European regulators are about to kill the digital media industry

CEO Randall Rothenberg


When we imagine an assault on free media, we often picture a
despotic ruler seeking to consolidate power by silencing voices
of opposition. Bangladesh, Egypt, Turkey, and Zimbabwe are but a
few arenas where battles for media dominance by the ruling class
have left news outlets censored, journalists in jail, and the
public deprived of the truth.

In Europe, a different but still
assault on free media is also under way.
And while it may be
harder to see – no news outlets are being seized by force – if
left unchecked its long-term impact is harmful to democracy and
economic prosperity.

Buried in pages of amendments to
the European Union’s latest privacy proposal, the
ePrivacy Regulation
, members of the European Parliament
recently recommended language that would strip European
publishers of the right to monetize their content through
eviscerating the basic business model
that has supported
journalism for more than 200 years. The new directive would
require publishers to grant everyone access to their digital
sites, even to users who block their ads, effectively creating a
shoplifting entitlement for consumers of news, social media,
email services, or entertainment.

The language may seem confusing
to the uninitiated. “No user shall be denied access to any
[online service] or functionality,” the proposed amendment says,
“regardless of whether this service is remunerated or not, on
grounds that he or she has not given his or her consent […] to
the processing of personal information and/or the use of storage
capabilities of his or her [device].”

In practice, it means this: The
basic functionality of the internet, which is built on data
exchanges between a user’s computer and publishers’ servers, can
no longer be used for the delivery of advertising unless the
consumer agrees to receive the ads – but the publisher must
deliver content to that consumer regardless.

In any other scenario, such a
proposal would be unthinkable. No lawmaker would consider
legalizing turnstile jumping on the subway, or free access to a
movie theatre, or the right to steal candy from a candy store, as
these practices are clear violations of the most fundamental
principles of contract law, on which the entire market economy is
built. Yet the European Parliament is intent on creating a
special law, by which the media industry alone is denied the
right to its historic business model.

The impact of this proposal would
be felt around the world, as all businesses operating in Europe
would fall under the scope of the proposal and be subject to
severe penalties. And it isn’t just businesses that would suffer
from such a proposal.

If passed, this proposal would be
devastating to consumers across Europe. As consumers begin
blocking advertising without consequence, publishers will have to
seek new revenue models to replace the 76% of the revenue
currently coming from advertising. Consumer fees for the services
we receive for free today would add up to hundreds of dollars per
month for companies to remain operational.

The impact in the mobile
environment, where the majority of mobile applications depend on
advertising revenue to survive, would be just as devastating.
With few consumers willing and able to pay the additional taxes,
the majority of the online content they enjoy today could
disappear forever – at exactly the time authoritarian governments
around the world are attempting to seize more control of the news
and entertainment media.

As one member of the
European Parliament, Daniel Dalton
of the United Kingdom,
recently said, “This [law] will break the current model of the

Fortunately, the free internet in
Europe is not yet dead. Existing EU law says that access to an
online service may be made conditional on the ability of a
website to deliver targeted advertising. The revised ePrivacy
Regulation should maintain this clarification.

More fundamentally, the European
Union must reevaluate its prescriptive approach to privacy that
hampers innovation. Citizens of the European Union would be
better served by enforceable rules of the road that encourage
companies to develop tailored approaches to privacy in alignment
with consumer expectations and marketplace realities.

With common sense principles that
recognize mass media’s dependence on advertising, we can ensure a
healthy digital ecosystem where the tremendous consumer surplus
of the internet continues to prevail.

Randall Rothenberg is the
president and CEO of the Interactive Advertising Bureau, a trade
organization representing media and technology companies centered
around the digital advertising industry.

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