How measurement monopolies survive

Clearly, incumbent media measurement standards benefit from network effects. The more widely a currency such as Nielsen’s ratings system is used to negotiate TV ad deals, the more necessary it is for any TV network or ad agency to subscribe, further cementing Nielsen’s status as an industry standard. (This competitive advantage is enhanced by barriers to entry, such as the high fixed costs of establishing a viable panel without a base of clients already in place.) Given such a feedback loop, even a small lead by one measurement firm will – all other things being equal – eventually lead to outright dominance. This pattern suggests that a divided measurement markets are inherently unstable, and thus that a single measurement currency will emerge online as it has in other platforms. The reality is messier than this. Two crucial features of existing measurement monopolies deserve close attention. First, and paradoxically, a single currency appears to be most dominant precisely in the broadcast platforms — television and radio — where natural data about audiences are absent. Conversely in print, where more complete, census‐like information about the size (and to some extent the quality) of the reading universe has always been available from subscription and newsstand figures, the measurement landscape remains more fractured. Upon reflection, the paradox disappears. To compare separately audited (or even unaudited) newspaper circulation figures is less than ideal. But to compare reach estimates projected from separate audience panels makes almost no sense, since the panels may be biased in different ways. (This has become painfully clear in the disagreement between the two online panels, discussed in the next section.) Second, the role of advertisers in anointing currency metrics cannot be ignored. Advertisers and ad agencies drove the formation of the circulation auditors ABC and BPA; funding for the two nonprofit auditors comes from dues paid by advertisers, agencies, and media companies, but agencies and advertisers dominate boards of both organizations. (Newspaper publishers are wary of ABC’s online auditing proposals partly because advertisers have so much influence over the group.) Likewise, both broadcasters and advertising agencies pay to subscribe to Nielsen’s television ratings. The firm’s pricing is opaque, but full subscriptions for commercial clients run to tens of millions of dollars per year. Media producers have a clear interest in understanding and comparing their own audiences. But it remains an open question whether a single measurement currency would emerge in the absence of pressure from advertisers and agencies. Finally, established measurement firms work hard to reinforce network effects and protect their monopoly. A report from USC Annenberg’s Lear Center points to Nielsen’s “carefully staggered annual contracts,” which make it extremely difficult for a challenger to win over a critical mass of clients.⁶about its decision not to get back into TV ratings in the 1990s, “We looked at this and saw that thereʹs a long history of people taking runs at the incumbent. …But thereʹs no halfway here. If we were to go after Nielsen, it would be war, and at the end of the day there would be one person standing. And believe me, there are skeletons littering the trail.”⁷