Online Consumers Say: Don't Know Me, Don't Charge Me

News that two-thirds of Americans object to advertisers tracking their online movements -- even if it is to provide more relevant product and service information - could jeopardize the use of target marketing to underwrite content costs. The result could be consumers paying for more of what they want.

The new findings of a survey conducted by the University of Pennsylvania and the University of California, Berkeley, suggesting consumers' heightened privacy concerns about behavioral advertising, could encourage some producers and distributors of professional content to begin charging users instead.

A fierce debate is raging over emerging business models such as how to pay for the creation of television, film, newspaper and magazine content that shows up free online. There is a related controversy over whether premium advertisers should have access to data collected by service providers about target user preferences and activities.

Marketers who argue that advertising supports free online content have suggested measures to avoid government regulation that include allowing consumers to opt in and opt out of behavioral profiling as well as clearly indicating when they are being tracked.

As television and film continue to lose revenues from traditional sources as such TV advertising and DVDs, they are under pressure to generate new offsetting income from the Internet and digital devices such as smart phones. News Corp. CEO Rupert Murdoch and InterActiveCorp. CEO Barry Diller are among the media elite who have recently warned that payment for more streaming online content is imminent.

Existing and emerging paid content models include Netflix's digital on-demand service, cable operators' subscription-based TV Everywhere and Apple iTunes' pay-for-play. The ad-supported video aggregator Hulu and Google's dominant YouTube also are considering select paid video options.

Consumers generally are not resigned to the routine collection of demographic data by service producers so they know who they are reaching. Ad-supported digital media requires a basic level of authentication. Consumers also clearly prefer not to pay for content. I'm not sure in the new interactive media world consumers can have it both ways.

The objection by survey respondents of all age groups to targeted advertising and news seems counterintuitive to the Web and the use of interactivity to create premium value and profits with more customized content and marketing applications.

Ultimately, various paid content and behavioral advertising models will likely co-exist across the digital landscape in recognition of a simple, undeniable fact: the interactivity genie is already out of the bottle.

My BNET Media colleague David Weir has another take on the online-ad survey here.