Voting With Eyeballs

Barry Nalebuff and I just published a column in Forbes proposing a simple way to fund a substantial chunk of the presidential campaigns. It starts with the simple proposition that lots of people watched the political conventions — and eyeballs have value:

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Shortly after the Olympics pulled in an average of 27.5 million viewers per day over 16 days this summer, the Democrats reached an average of 22.5 million viewers over four days. Barack Obama‘s acceptance speech drew 40 million viewers. Sarah Palin pulled in 37 million. Yet the parties gave away all that content for free.

What if the Democratic and Republican National Committees had decided to sell the broadcast rights to their conventions? What would that have been worth? NBC paid $894 million to get a total of 435 million viewer-days out of the sports in Beijing. At $2 per viewer-day, that suggests that the Democrats could have gotten $180 million for their 90 million viewer-days. Now, a convention has fewer commercial opportunities, especially during the candidate’s acceptance speech, and on the networks it’s only on for a couple of prime-time hours each day; so let’s knock that down to $100 million. Still, that’s a nice sum.

Many people react with horror when we first mention this idea. They don’t want to give any single network the power to frame the conventions. But a monopoly right to the revenues from commercial time does not necessitate giving a single network a monopoly right to broadcast the conventions.

We could still have 11 different channels showing the Republican convention; the channels would just have to agree to show the commercials that the winning network has sold. As we explain:

[The contract between the political party and the winning bidder] could make the winning bidder share the content and some of the revenue with other stations — but they would all have to air the ads sold by the winning bidder. Or the parties might insist that the winning bidder defray some of the costs of other networks’ coverage.

Bruce Ackerman and I have a book on campaign finance, Voting With Dollars (shameless plug), where we recommend giving every registered voter “Patriot Dollar” vouchers to fund the campaign of his choice.

Like the “one person, one vote” rule, Patriot Dollars give each voter the same power to finance political speech. Our convention idea applies an analogous idea to monetizing our attention. Under the Ayres/Nalebuff proposal, it’s “two eyeballs, one vote.”

Selling the commercial rights to public acts doesn’t mean that the public would be charged to watch. We can still mandate that content be given away to the viewer and at the same time sell the rights to the associated ad time:

What works for politics could be applied in many other places as well. Two examples: The rights to broadcast high-profile court cases could be sold, and the proceeds used to pay for both the defense and the prosecution. NASA could support space exploration by selling the broadcast rights to Martian landings.

In fact, the list goes on and on. The commercial rights to the original O.J. Simpson trial might have funded years of public defenders. And just last Friday, the Biden/Palin debate pulled in more than 70 million viewers. Why should the networks get this content for free?

I’m Ian Ayres, and I approved of this post.


Mike B

I am disappointed that the Federal Government refuses to monetize many of its valuable assets. For example, instead of the taxpayer paying 100% of the costs of state dinners other necessary White House upkeep, why can't the President simply enjoy a refreshing Snapple beverage during his State of the Union Speech? If Congress received a cut of ad revenue from C-SPAN maybe they would improve content of congressional sessions to attract move viewers (a call-in segment would be great). Why does the government give away name and picture rights to stamps, currency and most government buildings?

People might decry the commercialization of ostensibly "public" institutions, but as my friend told me "Government's already sold out, it might as well cash in."

Peter S

I always wonder who pays who in this situations.

The tv networks gets more viewes an more money from comecercials.

But the political parties is basicaly getting all the air time for free? Shouldnt they pay per minute the same as the comecercials?

who pays who?

I thought about this regarding the guitar hero games. The artist with songs in the game have increased sales.

The games popularety is decided by what songs/bands are in it.

Who pays who?

toao

Political parties are interested in maximising the coverage of their convention in order for their message to reach as many voters as possible. Money are just a means to achieve this end. It does not make any sense for parties to impose a cost on the media who enable them to speak directly to voters.

Gary

I see some promise in this... but it has some holes.

First, I looked but didn't find anything... are the major networks required to carry presidential addresses, the debates, and/or the conventions? I would think the FCC might have some kind of mandate here, but I'm not sure. It would seem cable news networks have much more freedom in tis regard.

Secondly, I think it'd be a good way to fund public funding for campaigns, but I'd think in order to ensure the system is equitable, the FEC would require the revenues to be split evenly between the parties, or deposited into the public financing fund. If a network bids way more for one party's convention than the other, it gives them a huge advantage if its sent right to the party coffers. Considering the massive wealth some in the media have amassed, and their biases, this could be used to circumvent campaign contribution limits (think Fox News bidding $1Bn for the RNC, while the DNC gets $150M from NBC).

Additionally, while I'm sure advertising would be lucrative during a debate, I'm quite sure many companies would not want to be seen as supporting a specific candidate or party. If Taco Bell runs an ad during the Republican convention but not during the Democratic convention, might potential customers boycott? This sounds absurd, but we're talking about the same country that served Freedom Fries after the invasion of Iraq...

In other news... calling tonight a "debate" is laughable. McCain is increasingly sounding like Obama, and Obama like McCain.

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Bobby G

Hm. I like the effort, but there are some additional externalities we have to think about. Let's say one network buys the rights to a convention. The other channels would use the feed from the first station in your proposal, correct? Knowing that, wouldn't the buying broadcast company plaster their logo all over the place?

What's nice about having the convention on so many channels is the viewer gets to choose which channel to watch; which channel is the least painful to watch (with all those graphics). A monopoly on the graphics and logos. From a political perspective, we might get inappropriate advertising... good for the demographic of the winning bidder, but maybe not for the demographics of the other channels.

I'm not sure, it's an interesting idea, but I feel like it's flawed. Maybe some other posters will have some better ideas.

shawb

In traditional transactions the customer is the entity which pays for the transaction. In advertising supported media, the customer would therefore be the advertiser. What is the advertiser purchasing? The viewing time of the audience. So, this means that the audience is the PRODUCT rather than the customer.

It makes sense that a company will do its best to provide the best product it can to the customer, so advertising supported television will do it's best to provide the best audience to the advertisers. What sort of people make the best product then? Those easilly swayed by advertising. That means it is fiscally irresponsible for an advertising supported media company to produce intelligent, thought provoking material. Profitable shows have to be able to appeal to the lowest common denominator, if they appeal to more discerning audiences that has very little effect on the bottom line, and indeed makes for a more inferior product. The TV show/radio broadcast/etc is simply used to ensnare viewers, they are more like the machines in a factory that actually make the product the customer buys. It makes sense that TV and most radio appeals mainly to the lowest common denominator, and in fact creating programming that makes the audence dumber, or at least puts them in a trance-like state where in theory they are more susceptible to advertising. Ever look into the eyes of someone who has been watching TV for a while? Usually a complete blank stare. And it takes a little time to shake the haze off once their concentration is broken from the tube.

So, in advertiser supported media you may occasionally get a smart show that appeals primarilly to intelligent, discerning people but this is expected to be a fluke rather than the norm. If you want good quality stuff, you either have to go the routes audience supported rather than advertiser supported: either a donation based model such as public television/radio or college radio, or you go with an entirely subscription based model as HBO or Showtime does. Not that everything on audience supported media will be good, and not that everything on advertiser supported media will be bad, but audience supported media will carry a much higher proportion of quality programming even if the advertisements themselves are omitted.

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Valpey

I am so happy that horrible ideas like this can get aired out and ridiculed before ever being seriously considered by authors of public policy.

jonathan

So if the Dems have Springseen perform and that drives ratings, is that good or bad? Do the parties share revenue or does it become Hollywood and the music business driving ratings numbers for one or the other?

But if the conventions become The Ed Sullivan Show, variety acts interspersed with politics, then wouldn't that cheapen the national discourse on such an important topic?

andy

Why must the right to broadcast be exclusive? Let all the networks pay, and then we lose legitimate concerns like Bobby G's (#1).

Also, I strongly agree with Jake (#5).

Jim (#8), you accidentally said "the people" and "know" instead of "the major networks" and "broadcast".

Peter S. (#18) reminds me very much of Peter Griffin of Family Guy.

Dan

You can't do this if you take public funding. You're not allowed to seek further donations after the nomination. I guess you could argue this is not a donation.

Dan

I believe this is illegal, because corporations aren't supposed to give money to political campaigns. They can only give it to political action committees. A work around may be for the campaign to give the rights away to a PAC and then let the PAC sell it.

Kris Verdeyen

Perhaps there's some kind of reverse auction structure where the good is non-exclusive. Each party bids, and the number of bids awarded is settled after the bidding to maximize the income to the seller.

For example, Jim bids $10, Joe bids $7, and Mary bids $4. The seller can decide to accept the $10 bid and award only Jim with the product, or can give both Jim and Joe copies for $7 each. Mary gets left out, because she's cheap. Each network runs their own commercials, everybody wins?

This probably has a name already.

Of course, the whole point of Campaign Finance Reform is to reduce corporate influence on politics. This might do that, by giving a non-legislative outlet for the politician's end of the deal, but my gut says no.

mp

Viewer days is not a smart metric because you're not taking into account the oppurtunity cost of using up that timeslot. I bet the conventions were only slighlty more popular than the normal shows, so the networks should pay only slightly more than they would for a normal show. Alot of their shows are garbage, so it shouldn't cost much.

Also, a smart network would pay nothing and air larry the cable guy or something else stupid as counterprogramming.

If the convetions were overtly commericialized, networks would not feel coverage was required in order to lend creidblity to their news desks.

Jim

I cannot believe my eyes. You want to privatize political coverage? The people have a "right" to know - not the "privilege" to know - and they should not have to pay for it. Who do you think funds the advertisers' pockets so they can buy time during the political debates? The consumers!! This is a very bad idea.

Julie VanDusky

This idea would actually reduce the number of viewers watching the conventions!

Sometimes Democrats watch Republican conventions and Republicans watch Democratic conventions. But that doesn't mean these viewers want to donate money to the campaigns of their rival party. This idea forces them to donate if they want to watch the convention. I think a lot less Democrats would watch Republican conventions and a lot less Republicans would watch Democratic conventions if they knew that by watching it, they would be donating money to that campaign.

Dov

Isn't saying two eyeballs = one vote an affront to the one-eyed?

Anyway, kidding aside, nice column....

MikeM

I'm sorry, but you're proposing turning our political process, and even legal system into a reality show?!

Kevin (#4) makes a good point. We already know what shows will do for ratings. It would be a complete perversion of politics and justice if they were also in a ratings grab.

I can just see the courtroom producer having a meeting with the jury to discuss how much longer they should take in their deliberations.

I was going to satirize this post by suggesting other possibilities (military offering rights to a war, police to a car chase, fire department to a fire, the national guard to a disaster zone) but I think the courtroom idea already takes the cake in absurdity.

And finally, we have this silly thing called the United States Constitution of the United States that sort of mentions something about infringing the freedom of the press.

Kevin

This causes a disincentive for informed voting (think of leaning voters, there's now a disincentive to watch the other convention). It also means that we'll get more Sarah Palin, man-bites-dog, type strategic moves. She was a ratings bonanza for the GOP, people tuned in out of pure curiosity (think the XFL's first game) but that hasn't translated into a stronger ticket. It's fine when one side does it, there's a viable alternate choice to be made to punish the selection. But now you've just incentivized BOTH sides making these types of moves. In four years, you'd be liable to get a Romney/Spears ticket challenging Obama/Oprah.

DJH

If everything ever aired is jammed with commercials, won't that dilute the value of commercials overall? Or does advertising-saturation not reduce its effectiveness?

doug

As I understand it, the network charges advertising based on number of viewers. Let them compete and the winner gets the added revenue.

If the networks get into a bidding war, is loser is the American consumer who has to ultimately pay the freight for the higher advertising rates. These companies will not absorb the cost, but as always 'pass it on'.