Adblock as a Tragedy of the Commons

When consumer attention, property rights, privacy rights, media ethics, and market misalignments collide, monopoly wins.


The Tragedy

On the eve of the launch of iOS9 and its Content Blockers, Joshua Benton of the Nieman Lab at Harvard, interviewed Jason Kint, CEO of Digital Content Next (DCN), the trade leader of the “Premium Publishing” industry. They took a deep and honest dive into the adoption of adblocking and privacyware. I was impressed with their rational approach. They both exuded composure at the precipice of an existential crisis. This industry has smart leaders and a steady stream of challenges.

Benton and Kint both agreed that we are living through a tipping point that ranks at “8 or a 9” out of 10 (total meltdown.) They use the expression of a “Tragedy of the Commons” to describe the situation. It’s an apt way to describe this media and technology event. They mention it in passing and don’t unpack it. I’ll try to do that here.

I’m also reframing it in a way that expands their concerns about adblocking beyond premium publishers. What about the ethics of media monopoly, the platforming of media culture, and the strangulation of the Open Web to favor proprietary formats and marketplaces?

The tragedy here is that consumers demanding a better product may hasten the demise of independent media, centralize and expand the power of commercial surveillance, and reduce the number of companies that control our pipelines to news and information.

We think we’re doing the opposite of this when we pick an adblocker. It’s a classic case of “be careful what you ask for” with the law of unintended consequences. Read Casey Johnston’s “Welcome to the Block Party” for The Awl and Nilay Patel’s “Welcome to Hell” for The Verge, who both make razor sharp cases against adblocking. Everyone considering an adblock installation should read these first. Although, no good business model can be predicated on “should.”

When Benton and Kint consider scenarios in the podcast where consumers have to be convinced to turn blockers off, you get a real sense of the severity of this situation.

The Commons

Other technology journalists, including Mathew Ingram for Fortune, downplay it. Don’t feel bad about adblocking. This is just the invisible hand at work correcting a misaligned market dynamic and so it will be cruel and merciless. It’s just business. There will be blood. Things will get better.

It shouldn’t have been surprising that new adblocker apps would pop to the top of the download charts because they solve real problems for consumers. They save your battery, your data plan, your time, and your patience. Who doesn’t want this, even if you fully respect that advertising pays the bills?

While we’re asking, why do I even want my ads targeted? Kint says that adtech really has “no right” to track our browsing habits to figure out what ads we want because it is not even necessary to monetize. Mythbusted.

The most insidious form of behavioral advertising is perhaps retargeting. It works (those creepy ads that follow you around) and that’s why advertisers use it. We still get spam because it still works. So does phishing. Was this retargeting technology the last straw for everyone, the total disregard for the consumer’s trust? It went from targeting to stalking. What’s the true cost now?

Via @jason_kint on Twitter

The billions of dollars invested in adtech propping up digital publishing has been taking $0.60 on every “viewable” ad-dollar as its commission. However, this industry seems to have spent approximately $0.00 of that ad-dollar on the consumer experience.

The “Internet’s Original Sin” wants to be cleansed and forgiven. If the Catholic metaphor doesn’t work for you, Doc Searls equates adtech to cancer, with the blockers as the chemotherapy. Searls has also employed a wheat-from-chaff and we’ve both tried fracking bans as other ways to frame the issue as a tragedy of the commons.

The Industry’s Privacyware

Of the litany of issues that people cite to legitimize using adblockers, the protection of privacy is a justifiable concern. During the music industry’s filesharing crisis with Napster and Bittorrent, copyright infringement was clearly occurring because companies were losing cash from lost transactions.

The publishing industry cannot make the equivalent claim in the case of adblocking as a form of piracy. Because we tacitly and explicitly consent to commercial surveillance to enable wholesaling and arbitrage to extract and refine value from data to set pricing in a macro-marketplace, the comparison to piracy doesn’t survive a basic analysis. There isn’t a direct payment being disrupted, but rather a highly abstracted exchange, subject to fraud, waste, and elemental supply and demand. No one really knows how much our individual data as a consumer is worth because you can’t put a useful price tag on it.

As our content consumption data is centralized into platforms like Facebook, away from the creaky obesity of adtech, fewer companies will own our data and the power of commercial surveillance becomes concentrated rather than diffused. Looking at the interfaces of Facebook’s privacy controls against the digital advertising industry’s AdChoices platform, we can see how a trade group’s attempt to address privacy is an unmitigated disaster. Neither AdChoices nor Facebook respects the “Do Not Track” (DNT) protocol. If they did, it would make it much easier to reestablish trust between consumers and producers.

Facebook’s interface to opt-out of ad targeting and tracking.
Facebook tries to expose the topics that constitute your interest profile and allows you to add and remove topics.
The Digital Ad Alliance’s AdChoices program for the US is inherently broken by requiring third-party cookies to be unblocked. This is what outright contempt for user experience looks like.
Ghostery’s Enterprise LiveScan product exposing the complex surveillance network of the adtech driving revenue for The Verge

Adtech, Paytech, Crowdfund, or Adblockchains?

What caught most observers off guard is that so many people were willing to pay for an adblocker. The bestselling blocker by Marco Arment was pulled after 36 hours and six-figure revenue because it “just doesn’t feel good” to succeed in this way and presumably receive cease-and-desists.

I’ve been testing Safari Adblock and it should end up a top free blocker, assuming it’s released, differentiated as highly customizable. Unlike Arment’s paid app, this free Content Blocker isn’t an all-or-nothing adblocker for profit. By contrast, it supports whitelisting and its blocking rules are publicly shareable and viewable.

I suspect the release delay means that Apple is asking Luke Li to improve his UI (it needs work) or change the name but it’s commendable (as these things go) for being the most ambitious in its customizability and one of the few I’ve examined that offers whitelisting features. It’s also possible that Li received a preemptive cease-and-desist.

Details like this do factor into Kint’s ranking this crisis at 8 or 9. The ability for publishers to restore trust with consumers is up against a “blunt instrument.” Literally, a few iOS coders are reshaping an industry as side projects. They are learning about the industry they have disrupted after the fact.

The whitelisting situation is initially terrifying for content creators. The most widely cited, lowest priced, app called Crystal by Dean Murphy has no settings. No whitelisting and an opaque blacklist. Simplicity is what users want, he claims. He’s right about that.

We immediately observed the influential John Gruber demand that his supporting ad network, The Deck, be whitelisted on Twitter. I called it an adblockchain. We’ll see more of this kind of public negotiation of blocking rules to help restore the lost trust and lift the veil on the exchange dynamics.

Adblockers Sell, Articles Won’t?

The publishing industry’s attempts to sell its content products digitally have failed over the past decade. Apple retired its replica edition (glorified PDFs) platform called Newsstand in iOS9, replacing it with Apple News. You can still purchase digital replica editions, but this market is literally on Social Security.

By failing to invest seriously in digital content e-commerce over the past decade, publishing is in a terrible position right now with no fallback and a now painfully obvious addiction to a harmful business model that virtually everyone detests. The exception to that generalization are the folks who work at adtech, chum box, click bait, and affiliate site companies now updating LinkedIn profiles.

The industry’s only attempt to offer a value bundle in an all-you-can-eat package called NextIssue will not succeed because just like the rest of the publishing and adtech infrastructure, it’s based on technology that’s more than 15 years old. It’s being forced into retirement, looking out 15 years from now. It’s not the Netflix-for-News we need because it retains the print bundle form-factor rather than unbundle articles into personalized and publisher branded topic streams offered by subscription rather than ad-supported.

Via @jason_kint on Twitter referencing Sourcepoint/comScore via Business Insider

Industry voices consistently insist people won’t pay for content. Yet they’re buying adblockers because it’s more frictionless than subscribing or signing into a paywall. Microtransactions are being tested in a few European markets who suffer from higher adblocking penetration compared to the US and the UK.

Looking back, the publishing industry hasn’t experimented with innovative payment models. They focus on telling stories and making great content. That’s why we love them and why we need them.

There are cogent arguments that crowdfunding is a workable model and journalism is boldly experimenting, learning from failures, and sharing insights about successes.

To give us what we want on digital platforms for free, publishers have sacrificed 60% of their revenues on adtech leaving no margin to invest in paytech. They have not been spending the last decade relentlessly figuring out how to push the design and technology up to the task of selling digital content that wants to be free.

In the face of this storm, it’s reassuring that Jason Kint is focused on restoring trust with consumers. The music and film industries have gotten there, the piracy threat now lore. Magazines and newspapers, not so much, apparently.

Monopoly is the problem because it is the solution to the problem.

All this aside, the harrowing realizations bravely exclaimed by Casey Johnston and Nilay Patel, are that adblock adoption will mortally wound the businesses that make what we want. These rare journalists who understand this complex technology and the existential implications are correct in pointing out the harm of adblockers. They make strong cases, despite blatant biases, that it will hasten the consolidation of the market making a regrettable situation terrible, if not dystopian.

The four horsemen of the adblockalypse, Apple, Google, Facebook, and Twitter, seek to monopolize access to information by killing off the adtech middleman layer and swallow premium publishers into their platforms, competing for market share of the attention economy. Apple is well positioned to exploit its position because it has existing relationships with the content industry, impeccable trust with its consumers, and all our credit cards are on file. They are really the only company poised to create the frictionless content purchase experience that consumers will accept. One tap, fingerprint scan. Cha-ching. Marco Arment probably proved that if Apple News ever offered an ad-free subscription experience, we would buy it.

The notion of the Open Web has been critically injured as collateral damage as news and entertainment become more fully platformed into a proprietary format and machine-managed selection and presentation in apps governed by an OS, not a standards committee or wide open knowledge linking. Apple’s tvOS and watchOS don’t even offer web browsers.

Speaking of TV, is that where this is going? Publishers are relegated to logo badges and articles are streamlined further into highly personalized, homogenized, standardized feeds. Distributed publishing is becoming a wire service, or at least more like television networks and channels.

Ethics

There is a strong argument to not install a Content Blocker into iOS9 and developers are having second thoughts. Despite the sound and fair thinking of basic business principles, a startling majority of voices on the topic, including myself at times, seem effusively reconciled to intentionally injure publishers to purify us of this failed adtech layer. Are we all conflicted and that’s why everyone is talking about it?

It seems unlikely that anyone can turn the tide and win a mass behavior shift and convince up to a third of the audience that adblocking is absolutely the equivalent to theft, without equivocation. Unfortunately, adtech is so atrocious and the implementation of digital ads have crossed so many lines demonstrating its supreme ineptitude as it scaled to mobile, the people have decided that it’s a scourge and it’s marked for death. There will be collateral damage. “It’s on its last legs.”

A content bubble will pop and a big market will correct. Spreadsheets will need to be totally rejiggered as the models and formula they calculate are collapsing before our monetized eyeballs. Fewer companies will filter and manage access to our information and they will be well positioned to extract flesh from content providers in the future as they monopolize audiences and exert complete control over design, technology, and the user experience.

The industry has had months, if not years, to prepare for this moment of reckoning. It was easier to keep going and see how it panned out. No one could have prevented this.

They didn’t build that thing that would kill them and that’s the Innovator’s Dilemma. The dudes writing adblockers for sale aren’t immoral businessmen, especially when you play by the rules of Silicon Valley.

Hindsight

This fate that unfolds before us was sealed when publishers decided in the early aughts to outsource ad sales to adtech because advertisers bought into the myth that behavioral advertising is even necessary. We’re now left wondering if supremely complex, VC-funded, arbitrage markets for attention are sustainable at scale.

Making a bad situation worse, magazines and newspapers had captive audiences of affinity groups and loyal tribes. But they didn’t realize it and they outsourced reader engagement to the social networks, especially Facebook, Twitter, and Snapchat.

When you outsource your value chain, you commoditize your product and sacrifice your differentiation, and become less defensible. Media companies realized they needed to transform into technology companies about 15 years too late. By demanding a better product, we help monopolize a solution, even if it’s against our interests in the long run. That’s the Tragedy of the Commons.