Lost Advertising (and Tax) Revenue: Within hours after the governor signed the bill into law, Amazon and Overstock terminated their advertising relationships with all Illinois web publishers.  Hundreds of other merchants are also expected to do the same (as they have in New York, North Carolina, Rhode Island, and Colorado).  This will shift hundreds of millions of dollars in advertising revenue from Illinois publishers to publishers in other states and offshore, thus shifting tens of millions of dollars of income-tax revenue from Illinois to other states and nations).

Unlike other states, Illinois didn’t assert immediate or retroactive effect, so Amazon and Overstock were able to give publishers a one-month “grace period” before these advertising relationships end.  (As a pessimist, I suspect that dozens of less-ethical merchants will deliberately delay their similar announcements until a few days before the law’s effective date).

Fleeing Businesses: As in other states, larger web publishers are planning their exodus from Illinois in order to avoid the law’s devastating impact.  Today, FatWallet announced that it will move out of Illinois, taking 55 jobs, and Coupon Cabin announced today that it’s exploring moving its offices to Indiana.

Carrion: Wal-Mart, Sears, and Barnes & Noble immediately invited Illinois web publishers to carry their advertising instead of Amazon’s.  But these companies offer lower advertising fees (and draw much lower conversion rates) than Amazon — and their web sites push customers into local stores (for which publishers aren’t paid any advertising fees).

In addition to their skimpy advertising rates, all three of these companies combined offer fewer than half as many products as Amazon, and provide much more limited product information. In my main niche, these three merchants combined offer fewer than 20% of the products which Amazon now advertises on my site.

Why Do I Care? I live and work in California, so the Illinois law doesn’t directly affect me (in fact, it might bring me a tiny slice of the advertising revenue lost by Illinois publishers). However, if California enacts its pending “Advertising-Nexus” bill, I’ll immediately lose the 26% of my total advertising revenue that comes from Amazon.

________

Update (August 2, 2011):

Both Coupon Cabin and FatWallet moved their offices and jobs out of Illinois, in order to maintain their advertising relationships with retailers without nexus in Illinois. The State of Illinois forced these companies to choose between staying in Illinois (with reduced revenue and layoffs, forced by the state) or taking all the jobs a few miles to a nearby state (and continuing to grow).

In both cases, the new offices aren’t very far from the old offices: FatWallet’s offices (and 55 jobs) moved about 5 miles from Rockton, IL to Beloit, WI, while Coupon Cabin moved about 15 miles from Chicago IL, to Whiting, IN).

While Illinois has certainly lost payroll taxes and corporate income taxes, employees didn’t have to move their homes: most employees can continue to live in Illinois while working in the other state, if they’re willing to accept both the increased commute cost (probably losing any public-transit options) and the income-tax hassles affecting folks who live in one state while working in another. Of course, employees living in Illinois won’t be allowed to “telecommute” (work from a home on some days), which will likely increase their commute costs further.

Over time, some current employees will move (to reduce commute expenses and tax hassles). When other employees quit, and as new positions are created, those jobs will go to local workers who live near the companies’ new offices in Wisconsin and Indiana.

A related note: As expected, California enacted its own “Advertising Nexus” tax law, and just as they did in Illinois and other states, Amazon and other out-of-state retailers terminated their advertising relationships with California web publishers. I’ve lost more than 26% of my advertising revenue, though I’m working hard to try to recover a small part of that lost revenue from other advertisers (all paying lower rates, and some less ethical).

Dear Mr. Cullen:

I’m confused by your use of the term “sales tax fairness” to refer to the Advertising-Nexus bills pending in the California legislature (http://news.bookweb.org/news/forbes-wonders-if-amazoncom%E2%80%99s-sales-tax-battle-losing-effort).  I was also surprised that you wrote about Amazon’s “threat” to terminate its advertising relationships with California web publishers as if it were a new development “this week.” Amazon’s letter is nearly identical to its June 2009 letter in response to the same “advertising-nexus” language (see http://www.abestweb.com/forums/showthread.php?t=120899).

These bills are not about “sales tax fairness” — they’re about pandering to California booksellers and other local businesses.  * * * * The state Board of Equalization has now concluded that if any of the bills were enacted, there would be no new sales tax collected, and income tax [revenues] would be reduced.

I strongly believe in “Sales Tax Fairness.”  I’m one of the few California taxpayers who actually report and remit use tax for purchases from out-of-state retailers.

Amazon and other out-of-state retailers should be required to collect and remit California sales tax.  The current situation is especially frustrating because the U.S. Supreme Court (in the Quill case) has provided a unusually clear blueprint to accomplish this — even without “physical presence” — but California abandoned that process and Congress has refused to act, so schemes like the “Advertising Nexus” language remain unconstitutional.

Please, let’s stop wasting our time and energy quibbling over unconstitutional “sleight-of-hand tricks” aimed only at punishing Amazon and other out-of-state retailers (without collecting a penny in additional sales tax).  Instead, we should all be working together on the issue of Sales Tax Fairness. — Mark J. Welch

In the editorial, Mr. Cullen deceptively cited New York data regarding its collection of $70 million in additional sales taxes.  We all know, of course, that Amazon was “tricked” in New York by the secret, unexpected insertion of the advertising-nexus language into a retroactive budget bill, so that Amazon was caught “off-guard.” Amazon chose not to challenge the retroactivity provision, but instead opted to collect sales tax from New York customers while challenging the law’s constitutionality in court.

Amazon has made clear (since the spring of 2009) that it would respond differently in other states.  Amazon has warned legislators and web publishers (clearly and repeatedly) that it will terminate its advertising relationships with publishers in any other state which enacts this unconstitutional language into law. When North Carolina, Rhode Island, and Colorado enacted similar laws, Amazon terminated its advertising relationships with all web publishers in those three states, and doesn’t collect sales tax from its customers in those states.

The booksellers are angry that Amazon benefits from “sales tax unfairness,” and they’re right to be angry about it.  They should be angry at state legislatures and Congress, but pandering politicians have successfully duped booksellers into directing their anger at Amazon and other out-of-state retailers instead. The politicians don’t want to eliminate “sales tax unfairness,” but instead to manipulate the issue as a pretext to garner support from local business owners.

The result, so far: laws that punish Amazon and in-state web publishers (by interfering with advertising relationships), without addressing sales tax unfairness.

While I’d love to join the chorus criticizing both Apple and law enforcement, I simply don’t have enough information to make a reasonable decision about the conduct of various parties. Some key questions: did the “finder” of the phone make a reasonable effort to return it; was it legal to sell or buy the “found” item; was it legal to open and dissect the “found” phone; did Apple act reasonably to find and reclaim the phone; did Apple accurately describe the facts to law enforcement; did law enforcement properly investigate; did law enforcement properly describe the situation when seeking the search warrant; did the judge properly apply the law when issuing the search warrant; did law enforcement act reasonably in conducting the search after recognizing that the “shield law” might be applicable; did law enforcement act properly under the “shield law” both before and after the blogger and Gizmodo expressly asserted its applicability; and did law enforcement allow Apple agents to participate in the residential search?

One key issue, of course, is whether or not a “blogger” is protected under California’s laws protecting “journalists.”  While many people have strong opinions, the issue is one of interpreting a statute. (There’s a helpful column by Gillian Reagan at BusinessInsider.com discussing the California “reporter’s shield law” and how it includes bloggers.)  In short, there is no doubt that the “shield law” applies in this case — but it’s not an absolute protection.

The shield law protects journalists against being compelled to identify their sources or to reveal “unpublished information obtained or prepared in the course of newsgathering activities.” The “shield law” is actually part of the California Constitution (Article I, section 2, subdivision (b)), and in a 2006  decision by the California Court of Appeals (also involving an alleged theft of confidential information from Apple) the court wrote:

“We decline the implicit invitation to embroil ourselves in questions of what constitutes ‘legitimate journalis[m].’ The shield law is intended to protect the gathering and dissemination of news, and that is what petitioners did here. We can think of no workable test or principle that would distinguish ‘legitimate’ from ‘illegitimate’ news.”  O’Grady v. Superior Court (2006) (emphasis added).

The O’Grady case didn’t reach the California Supreme Court, and the ruling doesn’t hold that all bloggers are protected by the shield law. But the facts in O’Grady were remarkably similar to the current Gizmodo situation: both involved disclosure of Apple’s “confidential” materials.

After O’Grady, Apple knew it couldn’t compel disclosure of the iPhone-prototype “source,” and so it chose instead to report the phone as “stolen property” and encourage a law-enforcement task force to instead search the blogger’s home to try to identify the source, while also “fishing for” any other confidential Apple property that might be there.

What stinks here is that Apple knew that it was actively seeking to circumvent the protections of the “shield law.”  By conducting the search without warning while the blogger was not home, law enforcement sought to capture the critical information (the identity of the source) before the blogger could assert the privilege.  As hoped, the search disclosed the identity of the source.

It also seems quite likely that Apple already knew the identity of the source (who found the phone), if he actually did call Apple to report finding it.  If so, then did Apple tell law enforcement?

One key issue is whether the purchase of the “lost” iPhone prototype was legal; was this “stolen property”?  (If it was “stolen property,” then an effort to recover the stolen property, or to identify the thief, might reasonably appear to law enforcement to justify a search warrant, and law enforcement might also reasonably worry that if the search were delayed, the blogger might destroy evidence.  Note that days before the search, the iPhone prototype had already been returned to Apple.)

Gizmodo reported that the person who found the phone:

“… called a lot of Apple numbers and tried to find someone who was at least willing to transfer his call to the right person, but no luck. No one took him seriously and all he got for his troubles was a ticket number.”

Although the phone worked when found, it was completely disabled the next morning; apparently, Apple remotely “wiped” the phone to prevent its prototype software from being disclosed.

At that time, it seemed a distinct possibility (to both the “finder” and to Gizmodo) that the phone might be a hoax, intended to be “found” and reported about.  But the Gizmodo blogger paid $5,000 for the iPhone prototype; it’s hard to imagine anyone paying that much without the belief that it was “more likely than not” that it was genuine, and of course it was the hope that it was a genuine phone that led the blogger to pay for the phone. Once Gizmodo recognized that the phone was genuine, it knew it did not legally own the phone (and Gizmodo asserts that it always intended to return the iPhone prototype to Apple, if Apple would accept it).

Regardless of the “genuineness” of the phone, it clearly wasn’t the legal property of the person who found it.  (When I was a young teen, I found a nice watch in the snow one day, and after failing to find the owner at the scene, I dutifully turned it over the local police department; after the rightful owner failed to claim it within 90 days, the police gave me the watch to keep as my own.)

I started this column by writing that “I simply don’t have enough information to make a reasonable decision about the conduct of various parties.”  The situation certainly “stinks” — it appears highly likely that Apple deliberately sought to circumvent the protection of the “shield law” which is part of the California constitution, and it appears highly likely that law enforcement exercised very poor judgment in obtaining and executing the search warrant.  But all the facts aren’t in yet.

The first is an editorial in the New York Times criticizing Supreme Court “Justices” Scalia and Thomas for their dissenting opinion in the case In Re Troy Anthony Davis, arguing that not only is it permissible, but legally required, that we execute an innocent person. (There is also a NY Times news article about the case.)  These two “justices” argued, in part, that a federal law should preclude an innocent death-row inmate from being allowed to present proof of innocence — and that it is constitutionally permissible to execute an innocent person.

The second issue was also widely reported (in many media outlets, including CNN, NPR, CNET, and the New York Post): New York Judge Joan Madden ordered Google to reveal the identity of an anonymous blogger who offended a model by describing her as “whoring,” “lying,” and “skanky.” (You might also wish to read a vivid account of the March court hearing here.)

This is a fascinating case because it illustrates some mistakes that lawyers and judges make.

• First, of course, model Liskula Cohen made a huge mistake when she hired Steven Wagner as her attorney. It’s hard to imagine any competent attorney advising a client to file suit against an anonymous blogger whose insults were visible to only a handful of people on a single day, knowing that the litigation would result in vast re-publication of the insults, and guarantee that news headlines would (quite properly) refer to Ms. Cohen as the “Skank Model.”  This case should never have been filed; the only “justification” for litigating this is to generate publicity for Ms. Cohen’s lagging modeling career (which would be an improper abuse of the courts).
• Second, the judge made a mistake (perhaps acting in a “legally correct, but unjust” way) by concluding that obviously-absurd comments about the sexual experience of a 37-year-old fashion model could potentially create a valid claim for defamation.  I can’t find a complete copy of the offensive post, but news accounts report that the blog described Ms. Cohen as the “Skankiest in NYC” and as a “psychotic, lying, whoring … skank.”  What I find absurd is that Ms. Cohen (or anyone else) could believe that the blogger’s statements were “factual” in nature. They are insults, and nothing more; nobody would believe that the anonymous blogger actually knew anything about Ms. Cohen’s sexual history.  Even if Ms. Cohen asserted that she was a virgin desparately concerned about her moral reputation, there would be no defamation case here; since she has now publicly described herself as a “serial monogamist,” it’s even harder to understand her objection to the hyperbolae in the anonymous blog posts.

If I focused exclusively on the legal issue here, I might conclude that Judge Madden’s ruling was correct, but Judge Madden clearly understood that this case raised serious First Amendment issues, and that anonymous speech is actually constitutionally protected.  Accordingly, I believe that her ruling was not just “wrong,” but “unjust and immoral.” I hope that the anonymous blogger finds support to appeal this incorrect ruling.

I. Finding and Reading “Republic.com”

In mid-December 2001, I was wandering through the local Barnes & Noble bookstore, uncertain what subject or title might pique my interest. As I wandered, I realized how different the experience of a real bookstore is from the experience of an online bookstore like Amazon.com. In a real bookstore, I am exposed to a wide range of books that I might never search out online.

And with that thought, I approached the “Current Affairs” section and found a book called “Republic.com,” by a University of Chicago law professor named Cass Sunstein . The book’s apparent subject was the likely effect on our society if more people use “filtering technology” so that they see and hear only the information and opinions they pre-select. In other words, Sunstein’s book addressed (in part) the notion of how society might be affected if we all had to shop for books online, where we’d see only subjects and authors we requested, instead of in a bookstore, where we encounter a wide range of subjects and authors. (Sunstein even cites the bookstore example at page 23.)

It took me about 10 days to work my way through the small, 212-page book.  I found myself carrying the book along to restaurants and BART trains, and as I read forward, I constantly turned back to re-read earlier passages.  Then, when I’d finished reading Republic.com , I put it aside for a few days, while I read The Elements of Journalism (by Kovach & Rosenstiel) and Crashing the Party (by Ralph Nader).  And then I re-opened Republic.com and started again at the beginning, this time with pen in hand to highlight passages and jot my comments in the margins.

Within a day after opening Republic.com, I knew I would be spending many days carefully reviewing its words, and I also knew that I’d be spending more time writing a vicious critique of the author’s misperceptions and ill-conceived proposals to solve non-existent problems.

II. The “Problems” Identified by Sunstein in “Republic.com”

Since I don’t agree with much of what Sunstein says, I doubt he would agree that this is a fair summary of his analysis. I urge anyone interested in these subjects to buy Sunstein’s book and read it for yourself.

Sunstein’s basic thesis: “consumer sovereignty” may conflict with the role of citizens in a republican government. He writes: “A commitment to consumer sovereignty may well compromise political sovereignty if, for example, free consumer choices result in insufficient understanding of public problems, or if they make it difficult to have anything like a shared or deliberative culture” (page 45-46). “An implicaton is that an individual’s rational choices, made only with reference to an individual’s self-interest, will produce too little knowledge of public affairs” (page 100).  Sunstein quotes Brandeis: “the greatest menace to freedom is an inert people.” (page 47, quoting from a concurring opinion in a 1927 case, Whitney v. California ).

Building to this, Sunstein’s first thesis in “Republic.com” is that technology is creating more and more opportunities for consumers to select their own media diets, instead of relying on “general interest intermediaries” (TV networks, TV stations, newspapers, and magazines) to provide a broad mix of content.  As TV channels and internet news sources multiply, “Filtering, often in the form of narrowing, is inevitable to avoid overload” (page 57).

One such opportunity is the concept of the “Daily Me,” a phrase intended to refer to computer or internet technology that allows consumers to view a newspaper-like home page that includes news and information tailored to each consumer’s personal preferences and tastes. Another is the “personal video recorder” (such as TiVo) which can record many hours of a consumer’s favorite programs for later viewing, and which can even “intelligently” suggest and automatically other similar programs that the consumer may enjoy, while excluding other programs.

Sunstein recognizes that the “Daily Me” represents a huge benefit to consumers, who need not wade through hundreds of TV channels, or flip past many pages of irrelevant articles, before finding content of interest. But he raises a disturbing spectre: the notion that when most consumers are able to choose a narrow diet of media content, the result may impair our community and democratic process.  “[A]s choice is increased, different individuals, and different groups, will make increasingly different choices” (page 54).

Imagine that some consumers choose to be exposed only to sports and entertainment content, and not political news or community information. Imagine that some other consumers choose to view political and community information, but they select only conservative viewpoints, while other consumers choose to hear only liberal viewpoints. Some consumers might elect to view only local information, while others may choose to learn about events in Europe, and others may select only news about the Middle East but nowhere else.

Sunstein observes some actual differences, noting that there is often little overlap between the consumer choices of different demongraphic or interest groups. “Indeed, seven of the ten most highly rated programs for African-Americans rank as the very least popular programs for whites” (page 57).  “Only one site (hotmail.com) can be found on both the list of top sites among women over fifty and the list of top sites among men over fifty” (page 58 — but when shifting from TV to the internet, Sunstein doesn’t clarify whether he is still referring to the “top 10″ or perhaps just the top 3 or 5 sites).  Internet users, Sunstein writes, “find each other, swap information, and stoke each others’ passions” (page 58). “Many of those with committed views on one or another topic . . . speak mostly with each other” (page 59).

Sunstein then makes some huge leaps, asserting without support:

* “[T]here is a natural human tendency to make choices, with respect to entertainment and news, that do not disturb our preexisting view of the world” (page 57).
* “In general, is is precisely the people likely to filter out opposing views who most need to hear such views” (page 67).
* “All too many people are now exposed largely to louder echoes of their own voices, resulting, on occasion, in misunderstanding and enmity” (page 74).

Given the importance of these statements to Sunstein’s arguments for government regulation, I think these statements deserve some concrete examples and statistical support, but Sunstein provides none.

If Sunstein’s assumptions are correct, then one result (in theory), could be isolation, as many consumers are simply unaware of the issues that concern their neighbors. Another result might be “fragmentation,” in which like-minded individuals communicate only with each other, and never hear the different viewpoints of others (pages 54-56). And the end result could be “polarization,” in which each groups’ beliefs become more intense and extreme.

Sunstein is concerned about “the pervasive risk that discussion among like minded people will breed excessive confidence, extremism, contempt for others, and sometimes even violence” (page 14). “If diverse groups are seeing and hearing quite different points of view, or focusing on quite different topics, mutual understanding might be difficult, and it might be increasingly hard for people to solve problems that society faces together” (page 61).  “To say the least, it will be difficult for people, armed with such opposing perspectives, to reach anything like common ground or to make progress on the underlying questions” (page 62).

To his credit, Sunstein turns around and argues that society can benefit when like-minded individuals with committed views speak only with each other, calling this “enclave deliberation” (pages 75-79).  Enclaves are suitable for “incubating” ideas, and for encouraging contributions from some individuals who might not speak in a broader group, Sunstein writes. But he argues that such enclave discussions must always be migrated into broader discussions that include opposing views (page 79). (I disagree.)

And finally, Sunstein writes, as individual consumers consume only their personal “Daily Me,” they might find that they can find no common experiences or events to unify a community and maintain a broad identity. Today, a huge cross-section of Americans share certain media experiences, including such fare as the Super Bowl and presidential debates, but over time a shrinking portion of Americans share these media experiences, as they fragment into ever-smaller interest groups.  In the end, if there are no “common ground” experiences or viewpoints shared by a majority of Americans (“social glue”), it may become difficult for Americans to communicate, deliberate, and resolve their differences over public policy issues (Chapter Four).

Sunstein does not suggest that these outcomes are likely, only that they are possible. His concern, is that if “consumer sovereignty” runs amok, and consumers neglect their duties as citizens, the result might be be impairment of our republican model of government, in which citizens (and their representatives) communicate and deliberate to reach some common ground on matters of public importance.  In other words, we could become an “inert people,” Brandeis’ “greatest menace to freedom.” Sunstein would prefer “citizens who are active rather than passive, curious rather than indifferent, engaged rather than inert” (page 110).

To counter “inertness,” Sunstein says, Americans have long benefited from “unwanted and unchosen encounters” with unexpected speakers and topics.  “First, people should be exposed to materials that they would not have chosen in advance” (page 8, page 34, and all of Chapter Two).  “Unplanned and unchosen encounters often turn out to do a great deal of good, both for individuals and for society at large. In some cases, they even change people’s lives” (page 35). Even if you are irritated by such encounters, and cannot be convinced to change your views, “At the very least, you will have learned what many of your fellow citizens think and why they think it.” (page 35).

Sunstein cites America’s long “public forum” history of permitting free speech in public places (parks, streets, and near institutions of government), and even extending free speech rights to some private places, such as California’s shopping malls (page 157).  He laments the possibility that in the internet age, consumers might not visit such places and thus might not be exposed to these speakers.

Sunstein also cites the “range of chance encounters” (page 11) that arise from “general interest intermediaries” (such as newspapers, magazines, and radio and TV stations) which deliver a wide variety of news and entertainment content. Their consumers are exposed, at least briefly, to a wide range of “unchosen” or “unwanted” content, while they search to find content they want.  Automatic filtering would reduce these chance encounters.

Oddly, Sunstein repeats one confusing point several times in his book: that if one citizen is exposed to an issue or viewpoint, that exposure may benefit many others. Each time he cites this example, he follows up with a limiting example of how that first citizen may share the information with others (page 93). I think he misses another important benefit: many people can benefit from the knowledge of the first citizen, even if the information is not shared . If my neighbor learns that a local factory is polluting, and my neighbor takes some action to stop or reduce the pollution, I benefit even if I never learn about the issue at all. Even if ignore the crusades and education efforts of one of Ralph Nader’s consumer or environmental crusades, I will still reap the benefits of safer products and reduced pollution.

In a democratic society, Sunstein argues, it is important for citizens to be exposed to “unchosen” and even “unwanted” speech, so that they are aware of issues asnd viewpoints that fellow citizens consider important. In fact, Sunstein notes, people often react to “unchosen” or “unwanted” speech by becoming more interested in the subject, choosing to learn more, and perhaps acting on this new knowledge for the benefit of their community (pages 107-110).

Sunstain also argues: “Second, many or most citizens should have a range of common experiences” (page 9, and Chapter Four). The notion here is that common experiences, including widely-shared exposure to some identical media content, provides both a common vocabulary and perhaps even a unifying “identity” for all citizens.

III. Where Does Sunstein Go Wrong? Part I: Flawed Assumptions

Alas, I disagree with many of Sunstein’s assumptions in Republic.com, starting with the notion that a significant number of consumers either could or would actually choose to completely block themselves off from a wide range of news topics or political viewpoints.

First, the technology question.

Sunstein writes: “As of this writing, many newspapers, including the Wall Street Journal, allow readers to create “personalized” electronic editions, containing exactly what they want, and excluding what they do not want” (page 5, emphasis added).

I don’t think Sunstein lives in the same technological universe I do, because no effort I have ever made to “personalize” or “customize” newspapers has allowed me to be exposed only to “exactly” what I want. Instead, every filtering technology I’ve seen is both over-inclusive and under-inclusive, delivering many articles that are of no interest to me and failing to deliver articles on topics that I expressly stated that I wanted to see.

Sunstein also quotes Gordon Bell, then-CEO of search engine Excite, as saying “About 43 percent of out entire user data base has personalized their experience on Excite” (page 7). Alas, I’m pretty sure that Mr. Bell and Excite (like Yahoo and other “portal” sites) view any user who has ever registered or selected a single preference, as having “personalized” their experience, even though the system may not actually provide a personalized experience based on the user’s actions, and the user may have received no benefit from the so-called “personalization.’

In other words, I believe that personalization technology is still in its infancy, with extremely limited capabilities, and that only a tiny fraction of consumers are “filtering” their news or information in any meaningful way.

Of course, improvements will come in time, and I can imagine a day in the not-so-distant future in which I can design my “Daily Me” to include all articles that contain certain keywords, or pertain to certain subjects selected from a huge menu, while excluding articles that contain certain other keywords or pertain to certain subjects. If this technology had been in place in 2001, perhaps I’d know nothing about any sports scores or celebrity rumors, and I’d spend the time saved reading substantive news.

But even if I’d expressed a desire to learn nothing at all about international news, politics, or crime, and implemented filters accordingly, I’m quite certain that on September 11, I’d have seen headlines and news (within hours) about the airplanes crashing into the World Trade Center towers and the Pentagon. (In reality, I was in Paris on September 11, 2001, and ascended the Eiffel Tower in late afternoon, completely unaware of the tragic events that had occurred a few hours earlier in New York.)

In my opinion, the technology will never be perfect (and I doubt anyone would want it to be perfect), and as a result even the most ardent isolationist will be exposed to news and viewpoints she did not want to see. But I’m sure that even with imperfect technology, it will be possible for some consumers to filter out content and never learn about a major buildup of troops on the India-Pakistan border, nor about a toxic-gas release in their own city.  And this is a concern to me, just as it is a concern to Professor Sunstein.

An interesting side note: as filtering technology improves, I’m sure that many clever speakers will find ways to “spoof” filters, so that their news or information will appear to pertain to a subject people wish to see, when in fact it is about a subject or viewpoint that people dislike. And the filtering technology will then be adapted to impair such spoofing, and the cycle will probably continue forever. (We already see this with “email spam,” in which the subject and sender’s name are forged to make the unwanted advertisement appear to be something else.)

If Technology Permits, Will Sunstein’s Problems Actually Arise?

Sunstein writes that “there can be no assurance of freedom in a system committed to the “Daily Me’” (page 50), as if this is a new risk. But there is no assurance of freedom for any of us, in any system. The absence of an “assurance” does not mean that there is actually any genuine risk that we will lose freedoms.

In arguing that “consumer sovereignty” (via unrestricted filtering) conflicts with the duties of citizens, Sunstein writes: “The choices people make as political participants seem systematically different from those they make as consumers” (page 114).  Yet Sunstein admits: “Everything depends on what people seek to do with the new opportunities that they have” (page 87), and he fails to demonstrate that most people will actually make the wrong choices.

Indeed, Sunstein concedes several times in his book that the “Daily Me” only creates problems if a significant number of consumers choose to limit their exposure to just a few topics or viewpoints, and that consumer-citizens may make wiser choices. “Citizens are often aware that their private choices, under a system of limitless options, may lead in unfortunate directions, both for them as individuals and for society at large. . . . They might attempt to restructure alternatives and institutions so as to improve the situation” (page 107).  “Indeed people [often] make choices so as to promote wider understanding and better formation of their own preferences” (page 112).

Sunstein also acknowledges that even if people make the “wrong” choices, filtering content in ways that cause isolation, fragmentation, polarization, and ill-prepared citizens, there might still be no way to improve the situation: “If, for example, people will never listen to points of view with which they disagree, there would be little point in exposing them to those points of view” (page 168).  In other words, Sunstein suggests that there may be no way to turn around those “consumers” who won’t live up to his expectations for citizens.

If Technology Permits, Will Many Consumers Filter So Narrowly?

I know that if I could customize my local newspaper to create a “Daily Me,” I would immediately jettison all sports content, and I would likely exclude gossip and celebrity news. And I might seek ways to limit the number of times I would be exposed to endless scandals (I’d want to know if my Congresswomman had an affair with an intern in her office, but I would not want to read the same “gussip and rumors” repeated every day, as occurred in the past few years). And if I find a particular columnist to be uninformative and vitriolic, I might block his column.

I know I’m unusual because I read at least a half-dozen weekly and a half-dozen monthly magazines (mostly specialized for the computer industry, plus some lawyer magazines and some general interest stuff). And I’m not a typical consumer or citizen (in part, because I was trained first as a journalist and later as a lawyer).

But I can’t imagine that anyone I know would simply block all news on any subject, nor editorials based solely on viewpoint.

If the technology allowed:

* I might decide that I don’t want to read the police blotter, but I’d want to read crime-news articles that my local editor deemed suitable for publication.
* I might decide that I don’t want to read the day-by-day accounts of the San Francisco “dog-mauling murder” case, but I’d still want to know of major developments and certainly the verdict.
* I might decide to exclude music reviews and standard news accounts of local concerts, but I’d still want to know if there was a riot at a local concert.
* Since I am a “socially liberal, fiscally conservative” Democrat, and since I’m a member of the Sierra Club and the ACLU, I might choose to allot a higher priority to news subjects or editorial viewpoints that match my interests, but I’d still want to see different articles on a fair number of topics and viewpoints.
* And no matter what news or information I select for inclusion or exclusion, I’d always make room for the “top three” news headlines selected by a local editor, and probably another “top three” news headlines selected by an editor at the New York Times or the Washington Post or some other “trusted” publication, and I’d also make room for a dozen or so “random” news selections each week.

Certainly, I assume that some people would elect to implement extremely narrow filters, including filters on both subjects and viewpoints. After all, some people elect to live in isolated communities, and many people are quite reasonably upset if their children are exposed to inappropriately sexual content, or to political or social speech they consider hateful or sacreligious. And of course, many people don’t read at all, nor watch news programs on TV, and choose not to be informed citizens.

But in the end, I doubt that “filtering technology” and the “Daily Me” will result in the level of isolation, fragmentation, or polarization that Sunstein considers problematic.

IV. Where Does Sunstein Go Wrong? Part II: Bad Solutions

Sunstein recognizes that most (perhaps all) of the potential “problems” he identifies might be avoided or solved if consumers or technology providers anticipate the problems. For example, he writes that even private partisan websites miight “take steps to ensure that people are exposed to a diversity of views” (page 30), and he acknowledges that “Indeed, people [often] make choices so as to promote wider understanding and better formation of their own preferences” (page 112).

Chapter Six of Republic.com is entitled “What’s Regulation? A Plea” and as I read it, I quickly assumed that Sunstein’s proposed solutions would include government regulation of internet news or filtering technology. I was right. To his credit, Sunstein clearly recognizes that any regulation of speech is controversial, and while I disagree with some aspects of his analysis, I think he is mostly accurate when discussing the state of American constitutional law on this subject. In other words, he is correct that in some situations, when the reasons are compelling, regulation of speech is permissible and even desirable.

Alas, Sunstein proposes that regulation be considered in the absence of any genuine problem, and he proposes regulations that would actually create some of the very problems which he claims they are intended to solve!

Disclosure of Content and Viewpoints, and Enabling of Filtering

In Chapter Three, “Fragmentation and Cybercascades,” Sunstein discusses the issue of “filtering” and notes that if consumers are permitted to filter out content and viewpoints they do not agree with, they may become more fragmented and polarized. In the absence of exposure to opposing viewpoints, some people may believe that their position is widely accepted and popular (since they only communicate with other believers), or that opponents have no valid arguments (since they only learn of opponent’s arguments from the mocking reports of fellow believers).

In other words, filtering may sometimes be a bad thing, if it causes isolation, polarization, and fragmentation.

Despite this apparent belief that filtering may have serious negative effects, one of Sunstein’s proposals in Chapter Eight is that producers (of broadcast or web content) be required to make disclosures which consumers could use to filter the content they see! (‘If viewers know the content of television programs in advance, they can use market pressures, by refusing to watch,” page 173).

Sunstein goes on to imply that only web sites with certain viewpoints be subjected to disclosure requirements: “The idea would be to ensure that anyone who is engaging in a practice that might produce harm, or do less good than might be done, should be required to disclose that fact to the public,” (page 174).

In fairness, Sunstein’s actuall recommendation is less clear than the last two quotes may imply. His actual “proposal” is so vague that it’s possible that he only intends to require that large broadcasters be required to disclose their public-service programming on a quarterly basis. If so, we must ignore dozens of pages of analysis about regulation of the internet and “harmful” web sites.

‘Must Carry” and Requiring Links to Opposing Viewpoints

Sunstein devotes many pages of his book to observations that many political web sites include links only to “like-minded” web sites, and rarely include links to web sites with opposing viewpoints (except when ridiculing such sites). Two of his six “proposals” would create< > “must carry” rules, in which “popular” or “highly partisan” web sites would be required to provide free hyperlinks to other web sites.

Proposal #5 would require the “most popular Websites” to carry links to other web sites, in order “to provide exposure to substantive questions.” Proposal #6 would require “highly partisan” web sites provide links to opposing views.

I simply can’t imagine what Sunstein is thinking here. He borrows a now-abandoned notion (the “Fairness Doctine,” requiring broadcasters to provide time for opposing views, and create and broadcast “public interest” programming — requirements that were imposed on broadcast stations who were granted free government licenses from a very limited broadcast spectrum), and attempts to apply it to a new medium which has no similar spectrum limitations or licenses.

What would it mean? What would the regulations say?  Sunstein certainly doesn’t offer a clue.

Let’s assume we are trying to write the regulations to require links to substantive sites, or to opposing views.

What exactly is a “highly partisan” web site? What exactly is a popular web site?

Where do the links go? Do they replace current paid advertising, or the webmaster’s existing links to other web sites she endorses? Do they get dumped on a “links page” that nobody ever visits? What if my site has a policy of not linking to ANY other web site (as it appears 50% of partisan sites do, in Sunstein’s examples on pages 59 and 64)?

Many web sites, especially partisan web sites, have a policy of not linking to any other sites (including “like-minded” web sites). Indeed, Sunstein’s own analysis (at pages 59 and 64) show that about half of partisan web sites contain no external links at all, (probably to avoid claims or favoritism, or in the case of political candidate and party web sites, potential problems with the Federal Election Commission or state election rules). Apparently Sunstein wants to force these sites to spend money to re-design their sites and submit more paperwork?

Okay, assume now that we agree on where the links will appear on my popular or highly-partisan web site; what sites do I link to?  Can I choose which opposing view sites I link to?  Can I link to the poorly-designed, poorly-written, and absurdly extremist site, or must I link to a better-designed, more rational and reasonable opposing view?  If I operate a pro-choice site, I might find it preferable to link to a hateful “murder the abortionists” site instead of linking to a thoughtful site offering support and funds to women who wish to consider adoption instead of abortion.  Can I decide to link just to a few poorly-designed extremist sites, or must I link to the “most popular” of the “pro-life” web sites? Who decides? Am I allowed to mock the sites when I link to them?  If I am the Democratic candidate for office, do I link to my Republican opponent but not the Green candidate?  If I am the Republican candidate, can I link to the Socialist and Green candidates but not my Democratic opponent?

He Must Be Kidding: Oddly, although Sunstein devotes considerable discussion to the issues of “content-neutral” versus “content-specific” speech regulations and “viewpoint-neutral” versus “viewpoint-specific” regulations, he makes no reference to the notion of “forced speech,” in which a speaker is required to make a disclosure, or worse to actually say something he believes is untrue. Of course, such laws can be written, if there is a compelling governmental interest ” we know this from viewing any American cigarette package, and we also know that in the context of an election subject to campaign-funding laws, disclosures may be required to identify the entity paying for the election advertisement or materials. But even in these extreme cases, the tobacco companies are not forced to provide the phone number for the American Lung Association, and a Republican candidate for Congress cannot be required to provide the name and contact information for the Democratic opponent!

Sunstein’s proposal to require partisan web sites to link to opposition views is intolerable under American free speech principles.

Conclusion: In Republic.com, Cass Sunstein offers some interesting ideas — worth thinking about — but unfortunately he fails to provide any credible support for some of his most surprising conclusions and concerns.  And ultimately, the book is fatally flawed by Sunstein’s earnest support for government regulation of speech and his bizarre proposals for unworkable regulatory “solutions,” some of which seem aimed at enabling rather than discouraging, the often-implausible problems that he identifies.  It would be great to read a book on this subject that wasn’t marred by muddled thinking.

(January 21, 2002) by Mark J. Welch

• Mark Nadel’s review in the Stanford Law Review (March 2002)
• Stephen Labaton’s review in the New York Times
• James Fallows’ review in the Industry Standard
• George Will’s review at TownHall.com
• Matt Gaylor’s review at the Ethical Spectacle.com
• Peter Coy’s review in Business Week (copy)
• Merle Rubin’s review in the Christian Science Monitor
• Nancy L. Savitt’s review in the New York Law Journal and Yang Yunyun’s review in The Edge (Malaysian)
• Adam D. Thierer’s review in Regulation (Cato Institute) [PDF]
• Discussion at ChristopherLydon.org about Republic.com
• Analysphere review of Republic.com
• Paul Rosenberg’s review in Philadelphia CityPaper.net
• Jason Roth’s Letter to Princeton University Press
• Web of Politics (multiple comments about Republic.com)
• Richard R. Forsten’s review for the Delaware State Bar Ass’n
• Archive of closed discussion forum with Cass Sunstein at Princeton University Press
• Article by Cass Sunstein in The Little Magazine, borrowing from Sunstein’s “forthcoming book” Republic.com
• Article by Cass Sunstein in Boston Review

“When I saw the December [1993] issue of the ABA Journal , I immediately felt irritated at finding yet another lawyer’s magazine cover story on a death penalty case (‘Reasonable Doubts,” page 38). I thought, haven’t we read enough about this subject by now?
“But then I read Richard Fricker’s article and I realized that no, we have not read enough yet.
“The article was a remarkable piece of investigative journalism. What impressed me most was that it did not seek to vindicate the man convicted of this crime, buyt instead focused on the system that has probably made it impossible for us to ever know if he was guilty.
“I encourage you to resist any nagging suggestions in the future that we have already read enough about injustice.’

– Mark J. Welch, Pleasanton, Calif.

For years, I have received emails from friends and strangers alike, urgently warning me about email viruses that could be triggered simply by reading an email message.

I always knew they were wrong, because I know that an email message is nothing more than plain text, and a virus can only be activated by executing a software program.  These warnings were hoaxes concocted to fool the gullible, and they were often distributed (often in modified form) by people who were gullible.

After the first few dozen warnings, I found these emails annoying, especially when the same person would re-send the same warning about the same message even after I warned them a month earlier that it was a hoax.  Usually, the warning described a particular message header or title, or the name of a particular sender whose name would appear in the return address.

Last year, when the “Melissa” email virus was released, many people again reported that it was triggered simply by “reading” the email, but this was again a mistake: the virus could only be triggered by executing a program file that was sent as an attachment.  The author of the “Melissa” virus was simply more devious than his predecessors: his virus caused itself to be re-sent to the first 25 or 50 email addresses in a Microsoft address book, but again only if someone executed a file attachment.  Unfortunately, since the email came from someone who had your email address in their address book, it was more likely than usual to come from someone you knew and trusted.  But long before the Melisa virus was even a gleam in its designer’s eye, we were all warned to never trust any file attachments, and always use a virus-scanning program for all downloads, regardless of their source.

But throughout it all, I was absolutely, positively certain that there was never any email virus that could wreak havoc just by being read.

This fall, I was proven wrong. The flaw came not from a particularly clever virus author, but from a implementation defect in Microsoft’s Outlook (and Outlook Express) software, when used on computers with “Windows Scripting Host” enabled.

My understanding is that Microsoft Outlook executes some attached ActiveX code when messages are viewed in its “preview pane.” (Microsoft’s proprietary ActiveX technology has been the entry point for a wide range of malicious programmers in the past year or so.)  Microsoft was advised that this could be exploited as a security breach, and released a patch for Outlook in August.

The first virus to exploit this defect was identified as the “bubbleboy ” virus, which was described by anti-virus experts as a “proof of concept” virus.  In other words, its author created the virus just to show that it worked, and sent copies to anti-virus experts so they could develop ways to prevent damage from more malicious virus authors.

Microsoft’s August patch for Outlook, if installed, would have blocked this virus from executing in the “preview pane.”  But many users don’t regularly check for updates and patches.  And some corporate information technology (IT) departments are unable to install such patches on corporate without restarting all Y2K compliance testing from scratch, since every change to software renews the risk of bugs and unexpected side effects.

Anti-virus software makers released patches and updates to detect the “bubbleboy” virus with a few days after its release.

I would have been unaffected by this virus, since I do not use Microsoft Outlook.  However, I did reply to the first warning about the “bubbleboy” virus with a firm dismissal of the suggestion that an email virus could be activated simply by opening an email, without actually opening or executing an attached file.

I can take no consolation in the notion that I was only wrong because of a design flaw in Microsoft’s software, nor that my reaction was reasonable since it was accurate for dozens of prior hoax emails.  Millions of people use Microsoft Outlook, and now they are vulnerable to a new form of virus attack.

Since this event prompted me to read many recent news articles about current activities by malignant virus programmers, I am even more upset to learn that there are a substantial number of viruses that are scheduled to “activate” on January 1, and more terrorists who are threatening to release new viruses in the final days of 1999.  Some of these “Y2K” viruses are designed to create damage that simulates predicted Y2K bugs, and others are simply designed to create more problems.

I strongly advise everyone to update your anti-virus software every single day until at least the first week of January.

(February 9, 1996) The First Amendment of the Constitution of the United States of America provides that Congress may enact no law which abridges “freedom of speech, or of the press.” The Supreme Court has interpreted this to mean that Congress may not prohibit speech merely because it offends some people; after all, Americans often offend each other, especially when discussing politics. Congress also may not impose restrictions that would reduce all discourse to the level of a child, or to avoid offending hyper-sensitive people.

In February 1996, Congress violated the Constitution of the United States by enacting the “Telecommunications Act of 1996,” which included provisions from the “Communications Decency Act” that outlaw any online communications which might be considered “indecent” or “patently offensive” to someone. (See the excerpts from the Act below.)

The law also expressly authorizes any online service or Internet service provider to censor any communications which it believes might be “objectionable” to someone, and removes all legal remedies otherwise available to those affected by that censorship. This amounts to an unlimited censorship license.

These provisions are designed to undermine free speech. And, although I’d like to blame this misguided law on the Republicans and their “Contract on America,” the truth is that about 90% of Congress voted for the law.

What can we do about it? Not much. Fortunately, theAmerican Civil Liberties Union (ACLU) and the Electronic Frontier Foundation (EFF) filed a lawsuit challenging the Constitutionality of the Communications Decency Act in federal court immediately after President Clinton signed the law. But until that suit is resolved, anyone whose message might be “indecent” or “offensive” risks criminal prosecution, and online service providers have unlimited discretion to censor any information which someone might consider “indecent” or “offensive.”

I find this law to be indecent and offensive to the American people, and to the tradition of free speech in this country. I don’t want obscene pornography to be available to children on the Internet, but that’s not what this law is about. The “Communications Decency Act” is about imposing broad restrictions on speech protected by the U.S. Constitution. It’s about stifling public debate on issues like abortion and birth control; it’s about barring access to art and literature. It’s wrong.

“Whoever (1) in interstate or foreign communications
“(A) by means of a telecommunications device knowingly (i) makes, creates, or solicits, and (ii) initiates the transmission of, any comment, request, suggestion, proposal, image, or other communication which is obscene, lewd, lascivious, filthy, or indecent, with intent to annoy, abuse, threaten, or harass another person;
“(B) by means of a telecommunications device knowingly (i) makes, creates, or solicits, and (ii) initiates the transmission of, any comment, request, suggestion, proposal, image, or other communication which is obscene or indecent, knowing that the recipient of the communication is under 18 years of age, regardless of whether the maker of such communication placed the call or initiated the communication;
“shall be fined under title 18, United States Code, or imprisoned not more than two years, or both.

A new section 223(d) is added, which reads:

“Whoever (1) in interstate or foreign communications knowingly (A) uses an interactive computer service to send to a specific person or persons under 18 years of age, or (B) uses any interactive computer service to display in a manner available to a person under 18 years of age, any comment, request, suggestion, proposal, image, or other communication that, in context, depicts or describes, in terms patently offensive as measured by contemporary community standards, sexual or excretory activities or organs, regardless of whether the user of such service placed the call or initiated the communication; or (2) knowingly permits any telecommunications facility under such person’s control to be used for an activity prohibited by paragraph (1) with the intent that it be used for such activity, shall be fined under title 18, United States Code, or imprisoned not more than two years, or both.”

This law appears to prohibit most messages about abortion or birth control.

“No provider or user of an interactive computer service shall be held liable on account of any action voluntarily taken in good faith to restrict access to or availability of material that the provider or user considers to be obscene, lewd, lascivious, filthy, excessively violent, harassing, or otherwise objectionable, whether or not such material is constitutionally protected”