Friday, August 6, 2010

The future of free media

Monday's Wall Street Journal article on cookie tracking was a bit underwhelming. So although (a) we've been having the same conversation over and over again since 1996 without getting anywhere*, (b) the article was a bit misleading and maddeningly vague, and (c) industry rumor has it that the church/state divide at the Journal does not quite live up to the J-school ideal, I am siding with Jeff Jarvis in believing that News Corp is not well enough organized to stage a conspiracy: the article was just poorly done.

These arguments are nominally about privacy. And providing privacy is a worthy but complicated** goal. But given the general level of philosophical confusion about privacy, I believe much of the commentary (and the comments to the commentary) is motivated by a hostility to advertising in general.

If you hate advertising, you hate advertising. Arguing that not paying for music means a diminished supply of quality music does not sway the downloader. Not paying for media--in whatever sense of pay--means a diminished supply of quality media. This argument does not sway the hater of advertising, but I'm not trying to convince them. Advertising provides something important: free (as in beer) media. This may not mean much to Rupert Murdoch--who can afford to pay cash for his media--but it means something to society. And it should mean something to those of us who are trying to find a way to make quality ad-supported online media a viable proposition.

Paying cash for media is regressive. High cover prices exclude those with less disposable income. (This strategy is used purposefully by mixed-model high-end media outlets to produce a demographic appealling to better-paying advertisers.) Advertising democratizes media***. And media allows a democracy.

Online media is suffering. Susan Athey and Joshua Gans say "the adoption of targeting... leads to higher impression prices, higher profits, and higher social welfare." Online media is in dire need of profits, much less higher profits. The alternative to targeting is the pay-wall. The FTC, in thinking about targeting, needs to seriously weigh the regressive impact of limiting advertising against the opinion of news outlets like the Wall Street Journal, who have consciously set out to exclude those who don't have a spare $363 per year to spend on something they can get elsewhere for the nuisance cost of seeing a few ads.

* i.e., The Financial Times, February 12, 1996, "This Bug in Your PC is a Smart Cookie"; and San Jose Mercury News, February 13, 1996, "Web 'Cookies' May be Spying on You."
** If you can quickly and simply articulate what privacy is and why it is important, I will quickly and simply point you to a counter-example. Privacy is not a single thing, it seems more like a bundle of things, so it defies easy analysis.
*** A fact evidenced by laws compelling certain content to be aired "free." This content, naturally, is usually sporting events, but that's a rant of a different color. Hansen & Kyhl "Pay-per-view broadcasting of outstanding events: consequences of a ban" talks about the EU directive of 1989.


Jeff said...

The current solutions put forth by the media and marketing industries; pay-walls/subscriptions, data collection/behavioral targeting and social networks, in addition to providing sub-par ad revenue, exhibit significant flaws. Pay-walls and subscriptions reduce the size of an audience. Data collection and behavioral advertising use advanced modeling to make flawed predictions and are awash in privacy concerns. A limited, if not single, player dominates social networks. Pay-per-download is currently monopolized by iTunes, and thanks, I always knew I could buy it, but that again limits audience reach.

Nowhere along the line have I seen what consumers would like to see. Isn't there a compromise somewhere?

Here's what a patent filing I made in early 2008 proposes.

I'll give your the most intimate of details about myself, even help you do market research. If I choose to consume some content (video, music, books, publications, blogs, games, code, a stock market-like mechanism determines in real-time what I am worth to marketers. If I'm valuable enough, show me targeted advertising and let me have my content free, in an ad supported format (or I can pay that same amount to have my content ad-free)....if my profile doesn't generate enough revenue to cover the cost of that content, I need to pay for it. Simple enough.

Everybody is happy. Publishers and artists get paid, marketers get the eyeballs they want and I'm given a choice. Sounds fair to me. Not only does this level the playing field for consumers by offering them choices while respecting their privacy, but it also works for artists and publishers. Finally a way to truly value digital content.

The Internet, the most addressable form of media transmission ever created, has failed to provide publishers of all forms of digital content enough advertising revenue to be profitable.

Isn't it time to try something new?

Alan Pearlstein said...

I still like my idea for a publisher revenue model - make the site free as long as the consumer accepts behavioral ads, or pay a subscription if you want no ads. If publishers put this choice front and center for every visitor on every page of their site, everyone would opt-in for the free site and allow their activities to be tracked. Last time I checked, publishers were in business to make money. Who says there needs to be a "free" option with untargeted ads? let's remove that from the dialogue and make the choice to pay, or use the site for free with targeted ads.