Demo, a 17-year-old conference franchise owned by the technology publisher IDG, has served as the springboard for hit products like the Palm Pilot and the TiVo digital video recorder. In San Diego during the second week of September, 70 start-ups will pay $18,500 each to make a six-minute presentation to a crowd of investors, journalists and others. To Michael Arrington, the elbow-throwing, supercilious founder of the popular Silicon Valley blog TechCrunch, Demo’s business model amounts to “payola.”

“How do you make objective decisions on the best companies when the first decision is whether they can pay or not?” Mr. Arrington said. “Sometimes the hottest start-ups either can’t afford it or don’t need it.”

These situations all raise interesting issues that Ellen Goodman theorizes in her work on stealth marketing. In line with my previous posts on the bounds of economic analysis, let me venture a rough utilitarian take on some of them, and then show how that fails to illuminate the chief externality of payola practices--corrosion of our sense of the authenticity of the culture around us.

First, an economist might dismiss Arrington's concern by pointing out that everyone knows that the startups featured at Demo are paying for their placement. VC's are sophisticated consumers of information--they can discount Demo's choices accordingly. Arrington may still worry that a money-driven conference may use its resources to displace his own, thus coarsening the general "info-sphere" on Silicon Valley startups. I'm still not convinced it's such a big deal--these are pretty much economic entities through and through, and they don't appear to me to affect culture or politics--our self-conception or self-government--in oppressive ways.

Product placement, on the other hand, does have a significant role in expressive works. We deserve to know if a reality TV episode built around, say, eating Oreo Cakester cookies, is based on its creators' own fancy or on a cold cash payment from Nabisco. I'm not saying Oreos are central to anyone's identity (although that wiki page I linked to suggests they're pretty important to somebody). But I do think we need to know if facets of our window on the world are the unadulterated expression of individuals, or commodities purchased by corporate entities.

The blurb case is particularly difficult, because there are so many ways in which "consideration" can flow. As Rachel Donadio writes,

Caveat lector! The endorsements on books aren’t entirely impartial. Unbeknownst to the average reader, blurbs are more often than not from the writer’s best friends, colleagues or teachers, or from authors who share the same editor, publisher or agent. They represent a tangled mass of friendships, rivalries, favors traded and debts repaid, not always in good faith.

What I hope to see eventually here is a website that alerts readers to the exact nature of these favors and debts. I have noticed, for instance, a "triangle trade" of blurbs between three prominent academics. I'm too pusillanimous to name names here, but I'd pitch in to some wiki-like project on blurbs. My worry is that without such a project, people will begin to discount blurbs uniformly because some bad apples abuse them.

The Google case strikes me as the hardest one. For background, here's what Findlaw did to provoke the massive search engine:

Todd Friesen[,] in a post entitled 'Shame Shame Shame Findlaw," [outlines that]

1) FindLaw sent unsolicited emails to lawyers and SEO experts selling a search engine marketing (SEM) program service; 2) FindLaw's service sells a law firm up to 3 hard coded links to be placed on editorially relevant pages of content for $12,000 ($1,000 per month for a 12 month contract); 3) FindLaw's service educates lawyers how to write the best text for their links (anchor text) so as to achieve higher search results for the lawyer's website; 4) A law firm is 'allowed to submit up to 5 articles to be placed' in relevant areas of the FindLaw, with 5 additional links.

Imagine being a law firm paying FindLaw $12,000 per year for search engine optimization and having your website adversely effected in search results as a result doing so.

Google's policies in general discourage such conduct, which makes perfect business sense for them: they don't want middlemen cutting in on the money they'd charge to provide paid ads. (As I explain in my piece Rankings, Reductionism, and Responsibility, an entity's demand for paid ads keyed to given search terms is likely inversely related to its prominence in the unpaid results for those terms--you don't need a paid ad on a page where you're already the top result.) The question becomes--is Findlaw analogous to a "legal search engine," and is Google effectively undercutting a competitor which is trying to carve out a "legal space" for searches? Or is Google policing the web to assure that its search results reflect individuals' genuine interests, and not purchased prominence?

My sense is that, whatever characterization you find most compelling, you don't have adequate information to make it. The exact details of the Google policies are not exactly transparent--there are many tactics for optimizing one's place in a search engine ranking that are "gray," neither explicitly commended nor proscribed by Google. So the first step to clarity here is to have some third party to whom websites can appeal if they believe they've been treated unfairly. This need not be a very formal or public process--but having someone other than Google "look under the hood" appears essential if we are to avoid the competition concerns I've mentioned above.

In conclusion--the beginning of our response to these problems may properly be an economic one, comparing the efficiency of paid versus unpaid praise or prominence. But at some point we must have a more holistic discussion about the culture of information we want. If we're comfortable with a slide toward cynicism or bemused skepticism about commercially-driven culture, rampant undisclosed product placement or paid blurbing shouldn't be a concern of law. Similarly, we may be resigned to a Google-dominated organization of information on the web, and support its private system of penalties for any site that attempts to manipulate it. I'm suspicious of both outcomes, and believe that minimal requirements of transparency in both spheres can help us avoid them.

PS: Want a glimpse of the future of children's videogames? Brought to you by Nabisco:

This game allows the child to use a virtual glass of milk to catch Oreo cookies that fall from the top of the game screen. The child gets more points for each Oreo he or she catches, and loses “glasses” every time one drops. Nabisco also has a Mah-jongg game using tiles decorated with the logos of various Nabisco products.

[From filing of the Children's Media Policy Coalition.]