What The WSJ Gains From Fear-Mongering Around Internet Privacy

My email inbox, Twitter,  and Facebook feeds have been filled with links to some provocative info-graphics produced by the Wall Street Journal recently, which takes a decidedly negative view of online tracking technology.  Having been in the online advertising space for a decade and knowing a lot about how these companies work, what data they collect, and the privacy implications of it all, I can say from experience that all this fear-mongering about tracking and privacy protection is largely without merit and designed to scare people.  When I read obviously loaded language like “marketers are spying on internet users” with no explanation about what this “spying” actually is, I have to wonder what the motive is for such blatantly biased journalism.

Found on http://blogs.wsj.com/wtk/

Media economics 101 says that you monetize content in one of two ways–get the reader to pay the publisher directly, or get the reader to pay the publisher indirectly by serving them ads that marketers pay for.  It’s no secret that Rupert Murdoch, who bought the Wall Street Journal in 2007, wants to ditch the online advertising model and erect pay walls to monetize the content via subscriptions.  Why? Because it’s easier and more lucrative, but only in the absence of free competition.

Now, what is the one thing that all of this tracking technology has in common?  It all helps target the right ad to the right person at the right time, and in doing so, making every ad impression more valuable.  This is the only way mass media producers can make money without drowning their audience in so many irrelevant ads that the content itself becomes unviewable.  Imagine a sales person in a clothing store who walks up to an old, skinny, wealthy white woman and tries to sell her a huge pair of baggy mens jeans.  No sales person would do this, because they are able to “spy” on the potential customer and use that information to help them pick a more appropriate product.  The best clothing sales people can tell your size just by looking at you. By “spying” on you, they add value.  There is nothing nefarious about this.

The websites that need information about a user the most are the ones with the most diverse group of users.  WSJ.com, as you can see in the data below, has no such need for this, because they index heavy on a very homogeneous group of rich, over-educated, men that are most likely white or Asian.  It’s like being a sales person in an expensive tie shop–you already know exactly who’s walking in the door.  They can easily sell their ads at a premium without much additional targeting technology, and many of the ads on their free pages are house ads promoting the paid “Pro” version of the site.

WSJ.com Demographics from Quantcast.com

Let’s look at what the previous owners had to say about the sale of the paper to Murdoch: “The Bancrofts worried about protecting the reputation of the Journal, the nation’s second-largest newspaper. They feared Mr. Murdoch would meddle in the paper’s editorial affairs and import the brand of sensationalist journalism found in some of his properties such as the New York Post.”

So what does the Wall Street Journal gain from Fear-Mongering?  To answer that question, let me borrow a propaganda tactic often-used by another Murdoch employee, Glenn Beck.  I’m not saying that the fears of the Bancroft family are being realized, or that Murdoch is encouraging his editorial staff to undermine the very technology that may well save the democratic tradition of free news supported by advertising, or that the WSJ under Murdoch is cynically pushing propaganda for self-serving purposes…I’m not saying any of that, I’m just playing devil’s advocate, but I’d like it if Mr. Murdoch could prove to me that he’s not.