Hey Publishers: Is Pay or Consent Viable?

I’m Alan Chapell. I’ve been working at the intersection of privacy, competition, advertising, and music for decades, and I’m now a pundit writing for The Monopoly Report.

The latest Monopoly Report podcast is out!

 The pod features a discussion with everyone’s favorite tech-journalist-turned-FTC-staffer, Shoshana Wodinsky. She offers an unfiltered view of how things sometimes function at the Federal Trade Commission, shares some insights on how recent FTC policies impact the ads space - and lets slip a very candid story of the day she first met “regulatory Bono.”

TMR Lampoon presents: My European Vacation

I had the good fortune to spend a month of my summer touring parts of Europe. I absolutely loved my time there, although I certainly got my fill of pop-up consent boxes. The U.S. is doing its VERY best to catch up in that regard, but Europe is still the world leader when it comes to the sheer volume of pop-up… consent… experiences(!)

I’ve previously shared thoughts regarding the UK and EU’s mad affair with consent. Today, I wanted to talk a bit about an analysis conducted by a team of privacy advocates at NOYB (formally styled noyb) on a particular use case involving consent - one that’s certainly been in the news lately.

Max Schrems

In late July, the advocacy group NOYB published a critique of “Pay or OK” as a consent model. For those of you who don’t know, NOYB was founded by a really smart lawyer from Austria named Max Schrems. Mr. Schrems is probably best known as the person who ultimately brought down the Safe Harbor and Privacy Shield programs that enabled EU personal data to be transferred into the U.S. And if I’m allowed to speculate a bit, when the EU Court of Justice opts to invalidate the EU to U.S. DPF cross-border transfer program, I’ll bet you a nickel that Mr. Schrems will be responsible for that as well.

In case you’re wondering, “What’s all this got to do with me?” — ask around. I’ll bet that someone in your company has had a high-revenue EU contract put on hold because of the invalidation of one of those programs and/or concerns about EU to U.S. data transfers. In other words, it’s a big deal!

Anyway, Mr. Schrems founded an advocacy group called None of Your Business (NOYB) in 2017. And dare I say, NOYB has consistently been one of the more effective advocacy groups when it comes to data protection.

Consent or Pay (aka, Pay or OK)

EU data protection law requires a consent for the placement of a cookie (or similar tracking technology) as well as profiling for targeted ads. Since at least 2018, certain EU publishers have refused access to all or part of their sites to those users who have refused to provide consent - testing the meaning of the term “freely given consent” under those laws.

Some of those publishers are asking users unwilling to provide their consent to cookies/tracking/profiling to pay a subscription fee. And it is this model — consent or pay — to which NOYB is currently objecting.

Author’s Note: There’s already been a fair amount of opinions and guidance on pay or consent as applied to very large online platforms like Meta. I’m not going to go into that here. Just know that the rules are a bit different for large platforms than they are for most other digital properties. If you want to know more, drop by my next Ask Me Anything session or subscribe to the Chapell Report.

What about NOYB’s objection?

NOYB published a report designed to critique pay or consent, in advance of the European Data Protection Board (EDPB) guidance on pay or consent coming this fall. Much of the critique is centered around the economics behind publisher monetization. It’s noteworthy that there’s relatively little in the report on data protection.

I’m really not a “swim lanes” guy. But I do wonder why it’s the data protection peeps weighing in on these concepts — and whether they are qualified to do so. Anyway, here are NOYB’s identified issues:

1. Pay or Consent doesn’t meaningfully augment publisher revenues. I’m paraphrasing (page 34), but that’s a pretty strong statement. Does NOYB back it up? I’m not so sure. The numbers cited in the study are from a post-pandemic period when traffic numbers had certainly fallen off. And it seemed odd that NOYB didn’t choose more recent figures given that they were available in June when NOYB was presumably finalizing the report.

Also, I’m a bit surprised that I couldn’t find public revenue numbers from the big EU publishers or trade associations. I would love to see them if anyone has ‘em. I reached out to a handful of friends with EU publisher connections; apparently THEY were on vacation too.

2. “Pay or OK is used by publishers to push their ‘unfair’ subscription services.” There’s a lot to unpack here. And again, I’m not sure how much of this really has anything to do with data protection. But here goes. According to NOYB’s study:

(a) Subscription services are unfair to consumers because some consumers forget about them. NOYB compares publisher subscriptions to a gym membership that doesn’t get used (page 14).

(b) It’d be much fairer if publishers were willing to adopt micro-payments and allow consumers to pay per article instead of paying via subscriptions (page 15).

(c) If extrapolated over multiple publishers, paying for consent via subscription models would represent an “unsustainable cost for data subjects, in particular if the model spreads beyond just an average of 19.6 of the top 100 pages or just individual apps” (page 31).

At some point, one would hope that consumers could make their own decisions regarding which content creators they choose to support — and not visit sites containing content that is not worth paying for with cash or data.

3. Publishers also use pay or consent as a dark pattern to push acceptance rates up. I recently talked about this with Tobias Judin at the Norwegian Data Protection Authority for a TMR Podcast that will be out in a few weeks. Mr. Judin made the following point: If every website on the open web adopted pay or consent, it would turn the idea of consent on its head. Because NOBODY wants to pay a fee for all content — particularly third-tier content like recipes and sports scores.

It’s a fair point. However, it may understate the idea that publishers and other content creators need to actually make money (and that contextual advertising alone might not be enough to help news publishers keep the lights on). Also, to assume that most charges are NOT fair kind of turns the idea of a market economy on its head.

NOYB claims that a 99% consent rate is clear evidence of bias. But it’s equally plausible that the 99% consent rate is evidence that data subjects might care less about giving away pseudonymous data.

4. Publishers can make money in many other ways and therefore don’t need tracking revenues. NOYB provides a list of ways that publishers can generate revenue on page 16 of the report. They suggest that, among other options, publishers can also earn money through:

• Subscriptions and/or membership

• Events

• Funding from platforms such as Google or Meta (LOL!)

• E-commerce

• Donations or philanthropy

• Related business

• In many EEA states, funding from the public sector

I don’t even know where to begin with this list. But if we’re looking to philanthropy, big tech platforms, and government funding as the future of newspaper monetization, then the publishing industry is in even bigger trouble than I thought. It’s also odd that “subscriptions” are top of the list given that the study makes a huge point of saying that subscription models are mostly unfair to consumers.

This is NOT meant as a critique of NOYB

I’m not here to throw shade on NOYB. They are simply pushing for companies to adhere to the law. I might disagree with them on some of the nuances of the law, but I would hope we can all agree on one thing:

The EU consent model as applied to digital media is horribly broken and doesn’t serve publishers, advertisers, or data subjects.

Maybe if we could all agree that the model is broken, we could start taking steps to fix it.

__________________________________________________________________________

If there’s an area that you want to see covered on these pages, if you agree or disagree with something I’ve written, if you want to tell me you dig my music, or if you just want to yell at me, please reach out to me on LinkedIn or in the comments below.