Subprime Attention Crisis

end users would still interact with their products and services in largely the same way.

This would be a temporary state of affairs: longer-term, the impact of this crisis would become more apparent to the average user. Intense dysfunction in the online advertising markets would threaten to create a structural breakdown of the classic bargain at the core of the information economy: services can be provided for free online to consumers, insofar as they are subsidized by the revenue generated from advertising. Companies would be forced to shift their business models in the face of a large and growing revenue gap, necessitating the rollout of models that require the consumer to pay directly for services. Paywalls, paid tiers of content, and subscription models would become more commonplace. Within the various properties owned by the dominant online platforms, services subsidized by advertising that are otherwise unprofitable might be shut down.

Imagine waking up to the announcement that searching the web would now require a monthly subscription fee, or that your favorite social network would have limited features until you added a credit card to sign up for a premium version. Imagine being charged on a per-trip basis for navigating with Google Maps. Think of WhatsApp—which was acquired by Facebook in 2014 but has not made significant money for the platform¹⁰—being shut down in order to preserve Facebook’s bottom line. How much would you be willing to pay for these services? What would you shell out for, and what would you leave behind? The ripple effects of a crisis in online advertising would fundamentally change how we consume and navigate the web.

Silicon Valley would not be the only region hurt by such a crisis. The failure of the programmatic advertising economy would have follow-up impacts throughout the media, considering how many media businesses rely on the programmatic ecosystem. Already in 2013, a survey of publishers revealed that 72 percent of them were offering space to advertisers through automated real-time auctions.¹¹ Condé Nast—the leading mass media company, which owns publications like Wired, The New Yorker, Vanity Fair, and GQ—makes advertising on all of its digital properties buyable through programmatic marketplaces.¹² Because programmatic advertising is increasingly a means of selling advertising through channels other than just banner ads on websites, a downturn in this economy might negatively affect some services that you might not immediately suspect. The audio streaming service Spotify, for instance, receives 20 percent of its advertising buys through programmatic means.¹³

All of these businesses rely on the continued strength of automated advertising marketplaces to generate revenue. The obvious outcome of a downturn would be for these businesses to cut costs. We might expect a massive round of layoffs in digital media, similar to but much larger than the 2019 firings at prominent content channels like Vice, BuzzFeed, Vox, and Mashable.¹⁴ Even a short-term decline in advertising could create massive disruptions. As the 2020 newsroom layoffs triggered by the COVID-19 outbreak show, most media businesses are not well positioned to weather even brief periods of weakness in the market for ads. Media companies dependent on online advertising might also become attractive acquisition targets for the well-resourced online platforms and other buyers in such a financially distressed environment.

Consider for a moment all of the advertising-supported media that you consume for free on a daily basis: podcasts, videos, articles, email newsletters, and more. How would it feel to have a large portion of that media suddenly disappear behind a paywall—or disappear entirely? How would your experience of the web change? What would it feel like for Facebook to announce that it was purchasing The New York Times or for YouTube to announce that it was purchasing Vice? What we consume and who controls what we consume would radically change in such an environment.

We might be able to stomach these changes as users of the web, but it’s important not to lose sight of the significant human costs of such changes. Paywalls rising throughout the web would exclude large populations of consumers unable to afford services that until recently were free. A failure of the online advertising markets would have a serious impact on a wide range of journalists, videographers, and other media creators great and small. Social media and platforms like YouTube serve as free distribution channels, allowing creators to reach much broader audiences than they otherwise would. A changing business model that prioritized subscription and paid access would narrow these prospects and make content creation less sustainable. Not to mention the knock-on effects that might emerge from a radical slowing of the spigot of philanthropic funding—from supporting medical research to fighting climate change—driven by a contraction of wealth in the technology sector.

In the most dramatic case, a sustained depression in the global programmatic advertising marketplace would pose some thorny questions not entirely unlike those faced by the government during the darkest days of the 2008 financial crisis. Are advertising-reliant services like social media platforms, search engines, and video streaming so important to the regular functioning of society and the economy that they need to be supported lest they take down other parts of the economy with them? Are they, in some sense, “too big to fail”? In an era when the relationship between the government and these platforms is becoming increasingly adversarial, state action to bail out a fragile tech industry might massively reshape the relationship between the state and the internet.¹⁵ What if the White House were to offer to keep key internet platforms solvent on the condition that they accept greater regulation and deeper involvement by government appointees in their operations?

This is a long way of saying that the web that we experience when we roll out of our beds and unlock our phones is sustainable only because of the continued health of programmatic advertising. Change that, and the whole edifice of the economy built on top of it begins to change with it. Persistent lack of confidence in the online advertising markets would produce a web that would be more fragmented, less accessible,