These stories are increasingly common. They are the reason dozens of lawsuits, investigations, and public health warnings have converged on a troubling conclusion: social media companies have built platforms deliberately designed to capture and hold the attention of young users at any cost, to maximize profit.

Engineered for attention, but at what cost?

Features such as likes, notifications, and algorithmic feeds create feedback loops that keep users coming back. They deliver small bursts of social validation that can make it difficult, especially for younger users, to step away. As Sean Parker, Facebook co-founder, famously acknowledged, these platforms were engineered to provide users with “a little dopamine hit every once in a while” so they keep coming back.

For teenagers whose brains and social identities are still developing, these design choices can have profound consequences. Studies increasingly link heavy social media use among adolescents to anxiety, depression, and body image concerns. Filters, curated images, and constant comparisons can intensify feelings of inadequacy, while endless scrolling and late-night notifications disrupt sleep and emotional well-being. Many of these lawsuits allege Meta, owner of Facebook and Instagram, had the most knowledge of these impacts but chose to suppress it. That’s one of the reasons it’s why courtroom arguments create a compelling comparison to big tobacco.

Lawmakers need to act, and to get social media regulation right

It’s no surprise lawmakers are looking for ways to respond. Across the country, proposals in California, Texas, Utah and Alabama like the Age Appropriate Design Code and the App Store Accountability Act aim to address harms to children online. While the motivation is understandable, many of these bills cast too wide a net and as a result, risk creating new problems while trying to solve existing ones.

Instead of narrowly targeting the design features and business models driving these harms, they often sweep in the broader digital ecosystem. Thus the regulation doesn’t just impact social media platforms, but also news organizations, educational services, and nonprofits. That raises serious First Amendment concerns. Laws that affect speech must be narrowly tailored, and courts have already shown skepticism toward broad, vague attempts to regulate online content.

Measures that require broad content restrictions or impose vague compliance obligations on publishers are also particularly vulnerable to legal challenges. And, if struck down, these efforts could further delay meaningful progress in addressing the real harms associated with social media.

A complex ecosystem requires precise solutions

There’s a better path: Instead of regulating the entire internet, lawmakers should focus their attention on large social media platforms whose business models depend heavily on algorithmic amplification of user-generated content. These companies derive enormous revenue from engagement-driven advertising models that reward keeping users on their platforms for as long as possible.

Policies aimed at limiting manipulative design features for minors, increasing transparency around algorithms, and establishing reasonable duties of care could address these issues without sweeping in good faith actors.

Congress has already begun exploring this more targeted approach. The Kids Online Safety Act (KOSA), which has attracted overwhelming bipartisan support, focuses specifically on platforms that rely predominantly on user-generated content and algorithmic recommendation systems. By concentrating on the companies whose products create the greatest risks for young users, KOSA offers a more precise model for addressing online safety concerns.

Overbroad regulation and unintended consequences

That narrower focus is critical not only for constitutional durability but also for avoiding unintended consequences.

If new legislation imposes sweeping compliance obligations—such as complex age verification systems, extensive data governance requirements, or new liability frameworks—many news organizations could struggle to meet them. Smaller publishers in particular lack the legal and technical resources required to implement costly regulatory regimes designed with massive social media companies in mind.

Possibly even more troubling, some proposals could inadvertently restrict teenagers’ access to credible, fact-checked journalism. If platforms respond to regulatory risk by broadly limiting content for minors, young people could find themselves cut off from some of the most reliable sources of information available online. Teenagers (and everyone else) need more access to reliable journalism from publishers who take responsibility for it. Policies designed to protect young people should not inadvertently make it harder for them to find credible reporting.

Mounting evidence of social media’s impact on youth mental health demands a serious policy response. But effective regulation must be precise. Broad, legislation may seem decisive, but it risks violating constitutional protections, burdening responsible publishers, and limiting access to reliable information.

A more focused approach that targets the design practices and business incentives of the largest platforms offers a better path forward. It should hold the most powerful platforms accountable for the environment they create and the choices they make about how young users interact with their services. If policymakers maintain that focus, they can address a generational public health challenge while preserving an open and diverse online ecosystem.

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Guardrails for AI

Podszun and Meyer identify three areas needing guidelines and policies to uphold democracies:

1. Trust in information is about ensuring that the information people receive is accurate and reliable, whether it’s news or other content. Laws like the Saarland Media Act stress the importance of journalists being careful and accurate when reporting. However, when artificial intelligence involves creating content, it can be hard to know if the information is trustworthy because the processes behind AI are often hidden. This lack of transparency can make people doubt the reliability of AI-generated content.
2. Public discourse refers to the conversations and discussions in society, especially around important issues. With the rise of AI-powered recommendation systems, people often get information that aligns with their beliefs and interests. This can create “bubbles” where people only hear opinions like their own, leading to societal divisions. The idea of the public sphere, where people from different backgrounds come together to discuss and solve problems, is important for democracy. However, social media platforms, which play a big role in public discourse today, can make it harder for diverse opinions to be heard.
3. Plurality is under pressure despite the many different media sources available today. The reality is that companies like Alphabet (Google’s parent company) and Meta (formerly Facebook) have too much control over the information people see. This concentration of power can limit the variety of perspectives and ideas people are exposed to, especially when AI algorithms are used to personalize content delivery.

A regulatory approach for AI

Regulation will be needed to address concerns and provide guidance for the most constructive development of the AI industry and its applications. This could include laws to prevent monopolistic companies from having too much control over information. Further, there is a need for transparency about how AI is used in creating content. It’s also important to ensure that the data used to train AI systems is diverse and representative of different viewpoints.

The authors provide recommendations for regulatory approaches to ensure diverse and trustworthy access to information. They suggest that:

• Preventing monopolistic concentration is crucial, given the dominance of big tech companies in both data-driven business models and AI control. Media concentration laws should counteract this trend, promoting diverse data pools and open technology. 
• Ensuring transparency and responsibility are fundamental. Trust in AI-driven media necessitates transparency regarding its usage, training data, and information sources. 
• Identifying prohibitions is necessary to enforce accountability. If AI crosses ethical boundaries, explicit bans with sanctions are imperative. 
• Addressing the training data problem is vital. Guaranteeing open and diverse data selection mitigates distortions in AI-generated content. Embracing adaptable AIs capable of correcting errors ensures ongoing development and integrity.

While AI offers unprecedented opportunities for media innovation, its unchecked proliferation poses significant risks to democratic principles. Effective regulation is imperative to harness the potential of AI in media while safeguarding pluralism, transparency, and trust in information dissemination. Only through collaborative efforts between policymakers, media stakeholders, and technologists can the transformative potential of AI be harnessed responsibly in the service of democratic societies.

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Surveying the regulatory landscape

DCN CEO Jason Kint kicked off the event with a focus on current key regulatory issues that impact digital media. He emphasized that the focus must remain on aligning content experiences, advertising behavior, and data usage with consumer expectations. He also looked at the current state of antitrust regulation.

As Kat Downs Mulder, SVP and GM of Yahoo News put it: media brands have a responsibility, in asking consumers for their information through sign-ons, “to be protective of our asks and thoughtful about what we request.”

Kint’s points were hammered home by Shoshana Zuboff, Harvard Business School professor and author of the book The Age of Surveillance Capitalism. Zuboff delineated the history of privacy erosion leading to tech companies’ engagement in a “secret massive scale extraction of human data” and how regulation is a driving factor in reining it in.

The current drive towards antitrust and reining in the dominance a few players have over the ad market was a focal point for Utah Republican Senator Mike Lee, who addressed attendees via Zoom. He discussed a bill he is reintroducing “in a few weeks with bipartisan support,” which is designed to restore and protect competition in digital advertising and improve advertising transparency.

“Unfortunately, big tech behemoths like Google have inserted themselves as middlemen into this relationship, extracting monopoly rents not just on their own properties, but from every corner of the entire internet ecosystem.”

How brand focus empowers growth

The impact of emerging regulation is far from the only challenge media executives currently face. Speakers touched on inflation, supply chain disruption, European conflict, U.S.-China tensions, the ongoing impact of Covid, climate concerns, labor challenges, the erosion of trust in institutions, and the fight for free speech.

However, Almar Latour, CEO, Dow Jones and The Wall Street Journal publisher (pictured at top) said that challenges like these actually drive brands closer to their mission. For his brands, that mission is to go deep with products to provide truth relevant to different aspects of the business world, he added. This strategy is one he believes will lead to subscription growth.

Producing great products consumers love and return to over and over is indeed a driving factor in subscription strategy, as illustrated in a discussion between Julia Beizer, Bloomberg Media CEO and chief digital officer and Mulder. She noted that consumers value connecting with authoritative voices in brand podcasts and newsletters.

Indeed, building an infrastructure on the foundation of staying true to one’s brand is key to success, according to Bonin Bough, Group Black co-founder and chief strategy officer.

Brand, however, is not some vague marketing tool. Scott Mills, BET president and CEO said that maximizing brand requires a comprehensive data-driven ecosystem encompassing linear, streaming, and digital platforms.

Advocating for truth and accuracy

Maximizing brand value requires providing consumers with a source of much-needed, trustworthy information – particularly when others seek to tamp it down and create a void that is often filled with dis- or misinformation.

Addressing Florida’s Department of Education rejection of the AP African American History course, Mills noted that such actions will “drive us to allocate more of our resources or more of our attention to ensuring that our community—and people who value and respect our community—have access to accurate information.”

Clearly, the need for accurate information is a global one, though journalistic approaches and press freedoms vary widely. In his work as the manager for East and Southern Africa at the organization Journalists for Human Rights, Dr. Siyabulela Mandela has found that offering training to local journalists not only empowers them, but helps their work better serve local communities. He said that improving journalism’s role of providing checks to those in power is critical at a time when “there seems to be a shift from more democratic ways of doing things towards more totalitarian ways.”

Mandela advocates for an approach that enables Western journalists to reframe stories in East and Southern Africa and the Middle East with a more contextual focus on human rights by leveraging his organization’s local knowledge base. He favors the idea of a collaborative exchange program for mutual training with journalists from East and Southern Africa. Each, he pointed out, has much to learn from each other.

Evolving with the times

In addition to providing content that continues to address the needs of audiences, speakers discussed how innovation in storytelling provides creative and impactful ways to engage and inform audiences.

For Emblematic founder and CEO Nonny de la Pena, that means finding new ways to use virtual reality. Nicknamed “the godmother of VR” de la Pena illustrated techniques and showed behind the scenes insights into how some of the most powerful VR stories have been created. However, despite her enthusiasm, she said that given the fact that creators of misinformation often leverage powerful tech, it is essential to establish immutable provenance for footage to make it difficult to manipulate.

Encompassing non-traditional strategies to engage new audiences requires portfolio diversification, noted Alice McKown, publisher and CRO of The Atlantic. While the company has digitized its entire archive of 30,000 articles from its 165 years, it also has expanded efforts into creating new ways to leverage its IP, including immersive art exhibits, video, podcasts, book publishing, and events.

The National Geographic also has instituted strategies to evolve with the times while staying true to the brand’s core attributes. The magazine still attracts a relatively small, but incredibly loyal following, according to editor-in-chief Nathan Lump. These days, however, National Geographic brand reaches millions of people via social media, the National Geographic Channel on Disney Plus, virtual reality, live events, a travel business, consumer products, books.

Given the many ways that the brand now reaches audiences, Lump pointed out that National Geographic is the biggest it’s ever been in its 135 years. National Geographic boasts 714 million global followers across the major social platforms alone.

For The New York Times, Chief Growth Officer, Hannah Yang told the audience that its impressive subscription growth is achieved through three well-defined missions: a subscription growth mission to meet financial goals; consumer-facing mission offering desired options such as games and cooking; and platform mission to ensure that all parts of the business have the technology and data perspective they need to thrive.

What’s next

“There’s never been a better time to monetize audiences,” noted Alex Michael, managing director of LionTree Group. He stressed the value of omnichannel strategy and bundling while discussing the investment opportunities his company is leaning into this year.

The power of omnichannel was echoed by a number of speakers, including board member Robin Thurston, Outside Interactive founder and CEO.  He said, “The concept of single sign-on omnichannel helps connect the dots and create value.”

Richard Plepler, founder, EDEN Productions and former HBO chairman and CEO, reminded attendees of something he’s advocated for many years: quality over quantity. “More is not better; only better is better. I am not of the belief that tonnage gets you more subscribers – what gets you more subscribers is when brands deliver on their promise.”

As DCN members map out strategies for 2023, innovation and audience focus remain constant. However, to win amidst contemporary challenges developing a seamless omnichannel strategy, while staying to brand mission, will be key to attracting new consumers and retaining existing ones.

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With the exception of non-profits, most news organizations employ a commercial model. In the simplest terms, advertising is used to drive revenue to support the news organization. However, intermediaries – notably Google and Facebook – now stand between the publisher and the advertiser. Since search and social media are key ways in which people discover and consume news online, these platforms benefit from the user traffic derived from publishers’ content. They collect personal data on users and group people into demographic and special-interest categories to target advertising to them on their platforms.

Radsch’s research examines how policymakers are working to redirect revenue to compensate news outlets more equitably.

Her report classifies the different policies into three distinct groups:

1. Digital taxation,
2. Competition policy (or antitrust), and
3. Intellectual property.

Taxation

In recent years, taxing digital advertising has gained interest. In 2019, the U.S.-based Free Press proposes a small tax on revenues generated from targeted advertising. This policy was established with Google and Facebook in mind. The taxed revenue would be used to fund public interest media systems.

Radsch notes it’s problematic that the policy does not identify who will monitor and implement a payment distribution system for the news media companies. 

While not covered in this report, in 2021, Connecticut, Indiana, New York, Oregon, and Washington introduced state proposals for a new tax on revenues from digital advertising or to expand the state sales tax to digital advertising sales. Interestingly, none of these proposals allocate the tax revenue to news organizations. Connecticut plan suggested the revenue from the tax be dedicated, in part, to funding online bullying prevention efforts and training for social isolation and suicide prevention.

Maryland became the first state to enact such a tax in February 2021. However, these state tax laws face court battles since they likely run afoul of the Constitution’s Commerce clause. This clause restricts the ability of states to regulate commercial activity across state lines, and the Internet Tax Freedom Act prohibits states from levying taxes solely on digital goods or services.

Bargaining power

Other policies are exploring making platforms pay for the news they use, headlines, photos, and snippets. This type of policy forces the platforms to negotiate directly with publishers rather than the government. Australia made headlines in 2021 when it passed this type of legislation requiring Facebook and Google to share algorithmic information with and pay licensing fees to news organizations. The code states that news media companies can bargain individually or collectively for payment from platforms to use their content.

As a result, Google and Facebook threatened to pull their services from the Australian market. Facebook did shut down its service for one week. Both companies ultimately acquiesced and signed deals with Australian publishers.

Intellectual property rights

Many question whether the “fair use” exception in copyright law, the use of a small amount of copyrighted material without prior permission, applies to Google and Facebook.

The 2021 EU Digital Copyright Directive created a right for press publishers, not just authors, to claim copyright, including for snippets of news. In addition to individual publishers being able to strike deals with the various platforms, the Directive allows collective management organizations to negotiate licensing fees and distribute them back to publishers. 

In 2021, members of the U.S. Congress proposed a new version of the Journalism Competition and Preservation Act of 2021. This bill would create a four-year safe harbor from antitrust laws for print, broadcast, or digital news companies to collectively negotiate with platforms regarding the use of the news companies’ content. In other words, media news companies could collaborate to discuss bargaining with Google and Facebook without fear of antitrust violation. Despite bipartisan support, the bill appears to have stalled.

Profits and progress

Google and Facebook claim that news content generates little revenue. However, their earning calls suggest otherwise. These companies benefit tremendously from the trusted content and audiences that news publishers deliver. 

Radsch’s report calls for platform transparency, including sharing traffic reports and the number of ads served around each news item. This would be a good first step to revealing the amount of revenue the news content generates on the platforms. Once this amount is determined and platforms equitably paid for news content, the relationship between the two can reset. Given the importance of advertising revenue to journalism, it’s important to get this right. Radsch’s report offers guidance and insights that will help policymakers move forward meaningfully.

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And yet scam and deceptive advertising is simply accepted as an ugly part of digital media and advertising. And it’s only getting uglier. Since the beginning of 2021, The Media Trust has detected a 50% increase in scam campaigns hitting publisher properties. Still, too many AdTech companies and publishers look the other way as the scams roll through the programmatic pipes, hoping their audiences have the good sense not to be bamboozled.

Unfortunately, there have been virtually no consequences for sites running scam ads. There’s the occasional massive fine, like when the Federal Trade Commission came down hard on Clickbooth for its acai berry barrage. However, for the most part, scammers advertise with impunity and AdTech and publishers become their accomplices.

However, consequences may be coming—and the fallout may be dire—judging by the developing online regulatory situation in the UK and increasing attention elsewhere.

The scope of online safety measures

British Prime Minister Boris Johnson has promised to present the Online Safety Bill before Christmas. The bill would require publishers, social networks, and many communication/messaging apps to deter, remove, and mitigate the spread of Illegal and harmful content—particularly when aimed at children. The bill threatens fines as high as £18 million or 10% of global revenue, and possible criminal sanctions.

Beyond content that sexually exploits children (which must be reported to law enforcement), the harmful content in question includes malicious trolling and racist abuse—with the added goal of “protect[ing] democracy,” presumably through stemming online disinformation. The UK Office of Communications (Ofcom) will enforce the proposed law, which will also give the regulatory agency the ability to completely block access to a site or platform.

However, advocates like famed British personal finance advisor Martin Lewis think the bill doesn’t go far enough. That’s because it’s laser-focused on user-generated content and doesn’t regulate online advertising—most notably scams. Lewis, whose likeness is often exploited in scam ads pushing bitcoin schemes, has been on a crusade against online scam ads for years, including forcing Facebook to settle for £3 million over a 2018 lawsuit regarding more than 1,000 scam ads featuring his appearance.

Drowning in scam ads

The data backs up Lewis’ claim that the “The UK is facing an epidemic of scam adverts.” In 2020, 410,000 cases of fraud reported to the UK police represented a 31% jump from the year prior, according to consumer group Which?, with £2.3 billion fleeced. Including anxiety and psychological damage, Which? puts the actual total suffered by UK consumers at £9 billion.

And the greatest frustration among consumers and public advocacy groups is the lack of recourse and sense that scammers act with impunity—aided by AdTech and digital media. In another Which? report, 34% of consumers said a scam they reported to Google was not taken down, while 26% said the same of Facebook.

In 2020, The National Cyber Security Centre removed more than 730,000 websites hosting scam advertising landing pages featuring the likenesses of Lewis, Richard Branson, and other celebrities. Despite that effort, The Media Trust has seen a 22% increase in these types of scam (aka “Fizzcore”) content throughout 2021 that use similar landing pages.

Fizzcore is more nefarious than other scams because it employs cloaking to hide malicious creative and/or landing pages from creative audits and other detection techniques. The vast majority of these have been pushing bitcoin investment scams, often with the same Lewis and Branson content.

Even if online scam advertising fails to make the final Online Safety Bill, a reckoning for scam ads could come in other forms. The UK’s Department for Digital, Media, Culture and Sport (DMCS) is developing the Online Advertising Programme (OAP), a framework that enables regulators to address potential consumer harms from digital advertising, including scam ads.

And just to pile on, UK. Home Secretary Priti Patel announced a relaunched Joint Fraud Taskforce on Oct. 21. Addressing the significant rise in scams during the peak of the coronavirus pandemic, the taskforce will focus on addressing scams and fraud through private-public partnerships and refurbishing of government reporting tools.

Fallout beyond the British Isles

The ramifications of all this regulatory (buildup) ought to make the industry anxious. The Online Safety Bill would put heavy new burdens on publishers and social media in moderating user content in the UK, but the inclusion of scam ads might directly affect revenue. In the absolute worst-case scenario, publishers would need to vet all specific advertisers running on their sites as well as be familiar with all creative to avoid liability. That could mean many risk-averse publishers shut off programmatic advertising.

Scam advertisers are notoriously hard to pinpoint. They use any and every buying platform available, and then tools like cloaking in code to hide their malicious motives. When it comes to rooting out scam campaigns, the proof isn’t completely in the ad code. While creative and domain patterns can be identified and blocklisted, finding scammers also requires investigation into the elusive end-advertisers, their motives, and their histories. It’s not impossible, but it requires dedicated teams always on the pursuit.

Beyond stopping scammers cold at the source, the next best way to stem proliferation of scam ads is to bring culpability to publishers and their AdTech partners. However, publishers are the low-hanging fruit. The website was where the consumer was attacked, so they’ll always be the prime regulatory target.

Despite the intense pressure in the U,K., regulators in other countries are also most definitely paying attention and looking for a potential roadmap. In the U.S., reform of Section 230 of the Communications Decency Act—which shields online media companies from legal liability regarding user-generated content—appeals to both major political parties. Really, what politician would say no to the easy win of protecting consumers from online scams? According to the Federal Trade Commission, consumers lost $3.3 billion to fraud in 2020, up from $1.8 billion in 2019—and that’s only the 2.2 million reports filed. 

Self-regulation to the rescue?

The IAB UK is conversing with the DMCS on the OAP, but ultimately the trade group believes industry self-regulation is the answer. While self-regulation on the data privacy front became a mockery of itself, self-regulation of scam ads doesn’t need to meet the same fate. First off, trade groups like the IAB need to establish stronger ad quality guidelines that offer standards for handling malvertising, scam, and other harmful ads.

In addition—or short of that—publishers need to take control of their own destinies regarding scam ads. Every ad quality provider should be identifying scam ads and enabling publishers to block them. Slapping down redirects simply isn’t enough for a bad-ad-blocker—a publisher serving scam ads is violating the trust of its audience and leaving consumers vulnerable.

Not only is blocking the scam ads the right thing for publishers to do, it is a way to get ahead of—or perhaps helping avoid—a regulatory onslaught that will have catastrophic revenue consequences. Failing to mitigate will come back to haunt the industry.

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Google and Facebook will pay for premium content

In 2019, the European Union approved the Copyright Directive and underlying publishers’ right, which gave news publishers legal leverage to demand better terms from platforms. Now, all eyes are on France where a court ruled earlier this year that Google must negotiate in good faith with publishers. Of course, Google will avail itself of all the legal channels to slow down any effort to force them to pay for content. However, it’s likely just a matter of when, not if.

On the other side of the globe, in 2019, the Australian Competition and Consumer Commission (ACCC) to develop a voluntary code to rebalance the relationship between news organizations and big tech platforms. As the latter predictably dragged their feet, the ACCC switched gears earlier this year and moved to the development of a mandatory code, which appears likely to be easily approved by the Australian parliament in 2021.

In response, Google and Facebook have threatened to drop news from their services and/or pull out of these markets altogether. However, we know these are empty threats. For one, there’s common sense. If Facebook’s news feed and Google’s search results were devoid of trusted news organizations, what kind of miserable consumer experience would that be?

Really, given the massive profit margins of these tech companies, and the political scrutiny they are facing on multiple fronts, it makes sense for them to simply buy their way out of this problem. Case in point: Earlier this month, Google launched Google News Showcase, which will pay out approximately $1 billion in licensing fees to a select group of news publishers. As News Corp’s CEO, Robert Thomson, noted, “…the principle and the precedent are now established.” My take: Google sees the writing on the wall and is trying to get ahead of regulators in an effort to set the market.

Also, earlier this month, the House Judiciary Committee issued a lengthy report that summarized their investigation into big tech platforms and laid out a host of legislative solutions. One of those proposals would allow news publishers to collectively negotiate terms with platforms like Google and Facebook. It’s pretty clear which way the wind is blowing. Platforms will pay for premium content in the not-to-distant future.

Consumer privacy laws will impact data collection and profiling, especially programmatic advertising

The EU’s General Data Protection Regulation (GDPR), which went on the books in 2018, was meant to give citizens new rights and protections over their data. Since then, the common narrative from big tech’s apologists has been that GDPR didn’t work. It only resulted in annoying pop-up notices while Google and Facebook cemented their dominance in digital advertising.

I dispute the narrative that GDPR didn’t work. It hasn’t been enforced…yet. The most significant enforcement action to date has been a French court ruling (currently under appeal) that Google improperly gained consent from consumers, which resulted in a $50 million fine. The resolution of that case could have huge implications for the entire industry, not just Google.

Meanwhile, Google, Facebook, Apple, and other companies claim Ireland as their European headquarters, which gives primary jurisdiction to Helen Dixon, Ireland’s Data Protection Commissioner (DPC). Last month, in response to a European court ruling, she announced that Facebook and other companies could not transfer data about European citizens back to the U.S. because the U.S. does not have equivalent privacy safeguards. In response, Facebook sued the DPC and declared that they might pull out of the European market if this ruling stands. (Sound familiar?)

At the same time, there are hundreds of cases pending before the Irish DPC, any one of which could have wide-ranging ripple effects. Adding to the pressure for her to act, the Belgian data protection authority issued an initial finding just last week that the IAB Europe’s Transparency and Consent Framework (TCF) is not compliant with GDPR. While the IAB Europe is expected to push back on these findings, the ruling could have massive implications worldwide for programmatic advertising, in particular the real-time bidding systems for open exchanges.

According to the United Nations, 132 out of 194 countries have enacted some kind of data privacy law – many of which are modeled after GDPR. This November, California voters are likely to approve a ballot initiative called the California Privacy Rights Act (CPRA), which will align California’s privacy law much more closely with the GDPR.

Of course, Google and Facebook have enormous legal and lobbying budgets that they will leverage to forestall regulation and enforcement for a time. But, eventually, the same public pressure that led to the enactment of GDPR and other data privacy laws will lead to the enforcement of these laws, which are primarily targeted at limiting the ability of big tech platforms to collect data about consumers.

Platforms will soon face new responsibilities and liabilities

Policymakers on both sides of the Atlantic seem to be hell-bent to make platforms more accountable for what’s happening across their services. This morning, the U.S .Department of Justice, along with 11 state attorneys general, filed suit alleging anticompetitive practices by Google with regard to the search marketplace.

The suit does not lay out specific remedies but could include breaking up pieces of Google into separate companies and/or imposing new obligations on the company. While the suit is likely to take years to play out in the courts, it dramatically ramps up the pressure on Google while also ensuring the conversation will remain top of mind for policymakers. It’s also widely expected there will be additional suits filed by the bipartisan state attorneys general who have been investigating Google on a range of practices including digital advertising.

Meanwhile, members of both political parties in the U.S. have expressed grave concerns about the anti-competitive practices and dominance of the big tech platforms. Democrats have expressed additional concerns about the impact on democracy, news organizations and vulnerable segments of society. Republicans have lambasted the platforms for allegedly suppressing conservative speech.

Importantly, both parties agree that platforms’ algorithms should be transparent. They think regulators should have greater authority to oversee their actions and mergers. And both sides believe that that Section 230 protections should be significantly narrowed. The CEOs of Google, Facebook and Twitter will likely be walking into a political minefield next week as they testify to Senate Commerce on this sensitive topic under threat of subpoena.

In Europe this month, European Commission Vice President Margrethe Vestager announced plans to move forward by the end of this year with two major legislative initiatives designed to impose a whole new set of obligations on big tech platforms. These big tech companies used to be the darlings of innovation. Now they are nearly uniformly seen as impediments to economic growth and democracy.

What does all this mean for publishers?

Taken together, these three unfolding and inevitable changes should provide a unique opportunity for premium publishers. Obviously, public policy debates are messy. And lawmakers and regulators don’t have the best track record in terms of truly understanding tech.

But, as we’ve seen with enforcement action in Europe, investigations by various competition authorities and hearings before the US Congress, policymakers have gotten a lot savvier and are poised to act in bold, new ways. Going forward, companies that enjoy trusted, direct relationships with consumers and advertisers are likely best positioned to flourish in a world where premium content and contexts will have greater value.

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For those following tech policy, the escalation is not surprising. Google and Facebook have built massive, unrivaled data collection operations. According to research from Princeton, the top 10 domains that track consumers across the web belong to Google and Facebook. This tracking, along with careless data practices, has given rise to a growing tide of consumer distrust that affects the entire internet. At the same time, these activities are a major factor in the widespread adoption of ad blocking.

A broken supply chain

Platform intermediaries with black box algorithms redirect more and more value from the supply chain. As a result, buyers (advertisers) and sellers (publishers) suffer increasing harm.

According to the Association of National Advertisers (ANA), approximately 30% of advertiser dollars go to fraud. At the same time, advertisers have suffered reputational harm as platforms negligently and haphazardly run ads for trusted brands against abhorrent content such as terrorist propaganda and child pornography. Thus, brands and marketers are increasingly wary of these opaque and irresponsible practices.

On the other side of the supply chain, publishers’ share of the advertising pie is shrinking as it is gobbled up by data-fixated platforms. And, given ad blocker adoption, the amount of metaphorical pie being served is also dwindling.  

What’s worse, however, is that rules and expectations of the digital advertising marketplace are being written by and for the big tech platforms. With all of that turmoil, state legislators and state Attorneys General, which tend to be younger and more digitally savvy than their national counterparts, are attempting to rebalance the scales in an effort to empower consumers and revitalize competition.

State led, nationally significant

The history of the United States is littered with examples of states taking the lead on policy issues. This was partly by design as the federal government lacked strong tools for regulating the economy prior to Teddy Roosevelt’s trust-busting campaign and FDR’s New Deal.

However, even in the modern era, states often take the lead. For example, civil rights were won first at the state and local levels. States continue to push the envelope on environmental protections. And now, states are now stepping up to serve as incubators for innovative public policy regarding consumer privacy and competition.

While it is heartening to see states assume their role as early advocates for issues of national importance, it’s more important than ever for the federal government to assume a leadership role in this debate. There are some promising signs: The Department of Justice has launched an investigation into the dominance of tech platforms, which could lead to a levelling of the playing field. Meanwhile, Congress is actively looking at setting a national consumer privacy standard.

Clarifying standards and policy

With more states expected to pass their own privacy standards in 2020, we are likely to see a mismatched patchwork of state privacy laws by this time next year. As a nation (and a global marketplace), we need to mend this situation – and fast. Given that data and competition are not bound by state lines, Congress needs to enact a single privacy standard that would empower and protect all consumers while at the same time paving a clear pathway to compliance for businesses of all sizes. Giving consumers real tools to protect their privacy would improve consumer trust and engagement online. It would also reward good actors and give regulators stronger tools to prosecute bad behavior.

At the same time, we must also expose anticompetitive practices and remedy the impact of monopolies on the digital economy. As we’ve seen over the last decade, Facebook and Google simply bought out their competition with the acquisitions of Instagram and DoubleClick respectively. Those acquisitions solidified their dominant position in the marketplace. They have also squelched the competition that drives innovation. Withouta level playing field, smaller companies and the next wave of innovation will be stunted.

The federal government should look to the states to better understand the issues – and envision the opportunity – before us. Empowering consumers and ensuring a healthy competitive landscape will do far more than help cure what ails the internet. It could usher in a new age of innovation and economic growth.

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The CCPA ripple effect

When CCPA first passed in June 2018,  just one month after GDPR’s enforcement, people were quick to refer to it as “GDPR light.” This was an indication that the landmark law will have significant ramifications on how companies that meet the thresholds and do business with Californians will have to change how they operate. At its core, CCPA signals a shift in business models, in particular where data is a revenue stream. What “GDPR light” downplays, however, is how significant that shift truly is.

The very fact that such regulations were passed in the world’s 5^th largest economy was a bold statement in itself. With California at the helm, it’s only a matter of time before the rest of the nation follows suit. Other states are not just going to sit back and have privacy issues impact their citizens after California has made the first move.

More legislation in the works

Already, several other states have already jumped on board with similar laws, some with pages pulled straight from CCPA.  For example:

• North Dakota: A proposed bill would require companies to provide to consumers (upon request) with information about the types of personal data that companies collect and possess.
• New York: Two bills are on the docket: one addressing biometric privacy and another that would govern businesses’ collection and disclosure of personal information. Utah: A bill would require law enforcement to get a warrant from a judge to access electronic information.
• Washington: Legislation would allow consumers to ask companies for a copy of their personal data and to delete or correct inaccurate data. It would also regulate facial recognition technology.
• Texas: Two bills have been proposed that take more than a page, entire chapters in fact, from CCPA: TCPA and TPPA.

The results are clear: CCPA is about to shake the very foundation of how companies conduct business nationwide. Because of this, several federal regulations have also been proposed. And while it’s unlikely any of them will pass before CCPA is enforced on January 1, 2020, it’s vital to note that these things are currently being worked on behind the scenes. More importantly, since CCPA passed sooner than anyone expected, publishers should begin taking immediate action to align with the upcoming regulations. The groundswell of consumer privacy ballot initiatives is only growing stronger as consumers become more outraged with their lack of privacy rights in the digital landscape.

Proposed amendments

Every publisher, whether operating in California or not, needs to be fully vetted on the new law because it affects anyone who conducts business with California residents. It provides those residents with new rights to their information such as knowing what personal information is being collected, shared, and sold, and with whom.

Furthermore, it also allows them to access and delete, or decline the sale of their information while still receiving equal service and price from businesses. Meanwhile, publishers must inform their digital readers of what information is being collected and why. Publishers must also work to ensure that each vendor in their supply chain is operating within their contracted policies. Additionally, toll-free numbers, email, or websites must be provided to consumers so that they can easily request their information.

The latest on CCPA

Recent changes to CCPA include several notable items, but there are two amendments in particular that could affect businesses for years to come—SB-561 and AB-25. The first dramatically increases the legal risks of businesses that collect and keep information by allowing consumers to file suit for any alleged violation of their CCPA rights without any evidence of harm—even before the Attorney General publishes guidance. What’s more, if the amendment passes, businesses will no longer have the right to consult with the AG on such matters.

The second amendment deals with how the law defines “consumer information.” If passed, this amendment would exclude information collected by a business from a job applicant, employee, contractor, or agent. That’s a good thing, because without this change, consumer information will include business contact information and employee information, resulting in unintended consequences. Former employees will be able to request items from  previous employer records, such as emails and other corporate documents that mention their name, including those that contain confidential corporate information and performance evaluations. They can also request emails to and from former contacts, enabling them to reach out to company clients and prospects.

Preparing for CCPA

At the end of the day, there’s no definitive answer on how CCPA evolves by the time it is enforced on January 1, 2020. Still, with less than a year to go, businesses need to take a risk management approach. They need to find out what information is collected  and from whom, what information is  shared and with whom, and how to secure that data. Operations, security, IT, and compliance teams will need to keep abreast of the regulations and their consequences for the organization. And in order to operationalize security and privacy, these teams will need to work together.

Those taking a wait-and-see approach should look no further than the average cost of GDPR compliance. It’s been noted that, after factoring in legal and other fees, the cost sits anywhere between $1M‐$10M. That number could quickly grow if a violation occurs, and the likelihood is high, given the increased right to personal information. To put it bluntly, waiting to see what happens next is not an option. Businesses of all sizes must act now to protect their bottom line or face the impending consequences. 

About the Author

Steve Stup is responsible for developing and overseeing the revenue strategy at The Media Trust. He has experience developing high growth sales teams through the course of his career spanning around 30 years at The Washington Post, Lexis Nexis, and other recognized brands. During his tenure at The Washington Post, Steve built the company’s digital business and spearheaded successful sales and revenue operations teams. He is an alum of Virginia Tech and The George Washington University.

The post Publishers face new risks in the wake of the CCPA appeared first on Digital Content Next.

In the table-setting remarks opening the 2019 DCN: Next Summit, I shared a publisher challenge that I strongly believe our industry is well on its way to overcoming: “Fighting the pervasive mentality that content must be free.” 

While there is speculation that subscriptions won’t work for many content companies online, there are a growing number of companies succeeding with subscriptions as well as other direct to consumer revenue models.  

Truth be told: We don’t know if direct revenues from the audience will suffice to sustain the industry in the broadest sense. However, there are positive trends on all dimensions. We’re certainly seeing more evidence across the DCN membership that people are willing to pay for premium publisher services. It’s no longer simply the financial or national news outlets that can garner subscription and membership revenues. Local news outlets, entertainment channels, and new bundles are attracting consumer revenue. We’ve started to capture these learnings in DCN research, as well as through our events on direct audience revenues. 

We see three positive subscription trends happening: 

1.  If you want to differentiate a news or entertainment service, you need to compare it to the rest of your category on YouTube or the Facebook news feed. Your offering, your brand, needs to clearly stand out as compared to the next best user-generated offering in the ways more and more users are discovering it.    
2. Every new subscription to a publisher’s product drives more intelligence and more investment back into the product so that the next subscription is easier to convert. In a world of more stable and dependable payments from your audience, it’s also easier to drive a percent of the revenue back into constantly improving the product (see trend 1) whether it be hiring more journalists or adapting the experience to the needs of the audience.  
3. The population that has grown up with digital devices shops for news and entertainment with the tap of their fingerprint on a mobile device. Subscribing to Spotify, Netflix, Hulu, Apple Music, and more is a way of life for them. They will not hesitate to invest in news and entertainment that they trust and value. Each successful experience drives their behavior going forward and is more likely to bring their friends into the market of paying subscribers.  

Importance of free to Google and Facebook 

Whenever the sentiment is shared that people simply won’t pay for content in the digital age of abundance, it’s likely that Facebook or Google is lurking around a corner. They’re a crafty pair. Often, they prop up this notion with a truly worrying concern: that a shift to paid content will only serve to further divide the public based on ability to pay. However, their intention is to protect their free fortresses. An industry-wide effort and belief that audiences will pay for content is bad business for them. Hence the veiled efforts over the years to spin the narrative and control the outcome.  

DCN has long established that the free digital content market has mainly benefited these two companies. The math is simple, and it’s been cited far and wide. However, it’s important to recognize how critical the free content ecosystem is to their unbalanced equation. And you don’t have to take our word for it. On Monday night, the UK government released the long-anticipated Cairncross Review, which contains over 150 pages of analysis of the digital news marketplace.  

The Cairncross Review highlights two clear problems with the disturbing dominance of the Google and Facebook business models: 

1. The first problem (that forms the foundation of the duopoly’s dominance) is Google’s control over the buying, selling, transacting, and measuring of the digital ad marketplace. As Cairncross so eloquently puts it: 

“Google has ad inventory in the form of Google Search and YouTube videos, and it owns ‘demand side technologies’ (used by advertisers to bid and buy inventory online), such as Display & Video 360 and Google Ads, and supply side intermediaries (that publishers will use to sell their ad space to advertisers), such as Ad Manager and AdSense. It also owns supplementary technologies such as Chrome browsers, Google Analytics (a ‘freemium’ web analytics service that tracks and reports website traffic as a basic free service, with more advanced features that can be paid for), and the Android mobile operating system.”   

It’s clear what’s wrong with this: Antitrust much? 

2. The second problem that bolsters the foundation of these platforms’ superiority is Google and Facebook’s unmatched ability to collect voluminous amounts of personal data on peoples’ everyday interests and behaviors in both the digital and physical worlds. Again, Cairncross astutely captures:  

“Publishers gather user data from their own sites, including login data for their subscribers, but this pales in comparison to the power of online platforms, which have a rich set of user data giving them significant advantage over others in the market. Whether it is search data (Google), the social networks of users (Facebook) or generally the devices, locations, interests and behaviours of users online (both), these players have an unimaginable wealth of information – valuable to advertisers and publishers – about who is coming to which news sites, and who is seeing which adverts.” 

Google and Facebook are fueled by the amount of personal data available to their heavily-controlled advertising systems. Subscriptions inevitably create more user friction and restrict the flow of data. This means that movement towards subscriptions also forces these companies to step outside their carefully constructed profit guardrails. For risk-taking Silicon Valley start-ups, they’re terrible at stepping outside their shareholder comforts. Cairncross hits the nail on the head in calling for regulatory scrutiny (without mincing words) of these businesses — in how they deal with publishers, their position in the advertising market, and how their algorithms make decisions in promoting journalism.  

So, who is the knight in shining armor? 

To be clear, there are also positive moves by industry and government to encourage these developments.   Interestingly, the Cairncross Review takes a similar position to the Canadian government by recommending a tax incentive for subscribers to news, local news, or investigative content. Again, we agree with this recommendation and expect it would help support publishers.  

To their credit, Google and Facebook have made donations to innovation, journalism institutes and, in the case of Facebook, run seminars to share best practices on subscriptions. Again, their profit guardrails make it impossible for real moonshots. So, while these are good efforts, they are not enough.   

And then there is Apple. A company with the leadership, the payment systems, the brand architecture, and lack of dependence on everything in between Facebook and Google’s profit guardrails (data collection, advertising). And, as news starts to trickle out on Apple’s plans for a subscription news service, there is a lot to like in it. However, as I shared with Ad Age, the reported 50% revenue share is offensive especially if it also comes with the risk of another intermediary controlling the customer relationship. I’m frankly surprised they would roll out with anything close to these terms and hopeful it’s merely a head fake.  

I don’t have any proprietary information, but my back-of-the-envelope numbers on Apple’s offering means that the 100 million monthly users of Apple News translate to approximate 10-20 million daily users. Even if 10 million of these users moved into a subscription tier, this is a mere $120 million in revenue. And according to what’s being reported, a paltry $60 million would get divided between all of the participating news companies. That math doesn’t add up. If Apple has higher confidence in their model and ability to expand the market, then they’re going to need to put some revenue share behind it. 

 It’s just business. Oh, and the future of journalism.  

The post Balancing the equation: In a fair market, subscriptions work appeared first on Digital Content Next.

After all, this enabling of “audience-based buying” brought marketers closer to their long-held notion of advertising utopia: reaching the right person, with the right message, at the right time, in the right context.

Data Dilemma

It also, theoretically, went a long way to minimizing wasted ad spend and enabled significant performance gains. The ad dollars flowed. But this shift took its toll on the sell-side.

To secure programmatic budgets (which were growing steadily and taking dollars away from their direct IO business), publishers had to relinquish control over their hard-won audiences by allowing cookie access to DSP partners in real time via cookie syncing. In doing so, they allowed the buy-side to build up and store those valuable audiences in their own platforms, reducing the need to work with publishers directly to gain access to or insights about their users.

Regulation Matters

The rapid proliferation of user-based targeting has understandably been followed by recent increased focus on consumer privacy. The GDPR went into effect across EU member states in May of last year, limiting unfettered access to user information and the ability to share that information with multiple parties across the ecosystem.

With passage of the California Consumer Privacy Act (which really means all of the US, given California’s outsized influence) and the likely imminent passage of the ePrivacy Regulation in the EU in the second half of 2019, the push for greater consumer privacy legislation seems unstoppable. France’s recent lawsuit against Google also indicates that common industry solutions and frameworks for satisfying new consumer data collection, usage, and privacy regulations aren’t always holding up to legal scrutiny, making the prospect of sharing data widely across partners and vendors increasingly difficult in the future.

While the enactment of these measures on such a global scale erodes the value (and calls into question the long-term viability) of cookie-based buying, it may also open a door for publishers to regain over their data and audiences and re-assert their position in the advertising value chain.

Data Diligence

Here are three tips for publishers looking to capitalize on the moment:

Limit access to your pages

A quick Ghostery check across a number of premium sites shows just how easy it is for 3rd-parties to build pools of data on a given publisher’s audiences. Publishers should be constantly evaluating who has access to their users, and what they’re doing with the data they’re collecting. Partners who add value, either by enhancing audience segments with additional data, or providing analytics and attribution services, should be prioritized. Others, who may be packaging up and reselling data, should be de-prioritized or even culled. An added benefit to this pruning process: faster page loading for users.

Use your data to enhance deals with buyers

Creating greater audience scarcity (enabled through the culling process mentioned above) opens a door for publishers to work more closely with advertisers looking to gain access to their users (and maximize the yield they see from those users). Striking guaranteed and non-guaranteed deals directly with advertisers based on 1st-party audience segments gives publishers the ability to more closely link the cost of media to the value of audiences, and thereby extract greater revenue from their inventory, while also benefiting parties up and down the supply chain. Advertisers enjoy the confidence of targeting audiences using the most recent and accurate data pools. And DSPs and SSPs executing the deals incur less waste (and listening costs), because the inventory is pre-filtered to match only the audience the buyer wants.   

Let advertisers bring their own data

More than just building and monetizing their own audiences, publishers should start allowing advertisers to bring their first-party data to the table. One of the main benefits to this strategy is that buyers are able to trust the veracity of the audiences they’re buying. From a publisher’s perspective, it opens up new options for inventory segmentation that may not have existed within their proprietary audience pools. Overlaying additional data will always limit scale, by matching cookies at the source of origin rather than through DSP and SSP intermediaries. And publishers and advertisers can at least maximize match rates, minimize data loss, and decrease the risk of inefficient decisioning down the line – thereby offsetting scale issues to the greatest extent possible (while also commanding very premium CPMs).

Audience First

Consumer privacy legislation is pushing us to the point where the party closest to the consumer – typically the publisher – will increasingly enjoy exclusive access to those audiences as well. When we add the unique ability to know who that user is and what their interests are, the value soars. Couple this with the decline in quality and scale in the open exchange and what you have is publisher data that hasn’t been this valuable since programmatic began to take off.

Following these three steps will help publishers maximize that value. It will also deliver greater efficiencies and performance to advertising partners as well as privacy consideration to valued users.

About the Author

Mike Pugh is a Senior Solution Consultant at IPONWEB where he acts as the intermediary between clients and IPONWEB’s design, delivery, and engineering teams to create custom ad tech projects. He is responsible for bringing client-specific solutions to market and ensuring a successful execution of the solution, strategy, and opportunity.  Mike is currently the team lead on the TrustX SSP as well as other strategic business accounts.  Prior to joining IPONWEB, he led a team of 14 programmatic traders at Accuen, Omnicom’s trading desk.  Mike has experience managing programmatic buying campaigns across the Autos, Retail, CPG, Financial, and Pharma verticals on most major DSPs.  Mike graduated from the University of Iowa with a Bachelor’s Degree in Economics and DePaul University with a Master’s Degree in Economics & Policy Analysis.

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