Today ITIF implemented a new feature on our website that detects whether visitors to our website have “Do Not Track” enabled in their browser. Users who request that ITIF not track their online behavior will receive a notice (shown below) telling them that their request has been denied.
Do Not Track is a preference that users can set in some web browsers to inform websites that they do not want to be tracked. Currently, IE8, IE9, and Firefox support various versions of Do Not Track. Do Not Track has been heavily promoted by various groups, including the Federal Trade Commission (FTC) and the White House. However, as I stated in my Congressional testimony, Do Not Track is a detrimental policy that undermines the economic foundation of the Internet. Moreover, while Do Not Track might work in the short-term, it will be a failure in the long-term.
Let me explain why.
Advertising revenue supports most of the free content, services, and apps available on the Internet. In exchange for viewing online ads, users get access to a wide range of free content (e.g., news, music, movies, and games), free services (e.g., email, storage, and personal productivity tools), and increasingly free mobile apps. Online advertising has improved in recent years thank to behavioral advertising which uses information about Internet users to deliver to them more relevant ads based on their browsing history. For example, someone who spends a lot of time on bridal websites might start to see more ads for local bakeries, photographers, jewelry stores, and dress shops. For the most part, this is done without revealing the identity of users to the advertisers. Not surprisingly advertisers are willing to pay more to advertise to individuals who are more likely to be interested in their products. In general, everyone wins: ad-supported websites increase their revenue, users receive fewer irrelevant ads and more free content, and advertisers get to be front of their target audiences.
However, privacy advocates do not like this so they have been pushing for the creation and implementation of a Do Not Track standard. The problem is that if users are not tracked, then websites cannot deliver targeted advertising. Instead, websites would only be able to use non-targeted advertising which does not generate as much revenue. Less revenue means less free content and services for Internet users. But privacy advocates are pushing forward, regardless of the consequences.
Realistically, these advocates face many challenges. To be effective, privacy advocates must get Do Not Track adopted as a universal standard on the Internet, implemented by millions of websites, and enforced by the FTC (or another regulatory body). However, even if they succeed at that, Do Not Track is simply not sustainable long term.
Let’s consider how this might play out over the next few years.
First, users must decide whether to enable Do Not Track in their browsers. If this happens on a small scale, nothing really changes. If only a small minority of users enable Do Not Track (and consequently opt out of targeted advertising), then websites may experience a minimal decrease in revenue, but the overall impact will be fairly minor and dispersed.
The real problem occurs if this happens on a large scale. If this occurs on a large scale, i.e. if large numbers of users enable Do Not Track, then website operators will see a substantial decrease in revenue (and potential revenue growth). A substantial decrease in revenue means a corresponding substantial decrease in free (or low-cost) content, apps and services. Or websites could try make up lost revenue by filling their websites with more untargeted ads.
So which is more likely? I think that if Do Not Track were widely available today most users would enable Do Not Track, especially if it was turned on by default in their browsers. The average user will likely believe that the benefit from protecting their privacy (or at least the perception that they are doing so) outweighs any cost to them in terms of less relevant advertising. This is especially likely given the typical fear-mongering that privacy advocates tend to engage in (and that the media tends to subsequently report). This is a classic case of economic externalities: individuals may receive a small benefit from enabling Do Not Track, but in doing that, they impose costs on the rest of Internet users.
So what will happen if website operators who rely on ad revenue face a substantive number of users accessing their sites with Do Not Track enabled? The assumption of privacy advocates seems to be that websites will not do anything in response.
However, one possible response is for websites to block users who enable Do Not Track in their browsers. Just as some websites have enacted paywalls to block non-paying users from their content, similarly websites can block users who refuse to allow targeted ads. There are already many plugins for WordPress, a common blog pl