Peter Bazalgette’s article in the most recent edition of Prospect argues for a fundamentally new model of funding media, through different sorts of adverts run by digital tracking technology companies. Why so? Like broadcast television or fireworks displays, the web is very much what economists call a public good—something which is difficult to charge for directly but which can be made economically viable when it is charged for either obliquely or through some kind of compulsory levy such as a TV license fee. And while you can get round this problem with a fireworks display, it can be rather more difficult for television…..
To solve the problem with fireworks displays you may find some oblique way of making money from them: perhaps charging burger vans to set up stalls on the village green. You can’t really charge admission to a fireworks display, since any good display will be visible for miles. Another interesting approach is to sell tickets partly in aid of some charity, which rather stigmatises the practice of watching without paying. Or you may get a local firm or oligarch to fund the display for their own self-aggrandisement. Or, as normal, you get the local council to do it.
With commercial broadcast television, you make money through advertising. Rather than paying for programmes with money, viewers accept a degree of interruption from advertisers. As Bazalgette notes, with the internet, we pay for some much of what we enjoy through unwittingly sacrificing a small part of our privacy. Gmail is an amazing free service—but it does read your emails.
Some people won’t do this: a large proportion of the German population uses the web with cookies switched off. (Postwar Germans are notably paranoid about issues of privacy—many refusing to complete the state census.) The effect of this is, presumably, to redice both the usability and the profitability of websites in Germany.
So here’s my take on this. First, I do believe individuals have a right to surf privately, but they must accept that their anxieties impose a cost on other web users – surfing with cookies off is a little akin to watching BBC1 without a licence. Happily, since the web is an individualised medium, it may be possible for ISPs simply to offer a higher monthly charge for people unwilling to sacrifice.
Second, I think it is more debatable for Phorm to use browsing data from visits to sites which carry no advertising. Phorm tracks everywhere you visit. Yet, the content on the Jaguar site is paid for by Jaguar, and they are happy to fund it because of the extra car sales it generates. It is not quite the same as, say, Yahoo, gmail or Facebook, where the quality and extent of the content will be compromised by knowing less about its visitors.
Finally, I am surprised no-one has explored the voluntary, charitable angle, as seen in the fireworks example above. I would be quite happy to entrust a large part of my consumer information to a trusted charitable intermediary—or infomediary—(say Cancer Research UK). The charity would make money from licensing it to commercial organisations.
Rory Sutherland is Vice-Chairman of Ogilvy Group UK