Randall Rothenberg: April 2008 Archives

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With barely an acknowledgement of the myriad ways in which the Internet has revolutionized economic development, information access, and communications diversity, an increasingly organized coalition of anti-business groups is mobilizing to get the Government to shut it down.

And the scary thing is: They are succeeding. I’ve detailed this “break-the-Web” effort in an article in yesterday’s Huffington Post. I urge you to print it out, circulate it, and oppose the forces that would force you under. (More on that later.)

Because virtually all of you reading this are scrambling to build your businesses in the face of a looming recession, you’ve probably been too busy to notice that a drive is underway to goad the Federal and State governments to regulate the core processes and technologies that underlie the operations of the Internet. The anti-Internet coalition’s proposals hide under the cover of very real, very legitimate concerns that citizens have over their personal privacy. But rather than focus on the real privacy dangers - loose data security policies, identity theft, Government intrusions into citizens’ phone and email records - these groups aim to shut down “advertising networks” and “third party entities,” including those central to the infrastructure of interactive media and advertising.

Hatred for Consumerism

If it were merely technological ignorance that’s driving them, it would be correctable. But even a casual read shows these groups are actually opposed to the consumer economy itself. And in their hatred for consumerism, they have drafted recommendations so breathtakingly broad that, if they stand, many sites will go under. Particularly vulnerable are the small, ad-supported sites that serve niche interests - the political blogs, ethnic dot-coms, and hobbyist Web sites that depend on ad networks to sell and place their ads. (I identified some of the potential victims in a Business Week article last week: Web communities like Disaboom.com, an ad-supported site for people with disabilities, run by Dr. Glen House, himself a quadriplegic.) Right behind them are the newspaper and magazine companies that are building vertical ad networks to extend their audience reach on the Web.

Here’s a sampling of some of the proposals gaining traction in Washington and State capitals:

  • The Connecticut state assembly is likely to pass a bill that labels standard interactive advertising practices “unscrupulous,” and would, for the first time in the U.S., regulate the Web by creating inflexible controls on how any third party involved in Internet advertising collects and uses anonymized data.
  • A New York State legislator has introduced a bill that would allow consumers to pull non-identifying information out of aggregated databases and regulate the companies that deliver 90 percent of the ads on the Web.
  • Under the implicit threat of formal regulation, the Federal Trade Commission has issued guidelines that would prevent media, agencies, and marketers from using non-identifying data to make ads more relevant and products more effective for consumers. The FTC would require Web site operators to obtain permission from users for any changes in their privacy policies - paradoxically, even if the sites have no information identifying those users or means of getting in touch with them.
  • In a signed editorial, The New York Times asked the Federal government to regulate the collection of the types of demographic information marketers have routinely gathered for decades, and recommended that all online data collection, including the measurement of Web traffic, be banned unless users explicitly provide permission.

Let’s be very, very clear: The IAB is utterly committed to protecting citizens’ privacy. Peoples’ names, addresses, Social Security numbers, financial and health records, and anything that can be associated with their identity ought to be under lock and seal, if that’s what they desire. All the major interactive media companies are equally unswerving in their commitment; they know (and have expressed repeatedly) that violating consumer privacy expectations is virtually an invitation to users to flee their sites for friendlier environments. We favor (and are working with other major marketing, media, and consumer associations toward) meaningful self-regulation of consumer privacy online.

But let’s be equally clear that these anti-consumerist efforts are not about protecting peoples’ identities. They are about shutting down consumer marketing - and limiting consumer choice in communications and consumption. Jeff Chester, the frequently quoted proprietor of the Center for Digital Democracy and one of the FTC’s favorite anti-Internet witnesses, has increasingly come clean on his real motivation. He opposes practices “to get individual consumers to behave or act in ways that favor or reflect the marketer’s goals,” he wrote in his blog on April 11. He went at it again this week, writing to Business Week that the Internet is “a commercial surveillance system that rivals the NSA… all so we can be encouraged to behave favorably to some marketing message.”

Aversion to Democracy

Underlying this “break-the-Internet” activism is an aversion to democracy - a fear that, left to their own devices, Americans will make bad choices for themselves, and so must be protected from forces that might lead them toward such choices. Joseph Turow, a University of Pennsylvania communications professor and another frequent FTC witness, has gone so far as to decry the very diversity of information, entertainment, and commercial options on the Web - a repeated underpinning of his arguments in favor of Internet regulation. He has written of the “mutual cooperation and togetherness” Americans exhibited from the 1940’s through the late 1960’s, and of the “society-making media,” including the “three-network universe,” that helped forge such social cohesion.

“Having the option to share the same marketplace of goods and ideas has become a central proposition of equality in the United States,” Prof. Turow argues. By contrast, he has excoriated “segment-making media” that “search out and exploit differences between consumers.” “The emerging marketplace will be far more an inciter of angst over social difference than a celebration of the American ‘salad bowl,” he writes. Eyeing with suspicion what he calls “a database-driven culture of suspicion,” Prof. Turow asks, rhetorically and paternalistically: “How should public policies respond to social divisions that are bound to grow as people envy the data files that enable their peers to get seemingly better prices, seemingly better service, or both?”

Repress the urge to suggest to him that public policies may be unnecessary, given the terabytes of relevant information available online to help people locate better prices or better service. Americans, he says, aren’t up to the task of choice-making. “You may try to jump from site to site to hunt for the best buy, but that’s time-consuming,” Prof. Turow argues. “And there are comparative shopping sites such as Bizrate or Nextag, but these can be tough to navigate, and companies are learning quickly how to game the system.” The only solution, he suggests, is regulation.

Prompted by this opposition to consumerism, the pro-regulation forces are attempting to redefine the concept of “identity” so it extends far beyond the boundaries with which it has typically been delimited. Mr. Chester, for example, talks about “our information” and “our data” as if online media and advertising have the inherent ability to vacuum up any and every individual’s name, rank, and serial number. If that were the case, it would be subject for worry. Indeed, interactive media companies DO need to understand that many consumers have legitimate concerns — “creeped out” is the phrase you hear most frequently — about what sorts of information is collected from plain-vanilla Web-surfing, whether it’s merged into direct-marketing databases, and what’s sold by whom to whom, and for what purposes. Concerns needs to be allayed with facts, and when issues arise that require action, we, as an industry, must address them with complete transparency.

Redefining Identity

But rather than zero in on the real issues, the anti-Internet activists are exploiting these concerns to seek regulatory approval for a new property right over any behaviors, including those that are not associated even indirectly with an individual - even behaviors which cannot be observed.

“…In today’s digital marketing era,” Mr. Chester wrote this week on his blog, “the very tiny bits of personal behavior they [interactive media companies] have identified are parts of individual human identity. Our ‘virtual’ identities may be composed of discrete and disassembled bits of information about ourselves: —what we like to read, watch, buy; our problems and concerns (such as health or our children’s education) or our political interests— but they are very much living aspects of ourselves.”

While the metaphysical nature of identity is a fascinating subject for philosophy and classics majors (myself included), such breathtaking redefinitions of established norms can make for very bad policy - and horrifying economics. If businesses are required to institute consumer opt-in’s for all measurements of consumption behavior (as Mr. Chester, The Times, and others propose), then bar-code scanners could not be used to tell retailers whether they need to restock shelves. TiVo would not be able to let the television networks know which programs viewers are avoiding. Research companies such as R.L. Polk (which for decades has used state auto-registration data to provide insights to auto manufacturers) would have to stop telling Detroit how to be competitive with Japan. Social scientists who pore through consumption data to tell us whether we’re going green or wasting energy, eating nutriciously or ingesting fat, buying domestic goods or favoring imports would have to go back to guesswork.

And, needless to say, interactive retailers would not be allowed to suggest products or services to you based on your preferences, search engines would not be allowed to serve ads to you based on your queries, and publishers would not be allowed to measure site traffic or customize their home pages to your interests. All of these activities require “behavioral targeting” and “third parties,” as they currently are defined (with astonishing breadth) in the regulatory proposals floating around Washington, Hartford, Albany, and Manhattan.

I’ve already been tarred by the anti-Internet forces as an “online ad industry lobbyist.” (I am not.) Prof. Turow has complained that I’ve made “fundamental misrepresentations” of his work. (Read his books - here’s the Amazon link again.) But let me make a few other suggestions to those in the interactive media and marketing worlds who care about the future of our industries - and the future of communications diversity:

  • Read the proposed regulations, and write their sponsors to oppose their loose language, over-reaching breadth, and the harm they would impose on media companies, small businesses, consumers and citizens. In particular, send the State legislators my Business Week, Huffington Post, or Wall Street Journal articles and ask them why they are proposing far-reaching, rigid regulation rather than working with the IAB, a dozen other industry groups, and the FTC to create meaningful, effective, and less destructive self-regulation.
  • Visit your Congressman and State legislative representatives and offer to provide a tutorial about how interactive marketing and media work - and don’t work. The best weapon against ignorance is education.
  • Write your own Op-Ed Pieces! Your local newspaper and your favorite blogs are terrific places to educate the public - and dispel myths - about interactive media and advertising. They can also help all of us pick up legitimate concerns, around which we can coalesce the industry to become a force for positive change.
  • Contribute to the IAB’s Political Action Committee. Write to our association’s one actual lobbyist, Mike Zaneis, for information. Even small contributions will help us get our message across in Washington.
  • Love your consumers. Don’t do anything you’re not willing to talk proudly about in public. And make sure your privacy policies are crystal clear, written in English (or whatever the preferred language of your audience is) and posted prominently.