Internet Users Value Site Content and Their Own Privacy

Once again, pro and con arguments for tolerating internet adverts are in the news.  Google is refining the standards for internet adverts (as only Google has enough clout to do).  As well, there are two scholarly papers on the topic: one (by Caleb Fuller) assesses whether consumers value privacy enough to pay for content directly instead of through invasive adverts; and the other (Shiller, Waldfogel and Ryan) gauges the loss of content that will occur if sites convert to paywall instead of purely advert supported.

To supplement the revenue from its civilized adverts, the Wall Street Journal (WSJ) uses an intelligent paywall approach.  When a non-subscribing visitor arrives, WSJ launches machine learning to take the guesswork out of how many stories, or what kinds of stories to let readers read for free, and whether readers will respond to hitting a paywall by paying for access or simply leaving.

WSJ’s smart paywall seems to work. The WSJ now has 1,389,000 digital subscribers, up 29% from a year ago.  The Financial Times (FT) also uses an intelligent paywall analysis to add subscribers.  FT has 700,000 digital subscribers out of its 900,000 in total circulation.  Perhaps equally important to WSJ and FT success is the caliber of adverts that run on pages behind their paywalls.  There is nothing too annoying and nothing too distracting, although some adverts might be chosen by the reader’s earlier browsing.

Most of the academic journals operate a hard paywall with subsidies only for verified students. To allow for some free academic papers access, Wiley lets the author of a paper pay for its publication, thereby allowing visitors free access to it.  Generally, journals do not allow a visitor to see an entire journal paper for free, and they set the single article price high enough to dissuade visitors who have just a casual interest.

Recent research by Caleb Fuller tackled the issue of why people who profess a high interest in privacy nevertheless browse through sites where their personally identifiable information (PII) and browsing history are being captured, ostensibly to serve up targeted adverts.  His research indicates that those internet users value access to the content more than they regret the loss in privacy.  They ascribe a low value to privacy — “82% of Google users are unwilling to pay anything for increased digital privacy.  His research nixes the claim that the internet users are unaware of what is being done with their PII and browsing history – the behavioral bias caused by so-called asymmetric information.  Fuller’s surveys also indicate that 71% of respondents said they would prefer not to be tracked, but of this group, 74% are unwilling to pay anything to retain their privacy.

Not all websites are equally attractive to internet browsers.  Many people reject sites inside a paywall because the cost of access is specific and real, but the value of the content is subjective and on any given day, unknown.  Some may have insufficient interest in the content that the site typically offers.  On the other hand, other sites attract plenty of interested readers even for limited “peeking” arrangement and adverts that increase the publisher’s revenue.  Some sites require us to abandon the instincts to protect our privacy.  Other sites are best visited while “wearing” a protective adblocker that shields us from ads and sometimes denies us access to content.

Google is incorporating the Coalition for Better Ads’ standards into its Chrome adblocker.  Most publishers welcome the new advert standards but are uneasy that Google can brandish enough raw power to revamp standards for the advert-supported Internet.  The decision to ditch junk ads is a defensive one for both Google and publishers.  Third-party ad blocker use is exploding, with as many as 615 million devices world-wide using them.

Ad blocking software allows users access to some information without generating ad revenue for site owners. A recent study found that “each additional percentage point of site visitors blocking ads reduces its traffic by 0.67% over 35 months.” As sites retaliate against adblocking, the revenue impact is compounded. Ad blocker users learn where not to visit, and adblocker users who do visit blocker-hostile sites do not generate advert revenues.

With 615 million internet users using ad blockers, the shrinkage in advert revenues must be painful.  The financial pain could double if the European Union increases hostility toward internet advertising because of social media’s and advertiser’s unauthorized invasions into personal privacy.

Of course, there is an unpopular middle ground.  Sites cold run adverts without allowing advertisers to harvest internet visitors’ PII and browsing history.  If the EU continues to pressure social media and the enablers of internet advertisers, some sites will erect European versions of their sites.  That could be a welcomed destination for EU and US audiences who want both the content and the privacy.

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