What Is to Be Done About the Ad-Based Internet economy?

Internet of Humans
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We all use it the services, or are affected by them in some way. The basic economic bargain we accept is that we pay directly for connectivity and get the content without paying because we allow them to profile us to sell more targeted ads. There is some regulation, and in China and a few other countries the government controls everything, some news services now charge for their content in a subscription, some people just use free wifi and some people don’t use Google or social media. But those are exceptions. The basic model is pay for connectivity and get the content “free.”

Any meaningful discussion about a human-centered internet has to deal with this fact and come up with a different model.

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I would much prefer for Facebook to be a subscription service where I pay them directly and they in turn treat me like I am the customer. That is almost certainly not going to happen because they make much more money with their current model. Same with Twitter, Google and all of these so-called free services.

So what do we do?

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One avenue, which the EU seems more interested in than the USA, is regulation. Because in fact there is not much of it going on.

Here are links to two interesting and worthwhile articles about Twitter. One concerns their rather conflicted CEO, Jack Dorsey and the other about how Twitter has effectively banned tweets about ISIS but allows white supremacists to do their thing more freely. In the Dorsey piece, he seems to be unable to get any real grip on what they should and should not allow, as if the whole thing ran away from him and his group long ago. Which in a sense it has, especially because its chief loyalty is to keeping its stock price up. In the other, it seems that the company would rather ban some Muslims unfairly so they can get rid of ISIS, but not run the risk of banning high-profile conservative (in the USA meaning Republicans) officials.

What does this have to do with ads? Everything, because they need to do what they can to bring in as many eyeballs as possible, while maintaining some public impression of social responsibility. Dorsey looks like he might crack. Zuckerberg though seems to have no such qualms.

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This is summarized by the (a bit easy) statement: If its free, you yourself are the product.

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Funny enough, that does not apply to open source software (at least not in general). I wonder how we could have an opens source news economy …

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Yes, the statement is too easy in its generalization, but its a good discussion-opener (like: why is that service for free?). Of course there are a lot of gifts, and these should be really honored and valued as gifts.

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Unless it is a hobby or pro bono/charity, at some point people have to be paid for their work.

I admit to at least some complicity in this whole process because in early 1994 I co-founded the first news website, sfgate.com, and we didn’t make anyone pay for it. This was before Yahoo, Google, Amazon or any of the big web content providers. Everything was experimental.

Back then, nobody was going to pay for any content. The reasons were not that different than they are now in the sense that connectivity got direct payment. Back then it not only cost money to connect, but it was kind of a hassle for the average user to even get onto the WWW.
Everything was still modems outside of big net-connected institutions and businesses and while that was a big part of the early web traffic, those users were not going to get their universities or companies to pay. A lot of the time was spent in off hours when the boss wasn’t looking. And if you used a modem things could get pretty slow. We often called WWW the “world wide wait.”

And print was still king back then, despite the large presence of proprietary services like AOL. So one could not realistically ask for money directly for content. And, there was no realistic way to collect the money unless you had an admin infrastructure set up to deal with it, which back then involved someone calling a new subscriber to make sure they had a valid credit card.

So, we started by giving away selected news and sports stories to build traffic in the hope that sometime in the future we could charge for it. I think it was Wired! and their early pioneering service Hotwired! that ran the first banner ads. This was the start of the process we have today. And because I was working for a newspaper that had an ad sales department, we too sold some banner ads.

Then Yahoo! began. This was the first game-changer. They had so much traffic that they could sell ads in bulk for very low per-impression prices. This forced everyone else to get more “creative” if they wanted to sell an ad.

At the risk of going on too long in this post, let me pause to explain a reality about selling advertisements. You have a media product for which you want to sell ads. You go to an advertiser and make your pitch. They seem interested, but often they will say something like, “looks good but can we do something a little different, a little more special?” So you, the salesperson, thinks, “if I say no we can’t do that then I am going to walk out of here with nothing. If I say sure we can do something special, then I will put a burden on my tech people, but I will get the sale.” Good salespeople always take the money. So what special things can you do?

At first, we manually put certain ads next to related content, but Yahoo, and in a few years Google, were getting the big-volume search traffic, far beyond anything we could do. We could automate it to a degree, but again, the volume just wasn’t there. In our case, we bundled the online ads with the print and TV stuff (my company also owned a TV station and we ran TV content too). That was the extent of our sophistication, and this is generally true of the industry itself back then. Match ads with content in whatever meaningful way you could figure out. That was the pervasive model. Same with Google.

Then in 2000/2001 came the dot-com bust period and the now-huge search companies had gone public and saw their stock price dropping. they had to do something or they were going to go bankrupt by losing their investors. Google realized that they were sitting on huge amounts of personal information that they could use for better ad targeting. And they had enough money to hire the best programmers. And so began the age of “surveillance capitalism” which is where we are today.

Meanwhile, during this time, the big phone companies, that had been surprisingly clueless about the data gold mine they were sitting on, started to catch on and made it easier for the public to “jack in.” In the process, the speed and convenience increased and they were able to begin raising their prices, locking in for themselves the direct-pay component of this new world.

And, given Metcalf’s Law, that says the network grows more powerful as each node connects to it, the Net’s winner-take-all model pushed everything toward the reality we have today.

Maybe it was all like a stream that started small and you could navigate your little boat, and then as it grew the current got to where you could only try to stay within the momentum of the flow…until, what - we all go over the waterfall?

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Another key component of today’s reality is what was originally called “collaborative filtering,” which was invented at the MIT Media Lab in the late 90s. My company was a sponsor of the Media Lab, which meant that I went to Cambridge twice a year from 1995-2001 for sponsor meetings where we saw demos of all the stuff they were working on, plus lectures, talks and meetings with industry luminaries. In 1996 (or 95, I forget which year) one of those people was Jeff Bezos. The memorable quote from his talk was, “we’re going to obsess about our customers and make our competitors obsess about us.” Pretty accurate, even today.

At that same meeting, one of the groups at the Media Lab demonstrated the first iterations of collaborative filtering. The idea was simply “if you like these things and someone else also likes them, then other things they like could be of interest to you and vice-versa.” Bezos saw immediately the possibilities of this and Amazon was the first large scale practitioner of what is now a huge core component of today’s commercial internet.

This is relevant to the free-with-ads model. One need only look at Facebook with a critical eye to see how this has taken on a life of its own. Their newsfeed is largely built on top of this concept. And in that form, it is key to driving people into the “filter bubbles” that are now widely studied by sociologists because they as seen as heavy contributors to our increasingly polarized societies. This is nowhere close to the good intentions of the Media Lab people who came up with the idea.

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Given the massive size and scope of the ad-based 'Net economy, I don’t think there is any way to curtail or possibly even slow down this momentum. Regulation can help, but even with the huge fines the EU imposed on Google, it has no meaningful effect on their bottom line. The ethos of these companies, like Google and Facebook, can I believe be fairly characterized as “better to ask forgiveness than permission.” And so they do frequently say in public how they got this or that “wrong” and then carry on their merry way.

And it has to be said that huge numbers of people, quite possibly a majority of users, are fine with this arrangement. or if they dislike something about it, they keep using the services.

So I think realistically the key to this is working to increase public awareness and if there is to be regulation, it should be in the area of, “do you know what you are trading off when you use these services and can you control it?”

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This sounds like a good lead in for its own topic discussion!

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There are a few newish nonprofits in the USA trying to function as a viable news service. This link lists 11 of them. Mainly they engage in more investigative pieces.

News is a tough business and it has always needed support from other aspects of its producer. newspapers relied on classified, horoscopes, columnists, sports and all kind of other items to support their core newsroom. Classified being the main one. For example, in the last year that I ran sfgate.com in 2001, the newspapers I worked for (there were 2 bound by what they called a “joint operating agreement” which in itself was designed to slow down the revenue drain that was already happening in the 60s) grossed 139 million dollars from classified advertising. The building had almost an entire floor of people who just took phone calls all day long for the ads.
Today they don’t even have a meaningful classified section at all. 139 million bucks is a ton of money to simply lose altogether!

In TV news, many don’t know this, but in the early days, TV stations didn’t want to carry news at all because it was not profitable to do it. But the federal government forced them as a condition of using the public airwaves. Even today I don’t think TV news is particularly profitable. For all the attention it receives from other news outlets that talk about such things, only about 5% of the TV-watching population watches TV news on a regular basis (my estimate based on reading a number of sites talking about the subject).

People get news from the internet, especially in younger demographics, but one can get into the weeds pretty quickly as you try to define what “news” even is. In this world of clicking to see things, it is now common for headlines to be more sensational and misleading as to the actual content of the story. AKA “clickbait.” Seems like newsy blogs are especially this way, but then so are a lot of other more mainstream sites. This leads to other bad habits like 'burying the lede" intentionally so you have to scroll down to find out the true nugget of the story.

So, yeah, open source not-for-profit news I believe is essential to a free society. But how to get there…?

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This is a good example of a small, focused news site, Climate Home News, that says it is open source, but is not nonprofit. They have sponsors and also accept donations through Patreon. They have a section called Sponsored Content where their sponsors post their own news. They are a responsible operation and a good example of where at least some of news is hopefully going. But only if they can keep the lights on…

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Maybe it starts with re-assessing the use value (and dangers) of constant “news”:

For being able to understand and influence (!) current affairs, awareness of every detail is not necessary at all and takes away the time one could spend on actual understanding: reading long-form articles, books about history, philosophy, sociology and so on. And books on actually influencing things … dangerous link ahead:

So my vision for an open source “news” economy would rather be that: a library of this in-depth content for active citizens. It would then recommend some of its content as suitable for each major event in society. Funding via Patreon (or better, its open source alternative LiberaPay) could be possible, but I’m not sure. It’s not something that too many people are really enthusiastic about so that they would spend money on it. But I might be wrong, and it would certainly be an important contribution to society.

And a lot of valuable material is already out there and just waits to be collected and presented properly in a digital library of open source works. That would probably be my starting point. For reference, doing just that but for a different topic took me around 50-60 hours for 509 e-books (so far).

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Great link to Alinsky.

Breaking news is definitely overrated and often is a real attention hook. I admit I look at it too often, but really it is in the probably vain hope that Trump will be on his way out of our lives.

I read the New Yorker, which I find to be a stellar source of in-depth story and analysis. The Atlantic is the same. The New Yorker is unique in that it gets more revenue from circulation than advertisers. Loyal readership that wants the in-depth stuff by the best writers. I recommend it to anyone who wants the long view. Good website too - no need for paper if you don’t want it. So that is what the top of the heap looks like where the best writers get paid well. Because that’s the thing - and a big reason why most newspapers dropped their investigative desks long ago - it’s very expensive to produce. Takes time and there are a lot of dead ends going after the story.

Breaking news with splashy headlines get the clicks. And even in newspapers, as one of my pals with decades in the news business says, “every newspaper story gets something wrong.” That has been my experience in the maybe dozen newspaper stories I have been featured in. But quick deadlines and no money for fact checking means a lot of inaccuracies. And bloggers or tiny operations often don’t even have copy editors or proofreaders.

I’m excited about the enthusiasm out there for a modern journalism that really serves the people. And I know a few in my locale who are dooing it local and small scale, but trying to do good journalism on a shoestring. But as the saying goes, don’t mistake a clear vision for a short path. News is one tough business. Tight margins and fiercely competitive.

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Nadia just offered this link to Codastory. It’s a high-end news nonprofit with significant writers and donor partners. Plus they take donations directly. Impressive group.

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And here is a piece that says after years of losses The Guardian is profitable.

How they got there is noteworthy: it looks like they and The Financial Times are the only newspapers who get most of their revenue now from digital. And they do it without a paywall.

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@inge works with them I think.

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This is a good New Yorker story called “The Urgent Quest for Slower, better News.” It has this salient quote, “As it turns out, there is a way to puncture this illusion of knowledge. It involves forcing people to explain in detail what would happen if their views on a specific public-policy issue were put into practice. It’s when we try to provide a “causal explanation,” Sloman and Ferbach write, that we realize how ignorant we are. That realization, in turn, leads us to become less extreme in our views. This insight has an obvious implication for media: depth matters. Journalism that engages with complexity, examines the implications of proposed policies, and offers the public rigorous analysis can lead to a more informed—and less polarized—citizenry. And yet, if Schudson is right, then only a small portion of readers will have the time, inclination, and disposition to become so ideally informed. Far more people will be monitorial, rather than informed, citizens—and, thanks to social media and high-volume news operations, they will be easily alarmed and distracted. Adding yet more stories to this maelstrom may make a certain economic sense for media organizations, but it won’t necessarily make us any better informed. It might only further fragment our knowledge.”

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I do agree with subscription agrument to some degree, but it’d be great if there was a system that would not just have money be thing giving you access to things (as not everyone has money globally, and this obviously will exclude people from certain opportunities/knowledge)

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great discussion and great topic: the never-ending question of how to fund news in an ethical way ;). And yes, I work with codastory.com! Thanks for the kind compliments! But we’re still trying to figure it out, as most of the news organizations are - at every journo conference there’s several panels on “how to not be paid by ads” ;).

A great initiative, in my opinion is https://civil.co/ - read here why it’s CEO Vivian Schiller (the former head of National Public Radio and of news and journalism partnerships at Twitter) tries to innovate journalism by re-examining the quality of public information and raise public trust in evidence-based reporting through blockchain: https://blog.joincivil.com/why-im-joining-civil-ca474d8b7440 (it’s still a bit unclear to me how civil works exactly, but…). She’ll be talking at ZEG Tbilisi Storytelling Festival in Tbilisi June 20-22 (there are still tickets if you want an excuse to visit Tbilisi :wink: )

Other great examples of not relying on any ad-related income in journalism are the Dutch The Correspondent https://thecorrespondent.com/ (tho they did F# up after fundraising in the US and not basing themselves there, but that’s a different story), and the Slovakian Dennik N https://dennikn.sk/: y by using a complex analytical and automated system, they target their readers to become members. They built this system by themselves, and it’s open-sourced. The cheapest membership is a one-month membership deal. The software helps them to target the right readers: analytics tell them that someone reading it on an iphone is 5 times more likely to buy a 3 month membership deal than someone on android - so they show a different deal to those than to android users. How it works: their long form reads are behind a paywall, but not fully. Readers can read several paragraphs, more than with others, before they hit the paywall. All members can get a shareable link and share the articles they want on social, giving their friends a one-time free pass to read the full story. They also publish one paragraph news stories without a paywall, often linked directly to other news sources. And they have a paper version, which they see as advertisement for their online platform.

Also, worth mentioning is the Polish Outriders, for which I also write. https://outride.rs/en/

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