Summary:  With congressional and administrative attention now on the online advertising industry, the industry is responding with “principles” to continue self-regulation.  Whatever the outcome of the debate now underway, TOUs and EULAs will change.  To the business side of digital companies, these are boilerplate:  To the lawyers, they should be seen as what they are–binding agreements with end users and that have serious consequences if they are too one-sided.  You can read the entire report atwww.iab.net/behavioral-advertisingprinciples.

The online advertising industry has responded to the February 2009 FTC Staff Report on the topic (which is called “behavioral advertising”).  That industry created a report on “principles” for managing these data.  These principles represent an attempt to maintain the self-regulation structure now in effect–something that has not made regulators happy (rightly or wrongly).

You can read the report at the URL above.  Here is our take on the principles:

  • Ad Industry Mobilization–the mere fact that disparate industry associations have gotten together is good news, because these people have great experience and expertise to apply to a topic that is really pretty nuanced.
  • No More Fine Print–well, everyone can dream.  It is not so much that the industry will eliminate dense legalese in TOUs, but that the language is supposed to be drafted to be transparent–providing genuine guidance that end users can understand.
  • Actual Innovation–The report includes one innovation:  an “approval” toolbar on browsers.
  • De-identification of data–this is the one we like the most.  Finally, the ad industry is beginning to recognize that the data can be extremely valuable in their aggregate form, without recourse to knowing about the actual individuals.  Pay attention to this one.
  • Sensitivity–This principles recognizes that not all data are created equal and some are more sensitive than others.  Think of medical records.
  • Material Changes–gone will be the days of unilateral retroactive changes to TOUs.  Actually, this is just a recognition that the Federal Trade Commission (FTC) will win on this point and that courts are moving in that direction, as well (See blog on Blockbuster case).

So What?

From a legal perspective, this will add more pressure on companies to change their TOUs, but from a strategic perspective, it is one more piece of the evidence of the growing appreciation–not of the data themselves but of their complexity and vast value.  In other words, it is no longer an either/or debate:  either the industry gets to collect everything or nothing.

Therefore, think about what kinds of data your company wants about use (and not necessarily about each end user).

(See some TOUs, etc., we have drafted: www.npbn.com and www.photospin.com for some examples.)

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Summary:  In what may be a variation on the model of the RIAA campaign against illegal music downloaders, AP has launched an assault on the “free” use of news on the Internet–not just their feeds but, apparently headline links.  A part of this assault is a suit in US district court in New York against All Headline News Corp., a news aggregator.  That court just denied a motion to dismiss the suit, applying the principle of “hot news” to online news for the first time.  One point for AP.  That decision and the legal theories underpinning the “assault” are connected.  Add another point for AP.  (Please note that a copy of this entry can also be found at digitaldumonde.wordpress.com and globalgeneralcounsel.wordpress.com)

AP recently announced that it is fed up with the misuse of its news feeds-an understandable lament given that its customers (newspapers) own AP.  You may be hearing echoes of the famous movie, Network, and they are more than echoes.  At the annual AP board meeting, the chairman, Dean Singleton said “We are mad as hell and are not going to take it anymore.”

We take no position on whether this is a good or bad thing.  Many, many talking heads (“typing hands” for a new name for bloggers?) are decrying what they see as a frontal assault on the doctrine of “fair use.”  We do not see it that way.  We do see it as an opportunity to clarify not only the application of that doctrine online but also a way to discuss, and eventually clarify, the appropriate business models for online news and information.

A Few Details

They plan on policing the misuse of copyrighted material.  How is a matter of speculation.  AP has signed up with Attributor, a company with technology that can track use of digital information (stories and photos) that have a digital “fingerprint.”  Armed with that information, AP could demand some portion of ad revenues from sites using the offending materials in a manner beyond the limits of the “fair use” doctrine.  (You heard it here first, by the way.  We wrote several weeks ago that demands by newspapers for such revenue are not unreasonable as a move to increase revenues for online newspapers.)

Fair Use May Change.

We get it.  We might not support the approach (and we might also support it) but fair use has been strained to, if not beyond, the limits of credulity to justify online use of information created by others, for which the copyrights are also owned by those others.  In these situations-where a legal doctrine lags too far behind market development-the doctrine becomes the focus of legal assaults and the consequences are a changed doctrine.  Regrettably, the public debate on this matter has begun to take on ideological “hate” language that relies more on ad hominem attacks than reasoned analysis and argument (in the “rhetoric” sense of that word).

The First Salvo:  All Headline News.

AP is going after All Headline News, a news aggregator.  They have been accused of stripping attribution (including copyright notice) from AP articles and re-publishing them without any changes whatsoever.  Again, we take no position on what they are doing.  AHS filed a motion to dismiss, which was denied by the district court in an interesting opinion.

Why?  Because the court anchored its action to the “hot news” doctrine from 1918 (an opinion from a case that arose from the start of the business of the real-life model of our favorite film character, Citizen Kane).  There, news that is so “hot” (like breaking news) becomes the quasi-property of the people creating the news stories in the first place.  Whatever your opinions on the doctrine, this is the first time that “hot news” has been applied to the online news world.

So What?

We discern a certain theoretical strategy behind AP’s approach, something that seems to have escaped notice with all the screaming against AP now underway.  In a sense, hot news can become something of an argument against a “fair use” defense.  That is not quite it-but we will leave that sentence in, anyway.  Rather, finding the applicability of the doctrine, the court gave AP the basis for arguing “misappropriation.”  That can become the basis of a legal theory that differs from mere infringement.  In a simple manner, it can be explained that the word is the civil law equivalent of “theft” in the criminal context.  Putting aside discussions of legal theories, strategies and tactics, the opening into this legal argument carries with it the potential of using “freighted” language to use in the PR battles that AP faces and will continue to face.

Information Wants to Be Free??

That rallying cry has energized much of the discourse that coincides with the explosive growth of all things digital.  Whether something as diffuse as “information” can be called something singular in that context is one thing;  whether it can “want” anything is another.  But that’s not our point.

There might be a tectonic shift underway (OK, warning: Now we’re getting really speculative).  Most obviously, the collapse of the newspaper industry alarmed people (OK, primarily the pundits and shareholders and employees but you get the point) enough for alternatives to “free” to be openly discussed as new (or recycled) business models.  At an even more abstract level, the conservative interpretation of the “free” market is now in retreat (rightly or wrongly is not our point), and so also might other ideological positions that tend toward a libertarian bent.

We don’t know.  But we do know that AP has a fight ahead of it–and it is a good fight.  The outcome might not be what AP wants-or what anybody wants-but it will be a changed world because of it.


Summary:  European newspapers are figuring out how to survive–even using an old concept.

We have posted quite a few blogs on newspapers (see others at digitaldumonde.wordpress.com where a different version of this entry is posted).  No, Chicken Little, the sky is not falling in the newspaper world, though it does look a bit cloudy.  Look around you.  Try Europe, for starters.

Premium Services, Not Premium News Access.

One approach is to provide premium services.  In Norway, you can pay a hefty price ($90) to join a weight-loss club that is part of a newspaper website.  Your profile on the site can be updated but only for another fee.

Now, paying to upgrade your profile may be a bit much (unless the weigh-loss membership has not been successful) because of the nearly ubiquitous networking sites, but the point is to offer other services for a fee.

US papers tried this approach but in a different manner:  They charged a premium for access to certain news.  (One site, about which we have written, http://www.globalpost.com, charges a premium for additional news AND access to the editorial meeting, of a sort, and access to the journalists themselves).  Think about other services.

The Old Horse of Repurposing Content

Axel Springer, a large player in the publishing space, revived an old concept, which makes perfect sense:  Write once, distribute many times.  Write the article and post it on multiple sites.  This is the old concept of “repurposing” content for different platforms and different audiences.

Data as a New Source of Revenue

Newspapers make money not be delivering news but by delivering audiences to advertisers.  Few things are better than granular data about audience interests.  The more platforms on which your news is available, the more granular those data.  Advertisers like that.  They will pay for that.

Perhaps losing weight through a club run by a newspapers does not sit well with your idea of reading weighty editorial pronouncements.  But something else might.  Newspapers thinking this way create what their advertisers want:  connections with their potential audiences.

And some of them may lose weight, too.

Oh, and if you want to think about the ramifications for licenses then go to globalgeneralcounsel.wordpress.com.

Summary:  Real life experience of data being collected for one purpose being used for other purposes–adding to the argument that data mining is just beginning.  And, when you can do something about it (like own it or get access to it through a license in your agreements) then you should.

Two articles in a recent issue of The Economist added (at least in my mind) to the thesis that we are entering an era when the slicing and dicing of data (OK, OK, call it data mining) will yield actionable results and meaningful rewards.  The issue was February 28, 2009.

To reiterate my point in other blogs, it is not so much the results of the studies that are interesting but the fact that data collected through new digital systems for one purpose were used for another purpose.

Permit me to address the first one, on social networks as a source for data analysis.

Facebook and the Dunbar Number (Hint:  It is not 42)

First, forgive me if I get the facts wrong (but they are not the point here).  Several years ago a professor posited an upper bound (on average) of the total number of people in a social network.  That is the Dunbar number.

Later, a Professor Marsden confirmed common sense that there is a much, much smaller “core” network.  The Dunbar number is 148;  the Marsden number is around ten.  (By the way, the Dunbar number has been surprisingly stable over history as an organizing unit for groups like armies, etc.).

Online social networks make social networking more efficient to create and sustain.  (The conclusion of the studies cited is that they do not affect these numbers, but that is not germane to the point of this post.)  Crunching the numbers from Facebook confirmed (pretty much) both the Dunbar Number and Marsden’s core.  The average network is about 120 (close enough to Dunbar) and, by looking at proxies for interaction (proxies are another theme of mine), the core number worked out to be about seven for men and ten for women and in some circumstances somewhat higher.  (Please keep in mind that these are averages:  Your mileage may vary.)

The Method Is Not Madness

The analysts looked more closely to determine the core.  This is where it gets interesting.  They used responses as proxies for interaction–that is, leaving a comment or otherwise communicating with someone who has communicated with you.  (It turns out that there are cultural or national differences, by the way.  For example, in research for a long time on this core it has been known that American men tend to have a very small circle of people with whom they regularly discuss important matters–smaller than other nationalities (this is, after all, a British magazine).

You can imagine all sorts of variables that affect these numbers.  That is true.  There may be more interaction between two people flirting;  there may be more interaction between family members;  and there may be less interaction among co-workers based on their rank.  Time of day, amount of alcohol–you pick–may also affect these numbers.  (These points were not raised in this article–I am just mentioning them).

So Test for It

But that is not the point.  You could test for–or control for–any number of variables.  Now, think like an advertiser, or a publisher that wants to increase the value (and thus the price of advertising) for the advertiser.

(Note to readers:  To anticipate one concern, the analysis does not have to include PII and can–and should–be done in full compliance with the strictest of privacy policies.)

You could cross-check any number of such users to see the overlap of interests.  You could check those overlapping interests against geographic distribution over time and then over demographic data (of the group) such as number of males in given age cohorts and then demographic data for the region(s) such as the baseline of behavior for such cohorts, etc.

An advertiser could then check those results against its sales or marketing efforts in the region or, for that matter, its marketing efforts to that group on that social networking site at those particular times.

OK, these insights are not entirely new.  Many search and ad companies have been doing this sort of thing for a few years.  What has not happened is that advertisers (and their gatekeepers, the ad agencies) have not yet embraced the power of these kinds of data analytics.  In other words, it has not yet gone mainstream.

So What About Dunbar Numbers?

I have not yet figured out the import of the actual Dunbar Number (looks like a constant to me) when it comes to monetizing data.  One thought is a kind of “data threading.”  Assume that people belong to several, if not many, groups.  One could trace the overlapping interests across the groups, not to mention the overlap of group memberships, as well.  Here we are not necessarily talking about social groups (“friends” in the parlance of Facebook and “Contacts” in the parlance of LinkedIn).

For example, I belong to some groups in which a few of those members also belong to other groups of which I am a member but they also belong to other groups of which I am not a member.  Some number of those members share my interests;  some number do not.  These overlaps could be “threaded.”  And, they could also be tested over time.

The Conclusion, Please

OK, OK, I am way over my self-imposed word limit.  Perhaps you get the point.  I will post on the second article soon (about crowds being analyzed by CCTV).  This should add weight to my point that your agreements should get you access to anay data collected in any digital deals you do.

And, yes, as a result, expect CPMs (and monetizing online experiences) to rise.

We are trying an experiment here.  Rather than rewrite a post we have made on another of our blogs we have set forth the link below.   That blog is for general counsel but the point is applicable to topics covered in this blog, as well.

Here is a summary:

An article in The New York Times Magazine on Sunday March 14th on basketball provides an object lesson that you should own whatever data may emerge from any digital initiatives memorialized in a legal agreement.

http://globalgeneralcounsel.wordpress.com/2009/03/21/data-the-new-york-times-basketball-agreements/

Why this matters:  traffic=ad revenues.  Scraping gets riskier.

Last month, the New York Times Corporation settled a suit brought by Gatehouse Media Inc., which runs websites for 125 Massachusetts newspapers.  The NYT\’s Boston Globe was essentially scraping the Gatehouse sites.

Technically (and this distinction is important), the Globe site was returning readers TO the page of the article.  Gatehouse complained that readers were bypassing the ads on the home page.  This is interesting.

Intuitively, one would think that a large number of readers who were returned to the Gatehouse site (albeit at a subsidiary page) would in fact go to the gatehouse homepage.  But no, Gatehouse wanted more (rightly or wrongly).  It also turns out that Gatehouse could figure out how to block this process, which probably led to theNYT offering to settle–so as to avoid case law that goes against them.

So what?

Sites regularly scrape or otherwise link to other sites–usually to the subsidiary pages.  We get a lot of people asking of us if they can do it.  Well, this case—though settled and therefore not an opinion for purposes of precedent–suggests (to no one\’s surprise) that doing so will subject you to legal challenge that will cost a lot to defend.

It makes sense, too.  Again, no opinion as to whether it is right or wrong, legal or not, but common sense should tell us that people who own the rights and go to the trouble of posting content where they want it posted should be able to control access to it.

Of course, Google is another matter.

And, by the way, there is already case law in Europe iin support of Gatehouse\’s position, so where it is done will also make a difference.

As of St. Patrick’s Day, much had already been written about the “death” of the Seattle Post-Intelligencer print edition, which the parent company, the Hearst Corporation, shut down on that green day. The paper is now web only, with twenty in the newsroom, down from about 160. This is not the only news about newspapers these days but, to me, what is most important is the content plan of the P-I site. Here’s my take: Little original content (weird). Include existing blogs (good but unstable; if they are that good they will leave for a better gig.) Links to other sites: While many news sites do this, is it really wise? Link to other sources within the Hearst family (see below). Local government officials as columnists: Now there’s a thriller. Snore. Hearst magazine content: This is a good idea. Hearst owns numerous magazines. Repurpose the content AND link to the magazine sites. Keep the traffic in the family. This is probably a good idea. How they will differentiate themselves from the sites of local TV stations remains to be seen. At least the inclusion of commentary may make it fresh. What seems to be missing from the reports of the plans are social networking and UGC functionality. Local Little League teams or AYSO teams should be invitted to create their pages there. It would cost the P-I little to enable such additional pages to be created. In that approach, they could become something of a virtual community center. But whatever direction they take, they should build a brand–or build on the brand they have, which is a pretty good one. And, the good news in all this: the newspaper industry now has a testbed–one of many more to come in the very near future, like the next couple of months, given the terror felt (rightly or wrongly) by newspaper corporate owners. Long live the paper! Full disclosure: a variation on this blog will be (or has been) posted on the blog “Convergent Realities” at http://www.thectcnetwork.org.