Online media: personal data collection as a source of revenue?

The limits of the ad-based revenue model are starting to show. Should we worry about online publishers getting involved in personal data collection in order to maintain income?

Susan McGregor
12 December 2015

Online advertising process as described by Internet Advertising Bureau, October 2015.

Online advertising process as described by Internet Advertising Bureau, October 2015. Wikicommons/Nagle. Some rights reserved.In his October 27 piece for this site entitled "Surveillance, privacy and the British press," author Jonathan Heawood raises (many) questions about the behavior of the British press in the wake of the Snowden revelations. Citing the apparent "cognitive dissonance" in some British news organizations' supporting both the Save Our Sources campaign and state surveillance, Heawood concludes that news organizations' financial dependence on data about their readers makes them the "strange bedfellows" of surveilling governments.

Many of the points that Heawood makes in the course of his piece hold true in the US as well as the UK: In 2013, for example, when Fox News reporter James Rosen was named as a possible "co-conspirator" (a criminal, rather than a civil, charge) by the US Department of Justice for his role in publishing classified information about North Korea's nuclear program, his own media company's criticisms were joined by those of many other news organizations. Yet just months before, Fox News had suggested that Edward Snowden might be a double agent, rather than a whistleblower, and in the wake of the recent shootings in California, a Fox News contributor suggested that law enforcement should increase surveillance of mosques and "stop worrying about people's rights" in the interest of national security.

Similarly, American media companies, like their British counterparts, have a vested interest in understanding where their readers are coming from. And of course, media companies have always been interested in knowing about the demographics of their readers; the idea of learning about your readership is hardly unique to the era of digital publishing (as a child, I remember physical surveys arriving with my parents' newspapers every year or so, printed with questions about annual income, marital status and church attendance). Just as food retailers use everything from loyalty cards to manufacturer's coupons in order in order to target their advertising dollars, media companies want to understand their readership so they can both better position their coverage and negotiate higher rates from advertisers. It's not unreasonable to suppose that cash-strapped media organizations might turn to selling consumer data as a way to cover the gap.

That digital media is not "'free'", as Heawood suggests, is only too well known to publishers, who for years have been cutting jobs to make ends meet as digital publishing has become the dominant platform for news consumption. And as Heawood also notes, the virtually limitless volume of advertising real estate on the Internet has almost certainly outstripped the "finite" volume of available dollars in the advertising market. Moreover, online ads command a fraction of the rate of their print analogs.

So it's not unreasonable to suppose that cash-strapped media organizations might turn to selling consumer data as a way to cover the gap. The problem is, selling their consumer data to online advertising networks - which is the way that most "free" goods and services providers make their money - would be like trying to sell milk to a dairy farmer. Thanks to web cookies, most online ad networks know far more about news organizations' readers than the media companies themselves. Moreover, some of the most important networks are run by the very same companies - like Google and Facebook - that already have access to so much of our most personal data.

Though as consumers we are increasingly paying for "free" services with our privacy, on the Internet the pipers getting paid are online ad networks and the companies that own them. Not only do the financials make it unlikely that news organizations are leveraging customer data for profit, but improving privacy for readers actually means better business for publishers. Improving privacy for readers actually means better business for publishers. 

For example, a large portion of media websites today are served over unencrypted HTTP connections; this make it easy for nearly anyone - from governments to telecommunications providers - to observe and potentially manipulate a user's web content. In addition to providing better privacy for consumers, serving news content over HTTPS connections raises the cost of blocking news websites by turning it into an all-or-nothing proposition. 

HTTPS also helps address another ad-based headache for media organizations and consumers alike: malware being delivered to consumers through online advertising. The reality of "malvertising" prompts many users to install ad blockers, which means lost revenue to publishers. But a switch to HTTPS - which has both become less costly and even has the support of the Internet Advertising Bureau - would protect consumers and reduce the need for ad-blockers online. 

Ultimately, the financial salvation for media companies may not be in advertisements at all; subscriptions, crowdsourcing, and yes, even micro-payments, have all shown recent promise for funding media content. So the soundest way forward for news organizations will likely be to continue doing what they do best: producing news and media that both serves and protects their readers' best interests.

There is an acute and growing tension between the concern for safety and the protection of our freedoms. How do we handle this? Read more from the World Forum for Democracy partnership.

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