As Ezra Klein wrote earlier this year at Bloomberg, someone has always footed the bill for information distribution. For a century and a half, newspapers and print sources were the primary sources people read in order to access information. Initially newspapers were bankrolled by political parties, but this gradually shifted to a model whose revenues were built on advertising. There were very few ways to ensure advertisements ended up in front of valuable consumers, and newspapers were able to sell the attention of their readers to advertisers eager to guarantee such an audience.
As the Internet has grown to dominate information distribution, advertising has continued to subsidize the distribution of information. From simple AdWords placements based on search terms to complex tracking schemes which build profiles of web users, advertising allows the information distributors to maintain the illusion that everything on the Internet can be free.
But as digital marketing and metrics allow for increasingly precise measures of advertising effectiveness, companies are increasingly only willing to pay for ads which directly lead to sales. Similarly, merchandisers want to be able to target their internal advertising, via circulars or product placement, in ways which maximize sales. The recent New York Times piece on how Target manages to do this, How Companies Learn Your Secrets, was, for many, an introduction to the sheer amount of data these companies and advertisers have amassed from our online and purchase histories.
Newspaper advertisements were a necessary inconvenience, if they were an inconvenience at all. Sure, you didn’t need to know how Macy’s was branding their sales promotion every week of the year, but sometimes it was nice to know when those jeans were on sale. And advertisers then could barely know anything about you, most likely your name and address, if that. Search-based advertisements, while initially confusing, were easily accepted. I’m openly looking for a Mont Blanc pen, so Mont Blanc retailers are looking for me. Targeted advertising based on a pool of data amassed by the same advertisers is another beast unto itself. People don’t like to be followed, especially online where many maintain the illusion that everything they do is anonymous.
In what must be entirely coincidental timing, Google recently announced it would incorporate a ‘Do-Not-Follow’ function into its browser one week later. But if Google and other information accumulaters can’t track your online life, the value of advertising falls. And if the value of advertising falls, who will pay for the distribution of information? Surely there are entities that would love to pick and choose what we see, just as political parties did when they controlled the newspapers in the mid-19th century. Is this an invitation for internet service providers who would gladly sell preferential access to certain websites for greater profit? Could it be an unexpected blow to those who fight for net neutrality? Will time tell, but only if someone pays it?