Desktop Advertising: Nuisance or New Business Model?

If we want a growing and dynamic economy, we need entrepreneurs who are willing to take risks and try new business models, innovating new ways of delivering value to consumers.

Entrepreneurs put their own money at risk to see if they can come up with something new. If they succeed, we all benefit, because consumers get something they want, the economy at large learns from the venture, and the risk-takers themselves make money, which they pour back into the economy.

We say this by way of preface to our discussion of a new study, “Following the Money (II): The Role of Intermediaries in Adware Advertising,” from the left-leaning Naderite consumer group Center for Democracy and Technology (CDT).

There are several problems with the CDT study, all of which fall along the lines of misunderstanding the importance of allowing innovation and experimentation in a free economy.

For one, the study simply assumes the illegitimacy of any business model that places software on your computer. It assumes this, despite the demonstrated utility of things like cookies that dramatically enhance the user’s Internet experience.

It is entirely possible, indeed likely, that desktop advertising software — in which ads are placed on the consumers’ computer — will develop into an acceptable business model, with legitimate players that respect consumer’s rights — where the software is fully disclosed, where it is easily uninstalled, and where it does not violate privacy. In fact, this is already happening.

Moreover, the study thinks it has uncovered a nefarious plot where companies use intermediaries to place advertising. Well, whoever wrote the study apparently doesn’t know anything about advertising, because this is commonly done in newspaper classifieds, billboards, radio advertising, among others.

The advertising-based content delivery model is everywhere. Sure, advertising (though occasionally inspiring) can be a nuisance. People gripe about advertising until they are faced with the option of forking out their hard-earned dollars, at which point they become much more willing to tolerate advertising. So isn’t it likely that most content over the Internet will be delivered over several different variations of the advertising model?

These are decisions that should be determined by markets, not by nosey, Naderite consumer organizations. It’s up to consumers whether or not a sufficient number of them value the service enough to make it work in the market.