Machines For Living: What's the Difference Between Advertising and Information Filtering? Personalization

The New York Times reports today that Atlantic Records is the first old school content publisher to receive the majority of its revenues from online sales, and it has bucked industry trends by doing so without a major decline in overall revenues. How did it Atlantic perform this feat?

“I think we’ve figured it out,” said Julie Greenwald, president of Atlantic Records. “It used to be that you could connect five dots and sell a million records. Now there are 20 dots you can connect to sell a million records.”

The 5 dots you used to connect are advertising dots. The 20 dots you now connect are the 20 network-based services that can be enabled based on your content. The NYT continues, "Replacing compact disc sales are small bits of revenue from many sources: Atlantic Records’ digital sales include ring tones, ringbacks, satellite radio, iTunes sales and subscription services. At the same time, record labels — Atlantic included — are spending less money to market artists." So Atlantic is making the same amount of money, but investing in network-based content services instead of advertising.

If Atlantic doesn't advertise as much, then why are consumers buying just as much? Because these 20 network-based content services receive personalized marketing thanks to online search and recommendation systems. Search and recommendation are applications of information filtering. Thanks to technology, we are evolving from information shouting, er, advertising, to information filtering that has the potential to offer us the precise content we want, when we want it, in a particular service format.

Online advertising is the main way that the Internet is monetized today. (This is the source of speculation that Google will collapse when it is revealed that most ad clicks are made by crawlers, not humans, undermining Google's main revenue source.) Based on Atlantic Records' experience, one wonders if improved search and recommendation systems will replace online advertising, such that actual commerce done online will replace advertising as the main way the Internet is monetized. What's the difference between advertising and information filtering? Personalization.

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For centuries, we've designed systems that alienate us from ourselves, from community, from the flow of life and our natural desire to do good. With the convergence of the digital and physical worlds, we live in a designed world. We can redesign it to be smarter, more efficient, and responsive to our natural lives and processes. Just as modernists called a house “a machine for living in”, so today all systems must be redesigned as machines for living.