Big tech critic Cory Doctorow lays out a four-part plan to save the news media from big tech’s stranglehold.
The plan: create a comprehensive new privacy law, open up the app stores to true competition, return to the internet’s founding principle of true end to end delivery, and finally, splinter Meta and Google into smaller independent competing companies.
Would it work? How close are we to any of this?
Host: Jesse Brown
Credits: Tristan Capacchione (Audio Editor and Technical Producer), Bruce Thorson (Senior Producer), Annette Ejiofor (Managing Editor)
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Jesse Brown: There must be some kind of way out of here. I mean, the situation that we are in with the big tech platforms, it’s no good. News audiences have become totally dependent on the platforms as like their primary news source. We go to Facebook, we go to Twitter to find out what is happening, to share links for other people about what is happening, to talk with everyone else about what is happening. News media, we’ve become totally dependent on big tech for the traffic, for the ad revenue, for data.
And the tech platforms themselves are totally dependent on us. Well, they’re not. They’re not dependent on us for anything, really. I mean, they made it clear they don’t need the news; they don’t even like the news. It brings them nothing but headaches, public relations nightmares. It results in a negative user experience. And they’ve told us in no uncertain terms they don’t need us. Maybe they’ll just turn off the news and everyone who depends on them for it can just go to hell.
So, yeah. We’re looking for some kind of way out of here. Our government has stepped in to force a compromise. And though I don’t like it, I have accepted that it’s happening, this compromise. I’ve compromised with the compromise, so now I’m compromised. I am part of the news industry push to get Google and Facebook to have to pay us, essentially forcing them to pay us for links to our news content.
And my role in that has been to say, along with a group of other independent digital publishers that I’ve joined, okay, if this is happening, if government is going to force big tech to pay news companies, then let’s make sure that we little independent companies do not get cut out of this and let’s make sure that the money is split up fairly and evenly according to your editorial expenditure. And let’s make sure that the public knows who is getting what. So that is what I’m advocating for as a member of a lobby group. That is my disclosure. That is my compromise.
My guest today does not compromise. Cory Doctorow is a Toronto born activist who has never stopped pushing for the foundational ideals of the internet. Communication by anyone and everyone to anyone and everyone. Creators Rights, freedom to remix, audience rights, freedom to share, privacy, openness, interoperability, all of that good stuff that people kind of stop talking about as the dominance of these tech platforms just became the way that things are.
And the few people who still went on about it, well, they seemed like relics of a bygone age. They have been dismissed as techno utopianism. But the difference between Cory Doctorow and the few other remaining people who talk that way is that he lives that way and it works. Cory Doctorow is a New York Times best selling author, but he refuses to sell his eBooks through Amazon because of the digital locks they put on their ebooks, which deprive readers of rights like the ability to share the things that they buy and own.
Cory, I have to tell you, as a friend and a like an important person in my life. He’s proven to me through the way that he conducts his career as both an author and an activist, and as, I don’t know, like somebody who’s given me advice and somebody who has been generous in exposing me to his audience when he was like one of the biggest bloggers in the world. And somebody who has just demonstrated that it is possible, it is possible to make stuff, to have a life, a career as a creator without accepting the “shitification” of the way things are or the way things are going. He showed me that we don’t have to just accept it.
He is inexplicably prolific. He writes book after book after book. He has written a book called Choke Point Capitalism. His newest book is a novel, Red Team Blues. It’s a thriller about cryptocurrency shenanigans. He is hard to keep up with intellectually. I find him so, but it’s always worth the workout, and he thinks he has a better way out of this. And he’s in Toronto and joining me in our studio in a moment. Wait for it.
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This episode is brought to you by Ann Thomas. Jack Welch, Kasandra Staniscia, Stephen Butchart, Vicky Wallace, Zach Jardak, Sean Roszell and Charlene.
Patreon supporter Charlene: Hi, my name is Charlene. I’m a geologist living in Halifax. I support Canadaland so that they can continue to offer their content for free to anyone who is looking for thoughtful, in-depth and knowledgeable stories about Canada that we don’t get anywhere else. And of course, as a Nova Scotian, I love listening to anything that Matteo Roache has to say.
Jesse Brown: Cory, let’s get right into your four point plan to save the news from big tech. Point number one, we need a new comprehensive privacy law.
Cory Doctorow: What a privacy law gets you here is a general prohibition on surveillance advertising.
Jesse Brown: Surveillance advertising, which a lot of people are very, very familiar with, but essentially-
Cory Doctorow: Behavioural –
Jesse Brown: Behaviour tracking.
Cory Doctorow: Yeah.
Jesse Brown: I go and I visit a website for a trip to Mexico, and then every ad that I look at for the next month is about a trip to Mexico.
Cory Doctorow: Yeah, and the broker who’s doing that targeting is also buying location data that’s being slurped up by the apps on your phone. They’re buying information from major retailers about what you shop for and increasingly, like what part of the grocery store you were in or where your eyes rested on the shelf. There’s a lot of gaze tracking in grocery stores now, a lot of just super invasive stuff.
Jesse Brown: So we could get rid of that and everybody will feel really good about that from just a like, let’s get rid of this creepiness.
Cory Doctorow: It’s a really good pro-privacy thing when we think about how those breaches are used to target people by stalkers, bad actors, by military, by cops, by foreign adversaries, just like all of this stuff, just this surveillance data shouldn’t exist. But more to the point-
Jesse Brown: I mean, it’s a long conversation for another forum and it’s been going on for many years.
Cory Doctorow: Right.
Jesse Brown: And the counterargument is like, do I really give a shit
Cory Doctorow: Right.
Jesse Brown: You know, the counterargument from the advertisers is, well, we’re able to give people highly relevant ads for things that they want.
Cory Doctorow: That’s always been the argument is that people give their consent because they like a good ad, right? And the way that we can tell they give their consent is that when they’re confronted by a garbage novella of legalese, somewhere in the process of using a website, they say, I.
Jesse Brown: They say I agree at the bottom of it.
Cory Doctorow: Yeah. And they don’t notice that, it says like by being dumb enough to use this service, you agree that, you know, I’m allowed to come over to your house, punch your grandmother, wear your underwear, make long distance calls, eat the food in your fridge. They just click. I agree, right?
Jesse Brown: Yeah. You have passionate and expansive thoughts as to why we do and should care about privacy. Let’s leave them aside for now-
Cory Doctorow: But let’s ask what people want, right? So when when Apple said-
Jesse Brown: Cory, what do people want?
Cory Doctorow: So Apple said, hey, Apple users, would you like to click this box and never be tracked again? And 96% of iOS users that’s Apple’s mobile platform clicked. Please never track me again. I presume the other 4% were confused or working for Facebook.
Jesse Brown: Right now, of course, Apple and making privacy a part of their product was also.
Cory Doctorow: Selecting for those people.
Jesse Brown: Perhaps not just that, but you know, they had self-interest. This was like certainly-
Cory Doctorow: Oh yeah, for sure.
Jesse Brown: -shifting the market in their favour.
Cory Doctorow: Let’s be clear, Apple then commenced spying on those same users right as aggressively as Facebook ever had. But the question of revealed preference here is very easy to settle. We gave people the chance to opt out, not even opt into tracking, opt out of tracking, 96% opt out.
Jesse Brown: When you make it clear we don’t want it.
Cory Doctorow: Right.
Jesse Brown: Okay. Now that’s all fine. We’re here to talk about how this is going to benefit the news industry.
Cory Doctorow: So if we said there’s a privacy law, you need affirmative consent to track. It needs to be meaningful consent. It needs to be informed consent. It needs to be continuous consent. To a first approximation, there would be no behavioural data to gather because nobody is going to click okay.
So now you have to find another way to target users or to target ads, rather. And we have a way of targeting ads based on not what we know about the user, but other factors. Today we call it contextual advertising. For the 700 years before 20 years ago, we just called it advertising.
Jesse Brown: You put the car ad in the car section of the newspaper.
Cory Doctorow: Exactly.
Jesse Brown: You put the movie ad in the entertainment section of the newspaper. You want to return to that? Everybody in the ad world has gotten very, very used to incredibly laser specific demographic targeting, behavioural tracking and things like that. They would call that a massive regression.
Jesse Brown: Sure.
Jesse Brown: But it does, to your point, favour publishers, because those of us who publish entertainment websites now, you know who’s going to get the ad from the movie that wants to let everybody who likes movies know that there’s a new movie. Take away the advertisers ability to select their ad for like who has spent over $1,000 on movies this year. And lives in this market and is of this age group and this income level. And instead just put the goddamn ad on a movie website.
Cory Doctorow: In the research, we see that context ads underperform targeting by behaviour by about five percent.
Jesse Brown: Really?
Jesse Brown: Yeah.
Jesse Brown: All of this technology of hyper targeting and everything that they’ve come up with for surveillance advertising gives a 5% advantage of just putting the car ad in the wheel section.
Cory Doctorow: Yeah, I think that what’s happened is that there are probably some spectacular gains from behavioural advertising, but they’re short lived because almost all stimulus regresses to the mean, right?
So there was a time when $3.99 was not $4 and now it is right. There was a time when seeing a targeted ad was like, gosh, that seems very relevant to something I’ve been thinking about, and then it just becomes noise.
Jesse Brown: Here’s where I actually can offer some maybe anecdotal, but like lived experience in this because podcasting ad tech is. Maybe like 10 to 15 years behind display ad tech. The track ability and really to the dismay of the industry, we do not have the same data that a website has about, you know, really it’s when somebody downloads the podcast, we know where they are, we might know what device they used or what app they used. We don’t know a lot more than that.
And then what they do with the ad, that’s why we give the promo codes, right? So there is a huge movement to introduce into podcasting the same ad dynamics that exist with display ads on the web and to basically aggregate ad buys so that you’re no longer saying, I want to buy an ad on Canadaland or I want to buy an ad on the Daily, but I want to buy an ad that goes to this demographic based on everything we know about them from the Internet.
And I have been warned that this is going to be terrible for podcasting. Basically, it says that my audiences were just basically like, we just get into a bidding situation with everybody else who has the same demographic.
Cory Doctorow: That’s right.
Jesse Brown: We operate at an old fashioned ad business where we actually have a human being, a lovely colleague named Dory, who will talk to the client. And to your point about contextual advertising, well, we know our stuff.
So when somebody comes with a product that’s like, Yeah, you don’t really want to have that product on that show, you know who’s going to do it. You know, who’s actually going to be passionate about your product. You want to put that on this show instead, right? And probably not on that episode because it’s just going to be a bad mood fit with what they talk about.
The exact same thing that salespeople at newspapers did for decade after decade. It seems to work okay. So that’s like a blast from the past, but maybe that’s sort of like a page from the future.
Cory Doctorow: And before we move on, the one thing to note about this is that this is an area in which the public, the audience and the publishers are class allies because nobody wants to be spied on and the publishers don’t benefit from the spying. And so there are a lot of people who are like, I am so sick of being spied on. So it’s like, this is a you and what Army story? Well, here’s the army. It’s all the people who don’t want to be spied on.
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Jesse Brown: Okay. So that was the first item on our list of how to save the news from our tech overlords. We should pass a comprehensive privacy law to ban surveillance advertising. Okay, now we move on. Cory, what’s number two?
Cory Doctorow: You’re an old Internet person. I’m an old Internet person. There is an old Internet idea that is really important to creating the Internet that we have today, which is the end-to-end principle. And this was the engineering principle that was right there from the start when they started to design packet switch networks as alternative to circuit switch network.
Circuit Switch Network was the old Bell Canada system. Every call was routed through Bell’s central office. Bell decided whether the call would be connected. Bell decided what services could run over those lines. You may remember when Bell brought in caller ID, we all had to pay $1.99 a month to find out who was calling us first. No one in an end-to-end world — and an end-to-end world is one in which the only job of the intermediary is to deliver data from willing senders to willing receivers — no one in that world was ever able to do a caller ID, right? Like if you want to check your email, you don’t have to pay $1.99 extra a month to find out who it’s from before you open the message.
Jesse Brown: A highlight of my journalistic career was meeting Vint Cerf at an event that you and I attended together in Mexico City, the father of the Internet and of the TCP/IP.
Let’s not get too wonky here, but essentially this is just like the basic idea from which this all came, which is the network itself is just there. Cory wants to send Jesse information. The network must deliver. The information that Cory sends to Jesse.
Cory Doctorow: The network’s job is to make a best effort to efficiently deliver that data.
Jesse Brown: Yeah.
Yeah. And so there’s a more familiar name for this from a more recent fight that was coined by an eminent Canadian who lives in America. Tim Wu. And Tim coined this term network neutrality to describe a phone company or an ISP that takes as its duty to serve back the data you request as efficiently as it can, rather than trying to shape what you get to its own benefit. Right?
Rather than giving you what its shareholders wish you’d asked for, it gives you what you asked for. So if you ask for a Netflix stream, it gives you a Netflix stream instead of the stream owned by its parent company. It doesn’t slow down the Netflix stream to make your stream more attractive and so on.
And the reason I’m going into all this detail is because that is not how social media or any other Internet service works. If you sign up for social media and you list out for that social media platform, all the people who matter to you and you say, tell me when those people post something for the people who follow them to see.
Jesse Brown: That’s the entry value proposition of all the social media. Who do you want to follow on Twitter? Who do you want to follow on Facebook? We’ll give you their posts.
Cory Doctorow: And it was at one point and then all these people went to the Darth Vader MBA, which, you know, has his core principle. I’ve altered the deal. Pray I don’t alter it further. So you show up, you articulate your list of people you want to follow and they say, we’ll just show you that stuff.
I mean, Facebook, like literally said this. They said, stop using Myspace. That’s the thing owned by the crapulent senescent Australian evil billionaire who spies on you all the time. Come use Facebook. We will never spy on you. And also, if you just tell us who matters to you, that’s all we’re going to show you.
And then after a certain point, once people are locked in on that platform and with social media, people get locked in really easily because we lock each other in. It’s mutual hostage taking. I ended up on Facebook as you were there. You’re staying on Facebook because I’m there. We would have to agree that we were both going to leave, and for that to happen, we’d have to get everyone else who matters to us to agree.
Jesse Brown: I don’t even know why I’m on Facebook anymore, but but I’m there.
Cory Doctorow: I mean I’m not anymore. But but, you know, it’s it’s we have this collective action problem, right? We can’t leave even though we don’t want to stay.
Jesse Brown: Right…
Cory Doctorow: And so once they have that lock in, they start to shift the value. They start to shift the distributions so that first they maybe give it to advertisers, so they start spying on you so that the advertisers can hit you. They might give it to media companies. I call this the “giant teddy bear school”, where if you’ve ever been down to the X by like 10 a.m. on the midway, there’s some poor slob with a giant teddy bear who supposedly got it by throwing five balls in a peach basket, but really, the carny has said, Hey, I like your face. If you can get one ball and I’ll give you a keychain, if you get two keychains, you can get a teddy bear.
Jesse Brown: They make sure somebody wins. So that everybody can see a winner.
Cory Doctorow: That’s right, yeah. Joe Rogan gets $100 million for podcasting. So they go to media companies and they say, How about you make content for our platform-
Jesse Brown: And that’s why everybody pivoted to video. The first few companies to do it were just flooded in traffic.
Cory Doctorow: Giant teddy bears.
Jesse Brown: Then they turn off the tap and all of a sudden you’re diminishing returns.
Cory Doctorow: And they start charging you money, right? They start saying, hey, remember when we non-consensually rammed your content into the eyeballs of people who never ask to see it? And some of them decided that they liked it enough to subscribe. Those people, if you want to keep reaching them, you’re going to have to pay us to boost your content, Right?
And so maybe it’s a blue tick or a gold tick. Maybe it’s Instagram verification, maybe it’s Facebook boosting. They all have some version of this, or if they haven’t got it yet, they will soon enough. Tik Tok is kinda teeing this up.
Jesse Brown: This is a process that you’ve been describing in various corners of the media as the “inshitification” of social media, the path that it seems like every platform is taking from offering really, really attractive goodies for free to just sort of becoming this monotonous part of life. And then ultimately just becoming-
Cory Doctorow: A pile of shit.
Jesse Brown: A pile of shit. Yeah. So what is the basic principle here?
Cory Doctorow: The big idea here is when the opportunity arises to regulate these companies either directly through legislation or as part of a settlement for one of their many abuses. Because these companies are all racking up all of this kind of policy debt in the form of privacy abuses, unfair practices and so on, they’re all going to be like in front of a prosecutor trying to negotiate a deal.
We say to them, you are now bound by the end-to-end principle and your job is to deliver messages from willing senders to willing receivers as efficiently and effectively as you can. And so that means that if I subscribe to your feed, then my default feed, unless I choose an algorithmic one or recommendation one, whatever my default feed should be, all the things posted by all the people who I asked to see this stuff.
Jesse Brown: But for our specific conversation, the benefit to news publishers is if 20,000 people said that they like Canadaland on Facebook, then my audience on Facebook-
Cory Doctorow: Is 20,000 people.
Jesse Brown: 20,000.
Cory Doctorow: Yeah, maybe you can pay to boost to other people, but you don’t have to pay to boost to reach those people. And so, you know, this is depriving Facebook of the opportunity to claw value back from you. It’s another instance in which you are aligned with the users because the users want to see what they ask to see. And while it may be hard to make a law that says this, there are certainly lots of opportunities to have settlements that say this right?
Jesse Brown: Okay, that’s number two end-to-end delivery. Doesn’t matter if you are Google or Facebook or Twitter or Amazon, whoever you are, you cannot get in the way. If I ask for something from someone, you are there to give it to me. You cannot tax me. You cannot force feed me things that I don’t want or limit my access to the things that I have asked for. And that is part two of your plan to get big tech out of the way and save the news business.
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Jesse Brown: What’s number three?
Cory Doctorow: Number three is subscription revenue collected through apps.
Jesse Brown: Yeah.
Cory Doctorow: When the platform started, the mobile platforms iOS and Android kicked off. They offered very competitive rates to people who built apps and moved inside their silo. I remember when Steve Jobs unveiled the iPad, I wrote a very dismissive article about it and I said, journalists are jumping on the bandwagon because they’re looking for a daddy figure who’ll tell them that everything’s going to be fine.
Jesse Brown: I remember the iPad. I mean, the Toronto Star literally like their digital future. They’re like way out of the downward spiral they’re on was going to be through a tablet app.
Cory Doctorow: Right. And so just like Apple said, we’re going to be the privacy tool and then started spying on you. Apple said we’re going to be the revenue generating tool and then started taking publishers money.
So they went from a 30% commission on the initial sale. So if you sold the app for $5, they got 30% to a 30% commission on lifetime revenues and they started to enforce it in more and more draconian ways where if you within the app had a button that you click that jumped to the web, that let you fill in a payment form and then go back to the app, Apple would delist those apps from the App Store. There’s been some pretty important lawsuits over this with Epic who make Fortnite and so on. The natural price for a payment processing in competitive markets is like 1-5%, right? That’s that’s what you see.
Jesse Brown: If you’re the intermediary who’s just handling the transaction, that’s typically what you would get.
Cory Doctorow: Yeah. And, it’s a very easy pitch. If you get your subscription revenue through the App Store right now, Apple takes 30%. If we cut it to 5%, you would add to your revenue per subscriber, 25% at the flick of a switch.
Jesse Brown: So regulations that essentially break up the app stores. Yeah.
Cory Doctorow: So in the European Union, we have the Digital Markets Act, which is going to do this. It’s going to require app store choice. And in the US there was a bill that died in the last Congress, the Open App Markets Act that will probably be reintroduced in this Congress.
Jesse Brown: I want to tell you a very short story here.
Cory Doctorow: Sure.
That also is about podcast exceptionalism. And this exceptionalism has nothing to do, I think with the amazing innovative thinking within podcasting or my incredible foresight as to how these nefarious forces could be circumvented, it has everything to do with just how marginal we are.
I think we were an afterthought. It didn’t matter enough so that for many years when Apple’s podcast person visited Toronto, I would invite them to come meet with me and they were good enough to do so. And every time they did at the beginning it was Apple’s podcast person from the Apple Podcast team, which was just that person. And over the years, when they realized, wow, this is a major way, we’re not making money off these podcasts.
But if we track how people are using their Apple devices, they are spending an incredible amount of time listening to podcasts, maybe we should take this seriously. And of course that led to a podcasting boom, and Apple now takes podcasting seriously.
Cory Doctorow: And let’s just say Apple, the privacy company, starts with the insight. Maybe if we just track how people use their iPhones for sure.
Jesse Brown: I mean, I’m speculating. I don’t know. But I have to imagine they know what app you’re on on your iPhone. Every time I met with Apple’s podcasting people, I begged them, please, this is my number one ask. It’s my only ask. Let me say to my listener, hey, look at your Apple device right now. If you want to support Canadaland, there’s a button that is pulsating. Press that button. You’ll become a subscriber. And please take a cut, right?
Because the amount of friction where I- in the early years when it was Patreon before we could have there’s still a certain amount of friction in saying click the link in the show notes or go to canadaland.com/join. But in the early days it was like I couldn’t even send you to Canadaland. I had to send you to some other website and then on that website you’re going through, you’re giving some strange website that maybe you never heard of before your credit card information.
Cory Doctorow: This is Patreon.
Jesse Brown: This is Patreon, which now people are familiar with. But in the early days it was of course, what am I? Who am I dealing with here? So I knew that in those early days, people have already given their credit card information to Apple. You could build it into the tech to just press a button and become a subscriber, and then we could start doing things like ad free feeds and things like that.
And I wanted them even though it meant that I wouldn’t get their email addresses, Apple would have that instead. I wanted that and they ignored me and every other podcast publisher. And I know that that’s what podcast publishers were asking for.
When they finally offered that which, which was maybe two years ago, we had already been offering it through Patreon and later Supercast, as had many other podcast publishers, and we had built a robust subscription based business and we had slowly gotten people used to the signup process and it could always be better. But by the time Apple let us do that and yes, the fees that we have to pay to Apple are many multiples of what we’ve ever paid to Patreon or anybody else.
But because we were so late to being like we’re so small podcasting that the App Store wasn’t even that interested in us, there was not that much money to be made, we found a workaround. And so now, yeah, we offer a Apple subscription. It’s the least beneficial to our company of all the different options and it’s the least popular. It’s the least popular.
Maybe it never would have been as effective as I had hoped, but maybe we just done such a good job over the years of getting people used to this other idea that the convenience of just pressing the Apple button, you know, we do some business there.
Cory Doctorow: Right.
Jesse Brown: It’s okay,
Cory Doctorow: Right.
Jesse Brown: But most of our subscription business is through these other solutions.
Cory Doctorow: Right. And you would expect that in a kind of an ideal world to drive Apple to try and figure out how to be more valuable to you. That’s the, look, there are people out there who are hi-ec-pilled who think that markets solve all of our problems. I’m not one of those people.
I’m kind of a market skeptic in a lot of ways, which is weird for someone who talks about competition as much as I do. But I do think that competition disciplines firms, right? If a company has to keep your business by making you happy, they will do more to make you happy than if they just get to keep your business anyway.
Jesse Brown: That’s true. And now when I meet with Apple’s people and they and now they have a robust podcast team, many of whom are drawn from the world of public radio and podcasting, and they sort of speak the same language and are of the same culture.
And it’s interesting to meet with Apple. The dynamics have shifted because I think I can’t speak to whether they’re disappointed with the performance of their subscription service or not, but they are constantly asking me like how much of your subscription business comes from us now that we’re letting you do this. What can we do to make it better? It’s an inversion of the old relationship where I was begging them for features that they just couldn’t be bothered to provide.
Cory Doctorow: Right, and so the argument that the press has about big tech broadly is that when they go to big tech and say, give me something that will help me publish the news better, Big Tech says, What’s in it for me? But here you have an environment in which a big tech platform is competing, and it’s not the it doesn’t have market dominance. It doesn’t have lock in. And what it’s doing is coming to you and saying, what can I do for you?
And like, I don’t think that is attributable to the unique character of Apple. Like, I don’t think it makes Apple a better company. I think it has to do with the economic circumstances of Apple. I think that there’s this saying, you know, if you’re not paying for the product, you’re the product. Like everyone who’s ever bought a John Deere tractor or an iPhone and then been forced to use their official repair depots and pay like ten-x knows that paying for the product doesn’t make you not the product, right?
What makes you not the product, what causes firms to treat you with respect is not you bribing them with money. It’s them not having a choice because they’re disciplined by either regulation or competition.
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Jesse Brown: I think all of your solutions so far have to do with if the game is unfair and when we look at who’s winning and who’s losing, it just seems incredibly tilted. You know, don’t hate the player, hate the game, change the rules.
So let’s move on to number four. And this one, this is a biggie. It’s the same idea of antitrust, of breaking them up, applied to the ad tech sector. You think we should break up Google and Facebook, Meta into smaller pieces so that, yes, they still maintain their ad businesses, but they’re separate from the rest of their businesses. And one of the reasons to do this, as I understand it, is that these have become behemoths. These companies snap up 51% of every dollar in every ad transaction. Before we figure out how to solve for that. Cory, how did they get there? How did they pull that off?
Cory Doctorow: How does ad-tech get $0.51 at every dollar? One way that they do it is by being vertically integrated. So the two big ad tech stacks, which are run by Meta and Google, these are both two ad tech stacks that they got through acquisitions, not through internal development. They bought these companies in roll ups that would have been prohibited back when antitrust law was rigorously enforced.
They represent in every ad transaction or most ad transactions. They represent the buyer. So they’re the buyer’s agent, they represent the seller, the publisher, so the seller’s agent, and they operate the marketplace in which the buyer and the seller meet to exchange an ad for a place to put that ad, right.
And at each stage of that negotiation, they have the opportunity to rake off big fees, but also to organize things so that the fees are maximized and so that the greatest take goes to the intermediary, the middleman, and not to the advertiser, nor to the publisher.
And in fact, oftentimes we talk about this from a publisher-centric way, but there is a class ally of publishers in this, believe it or not, and it’s advertisers who are getting ripped off like crazy. Right? They’re paying more to reach fewer people in a fraud riddled marketplace that is under-policed by two lazy monopolists who are able to scrape $0.51 out of every dollar. And they’re able to do it because they run the whole stack.
And if that wasn’t bad enough, in the Texas attorney general’s case, we learned that Facebook and Google have an illegal collusive arrangement called “Jedi Blue”, where they got together and they just cooked the market like the pope dividing up the new world, so they would each be guaranteed a share and they would exclude other companies that might come in and offer more money to either advertisers or to publishers or a better deal to advertisers, so they could fence them out and they could maintain this duopoly.
Jesse Brown: So if I launch an ad campaign and I’ve got a budget of $100,000, I’m going on to my Google campaign to place my ads, choose my demographics. It’s super, I love this, I got great data. I can choose my demographics, but Google is taking a cut from me from that $100,000.
Cory Doctorow: Right.
Jesse Brown: On the other side of it, you’ve got news publishers and every other publisher who’s running Google adwords, right? And they’re receiving payments in exchange for putting those ads on their websites. And every dollar that comes in, they’re sharing that with Google as well.
Cory Doctorow: And Google is a publisher, right?
Jesse Brown: So that’s Google is also my competitor in that instance as well.
Cory Doctorow: So they are competing with the people you want to place your ads with. And so Google might say, although the best fit for your ad is one of our rivals, we’ll take the ad.
Jesse Brown: Right.
Cory Doctorow: Right. So you’re reaching a worse audience as well, and you might be paying more for it.
Jesse Brown: And to boot, there’s only one real competitor, and that’s Facebook. Facebook and they are price fixing with.
Cory Doctorow: Yeah, I mean, this is just basically the referee pays the coaches of both teams and the referee is getting incredibly wealthy and the game is getting worse and worse. And the referee is like the great forces of history have come to bear on the game to make it worse. And it has nothing to do with the fact that I own the wages of both teams.
Jesse Brown: So this is Antitrust 101. This is a situation where really competition would do the trick.
Cory Doctorow: And Mike Lee in the United States, who’s an American senator, has introduced a bill, the America Act. But what’s interesting is who’s sponsoring it, because it’s co-sponsored by the likes of Elizabeth Warren and Ted Cruz. So this is an issue that has a lot of legs behind.
Jesse Brown: Antitrust is heating up in the United States of America for reasons that you heard about and spoke about on Commons Monopoly series, where a laggard and we have a broken competition act in which all they need to demonstrate is that consolidation and monopolization presents efficiencies for them, right? For them.
Cory Doctorow: Yeah. Canada’s Canada’s not have a fit for purpose law.
Jesse Brown: It also not for the consumer, not for the public, not for publishers. However, the silver lining, I suppose, is that if antitrust is back in fashion in the States 5 to 10 years from now, that’ll have an impact on us.
Cory Doctorow: Also if they break up adtech in the US.
Jesse Brown: Yeah, we’re not going to it’s it’s hard to imagine that we’ll be-
Cory Doctorow: You’ll be able to do like Google and Facebook have a lot of influence in Canada don’t get me wrong. But they’re not going to be able I think to get a regulation passed that says Canadaland must do business with Google and Facebook and not with one of the other companies that pops up in the wake of them being broken up in the US.
Jesse Brown: All right. So this fixes things for news publishers who-
Cory Doctorow: A little.
Jesse Brown: A little bit, those who do advertising on their websites in that they’re keeping more of that money. So that all sounds swell. My only complaint with your “inshitification” process that you’ve described, because it perfectly describes what’s happening in each of these platforms.
But I’ve heard you lay it out here and elsewhere and it’s like, yeah, like that. It conjures up an image that Zuckerberg was like rubbing his palms together and planning to “inshitify” Facebook. And I’ve never met a tech owner who doesn’t think that they’re actually doing something wonderful for the world.
Cory Doctorow: Sure this is just what happens when you’re not disciplined by regulation or competition-
Jesse Brown: It’s just what happens, it’s the game and the game is at different junctures in the game, you look at the rules and you see what is my path to advantage based on these rules?
Cory Doctorow: I mean to be clear, the investors are often like, how do we eliminate competition, right? Like Peter Thiel. Peter Thiel says competition is for losers. The terrifying, enduring priapism of Warren Buffett whenever he talks about why sustainable moats for his businesses to stop competition from entering the market.
Jesse Brown: No, I’m not trying to say that they’re not evil. I’m just saying that they’re not, they don’t have that level of forethought.
Cory Doctorow: No, I’m just saying yeah, given the imperatives of the market and in the absence of regulation or competition, this is where you end up, right? Just like crabs always emerge evolutionarily or we keep getting the eye or wings develop on different animals.
A platform, an intermediary without regulation or competition will figure out how to take more value from either side of the intermediated relationship until there’s none left for anyone else.
Jesse Brown: So I’m trying to figure out my own path forward for this business. And also I think about it for other news businesses in Canada. And what I see is like, I believe them. I believe Google and Facebook when they say, if this is the way it’s going to be, we’re just turning news off because Facebook has already done it. Really. They’ve just choked it to the point where it’s a drip so that they don’t have the same bad look that Google got for that week when they turn it off completely.
Cory Doctorow: Unless you paid a boost.
Jesse Brown: Unless you paid a boost. But they’ve said this explicitly that that news has become a toxic part of people’s experience. They don’t want as much so much news on people’s news feeds. Right. And I believe that it is certainly possible. I don’t claim to know whether they’re bluffing or not for a fact, but I think it’s entirely possible that if they’re forced to pay for news that they link to, they’ll just stop linking to it. And that’s Google and Facebook.
And I’m looking at that and saying huh, maybe that’s okay. Maybe that’s okay. Maybe we need to craft a new deal. Like, has it been so great having them in the picture? You know, and maybe we need to turn to the public and say you can no longer count on these places to deliver you any news information. And if you want news information, you’re going to have to go directly to people who provide it and you’re going to have to pay them for it.
And we can mount a case for subscription revenue based on that. We need to refind our audience. We’ve had too many conversations in news about like, well, nobody will pay for news because most people won’t pay for news.
Cory Doctorow: Right.
Jesse Brown: Nobody says, I’m not going to open up a vegan burger joint because-.
Cory Doctorow: Because most people like it.
Jesse Brown: Because most people like McDonald’s.
Cory Doctorow: Right.
Jesse Brown: Right? All you’re concerned about is. Oh, there is, is there or is there not a market for vegan hamburgers? In some places there is, right. The actual paying news consumer has never been more than 10% of the adult population.
Cory Doctorow: Right, yeah.
Jesse Brown: We’ve lost track of- there are people who will pay for news, but we’ve gotten so seduced by bringing news to the masses, which is what social media did. All of a sudden, everybody’s trading news back and forth and commenting on news.
And I just wonder if purely by luck, I haven’t stumbled. And those of us in podcast news haven’t stumbled upon the formula that actually can work like tomorrow. And we have a product that is archaic: its mp3 files delivered over RSS. This old tech.
Cory Doctorow: A nobler weapon from a more civilized age.
Jesse Brown: That’s right. And every few years somebody comes along. I remember back the CBC. They originally refused to invest in podcasts because they had just bought a proprietary video streaming service.
Cory Doctorow: I remember that.
Jesse Brown: And they said, Well, look, look, we want all of our audio to go through this video player because then we can put ads on it and we can use all the data we get from our website.
I’m like, Yeah, but who wants to listen to a radio show on your shitty web page that failed? Right. And through the years, everybody, The New York Times just launched an audio app. CBC has their own audio app.
Cory Doctorow: BBC Sounds.
Every single audio publisher has tried to like take-
Cory Doctorow: Spotify.
Jesse Brown: And even Spotify had to accept, we’re going to let every single podcast onto our platform because anybody who’s tried to create oh, this is the best curated little Netflix of audio has failed because it’s much like the web itself. It’s resilient.
The beauty of podcasting is that any product that you try to improve upon, the openness of podcasting is going to be a more limited, it’s going to offer people less, you know? Yeah. So we just by stupid luck because audio was the last thing that big tech had its mind on.
Cory Doctorow: Yeah.
Jesse Brown: I think we have something that works that you have to get all four of those policy initiatives in place, not just in America but around the world to get the results. Whereas those four policy initiatives kind of describe the way things were at the beginning of the Internet, which is kind of where podcasting still is.
Cory Doctorow: So you’re right. But how many bullets can podcasting dodge, right? Because the open web is getting less and less open by the day. Yeah, right. And you know, here’s what I think. I think that you’re putting a logical exclusive or where you want an and.
Like you’re right, you’ve got a good thing going and maybe you don’t have to change it, but if you want to defend it over the long term, we need policies that are going to tip in favour of openness and tip the distribution towards the creative and news gathering workforce and away from intermediaries and capital. Right? That’s how we get a fairer arrangement. |
My favourite theory of change comes from my arch nemesis, Milton Friedman. I like to quote him as often as I can because I like to think that as he looks up from the spit he’s roasting on in hell. And here’s his words in my mouth that he gets especially angry. And Milton Friedman, for people who don’t know, he was the crank who basically started the Chicago School of Economics. He had this idea that we should reverse all the gains from the New Deal, from the social contract after World War Two. And people would say to Milton, how are you going to convince people to do this? They like their kids going to school and not working in mills.
Jesse Brown: Weekends are nice.
Cory Doctorow: Weekends are great. And Friedman would say eventually there will come a crisis. And when that happens, people will reach for ideas that are lying around and ideas will move from the fringe to the centre very quickly. And the arrangement we have between big tech and the news is so inequitable, so unstable, so fragile that it keeps lurching from crisis to crisis. And at each crisis, we say something must be done.
But because the only ideas we have lying around are how about a link tax every single time we reach for the link tax and we hope that we’ll get a different outcome. I think that if we want better bargaining between the news and tech that what we need to do is change the shape of the market. And as I keep noting as I go through these four proposals, these are proposals that everybody should want except for shareholders of tech firms, right? These are proposals that benefit all of us.
And so when you say, well, how are we going to get change in Canada, Canada is nowhere near doing this. What I’m saying is hitch the news to the wagon of all the advertisers who want to stop getting ripped off by ad fraud, all the members of the public who are sick and tired of being spied on. And now you’ve got to force to be reckoned with.
You know, James Boyle says that before the term ecology was coined, some people cared about owls and some people cared about the ozone layer, but they were like, what is the destiny of charismatic nocturnal avians have to do with the gaseous composition of the upper atmosphere? They didn’t have a movement. They had issues, right?
The term ecology took a thousand issues and made a movement out of them. We have an opportunity to fight for a better digital ecology, and if we can socialize these ideas, have them lying around, get on Canadaland and spend an hour talking about them, then these ideas might be the things we reach for the next time we reach a crisis and we say something must be done.
Jesse Brown: Cory, this has been an absolute pleasure. Thank you.
Cory Doctorow: Thank you.
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You can email me, I’m at email@example.com, I read everything you send. We’re on Twitter at Canadaland. Our website canadaland.com. Our senior producer is Bruce Thorson. Additional production and editing from Tristan Capacchione, our audio editor and technical producer. Our managing editor is Annette Ejiofor. I’m your host, Jesse Brown. Our theme music is by So-called. Syndication is handled by CFUV 101.9 FM in Victoria. You can visit them online at CFUV.ca. You can listen to Canadaland ad free on Amazon Music included with Prime.