Digital Thoughts: The Desktop Space: Hobbes and Locke Weigh In
by Sam Harrelson 

2004 is shaping up to present an interesting paradigm shift in the way our industry does business. With the introduction of CAN-SPAM, the death of the pop, ever falling email conversion rates and pricey co-regs, it would seem that online publishers and marketers would be going out of business en masse. However, that is not the case. Players in our industry are continually seeking the best way to make revenue while staying within the realm of legality and social acceptability. In the desktop space, there is much discussion as to who owns what. Consumers demand they own the right to what they see in terms of ads, affiliates are upset at lost commissions and advertisers are suing over their websites being over-taken by competitor’s pops. The term “consideration” seems to be the general watermark for what is an acceptable practice. What I propose is that by looking at game theory and its take on property rights, we can better come to a definition of what “consideration” actually means in this space.

In 1968, ecologist Garrett Hardin published the classic article “The Tragedy of the Commons” which investigated the reasons behind the tragic abuse of land throughout the history of England. Still both reviled and praised in academic (and activist) circles, the work does raise an interesting phenomenon in the form of an anecdote. The “commons” which were at the center of every town in England were held in common ownership and farmers/herders were allowed to let their cattle graze the land. Instead of considering the common good, farmers felt that they had to take advantage of this common space as much as possible before their competitors could do so. Why would the farmers do this?

Game theory dictates that they knew that if they did not take advantage of the land as much as possible, their competitors would, and they would be at a disadvantage. So, instead of upholding the public good on this public land, each farmer contributed to the destruction of it, to the whole community’s loss. Putting a free-market spin on the issue, no one owned the commons, so there was no one available to set the rules for how much an individual farmer could (over)graze the land. Therefore, each farmer, seeking to make a small individual gain, contributed greatly to the destruction of the commons.

The question comes down to the consideration of public good versus the enterprise of private gain. This question is still a hotly debated issue in economic and even political spheres. Thomas Hobbes offered a famous solution in his 1660 work, Leviathan. We are all familiar with the much overused and over-abused Hobbesian description, “the life of man, solitary, poore, nasty, brutish and short." Hobbes, contrary to many opinions in the industry, is not referring to the life of the email publisher or affiliate network. What Hobbes had in mind was a political sovereign capable of keeping the individual in line, for the sake of the common good. Without this strong central power, humanity would be incapable of cooperating to raise itself above a level of base nature. As an industry, we clearly are lacking the presence of a benevolent sovereign capable of keeping companies in line with the common good of the industry. There is no Leviathan to make sure that desktop publishers do not pop consumers with too many advertisements on a daily basis without their permission. This is a good thing. The Hobbesian jungle that necessitates a bully which allows us to have certain rights it feels we can use without killing each other is directly at odds with the nature of our industry.

John Locke is essential for understanding the notion of “consideration” in terms of what is acceptable for our industry in general and the desktop space in particular. Whereas Hobbes detailed the need for a strong sovereign who hands out rights to satiate individuals and keep them from harming one another, Locke introduces the all important idea of property rights into the conversation. Locke sees the government, or central power, as the holder of rights that the collective citizenry entrusts to it for protection. The rights of the individual are derived from the individual themselves with regard to their own person and property.

With this in mind, it is easy to see why the abuse of the commons existed. There were no individual property rights associated with the land, and no one was able to keep the over-grazing from occurring. Why are we still grappling with the idea of what is acceptable in terms of desktop advertising? Because there are no clear definitions of property rights as to who owns what in terms of a consumers eyeballs. Again, game theory comes into play and holds that there will be “defection opportunities” present for companies looking to make private gains in hopes they will beat the competition.

So what does this all mean? Is there a need for a strong central Hobbesian sovereign to hand out rights to desktop publishers in their marketing endeavors? Or is there a need for consumers to re-stake their claim to what their eyeballs see in terms of advertising, and what is placed on their internet browsing? Or, can we take the Locke argument of property rights one step further and investigate the role that private property and free-markets play in this debate?

I asked economist David A. Campbell, an expert in free markets, about the nature of free markets in relation to the game theory and desktop advertising space,

“Free markets do perform a vital function for society.  They equate individual valuations on goods and services that could never be comprehended by any conscious effort.  In doing so, they use the price system to convey these relative desires and demands, so that we all may benefit through this aggregation of knowledge.  This is the nature of [Adam Smith’s] the invisible hand, the ability to direct scarce resources to those who value them the highest.  In order for markets to work, however, we must have clear and enforceable property rights over our resources.”

What Campbell does is combine our discussion of game theory and private property into one cumulative summation. The free market nature of our industry, and particularly the desktop space, is a healthy development because it places value on the consumer’s activity in relation to the ads being served. However, property rights must exist for the consumer. The alternative is collective over-grazing without much consideration.

Consideration defined in this way incorporates not only the consumer but also the affiliate markets. On many of the popular affiliate marketing chat boards, there is a loud cry against the actions of desktop advertisers and their ability to circumvent the commissions that affiliates feel they are due. As an industry, we must come to a decision as to what justifies the property rights of publishers, affiliates and consumers. If you ask individuals from each of these groups for their definition of property rights for the parties involved, the answers will invariably differ. How do we come to this point of recognizing the delineations of these property rights? Hobbes would say we need a central sovereign. However, Campbell is able to point us to a more satisfactory route that incorporates Locke; the need for free markets to set the boundaries. As an industry that is still relatively young, online marketing has a unique opportunity to allow the market to direct scarce resources in the way of value. Answers to the question of consideration and ownership of desktop space or commissions will not come through a bullying central sovereign. Rather, the markets can and will provide the best answers to these questions if we allow them to do so unfettered.

This is not an overnight process, however. Markets are ever changing, and the definitions they make are permanently malleable. So what is a desktop publisher to do in order to provide for their own private gain while also incorporating the need for non-over-grazing?

Email publishing has already offered up a guideline for ways to find this answer in the absence of clearly defined boundaries; value, permission and frequency. The best desktop publishers will give value to their users, make sure to have the consumer’s permission for participation and incorporate a sensible amount of frequency into their daily ad-serving. As in email, there is definitely a large amount of short term gain to be made from over-grazing and blasting 10-20 messages to a consumer every day. However, the resource of data, not to mention consumer attention, is a scarce resource. Desktop publishers would do well to heed the lessons that email publishers have learned over the last four years.

Sam Harrelson is the Co-Editor of the Digital Moses Confidential. Send comments and questions to sam@digitalmoses.com