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SoylentNews is people

posted by martyb on Sunday July 19 2015, @09:46PM   Printer-friendly
from the averse-to-adverts dept.

Australian Broadcasting Corporation carries a piece of analysis/commentary on the societal ethics of advertising. I found it fascinating by the depth of arguments (true, there is a bias, but it's likely that most of us soylents share it); do take your time to read it in full, my attempts to summarize it below is bound to fail:

Advertising is a natural resource extraction industry, like a fishery. Its business is the harvest and sale of human attention. We are the fish and we are not consulted.

Two problems result from this. The solution to both requires legal recognition of the property rights of human beings over our attention.

First, advertising imposes costs on individuals without permission or compensation. It extracts our precious attention and emits toxic by-products, such as the sale of our personal information to dodgy third parties.

Second, you may have noticed that the world's fisheries are not in great shape. They are a standard example for explaining the theoretical concept of a tragedy of the commons, where rational maximising behaviour by individual harvesters leads to the unsustainable overexploitation of a resource.

A classic market failure

The advertising industry consists of the buying and selling of your attention between third parties without your consent. That means that the cost of producing the good — access to your attention — doesn't reflect its full social cost.

...Since advertisers pay less to access your attention than your attention is worth to you, an excessive (inefficient) amount of advertising is produced.

...It's a classic case of market failure. The problem has the same basic structure as the overfishing of the seas or global warming. In economics language, people's attention is a common good.

Why now?

First, as we have become more wealthy our consumption decisions have become more valuable...

Second, a shift in social norms has made it more acceptable to sell other people's attention.... Anyone in a position to access our attention, like the managers of pubs or hockey arenas, will be approached by multiple companies offering to pay a fee to install their advertising screens, banners, or cookies...

Thirdly, technology has made advertising even more intrusive. Not only is it now possible to print advertisements on grocery store eggs and to put digital displays above pub urinals.... Every moment we spend on the internet or with our smart phones is being captured, repackaged and sold to advertisers multiple times...

Counter-counter arguments: How economists defend advertising and why it isn't enough

  1. The direct value of advertising First is that advertising gives consumers valuable information about the sellers and prices of products they want to buy. The favoured example here is the classified ads section in newspapers.... Perhaps it was the case in 1961 that consumers struggled to find such information for themselves. But it is hard to see how this can still be the case in the internet age...

    Advertising can be used to reduce competition: high spending by rich established players drowns out information from smaller newer competitors and thus creates an entry barrier, converting markets to oligopolies...

    Second is the counter-intuitive claim that brands communicate their trustworthiness by their conspicuous expenditure on advertising not by what it actually says....[but]Companies wanting to demonstrate their confidence in their products don't have to waste so much of our time to do so. There are all sorts of more constructive ways of spending money conspicuously.

    Third, is the social status that advertising can confer on a product and its consumption. What's the point of buying a Rolex or Mercedes unless the people around you know that it is expensive and are able to appreciate how rich and successful you must be? The business logic here is sound, but not the moral logic.

  2. Financing public goodsAdvertising is the financial model for many pure public goods like terrestrial television and radio, as well as club goods like newspapers, Google's search/email and Facebook... Advertising provides an alternative revenue source that makes it possible to profitably provide such services universally at the marginal cost of production — that is, zero.

    There are alternatives. If these things are so valuable to society there is a case for supporting them from with taxes — grants, license fees (many national broadcasters) or payments for ratings. This is a well-established system for funding public and club goods...

    Alternative models, like that of Wikipedia, are sometimes possible and are more socially — that is, economically — efficient. Wikipedia's value to consumers is in the hundreds of billions of dollars while its annual operating costs are only $25 million...
      Obviously Wikipedia's operating costs are so low, like Mozilla's, because of its volunteer labour force. But that fact just makes one wonder why we couldn't have a "democratic" Facebook too, and whether that would not be superior from a social welfare perspective to the current "farming model" of extracting maximum value from its members-cum-livestock.

The right to preserve our attention

Advertising is a valuable commercial opportunity for businesses with access to consumers' attention, or their personal information. For the companies that buy and sell our attention it is — as all voluntary transactions must be — a win-win. But advertising lacks the free market efficiency that is claimed for it. Advertising is made artificially cheap, like the output of a coal burning power station, because the price at which it is sold doesn't reflect its negative effects on third parties — us.


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  • (Score: 4, Informative) by NCommander on Monday July 20 2015, @12:56AM

    by NCommander (2) Subscriber Badge <michael@casadevall.pro> on Monday July 20 2015, @12:56AM (#211229) Homepage Journal

    I've described SoylentNews's business model to quite a few MBAs, and I've been told it wouldn't work. I've been laughing at the irony for the last year. SomethingAwful basically runs off a similar model that we do, with the exception of requiring pay-to-post. They're still alive and kicking.

    For small websites, cheap hosting will cover you, but if you've got a real community, its not unrealistic to ask members to pitch in to pay the bills (I vaguely remember that due to traffic and ezBoards pricing, gold community was something like $300 a year). If reddit was privately owned, or non-profit, I'm pretty sure they could cover their hosting and legal costs off gold subscriptions + gilding. I used to frequent a webform known as "Sonic 2 Beta" on ezBoard, and they were able to get their community together to buy premium subscriptions to keep the ads off their forums until they migranted to dedicated hosts.

    Long term, I'd love if we grew to the point that we could hire staff, but even if that never comes to be, I'm fairly sure we'll be able to cover our hosting costs more or less indefinitely as long as we continue to support the community.

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