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Is the internet advertising economy about to implode?

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Advertising drives the modern digital economy. Whether it’s reading news sites like this one or perusing your social media feeds, advertising is the single most important industry that came out of the development of the web. Yet, for all the tens of billions of dollars poured into online advertising just in the United States alone, how much does that money actually do its job of changing the minds of consumers?

Tim Hwang has a contrarian stance: it doesn’t. In his new book published as a collaboration between Logic Magazine and the famed publisher Farrar, Straus and Giroux, he argues in “Subprime Attention Crisis” that the entire web is staring into an abyss of its own making. Advertising is overvalued due to the opaqueness of the market, and few actors are willing to point out that the advertising emperor has no clothes. Much like the subprime mortgage crisis, once people come to realize the true value of digital ads, the market could crater. I found the book provocative, and I wanted to chat further with Hwang about his thoughts on the market.

Hwang formerly worked at Google on policy and has developed many, many projects across a whole swath of tech-oriented policy issues. He’s currently a research fellow at Georgetown’s Center for Security and Emerging Technology.

This interview has been condensed and edited for clarity.

TechCrunch: Let’s dive straight into the book. How did you get started on this topic of the “subprime attention economy”?

Tim Hwang: There were two incidents where I was like, something is going on here. I was having conversations with a couple of friends who are product managers at Facebook, and I remember making the argument that that there’s a lot of evidence to suggest that this whole adtech thing is maybe just mostly garbage. The most interesting thing that they said was, “Oh, like, advertising works but we can’t really tell you how.” That’s like talking to someone from the national security establishment and they’re like, “Oh yeah, we can stop terrorists but, like, we can’t tell you exactly how that goes down.”

I think one thing that got me really interested in it was how opaque a lot of these things are. The companies make claims that data-driven programmatic advertising really is as effective as it is but then they’re kind of strangely hesitant to show evidence of that.

Second, I was doing research with a lot of people who I think you’d rightly call sort of tech critics — strong critics of the power that these platforms have. I think one of the most interesting things is that even among the strongest critics of tech, I think a lot of them have just bought this claim that advertising and particularly data-driven advertising is as powerful as industry says it is.

It’s a kind of strange situation. Tech optimists and tech pessimists don’t agree on a whole lot, but they do seem to agree on the idea that this sort of advertising works. That was what I wanted to explore in the book.

Why don’t we talk a bit about the thesis?

The thesis of the book is really quite simple, which is you look around and basically our modern experience of the web is almost entirely shaped by advertising. The way social media is constructed, for example, is largely as a platform for delivering ads. Engagement with content is really good for creating profiles and it’s really good for delivering ads. It really has been the thing that has powered the current generation of companies in the space.

As you sort of look closer though, it really starts to resemble the market bubbles that we know of and have seen in other places. So explicitly, the metaphor of the book is the subprime mortgage crisis. I think the idea though is that you have this market that is highly opaque, there’s a lot of evidence to suggest that the value of ads is misidentified, and you have a lot of people interested in boosting it even in spite of all that.

For the book, I wanted to look at that market and then what the internet could look like after all this. Are there other alternative business models that we want to adopt for the web going forward?

Lyron Foster is a Hawaii based African American Musician, Author, Actor, Blogger, Filmmaker, Philanthropist and Multinational Serial Tech Entrepreneur.

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Pinterest tests online events with dedicated ‘class communities’

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Pinterest is getting into online events. The company has been spotted testing a new feature that allows users to sign up for Zoom classes through Pinterest, while creators use Pinterest’s class boards to organize class materials, notes and other resources, or even connect with attendees through a group chat option. The company confirmed the test of online classes is an experiment now in development, but wouldn’t offer further details about its plans.

The feature itself was discovered on Tuesday by reverse engineer Jane Manchun Wong, who found details about the online classes by looking into the app’s code.

Currently, you can visit some of these “demo” profiles directly — like “@pinsmeditation” or “@pinzoom123,” for example — and view their listed Class Communities. However, these communities are empty when you click through. That’s because the feature is still unreleased, Wong says.

When and if the feature is later launched to the public, the communities would include dedicated sections where creators will be able to organize their class materials — like lists of what to bring to class, notes, photos and more. They could also use these communities to offer a class overview and description, connect users to a related shop, group chat feature and more.

Creators are also able to use the communities — which are basically enhanced Pinterest boards — to respond to questions from attendees, share photos from the class and otherwise interact with the participants.

When a user wants to join a class, they can click a “book” button to sign up, and are then emailed a confirmation with the meeting details. Other buttons direct attendees to download Zoom or copy the link to join the class.

It’s not surprising that Pinterest would expand into the online events space, given its platform has become a popular tool for organizing remote learning resources during the coronavirus pandemic. Teachers have turned to Pinterest to keep track of lesson plans, get inspiration, share educational activities and more. In the early days of the pandemic, Pinterest reported record usage when the company saw more searches and saves globally in a single March weekend than ever before in its history, as a result of its usefulness as a online organizational tool.

This growth has continued throughout the year. In October, Pinterest’s stock jumped on strong earnings after the company beat on revenue and user growth metrics. The company brought in $443 million in revenue, versus $383.5 million expected, and grew its monthly active users to 442 million, versus the 436.4 million expected. Outside of the coronavirus impacts, much of this growth was due to strong international adoption, increased ad spend from advertisers boycotting Facebook and a surge of interest from users looking for iOS 14 home screen personalization ideas.

Given that the U.S. has failed to get the COVID-19 pandemic under control, many classes, events and other activities will remain virtual even as we head into 2021. The online events market may continue to grow in the years that follow, too, thanks to the kickstart the pandemic provided the industry as a whole.

“We are experimenting with ways to help creators interact more closely with their audience,” a Pinterest spokesperson said, when asked for more information.

Pinterest wouldn’t confirm additional details about its plans for online events, but did say the feature was in development and the test would help to inform the product’s direction.

Pinterest often tries out new features before launching them to a wider audience. Earlier this summer, TechCrunch reported on a Story Pins feature the company had in the works. Pinterest then launched the feature in September. If the same time frame holds up for online events, we could potentially see the feature become more widely available sometime early next year.

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SpaceX targeting next week for Starship’s first high-altitude test flight

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SpaceX looks ready to proceed to the next crucial phase of its Starship spacecraft development program: A 15km (50,000 feet) test flight. This would far exceed the max height that any prior Starship prototype has achieved so far, since the current record-setting hop test maxed out at around 500 feet. Elon Musk says that SpaceX will look to make its first high-altitude attempt sometime next week.

This tentative date (these are always subject to change) follows a successful static test fire of the current SN8 generation prototype — essentially just firing the test spacecraft’s Raptor engines while it remains stationary on the pad. That’s a crucial step that paves the way for any actual flight, since it proves that the spacecraft can essentially hold together and withstand the pressures of active engines before it leaves the ground.

SpaceX’s SN8 prototype is different from prior versions in a number of ways, most obviously because it has an actual nosecone, along with nose fins. The prototypes that did the short test hops, including SN6, had what’s known as a mass simulator up top, which weighs as much as an actual Starship nose section but looks very different.

Musk added that the chances of an SN8 high-altitude flight going to plan aren’t great, estimating that there’s “maybe a 1/3 chance” given how many things have to work correctly. He then noted that that’s the reason SpaceX has SN9 and SN10 ready to follow fast, which is a theme of Starship’s development program to date: building successive generations of prototypes rapidly in parallel in order to test and iterate quickly.

We’ll likely get a better idea of when the launch will take place due to alerts filed with local regulators, so watch this space next week as we await this major leap forward in SpaceX’s Starship program.

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Police case filed against Netflix executives in India over ‘A Suitable Boy’ kissing scene

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Netflix, which has invested more than $500 million to gain a foothold in India in recent years, is slowly finding out just about what all could upset some people in the world’s second-largest internet market: Apparently everything.

A police case has been filed this week against two top executives of the American streaming service in India after a leader of the governing party objected to some scenes in a TV series.

The show, “A Suitable Boy,” is an adaptation of the award-winning novel by Indian author Vikram Seth that follows the life of a young girl. It has a scene in which the protagonist is seeing kissing a Muslim boy at a Hindu temple.

Narottam Mishra, the interior minister of the central state of Madhya Pradesh, said a First Information Report (an official police complaint) had been filed against Monika Shergill, VP of Content at Netflix and Ambika Khurana, Director of Public Policies for the firm, over objectionable scenes in the show that hurt the religious sentiments of Hindus.

“I had asked officials to examine the series ‘A Suitable Boy’ being streamed on Netflix to check if kissing scenes in it were filmed in a temple and if it hurt religious sentiments. The examination prima facie found that these scenes are hurting the sentiments of a particular religion,” he said.

Gaurav Tiwari, a BJP youth leader who filed the complaint, demanded an apology from Netflix and makers of the series (directed by award-winning filmmaker Mira Nair), and said the film promoted “love jihad,” an Islamophobic conspiracy theory that alleges that Muslim men entice Hindi women into converting their religion under the pretext of marriage.

Netflix declined to comment.

In recent days, a number of people have expressed on social media their anger at Netflix over these “objectionable” scenes. Though it is unclear if all of them — if any — are a Netflix subscriber.

The incident comes weeks after an ad from the luxury jewelry brand Tanishq — part of the 152-year-old salt-to-steel conglomerate — which celebrated interfaith marriage received intense backlash in the country.

For Netflix, the timing of this backlash isn’t great. The new incident comes days after the Indian government announced new rules for digital media, under which the nation’s Ministry of Information and Broadcasting will be regulating online streaming services. Prior to this new rule, India’s IT ministry oversaw streaming services, and according to a top streaming service executive, online services enjoyed a great degree of freedom.

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