To fully grasp the challenge facing wireless providers as we make the transition from wireless voice to wireless data, it is helpful to put some ballpark numbers around current usage levels. Today, the average voice-only customer consumes something like 50 megabytes of data every month. For that, they pay about $40, or about $0.80 per megabyte. That's 70% of wireless industry revenues. Text messaging generates another $10 per month for a minuscule amount of data (in fact, arguably no throughput at all, since text messaging travels in a signaling band rather than in the carrier band itself). Let's call it $1,000 per megabyte. That's another 15% of industry revenues. On a blended basis, then, that's $1.00 per megabyte for 85% of industry revenues.

And then there's the iPhone. By some estimates, the average iPhone user consumes as much as 800 megabytes per month. Take out their 50 Mb for voice and you're looking at 750 Mb of data... for an additional $30. For the mathematically challenged, that's a princely sum of... wait for it... four cents per megabyte. Worse, we noted that the FCC's wireless net neutrality policies posed the risk of "bandwidth arbitrage," where low bandwidth services (at $1.00 per megabyte) would be replaced with free or almost free applications that ride on $0.04 per megabyte data plans, and where carriers' hands would be tied to prevent it. Taking a business that is currently getting $1.00 per megabyte down to just $0.04 per megabyte is, well, hard. And lest anyone think that this threat is idle fear-mongering, Google's acquisition last week of Gizmo5, a wireless VoIP specialist, should give one pause.

According to the FCC's most recent data, there were over 59 million mobile wireless high speed lines.

In addition, mobile wireless broadband growth continues to outpace every other broadband platform, with net additions between December 2007 and June 2008 greater than those of DSL and cable modem combined.

Mobile data and Internet traffic will increase 66 times between 2008 and 2013;

By 2010, "mobile broadband penetration will surpass fixed penetration globally."

The simple task of watching a YouTube video consumes 100 times the bandwidth of a voice call.

The mobile data traffic footprint of a single mobile subscriber in 2015 could very well be 450 times what it was in 2005.

These projections are consistent with mobile broadband providers' experiences to date. For example, AT&T noted that its wireless data traffic has increased nearly 5,000 percent in the past quarters and other carriers have likewise reported dramatic increases. Similarly, since T-Mobile began offering its G1 smartphone, customers of that device use, on average, 50 times the data of the average T-Mobile customer.

PFF will be hosting a debate about these issues on Tuesday, December 1st at 9am at the National Press Club in Washington, D.C. The event is called, "Let's Make a Deal: Broadcasters, Mobile Broadband, and a Market in Spectrum." Seating is limited, so reserve your spot now by RSVPing here. We've got a terrific lineup for the event, including:

• Blair Levin, Executive Director, Omnibus Broadband Initiative, Federal Communications Commission


• Coleman Bazelon, Principal, The Brattle Group


• David Donovan, President, Association for Maximum Service Television, Inc.


• Paul Gallant, Senior Vice President, Washington Research Group


• John Hane, Counsel, Communications Practice Group, Pillsbury Winthrop Shaw Pittman LLP


• Kostas Liopiros, Principal, The Sun Fire Group

Last year at about this time, I wrote a short piece about the results of an FCC Office of the Inspector General semi-annual report on the FCC's administration of various universal support funds, including the TRS fund. All telephone consumers pay into the Telecommunications Relay Service (TRS) fund via assessments on their phone bills. In 2008, these TRS fees totaled about $540 million. The TRS fund has growth exponentially in recent years, largely on the basis of the manner in which it supports video relay services. The FCC's rules permit reimbursements for the video service that can totally hundreds of dollars per hour, so accurate billing of minutes of use are particularly important.

Among the many problems identified by the OIG internal reporting, cost standards and cost controls appear to have gone missing from the TRS Fund program.

The worked (sic) performed . . . found that TRS providers' processes for accumulating and reporting minutes of services provided and related costs were not always adequate. This resulted in some TRS providers being paid for unallowable minutes of service from the TRS Fund. The audit work also concluded that methodologies used by TRS providers for accumulating and reporting minutes of services provided and related costs were not uniform. The increased risk that unreasonable, unallowable, unnecessary and inaccurate costs were considered in the rate used to reimburse providers from the TRS fund. These risks could result in rapid cost growth and require higher funding rates. (emphasis added)

My translation of this finding was that the TRS rate base was "at risk" of containing unreasonable, unallowable, unnecessary and inaccurate costs due to irregular and inadequate controls. That is, waste, fraud and abuse may have added to the tremendous growth of the TRS Fund over the last ten years, but one couldn't be sure because recipient internal controls are lacking.

The OIG report had revealed that the seven providers who were the subject of the performance audits received 15 percent of TRS payments made between 2006 and 2007, and that an eighth failed to provide enough cost and billing information to allow completion of its audit. Thus, a small sub-set of providers may account for a large percentage of the cost increases and at least one of them was either uncooperative or incapable of supplying the requested information to the auditors.

Second, the OIG report singled out one specific form of TRS as likely to have been overpaid: video relay services. It appears that the current compensable hourly rate for VRS is $376.11 (out of a maximum of $404.17). Yet the median rate of pay for a VRS interpreter is only $17.79 per hour, leaving "approximately $385.32 or more of gross margin per reportable hour to cover the other costs associated with the provision of VRS telecommunication services. The other cost associated with VRS discussed in the OIG report is broadband service. Significantly, the report states that "the hourly margin, when compared with the costs of broadband services, suggests that the FCC needs to look much more closely into the allowable expenses and the capital costs that underlie the cost projections that VRS providers submit to the FCC in setting the rates that VRS providers receive per allowable minute of reported service." Wow! That is $385 or more of "gross margin" for a service whose hourly ASL interpreter rates are less than $18! That's quite a business to be in.

It was therefore especially heartening to read that the that the FCC had launched the investigation after receiving evidence of fraud. FCC Chief of Staff Edward Lazarus said the event was "both a tragedy and an opportunity." As a result, Lazarus said the FCC has increased scrutiny of records, resulting in withholding payment on some 2 million minutes worth of submitted calls, plans to put stricter controls on the program's administrator, and plans to undertake to a comprehensive review of the program.

This is a very encouraging development and it should be commended. My colleague Adam Thierer worries that the FCC is reconstituting itself as the "Federal Cloud Commission," and I share his concern. But news of the TRS fund investigation also indicates that behind the scenes, the really important work of the FCC -- the day-to-day carrying out of its explicitly delegated authorities under the Communications Act -- has not been sidelined by National Broadband Plan activity, and that repair of some of the FCC's broken processes is underway. That is real forward progress.

My Droid is a pretty darn good substitute for a desktop PC. In fact, since my desktop's motherboard died the other day, the Droid is all I have at home right now-and it satisfies most of my computing needs, at least for home use. So... that means every wireless carrier with a strong android/iphone-class device is a substitute, meaningfully, but of course not perfectly, for traditional ISP options like DSL, cable, fiber, etc. So why don't 3G networks get counted at all when assessing whether broadband markets are so uncompetitive that only net neutrality regulations can save us from corporate abuse?

Oh, and did I mention that, if my thumbs get tired, I will soon be able to tether my Droid to bring Verizon's data network to my PC?

And on the benefits of Apple's heretical "closedness":

The iPhone operates on a closed system, which can only run on Apple hardware, meaning third- party developers can produce apps and games that work exclusively with the iPhone Therefore, despite Apple's questionable and controversial approval policy for iPhone apps developers can code one app that works with 40 million iPhone and iPod Touch devices which is less time consuming than developing several versions of one app for a variety of Windows Mobile smartphones. In turn, that spells out to a larger number of apps in the App Store, which enables Apple's hardware to cater to a larger and broader audience.

As other approaches, such as cloud computing, evolve, will established standards or de facto standards become more important to the applications development process? For example, can a dominant cloud computing position raise the same competitive issues that are now being discussed in the context of network neutrality? Will it be necessary to modify the existing balance between regulatory and market forces to promote further innovation in the development and deployment of new applications and services?

Today, as part of the Commission's ongoing effort to develop a National Broadband Plan, the FCC released a request for information "on data portability and its relationship to broadband." (NBP Public Notice #21) "The Commission seeks tailored comment on broadband and portability of data and their relation to cloud computing, transparency, identity, and privacy," the notice says. Here was the second item on the list of things the Commission said it was investigating:

1. The National Institute of Standards and Technology defines cloud computing as "a model for enabling convenient, on-demand network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction." Does this definition accurately capture the concept of cloud computing?
2. What types of cloud computing exist (e.g., public, hybrid, and internal) and what are the legal and regulatory implications of their use?
3. Can present broadband network configurations handle a large-scale shift in bandwidth usage that a rapid adoption of cloud computing might cause?
4. How does cloud computing affect the reliability, scalability, security, and sustainability of information and data?
5. To what extent can the federal government leverage cloud solutions to improve intra-agency processes, intergovernmental coordination, and civic participation?
6. What impact do developments in cloud computing have with respect to broadband deployment, adoption, and use?
7. How can various parties leverage cloud computing to obtain economic or social efficiencies? Is it possible to quantify the efficiencies gained?
8. To what extent are consumers protected by industry self-regulation (e.g., the Cloud Computing Manifesto), and to what extent might additional protections be needed?
9. What specific privacy concerns are there with user data and cloud computing?
10. What precautions should government agencies take to prevent disclosure of personal information when providing data?
11. Is the use of cloud computing a net positive to the environment? Are there specific studies that quantify the environmental impact of cloud computing?

Or perhaps I'm just being paranoid.

Regardless, at a minimum, would someone at least tell me where the FCC gets the authority to even ask these questions? Or do we live in such a Bold New World of progressive government that little encumbrances like statutory authority can be thrown to the wind? Years from now, some might look back and ask the question that Nobel Prize-winning economist Ronald Coase asked 50 years ago about the FCC and spectrum regulation: "How did the commission come to acquire this power?" But I'd like to know the answer to that question right now regarding the FCC's growing interest in cloud computing.

Utter rubbish. In fact, just six years after Karmazin spoke those words, Microsoft finds itself in a heated war with Google on all fronts, AOL-Time Warner has crumbled (even Time Warner Cable and Time Warner Entertainment got divorced!), and Comcast is now squaring off against telco and online video competitors that were unfathomable at the time (not to mention traditional satellite TV competitors.) In the meanwhile, Karmazin abandoned Viacom and today, as CEO of Sirius XM, is struggling to find a way to make the satellite radio universe survive the ongoing digital music bloodbath thanks to unforeseen competition from online music services and a little thing called the iPod!

It's proof positive that media markets and digital technologies always evolve faster than most people -- even smart industry titans like Karmazin -- anticipate.

In essence, the Stupak bill is the "Son of COPA," or the Child Online Protection Act of 1998, a law that has been constitutionally tested and come up short during an epic, decade-long legal battle in which it was made clear that mandatory age verification is unwise, unworkable, and unconstitutional under the First Amendment.

COPA sought to make it a crime for someone to "knowingly" place materials online that were "harmful to minors." The law provided an affirmative defense from prosecution, however, to those parties who made a "good faith" effort to "restrict[ ] access by minors to material that is harmful to minors" using credit cards or age verification schemes. COPA was immediately challenge, however, and a 10-year court battle ensued. The law was blocked by lower courts because it was too sweeping in effect and because courts held that there were other "less restrictive means" that parents could use to deal with objectionable content -- such as Internet filters.

COPA's decade-long legal battle finally concluded in January 2009 when the U.S. Supreme Court refused to revisit the law. COPA had already been reviewed by the Supreme Court twice before -- in 2002 and 2004. Thus, a third visit to the Supreme Court by COPA would have been something of a historical development in the world of First Amendment jurisprudence. But with the Supreme Court's rejection of the government's appeal in January, lower court rulings stood and COPA remained unconstitutional and unenforceable. The key recent legal battle occurred in the Third Circuit Court of Appeals, which upheld a lower court ruling striking down COPA. The Third Circuit's full decision is here. And I penned a 3-part series on the lower court ruling by Judge Lowell Reed Jr., senior judge of the U.S. District Court for the Eastern District of Pennsylvania, here, here, and here. Also make sure to check out this summary of COPA's legal journey that Alex Harris penned last November.

Many, many times here before I have documented my serious ongoing reservations about mandatory age verification. [In particular, see this lengthy white paper and this event transcript for all the details.] Moreover, as I pointed out in a recent PFF white paper ("Five Online Safety Task Forces Agree: Education, Empowerment & Self-Regulation Are the Answer"), every major online safety task force that has studied the possibility of mandatory age verification for the Internet has come to the same conclusion: It won't work, it's unconstitutional, and it raises serious privacy concerns. Down below the fold I have pulled some of the relevant language from the five online safety task forces that have met since 2000 and considered this issue.

I would hope that Mr. Stupak and other lawmakers would heed the warnings about mandatory age verification that these task forces issued. Read on for brief look at what the experts had to say. And as you do, remember that every dollar spent litigating another misguided attempt to mandate online age verification is another dollar that could be spent on education and empowerment solutions or other law enforcement strategies, all of which could be put in place immediately to make our kids safer online.

2000 - Commission on Online Child Protection ("COPA Commission")

[Age verification] imposes moderate costs on users, who must get an I.D. It imposes high costs on content sources that must install systems and might pay to verify I.D.s. The adverse effect on privacy could be high. It may be lower than for credit card verification if I.D.s are separated from personally-identifiable information. Uncertainty about the application of a harmful to minors standard increases the costs incurred by harmful to minors sites in connection with such systems. An adverse impact on First Amendment values arises from the costs imposed on content providers, and because requiring identification has a chilling effect on access. Central collection of credit card numbers coupled with the "embarrassment effect" of reporting fraud and the risk that a market for I.D.s would be created may have adverse effect on law enforcement.[1]

2002 - Youth, Pornography, and the Internet ("Thornburgh Commission")

In an online environment, age verification is much more difficult because a pervasive nationally available infrastructure for this purpose is not available. [...] Note that each of these [age verification] methods imposes a cost in convenience of use, and the magnitude of this cost rises as the confidence in age verification increases.[2]

2008 - Safer Children in a Digital World ("Byron Review")

[N]o existing approach to age verification is without its limitations, so it is important that we do not fixate on age verification as a potential 'silver bullet'.[3]

2009 - Internet Safety Technical Task Force (ISTTF)

Age verification and identity authentication technologies are appealing in concept but challenged in terms of effectiveness. Any system that relies on remote verification of information has potential for inaccuracies. For example, on the user side, it is never certain that the person attempting to verify an identity is using their own actual identity or someone else's. Any system that relies on public records has a better likelihood of accurately verifying an adult than a minor due to extant records. Any system that focuses on third-party in-person verification would require significant political backing and social acceptance. Additionally, any central repository of this type of personal information would raise significant privacy concerns and security issues.[4]

2009 - "Point Smart. Click Safe." Blue Ribbon Working Group

The task force acknowledges that the issues of identity authentication and age verification remain substantial challenges for the Internet community due to a variety of concerns including privacy, accuracy, and the need for better technology in these areas.[5]

[2] Computer Science and Telecommunications Board, National Research Council, Youth, Pornography and the Internet (Washington, DC: National Academy Press, 2002), at 63-4, www.nap.edu/html/youth_internet/

[3] Safer Children in a Digital World: The Report of the Byron Review, March 27, 2008, at 99. www.dcsf.gov.uk/byronreview

[4] Internet Safety Technical Task Force, Enhancing Child Safety & Online Technologies: Final Report of the Internet Safety Technical Task Force to the Multi-State Working Group on Social Networking of State Attorneys General of the United States, Dec. 31, 2008, at 10, http://cyber.law.harvard.edu/pubrelease/isttf.

[5] www.pointsmartclicksafe.org/report

- - - - -

[NOTE: Follow H.R. 4059 and comment on it over at Washington Watch.]

- - - - -

ATTACHMENT: Final Statement of Adam D. Thierer on Age Verification to the Internet Safety Technical Task Force

ISTTF Thierer Closing Statement

Scott Cleland wrote a nice little piece on the tendency of net neutrality advocates to re-write Internet history so that the steady movement away from government ownership and control, including economic regulation, during the Clinton Administration is air-brushed out of history. My point is less global, but no less important. The terms, conditions and prices of cable modem service at both the retail and wholesale level have never been subject to regulation.

Instead, the FCC made the conscious decision to classify the service not as a highly regulated common carrier telecommunications service, but rather as a then-unregulated "information service." This decision was made for the purpose of encouraging broadband deployment and permitting such Internet services to be provided in a minimally-regulated environment, and it was upheld by the U.S. Supreme Court in the Brand X case. And, yes, the FCC launched a companion rule-making to consider whether to impose any special requirements on this information service pursuant to its Title I "ancillary jurisdiction. But it has never acted on that proposal. Thus, there is no rate-regulated leasing of cable modem lines for regulators to revive.

But I digress. The real story is that the FCC, for the first time, is seriously considering imposing common carrier-like economic regulation on cable Internet providers, in the context of its charge from Congress to develop a "National Broadband Plan" to increase broadband deployment. Setting that irony aside for the moment, we can, and will, debate the merits and drawbacks of the open access issue for some time to come (and rest assured, it will feel like Groundhog Day for many of us). But let's not start the debate from the false premise that we are just returning to the good old days of yore.

Is such a deal feasible and in the best interests of broadcasters? Is the arrangement necessary to encourage growth in broadband penetration consistent with the goals of the Recovery Act? Will Congress go along with the deal, or would it be blocked as contrary to "the public interest?" Alternatively, would lawmakers back the deal but seek a significant cut of the auction proceeds, leaving less available for broadcasters? These and other policy issues will be discussed at "Let's Make a Deal: Broadcasters, Mobile Broadband, and a Market in Spectrum," a congressional seminar hosted by The Progress & Freedom Foundation. The event will be held Tuesday, December 1st from 9:00am to 11:00am in the Holeman Lounge, 13th Floor, at the National Press Club, 529 14th Street, NW in Washington, DC.

Panelists confirmed so far for the event include:

• Blair Levin, Executive Director, Omnibus Broadband Initiative, Federal Communications Commission


• Coleman Bazelon, Principal, The Brattle Group


• David Donovan, President, Association for Maximum Service Television


• Kostas Liopiros, Principal, The Sun Fire Group


• John K. Hane, Counsel, Pillsbury Winthrop Shaw Pittman LLP


• and 1 or 2 more to come!

Yet many valuable media products have long been simply given away by their producers in the implicit value exchange of advertising: newspapers, magazines, radio, television and online content/services for customers' attention. It's as if publishers set up a store with no walls and put up a big "steal this book!" sign inviting shoplifters in. Advertisers simply have to hope that their ads are interesting enough to catch the attention of readers/viewers/listeners--and, on the Web, maybe even get users to click on the ad! It should be obvious that the lack of any "enforcement technology" simply means that there will be less funding for this "free" stuff enjoyed by consumers--just as there would be fewer goods and/or higher prices if stores were prevented from discouraging or punishing shoplifting.

Ethicists could debate until the cows come home whether ad-blocking (or ad-ignoring) is morally tantamount to shoplifting--taking without "paying" (through attention)--but who cares? Whatever the morality of it, the important, and undeniable, thing is that those who ignore/block commercials are free-riding on the economic value created by those who don't.

Enter Apple, which recently filed a patent application for a technology intended to ensure that users are seeing, and actually paying attention to, ads. Randall Stross, author of the excellent book Planet Google, hates the idea of "compelling attention" and suggests that it would so annoy consumers that it would cost Apple more in reputational capital than it's worth. Stross may well be proven right in the marketplace (and, if so, fine), but does that make Apple's proposal wrong? The brilliantly satirical "Secret Diary of Steve Jobs" calls the idea "evil," and suggests that, in the pretended voice of Steve Jobs:

Thus Apple now becomes the cable company. And the cable company dies. Yes, friends, another enormous, ridiculous, old-fashioned, greedy, fat, slow-moving, change-averse, stupid industry falls before the power of Steve. Or, as we call it, "Internet + Steve = you're dead." We did it to music retailers. Doing it now to mobile phone companies. Why not cable TV? These guys are ripe for a takedown.
It may well be true that and others will ultimately "disintermediate" existing cable companies, but that speculation misses the important point: It's amazing that, despite the overwhelming success of advertising-supported business models on the Internet, even some of the cleverest commentators simply can't fathom that some users would actually prefer to enter into a deal to get more stuff for free even if it meant dealing with the annoyance of "enforceable"/"compelled" advertising. Instead, Apple's technology must be part of an evil plot to trick users into paying for content!

This is a classic seen/unseen problem: These critics see the annoyance of advertising (and resented bitterly) but they can't see just how much value is created by empowering (yes, empowering) users to hold themselves to their promise to watch the ads that fund the content and services they get for free.

As I've noted, "sometimes we're better off by being able to 'bind' our future selves--just as Ulysses asked his crew to tie him to his ship's mast so he could enjoy the Siren's enchanting song without giving in to their spell." If users don't have a way of proving that they're paying attention, advertisers will have to discount the amount they pay publishers to account for uncertainty as to whether who is actually paying attention to ads--which means less free stuff for consumers. Similarly, if the digital rights management technology didn't exist to ensure that movies downloaded from some online services could only be played for a certain number of days after download or first view (one day in the case of iTunes), consumers would actually be worse off because they would probably have to pay a price closer to the cost of downloading the movie to own forever (~$20 on iTunes) rather than being able to rent it for far less ($4-5).

Ultimately, if advertising is to sustain media and culture, advertisers may have to make explicit the currently implicit quid pro quo attention-for-content/services: There is simply no moral reason that users who choose to block/ignore ads hould be able to enjoy the fruits of everyone else's attention/time/data. The only question is a practical one: whether it's worthwhile for advertisers and publishers to invest in "enforcement" technologies like Apple's.

But this same dynamic plays out in the ongoing debate over efforts to restrict online advertising (particularly behavioral advertising or "OBA") in the name of "privacy." As Adam Thierer and I have warned about regulations on the data collection that makes online advertising profitable for publishers:

regulation could short-circuit the eternal battle of technological one-upmanship between online advertisers and those users who rely on the technologies of evasion to "opt-out" of seeing ads or being tracked. Such privacy-conscious users are "free-riding" off of those users who don't opt-out, since (at present) they generally don't lose access to the free content and services supported by the targeted advertisements that other users do see. The user who blocks tracking, but not ads, is still free-riding off those users who don't opt-out of tracking. On a large enough scale, such self-help has the potential to disrupt the value exchange of the Internet, just as automatic commercial-skipping has already disrupted the value exchange of television. As with all "Spy v. Spy" battles, this long-term trend is inevitable: As more sophisticated technologies of evasion are incorporated seamlessly into browsers and can be used without significantly degrading the browsing experience, their use will become increasingly mainstream. But ultimately, just as with television commercial-skipping, market forces can and will, if permitted, respond through technological means and the development of new business models. Today's implicit quid pro quo may become, of necessity, explicit: Websites and ad networks will have to find increasingly creative ways to grant access to certain content and services for users who do not block ads or the tracking that makes ad space more valuable. Policymakers should take care not to ban such technologies or cripple such business models (e.g., through requiring opt-in), which may rely on more sophisticated forms of targeting such as the use of packet inspection data.

As users face an increasingly clear choice between (i) getting content and services for free supported by behavioral advertising and (ii) paying to receive those same services and content without tracking or even without ads altogether, policymakers will finally see whether users are really as bothered by profiling as the advocates of OBA regulation insist. Given the ongoing and widespread replacement of fee- or subscription-supported web business models with ad-supported models, it seems likely that the vast majority of consumers will continue to choose ad-supported models, including profiling.

1. Monday (11/16), 11 am: the coalition of 10 so-called "privacy advocacy" groups that recently demanded sweeping regulation of online data collection and use will be holding a briefing for congressional staffers on their demands in 2322 Rayburn House Office Building.


2. Wednesday (11/17), 4 pm: A "bipartisan briefing for staff of Members on the Subcommittees" in 2322 Rayburn, followed by a Democratic staff briefing.


3. Thursday (11/18), 10 am: The House Energy & Commerce Committee's Subcommittee on Communications, Technology & the Internet and Subcommittee on Commerce, Trade & Consumer Protection will hold a joint hearing on "Exploring the Offline and Online Collection and Use of Consumer Information" in 2123 Rayburn.

So I suspect the hearing will consist largely of the two of them trying to dodge the question Adam Thierer and I keep asking: What's the harm that requires government regulation? For them--and for David Vladeck--the new head of the FTC's Bureau of Consumer Protection--the answer seems to be that no real harm need be established to justify regulation, whatever the cost to consumers of regulation, because "harm" may be defined by anecdote and in terms of "dignity interests"--a legal standard that has all the intellectual and factual rigor of a plate full of Jell-O shots (intoxicating and fun for parties but squishy with little real substance).

Adam and I will be raising this and other questions at the FTC's Exploring Privacy workshop on December 7. I will be participating in the online behavioral advertising panel, and PFF President Adam Thierer will be participating in the consumer expectations/surveys panel. Check out my comments to the FTC for more on our perspective.

I want to tell one of those stories today.

Boulder City, Nevada, is an enduring echo of FDR's New Deal. The small city just south of Las Vegas was entirely planned and built in 1932 by the Bureau of Reclamation to house thousands of workers recruited to build a power-producing dam on the Colorado River. The dam was later to be named after the Secretary of Commerce principally responsible for launching the project - Herbert Hoover.

Five years after the city was founded, in 1937, a daily newspaper was born in Boulder City - the Boulder City Daily News - and for 70 years it brought coverage of local news, sports, and events to the breakfast tables of a small city that became an oasis in the desert. Although the paper switched to weekly publication in 1949, the Boulder City News remained one of the strongest community newspapers in the country for many years.

In many ways, the Boulder City News was the prototypical small town, community paper. It was one of several media properties locally owned and operated by the Greenspun family of Southern Nevada. Under Greenspun ownership, the newspaper won numerous industry awards for excellence. Indeed, only two years ago, the Boulder City News took third place in the Newspaper of the Year competition for papers with circulations up to 10,000. The paper was acclaimed for its enterprise reporting, lively Arts & Style section, and strong editorial voice.

Sadly, at the end of October, Greenspun Media Group announced that the company was suspending publication of the Boulder City News and its sister paper in Henderson, Nevada. As the Las Vegas Sun noted in reporting the demise of the Boulder City News, the paper's "widely recognized editorial excellence was not enough to save [it] from the economic realities."

So where do we go from here? Who will now cover local news in Boulder City? Might one of the large Las Vegas papers publish a "Boulder City" insert for the area? But those papers, too, are suffering from decreased circulation and lost advertising revenues.

The production of news is not free, and it is not immediately clear where new sources of funding for high quality reportage will come from. Unfortunately, current restrictions on who may own broadcast properties limit the structural options available to media companies trying to adjust to the new economic realities. Critics of media freedom who advocate the retention of those restrictions in the name of "media diversity" might want to start asking whether, in the future, there will be any free media at all.

But here's the first thing that pops in my mind every time I see someone showing off their new Droid: How can a device like this even exist when America's leading cyberlaw experts have been telling us that the whole digital world is increasingly going to hell because of "closed" devices, proprietary code, and managed networks? I'm speaking, of course, about the lamentations of Harvard professors Lawrence Lessig, Jonathan Zittrain, and their many disciples. As faithful readers will recall, I have relentlessly hammered this crew for their unwarranted cyber-Chicken Little-ism and hyper techno-pessimism. (See my many battles with Zittrain [1, 2, 3, 4, 5, 6 + video] and my 2-part debate with Lessig earlier this year).

"Left to itself," Lessig warned in Code, "cyberspace will become a perfect tool of control." He went on to forecast a dystopian future in which nefarious corporate schemers would quash our digital liberties unless benevolent public philosopher kings stepped in to save our poor souls. Code was the Old Testament of cyber-collectivism. The New Testament arrived last year with Zittrain's The Future of the Internet and How to Stop It. In it, we hear the grim prediction that "sterile and tethered" digital technologies and networks will triumph over the more "open and generative" devices and systems of the past. The iPhone and TiVo are cast as villains in Zittrain's drama since they apparently represent the latest manifestations of Lessig's "perfect control" paranoia.

Apple's "Angel of Death"

I find Weinberger's claim that "a serious de-generation of computing" is looming because of the iPhone to be especially ridiculous. It's the same sort of rubbish Lessig was spewing in Code when he predicted that AOL's walled garden model was going to take over the entire cyber-world and ensure "perfect control," just one of the many things Lessig got wrong in the book. And it's the same silliness we see at work in Zittrain's work when he claims that we're doomed to live in a world of closed "sterile and tethered" digital technologies and networks. Similarly, last year, Public Knowledge analyst Alex Curtis managed to reach the zenith of this rhetorical insanity when he likened the Apple App Store to an Orwellian Big Brother that was bringing us a "1984 kind of total control." You know, because Apple is forcing us all to own iPhones and locking us into re-education camps. Right.

I Fart, Therefore I Am (Generative)

Moreover, it's not just that a remarkably innovative and generative device like the Droid gets widespread release and praise, it's the fact that there are countless other mobile devices and applications on the market today much like it. On the Zittrainian "generative-vs.-sterile appliance" spectrum, the range of mobile devices just continues to grow and grow in both directions. You can decide exactly what type of device you want. But here's the more important point: How much of a difference does it even make how "open" these phones and app stores are? You've got more "closed" systems like Apple's iPhone and Palm's Pre on one end of the spectrum and then more "open" systems like the Droid and even many Windows Mobile devices on the other end, but do these competing models really result in many difference in terms of functionality and innovation? The reality is this: tons of innovation is occurring across all of these devices and platforms regardless of how "open" or "closed" they may be.

For example, when I go to Handango, a terrific mobile application marketplace, and search for "all apps" available for my HTC Touch (which runs a Windows Mobile OS), my senses are assaulted with 6,677 choices. It's all a bit overwhelming. Luckily, a quick search can get me right to the important applications I really need -- like the "Pocket Fart" app. Folks, let me tell you, no "generative" device is worth its salt without a good farting application. I don't care how bad of a mood my kids are in, when I fire up a fart app, it puts an instant smile on their faces!

But hey, guess what... that "angel of death," the iPhone Store, offers fart apps, too! Dozens and dozens of fart apps, in fact. In terms of Zittrainian generativity, the iPhone is positively fart-tastic. Just check out that video below. And in addition to those dozens of flatulence apps, the Apple AppStore has another 100,000 apps available for downloading, making it the largest applications store in the world. And back in September, Apple announced that more than two billion apps had been downloaded from the App Store in its short existence. That's Billion with a "B". Does this sound like it "portends a serious de-generation of computing" as Weinberger suggests? Incidentally, if he's so frightened that Steve Jobs is the Grim Reaper incarnate he can always go find another phone. Seriously, Steve Jobs doesn't force anybody to buy one of these expensive toys.

If the iPhone is Good Enough for Zittrain, Why Isn't It Fine for the Rest of Us?

But the Berkman boys don't seem content with all that. And I wouldn't usually give a damn about the lunacy of these hyper-pessimistic prognostications from the Harvard crew if it was all just harmless cyber-sourpuss ramblings from the ivory tower geeks with too much time on their hands. But the problem is that these people want regulators to take steps to correct these supposed "code failures," as Lessig calls them. Zittrain calls for "API neutrality" in his book, which would force net neutrality-like mandates on digital devices. And in a New York Times editorial this summer entitled "Lost in the Cloud," he made it clear that cloud neutrality regulation was next on the list. [Others are joining that call.] I've got a serious problem with that, as I detailed extensively in earlier essays (here and here), and Berin Szoka and I have discussed how these escalating neutrality wars are bound to lead to the digital equivalent of "mutually assured destruction" within the tech community before it's all over.

Finally, when the Berkman gang, which is the most respected cyberlaw shop in the land, go around casting these debates with terms like "evil" applications and "angels of death," then I have a serious problem because the game you are playing becomes hazardous to the health of the digital economy. This poisons the public policy debate by using absurd moralistic rhetoric about something as fundamentally agnostic as digital platforms and protocols. These things are neither good nor evil; they are just choices. They represent different ways of promoting innovation. And we should be happy that our current digital marketplace is offering us a rich mosaic of business models and options that can fill almost any need and fit almost any picky user's desires. If that ain't progress, I don't what is.

in the third quarter, which ended in September, about 40 percent of the acquisition deals involved some kind of divestiture, up from 25 percent for the same period one year ago. That is, companies weren't buying smaller, stand-alone outfits; they were buying essentially the castoffs of other companies.

And a recent survey by Pricewaterhouse found that 69 percent of the 215 companies polled expected divestiture activity to either stay the same or increase over the next year.

Many of these divestitures are the fruit of ill-considered acquisitions made over the past few years. This failure rate should come as a surprise to no one in the board room or executive cubicle. A few years ago, McKinsey & Co. published a study indicating that 70 percent of mergers failed to generate the expected returns. Hope, however, seems to spring eternal in boardrooms as companies keep making deals.

Let's try to keep these failure rates in mind as we see increased antitrust fervor about blocking or otherwise restricting or simply bogging down mergers. The truth is that most mergers don't work out in the end. But that's an argument against aggressive antitrust enforcement scratch that intervention, rather than for it, because some mergers do create great value for consumers through greater efficiencies and government bureaucrats are unlikely to be able to guess which are which. If they could, they'd be making a fortune in the private sector advising companies how to avoid boneheaded deals! This problem is particularly acute in the tech sector, where today's leaders tend to become tomorrow's laggards because of the inevitability of disruptive innovation, which big companies manage poorly.

Privacy Trade-Offs: How Further Regulation Could Diminish Consumer Choice, Raise Prices, Quash Digital Innovation & Curtail Free Speech

• Privacy is "the subjective condition that people experience when they have power to control information about themselves and when they exercise that power consistent with their interests and values."^[1]


• As such, privacy is not a monolith but varies from user to user, from application to application and situation to situation.


• There is no free lunch: We cannot escape the trade-off between locking down information and the many benefits for consumers of the free flow of information.


• In particular, tailored advertising offers significant benefits to users, including potentially enormous increases in funding for the publishers of ad-supported content and services, improved information about products in general, and lower prices and increased innovation throughout the economy.


• Tailored advertising increases the effectiveness of speech of all kinds, whether the advertiser is "selling" products, services, ideas, political candidates or communities.

1. What exactly is the "harm" or market failure that requires government intervention?


2. Are there "less restrictive" alternatives to regulation?


3. Will regulation's costs outweigh its supposed benefits?


4. What is the appropriate legal standard for deciding whether further government intervention is required?
   ]]> We have addressed these questions in the PFF publications attached below, which I respectfully submit for the Commission's consideration. This executive summary highlights their findings.
   • Online Advertising & User Privacy: Principles to Guide the Debate, Berin Szoka & Adam Thierer, Progress Snapshot 4.19, Sept. 2008.
   • Targeted Online Advertising: What's the Harm & Where Are We Heading?, Berin Szoka & Adam Thierer, Progress on Point 16.2, April 2009.
   • Privacy Polls v. Real-World Trade-Offs, Berin Szoka, Progress Snapshot 5.10, Oct. 2009.
   • The Benefits of Online Advertising & Costs of Privacy Regulation, Berin Szoka & Mark Adams, PFF Working Paper, Nov. 8, 2009. ^[2]
   • Benefits of Online Advertising, Berin Szoka, Mark Adams, Howard Beales, Thomas Lenard, Jules Polonetsky, PFF Capitol Briefing, July 2009.

   I. A Principled Pro-Consumer Alternative to Further Regulation

   The "Privacy Wars" that have waged over how government should regulate online collection and use of data might better be referred to as the "Privacy Proxy Wars" because the most clearly demonstrated "harm" at issue seems to be from government itself, not the private sector. The Fourth Amendment guarantees that "The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated..." Americans have a legitimate expectation that this "security" extends to their digital "papers and effects," yet that expectation is not given effect by current restraints on government access to consumer data in American law. Thus, we have proposed the following layered approach to concerns about online privacy, focusing on restraining government access to data, rather than crippling the private sector uses of data that directly benefit consumers:
   1. Erect a higher "Wall of Separation between Web and State" by increasing Americans' protection from government access to their personal data--thus bringing the Fourth Amendment into the Digital Age.
   2. Educate users about privacy risks and data management in general as well as specific practices and policies for safer computing.
   3. Empower users to implement their privacy preferences in specific contexts as easily as possible.
   4. Enhance self-regulation by industry sectors and companies to integrate with user education and empowerment.
   5. Enforce existing laws against unfair and deceptive trade practices as well as state privacy tort laws.
   Such a layered approach would not only be a "less restrictive" alternative to increased government regulation, but also potentially more effective in key respects than government data use/collection mandates. In an ideal world, adults would be fully empowered to tailor privacy decisions, like speech decisions, to their own values and preferences ("household standards"). Specifically, in an ideal world, adults (and parents) would have (1) the information necessary to make informed decisions and (2) the tools and methods necessary to act upon that information. Importantly, those tools and methods would give them the ability to block the things they don't like--annoying ads or the collection of data about them, as well as objectionable content.

   A wide variety of self-help tools and "technologies of evasion" are readily available to all users and can easily thwart traditional cookie-based tracking, as well as more sophisticated tracking technologies such as packet inspection. While cookie management tools that allow users to delete their cookies have been standard in browsers for some time, the latest generation of browsers incorporates far more advanced control over what kind of cookies browsers will accept from websites in the first place. Furthermore, the extensible nature of modern browsers allows any freelance software developer who sees a way to improve a browser to do so by writing an add-on that "plugs in" to the browser using standard programming interfaces designed by each browser developer. Many such add-ons are wildly popular, but even those users who never install a single one benefit from the acceleration of browser evolution made possible by add-ons. We have documented examples of these tools in an ongoing series of blog posts about "Privacy Solutions," available at www.pff.org/privacy-solutions/.

   But a "layered approach" that relies on user empowerment and education need not be perfect to be "good enough," because "privacy" is not an absolute good that trumps all other consumer interests, nor can "community standards" accommodate a diverse citizenry. If we "make the best the enemy of the good" by insisting on perfection, consumers will be made worse off. Advertising is indispensable to the future of online media, but it is also currently inadequate to sustain "Free" culture. The advocates of regulation pay lip-service to the importance of advertising in funding online content and services but don't seem to understand that this quid pro quo is a fragile one: Tipping the balance, even slightly, could have major consequences for continued online creativity and innovation. Something must give because there is no free lunch.[3]
   

   II. Benefits to Users of Smarter Online Advertising

   
   The attached working paper I co-authored with PFF Visiting Fellow Mark Adams identifies five broad categories of benefits to users from targeted advertising:
   
   
   
   1. More relevant, and potentially less annoying/interruptive advertising for consumers;
   
   
   2. Higher-quality content and services supported by advertising;
   
   
   3. Better correlation between the production of content and services, and consumer preferences;
   
   
   4. A more vibrant media and improved political discourse and communities; and
   
   
   5. Lower prices for consumers and greater innovation throughout the economy.
   
   
   
   The paper explains how better targeting of advertising delivers these benefits by:
   
   
   
   • Increasing the informational value of advertising to consumers;
   
   
   • Increasing advertising funding for content and services that might not be sustainable on an ad-supported basis with untargeted or less targeted advertising; and
   
   
   • Reducing the costs of buying and selling ("transaction costs").
   
   
   
   In particular, we note that, with behavioral targeting, the value of a site's viewers depends less on the content associated with that site (keywords) and more on the viewers themselves. In this sense, behavioral advertising levels the playing field by allowing websites to sell access to viewers directly, rather than through the keywords associated with the website. Better targeting democratizes the ad-supported economy by empowering consumers to direct advertising revenues to the sites they spend time on. Targeting essentially increases the ability of Internet users to "vote with their clicks" for online content and services just as they "vote with their dollars" every time they make a purchase in the traditional economy.

   Data on the precise "delta" between contextual and behavioral advertising is limited, but appears to indicate that behavioral advertising can produce significant increases in revenue for many publishers. In particular, we note the following increased measures of effectiveness
   

   
   
   • Increased Click-Through-Rates 94% to 225% and conversion rates up to 3,000% (2005);[4]
   
   
   • Increased CTR of 670-1000% (2009);^[5] and
   
   
   • Increased conversion rates of 400-900% (2008).[6]
   
   
   
   There are a wide range of predictions on the potential value created by behavioral targeting. As with previous innovations in online advertising, it seems likely that the performance of behavioral targeting will improve over time. Professor Tracy Tuten, author of Advertising 2.0, predicts that a twelvefold increase in the value of page views, from $10 to $120 per thousand views.^[7] Rich Karpinski calculates that Blue Kai, an ad network, is currently selling behaviorally targeted ads a rate of $4-15 per thousand views^[8]--a significantly lower rate than Ryan suggests but higher than the current performance of print advertising ($5.50)^[9] and several times higher than the average price of non-premium display advertising ($0.60-$1.10).^[10] One experiment with re-targeting (showing users ads on one site based on actions taken towards making a purchase on one site but not completed) produced significantly higher returns: "retargeted impressions represented only 7% of all the banner impressions delivered, [but] were responsible for over 50% of the revenue and 25% of the sales generated by the campaign as a whole."^[11] Hallerman concludes that "Behavioral targeting is more than hype.... For publishers, it can mean making more money from undersold or unsold ad inventory."[12]
   

   III. The Quid Pro Quo behind "Free"

   
   Traditionally, users "paid" for content by devoting part of their attention to ads, which have long funded the costs of generating content for radio, television, and newspapers (with subscriptions paying only for distribution).^[13] The basic reason is simple economics: In competitive markets, prices tend to fall to the marginal cost of production, which quickly converges on zero for information. The Internet has simply borne this theory out in full:
   
   
   
   1. Producing the first unit of content (e.g., a news story or video) remains costly, so while the marginal cost of every additional unit is essentially zero, average cost is not.
   
   
   2. The failure of micropayments online seems to confirm that, no matter how low the technological transaction costs are, the mental transaction costs involved combined with even tiny payments will exceed the perceived value of most content.
   
   
   3. The world of media scarcity in which consumers could choose from only a few sources of content (e.g., news, entertainment) has given way to a world of staggering media abundance and the choices of users are no longer constrained by the tyranny of physical limitations like distance and printing costs.
   
   
   4. Because pure information cannot be copyrighted (and fair use allows significant referencing and quotation), very little content is so unique that users cannot find a ready substitute elsewhere if a site (or even a group of sites) attempted to charge.
   
   
   
   Thus, while policymakers should generally avoid preferring one business model over others, they must also recognize that the "economics of bits" will make advertising increasingly indispensable to the future of online content, services, media and culture. For that reason, they should take great care when tinkering with the economic engine that has made America the envy of the digital world as the fountainhead of online innovation and creativity.
   

   IV. Consumer Attitudes & Expectations

   
   While many consumers said, in a recent poll, that they don't want ads, content and news "tailored" to their interests,[14] their actions in the real world speak louder than words: The increased click through rates and conversion rates mentioned above are evidence that consumers do, in fact, value more relevant advertising.[15] Whatever Americans tell pollsters about "tailored" ads, they also complain about irrelevant ads: A previous poll found that 72% of consumers "find online advertising intrusive and annoying when the products and services being advertised are not relevant to [their] wants and needs" and 85% say that less than 25% of the ads they see while browsing online are relevant to their wants and needs.^[16]

   Until a proper experiment is conducted by trained behavioral economists that includes real-world trade-offs and makes users aware of privacy management tools, all we can say with confidence is the following:
   

   
   
   1. Users don't understand exactly how ads are tailored;
   
   
   2. Users seem to be concerned about "tailoring" or "following" in the abstract;
   
   
   3. Users are generally unwilling to pay for online content and services; and
   
   
   4. Better tailoring of ads means more funding for content and services.
   
   
   
   Only the layered approach outlined above can address all these concerns: educate users about how online advertising works and how they can implement their own privacy preferences, while constantly striving to further empower users to make privacy management easier.

   Policymakers should avoid presuming they can divine the true preferences of users regarding the complex and multi-faceted trade-offs of the real world. Instead of guessing what consumers might choose, the FTC and other law enforcement agencies should focus on holding companies to the "expectations" they set in their official privacy policies and other statements about their any use and collection practices. In a sense, this is to approach the problem from the "supply" side rather than the "demand" side: If a browser manufacturer, for example, overstates the privacy protection offered by privacy management tools in the browser (e.g., cookie settings or a private browsing mode), this might well be considered an unfair and deceptive trade practice subject to FTC enforcement. The advantage of this approach is that the FTC can, using its existing authority, play a valuable role in ensuring consistency between theory and practice in what industry actually does-- without sending into the intractable morass of subjective user preferences. In other words, the FTC can help give effect to "household standards" without imposing "community standards" for everyone.
   

   V. Underlying Fear of Advertising

   
   On some level, this debate isn't about user privacy at all, but about the common (though baseless) fear of advertising as inherently manipulative and wasteful--essentially: "Since people are stupid, ignorant and/or lazy, they're easy to control and trick with shiny objects, pretty faces, memorable slogans, and catchy jingles." No better response to this sentiment has ever been made than was offered by the ad firm Young & Rubicam in this 1959 magazine ad:
   

   There is no chestnut more overworked than the critical whinny:
   "Advertising sells people things they don't need."

   We, as one agency, plead guilty. Advertising does sell people things they don't need. Things like television sets, automobiles, catsup, mattresses, cosmetics, ranges, refrigerators, and so on and on.

   People don't really need these things. People don't really need art, music, literature, newspapers, historians, wheels, calendars, philosophy, or, for that matter, critics of advertising, either.

   All people really need is a cave, a piece of meat and, possibly, a fire.

   The complex thing we call civilization is made up of luxuries. An eminent philosopher of our time has written that great art is superior to lesser art in the degree that it is "life-enhancing." Perhaps something of the same thing can be claimed for the products that are sold through advertising: They enhance life, to whatever degree they can.

   
   

   VI. Conclusion

   
   If misguided government regulation chokes off the Internet's growth or evolution by starving content and service providers of much-needed advertising revenue, we would be killing the goose that laid the golden eggs. Apart from a hardcore fringe who embrace the Marxist dogma that advertising is inherently deceptive and wasteful, most participants in this debate at least pay lip service to the economic importance of online advertising. One might therefore be lulled into a false sense of complacency that "sensible" regulation (or government-led co-regulation) would surely avoid crippling this dynamo. This widespread assumption calls to mind the famous quip of Chris Patten, last British Governor of Hong Kong, who paraphrased those who dismissed his concerns about the potentially negative effects of a Chinese take-over of the British colony in 1997, as follows: "It is unimaginable that the Chinese would kill such a goose." To this, Patten responded, "Yet we wouldn't need the metaphor of golden eggs and geese if history weren't full of dead geese."^[17] The dangers of regulation to the health of the Internet are real, but the ease with which government could disrupt the economic motor of the Internet (advertising) is not widely understood--and therein lies the true danger in this debate.

   Depending on how regulation is structured, therefore, it is possible that new privacy mandates would severely curtail the overall quantity of content and services offered--and greatly limit the ability of new providers to enter the market with innovative offerings. Alternatively, or perhaps additionally, companies would change the character of their offerings and water-down sophisticated services that cater to consumer demand; in other words, the quality of service would deteriorate.

   Bottom line: We live in a world of trade-offs, and regulation is not costless. Indeed, regulation might best be understood as a giant game of economic whack-a-mole: Attempting to control one of the primary variables of price, quantity, or quality inevitably results in non-optimal adjustments in the other two variables. The absence of price as a variable in the context of "free" (i.e., ad supported) content and services means there is one less variable for the government to control in the first place. Simply stated, stifling the evolution of the online advertising marketplace will likely result in fewer free online services and less content, less high-quality online services and content, or some combination of both.

   These observations are even more relevant to the online marketplace, where advertising has been shown to be the only business model with any real staying power. Walled gardens, pay-per-view, micropayments, and subscription-based business models are all languishing. Consequently, the overall health of the Internet economy and the aggregate amount of information and speech that can be supported online are fundamentally tied up with the question of whether we allow the online advertising marketplace to evolve in an efficient, dynamic fashion. Heavy-handed privacy regulation (or European-style "co-regulation," where the government steers and industry simply rows) could, therefore, become the equivalent of a disastrous industrial policy for the Internet that chokes off the resources needed to fuel e-commerce and online free speech going forward.

   ---

   [1]. "Properly defined, privacy is the subjective condition people experience when they have power to control information about themselves." Jim Harper, Cato Institute, Understanding Privacy - and the Real Threats to It, Cato Institute Policy Analysis No. 520, Aug. 4, 2004, http://www.cato.org/pub_display.php?pub_id=1652.

   [2]. Currently in draft form, pending further research quantifying the benefits of personalized advertising.

   [3]. Berin Szoka & Adam Thierer, The Progress & Freedom Foundation, Targeted Online Advertising: What's the Harm & Where Are We Heading?, Berin Szoka & Adam Thierer, Progress on Point 16.2, April 2009, www.pff.org/issues-pubs/pops/2009/pop16.2targetonlinead.pdf.

   [4]. Scott Ferber, Stepping Up Search: How Behavioral Targeting Can Enhance ROI, MediaPost Publications, Jun 6, 2005, www.mediapost.com/publications/index.cfm?fa=Articles.showArticle&art_aid=30838.

   [5]. Jun Yan, Ning Liu, Gang Wang, Wen Zhang, Yun Jiang & Zheng Chen, How Much Can Behavioral Targeting Help Online Advertising?, presented at World Wide Web Conference, Madrid, Spain, April 20-24, 2009, p. 262.

   [6]. Erik Sherman, Want to Target Online? You Better Build Trust, Advertising Age, Apr. 14, 2008, http://adage.com/adnetworkexchangeguide/article?article_id=126242.

   [7]. Id.

   [8]. Rich Karpinski, Will Using Behavioral Data Lead to Smarter Ad Buys?, Advertising Age, April 20, 2009, http://adage.com/adnetworkexchangeguide09/article?article_id=136003 (subscription only).

   [9]. Howard Beales, Public Goods, Private Information & Anonymous Transactions: Providing a Safe & Interesting Internet, presentation given at the Law & Economics of Innovation Symposium at George Mason University School of Law, May 7, 2009 (copy on file with authors) at 17 (citing Media Dynamics data from 2008).

   [10]. Id.

   [11]. Id.

   [12]. David Hallerman, Behavioral Targeting: Marketing Trends, eMarketer, June 2008, at 2, http://www.emarketer.com/Reports/All/emarketer_2000487.

   [13]. See, e.g., Walter Mossberg, Now You See 'Em..., SmartMoney.com, June 15, 2000, available at web.archive.org/web/20061124235126/http://www.smartmoney.com/mossberg/index.cfm?story=20000615.

   [14]. Joseph Turow, Jennifer King, Chris Jay Hoofnagle, Amy Bleakley & Michael Hennessy, Americans Reject Tailored Advertising and Three Activities That Enable It, Sept. 2009, http://graphics8.nytimes.com/packages/pdf/business/20090929-Tailored_Advertising.pdf.

   [15]. See generally Berin Szoka, Privacy Polls v. Real-World Trade-Offs, The Progress & Freedom Foundation, Progress Snapshot 5.10, Oct. 2009, http://www.pff.org/issues-pubs/ps/2009/ps5.10-privacy-polls-tradeoffs.html.

   [16]. TRUSTe, 2009 Study: Consumer Attitudes About Behavioral Targeting, March 4, 2009, at 2, 5, available at www.truste.com/about/bt_overview.php.

   [17]. Tom Plate, Hong Kong Will Remain Very Much Alone After 1997, The Standard, Jan. 7, 1996, www.thestandard.com.hk/archive_news_detail.asp?pp_cat=&art_id=20783&sid=&con_type=1&archive_d_str=19960107

   ]]>
   - Berin Szoka