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Tags containing: "Net Neutrality"

Featured Post | Perspectives | Policy

The Midterms are over: Sizing up what it means for big tech

For the last two years, Congress has increasingly focused on big tech platforms. Lawmakers have summoned executives, consumer advocates, and academics for hearings on consumer privacy, market dominance, data breach scandals and perceived political bias. However, with the exception of a bill to amend Section 230 of the Communications Decency Act to clarify  companies’ liability for facilitating  sex trafficking on their sites, Congress has not yet moved significant legislation to regulate the tech industry.

Some are wondering whether a new Democratic majority in the House means Congress will start legislating, particularly with the President saying that he is interested in discussing with Democrats whether or how to regulate the technology industry. Let’s take a look at how the 2018 midterm election results might impact a few high-profile tech issues.

Market Dominance of Big Platforms

Even before the elections, Democrats and Republicans raised concerns about the outsized influence of Google, Facebook, and Amazon – albeit for different reasons. Many Democrats are concerned about the data surveillance business models of big tech companies. Republicans, on the other hand, distrust social media algorithms, which they believe favor liberal points of view over conservative voices.

I expect both parties’ concerns will only grow, especially as we get closer to the 2020 Presidential election. And those concerns might fuel action on other issues. Congress is not likely to do anything to directly address the dominance of the big technology platforms. The expectation is that the Department of Justice and the Federal Trade Commission will work with Congress to provide guidance on what, if anything, lawmakers should do. Thus far, discussions have focused on how various digital business models function and what remedies or regulations would be needed to enhance consumer experiences.

Net Neutrality

Over the past decade, Congress and the Federal Communications Commission (FCC) have been bickering about net neutrality without final resolution. Most recently, the Republican-controlled FCC rolled back net neutrality regulations promulgated by President Obama’s FCC.

With Democrats set to take the reins in the House, they are more likely to move a bill to reinstate those Obama-era net neutrality rules. But the Republican-controlled Senate is likely to completely ignore any bill sent over by the House. That dynamic could change if the courts rule on the pending challenges to the FCC’s rollback. Until the incessant shouting stops, this is likely an insular technology discussion and fodder for future campaigns.

Consumer Privacy

Congress has held dozens of hearings on consumer privacy over the years. This year was no different. However, the tone of the conversation has changed dramatically just in the past few months. As mentioned before, many Democrats have long advocated for a consumer privacy bill of rights, saying that Congress needs to step in to protect consumers. Now, a few key Republicans agree. Many in the industry are calling for the same as the California Consumer Privacy Act and the EU’s General Data Protection Regulation go into effect.

Just last month, Senate Commerce Committee Chairman John Thune (R-SD) stated, “It is increasingly clear that industry self regulation in this area is not sufficient.” Clearly momentum was building on this issue before the midterm elections and there is reason to believe it will continue. Senator Thune is likely to move into a leadership position in the Senate, thus relinquishing his position as Chairman of the Senate Commerce Committee.

However, the next likely chairman is Senator Roger Wicker (R-MS), who signed a bipartisan letter with three other key senators in September saying they want to work with the Administration to “provide consumers with more transparency and control over the collection and use of (consumers’) personal data while preserving the innovation at the heart of the internet.” The House Energy and Commerce Committee is likely to be chaired by Representative Frank Pallone (D-NJ), who included consumer privacy legislation on his agenda for 2019. On top of that, a host of other policymakers, including Senators Wyden (D-OR), Blumenthal (D-CT), and Markey (D-MA), have recently introduced their own legislative proposals. Comprehensive consumer privacy legislation appears to have early bipartisan and bicameral support.

All that said, our nations’ founders intentionally made it difficult to pass legislation. And, 2019 will be no different. For any meaningful legislation to advance through both chambers of Congress, Democrats and Republicans will have to put aside partisan differences long enough to find middle ground. That will be hard for elected officials to do in the current highly polarized political environment. Odds-makers would say the chances are slim that Congress can enact comprehensive consumer privacy legislation, but it’s got a better chance than most.

Perspectives

Net neutrality – every voice counts

In a matter of days, the 2015 Open Internet Order is set to be repealed by the FCC. This will give internet service providers (ISPs) the power to control how consumers use the internet. They will have free reign to prioritize, slow down, or block online services and set individual pricing for different types of traffic.

If it goes ahead, the repeal will obliterate net neutrality — the single most important attribute of the internet. Net neutrality ensures that the internet remains a level playing field where anyone can create and share content that can be accessed equally by all.

Without net neutrality, the internet is likely to be monopolized by mass media platforms, which are either owned by ISPs or have the money and influence to cut preferential deals with them. Smaller independent publishers could see visitor numbers and associated revenues plummet. Consumers will be reliant on the content of a select few who pay for control and preference — which is deeply concerning for the future of free speech. And advertisers will be compelled to use these generic platforms rather than reaching consumers though more specific and engaging channels.

The fight for a fair internet continues

The fight for net neutrality is far from over. Senators are attempting to overturn the repeal using the Congressional Review Act, requiring just one additional vote to reach a majority in the Senate. While the bill may struggle to pass the House of Representatives, it raises awareness of the issue. It is also a strong illustration of widespread support for net neutrality. Multiple lawsuits have also been filed against the Federal Communications Commission’s (FCC) decision to repeal the order – backed by the Internet Association (IA), which represents Google, Facebook and Amazon – including one lawsuit filed by 21 state attorneys general.

In addition to these combined efforts, individual states are taking separate action. Washington is the first state to enact its own net neutrality rules, specifically prohibiting ISPs from blocking or slowing web content, as well as speeding up apps and services in exchange for money from developers or website owners. Another net neutrality bill was recently proposed in California. And it is even stricter than the original 2015 Open Internet Order as it would ban zero rating. That would mean exempting certain types of content from mobile data limits. In fact, action against the FCC’s repeal of net neutrality rules is being taken in 35 states, according to activist group Fight for the Future, including executive orders, filed lawsuits, and state legislation. It is as yet unclear whether the FCC or individual states have ultimate authority to oversee broadband internet services.

Stand together in support of net neutrality

Consumers, advertisers and publishers may think their individual voices won’t be heard in the debate around net neutrality. However, there are many ways to join the fight and make a real difference. Writing to, or calling congressional representatives and senators to express personal views is a first step. The website Battle for the Net is a great place to start. There are numerous petitions individuals can sign, as well as nationwide protests and meetings to take part in.

The legal and political debate around net neutrality will continue well after the repeal date of April 23 has passed. So, for anyone that values a free and open internet, where anyone can create and publish content to be accessed equally by all, standing together in support of this fundamental principle is essential.

Walter Knapp is the CEO of Sovrn – a fast growing, Boulder, Colorado based company helping on-line publishers succeed. Prior to Sovrn he was the Chief Operating Officer at Federated Media Publishing and Lijit Networks. With more than 20 years of business and operations management, Walter has been an investor as a partner and principal for two very successful venture capital funds. He has also built and led large field organizations for two public companies, Novell and Cambridge Technology partners. Walter regularly speaks about monetization and data strategies at industry events covering both online publishing and advertising. Walter holds a Master’s in Engineering from the University of Colorado in Boulder and a B.A. in History from Boston College.

Perspectives | Video

The top 8 trends for publishers in 2018

We live in interesting times. And they will only get more interesting if the past year is any guide to what’s ahead. With Donald Trump in office and “fake news” becoming the new “f-word,” there’s a lot to mull in the coming year for publishers. Beyond politics, 2017 was a tough year for those who pivoted to video without a solid strategy, and the “duopoly” of Facebook and Google gobbled up more digital advertising, even as they helped publishers on other fronts. And newer technologies like artificial intelligence and blockchain are going from “good to know” to “need to know.”

Now that the year is coming to an end, let’s look ahead at how the past year’s biggest trends will influence the digital media business in the year ahead.

1. Power of Subscriptions as Trump Bump Continues

By the end of 2016, increased readership and donations to the likes of the New York Times and ProPublica suggested that partisan politics and the non-stop news cycle, for all its distress, were at least helping the bottom line of news publishers. While some subscription-driven and membership-based publications saw a leveling off of that by the middle of the year, it seems helpful to take a macroscopic view of this trend rather than a quick snapshot: The New York Times recently announced that it has more than 3.5 million subscriptions and more than 130 million monthly readers. That’s more than double the audience it had two years prior. While the Gray Lady’s boost can’t speak for everyone — local news still struggles, for example — it suggests that audiences are becoming more used to the fact that they ought to pay for premium content. With AI also becoming more efficient, and Google and Facebook both making efforts to support subscriptions, expect that technological help, including better personalized targeting and performance measuring, will help boost subscriptions and donations even more.

2. Pivot to Reality

For all the hype surrounding pivoting to video, not everyone who invested in the strategy saw its benefits. Perhaps most jarring was Mashable’s fire sale for $50 million. Given Mashable’s $250 million valuation just last year, the sale price serves as a dire warning to other digital darlings. Mashable is now poised to lay off more employees (last year, investment in video justified a round of high-profile layoffs) as it refocuses its brand yet again. BuzzFeed too, has announced layoffs of about 100 employees after revealing it missed its 2017 revenue targets. Vice Media is also expected to miss its revenue target by more than $800 million this year. CNN Digital announced 2017 brought in its highest revenues ever at $370 million —but it faces a $20 million budget shortfall. And let’s not forget the abrupt closure of DNAInfo and Gothamist.

Factoring in that Google and Facebook continue to gobble up digital advertising revenue, many publishers need to diversify revenue streams fast. Digital darlings like BuzzFeed and Vice, not to mention smaller publishers, will have to think beyond native ads. Perhaps the best strategy, as The Atlantic’s Derek Thompson put it, is not to pivot to video or pivot to VC money, but to pivot to readers.

3. A Shifting Regulatory Environment

Net neutrality, that on-again off-again issue, is officially back on after Ajit Pai, the chairman of the Federal Communications Commission, pushed a proposal to repeal it. Even with the announcement that more than a million of the comments submitted to the FCC were fake, the outcome of the net neutrality vote isn’t in doubt as Republicans control the Commission. The new regulatory environment would be a bust for streaming video publishers like Netflix and Amazon Video, and a boon for publishers under the umbrella of the larger telecom companies that will benefit, including AOL, HuffPost, and NBCUniversal. Meanwhile, the AT&T and Time Warner merger — which the U.S. government is trying to block — would inevitably boost HBO, CNN, and TBS if it goes through.

What this amounts to is a huge upending for independent publishers and small businesses used to an even playing field, and the potential bundling of subscriptions and promotions would favor the larger ISPs and telecom companies. Meanwhile, Congress’ clampdown on the technology industry suggests that regulation may also be coming for major tech companies. With opposition on all sides of the regulation debate, expect a topsy-turvy cycle of enforcement — and resistance — in the year ahead.

4. Leveraging AI

Artificial intelligence is often talked about, but little understood. Expect 2018 to be the year publishers take heavier stock in what it can mean for them. Publishers have already turned toward programmatic advertising, and programmatic video has a huge potential to deliver advertising boosts. However, that doesn’t mean publishers can turn a blind eye on issues like ad tech fraud, high programmatic fees, and lack of vendor transparency. Leveraging AI will mean investing more time in quality control.

And while it is the root of many fears, AI doesn’t necessarily mean the complete displacement of humans. Rather, working AI to your advantage can free humans up to do tasks that require much more nuanced attention. Utilizing AI to deliver more meaningful analytics that can help automate repetitive tasks for publishers like social media distribution, for example, or more personalized ad and news targeting, is one way publishers can redirect their energies and consider AI as an aid rather than a threat.

5. The Rise of Audio and Voice

If you’ve visited the websites of The New Yorker or The Atlantic lately, you may have noticed options to “listen” to digital stories. Will others follow? Given the attention on the voice — think of the popularity of podcasts and the mainstreaming and price drops of home speakers like Google Home and Alexa — expect voice-command gear, and more options to listen, to take center stage in 2018.

There’s been a push by tech companies to move into audio, with Google buying the audio curation app 60dB, and Apple recently buying the audio search platform Audiosear.ch and the music recognition app Shazam. Audio publishers are bound to get a huge boost if Google surfaces playable audio clips in its news results, for example. And while some voice-command software may get a lot of flack for “eavesdropping,” the threat to user privacy is likely overblown. With all the new options to listen to voices and startups like Trint and Descript focused on automatic transcription of these voices (which can serve as huge tools for publishers), 2018 may just be the year of the voice.

6. Brand Safety Issues

Brand safety was a huge watchword this year, from fake Russian accounts on Facebook to the discovery Google helped advertisers target people searching racist search terms, to the more recent revelations that YouTubers were reaping huge financial benefits from posting disturbing footage of children. You can expect Facebook, Google, and other platforms to be under the microscope even more in 2018. While many publishers can crow about creating safe curated spaces for advertisers, they too need to watch out for problematic issues when using programmatic ads.

7. The Battle Against Fake News Continues…

The battle against fake news and the filter bubble on platforms may have felt like it reached fever pitch in 2017, but as the weaponization of social media around the world shows, it’s a topic that’s here to stay, especially with the 2018 mid-term elections on the horizon. Google struggles to separate rumor from fact during breaking news, Facebook is at the center of a Rohingya massacre in Myanmar, and the Philippines’ right-wing president Rodrigo Duterte has also been using the platform to undermine opponents — including human rights activists and publishers who leverage Facebook as their main medium of distribution. Plus, Russia’s utilization of “social bots” to influence the outcome of the 2016 U.S. election is the precise reason Google, Facebook, and Twitter had to testify before Congress. With Donald Trump’s recent suggestion that the Access Hollywood audio in which he bragged about sexual assault was fake, expect more scrutiny on fake news in audio and video. The battle is only beginning.

8. The Power of Blockchain

The recent attention on the skyrocketing valuation of Bitcoin may have raised people’s FOMO quotient, but the attention on the technology behind it — blockchain — could have a huge influence on publishers and advertisers. Not only can this cryptocurrency technology allow for efficient monetization of content, but as Daniel Newman writes in Forbes, it has the power to help curtail ongoing issues with ad targeting. “Because the chain is transparent and encrypted, companies can easily determine if the people viewing their ads are members of their targeted audience—or not—saving millions in ad spend each year,” Newman wrote.

Indeed, there are a myriad of ways marketers can leverage blockchain. Publishers too can reap the benefits. A new startup called Civil, for example, looks to leverage blockchain to create a journalism platform free from fake news, advertising and outside influence. Blockchain also has journalists talking about its potential impact on news publishing.

For all its potential, though, blockchain remains confusing to many people, so you can expect a lot of explainers in the new year as interest increases.

Looking Forward

It’s been a rough 2017 in many ways, and change is such a constant that it has become a way of life in digital publishing. But we can be sure that as digital advertising has surpassed TV ads for the first time that digital has stopped becoming the “other,” the “nerds in the corner” and has now become the center of publishing. So rather than pout and complain in 2018, it’s time to buckle up, sharpen our focus on new tech, new techniques, and new collaborations and partnerships, so we can make the most of this wild ride.

Perspectives | Policy

Discriminatory deals could close the open web

Earlier this week, we filed our formal comments with the FCC detailing DCN’s view on net neutrality. In the comments, we noted the potential hazards associated with allowing ISPs to give preferential treatment to some websites over other, particularly when it comes to those owned by the ISPs themselves.  

 

The issues really come into focus when you consider the case of Verizon. Over the last few years, Verizon has made a series of strategic acquisitions of digital content – first, by purchasing AOL and all its properties and, recently, Yahoo (which have been combined under the Oath brand). 

 

Many have speculated that these purchases were all about Verizon building scale to attract advertising dollars. And, if that was in fact their goal, Verizon is now heavily incentivized to maintain and even grow the audiences and platforms they have acquired. To do so, a natural next step would be for Verizon to provide faster access to its vertically-owned sites.  

 

In addition, Verizon would be disincentivized to allow the same speedy access to websites that compete with, say, Yahoo Finance. It’s not even a matter of whether a competing site could try to pay for preferential access (which on its own makes it hard for smaller content providers to compete). In this case, Verizon would simply want to ensure that Yahoo Finance gets the most traffic. And given its unique ability to control access speeds, it would be in a position to do so.  

 

It’s hard to imagine that a public company with profit motives and shareholder expectations wouldn’t make every effort to drive more traffic to its sites in order to show the value of these acquisitions. However, the larger issue here is that—as an on-ramp to the internet—Verizon could prioritize delivery of its websites, thus ensuring that consumers are more likely to access them. 

 

The same dynamic would play out in any space where Verizon has its own content. It is not a stretch to assume that Verizon’s shareholders would expect Verizon to provide preferential access to Yahoo Tech, Yahoo Beauty, Yahoo Sports, Yahoo Lifestyle, TechCrunch, and HuffPost. In short, other tech review sites, fashion magazines, sports sites, lifestyle publications, and news organizations would lack the ability to compete fairly.  

 

Adding to the problem is that there are only a handful of mobile broadband providers. (And, as we all know, mobile increasingly dominates content consumption.) So, if each of the mobile broadband providers has their own content for a specific vertical, the remaining content creators would be left without a chair in the game. In fact, they would find themselves at a significant competitive disadvantage. Instead of competing on quality of content, publishers would be forced to compete over who can be bought first by a mobile broadband provider.

 

We all agree that ISPs should not block or throttle consumers trying to access the plethora of available lawful content. But, we need to be equally careful to ensure that discriminatory deals don’t dramatically limit the number and variety of websites available to consumers. As the internet’s inventor Tim Berners-Lee said, “The important thing is the diversity available on the Web.” The Internet is a wonderfully weird place where innovation is the norm and a cacophony of voices flourish. Let’s keep it that way.

Perspectives | Policy

Unbridled tracking, zero rating, and how we’re about to break the internet

According to recent reports, Federal Communications Commission (FCC) Chairman Ajit Pai is preparing to roll back the net neutrality rules put in place by former Chairman Tom Wheeler. While we don’t know the exact details yet, Chairman Pai is aiming to restore the jurisdiction of the Federal Trade Commission (FTC) over ISPs in exchange for promises from the ISPs to not block or throttle content and to not engage in paid prioritization deals.

Let’s put aside the debate over whether the FCC or FTC is best positioned to police broadband providers and whether mere promises from cable companies will be enough to protect consumers. Make no mistake – there is a lot to consider there.

For now, let’s dig into what provisions of net neutrality are important for a free and open society. As we noted in our 2015 comments to the FCC, consumers should be able to access content they choose. Therefore, it makes sense to prohibit blocking and throttling by ISPs. Also, “paid prioritization” deals could potentially favor content creators with more resources and market power over non-profit or startup companies. “Paid prioritization” would also likely favor content companies that are owned by the ISPs. Certainly, without transparency and safeguards, “paid prioritization” quickly starts to feel like paying a ransom.

Missing the Plot  

What’s more concerning about Chairman Pai’s proposal is what is missing. Namely, the silence on “zero rating” plans and the lack of basic privacy protections for consumers.

During the debate over the FCC privacy rules for broadband providers, many cable lobbyists complained that these rules would create an un-level playing field. There was concern that ISPs would have more restrictions on their ability to surreptitiously collect and sell consumer data than companies like Google. To be clear, if you’ve watched the continued rise in the use of ad blocking software by consumers, then you know consumers aren’t happy with the rise in “big brother” data collection methods by corporate giants.

However, in restoring FTC jurisdiction, there is an opportunity to create a level playing field while at the same time providing some basic privacy protections for consumers. As I noted a couple of weeks ago, the industry’s self-regulatory code requires any company that tracks “all or substantially all” of a consumer’s activity on the web to obtain that consumer’s consent. Companies like Google and Verizon have already publicly promised to abide by these rules. If the FTC holds the industry to the promises made in their self-regulatory code, we would have a level playing field that begins to match with most consumers’ expectations under a flexible FTC enforcement regime.

Zero Rating Issues

“Zero rating” plans also need to be addressed. This is the practice whereby a broadband provider allows consumers to access content without counting that access against a data cap. ISPs tend to “zero rate” content that they own (see Verizon’s AOL and Yahoo content). As more and more content consumption moves to mobile devices (with data plans), “zero rating” will become a huge issue. Most consumers don’t have unlimited data plans and many broadband providers have stopped offering them altogether.

The concern with “zero rating” is that there are only so many content creators that can benefit. This is partly true because a broadband provider only wants one content creator per vertical. For example, AT&T might accept payment from sportingnews.com to “zero rate” their content. Verizon owns Yahoo Sports. But where does that leave every other content creator in the sports world? Doesn’t this create a barrier to entry for any startup? This quickly becomes a game of a musical chairs that doesn’t end well for consumers, innovation or minority voices.

Open or Closed

Content creators thrive in a competitive and open marketplace in which they compete on the value of their news and entertainment. Unchecked “zero rating” plans could have the same effect as ISPs engaging in blocking, throttling and paid prioritization.

We can and should have a robust debate about whether the FTC or FCC is best positioned to promote net neutrality. But let’s not lose sight of the opportunity to protect the internet’s promise of wide, open access and the societal good that promise has delivered since its inception.  Any net neutrality plan must also address “zero rating” and set a level playing field for consumer privacy protections.  Without these safeguards, the hallmark characteristics of the open web — diversity of voices, opportunity for discovery and freedom to innovate — are imperiled.

Advertising | Perspectives | Revenue

Ad blocking: No, we haven’t won.

About a year ago, Josh Benton of Harvard’s Nieman Journalism Lab asked me how concerned I was about ad blocking on a scale of 1-10. I answered “eight or nine.” And one year later, the situation has not improved: As of today it’s still a nine.

In the spirit of transparency, I thought the time was right to look at where we are in terms of ad blocking, if for no other reason than I don’t want my silence on the topic to suggest that the issue is less dire than it was during the flurry of discussion around it in 2015. Since then, DCN has conducted research on the ad blocking ecosystem – some of which has been released only to our member companies. We have also posed many questions about Google, the ad tech ecosystem and the actual flow of the monies.

The state of ad blocking today

Unfortunately, the ecosystem remains every bit as murky. The ambitions and fate of those profiting and suffering from ad blocking (including Google) have not yet been fully revealed. But one thing is crystal clear: The companies that create original content are being hurt the most by ad blocking because it prevents them from monetizing the audiences they attract. And the two companies, now known as the “duopoly” are likely hurt the least.

As predicted, the adoption of ad blockers continues to grow linearly according to PageFair’s latest Ad Block Report. While the sky is not falling, the U.S. desktop penetration did grow from 15% to 18% last year and this number matters … a lot. Despite this growth, the IAB oddly recently claimed victory over ad blockers “rendering them toothless” and suggesting the risk of “network-level ad-blocking has virtually disappeared.” This kind of thinking is where things get dangerous.

We have won neither the battle nor the war. In fact, PageFair’s report—which we have every reason to believe—clearly points to the contrary. Frankly, it’s for this reason that I’m writing now in parallel to our continued participation and support with other organizations on the new Coalition for Better Ads.

The danger is real

Here are three reasons we need to remain focused on ad blocking in order to maintain our ability to monetize audiences attracted by high-quality content:

  1. The companies in the ad tech ecosystem—where many of the ad blocking issues are forged—have very little incentive to be concerned about ad blocking. Their collective migration to the latest ad tech craze, header bidding, has increased their inventory and revenue access by an order of magnitude. It’s also widely recognized to have increased latency, data leakage and other vulnerabilities. So potentially good for revenues, arguably bad for consumers. The additional inventory dwarfs any modest increase in ad blocking so the ad tech companies’ incentives are in many ways at odds with consumers and content creators.
  2. Consumers are shifting to mobile, where ad blocking penetration is estimated at an immaterial 1% in the U.S. However, the value proposition of a mobile ad blocker is significantly higher (heightened concerns for security, user experience, data charges, privacy). So it’s risky to expect penetration to stay at 1% given that it’s currently 60% in parts of Asia, where ad blocking is built into the browser. The same functionality is already available in the States (through the Brave and Opera browsers). And not incidentally: In China, mobile users know how to change the proxy servers on their phones, so I’d expect Generation Z may soon be doing the same, in droves. And this is just one of the numerous ways in which ad blocking may rapidly impact mobile apps.
  3. Network-level ad blocking concerns will likely grow. The number one goal of the new administration’s FCC is to throw out the net neutrality rules. Yes, there is a rational argument against the current regulation. However, nearly 100% of the public wants something in place that protects the neutrality of the Internet against blocking, throttling and other nefarious practices. I’m pretty sure it is not a good idea to fight the Internet. To the point of ad blocking, if the FCC rules are thrown out and not properly replaced by Congress, there is nothing to prevent a carrier (why hello there T-Mobile!) from launching its own ad blocking plan. Meanwhile, the most powerful trade bodies in our industry have yet to take a stand in support of net neutrality (other than DCN, which is not conflicted on the issue).
Burning questions

So now that we’ve established that victory has not yet been achieved against ad blockers, here are some of the questions keeping me up at night:

  1. The financial impact of ad blocking trails its penetration mostly because advertising supply greatly outweighs demand. As long as there is considerably more desktop inventory than demand, then the financial impact is mitigated. But what happens when it doesn’t?
  2. The largest advertising company in the world, Google, is virtually untouched by ad blocking. Google has avoided most of the impact by paying to be whitelisted – as they’ve publicly disclosed – giving them a privileged position that, as far as I know, none of the nearly 80 companies inside of DCN have. Let that sink in. When a monopoly gets to set the rules…
  3. Privacy continues to be the third rail in the industry. The CMO of the largest advertiser in the world, Procter& Gamble, clearly expressed this concern a few weeks ago. The Chairman of the largest media buyer in the world, GroupM, has also called out this same concern. Meanwhile, the industry is aggressively pushing to keep the bar as low as possible, while cloaking the rapidly increasing level of tracking in darkness. This is happening through policy, as much of industry pushes to remove the FCC privacy rules on ISPs. It’s also happening through technology, as tracking has moved into digital fingerprinting and server to server sharing of browsing history. I know many people want to ignore it, but what if data leakage in the ad tech ecosystem is actually the common thread across the performance, security, transparency and consumer privacy issues that have resulted in a loss of consumer trust and rising ad block usage? There are both industry advocates and executives who make this argument.
  4. Facebook has opted to engage in a tech arms race against the very same engineers who are paid by the ad block whitelisting program. Facebook continues to fight a desktop war against ad blockers by circumventing the technology. Almost all of Facebook’s ad revenue growth on desktop came as a result of this tech hacking, according to their CFO during their earnings call. In mobile, Facebook is aggressively shifting content experiences away from the open web, reportedly even ignoring their browser experience, so that they can keep consumers in their app and fight back against ad blockers. Who is monitoring this?
  5. Who owns the number two blocker, Ad Block? At the very least, it’s dubious that a company with undisclosed ownership can block this much advertising. At the worst, it’s a clear-cut antitrust or national security issue to have that much control in the hands of an unknown actor. Can no one solve this riddle?

In the face of this uncertainty and looming unanswered questions, industry leaders need to refocus on meeting the underlying consumer needs. Yes, many articles have been written and many committees created. However, I challenge the industry to work with us, to dig deeper into the dynamics of ad blocking. As much as you might want to believe ad blocking to be a 2015 meme that’s now under control, that is entirely incorrect. Sitting idle while one company, whether it be Ad Block Plus or Google, controls much of the current future ecosystem could be the most dangerous failure of the Internet yet.

Perspectives

Consumer matters: trust, transparency and the open web 

I have no doubt the next year will bring meaningful developments in defense of the open web—the essential platform where publishers are able to distribute and monetize their content directly with consumers. On the open web—one in which information flows freely and gatekeepers are not able to restrict that flow—transparency rules, from sources to source code, and the most valued commodity is trust.

To that end, champions of the open web are now writing and debating rules that will impact the value of publishers’ relationships with their readers and viewers. It’s our role at DCN to ensure that the united voice of the 74 premium publishers in our membership is clearly heard.

Last week, DCN sent an important letter to the Federal Communications Commission (FCC) after it recently signaled it’s drafting the privacy rules it promised last year when it issued the Open Internet Order (aka “Net Neutrality”). Internet Service Providers (ISPs), which include both carriers and cable operators, have argued that the rules of the wider web are sufficient for them. Of course, Verizon Wireless famously proved otherwise last year.

DCN, as the voice of premium publishers, has asked the FCC to consider context and consumer expectations in writing these rules. Significantly, it appears that no ISP wants to be identified as holding a privileged position in being able to collect and use data on consumers. I’m not sure how this argument holds water considering the fact that consumers now keep personal, connected devices on 24/7 wherever they go. Consider that your mobile broadband provider can see all the activity on your phone—your web history, app usage, phone calls, friends and even your location history—and then tie that data back to the subscriber data they have about you. Clearly ISPs have a heightened responsibility to provide transparency, choice, and control for consumers.

ISPs have begun to fund research from respected academic and industry thought leaders in an attempt to prove that they are in an inferior position to companies like Facebook and Google in collecting this data. Let’s face it: There are also plenty of concerns about how Facebook, Google (and much of the adtech complex) mine data across the web and mobile as well, and our interest in a higher level of consumer trust is certainly not limited to the ISPs. All parties collecting data out of context of consumer expectations carry responsibility to be transparent and offer real choices to consumers. That said, just because some parts of the marketplace have systemic problems with trust doesn’t mean we should default to the lowest common denominator for ISPs. We should all aspire to do better – publishers as well, who carry the flag of trust as much as any party.

DCN’s focus on data ownership and consumer privacy is not only an effort for securing consumer trust but also an effort to secure the economics that will pay for the trusted content of the future. Location and behavioral data collected by third parties is what currently fuels much of the dysfunctional digital advertising marketplace. You know, the one where Google and Facebook eat half of the dinner while adtech gobbles up much of the marketers’ dessert. This market, unlike any other media, consists mostly of direct response advertising targeting thumb taps, installs, clicks and fleeting actions – not the kind of advertising that engenders consumer trust and funds premium content experiences.

Then, of course, there is the rising specter of ad blockers. The industry has rightly been up in arms over this issue for more than a year. The IAB, which represents ad tech companies, went so far recently as to call ad blockers “an unethical, immoral, mendacious, coven of techie wannabes” with “silly titles and funny walks.” Although it made for an interesting sideshow, this is a serious issue and we need to be clear on what is happening: Google, the single largest recipient and dependency of advertising revenues and by far the largest and most influential member of the IAB, is paying the #1 blocker, Adblock Plus (“ABP”), to have its ads “whitelisted” and thereby likely helping to keep ABP’s lights on.

However, pointing all of the blame at ABP and their sketchy business model only does so much because I’m not so sure that consumers care. If ABP and any other for-profit ad blockers went away tomorrow, there are plenty of non-profit ad blockers that would immediately fill the void. The best thing the leaders of our industry can do is to focus on solving the problem from the consumer’s perspective.

I see countless examples of DCN Member companies taking this approach and testing a wide range of possible solutions to ad blocking, from revamping ad and content experiences to consumer education to streamlining mobile experiences by reducing interference by intermediaries. And this month, I have the opportunity to explore approaches and issues from another vantage point at dozens of meetings with senior leaders of European organizations representing advertisers, agencies and publishers. As always, I’ll be leaning in, particularly focused on seeking consumer-focused insights that help advance the future of trusted content. I expect these insights to include thoughts on Google AMP, Facebook Instant Articles, ad blocking and an issue very much related and important in 2016—data ownership. I’ll keep you posted.

Data Security Header
Policy

FCC Wading Into Privacy Matters

In response to growing consumer concerns, the Federal Communications Commission (FCC) is beginning to dig deeper into consumer privacy issues.  And, as with their first foray into these matters, it appears the FCC will take a measured and thoughtful approach.

In its Open Internet ruling (aka “Net Neutrality”), the FCC decided not to waive the Title II privacy rules.  Instead, the FCC announced it would hold a separate proceeding to figure out how the old rules in Title II should be adapted for a broadband world.  As the FCC rightly noted, “broadband providers serve as a necessary conduit for information passing between an Internet user and Internet sites or other Internet users, and are in a position to obtain vast amounts of personal and proprietary information about their customers.”

The FCC subsequently held a workshop  with industry and consumer representatives to learn more about how consumer data is collected, used and retained by broadband providers.  Some workshop participants tried to argue  that ISPs don’t have access to any special set of consumer data and that apps and websites would have the same data, but common sense would tell us differently.  ISPs have a different relationship with consumers than just about any other actor in the digital ecosystem.  Consumers constantly choose which websites to visit and which apps to download, but they cannot avoid or shield their activity from an ISP therefore there are different consumer expectations in regards to their data.  In fact, the Federal Trade Commission (FTC) has been very vocal about the different expectations that consumers have with respect to 1st vs 3rd parties.

Now, as part of this privacy discussion, Consumer Watchdog is asking that the FCC require adherence to a Do Not Track (DNT) standard to protect consumers.  While there are real concerns about how a DNT standard would be administered and whether the FCC has regulatory authority to enforce it, the request isn’t unreasonable.  Even though very few companies honor it today, an increasing number of consumers are activating their browser’s DNT signal in an attempt to block being tracked by various parties across the web.  The World Wide Web Consortium (W3C) just this week completed a technical and policy standard for how companies should respond to the DNT signal.  Interestingly, the standard is not that different from the industry’s self-regulatory opt-out program and could provide a roadmap for the FCC and companies.

It is heartening to see the FCC take a measured and thoughtful approach to learn more about how privacy rules should be implemented for broadband.  There is a real opportunity for the FCC to build upon and even strengthen the fine work of the FTC. This important effort will ultimately enhance consumer trust and grow the opportunities for the brands they love.

Perspectives

On Lions and Lambs

Jason Kint Headshot with TwitterWe’ll use this space going forward to bring you a quick recap of the month: ICYMI. So let’s take a look back at March, which proved to be a month that delivered few answers. The most popular question by far was how to deal with Facebook: Are they a lion or a lamb? Should you hold back your crown jewels as Nick Denton argued last month at Code/Media or is it inevitable that you must go where your audience is going. Some even argue that Facebook has already won. The debate on this one is far from over.

The hotly anticipated Net Neutrality Order was released on March 12th and it matched up quite nicely with DCN’s filed comments to the FCC. In fact, we were cited four times in the final Order, all in areas vital to content creators such as free speech and innovation. And in just a matter of days, the first lawsuits challenging Net Neutrality were filed.

Sadly, if unsurprisingly, there was very little activity as a result of the White House release of its Privacy Consumer Bill of Rights. This is unfortunate as it was intended to be a conversation starter. Consumers will be the ultimate losers if these important issues fall by the wayside as they’re left without any legitimate options to protect their privacy as they browse across the web. This will continue to drive down their trust in digital media including the publishers (and marketers who fund it). We’ve started to more closely track the rise in adoption rates of ad blocking software and urged companies to “connect the dots” between the nefarious web and a new generation of users who are blocking out all ads.

In related news, Nielsen purchased one of the largest data brokers on the planet. And Oracle purchased BlueKai last year. Which DMP is next? This is a question that should be on your mind.

DCN spent time at a number of industry events in March. The ARF (Advertising Research Foundation) had their annual Re:Think conference March 16-18th in NYC where researchers from all over media came together to debate the future of their craft. The 4As held their annual Transformation conference while the ANA held its Media Conference. Both conferences set record attendance. “Trust” seemed to be a common theme as the buy side deals with the black box of programmatic ushering in arbitrage, rebates, and junk ads and at its worst non-human traffic. Automation isn’t going away; it is part of our future. Nevertheless knowing who you’re doing business with and how they do business will become key themes to good automation practices.

As part of our effort to expand our footprint and influence in DC, DCN sponsored the Center Democracy and Technology’s annual “Tech Prom,” which is attended by thousands of tech policy people from companies and consumer advocacy groups as well as all the major policymakers from the FTC, FCC and Capitol Hill.  Chris Pedigo, DCN’s SVP for Government Affairs was recognized on the Host Committee.

DCN launched a couple events of its own in March starting off the month with its first “Digital DC” event graciously hosted by member company, National Geographic. March closed with DCN traveling to Vail, CO where I had the opportunity to host the Publisher Town Hall at Digiday’s Publishing Summit. Digiday EIC Brian Morrissey and I also moderated the first “DCN: The Next Conversation” over a private dinner with a number of senior execs at DCN member companies. We had some great discussion about creating energy across diverse workforces, specializing in skills and adapting to the accelerating change all around us.

Also in March we launched the first of several Board committees to leverage the expertise and input of our members to drive action on key issues that impact the business of digital content companies. The first two committees focus on Fraud and Viewability and are charged with identifying initiatives that DCN can develop to move the needle by influencing the industry debate and providing resources to the membership on these topics.

And finally I want to say R.I.P to GigaOM. Gone before its time, it reminded us how fleeting success can be in digital media. DCN exists to pave the way for the trusted content of the future. This means building and evolving sustainable brands which can stand the test of time. Om Malik’s creation produced thought-provoking work created by some of the most provocative and hard-working reporters in the business. But the forces at work in digital media are powerful ones and GigaOM vanished as quickly as it appeared.

These March lions show no sign of going out like lambs any time soon.

Jason Kint Signoff

Perspectives | Policy

Between Consumers, Innovators and Open Internet, FCC Chooses All of the Above

Last week, the FCC released the details of its Net Neutrality order. Looking past the sound bites from both sides of this debate, the FCC appears to have a struck a delicate balance that will ensure consumers can continue to enjoy access to the digital content and experiences they love and, at the same time, preserve the ability of current and future content creators to innovate.

The crux of the order is the ban on blocking, throttling or prioritizing content. Rightfully, the FCC is seeking to preserve consumers’ unfettered access to content or experiences on the Internet. Just as importantly, however, the order also protects the ability of content creators to reach their audience without having to seek the blessing of the ISPs.

In the absence of this order, future content creators might have to pay ISPs just to receive fair treatment of their content or, worse, find themselves shut out in favor of content created by affiliates of the ISP. To be clear, large and established corporations would probably do very well in a world where broadband providers served as gatekeepers of the Internet – the small and game-changing innovators, well, not so much. The FCC should be applauded for going to great lengths to ensure that the consumer experience and content creators are protected.

Another key component of the order is the requirement that a broadband provider provide transparency about “the network management practices, performance, and commercial terms of its broadband Internet access services.” This kind of transparency is vital to helping consumers fully understand the internet services they have purchased and whether they are getting full value. This information is also critical to content creators who need to know that new applications, content and services will operate as expected.

The FCC also declined to waive (or “forebear”) the consumer privacy requirements under Title II although they won’t apply them immediately. Instead, the commission intends to hold a workshop to explore how the Title II privacy provisions should be implemented to protect consumer privacy. As the FCC rightly notes, “broadband providers serve as a necessary conduit for information passing between an Internet user and Internet sites or other Internet users, and are in a position to obtain vast amounts of personal and proprietary information about their customers.” As we’ve written about before, and the FCC agrees, consumer trust is critical to harnessing the full potential of broadband internet services.

We argued in our comments to the FCC last summer that the FCC should focus their work on the consumer experience. With this order, the FCC has taken important steps to encourage investment and innovation in content creation for consumers, and ensure that the Internet is an open platform that supports consumer choice and the open exchange of ideas and information.

Perspectives

FCC Approves Net Neutrality

The Federal Communications Commission by a 3-2 vote today voted to reclassify broadband internet service as a public utility. This will prohibit Internet service providers from blocking Web traffic or charging websites for priority service.

Jason Kint, DCN CEO, commented:

We appreciate the FCC’s action today because it starts with the premise that the consumer experience should not be compromised.  Consumers’ access to great content and experiences on the Internet should be protected.  Under these rules, future and current content creators will continue to have the ability to innovate and connect with their consumers.

Related: FCC Close to Revealing New Net Neutrality Regulations

Perspectives | Policy

FCC Close to Revealing New Net Neutrality Regulations

FCC Chairman Wheeler is expected to unveil a new plan for Net Neutrality regulations in the coming weeks.  If reports prove correct, the new rules would reclassify broadband as a Title II service, applying regulations to broadband and mobile internet that some have called “utility-style”.

The cable industry has vigorously opposed this approach for years, arguing that Title II would constrain the development and deployment of broadband. Meanwhile, wireless carriers believe Title II would be wholly inappropriate for mobile. At the same time, with a newly won majority in the House and Senate, Republicans may even try to proactively move legislation to head off the FCC’s efforts.

While the FCC’s intent is to require ISPs to treat all web traffic equally, with no blocking and no throttling, and to ensure that consumers have unfettered and non-discriminatory access to the internet – a laudable goal. The Chairman’s proposal is not likely to be black and white. The FCC could broadly apply Title II while also providing specific relief (or “forbearance”) from certain requirements and exempting certain parts of the ecosystem. Indeed, the FCC is widely expected to grant forbearance with regard to pricing – meaning they won’t regulate or set prices for broadband internet access. Also, the FCC has suggested that there may be instances in which prioritization of certain content may be acceptable. We would also suggest that–as we argued in our comments to the FCC–the regulations should not extend to websites or edge providers since the federal government should not be in the business of regulating content creation or distribution.

The FCC should carefully craft rules that will allow the Internet to continue serving as the open platform that has been its defining characteristic. It is critical that the FCC rules allow for the next generation of content creators to flourish and ensure that consumers can continue to enjoy access to all the content and services they demand and expect.

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