged in heated debates over role of amateur production and benefits of abundant media

• pessimists fear impact of Net and “cult of amateur” on “professional” media

• without “enforceable scarcity” and protection for the “enlightened class,” the pessimists wonder how “high quality” news or “high art” will get funded and disseminated; and they worry about the decline of authority & truth

• optimists argue that new modes of production (namely peer-production) will be an adequate (if not superior) alternative
  • or they believe new business models will evolve to support professional media

• but pessimists argue that all the new choices are largely false choices
  • participatory democracy all bunk (“mob rule” and rumor mill mongering)
  • just more force-fed commercial propaganda; concerns about advertising
  • also worry about “digital sharecropping” where small group of elites make money off backs of free labor

• optimists counter that Web 2.0 offers real choices and voices
  • optimists argue that many (perhaps most) aren’t in it for the money
  • they do it for love of knowledge & “free culture”

• pessimists argue that “free” culture isn’t free at all; often just parasitic copying / piracy
  • could have profound ramifications for future of news, journalism, “high culture”
  • fear loss of trusted intermediaries & authorities
  • could “dumb down” the masses

• the centrality of Wikipedia to the discussion serves as a microcosm of the entire debate
  • does Wikipedia mark the decline of authority?
  • what is “truth,” the pessimists ask? [“truthiness” fear, a la S. Colbert & Manjoo]
  • who and what can be trusted if everyone is considered an authority?
  • on the other hand, what if it works (at least reasonably well)?
  • what does that tell us about peer production / crowdsourcing?

The Debate over the Promise or Perils of Personalization

• both optimists and pessimists agree that Net & Web 2.0 is leading to more “personalized” media experience
  • but they vehemently disagree on whether that is good or bad
  • what will it mean for participatory democracy?

• pessimists fear Negroponte’s “Daily Me” (i.e., hyper-personalization) leads to:
  • homogenization
  • close-mindedness
  • an online echo-chamber
  • overload of choices + just more corporate brainwashing

• optimists counter that personalization leads to:
  • heterogeneity / chance for everyone to be heard
  • openness
  • exposure to new thinking and opinions
  • abundance of choices = diversity of thought / participation
• in the extreme, some pessimists fear the “mechanization of the soul” and the “surrender to the machine”

• while that may sound a bit over the top, it doesn’t help that some optimists speak of the noosphere & “global consciousness” and seem to long for the eventual singularity

Who’s Got It Right?

• On balance, I believe the optimists generally have the better of the argument today
• But pessimists make many fair points that deserve to be taken seriously; they just need a more reasonable articulation of (some of) those concerns
• The better approach is what I call “pragmatic optimism,” which attempts to rid the optimist paradigm of its kookier, pollyannish thinking while also taking into account some of the very legitimate concerns raised by the pessimists, but rejecting its Luddite fringe in the process.

Thoughts on the Pessimists…

• First and foremost, the pessimists need better spokespersons! Or, they at least need a more moderated, less hysterical tone when addressing concerns raised by technological progress (many of which are quite legitimate).

• It’s often difficult to take the pessimists seriously when they persist with their seeming outright hostility to most forms of technological progress / change. Every one of them claim they are not a Luddite, and often I believe them. But the tone of some of their writing, and the thrust of some of their recommendations, have clear Luddite tendencies.

• Moreover, their endless name-calling and derision for the digital generation is, at times, just as insulting and immature as they “mob” they repeatedly castigate in their works. Too often, their criticism devolves into philosophical snobbery and blatant elitism. Constantly looking down their noses at digital natives and all “amateur” production doesn’t help them win any converts.

• It’s quite shocking how the pessimists have almost nothing good to say about Wikipedia and demonize it endlessly. Much the same goes for open source and other collaborative efforts. They don’t appear willing to accept the possibility of any benefits coming from collective efforts. And they wrongly treat the rise of collective / collaborative efforts as a zero-sum game; they seem to imagine it represents a net loss of individual effort & “personhood.” That simply doesn’t follow.

• Most importantly, the pessimists need to come to grips with the Information Revolution and offer more constructive and practical solutions to legitimately difficult transitional problems created by disintermediating influences of the digital technologies and Net.

• The nostalgia the pessimists typically espouse for the past is a common refrain of cultural and technological critics who fear that the “good ‘ol days” are behind us and the current good-for-nothing generation and their new-fangled gadgets are steering us straight into a moral abyss.  The truth typically proves less cataclysmic, of course.  The great thing about humans is that we adapt better than other creatures. When it comes to technological change, resiliency is hard-wired into our genes.  We learn how to use the new tools that are given to us and gradually assimilate them into our lives and culture.  Indeed, we have lived through more radical revolutions than the Information Revolution. We can adapt and learn to live with some of the legitimate difficulties & downsides of the Information Age.

• The pessimists are at their best when highlighting the very legitimate concerns about the challenges that accompany technological change, including the impact of the digital revolution on “professional” media and the decline of authority among trusted experts and intermediaries.
  • we absolutely don’t want to lose all that
  • there are real benefits associated with it
  • and we need to find a way to fund “professional” media / art going forward

• But, practically speaking, what would the pessimists have us do if we can’t mitigate these problems? Would they roll back the clock with burdensome restrictions? As Ben Casnocha noted recently: “the wind at the backs of all techno-optimists … [is] the forward momentum of technological development. You cannot turn back the clock. It is impossible to envision a future where there is less information and fewer people on social networks. It is very possible to envision increasing abundance along with better filters to manage it. The most constructive contributions to the debate, then, heed Moore’s Law in the broadest sense and offer specific suggestions for how to harness the change for the better.”  That’s what many pessimists have failed to do in their works.

Thoughts on the Optimists…

• The optimists currently have the better of the debate as the abundance of Web 2.0 riches is generally benefiting culture / society.

• Relative to the past it is almost impossible to see how one could argue society has not benefited from the Internet and new digital technologies. The Digital Revolution has greatly empowered masses and offered them more informational inputs.

• An age of abundance is certainly preferable to an age of information scarcity!

• But optimists need to be less Pollyanna-ish and avoid becoming the “technopolists”  (or digital utopians) that Postman feared were taking over our society
  • Way too much Rousseauian romanticism at work in some optimist writings. All this talk of the Net “remaking man” or human nature is pure rubbish.
  • Not all change is good change; the optimists need to be mature enough to understand and address the occasional downsides of digital life without dismissing the critics.
  • And they need to acknowledge that sometimes the wisdom of crowds really can = the stupidity of crowds (when does collective intelligence devolve into herd mentality?) And all this crazy talk of “the hive mind” and the “noosphere” must end.  Some of optimists sound like they long for life in The Matrix; bring on the Singularity!  That’s when you know an optimists has crossed over into the realm of quixotic techno-utopianism.

• Optimists often overplay the benefits of collective intelligence, collaboration, and the role of amateur production.  They need to frame Wiki / peer-production models as a complement to professional media, not a replacement for it.
  • Could The New York Times really be cobbled together by amateurs each day?
  • Why aren’t there any really compelling open source video games?
  • There is a big difference between “remix culture” and “rip-off culture”
  • “The Long Tail” is not “the future of all business”; but it is an increasingly important part of it, and it is wonderful that it is so much more accessible than it was in the past.
  • Will we really be better off if all professionals & intermediaries disappear? Optimists play the “old media just don’t get it” card too often and snobbishly dismiss all their concerns and efforts to reinvent themselves

• Optimists need to place technological progress in context and appreciate that, as Postman argued, there are some moral dimensions to technological progress that deserve attention.

• Of course, on the other hand, some of those moral consequences are profoundly positive, which the pessimists usually fail to appreciate or even acknowledge.

Conclusion: Toward “Pragmatic Optimism”

• Generally speaking, I believe the optimists currently have the better of the debate. It is impossible for me to believe that we were better off in an era of information poverty & un-empowered masses.

• But there’s a kernel of truth to what the pessimists predict about how the passing of the old order leaving society without some things that might be worth preserving.  And they are certainly correct that each of us should think about how to better balance new technologies and assimilate them into our lives.

• The sensible middle ground position is “pragmatic optimism”: We should embrace the amazing technological changes at work in today’s Information Age but do so with a healthy dose of humility and appreciation for the disruptive impact and pace of that change. [See my “Pragmatic (Internet) Optimist’s Creed” below]

• We need to think about how to mitigate the negative impacts associated with technological change without adopting the paranoid tone or Luddite-ish recommendations of the pessimists.

• And it is important for us to personally exercise some personal restraint in terms of the role technology plays in our life. While pessimists from Plato and Postman certainly went too far, there is a kernel of truth to their claim that, taken to an extreme, technology can have a negative impact on life and learning.  We need to focus on the Aristotelian mean. We must avoid neo-Luddite calls for a return to “the good ‘ol days” on the one hand, while also rejecting techno-utiopian Pollyanna-ism on the other

• Regardless, the old Theuth-Thamus debate about the relationship between technological change and its impact on culture and society will continue to rage. There is no chance this debate will die down anytime soon. And just wait till virtual reality goes mainstream!  Oh brother, now that is going to be a lively debate. I might turn into a Thamusian once I find my son playing a virtual gangster or pimp in “Grand Theft Auto 12: The Immersive Experience.”

• Nonetheless, generally speaking, I remain quite bullish about the prospects for technology to generally improve the human condition.

The Pragmatic (Internet) Optimist’s Creed

by Adam Thierer

I believe that the Internet and digital technologies are reshaping our culture, economy, and society in most ways for the better, but not without some serious heartburn along the way.

I believe that the world of information abundance that has dawned is vastly superior to the world of information poverty that we just left. But I also understand that not all information is equal and that that the rise of abundance raises concerns about information overload, objectionable content, and the role of “authority” and “truth.”

I believe the era of traditional Mass Media is coming to an end, but “professional” media institutions and creators continue to play a vital role in the creation, aggregation, and dissemination of news, information, culture, and entertainment. The Internet, however, will force gut-wrenching changes on traditional media institutions and some of the more traditionally vital ones (ex: daily local newspapers) will struggle to re-invent themselves, or may wither away entirely. And while I believe that “professional” journalism faces very serious challenges from the rise of the Internet and user-generated content, but I also believe that hybrid forms of news-gathering and reporting are offering society exciting new ways to learn about the world around them.

I believe Wikipedia is an amazing example of collection action / intelligence at work, but I also understand it is not without flaws and limitations. I believe Wikipedia is a wonderful complement, but not a complete substitute, for other media and information sources and inputs.

I believe that free and open source software (FOSS) has produced enormous social / economic benefits, but I do not believe that FOSS (or “wiki” models) will replace all proprietary business models or methods.  Each model or mode of production has its place and purpose and they will continue to co-exist going forward, albeit in serious tension at times.

I believe the Long Tail is a powerful phenomenon, but not “the future of all business.” It is now a more important part of the future of business, but not the entirety of it. But it is wonderful that it is more accessible than ever and that we have found ways to monetize it to benefit less well know creators and innovators.

I believe there is a difference between “remix culture” and “ripoff culture.”  Remix culture generally enhances and extends culture and creativity. Blatant content piracy, on the other hand, can discourage the creative efforts of the citizenry and deprive some of society’s most gifted creators of the incentive to produce culturally beneficial works. Likewise, hacking, circumvention, and reverse-engineering all play an important and legitimate role in our new digital economy, but one need not accept the legitimacy of those activities when conducted for nefarious purposes (think identity theft or chip-modding to facilitate video game piracy.)

I believe that the Internet has empowered the masses and created a world of “pro-sumers” that gives every man, woman, and child a soapbox on which to speak to the world. But that does not mean that all of them will have something interesting to say, and I won’t praise user-generated content as a good in and of itself. It’s quality, not volume, that counts.

I believe that the Internet’s empowering nature has changed much about society and culture, but I do not believe in the romanticism some espouse about how the Net “remaking man” or changing human nature in any fundamental way. The Internet does not liberate us from all earthly constraints and it cannot magically solve all of civilization’s problems.

I believe that the Internet is reinvigorating deliberative democracy and giving us increased exposure to a breathtaking diversity of views previously inaccessible. On the other hand, I understand that some will often seek out only those views that reinforce their pre-existing biases.

I believe in the liberating power of freedom of speech and expression, and appreciate that the Internet and the rise of user-generated content has given us a world of unprecedented information and cultural riches. I also understand, however, that unrestricted freedom of speech and expression permits an increase in the prevalence of objectionable, even loathsome, speech and content. On net, however, (excuse the pun) the Internet is the most important medium of human communication and expression yet.

In sum, there are more reasons to be optimistic than pessimistic about the Internet and its role in shaping our lives, culture, economy, and society. But that doesn’t mean it will be all roses going forward.

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Additional Reading (from me):

• Two Schools of Internet Optimism
• The Digital Decade’s Definitive Reading List: Internet & Info-Tech Policy Books of the 2000s
• Grouping Recent Net Books: Internet Optimists vs. Pessimists
• Can Humans Cope with Information Overload? Tyler Cowen & John Freeman Join the Debate
• Book Review: Clay Shirky’s Cognitive Surplus: Creativity and Generosity in the a Connected Age
• Book Review: Jaron Larnier’s You Are Not a Gadget: A Manifesto
• Book Review: A Better Pencil by Dennis Baron
• Book Review: Lee Siegel’s Against the Machine
• Book Review: Nick Carr’s Big Switch and The Shallows
• Book Review: Digital Barbarism by Mark Helprin
• Thoughts on Andrew Keen, Part 1: Why an Age of Abundance Really is Better than an Age of Scarcity
• Thoughts on Andrew Keen, Part 2: The Dangers of the Stasis Mentality
• The 10 Most Important Info-Tech Policy Books of 2009
• The Most Important Tech Policy Books of 2008

Additional Reading (from others):

• Plato on writing
• Cyberspace and Information Overload (by Tim Lee)
• Michiko Kakutani essay in the New York Times, “Texts Without Contexts”
• Andrew McAfee’s terrific essay “I Know I’m Not the Only Internet Optimist…” from his blog
• the great PBS documentary about these issues: “Digital Nation: Life on the Virtual Frontier” (+ my thoughts on the film)
• a video from a Family Online Safety Institute event about the PBS documentary that features a discussion about Internet optimism vs. pessimism
• Gordon Crovitz of The Wall Street Journal asks “Is Technology Good or Bad?”
• Peggy Noonan of The Wall Street Journal argues that “Information Overload is Nothing New“
• “Technology Sabbaths and Other Strategies for the Digitized World,” by Michael Sacasas
• “Are We Too Plugged In? Distracted vs. Enhanced Minds“, by Aaron Saenz at the Singularity Hub blog

• and here’s a great video from 1995 featuring the late Neil Postman with his pessimistic take on cyberspace..

Also, courtesy of the Brain Pickings blog, check out this amazing 1972 documentary based on Alvin Toffler’s famous 1970 book, Future Shock. It perfectly foreshadowed so many of today’s technology policy debates.

by Berin Szoka & Adam Thierer

This morning, the House Energy & Commerce Committee will hold a hearing on “Behavioral Advertising: Industry Practices And Consumers’ Expectations.” If nothing else, it promises to be quite entertaining:  With full-time Google bashers Jeff Chester and Scott Cleland on the agenda, the likelihood that top Google officials will be burned in effigy appears high!

Chester, self-appointed spokesman for what one might call the People for the Ethical Treatment of Data (PETD) movement, is sure to rant and rave about the impending techno-apocalypse that will, like all his other Chicken-Little scenarios, befall us all if online advertisers were permitted to better tailor ads to consumers’ liking. After all, can you imagine the nightmare of less annoying ads that might actually convey more useful information to consumers? Isn’t serving up “untargeted” dumb banner ads for Viagra to young women and Victoria’s Secret ads to Catholic school kids the pinnacle of modern online advertising?  Gods forbid we actually make advertising more relevant and interest-based!  (Those Catholic school boys may appreciate the lingerie ads, but few will likely buy bras.)

Anyway, according to National Journal’s Tech Daily Dose, the hearing lineup also includes:

• Charles Curran, Executive Director, Network Advertising Initiative
• Christopher Kelly, Chief Privacy Officer, Facebook
• Edward Felten, Director, Center for IT Policy, Princeton University
• Anne Toth, Chief Privacy Officer & Vice President, Policy, Yahoo!
• Nicole Wong, Deputy General Counsel, Google

That’s an interesting group and we’re sure that they will say interesting things about the issue. Nonetheless, because four of them have a corporate affiliation that fact will inevitably be used by some critics to dismiss what they have to say about the sensibility of more targeted or interest-based forms of online advertising. So, we’d like to offer a few thoughts and pose a few questions to make sure that Committee members understand why, regardless of what it means for any particular online operator, targeting online advertising is very pro-consumer and essential to the future of online content, culture, and competition.  As Wall Street Journal technology columnist Walt Mossberg has noted, “Advertising is the mother’s milk of all the mass media.”  Much of the “free speech” we all cherish isn’t really free, but ad-supported!

Our Approach

We have previously set forth a framework for analyzing advertising policy issues in two PFF reports: “Online Advertising & User Privacy: Principles to Guide the Debate” and “Targeted Online Advertising: What’s the Harm & Where Are We Heading?” At root, our model depends heavily on two common-sense, and inter-related, principles:

1. We live in a world of trade-offs; and
2. There is no free lunch.

Their Approach

We are deeply concerned that too few people are talking about—or even understand the relevance of—those two principles in the debate over targeted online advertising. It seems that too many who wish to retard the further evolution of the advertising marketplace are living a lie based upon the antithesis of our model. Many privacy advocates seem to imagine that regulatory actions don’t have consequences and that Congress can simply mandate new privacy standards for the Internet without having any impact on the free flow of ideas supported by, and direct facilitated through, advertising.

Simply put, the privacy critics often imagine that their values are indicative of everyone’s values. Our blogging colleague Jim Harper of the Cato Institute has referred to this as “preference imposition” but we’ll use a simpler term: Elitism. In essence, privacy advocates seem to believe that:

1. People are too ignorant, busy or just plain stupid, and cannot be trusted to make wise decisions for themselves (or their children); and/or
2. Everyone shares the same values or concerns when it comes to privacy such that a national “baseline” regulatory standard (namely, mandatory “opt-in” regulations for data collection and use) should govern the entire online marketplace.

Let’s be clear: Such a mandate, and the thinking behind it, would greatly impoverish the future Internet economy. Too many people think of the Internet as a magic box that just keeps cranking out free goodies. But something powers that box of goodies: advertising.  More than anything else, it’s advertising that keeps the Internet “Free, Innovative & Open,” to borrow the slogan of our friends at CDT, which seems to flirt with joining the PETD movement, despite their well-earned reputation for pragmatic skepticism of government interference with the Internet.

The regulatory advocates complain that giving consumers the right to opt-out of data collection and use isn’t meaningful because very few consumers will exercise the opt-out.  Again, they presume that this must be because users just don’t know what’s good for them because of course if they really understood what was being done with “their data,” they would never choose to just “give it away” for a few scraps from the advertisers’ table.  It never occurs to them that (i) many, perhaps most, users just don’t care and that (ii) that their “ignorance” about the all specific details of “how the sausage is made” (online data collection and use practices for targeting advertising) may be completely rational.

But just as importantly, would-be privacy regulatory don’t seem to understand—or perhaps simply don’t care—that what’s true of opt-out is also true of opt-in:  in practice, few people will bother doing either.  In a world of perfect information and infinite time, of course, there would be no difference in outcomes with the two different rules.  But in the real world with real constraints on time, knowledge and everything else, mandating opt-in would make all the difference in the world by severely limiting the ability of advertisers to target advertising.

The Ignored Trade-offs

We’ve been assembling evidence on the real-world costs of restricting targeted advertising. Here are just a few data points we’ve seen to give you a sense of what’s at stake:

• Relevance to Users: The best evidence that users prefer seeing more relevant ads is their increased likeliness to actually click on an ad—instead of just ignoring it or trying to block it. The most recent study of this issue concluded that Click-Through Rates (CTR) can be improved by as much as 670% by using basic behavioral targeting as compared to simple contextual targeting—0r even more than 1000% using more sophisticated targeting. Conversion rates (the percentage of clicks that actually result in a sale) also strongly indicate that consumers find ads more interesting, and in one 2005 study, were estimated to increase up to 3000% with behavioral targeting.
• Macro: More Revenue to Fund All Services & Content: eMarketer (in June 2008) estimated that U.S. spending on behavioral targeting would grow from $.775 billion in 2008 to $4.4 billion in 2012—representing fully a quarter of display ad spending.  The total amount of money at stake is huge:  U.S. online ad revenues totaled $23.5 billion in 2008.
• Micro: More Revenue for Individual Publishers: Estimates on the increased profitability of behavioral targeting range as high as 1200% (eMarketer).

While these examples illustrate the broad outlines of the trade-offs ignored by privacy regulatory advocates, the key dilemma to understand is this: If, under an opt-in regime, publishers would be able to target advertising for webpages based on the keywords contained within those pages, and not on other content the user has looked at, the value of most Internet content will depend not on how many eyeballs it attracts but primarily on the economic value of the keywords that are directly associated with it. Pages with keywords related to products and services will fetch a fine price because advertisers will be able to make money off ads on those pages ( e.g., a site for digital camera reviews). But content with little commercial value will generate little revenue. Indeed, this is perhaps the single greatest problem faced by journalism sites. Who wants to advertise on a story about North Korea? How many users are going to be interested in taking a honeymoon in the DMZ?

But if such websites could target advertising to users’ user’s likely interests based on an anonymous profile of their interests created by collecting data about their browsing “behavior,” web content becomes valuable because of the audience it attracts, not just because the content itself serves as a rough proxy for a user’s interests. This democratization of Internet advertising revenue is essential for sustaining the future of journalism in particular, but also for “free” culture more generally.

As we noted in our response to the FTC’s proposed self-regulatory guidelines on data collection for advertising:

Depending on how regulation is structured, therefore, it is possible that new privacy mandates would severely curtail the overall quantity of content and services offered—and greatly limit the ability of new providers to enter the market with innovative offerings. Alternatively, or perhaps additionally, companies would change the character of their offerings and water-down sophisticated services that cater to consumer demand; in other words, the quality of service would deteriorate. Bottom line: Something must give because there is no free lunch. Regulation is a giant game of economic whack-a-mole: Attempting to control one of the primary variables of price, quantity, or quality inevitably results in non-optimal adjustments in the other two variables. The absence of price as a variable in this context means there is one less variable for the government to control in the first place. Simply stated, stifling the evolution of the online advertising marketplace will likely result in fewer free online services and less content, less high-quality online services and content, or some combination of both… We stand at an important crossroads in the debate over the online marketplace and the future of a “free and open” Internet. Many of those who celebrate that goal focus on concepts like “net neutrality” at the distribution layer, but what really keeps the Internet so “free and open” is the economic engine of online advertising at the applications and content layers. If misguided government regulation chokes off the Internet’s growth or evolution, we would be killing the goose that laid the golden eggs…. These observations are even more relevant to the online marketplace, where advertising has been shown to be the only business model with any real staying power. Walled gardens, pay-per-view, micropayments, and subscription-based business models are all languishing. Consequently, the overall health of the Internet economy and the aggregate amount of information and speech that can be supported online are fundamentally tied up with the question of whether we allow the online advertising marketplace to evolve in an efficient, dynamic fashion. Heavy-handed privacy regulation (or co-regulation) could, therefore, become the equivalent of a disastrous industrial policy for the Internet that chokes off the resources needed to fuel e-commerce and online free speech going forward.

Our Challenge to the Advocates of Privacy Regulation

For these reasons, we have repeatedly issued the following three-part challenge in our previous work to those who advocate the regulation of online advertising:

1. Identify the harm or market failure that requires government intervention.
2. Prove that there is no less restrictive alternative to regulation.
3. Explain how the benefits of regulation outweigh its costs.

We’re still waiting…

We’ve also made it clear that there is an alternative to the pre-emptive, one-size-fits-all regulation demanded by the regulatory advocates:  We’ve proposed a “layered approach” based on user education, user empowerment, self-regulation and FTC enforcement of privacy policies.  Our goal is as follows:

The ideal state of affairs would be to create a system of tools and data disclosure practices that would empower each user to implement their personal privacy preferences while also recognizing the freedom of those who rely on advertising revenues to “condition the use of their products and services on disclosure of information”—not to mention the viewing of ads! Self-regulatory efforts can be refined, especially through technological innovation to better satisfy the concerns of policymakers, privacy advocates, and average consumers. For example, if websites and ad networks participating in a self-regulatory framework supplemented their current “natural language” privacy policies with equivalent “machine-readable” code [ e.g., P3p], that data could be “read” by browser tools that would implement pre-specified user preferences by blocking the collection of information depending on whether the privacy policies of certain websites or ad networks met the user’s preferences about data-use. Such robust and granular disclosure, if implemented for behavioral advertising, would exceed the wildest dreams of those who argue that users currently do not read privacy policies—without disrupting the browsing experience or cluttering websites. But this system would only work if users had to make real choices about “pay*ing+ for ‘free’ content and services by disclosing their personal information.”

A Final Word About Advertising

On some level, this debate isn’t about user privacy at all, but about the alleged evils of advertising as inherently manipulative.  Jeff Chester straddles both camps.  His rantings about the use of “neuromarketing” boil down to the same simple idea that the Neo-Marxists have been pushing for decades:  Since people are stupid, ignorant and/or lazy (see above), they’re easy to control and trick with shiny objects, pretty faces, memorable slogans, and catchy jingles. No better response to this argument has ever been made than was offered in this 1959 magazine ad by the ad firm Young & Rubicam (emphasis added for Chester’s benefit):

There is no chestnut more overworked than the critical whinny: “Advertising sells people things they don’t need.” We, as one agency, plead guilty. Advertising does sell people things they don’t need. Things like television sets, automobiles, catsup, mattresses, cosmetics, ranges, refrigerators, and so on and on. People don’t really need these things. People don’t really need art, music, literature, newspapers, historians. wheels, calendars, philosophy, or, for that matter, critics of advertising, either. All people really need is a cave, a piece of meat and, possibly, a fire. The complex thing we call civilization is made up of luxuries. An eminent philosopher of our time has written that great art is superior to lesser art in the degree that it is “life-enhancing.” Perhaps something of the same thing can be claimed for the products that are sold through advertising. They enhance life, to whatever degree they can.

A few months ago, Adam Thierer penned The Pragmatic (Internet) Optimist’s Creed in response to calls from “Internet pessimists” for increased regulation of the Internet on many fronts. Adam‘s recent 4-way debate with pessimists Larry Lessig and Jonathan Zittrain (as well as optimist Declan McCullagh) inspired me to pen the following cheeky homage to Lessig, the Father of Internet Pessimism, whose work has launched a thousand efforts to increase government control of the Internet in the name, ironically, of “freedom:”

Our Lessig, who art in Harvard, Hallowed be thy blog. Thy Free Culture come. Thy Code be done, In Washington as it is in thy Ivory Tower.

The WSJ reports that a study will be released tomorrow noting an 8% drop in total “paid search” revenues in 2008.  Google’s Fourth Quarter results will be released Thursday.  While this is clearly bad news for Google, Yahoo!, Microsoft and other companies that sell ads next to the results of their search engines, it’s also terrible news for the Internet users who have come to take for granted not just these free search engines, but the other free services and content cross-subsidized by search ad revenue.  A quick look at the offerings pages of Google,  Yahoo! and Microsoft (downloads and some services) should remind you of a few of these ad-supported offerings.

What’s even worse for users is that search ad spending may be the “canary in the coalmine” for online advertising overall:  A drop in search ad spending may suggest that display ad revenue for 2008 may have fared even worse.  While search ad revenue funds offerings from search engine providers, display ad revenue is the bread & butter of millions of websites, from the “short head” (big websites like ESPN.com) to through the “long tail” (small websites).   As advertisers cut back on buying web ads, there will be less funding available for “Free!” culture—and we’ll all suffer from the resulting decline in creativity and innovation.  

Let’s hope 2009 is a better year for advertising—both search and display—than 2008.

The Progress & Freedom Foundation has just launched the new Center for Internet Freedom.  CIF offers an alternative to the proliferation of advocacy groups calling for government intervention online by offering timely analyses and critiques of proposals that diminish the vital role of free markets, free speech and property rights.  We aim to drive the Internet policy debate in new directions by emphasizing a layered approach of technological innovation, user education, user self-help, industry self-regulation, and the enforcement of existing laws consistent with the First Amendment.  Such an approach is a less restrictive—and generally more effective—alternative to increased regulation.  

Here are some of the issues I’ll be working on as CIF’s Director in conjunction with my esteemed colleagues Adam Thierer, Adam Marcus, and adjunct fellows: 

• Defending online advertising as the lifeblood of online content & services, especially in the “Long Tail”;
• Emphasizing market solutions to problems of privacy protection, especially regarding the use of cookies and packet inspection data;
• Protecting online speech and expression both in the U.S. and abroad;
• Defending Section 230 immunity for Internet intermediaries;
• Opposing online taxation and legal barriers to e-commerce and digital payments, especially at the state and local levels; and
• Ensuring that Internet governance remains transparent and accountable without hampering the evolution of the Internet.

By Berin Szoka & Adam Thierer Progress Snapshot 4.19 (PDF)

Since the fall of 2008, a debate has raged in Washington over “targeted online advertising,” an ominous-sounding shorthand for the customization of Internet ads to match the interests of users.  Not only are these ads more relevant and therefore less annoying to Internet users than untargeted ads, they are more cost-effective to advertisers and more profitable to websites that sell ad space.  While such “smarter” online advertising scares some—prompting comparisons to a corporate “Big Brother” spying on Internet users—it is also expected to fuel the rapid growth of Internet advertising revenues from $21.7 billion in 2007 to $50.3 billion in 2011-an annual growth rate of more than 24%. Since this growing revenue stream ultimately funds the free content and services that Internet users increasingly take for granted, policymakers should think very carefully about what’s really best for consumers before rushing to regulate an industry that has thrived for over a decade under a layered approach that combines technological “self-help” by privacy-wary consumers, consumer education, industry self-regulation, existing state privacy tort laws, and Federal Trade Commission (FTC) enforcement of corporate privacy policies.

In an upcoming PFF Special Report, we will address the many technical, economic, and legal aspects of this complicated policy issue-especially the possibility that regulation may unintentionally thwart market responses to the growing phenomenon of users blocking online ads.

We will also issue a three-part challenge to those who call for regulation of online advertising practices:

1. Identify the harm or market failure that requires government intervention.
2. Prove that there is no less restrictive alternative to regulation.
3. Explain how the benefits of regulation outweigh its costs.

The Online Advertising Market

While there are other forms of targeted advertising based on who you are (“demographic”) or where you are (“locational”), the most important varieties are based on what you’re searching for, seeing or doing online at any particular moment (“contextual”) and the pattern of what you’re searching for, seeing or doing over time (“behavioral”). The bulk of Internet advertising falls into one or both of these last two categories, with behavioral advertising growing rapidly.

Search engines deliver contextual ads on search results pages based on the search keywords entered by a user, while third-party advertising networks (some of which also run search engines) deliver contextual ads on behalf of website operators who sell ad space to the network, with the ads displayed on each page chosen according to keywords on that page. Contextual advertising is far “smarter” than displaying the same “dumb” untargeted banner ads to every user, because the contextual ad uses keywords to “guess” what the user is interested in based on the context of each page. But the purely contextual ad network doesn’t “remember” what the user has looked at in the past, so its insights into what the user would find relevant are very limited, especially for some websites. Online behavioral advertising (OBA) solves this problem and increases the value of advertising space on all websites by targeting ads based on a “profile” of the user created by tracking websites the user has visited—as well as limiting the number of times a user is shown a particular ad.

The Perceived Harm Driving Calls for Regulation

For a decade, the basic technology behind OBA has changed little: When a user visits the typical webpage, they download not only the webpage contents but also a small piece of code that allows the website to distinguish that user’s browser from other browsers (a “cookie”)—without personally identifying the user. Some cookies are required to make sites work properly (“site cookies”) while others (“tracking cookies”) are used by the third party ad network in which that site participates to recognize that browser across multiple sites participating in the ad network, and thus create a “profile” of what the user might be interested in. Even though such profiles themselves are anonymous, many privacy advocates have pointed to four reasons why online profiling is becoming “too invasive:” (i) It is sometimes possible to infer the actual identity of the user; (ii) though all browsers allow users to opt-out of tracking by “cleaning out” their tracking cookies, a website may be able to restore deleted tracking cookies through the use of cookie alternatives such as “Flash cookies”; (iii) certain vulnerabilities in current browser design make it theoretically possible to “sniff” a user’s browsing history, cache or bookmarks; and (iv) the use of “packet inspection” by Internet Service Providers (ISPs) (instead of the use of cookies) to track online browsing amounts to illegal wiretapping.

The other concerns expressed by the advocates of regulation vary significantly. Some fear that browsing profiles could be captured by hackers, somehow associated with personally identifying information, and used for identity theft. These advocates demand limits on data retention as well as data security mandates. Others demand that users have access to their own profiles—a goal inherently in tension with data security. Most share a vague queasiness about “being tracked” and about advertising in general, while downplaying the effectiveness of self-regulation or user self-help.

Perhaps most legitimately, others fear that the real “Big Brother”—the government—will gain access to a “honeypot” of surveillance data that might be associated with individual users. A variety of other solutions have been proposed to what is, for the most part, a poorly defined problem, including a government-run “Do Not Track” registry to make it easier for users to block tracking cookies; mandating opt-in for some or all forms of profiling; and banning completely the collection of tracking data about sensitive subjects, cross-referencing of data sets, and use of packet inspection data for OBA.

The Less Restrictive Means: A Layered Approach

But how should policymakers decide which, if any, of these interventions are really necessary–or would even be effective? Ironically, those who demand immediate OBA regulation to protect user privacy are often the first to insist on less burdensome approaches whenever a policy “problem” involves purely non-commercial speech. For example, emphasizing personal and parental responsibility is often favored as the more sensible approach to dealing with free speech and child protection concerns. But, as Chapman University Law Professor Tom Bell has asked, why not apply the same standard across the board? Why not expect those especially privacy-sensitive users who object to OBA to do something about it? To the extent effective self-help privacy tools exist, they provide a means of solving policy problems that is not only “less restrictive” than government regulation but generally more effective and customizable as well. Why settle for one-size-fits-all solutions of incomplete effectiveness when users can quite easily and effectively manage their own privacy? Indeed, those who advocate personal responsibility and industry self-regulatory approaches to free speech and child protection issues should be advancing the same position with regards to privacy.

Fortunately, a wide variety of self-help tools and “technologies of evasion” are readily available to all users and can easily thwart traditional cookie-based tracking, as well as more sophisticated tracking technologies such as packet inspection. While cookie management tools that allow users to delete their cookies have been standard in browsers for some time, the latest generation of browsers incorporates far more advanced control over what kind of cookies browsers will accept from websites in the first place. Furthermore,  the extensible nature of modern browsers allows any freelance software developer who sees a way to improve a browser to do so by writing an add-on that “plugs in” to the browser using standard programming interfaces designed by each browser developer.  Many such add-ons are wildly popular, but even those users who never install a single one benefit from the acceleration of browser evolution made possible by add-ons.  We will be documenting examples of these tools in our upcoming Special Report and in an ongoing  series of blog essays.

The Benefits of Smarter Advertising

The “free” Internet economy is based on a simple value exchange: Users get access to an ever-expanding collection of content and services at no cost from websites that are able to generate revenue from “eyeballs” on their pages by selling space on their sites to advertisers, usually through ad networks. The smarter that advertising, the more free content and services it can support. This is the same value exchange that has supported free, over-the-air television and radio content for decades. The only difference is technological: Because websites can connect directly with the user, they need not rely on crude profiling tools such as Nielsen ratings.

There are larger economic benefits of smarter online advertising. First, it makes the overall economy more open and competitive by allowing small market entrants to reach consumers with messages about their products. Second, those who attack the use of packet inspection by ISPs for OBA fail to see that it is precisely the kind of “game-changer” that could disrupt Google’s currently dominant market position. Third, the involvement of ISPs in OBA could help defer broadband costs: Even if OBA revenue does not completely subsidize monthly service costs, smarter advertising could at least keep prices in check and potentially lower them significantly going forward.

But smarter advertising isn’t just about selling products or services. It is ultimately about making all kinds of speech more cost-effective. The ability to “target” listeners more narrowly also increases the ability of political and other not-for-profit speakers to communicate their messages. In short, smarter advertising means more voices, more choices, and more speech. The line between “advertising” and “content” is already blurring rapidly, as the technologies used to customize advertising are also used to customize webpages and ad networks themselves are used to deliver content.

The Larger Implications of Potential Regulation

As if reducing the advertising revenue generated by each web ad didn’t do enough to reduce the total amount of funding for free web content and services, government regulation of targeted online advertising could reduce advertising revenues even further by aggravating the problem of adblocking in two ways. First, the less relevant ads are, the more annoying users will find them, and the more likely users are to try to block them. Increased relevance is perhaps the most important remedy for adblocking and the best way to maintain the implicit value exchange that currently supports free Internet content and services

Second, regulation could short-circuit the eternal battle of technological one-upmanship between online advertisers and those users who rely on the technologies of evasion to “opt-out” of seeing ads or being tracked. Such privacy-conscious users are “free-riding” off of those users who don’t opt-out, since (at present) they generally don’t lose access to the free content and services supported by the targeted advertisements that other users do see. The user who blocks tracking, but not ads, is still free-riding off those users who don’t opt-out of tracking. On a large enough scale, such self-help has the potential to disrupt the value exchange of the Internet, just as automatic commercial-skipping has already disrupted the value exchange of television. As with all “Spy v. Spy” battles, this long-term trend is inevitable: As more sophisticated technologies of evasion are incorporated seamlessly into browsers and can be used without significantly degrading the browsing experience, their use will become increasingly mainstream. But ultimately, just as with television commercial-skipping, market forces can and will, if permitted, respond through technological means and the development of new business models. Today’s implicit quid pro quo may become, of necessity, explicit: Websites and ad networks will have to find increasingly creative ways to grant access to certain content and services for users who do not block ads or the tracking that makes ad space more valuable. Policymakers should take care not to ban such technologies or cripple such business models (e.g., through requiring opt-in), which may rely on more sophisticated forms of targeting such as the use of packet inspection data.

As users face an increasingly clear choice between (i) getting content and services for free supported by behavioral advertising and (ii) paying to receive those same services and content without tracking or even without ads altogether, policymakers will finally see whether users are really as bothered by profiling as the advocates of OBA regulation insist. Given the ongoing and widespread replacement of fee- or subscription-supported web business models with ad-supported models, it seems likely that the vast majority of consumers will continue to choose ad-supported models, including profiling.

Conclusion

The questions raised above—about the harm that supposedly requires intervention, the availability of less restrictive means, and the cost/benefit analysis of regulation—are vital considerations for the future of the Internet. Indeed, if smarter online advertising will not fund the Internet’s future, what will? As both the desire for “free” services and content and the need for bandwidth expand, OBA has the potential to offer important new revenue sources that can help support the entire ecosystem of online content creation and service innovation, while also providing a new source of funding for Internet infrastructure and making ads less annoying and more informative. That would certainly seem preferable to increased user fees or other “pay-per-view” pricing models for Internet content and services.

But looming legislative and regulatory action could stop all of that by replacing the current regime—in which the FTC merely enforces industry self-regulatory policies—with one in which the government preemptively dictates how data may be collected and used. The more enlightened approach is a “layered” approach to privacy protection that combines industry self-regulation, enforcement of industry-established privacy policies, consumer education, and user “self-help” solutions. These and other issues will be addressed in greater detail in our upcoming PFF Special Report.

[Note: I updated this discussion and chart in a subsequent essay. See: “Are You An Internet Optimist or Pessimist? The Great Debate over Technology’s Impact on Society.”]

A number of very interesting books have been released over the past year or two which debate how the Internet is reshaping our culture and the economy. I’ve reviewed a couple of them here but I have been waiting to compile a sort of mega-book review once I found a sensible way to conceptually group them together. I’m not going to have time to cover each of them here in the detail they deserve, but I think I have at least found a sensible way to categorize them. For lack of better descriptors, I’ve divided these books and thinkers into two camps: “Internet optimists” versus “Internet Pessimists.” Here’s a list of some of the individuals and books (or other articles and blogs) that I believe epitomize these two camps of thinking:

Adherents & Their Books / Writings

And here’s a rough sketch of the major beliefs or key themes that separate these two schools of thinking about the impact of the Internet on our culture and economy:

Beliefs / Themes

So, what to make of this intellectual war? Who’s got the story right?

Although it will be easy for many in the blogosphere to side with the Internet optimists — and I would count myself as generally being in the optimist camp — I think the Net pessimists make many fair points about the disruptive nature of the Internet and how it forcing individuals and industries to completely reconsider the way they live their lives or organize their business affairs. Many Net optimists have a tendency to paint an excessively rosy picture of the transformative nature of the Net. In the extreme, the optimists seem to imply that the Net is somehow remaking man, altering human nature, and changing the economy only for the better. Among the Net optimists, there’s often a lot of romanticized talk of collective action / intelligence overcoming all barriers to knowledge or progress, and so on. (Sometimes I am guilty of a bit of that myself in my writing here). Net optimists need to be careful about overstating their case, especially on the economic front, and we would be wise to read the work of the Net pessimists with that criticism in mind.

The problem with the Internet pessimists, however, is that their skepticism often borders on Chicken Little-ism or outright Ludditism. I thought Andrew Keen’s Cult of the Amateur was about as over-the-top as things could get in this regard. (See my 2-part book review here and here), but then I worked my way through Lee Siegel’s tedious screed, Against the Machine. It made Keen seem downright reasonable and cheery by comparison! Keen and Siegel seem to be in heated competition for the title “High Prophet of Internet Doom,” but Siegel is currently a nose ahead in that race.

Nick Carr is probably the most reasonable and respected of the Net skeptics. He is an enormously gifted writer and I always enjoy reading his books, articles, and blog entries, even when I disagree with him. In The Big Switch, he makes many valid points about the downsides of the gut-wrenching changes that the Net is bringing about. Similarly, in his provocative recent Atlantic article, “Is Google Making us Stupid?”, he wonders how the Net is negatively affecting our minds and attention spans. Carr also argues that the Internet economy is increasingly built on a “sharecropper” model that essentially exploits the free labor of the multitudes to make just a handful of major Net operators rich. He makes some interesting points but, ultimately, I think he overstates the problem. Most of us feel we get a lot back as part of this value exchange. Sure, Google, Facebook, and a lot of other Net middlemen are getting big and rich based on all the user-generated content flowing over their sites and systems, but we extract enormous benefits from the existence of those (mostly free and constantly improving) platforms and services.

Nonetheless, the Net pessimists (especially Carr) raise some very legitimate questions about the limitations of the “free culture” mindset. They are on stronger ground when the highlight the problems associated with online piracy, however, than when they are critiquing Wikipedia and the occasional limitations or errors of collaborative endeavors like it. But Wikipedia in particular seems to be an obsession for many of the Net pessimists, especially Carr and Keen.

It is also true, however, that Net optimists like Tapscott and Benkler sometimes make too much out of “wiki” / collective intelligence models, seemingly implying that proprietary business models, private firms, and potentially capitalism itself are passé notions. I disagree. While I think wiki / collective intelligence approaches have their place and play a vitally important role in our new digital economy, the old ways of doing things are still alive and well and producing some wonderful results. For example, “The Dark Knight” wasn’t the product of spontaneous collective action, and I still don’t see any truly compelling open source video games to compete with the likes of “Madden 2009” or “Star Wars: The Force Unleashed.” I think some of the Net optimists get a bit carried away at times when the place too much faith in the “Wikipedia-ization” of everything, or the idea that the Long Tail is somehow “The Future of Business,” as the subtitle of Chris Anderson’s book suggest. I think that goes much too far. On the other hand, I am huge fan of Wiki & Long Tail models and, like most others, understand their limitations. Those models will play an increasingly important role in the Net economy moving forward whether the Net pessimists like it or not. Bottom line: each model or mode of production has its place and purpose and they will continue to co-exist going forward, albeit in serious tension at times.

Perhaps when I have more time I will return to this discussion and fill it out more with some passages and quotes from each book. I just don’t have the time right now but I will try to do so at some point in the future. Anyway, these are important books that deserve your attention if you are following the debate over the impact the Net is having — for better or worse — on our culture and economy.