TEXT OF COMMENTARY
KAI RYSSDAL: Activist shareholder and sometime corporate raider Carl Icahn has decided to settle for second best. Early this morning Icahn and Yahoo announced a deal to end Icahn’s attempt to get rid of that company’s board of directors. Instead, he and a couple of friends will get seats on Yahoo’s board, which puts a stop — for now at least — to Icahn’s efforts to sell the company to Microsoft. And it leaves Microsoft still trying to figure how to get a real toehold in the world of Internet advertising. We’re talking a pretty lucrative toehold, too. One industry study says $21 billion was spent advertising online last year. Almost half of the money went to search engines — those ads that appear after you run a search. Google’s got the lion’s share of that market.
But commentator and economist Ian Ayres says thanks to new programs from Microsoft and others, you, too, can get in on the action.
IAN AYRES: We expect Internet services to be free. It’s almost an inalienable right. A site like Google provides us incredibly useful information and charges us nothing for the service.
But now Microsoft goes one better in this limbo game of “how low can you go.” Its new “Cashback” program will actually pay you to search the Web, provided you ultimately buy the item.
But the next step is for a search company to start paying consumers for clicking, whether or not they make a purchase.
Why would a company like Microsoft or Google be willing to share any of its ad revenue? For one, they believe the cash incentive will encourage more of us to use that search service.
On the Internet, eyeballs are valuable commodities. Advertisers sometimes pay Google more than $50 per click to have their ad pop up after particularly valuable search terms like “free insurance quote.”
An advertiser who is willing to compensate you for clicking through is putting its money where its mouth is — that you’re going to find its ad worthwhile.
Of course, under this system, some consumers will be tempted to click-and-close just so that they can cash in on the compensation. Hackers will even be tempted to set up bots to search and click compensated ads.
But advertisers have easy ways to limit this abuse. They can cut off your compensation if you develop a history of clicking through without ever purchasing.
Advertisers spend millions on print ads. And they get far less information about whether we read, much less buy, based on the ad.
Compensated ad consumption could even expand beyond the Internet. It could also help redeem television ads. TiVo and Google TV have the technology today to start compensating viewers who watch particular commercials — live or even after the fact.
Imagine it. A world where advertisers paid you for your time.
RYSSDAL: Ian Ayres is a professor at the Yale Law School.
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