Can Spam and Spyware Ever Be Good?
Over at the Conglomerate, Professor Eric Goldman’s paper, A Coasean Analysis of Marketing, is being workshopped in the Conglomerate’s Second Annual Junior Scholars Workshop. Professors Peter Huang and Frank Pasquale (previously a guest blogger here at Concurring Opinions) are providing commentary.
I’ve read Eric’s paper, and it is quite interesting and provocative. Eric attempts to point out the brighter side to junk mail, spam, adware, and other marketing technologies that most of us detest. Is there such a thing as a good spam? I have my doubts, but Eric presents a thoughtful argument why we shouldn’t view spam and other marketing technologies as totally evil. He argues that we ought to be very careful in how we regulate marketing, and he proposes new approaches toward addressing the problems unwanted marketing create. Here’s the abstract:
Consumers claim to hate marketing—mostly, because they get too much unwanted marketing. In response, regulators develop medium-by-medium marketing suppression regulations. Unfortunately, these ad hoc solutions do little to satisfy consumers, and dynamic technologies and business practices quickly render them moot. Instead of continuing this cycle, there would be some benefit to developing a cross-media marketing regulatory scheme. However, any holistic solution must be predicated on a clear rationale for regulating marketing. The most common justification is that marketing imposes a negative externality on consumers, but this argument ignores the private and social welfare created by marketing and can lead to cost overinternalization and marketing undersupply. The Coase Theorem also suggests that social welfare improves by reducing the costs of matching marketers with interested consumers. To achieve this, consumers need a low cost but accurate mechanism to manifest their preferences. This Article shows that typical regulatory and marketplace solutions do not provide effective mechanisms. Instead, marketer-consumer matchmaking will improve from technology that will automatically infer consumer preferences and use these inferences to filter incoming marketing and seek out wanted content. This technology does not yet exist, but it is being rapidly developed. However, regulation of surreptitious monitoring devices (like adware and spyware) may inadvertently block the development of this socially-beneficial technology. As a result, current regulatory overreactions to developing technology may counterproductively foreclose social welfare improvements.
The Conglomerate welcomes your comments on Eric’s paper: “We invite all readers to comment on Eric’s paper in the commennts section of this post.” Please comment over at the Conglomerate post.