Jeff Vidler: Why Advertisers Are Starting to Open their Wallet for Podcasts

This guest column by Jeff Vidler, President of Audience Insights Inc. in Ontario, was first published in Medium. Jeff Vidler is a regular speaker at RAIN Summit Canada, and is the co-producer of the Canadian Podcast Listener Report.

It’s a heady time to be in podcasting. The latest IAB/PwC Podcast Ad Revenue Studyof the U.S. podcast industry estimates the 2018 ad revenue for podcasts was USD $479 million, a more than 400% increase from USD $107 million in 2015.

That’s pretty spectacular growth for a medium that’s been around for more than 15 years. And there are plenty of good reasons for that. Yes, more people are listening to podcasts. Even more important, advertisers and agencies are waking up to some of the one-of-a-kind benefits offered by podcast ads.

At Audience Insights Inc., we’ve worked on dozens of research studies on podcast listening in both the U.S. and Canada over the past few years, most recently Westwood One and Audience Insights Inc.’s Podcast Download — Spring 2019 Report.

From our research, we see three clear advantages of podcast advertising:

1. Deeply engaged listeners

If you’ve ever gone scuba diving or snorkeling, this may ring a bell for you. I went snorkeling a long time ago. What struck me was the immersive nature of the experience. Surrounded by an undersea world teeming with life, the “above sea” world slipped away. So did time. And I had the sunburn to prove it, because what seemed like 15 minutes was actually an hour and a half. I’d forgotten what snorkeling felt like until I started listening to podcasts. A compelling podcast can be equally engaging, bringing you into another world and making otherwise dead time fly by. Without the sunburn.

We’ve seen this engagement in action in the brand lift studies we have conducted for Pacific Content. Pacific Content takes the idea of a branded podcast and raises the bar by working hand-in-hand with their marketing team on the conception and development of the podcast, then adding in a layer of world-class storytelling. They call them “original podcasts for brands,” and they’ve built them for some of America’s biggest brands — including Facebook, Charles Schwab, Dell Technologies and Prudential Insurance. Remarkably, with no more than a couple of “brought to you by” mentions and absolutely zero product sell per episode, we typically see unaided sponsor recall scores that meet or exceed benchmarks for full length ads embedded in online video content.

2. The personal connection to the program and host

Listeners develop a close relationship with their favorite podcast hosts and shows. It’s a natural extension of that deep engagement.

Popular podcasts often sell out large theatres for their live shows in a way that radio DJs or hosts could only imagine.

We also see this when we ask podcast listeners why they say podcast ads command more of their attention than ads in other media. In our study with Westwood One on U.S. podcast listeners, the top three reasons revolve around the host and their personal connection to the podcast.

The very personal appeal of podcasts — and the ads they typically carry — are also reflected in the ad avoidance results. Fewer U.S. podcast listeners say they skip or otherwise avoid ads in podcasts than ads in any other media, especially ads in other digital media.

3. A unique opportunity for advertisers to reach an on-demand audience

Podcasts occupy the same on-demand media space as Netflix and paid music streaming services like Spotify and Apple Music. This puts them squarely on trend, reaching the same affluent millennial audience that wants their content on their terms and their schedule.

Just one difference. Brands can advertise on podcasts while they can’t advertise on Netflix or paid Spotify or Apple Music subscriptions.

The on-demand pull of podcasts also happens to play into one of podcasting’s strengths as an ad medium. With literally hundreds of thousands of podcasts available, niche interests are a big driver of podcast listening. That in turn provides vertical advertising and marketing opportunities you can’t get through mass media.

What Could Keep Advertisers from Opening their Wallet Wider

PwC projects ad revenue for podcasting to more than double by 2021, breaking through the USD $1 billion milestone. Podcasting is poised to hit that mark or beat it. But future growth will depend on how well the podcast industry meets the following challenges:

While it is getting better, measurement can still be a buying barrier. Downloads do not equal listens. Meanwhile, demographic and attribution data are still lacking. On the bright side, more podcast publishers are now participating in the U.S. IAB guidelines and increasing ad revenues are helping to fuel measurement innovations.

Fragmentation can complicate the buying process. With so many podcasts available, media buys can be challenging. Again, this is improving as sales networks (such as Midroll or Westwood One in the U.S. and TPX in Canada) help brands navigate this by aggregating inventory across multiple podcasts.

Will the need for scalability create a push to programmatic advertising? Podcasters need to fend off the temptation to plug inventory holes with ads that don’t deliver on the one-of-a-kind opportunity to tap into the deeply personal nature of podcasts.

Full results from Westwood One and Audience Insights Inc.’s Podcast Download–Spring 2019 Report of more than 1,400 monthly podcast listeners are available here. The study replicated questions from the survey from The Canadian Podcast Listener 2018 in partnership with North American podcast consulting firm Ulster Media with support from The Podcast Exchange (TPX). New data from The Canadian Podcast Listener 2019 will be available this Fall.

How The Economist builds digital products

The lessons we learned in product development

Over the past year, our digital teams at The Economist have been thinking more deeply about how we can build products and experiences that subscribers love. After a year of experimentation, a little bit of chaos and a whole lot of fun, here are some of the biggest lessons we learned.

Invest in your owned-and-operated products

While it’s important to experiment with new platforms such as social media and other third-party channels, we realised that it’s even more important to invest in the platforms we ultimately control, such as our website and apps. A year ago, The Economist made a big investment to accelerate the development of and a new app — the products that we believe are best positioned to attract and retain subscribers. is already a big driver of subscriptions. Many people use it to sample our journalism before deciding whether to subscribe. It is crucial that we make a good first impression. That is why we are focusing more resources on optimising our readers’ first visit to the website, in addition to improving basic things like speed, navigation and performance for regular visitors.

The new app, meanwhile, aims to retain subscribers once they have signed up. As my colleague Richard Holden, who led its development, writes: the goal is to help subscribers easily discover and enjoy the best of our journalism in one place.

Ensure that your strategy aligns with your mission

Our product mission is to complement world-class journalism with a world-class digital experience. However, doing more digital stuff is not a strategy. Digital is a means to an end — that end being a better customer experience across all channels. We now try our best to put the customers’ needs (rather than our own!) at the heart of every feature and product we build.

Be humble. Don’t second-guess your subscribers

It’s human nature to want to jump to quick solutions to problems. But in product development, the wrong solutions could turn into a costly waste of time. Especially if you are solving the wrong problems. Before we developed the new app, we started with a simple hypothesis based on customer feedback: readers are cancelling because of the “unread guilt factor”.

Many of our former subscribers found it difficult to stay on top of The Economist edition each week and simply gave up. We spoke to some of them to validate that the problem actually existed. (It helped that The Onion once spoofed us about it.) It did. We also invalidated some of our assumptions: for example, we suspected that readers might want a personalised list of articles, when in reality they saw us as a trusted curator and valued our editorial judgement.

Test ideas with subscribers

Our UX researcher spoke to more than 100 subscribers and prospects before we built the app in actual code. This ensured we weren’t wasting time and resources on features no one wanted. In fact, in some of our user-testing labs, we used post-its as fake menus and prototypes on Marvel, a prototyping app, to figure out whether the app was addressing real pain points, such as information overload and difficulty finding relevant content — the leading indicators for churn. Once we had built the real app, we ran an alpha test with 50 subscribers before releasing it to more than 700 on TestFlight, an Apple service for testing iOS apps.

Featuritis will kill a product

We endeavoured, where possible, to avoid “featuritis” — a terrible affliction that affects many in the world of product management. With the app, we focused on delivering the minimal viable features required at launch (a topical selection called Daily Picks, the Espresso morning briefing, access to the print and audio editions, and bookmarks). Admittedly, it was tempting to cram every shiny new thing into the app before its first release, but we reassured our stakeholders that the launch is only the first step. We plan to continue polishing and improving the app. It is, after all, our job to keep delighting subscribers.

There’s always room for improvement. Tell your customers that

It’s important to take customer feedback seriously, but not too personally (which is easier said than done!). With both the new app and, we get a flurry of constructive and sometimes painful-to-read comments, daily. While many users raved about the new app experience, for example, some gave us a heart-wrenching 1-star rating (out of five) because we did not include their most beloved feature. So we reassured them that we are working on it and will be adding more features in the coming weeks and months.

As usual, we’d love your feedback. What do you like about our products? What bugs you? What could we do to improve your digital experience of The Economist? Let us know in the comments below.

Computers may take the place of parliament

We’re entering a world where voters’ wishes will be so well understood that arguments for direct democracy will grow.

If this column were a book it might be called: My Dad, the Theory of Measurement and the End of Representative Democracy. When my mum died and we cleared out their house, I took home some of my father’s papers as mementos of his working life. Some stuff about transducers and his book The Mathematical Modelling of Metabolic and Endocrine Systems, which isn’t exactly a page-turner, unless you turn the pages without reading them.

Dad, Professor Ludwik Finkelstein to give him his proper title, was a professor of measurement. And I confess I was never absolutely certain what that meant. A few weeks ago, however, City, University of London, informed me that on the institution’s 125th anniversary it was declaring my father an icon of the university for his scientific contribution, and asked if I would be able to attend the ceremony. Yes, of course. But I thought before I did so it would be a good idea to get a grip on the whole thing.

I learnt quite a bit about scientific instruments that I will save to entertain everyone at the next family party. But here, in a nutshell, is what might matter to you. And what matters to understanding politics and its future.

My father helped develop a consistent understanding of measurement. It is a language, he argued, that you use to describe things. It allows you to appreciate their basic properties, to compare them and to rank them. The purpose of pinning down the meaning of a “proper” measurement was that with this descriptive language you can understand better what look like fuzzy bits of human behaviour. You can see that they are predictable and consistent systems. You can model them and therefore you can computerise them too. Dad’s work was the bedrock of computerisation.

Now I see why, despite being an engineer and devoted to the discipline, Dad was always very encouraging of my interest in politics and economics. He saw they were every bit as much a system as the instruments he installed in coalmines at the start of his career. And as I look both backwards in my political life and forwards to the future of politics, I can see that he was right.

When I first went to work for the Conservative Party in 1995 I realised something quite early on. We were amateurs fighting professionals. Tony Blair’s Labour Party was studying voters systematically, using qualitative and quantitative polling. We were relying on instinct. So when a controversy arose, they knew what voters would think while we were guessing.

Although I say they knew, in fact what they were doing was rudimentary. Some focus group polling, some survey work. Soon the techniques available became much more sophisticated. By the 2015 election, parties were able to target individuals based on demographics, shopping habits and so forth. They were able to describe voters using numbers in exactly the way my father would have recognised, ranking them, ordering them, predicting their behaviour.

Then, of course, there was the controversial work during the Brexit referendum (and in the US, with Trump) to influence opinion based on data mining by companies such as Cambridge Analytica.

Yet this is just the start. This process of ordering and systemising will get deeper as we are able to store more data and process it more quickly. Increasingly we are able not just to ask people what they think but to predict what they will think. As Jamie Susskind noted in his thought-provoking book Future Politics, Facebook’s algorithm needs only ten likes before it can predict your opinions better than your colleagues, 150 to beat family members, 300 to defeat your spouse. Computers will be able to predict what you think better than you can yourself.

Even with this, we will still just be getting going. We will be at the computer-assisted parking stage of development, but we may go all the way to the driverless car stage. Eventually you will be able to produce a speech that is perfectly engineered to achieve a certain reaction. You will be able to take policy positions perfectly designed to produce coalitions of support of a given size. You will be able to select candidates perfectly engineered to win elections. You will know exactly how any argument will play.

Once you know this sort of thing, indeed once you are able to know it, you won’t be able to carry on as before. If you do, you will be beaten by someone who lets the technology assist them.

During the 2011 referendum on the alternative vote, the advocates of AV persisted with an argument — AV would help deal with expenses fraud — that focus groups said wouldn’t work. Presumably they thought it was still compelling, but guess what? Voters didn’t. Which was knowable. To press on with a position when you are certain it’s a loser is unprofessional, and also unyielding.

There is no point objecting that you wouldn’t want all this to happen. That you will want authenticity rather than something so calculated. Because the whole point is that whatever is calculated will, by definition, be what you want. It will always be more appealing to you than the alternative because it will be based on measurements of what you think, what you want and who you are.

And, as with the Cambridge Analytica work, the line between what you really think and what, with computer assistance, you can be persuaded to think will be blurred.

This will be the position every parliamentary representative will find themselves in. It’s one thing to take a stand against public opinion in the hope it will work out. It’s quite another when technology allows you to appreciate that it absolutely won’t work out. Representatives who don’t follow predictable, knowable opinion will be replaced by those who do.

At the same time, the demand for direct democracy may increase. After all, the objection that we can’t deal with complicated questions because we can’t all gather in the same room has already gone. And if technology can measure our opinion and predict our position, it can allow us to make decisions on legislation that reflect our point of view even on issues we don’t properly understand. A computer may know our view on the Domestic Energy Efficiency Plan Bill even when we don’t.

One day, it could even make these decisions without our intervention: driverless cars, voteless democracies.

It seems quite a scary outcome. But I am shored up by what I acknowledge is a statement of faith more than anything else. My Dad always believed that nothing really bad could come from scientific insight and systematic knowledge. That bit of his work I did understand. And I think he was right.

It’s Time to Break Up Facebook

Mark Zuckerberg is a good guy. But the company I helped him build is a threat to our economy and democracy.

The last time I saw Mark Zuckerberg was in the summer of 2017, several months before the Cambridge Analytica scandal broke. We met at Facebook’s Menlo Park, Calif., office and drove to his house, in a quiet, leafy neighborhood. We spent an hour or two together while his toddler daughter cruised around. We talked politics mostly, a little about Facebook, a bit about our families. When the shadows grew long, I had to head out. I hugged his wife, Priscilla, and said goodbye to Mark.

Since then, Mark’s personal reputation and the reputation of Facebook have taken a nose-dive. The company’s mistakes — the sloppy privacy practices that dropped tens of millions of users’ data into a political consulting firm’s lap;the slow response to Russian agents, violent rhetoric and fake news; and the unbounded drive to capture ever more of our time and attention — dominate the headlines. It’s been 15 years since I co-founded Facebook at Harvard, and I haven’t worked at the company in a decade. But I feel a sense of anger and responsibility.

Mark is still the same person I watched hug his parents as they left our dorm’s common room at the beginning of our sophomore year. He is the same person who procrastinated studying for tests, fell in love with his future wife while in line for the bathroom at a party and slept on a mattress on the floor in a small apartment years after he could have afforded much more. In other words, he’s human. But it’s his very humanity that makes his unchecked power so problematic.

Mark’s influence is staggering, far beyond that of anyone else in the private sector or in government. He controls three core communications platforms — Facebook, Instagram and WhatsApp — that billions of people use every day. Facebook’s board works more like an advisory committee than an overseer, because Mark controls around 60 percent of voting shares. Mark alone can decide how to configure Facebook’s algorithms to determine what people see in their News Feeds, what privacy settings they can use and even which messages get delivered. He sets the rules for how to distinguish violent and incendiary speech from the merely offensive, and he can choose to shut down a competitor by acquiring, blocking or copying it.

Mark’s influence is staggering, far beyond that of anyone else in the private sector or in government.

Mark is a good, kind person. But I’m angry that his focus on growth led him to sacrifice security and civility for clicks. I’m disappointed in myself and the early Facebook team for not thinking more about how the News Feed algorithm could change our culture, influence elections and empower nationalist leaders. And I’m worried that Mark has surrounded himself with a team that reinforces his beliefs instead of challenging them.

The government must hold Mark accountable. For too long, lawmakers have marveled at Facebook’s explosive growth and overlooked their responsibility to ensure that Americans are protected and markets are competitive. Any day now, the Federal Trade Commission is expected to impose a $5 billion fine on the company, but that is not enough; nor is Facebook’s offer to appoint some kind of privacy czar. AfterMark’s congressional testimony last year, there should have been calls for him to truly reckon with his mistakes. Instead the legislators who questioned him were derided as too old and out of touch to understand how tech works. That’s the impression Mark wanted Americans to have, because it means little will change.

We are a nation with a tradition of reining in monopolies, no matter how well intentioned the leaders of these companies may be. Mark’s power is unprecedented and un-American.

It is time to break up Facebook.

Wealready have the tools we need to check the domination of Facebook. We just seem to have forgotten about them.

America was built on the idea that power should not be concentrated in any one person, because we are all fallible. That’s why the founders created a system of checks and balances. They didn’t need to foresee the rise of Facebook to understand the threat that gargantuan companies would pose to democracy. Jefferson and Madison were voracious readers of Adam Smith, who believed that monopolies prevent the competition that spurs innovation and leads to economic growth.

A century later, in response to the rise of the oil, railroad and banking trusts of the Gilded Age, the Ohio Republican John Sherman said on the floor of Congress: “If we will not endure a king as a political power, we should not endure a king over the production, transportation and sale of any of the necessities of life.If we would not submit to an emperor, we should not submit to an autocrat of trade with power to prevent competition and to fix the price of any commodity.” The Sherman Antitrust Act of 1890 outlawed monopolies. More legislation followed in the 20th century, creating legal and regulatory structures to promote competition and hold the biggest companies accountable. The Department of Justice broke up monopolies like Standard Oil and AT&T.

For many people today, it’s hard to imagine government doing much of anything right, let alone breaking up a company like Facebook. This isn’t by coincidence.

Starting in the 1970s, a small but dedicated group of economists, lawyers and policymakers sowed the seeds of our cynicism. Over the next 40 years, they financed a network of think tanks, journals, social clubs, academic centers and media outlets to teach an emerging generation that private interests should take precedence over public ones. Their gospel was simple: “Free” markets are dynamic and productive, while government is bureaucratic and ineffective. By the mid-1980s, they had largely managed to relegate energetic antitrust enforcement to the history books.

This shift, combined with business-friendly tax and regulatory policy, ushered in a period of mergers and acquisitions that created megacorporations. In the past 20 years, more than 75 percent of American industries, from airlines to pharmaceuticals, have experienced increased concentration, and the average size of public companies has tripled. The results are a decline in entrepreneurshipstalled productivity growth, and higher prices and fewer choices for consumers.

The same thing is happening in social media and digital communications. Because Facebook so dominates social networking, it faces no market-based accountability. This means that every time Facebook messes up, we repeat an exhausting pattern: first outrage, then disappointment and, finally, resignation.

In2005, I was in Facebook’s first office, on Emerson Street in downtown Palo Alto, when I read the news that Rupert Murdoch’s News Corporation was acquiring the social networking site Myspace for $580 million. The overhead lights were off, and a group of us were pecking away on our keyboards, our 21-year-old faces half-illuminated by the glow of our screens. I heard a “whoa,” and the news then ricocheted silently through the room, delivered by AOL Instant Messenger. My eyes widened. Really, $580 million?

Facebook was competing with Myspace, albeit obliquely. We were focused on college students at that point, but we had real identities while Myspace had fictions. Our users were more engaged, visiting daily, if not hourly. We believed Facebook surpassed Myspace in quality and would easily displace it given enough time and money. If Myspace was worth $580 million, Facebook could be worth at least double.

From our earliest days, Mark used the word “domination” to describe our ambitions, with no hint of irony or humility. Back then, we competed with a whole host of social networks, not just Myspace, but also Friendster, Twitter, Tumblr, LiveJournal and others. The pressure to beat them spurred innovation and led to many of the features that distinguish Facebook: simple, beautiful interfaces, the News Feed, a tie to real-world identities and more.

From our earliest days, Mark used the word “domination” to describe our ambitions.

It was this drive to compete that led Mark to acquire, over the years, dozens of other companies, including Instagram and WhatsApp in 2012 and 2014. There was nothing unethical or suspicious, in my view, in these moves.

One night during the summer of the Myspace sale, I remember driving home from work with Mark, back to the house we shared with several engineers and designers. I was in the passenger seat of the Infiniti S.U.V. that our investor Peter Thiel had bought for Mark to replace the unreliable used Jeep that he had been driving.

As we turned right off Valparaiso Avenue, Mark confessed the immense pressure he felt. “Now that we employ so many people …” he said, trailing off. “We just really can’t fail.”

Facebook had gone from a project developed in our dorm room and chaotic summer houses to a serious company with lawyers and a human resources department. We had around 50 employees, and their families relied on Facebook to put food on the table. I gazed out the window and thought to myself, It’s never going to stop. The bigger we get, the harder we’ll have to work to keep growing.

Over a decade later, Facebook has earned the prize of domination. It is worth half a trillion dollars and commands, by my estimate, more than 80 percent of the world’s social networking revenue. It is a powerful monopoly, eclipsing all of its rivals and erasing competition from the social networking category. This explains why, even during the annus horribilis of 2018, Facebook’s earnings per share increased by an astounding 40 percent compared with the year before. (I liquidated my Facebook shares in 2012, and I don’t invest directly in any social media companies.)

Facebook’s monopoly is also visible in its usage statistics.About 70 percent of American adults use social media, and a vast majority are on Facebook products. Over two-thirds use the core site, a third use Instagram, and a fifth use WhatsApp. By contrast, fewer than a third report using Pinterest, LinkedIn or Snapchat. What started out as lighthearted entertainment has become the primary way that people of all ages communicate online.

Even when people want to quit Facebook, they don’t have any meaningful alternative, as we saw in the aftermath of the Cambridge Analytica scandal. Worried about their privacy and lacking confidence in Facebook’s good faith, users across the world started a “Delete Facebook” movement. According to the Pew Research Center, a quarter deleted their accounts from their phones, but many did so only temporarily. I heard more than one friend say, “I’m getting off Facebook altogether — thank God for Instagram,” not realizing that Instagram was a Facebook subsidiary. In the end people did not leave the company’s platforms en masse. After all, where would they go?

Facebook’s dominance is not an accident of history. The company’s strategy was to beat every competitor in plain view, and regulators and the government tacitly — and at times explicitly — approved. In one of the government’s few attempts to rein in the company, the F.T.C. in 2011 issued a consent decree that Facebook not share any private information beyond what users already agreed to. Facebook largely ignored the decree. Last month, the day after the company predicted in an earnings call that it would need to payup to $5 billion as a penalty for its negligence — a slap on the wrist — Facebook’s shares surged 7 percent, adding $30 billion to its value, six times the size of the fine.

The F.T.C.’s biggest mistake was to allow Facebook to acquire Instagram and WhatsApp. In 2012, the newer platforms were nipping at Facebook’s heels because they had been built for the smartphone, where Facebook was still struggling to gain traction. Mark responded by buying them, and the F.T.C. approved.

Neither Instagram nor WhatsApp had any meaningful revenue, but both were incredibly popular. The Instagram acquisition guaranteed Facebook would preserve its dominance in photo networking, and WhatsApp gave it a new entry into mobile real-time messaging. Now, the founders of Instagram and WhatsApp have left the company after clashing with Mark over his management of their platforms. But their former properties remain Facebook’s, driving much of its recent growth.

When it hasn’t acquired its way to dominance, Facebook has used its monopoly position to shut out competing companies or has copied their technology.

The News Feed algorithm reportedly prioritized videos created through Facebook over videos from competitors, like YouTube and Vimeo. In 2012, Twitter introduced a video network called Vine that featured six-second videos. That same day, Facebook blocked Vine from hosting a tool that let its users search for their Facebook friends while on the new network.The decision hobbled Vine, which shut down four years later.

Snapchat posed a different threat. Snapchat’s Stories and impermanent messaging options made it an attractive alternative to Facebook and Instagram. And unlike Vine, Snapchat wasn’t interfacing with the Facebook ecosystem; there was no obvious way to handicap the company or shut it out. So Facebook simply copied it.

Facebook’s version of Snapchat’s stories and disappearing messages proved wildly successful, at Snapchat’s expense. At an all-hands meeting in 2016, Mark told Facebook employees not to let their pride get in the way of giving users what they want. According to Wired magazine, “Zuckerberg’s message became an informal slogan at Facebook: ‘Don’t be too proud to copy.’”

(There is little regulators can do about this tactic: Snapchat patented its “ephemeral message galleries,” but copyright law does not extend to the abstract concept itself.)

Would-be competitors can’t raise the money to take on Facebook.

As a result of all this, would-be competitors can’t raise the money to take on Facebook. Investors realize that if a company gets traction, Facebook will copy its innovations, shut it down or acquire it for a relatively modest sum. So despite an extended economic expansion, increasing interest in high-tech start-ups, an explosion of venture capital and growing public distaste for Facebook, no major social networking company has been founded since the fall of 2011.

As markets become more concentrated, the number of new start-up businesses declines. This holds true in other high-tech areas dominated by single companies, like search (controlled by Google) and e-commerce (taken over by Amazon). Meanwhile, there has been plenty of innovation in areas where there is no monopolistic domination, such as in workplace productivity (Slack, Trello, Asana), urban transportation (Lyft, Uber, Lime, Bird) and cryptocurrency exchanges (Ripple, Coinbase, Circle).

I don’t blame Mark for his quest for domination. He has demonstrated nothing more nefarious than the virtuous hustle of a talented entrepreneur. Yet he has created a leviathan that crowds out entrepreneurship and restricts consumer choice. It’s on our government to ensure that we never lose the magic of the invisiblehand. How did we allow this to happen?

Since the 1970s, courts have become increasingly hesitant to break up companies or block mergers unless consumers are paying inflated prices that would be lower in a competitive market. But a narrow reliance on whether or not consumers have experienced price gouging fails to take into account the full cost of market domination. It doesn’t recognize that we also want markets to be competitive to encourage innovation and to hold power in check. And it is out of step with the history of antitrust law. Two of the last major antitrust suits, against AT&T and IBM in the 1980s, were grounded in the argument that they had used their size to stifle innovation and crush competition.

As the Columbia law professor Tim Wu writes, “It is a disservice to the laws and their intent to retain such a laserlike focus on price effects as the measure of all that antitrust was meant to do.”

Facebook is the perfect case on which to reverse course, precisely because Facebook makes its money from targeted advertising, meaning users do not pay to use the service. But it is not actually free, and it certainly isn’t harmless.

We pay for Facebook with our data and our attention, and by either measure it doesn’t come cheap.

Facebook’s business model is built on capturing as much of our attention as possible to encourage people to create and share more information about who they are and who they want to be. We pay for Facebook with our data and our attention, and by either measure it doesn’t come cheap.

I was on the original News Feed team (my name is on the patent), and that product now gets billions of hours of attention and pulls in unknowable amounts of data each year. The average Facebook user spends an hour a dayon the platform; Instagram users spend 53 minutes a day scrolling through pictures and videos. They create immense amounts of data — not just likes and dislikes, but how many seconds they watch a particular video — that Facebook uses to refine its targeted advertising. Facebook also collects data from partner companies and apps, without most users knowing about it, according to testing by The Wall Street Journal.

Some days, lying on the floor next to my 1-year-old son as he plays with his dinosaurs, I catch myself scrolling through Instagram, waiting to see if the next image will be more beautiful than the last. What am I doing? I know it’s not good for me, or for my son, and yet I do it anyway.

The choice is mine, but it doesn’t feel like a choice. Facebook seeps into every corner of our lives to capture as much of our attention and data as possible and, without any alternative, we make the trade.

The vibrant marketplace that once drove Facebook and other social media companies to compete to come up with better products has virtually disappeared. This means there’s less chance of start-ups developing healthier, less exploitative social media platforms. It also means less accountability on issues like privacy.

Just last month, Facebook seemingly tried to bury news that it had stored tens of millions of user passwords in plain text format, which thousands of Facebook employees could see. Competition alone wouldn’t necessarily spur privacy protection — regulation is required to ensure accountability — but Facebook’s lock on the market guarantees that users can’t protest by moving to alternative platforms.

The most problematic aspect of Facebook’s power is Mark’s unilateral control over speech. There is no precedent for his ability to monitor, organize and even censor the conversations of two billion people.

Facebook engineers write algorithms that select which users’ comments or experiences end up displayed in the News Feeds of friends and family. These rules are proprietary and so complex that many Facebook employees themselves don’t understand them.

Facebook engineers write algorithms that select which users’ comments or experiences end up displayed in the News Feeds of friends and family. These rules are proprietary and so complex that many Facebook employees themselves don’t understand them.

In 2014, the rules favored curiosity-inducing “clickbait” headlines. In 2016, they enabled the spread of fringe political views and fake news, which made it easier for Russian actors to manipulate the American electorate. In January 2018, Mark announced that the algorithms would favor non-news content shared by friends and news from “trustworthy” sources, which his engineers interpreted — to the confusion of many — as a boost for anything in the category of “politics, crime, tragedy.”

Facebook has responded to many of the criticisms of how it manages speech by hiring thousands of contractors to enforce the rules that Mark and senior executives develop. After a few weeks of training, these contractors decide which videos count as hate speech or free speech, which images are erotic and which are simply artistic, and which live streams are too violent to be broadcast. (The Verge reported that some of these moderators, working through a vendor in Arizona, were paid $28,800 a year, got limited breaks and faced significant mental health risks.)

As if Facebook’s opaque algorithms weren’t enough, last year we learned that Facebook executives had permanently deleted their own messages from the platform, erasing them from the inboxes of recipients; the justification was corporate security concerns. When I look at my years of Facebook messages with Mark now, it’s just a long stream of my own light-blue comments, clearly written in response to words he had once sent me. (Facebook now offers this as a feature to all users.)

The most extreme example of Facebook manipulating speech happened in Myanmar in late 2017Mark said in a Vox interview that he personally made the decision to delete the private messages of Facebook users who were encouraging genocide there. “I remember, one Saturday morning, I got a phone call,” he said, “and we detected that people were trying to spread sensational messages through — it was Facebook Messenger in this case — to each side of the conflict, basically telling the Muslims, ‘Hey, there’s about to be an uprising of the Buddhists, so make sure that you are armed and go to this place.’ And then the same thing on the other side.”

Mark made a call: “We stop those messages from going through.” Most people would agree with his decision, but it’s deeply troubling that he made it with no accountability to any independent authority or government. Facebook could, in theory, delete en masse the messages of Americans, too, if its leadership decided it didn’t like them.

Mark used to insist that Facebook was just a “social utility,” a neutral platform for people to communicate what they wished. Now he recognizes that Facebook is both a platform and a publisher and that it is inevitably making decisions about values. The company’s own lawyers have argued in court that Facebook is a publisher and thus entitled to First Amendment protection.

No one at Facebook headquarters is choosing what single news story everyone in America wakes up to, of course. But they do decide whether it will be an article from a reputable outlet or a clip from “The Daily Show,” a photo from a friend’s wedding or an incendiary call to kill others.

Mark knows that this is too much power and is pursuing a twofold strategy to mitigate it. He is pivoting Facebook’s focus toward encouraging more private, encrypted messaging that Facebook’s employees can’t see, let alone control. Second, he is hoping for friendly oversight from regulators and other industry executives.

Late last year, he proposed an independent commission to handle difficult content moderation decisions by social media platforms. It would afford an independent check, Mark argued, on Facebook’s decisions, and users could appeal to it if they disagreed. But its decisions would not have the force of law, since companies would voluntarily participate.

In an op-ed essay in The Washington Post in March, he wrote, “Lawmakers often tell me we have too much power over speech, and I agree.” And he went even further than before, calling for more government regulation — not just on speech, but also on privacy and interoperability, the ability of consumers to seamlessly leave one network and transfer their profiles, friend connections, photos and other data to another.

Facebook isn’t afraid of a few more rules. It’s afraid of an antitrust case.

I don’t think these proposals were made in bad faith. But I do think they’re an attempt to head off the argument that regulators need to go further and break up the company. Facebook isn’t afraid of a few more rules. It’s afraid of an antitrust case and of the kind of accountability that real government oversight would bring.

We don’t expect calcified rules or voluntary commissions to work to regulate drug companies, health care companies, car manufacturers or credit card providers. Agencies oversee these industries to ensure that the private market works for the public good. In these cases, we all understand that government isn’t an external force meddling in an organic market; it’s what makes a dynamic and fair market possible in the first place. This should be just as true for social networking as it is for air travel or pharmaceuticals.

Inthe summer of 2006, Yahoo offered us $1 billion for Facebook. I desperately wanted Mark to say yes. Even my small slice of the company would have made me a millionaire several times over. For a 22-year-old scholarship kid from small-town North Carolina, that kind of money was unimaginable. I wasn’t alone — just about every other person at the company wanted the same.

It was taboo to talk about it openly, but I finally asked Mark when we had a moment alone, “How are you feeling about Yahoo?” I got a shrug and a one-line answer: “I just don’t know if I want to work for Terry Semel,” Yahoo’s chief executive.

Outside of a couple of gigs in college, Mark had never had a real boss and seemed entirely uninterested in the prospect. I didn’t like the idea much myself, but I would have traded having a boss for several million dollars any day of the week. Mark’s drive was infinitely stronger. Domination meant domination, and the hustle was just too delicious.

Mark may never have a boss, but he needs to have some check on his power. The American government needs to do two things: break up Facebook’s monopoly and regulate the company to make it more accountable to the American people.

First, Facebook should be separated into multiple companies. The F.T.C., in conjunction with the Justice Department, should enforce antitrust laws by undoing the Instagram and WhatsApp acquisitions and banning future acquisitions for several years. The F.T.C. should have blocked these mergers, but it’s not too late to act. There is precedent for correcting bad decisions — as recently as 2009, Whole Foods settled antitrust complaints by selling off the Wild Oats brand and stores that it had bought a few years earlier.

There is some evidence that we may be headed in this direction. Senator Elizabeth Warren has called for reversing the Facebook mergers, and in February, the F.T.C. announced the creation of a task force to monitor competition among tech companies and review previous mergers.

How would a breakup work? Facebook would have a brief period to spin off the Instagram and WhatsApp businesses, and the three would become distinct companies, most likely publicly traded. Facebook shareholders would initially hold stock in the new companies, although Mark and other executives would probably be required to divest their management shares.

Until recently, WhatsApp and Instagram were administered as independent platforms inside the parent company, so that should make the process easier. But time is of the essence: Facebook is working quickly to integrate the three, which would make it harder for the F.T.C. to split them up.

Some economists are skeptical that breaking up Facebook would spur that much competition, because Facebook, they say, is a “natural” monopoly. Natural monopolies have emerged in areas like water systems and the electrical grid, where the price of entering the business is very high — because you have to lay pipes or electrical lines — but it gets cheaper and cheaper to add each additional customer. In other words, the monopoly arises naturally from the circumstances of the business, rather than a company’s illegal maneuvering. In addition, defenders of natural monopolies often make the case that they benefit consumers because they are able to provide services more cheaply than anyone else.

Facebook is indeed more valuable when there are more people on it: There are more connections for a user to make and more content to be shared. But the cost of entering the social network business is not that high. And unlike with pipes and electricity, there is no good argument that the country benefits from having only one dominant social networking company.

Still others worry that the breakup of Facebook or other American tech companies could be a national security problem. Because advancements in artificial intelligence require immense amounts of data and computing power, only large companies like Facebook, Google and Amazon can afford these investments, they say. If American companies become smaller, the Chinese will outpace us.

While serious, these concerns do not justify inaction. Even after a breakup, Facebook would be a hugely profitable business with billions to invest in new technologies — and a more competitive market would only encourage those investments. If the Chinese did pull ahead, our government could invest in research and development and pursue tactical trade policy, just as it is doing today to hold China’s 5G technology at bay.

The cost of breaking up Facebook would be next to zero for the government, and lots of people stand to gain economically. A ban on short-term acquisitions would ensure that competitors, and the investors who take a bet on them, would have the space to flourish. Digital advertisers would suddenly have multiple companies vying for their dollars.

Even Facebook shareholders would probably benefit, as shareholders often do in the years after a company’s split. The value of the companies that made up Standard Oil doubled within a year of its being dismantled and had increased by fivefold a few years later. Ten years after the 1984 breakup of AT&T, the value of its successor companies had tripled.

But the biggest winners would be the American people. Imagine a competitive market in which they could choose among one network that offered higher privacy standards, another that cost a fee to join but had little advertising and another that would allow users to customize and tweak their feeds as they saw fit. No one knows exactly what Facebook’s competitors would offer to differentiate themselves. That’s exactly the point.

The Justice Department faced similar questions of social costs and benefits with AT&T in the 1950s. AT&T had a monopoly on phone services and telecommunications equipment. The government filed suit under antitrust laws, and the case ended with a consent decree that required AT&T to release its patents and refrain from expanding into the nascent computer industry. This resulted in an explosion of innovation, greatly increasing follow-on patents and leading to the development of the semiconductor and modern computing. We would most likely not have iPhones or laptops without the competitive markets that antitrust action ushered in.

Adam Smith was right: Competition spurs growth and innovation.

Just breaking up Facebook is not enough. We need a new agency, empowered by Congress to regulate tech companies. Its first mandate should be to protect privacy.

The Europeans have made headway on privacy with the General Data Protection Regulation, a law that guarantees users a minimal level of protectionA landmark privacy bill in the United States should specify exactly what control Americans have over their digital information, require clearer disclosure to users and provide enough flexibility to the agency to exercise effective oversight over time. The agency should also be charged with guaranteeing basic interoperability across platforms.

Finally, the agency should create guidelines for acceptable speech on social media. This idea may seem un-American — we would never stand for a government agency censoring speech. But we already have limits on yelling “fire” in a crowded theater, child pornography, speech intended to provoke violence and false statements to manipulate stock prices. We will have to create similar standards that tech companies can use. These standards should of course be subject to the review of the courts, just as any other limits on speech are. But there is no constitutional right to harass others or live-stream violence.

If we don’t have public servants shaping these policies, corporations will.

These are difficult challenges. I worry that government regulators will not be able to keep up with the pace of digital innovation. I worry that more competition in social networking might lead to a conservative Facebook and a liberal one, or that newer social networks might be less secure if government regulation is weak. But sticking with the status quo would be worse: If we don’t have public servants shaping these policies, corporations will.

Some people doubt that an effort to break up Facebook would win in the courts, given the hostility on the federal bench to antitrust action, or that this divided Congress would ever be able to muster enough consensus to create a regulatory agency for social media.

But even if breakup and regulation aren’t immediately successful, simply pushing for them will bring more oversight. The government’s case against Microsoft — that it illegally used its market power in operating systems to force its customers to use its web browser, Internet Explorer — ended in 2001 when George W. Bush’s administration abandoned its effort to break up the company. Yet that prosecution helped rein in Microsoft’s ambitions to dominate the early web.

Similarly, the Justice Department’s 1970s suit accusing IBM of illegally maintaining its monopoly on personal computer sales ended in a stalemate. But along the way, IBM changed many of its behaviors. It stopped bundling its hardware and software, chose an extremely open design for the operating system in its personal computers and did not exercise undue control over its suppliers. Professor Wu has written that this “policeman at the elbow” led IBM to steer clear “of anything close to anticompetitive conduct, for fear of adding to the case against it.”

We can expect the same from even an unsuccessful suit against Facebook.

Finally, an aggressive case against Facebook would persuade other behemoths like Google and Amazon to think twice about stifling competition in their own sectors, out of fear that they could be next. If the government were to use this moment to resurrect an effective competition standard that takes a broader view of the full cost of “free” products, it could affect a whole host of industries.

The alternative is bleak. If we do not take action, Facebook’s monopoly will become even more entrenched. With much of the world’s personal communications in hand, it can mine that data for patterns and trends, giving it an advantage over competitors for decades to come.

Itake responsibility for not sounding the alarm earlier. Don Graham, a former Facebook board member, has accused those who criticize the company now as having “all the courage of the last man leaping on the pile at a football game.” The financial rewards I reaped from working at Facebook radically changed the trajectory of my life, and even after I cashed out, I watched in awe as the company grew. It took the 2016 election fallout and Cambridge Analytica to awaken me to the dangers of Facebook’s monopoly. But anyone suggesting that Facebook is akin to a pinned football player misrepresents its resilience and power.

An era of accountability for Facebook and other monopolies may be beginning. Collective anger is growing, and a new cohort of leaders has begun to emerge. On Capitol Hill, Representative David Cicilline has taken a special interest in checking the power of monopolies, and Senators Amy Klobuchar and Ted Cruz have joined Senator Warren in calling for more oversight. Economists like Jason Furman, a former chairman of the Council of Economic Advisers, are speaking out about monopolies, and a host of legal scholars like Lina Khan, Barry Lynn and Ganesh Sitaraman are plotting a way forward.

This movement of public servants, scholars and activists deserves our support. Mark Zuckerberg cannot fix Facebook, but our government can.

Veritonic launches Audio Score, an audio effectiveness standard

Veritonic, a preeminent audio value technology platform, today announced its Audio Score — a measure of audio effectiveness that can be applied to audio ads, sonic brand elements like audio logos, voices, music, and scripts. The idea  is to apply a grading standard of effectiveness to any audio which is created to influence audiences and create deeper relationships with customers.

While technical details and specifications are not included in today’s release, four attributes to be measured are put forward:

  • emotional resonance
  • memorability (recall)
  • ability to drive purchase of the product
  • most engaging aspects

The score is delivered on a 1-100 scale. Benchmarks are part of the complete evaluation process for clients, who can weigh their assets against industry benchmarks such as industry sector and competitive sets.

Pandora is one audio publisher advocating for the Audio Score at launch. “Audio is quickly becoming the most critical channel for marketers to engage customers and creative is what engages them,” said Melissa Paris, Senior Director of Sales Research at Pandora. “Planning and executing an audio campaign without knowing, objectively, which creatives work best for each scenario is akin to leaving money on the table. A standard score like this makes that knowledge accessible and actionable — which in turn makes it a lot easier for our brand partners to maximize every dollar they spend.”

Facebook to launch digital currency, Libra, in effort to create new global payment system

The project is the biggest step of any major corporation into the emerging realms of digital currency and blockchain technology.

SAN FRANCISCO — Facebook is going into the banking business.

The social networking company on Tuesday said it plans to help launch a digital currency in 2020, marking one of the company’s most aggressive moves yet to push beyond digital advertising.

A new nonprofit group based in Geneva, the Libra Association, will oversee the currency, called Libra. It will initially be backed by Facebook’s expertise but governed by 28 founding partners including payment firms Visa and Mastercard and internet companies eBay, Spotify and Uber.

Facebook said that it wants the currency to be available starting the first half of next year and that it believes many of the 2 billion people who are already on the company’s services will one day regularly use the new currency to buy things or send money internationally.

“The motivation for this is to effectively enable a simple global currency and financial infrastructure that empowers billions of people,” Dante Disparte, head of policy and communications for the Libra Association, told NBC News.

The project would bring a consumer-friendly version of digital currencies to smartphones around the world, potentially creating a way for people to easily transfer money, build credit and pay bills while avoiding costly fees. Libra is open source, meaning any company or person can build a business within its framework.

For example, a consumer could buy some Libra using dollars and save them in a digital wallet. That Libra could then be sent to a family member via WhatsApp messenger or used to pay a bill in a foreign country without having to worry about an exchange rate.

For example, a consumer could buy some Libra using dollars and save them in a digital wallet. That Libra could then be sent to a family member via WhatsApp messenger or used to pay a bill in a foreign country without having to worry about an exchange rate.

The project is the biggest step of any major corporation into the emerging realms of digital currency and blockchain technology, representing a vote of confidence that experiments in new forms of digital payments could be more than a passing fad. Blockchain is a decentralized system in which computers each contribute to a shared public ledger, allowing for secure transactions without a central authority.

Libra, named partly after a Roman unit for weight and currency, will have echoes of bitcoin, the popular cryptocurrency, but also some key differences — most notably that it will be governed by a central authority and that its value will be tied to other assets.

Facebook said it plans to offer financial services, possibly one day including loans, through a new subsidiary that specializes in Libra.

The price of bitcoin has rallied above $9,000 in recent days, the highest in more than a year, as news reports about Facebook’s plans raised expectations for digital currencies.

“Any cryptocurrency needs critical mass to have success, and you can’t have more critical mass than Facebook,” said Jamie McCormick, managing director of Bitcoin Marketing, which helps companies launch products and services using cryptocurrencies. McCormick called Libra, “a very interesting development that will legitimize the industry.”

Facebook said it would keep data about people’s financial transactions separate from data about social networks, so that Libra information would not be used to target advertising on Facebook or Instagram.

Libra will not be exactly like bitcoin or other so-called cryptocurrencies that began emerging a decade ago. Cryptocurrencies are known for their decentralized nature, existing outside any central authority such as a government or large, corporate association.

And the Libra value will be pegged to a reserve of real, low-volatility assets, making it relatively stable compared to the notoriously fluctuating value of bitcoin, according to Facebook and the Libra Association. The reserve, or “basket,” will have assets “like bank deposits and government securities in currencies from stable and reputable central banks,” Facebook said.

The Libra could be useful to people who don’t have easy access to banking services or cash, such as people in crisis immediately after a natural disaster or other unstable situations, said Pete Lewis, a spokesman for Mercy Corps, a humanitarian organization that signed up as one of the 28 founding partners for the Libra Association.

“A low-volatility currency could provide financial stability for people struggling with conflict,” Lewis said in an interview, adding that the Libra could give people an alternative to currencies that are experiencing hyperinflation in a crisis.

Some people, though, may not want to keep their savings in a currency outside their local one. New York University economist Nouriel Roubini said on Monday that there would be “significant currency risk” for people using the “FB Coin.”

“Most consumers are local and think/pay local and don’t want currency risk related to using a coin that is a basket of global currencies,” Roubini wrote on Twitter.

Facebook investors and others who watch the company closely have expected the company to consider a digital currency or something like it since at least May 2018, when the company opened a divisionto focus on blockchain, the technology that makes cryptocurrencies possible through records kept on far-flung computers.

Transactions made with Libra will be recorded in a blockchain designed to handle billions of possible accounts, according to a 12-page white paper outlining the plan. Facebook engineers designed the blockchain, but the technology will be open-source, meaning others may contribute to it, the white paper says.

Central to the thinking behind Libra is that a wide array of companies, not just Facebook, will be involved in decision-making and begin offering for-profit services related to the currency, Disparte said.

“This will start to develop a wave of responsible financial innovation,” he said.

Money transfers, though, have become a competitive business. In addition to established players such as Western Union, apps like Venmo, TransferWise and Remitly offer ways to send money overseas, at various speeds and costs.

Facebook said it plans to begin offering accounts next year through a new subsidiary called Calibra, echoing the name of the new currency. Calibra will be a digital wallet that will allow people to send money in the form of Libra “at low to no cost,” the company said. Calibra will be integrated into through Facebook’s WhatsApp and Messenger services.

WhatsApp and Messenger are central to Facebook’s future, as CEO Mark Zuckerberg tries to respond to a shift in how people spend their time — away from public news feed posts toward private messaging.

“We want sending money to be as easy as sending a text message,” Kevin Weil, vice president of product for Calibra, said in an interview.

He said the average cost now to send money worldwide was 7 percent, and that a lower transaction cost could eventually mean lower prices for services such as Uber rides.

Facebook declined to say how much the company has spent on the digital currency effort, but Weil said financial services could be an important part of Facebook’s business if Libra proves popular.

Initially, “the whole goal will be around driving adoption,” he said. “If we’re successful at that, we think there will be other opportunities to provide financial services to people that would be a business to us.”

Disparte said that the Libra Association wants to have 100 organizations as partners by the time the digital currency debuts.

Each of the partners will have equal voting power, although Facebook “is expected to maintain a leadership role through 2019,” according to the white paper.

In addition to the Roman unit of measure for weight that was associated with coins, the name, he said, also comes from the astrological sign represented by balanced scales and partly by the French word “libre,” meaning freedom. “You have money, justice and freedom, and that really is the spirit of this new project,” Disparte said.

Facebook is offering employees working on Libra the option of being paid in the currency, The Information, a tech news website, reported this month.

In blockbuster podcast deal, Spotify acquires Gimlet Media and Anchor

In a blockbuster deal for podcasting, Spotify has acquired not one, but two important and contrasting podcasting companies. The double acquisition could be described as a realignment of the podcast ecosystem.

The rumor mill hinted this week that the streaming company was in negotiations for podcast producer Gimlet Media, and that is one of the purchases. But Spotify has also acquired Anchor, a straightforward service that lets anyone start creating, distributing, and monetizing podcasts. Anchor claims that it serves 40% of newly created podcasts — if accurate, a testament to its ease of use for amateur and semi-pro podcasting.

No financial details or other terms of the deals were disclosed, and both are expected to close in the first quarter of 2019.

“These acquisitions will meaningfully accelerate our path to becoming the world’s leading audio platform, give users around the world access to the best podcast content, and improve the quality of our listening experience as well as enhance the Spotify brand,” Spotify Co-Founder and CEO Daniel Ek said in the press release. “We are proud to welcome Gimlet and Anchor to the Spotify team, and we look forward to what we will accomplish together.”

This double-whammy of a development marks a more forceful push into podcasting for Spotify. The company has been building a small cadre of original and exclusive programming in the past year, and has some high price tags in play. Ek explained more about the motivations for the two purchases in a blog post. “Based on radio industry data, we believe it is a safe assumption that, over time, more than 20% of all Spotify listening will be non-music content,” he said. “This means the potential to grow much faster with more original programming — and to differentiate Spotify by playing to what makes us unique — all with the goal of becoming the world’s number one audio platform.”

Spotify’s interest is further indication that the podcast audience’s recent growth is unlikely to slow down as more content platforms commit to promoting the format. And Spotify indicated that these major acquisitions might be just a start, and the company is earmarking $500-million to future podcast grabs in 2019. So the landscape could get further rearranged.

“Spotify is poised to become the largest audio platform in the world and we are excited for Gimlet’s award-winning podcasts to connect with new audiences around the world,” said Alex Blumberg and Matt Lieber, co-founders of Gimlet Media. “The medium of audio is uniquely great at creating human connection and understanding. We are thrilled that Gimlet is joining Spotify to do that at a global scale, on the platform and beyond.”

“We are incredibly excited to introduce Anchor’s industry-best podcasting tools to Spotify’s massive user base as we continue our journey, now with even greater resources,” Anchor CEO Michael Mignano said. “We look forward to continuing to empower creators all over the world to build an audience, generate revenue, and most importantly, have their voices heard.”

Once the deals close, Spotify will have a much stronger in-house infrastructure for podcasters. Gimlet will provide its experience in IP development, production, and advertising along with its pedigreed podcast studio. Anchor will deliver tools for podcast creators and a large number of existing clients and shows.


You’ve found product market fit. You’ve hired a team, including some managers. Your initial, small customer base is very happy. You’ve discovered an initial channel of customer acquisition that’s working. You’ve raised a meaningful round of capital. And then, right then, product innovation decelerates to zero.

The fast pace that characterized the past 12-18 months, when you would germinate an idea and write the code in less than a few days, has evaporated. Suddenly, the product and engineering teams are bogged down. Every innovation requires a Herculean effort to achieve.

Why? Why does this fact pattern evolve in many software companies? Here are the most common reasons I’ve seen.

First, technical debt. The freewheeling, hedonistic days of idea to instantiation in an instant are over. They’ve left you with the hangover of technical debt.

Architectural issues arise that the team didn’t anticipate when you were building features for a single customer or isolated use case. Now, there’s a growing customer base and more complex integrations. It’s time to shore up the initial infrastructure with production ready code. This happens at nearly every company, even Google. Few people are as motivated to refactor code as write new features. Combine technical debt with demoralized people and you get molasses every time.

Second, the founder/CEO’s once singular focus on product is no longer possible. Rewind a year ago, when 90% of their time was spent on product: finding product market fit, understanding customer needs, translating that into a vision and mocks to be coded.

Today, the demands on the CEO’s time have exploded manifold. Fundraising, recruiting, press, hiring, managing, board meetings; the task count and diversity has exploded. Instead of focusing 90% on product, they may have 15% or 20%. Without someone driving the product roadmap, product innovation decelerates.

Third, inertia. As your customer base grows, the product can’t move as quickly as you’d like because each iteration requires existing customer education. Even minor UI tweaks spike inbound customer support queries, which cost real money.

Fourth, testing. There’s a colloquialism for a collection of testing software within the quality assurance world: harness. The idea is to harness the furious efforts of the thoroughbred engineering team into a smooth release process that ensures few errors for customers in production. At this stage, the mot juste isn’t a harness, but a yoke, a heavy wooden cross beam braced across the shoulders of oxen.

Because just as the engineering team has accrued technical debt, so has quality assurance. Few companies have invested the effort during the crusade for product market fit to develop a robust testing suite. But as the business scales, testing becomes another key part of scaling infrastructure that requires significant investment, without any user-facing advances.

Most of these issues cannot be countered. Developing tests before product market fit isn’t worthwhile. You might anticipate inertia, but you won’t be able to meaningfully change customer behavior; we all habituate to software as we learn it.

But startups can focus on these areas when they arise by prioritizing great quality assurance, creating transition plans for existing customers, and finding a way for someone in the organization to run product nearly full time again; either by hiring someone and delegating that responsibility, or by delegating the other parts of the CEO job and focusing on product.

The Economist is exploring how video can drive subscriptions

In September, as part of a project funded by the Google News Initiative, The Economist will launch a weekly exclusive YouTube series, provisionally called “The Truth About….” Each episode will be roughly 10 minutes long and take a more in-depth look at a topic that Economist journalists are covering. The series is planned to run until March.

According to the publisher, the series aims to drive reach and subscribers on YouTube, where The Economist has nearly 900,000 subscribers, but also to drive traffic to its own site. Ultimately the aim is to deepen its relationship with audiences and explore how video can drive subscriptions and retention.

“In the last six months, we’ve been starting to ask how much further into the customer journey is there a role for video and what does that look like,” said David Alter, director of programs at Economist Films at Digiday’s Video Summit, Europe. “These are open questions: Are we making content in the best way to engage the audience with the brand itself? What would the role of video look like in converting those prospects into Economist subscribers? And then is there a role for video in driving retention?”

The publisher is currently looking at what creative formats will prompt audiences to discover more about a topic, according to Alter. For instance, within the show, a film producer could speak with a journalist about a specific lead article that’s already published on the site. In doing so, the videos can act as signposts to more of the publisher’s on-site content.

“Producers are like avatars for the viewer,” he added. “We are not the world experts on Trump and China, but we sit in a building with those experts. The audience can share our producers’ discovery journey.”

The series will also use YouTube’s call-to-action tools, like end cards which direct viewers to The Economist site. The Economist’s video will remain in front of the paywall for now. Rather, the focus will be on using original video to increase the value for existing subscribers, like by saving them time or offering more content.

As part of the Google grant, the Economist Films unit plans to hire an additional eight to 10 people for the duration of the GNI project. This brings the team to around 30 people. When Economist Films launched four years ago it was with a core team of eight.

Community management will also be key, and YouTube is fertile ground for people who comment. For the first time, Economist Films has hired several specific roles in audience engagement who will sit in the production team. The ambition is to also have a weekly YouTube livestream where these producers respond to audience comments as a way of building an ongoing dialogue with the viewers.

“We’ll be trying to create a moment of dialogue for people to react to in the film and identifying those,” said Alter. “It’s partly emotional and editorial, but we’ll try and predict those engagement spikes.”

Last year, Economist Films was profitable for the whole year for the first time as a standalone unit. Alter couldn’t share what percentage the unit makes for the company but did say that Economist Films helped contribute £3.5 million ($4.4 million) of digital business to the group.

Other publishers are exploring how video drives subscribers, but concrete examples are hard to come by. The Financial Times has explored how YouTube can drive traffic and engagement.

“There is no question that if you get the right video to the right person at the right time, it will lead to high-level engagement and propensity to subscribe,” said David Gosen, chief commercial officer at Cxense, which works with publishers to drive customer relationships. “What makes it more complex is no one knows the right length of video yet. That’s why you have to A/B test. Anyone not testing is dying.”

What Challenges Amazon will face buying Sizmek ad server

Amazon has reportedly managed to outbid Maurice Levy-backed ad tech firm owner Ycor for the purchase of Sizmek’s ad server and Dynamic Creative Optimization business.

Ycor, which owns ad tech firm Weborama, launched a last-minute counter bid to Amazon’s on June 7, slowing the retail giant’s ad tech plans. But the delay was to be short-lived.

Amazon’s initial bid was for a reported $30 million, though documents filed in a New York Court on June 17, stated that Ycor was willing to raise its initial bid multiple times, by a total of at least $15 million, while Amazon raised its own bid by $7.5 million. No official disclosure of the final price has been given.

Regardless, Amazon has still managed to buy two of Sizmek’s core products for a song. Although the final bid is likely now higher than the initial price tag, $30 million is roughly a third of what Sizmek’s annual revenues are, according to sources with knowledge of the business.

What Amazon would stand to gain from the buyout, has been well documented. But there is just as much talk in the ad tech industry as to what challenges the retail giant may face after buying the Sizmek ad server in particular.

Here’s a look at some of those challenges:

Maintaining an expensive ad server infrastructure 
Some ad tech executives believe the Sizmek ad server was not getting the full attention it needed over the last few years. In fact, Sizmek had tried and failed to relaunch its upgraded ad server several times with success. The first and second attempts were “a disaster,” said an ad tech exec who previously worked for Sizmek. However, over the last year, the team had rallied under the new leadership of CEO Mark Grether, who joined in 2017, and managed to overhaul plans with the result that a  successful upgrade was launched last Spring, complete with far more sophisticated attribution features.

However, migrating ad servers even internally is a major undertaking. Only some Sizmek clients have migrated over to the new ad server platform. Many of Sizmek’s largest clients remain on the old ad server, which a former Sizmek employee said was due to the fact that these clients required sophisticated attribution features that hadn’t been available on the new platform. That means that, currently, Sizmek is running dual ad-server platforms — at great cost.

“It takes a lot of development resources to keep an ad server’s features competitive in the market, especially when competing with Google,” said Arnaud Créput, CEO of ad server Smart. Amazon’s move demonstrates how hard it is to build an ad server from scratch, even for them, he added. “Many companies have acquired or built ad servers and then struggled to keep the solutions competitive and to make those businesses work.”

Although Amazon has the server capacity to help ease this, it will initially need to fork out a chunky sum in order to keep those dual ad servers going, before eventually migrating all clients over to the newer version, according to ad tech sources.

Retaining Sizmek talent 
In order to sort through and manage some of the challenges that will arise on the technical side, Amazon will need to retain key Sizmek product talent. Even a business with Amazon’s engineering clout, won’t necessarily find it a walk in the park to pick up and run with another business’s ad server. They’ll need an in-depth understanding of the nuances of that particular ad server’s infrastructure, as well as a deep understanding of the digital ad ecosystem and how everyone fits and plugs into each other. “You can have the greatest coders in the world, but if they’re fresh into the ads business, it’s different,” said an ad tech executive who spoke on condition of anonymity. “When people talk about the [Amazon’s] DSP itself they say it’s one of the worst. Their tech isn’t known as the best in ad tech; they’re known for their data and their name.”

It wouldn’t have helped that many of Sizmek’s top engineers have left the company in droves over the last few years. Retaining the remaining staff, will be critical. “If they [Amazon] are unable to retain the talent who worked on the [ad server] project, that is going to be very tough,” said Kees de Jong, managing partner of headhunting consultancy Uncommon People and former Sizmek gm for EMEA. “[Building ad servers] is a complex beast, and if you come in completely fresh, then it’s difficult.”

Migrating Amazon-suspicious clients 
Not all existing Sizmek ad server clients will be thrilled to be adopted by Amazon. The current company line is that Amazon Advertising and Sizmek will continue to operate separately for the time being. However, some ad executives have claimed that certain clients will be more sensitive to being on an Amazon-owned ad server than others. For starters, those on the old ad server infrastructure will need to undergo the same laborious task of any ad server migration, as they are gradually shifted over to the upgraded version — an outcome many ad executives believe will be inevitable. “From the inside out, Sizmek will be difficult to sort out and manage,” said an ad tech executive who spoke on condition of anonymity.

But clients that compete with Amazon, or ones that actively sell their products to Amazon, are likely to be unnerved by any shift to the retail giant’s products suite. “That are certain types of [Sizmek] clients that may not be super comfortable with their data running across Amazon-owned products,” said de Jong. “You then have the scenario of the teacher marking its own homework.”

Far larger global footprint

While we tend to think of Amazon as a global company, in reality, its core markets are predominantly U.S. and Europe, particularly the U.K. Whereas Sizmek’s footprint is genuinely worldwide. The ad tech company has offices across three continents, although several offices have been seriously downsized since the bankruptcy filing, according to ad tech sources. Naturally, that footprint represents an opportunity for Amazon to gain a foothold in those markets, but it will also be a serious challenge to manage teams in such fragmented regions, particularly when it’s accustomed to its core market — the U.S. — being a single country.

Several ad executives anticipate more cuts, though not everyone is cynical on that front. “The amount of consumer touch points Sizmek has across the world, that across the world that Amazon doesn’t have, will help it to map the global population, and create a universal ID which is compelling and not cookie-based,” said de Jong. “That will be where the battle is fought.”

Monetizing ad serving is a tough gig 
Ad serving remains a fundamental part of the underlying tech that powers digital advertising. But that doesn’t make it sexy. In fact, it’s become somewhat commoditized, and that makes it very tough to monetize. Sizmek was known in the market for its successful managed-services business, though that had begun to wane over the last two years, according to agency executives. Some ad executives pointed to the purchase of DSP Rocketfuel as a key moment when critical attention was drawn away from the ad server core product. “Then everything got slowed down as they put all their eggs in the DSP basket because they thought that would be the savior for money going forward,” said an ad tech executive who spoke on condition of anonymity.

Google doesn’t rely on ad serving for the bulk of its monetization, but rather its other ad products. That’s why, in some instances, it would be fruitless to attempt to compete long term with Google for standalone buy-side ad serving, according to ad tech executives. “The opportunity is to compete with Google for advertising spend using this tech to create a closed ecosystem, aka a walled garden, added Créput. “The ad server is a key strategic asset to control the relationship with agencies and derive the full value of their DSP.”