Automated bidding in auctions

 Part of the future of market design (as artificial intelligence evolves from large language models to something more like general AI) will involve not only the design of marketplace rules, but also design of the marketplace participants.  So a good way to get some sense of that future is to look at parts of it that have already arrived.  And there are lots of algorithms already at work participating in high frequency markets.  Here's a paper surveying automated bidding on ad auctions, by a big group of authors at Google.

Auto-bidding and Auctions in Online Advertising: A Survey by Gagan Aggarwal, Ashwinkumar Badanidiyuru, Santiago R. Balseiro, Kshipra Bhawalkar, Yuan Deng, Zhe Feng, Gagan Goel, Christopher Liaw, Haihao Lu, Mohammad Mahdian, Jieming Mao, Aranyak Mehta, Vahab Mirrokni, Renato Paes Leme, Andres Perlroth, Georgios Piliouras, Jon Schneider, Ariel Schvartzman, Balasubramanian Sivan, Kelly Spendlove, Yifeng Teng, Di Wang, Hanrui Zhang, Mingfei Zhao, Wennan Zhu, and Song Zuo

Abstract: In this survey, we summarize recent developments in research fueled by the growing adoption of automated bidding strategies in online advertising. We explore the challenges and opportunities that have arisen as markets embrace this autobidding and cover a range of topics in this area, including bidding algorithms, equilibrium analysis and efficiency of common auction formats, and optimal auction design

Freakonomics interviews John Cawley about celebrity advertisements and repugnance (when the celebrity goes bad)

 My email this morning included this announcement:

"Thank you for sitting down with Freakonomics Radio to discuss your work. The episode "Your Brand’s Spokesperson Just Got Arrested — Now What?" includes your interview and has just been released. You can listen and find the transcript on our website here, or download on Apple Podcasts, Spotify, or wherever you get your podcasts. We will be posting the episode on our Twitter, Facebook, and LinkedIn pages and would love it if you could share it on your social media as well."

The episode interviews John Cawley about this paper:

The Role of Repugnance in Markets: How the Jared Fogle Scandal Affected Patronage of Subway  by John Cawley, Julia Eddelbuettel, Scott Cunningham, Matthew D. Eisenberg, Alan D. Mathios & Rosemary J. Avery NBER WORKING PAPER 31782 DOI 10.3386/w31782  October 2023

And they chat with me a bit about repugnance.

I had blogged about that paper here:

Saturday, October 21, 2023

Repugnance is hard to predict

 

Sigecom Test of Time Award 2024 for AdWords and generalized online matching by Mehta, Saberi, Vazirani, and Vazirani

 The SIGecom Test of Time Award recognizes the author or authors of an influential paper or series of papers published between ten and twenty-five years ago that has significantly impacted research or applications exemplifying the interplay of economics and computation. More details and nomination procedure…

The Test of Time Award Winners for 2024 are Aranyak Mehta, Amin Saberi, Umesh Vazirani, and Vijay Vazirani  

They are cited for "introducing and solving a model of online matching with budgets that has seen many practical applications to online markets and broad and continuing impact in the literature."

in their paper

AdWords and generalized online matching, Journal of the ACM 54(5), 2007, Article 22

Abstract: How does a search engine company decide what ads to display with each query so as to maximize its revenue? This turns out to be a generalization of the online bipartite matching problem. We introduce the notion of a trade-off revealing LP and use it to derive an optimal algorithm achieving a competitive ratio of 1−1/e for this problem.

From the introduction:

"Internet search engine companies, such as Google, Yahoo and MSN, have revolutionized not only the use of the Internet by individuals but also the way businesses advertise to consumers. Typical search engine queries are short and reveal a great deal of information about user preferences. This gives search engine companies a unique opportunity to display highly targeted ads to the user.

"The online advertising mechanisms used by search engines, including Google’s AdWords, are essentially large auctions where businesses place bids for individual keywords, together with limits specifying their maximum daily budget. The search engine company earns revenue when it displays their ads in response to a relevant search query (if the user actually clicks on the ad). Indeed, most of the revenues of search engine companies are derived in this manner [Battelle 2005]. One factor in their dramatic success is that, unlike conventional advertising, search engine companies are able to cater to low-budget advertisers (who occupy the fat tail of the power law distribution governing advertising budgets of companies and organizations).

"The following computational problem, which we call the adwords problem, is a formalization of a question posed to us by M. Henzinger: There are (private communication, 2004). N bidders, each with a specified daily budget bi . Q is a set of query words. Each bidder i specifies a bid ciq for query word q ∈ Q. A sequence q1q2 · · · q M of query words q j ∈ Q arrive online during the day, and each query q j must be assigned to some bidder i (for a revenue of ciq j ). The objective is to maximize the total revenue at the end of the day while respecting the daily budgets of the bidders.

"In this article, we present a deterministic algorithm achieving a competitive ratio of 1 − 1/e for this problem, under the assumption that bids are small compared to budgets."

###########

Last year's award:

Monday, April 3, 2023

Test of Time Award 2023 to Immorlica & Mahdian, and Ashlagi, Kanoria & Leshno

#######

"Past and Present Members of the Test of Time Award Committee: Yeon-Koo Che, Yiling Chen, Nikhil Devanur, Joan Feigenbaum, Jason Hartline, Bobby Kleinberg, Paul Milgrom, Noam Nisan, Asu Ozdaglar, David Parkes, David Pennock, Alvin Roth, Tim Roughgarden, Larry Samuelson, Tuomas Sandholm, Yoav Shoham, Éva Tardos, Moshe Tennenholtz"

The market for (and marketing of) baby formula

 The Lancet has a series of articles on baby formula.  It begins with this editorial, and is followed by three articles:

Unveiling the predatory tactics of the formula milk industry, The Lancet, Published: February 07, 2023 DOI:https://doi.org/10.1016/S0140-6736(23)00118-6

"For decades, the commercial milk formula (CMF) industry has used underhand marketing strategies, designed to prey on parents' fears and concerns at a vulnerable time, to turn the feeding of young children into a multibillion-dollar business. The immense economic power accrued by CMF manufacturers is deployed politically to ensure the industry is under-regulated and services supporting breastfeeding are under-resourced. These are the stark findings of the 2023 Breastfeeding Series, published in The Lancet today."

******

VOLUME 401, ISSUE 10375, P472-485, FEBRUARY 11, 2023 Breastfeeding: crucially important, but increasingly challenged in a market-driven world, by Prof Rafael Pérez-Escamilla, PhD  Cecília Tomori, PhD Sonia Hernández-Cordero, PhD Phillip Baker, PhD Aluisio J D Barros, PhD MD France Bégin, PhD Donna J Chapman, PhD Laurence M Grummer-Strawn, PhD Prof David McCoy, PhD Purnima Menon, PhD Paulo Augusto Ribeiro Neves, PhD Ellen Piwoz, PhD Prof Nigel Rollins, MD Prof Cesar G Victora, PhD MD Prof Linda Richter, PhD on behalf of the 2023 Lancet Breastfeeding Series Group†  Open Access Published: February 07, 2023 DOI:https://doi.org/10.1016/S0140-6736(22)01932-8

"When possible, exclusively breastfeeding is recommended by WHO for the first 6 months of life, and continued breastfeeding for at least the first 2 years of life, with complementary foods being introduced at 6 months postpartum.9 Yet globally, many mothers who can and wish to breastfeed face barriers at all levels of the socioecological model proposed in The Lancet's 2016 breastfeeding Series."

 VOLUME 401, ISSUE 10375, P486-502, FEBRUARY 11, 2023 Marketing of commercial milk formula: a system to capture parents, communities, science, and policy by Prof Nigel Rollins, MD  Ellen Piwoz, ScD Phillip Baker, PhD Gillian Kingston, PhD Kopano Matlwa Mabaso, PhD Prof David McCoy, DrPH  Paulo Augusto Ribeiro Neves, PhD  Prof Rafael Pérez-Escamilla, PhD  Prof Linda Richter, PhD  Prof Katheryn Russ, PhD  Prof Gita Sen, PhD  Cecília Tomori, PhD  Prof Cesar G Victora, MD  Paul Zambrano, MD  Prof Gerard Hastings, PhD  on behalf of the 2023 Lancet Breastfeeding Series Group  Open Access Published:  February 07, 2023 DOI:https://doi.org/10.1016/S0140-6736(22)01931-6

"Despite proven benefits, less than half of infants and young children globally are breastfed in accordance with the recommendations of WHO. In comparison, commercial milk formula (CMF) sales have increased to about US$55 billion annually, with more infants and young children receiving formula products than ever. "

 VOLUME 401, ISSUE 10375, P503-524, FEBRUARY 11, 2023 The political economy of infant and young child feeding: confronting corporate power, overcoming structural barriers, and accelerating progress by Phillip Baker, PhD Julie P Smith, PhD Prof Amandine Garde, PhD Laurence M Grummer-Strawn, PhD Benjamin Wood, MD Prof Gita Sen, PhD Prof Gerard Hastings, PhD  Prof Rafael Pérez-Escamilla, PhD  Chee Yoke Ling, LLB  Prof Nigel Rollins, MD Prof David McCoy, DrPH  on behalf of the 2023 Lancet Breastfeeding Series Group†  Open Access Published: February 07, 2023 DOI:https://doi.org/10.1016/S0140-6736(22)01933-X

"The first and second papers in this Series8,  9 present several reasons for the global rise of CMF in human diets, including the CMF industry's exploitation of parental anxieties; ubiquitous marketing; and absent or inadequate protection and support for breastfeeding within health-care systems, work settings, and households. In this Series paper, we look further upstream and examine the root causes of low worldwide breastfeeding rates10 to understand why so many women and families are prevented from making and implementing informed decisions about feeding and caring for infants and young children; why so many policy makers and health-care professionals are co-opted by CMF marketing and other commercial forces; and why so many countries have not prioritised and implemented policies to protect, promote, and support breastfeeding. It is important to note that we use the terms women and breastfeeding throughout this Series for brevity, and because most people who breastfeed identify as women; we recognise that not all people who breastfeed or chestfeed identify as women."

**********

Among my previous posts on milk are some noting that there are shortages of human breast milk, and that in many places the sale of breast milk is banned (in some places out of concern that poor mothers would sell their milk instead of feeding their children, and in some places out of concerns that the sale of breast milk is repugnant even from mothers who produce milk in excess to their children's needs.)  

Thus (in different times, places, and circumstances) there is repugnance both to the sale of mothers' milk and to the sale of substitutes for it.

Super (bowl) markets

 There's also a football game, but here are some other, related markets (gambling, advertising, deal making...).

Gambling:

WSJ: Watching the Super Bowl? Bettor Beware. It’s easier than ever for the average fan to bet on sports, even mid-game. But when it comes to winning, the odds are stacked. by Danny Funt

"Thanks to the profusion of online betting, sportsbooks are encouraging customers to bet during games—a category that is “growing exponentially,” Mr. Scott said. Chris Grove, partner emeritus at Eilers & Krejcik, said in the near future, in-game betting should account for the “overwhelming majority” of U.S. sportsbook revenue.

"Roughly half of bets on NFL games this season were placed after the opening kickoff. Customers can wager on lines that move with every play, as well as on short-term “prop” bets like, “Will this possession end in a touchdown?” 

...

"An even bigger source of growth for sportsbooks has been parlays, in which bettors string together multiple bets for the chance at a larger payout, but lose if any of the components fails to transpire. Bettors can now place same-game parlays, bundling wagers on, say, the winning team, the total points scored and a quarterback’s passing yards. (Naturally, sportsbooks offer in-game same-game parlays, too.)

"FanDuel, which controls about half of the national online betting market, according to Eilers & Krejcik, leads the industry due in part to its success capitalizing on parlays. Last October in Illinois, for example, seven out of every 10 bets placed at FanDuel was a parlay, according to data published by the state’s gaming board. FanDuel made about $29.60 for every $100 bet on parlays, compared with $4.80 for every $100 in non-parlay bets."

------------

Record 50 Million Americans to Wager $16B on Super Bowl LVII Press Release 

"A record 50.4 million American adults (20%) are expected to bet on Super Bowl LVII, a 61 percent increase from the record set in 2022, according to a new American Gaming Association (AGA) survey. Bettors plan to wager an estimated $16 billion on this year’s championship game, more than double last year’s estimates.

"With the expansion of legal sports betting, traditional Super Bowl wagers are expected to pass casual wagers for the first time ever:

"30 million American adults plan to place a traditional sports wager online, at a retail sportsbook or with a bookie, up 66 percent from 2022.

"28 million plan to bet casually with friends or as part of a pool or squares contest, up 50 percent from 2022."

********

Advertising:

The 2023 Super Bowl Ads Will Feature Booze, Betting and Jesus. Alcohol is an open field after Anheuser-Busch InBev gave up category exclusivity, while cryptocurrency is set to be a no-show. By Megan Graham

"The Super Bowl still regularly draws an audience of around 100 million people, making it TV’s biggest event of the year and advertising’s biggest night.

"Fox this week said it has sold out of advertising for its Super Bowl broadcast, with some 30-second slots selling for more than $7 million"

----------------

The Backstory to the Jesus Ad Coming to the Super Bowl. The political underpinnings of this campaign are hiding beneath the surface. BY MOLLY OLMSTEAD

"The campaign is being run by something called The Signatry, a Kansas-based Christian foundation that exists, essentially, to connect donors (and their financial advisors) with causes in order to “inspire and facilitate revolutionary, biblical generosity.” According to Ministry Watch, an evangelical watchdog organization that scrutinizes the finances of Christian charities, in 2018, the foundation reported more than $1 billion in contributions. "

*******

Dealmaking by DEALBOOK NEWSLETTER:

"For most of America, the Super Bowl starts on Sunday evening. But for the deal makers who use the event as a backdrop for doing business, the real game starts days before kickoff.

"It’s not uncommon to attend exclusive dinners and parties during the week, and then jet out of town before the opening kickoff. “Once the game starts, it’s just a game,” said George Foster, a professor at Stanford Business School who directs the school’s sports management initiative. “It’s much more effective to get extended time fairly focused on the business relationship on Thursday, Friday and Saturday.”

...

Sex work (same link as Dealmaking):

"In December, Gov. Doug Ducey of Arizona, like many government officials preparing to host the Super Bowl before him, announced a statewide campaign to raise awareness of human trafficking, including sex trafficking, ahead of the big game. Though the claim that increased sex trafficking and sex work occurs during major sporting events like the Super Bowl has been debunked over and over and over and over and over again, anti-human trafficking campaigns often target these events.

"Campaigns by cities have been criticized by advocates for sex workers, who say such efforts often rely on law enforcement “raids.” More patrolling can lead to more arrests of sex workers who are not being trafficked, they say, as well as the possibility that victims of trafficking will be arrested.

"It’s also unclear whether campaigns to raise awareness about sex trafficking are effective at addressing it. “If we want to protect people who are being trafficked, we need to protect sex workers because they are the most vulnerable for that happening to them next,” Kristen DiAngelo, executive director of the Sex Workers Outreach Project in Sacramento, told The Washington Post ahead of last year’s Super Bowl."

Social media advertising and COVID vaccination, in PNAS

 Vaccine rollout is different than allocating other (initially) scarce goods because it involves overcoming vaccine hesitancy.  Here's a meta-analysis which concludes that advertising was helpful and cost effective.

Athey, Susan, Kristen Grabarz, Michael Luca, and Nils Wernerfelt. "Digital public health interventions at scale: The impact of social media advertising on beliefs and outcomes related to COVID vaccines." Proceedings of the National Academy of Sciences 120, no. 5 (2023): e2208110120.

Abstract: Public health organizations increasingly use social media advertising campaigns in pursuit of public health goals. In this paper, we evaluate the impact of about $40 million of social media advertisements that were run and experimentally tested on Facebook and Instagram, aimed at increasing COVID-19 vaccination rates in the first year of the vaccine roll-out. The 819 randomized experiments in our sample were run by 174 different public health organizations and collectively reached 2.1 billion individuals in 15 languages. We find that these campaigns are, on average, effective at influencing self-reported beliefs—shifting opinions close to 1% at baseline with a cost per influenced person of about $3.41. Combining this result with an estimate of the relationship between survey outcomes and vaccination rates derived from observational data yields an estimated cost per additional vaccination of about $5.68. There is further evidence that campaigns are especially effective at influencing users’ knowledge of how to get vaccines. Our results represent, to the best of our knowledge, the largest set of online public health interventions analyzed to date.

Simone Biles in the WSJ. News, sports, ads, endorsements: the money trail is varied and complex:

 Sports, accomplishment, celebrity, endorsements, modeling: The WSJ published last week a long article about Simone Biles, the gymnast who is one of the most dominant athletes in any sport.  It's an article that touches on her past Olympic and other victories, on how she trained during Covid, on her work ethic and ability to concentrate even during the Covid pandemic. It also covers her business ventures and endorsements, and the training facility her family runs.  

The story also addresses darker issues in her family and her sport, including that she was a victim of sex abuse by the now imprisoned USA Gymnastics national team doctor, who was convicted of abusing many young gymnasts.

The article comes with photos, and in many of them she is modeling clothes, which are described by producer and price in the captions, which also refer back to the larger story.  Here is one caption which made me blink as it juxtaposed the story about sex abuse with the price of the clothes she was modeling:

"Biles says that by competing and remaining in the public eye, she is forcing the world to continue to address the Larry Nassar scandal and the many failures that allowed him to prey on gymnasts for years. Kwaidan Editions dress, $990, ssense.com, Mateo earrings, $650, mateonewyork.com, and Completedworks necklace, $240, completedworks.com."

Here's the whole article:

Simone Biles Will Not Be Denied.  "At 24, the most powerful gymnast in history has defied expectations to become even stronger—after surviving abuse, enduring a family ordeal and overcoming her own doubts."    By Louise Radnofsky | Photography by Rahim Fortune for WSJ. Magazine | Styling by Jessica Willis

The UpFront market for television ads: is it time to change its timing?

The coronavirus pandemic is an opportunity for advertisers and television networks to renegotiate an odd feature of their market for advertisements.  As I understand it, advertisers wishing to purchase blocks of advertising for Fall television series have to do so early, in the Spring, in what is called the upfront market.  This runs so early that some of the shows are still in the early planning stage, so that advertisers have some descriptions of plot lines and target demographics, but they are buying ads in shows that no one has seen yet.

The WSJ has the story:

Big Advertisers Call for a Seasonal Time-Shift in TV’s Upfront Marketplace
Procter & Gamble, Bank of America and others want to move upfront negotiations for ads in the multibillion TV market to the fall from the spring.  By Sahil Patel

"Big-brand advertisers and an industry trade group are calling on the television networks to delay their annual upfront ad marketplace to later in the year—a big shift in the way TV programmers and advertisers have done business for decades.

"The push is driven in part by the havoc the coronavirus has caused in the television business, from the shutdown of production to the big question mark over when sports will return. Both are critical to advertisers: they say there is a lack of visibility into what they would be buying. Ad budgets also are in flux as many advertisers have pared spending during the recent downturn. Many are struggling to figure out what next year’s budgets will look like.
...
"The TV industry has operated on a broadcasting and advertising calendar that starts in September since 1962, when ABC decided to debut all its programs after Labor Day. Normally, TV networks pitch their new programming at glitzy New York City events in the spring and negotiate ad deals for the fall season soon after.

This year, however, the live upfront events were canceled due to the virus, and executives now expect deal-making will drag out through the year.
...
"The trade group said there is still value in negotiating ad deals upfront—they would just prefer to shift the timeframe. Upfront deals are beneficial to advertisers as they are able to get lower prices, especially with a limited supply of inventory, and maintain protections like make-goods—which aren’t available to advertisers buying in the “scatter” market, when ads are purchased closer to the time they air."

The market for influence, by Fainmesser and Galeotti (the movie)

Here's a nicely done "trailer" for a paper by Itay Fainmesser and Andrea Galeotti. It's a three minute video...
"The Market for Influence" by Itay Fainmesser and Andrea Galeotti from Itay Fainmesser on Vimeo.

For you dinosaurs who prefer an abstract to a trailer, here it is, with the whole movie paper at the link.

The Market for Influence

Itay P Fainmesser

Johns Hopkins University - Carey Business School

Andrea Galeotti

University of Essex

Date Written: August 2018

Abstract

Influencer marketing is the fast-growing practice in which marketers purchase product endorsements from influencers — who are individuals with many followers and strong reputations in niche markets. This paper develops a model of the market interactions between influencers, followers, and marketers. Influencers trade off the increased revenue they obtain from more paid endorsements with the negative impact that this has on their followers’ engagement, which in turn affects the price marketers are willing to pay for their endorsement. Our analysis provides testable predictions on how the price that influencers receive depends on the size of their audience and how an improvement in the online search technology affects influencers’ competition for followers and marketers. We show that, in equilibrium, over- and under-provision of paid endorsements coexist. We evaluate the strategic effects of recent, transparency-motivated policy interventions implemented by competition authorities in the US and Europe, requiring influencers to clearly indicate marketer-sponsored content.

Suggested Citation:

Fainmesser, Itay P and Galeotti, Andrea, The Market for Influence (August 2018). Available at SSRN: https://ssrn.com/abstract=3207810 or http://dx.doi.org/10.2139/ssrn.3207810

  Before the paper was made into a movie, I had earlier posted about it and a related news article here:

Wednesday, July 18, 2018

Matching endorsements to endorsers

Politico summarizes the Backpage story

Here's an article for those who haven't been following this first amendment/prostitution/human trafficking story...

The Sex-Trafficking Case Testing the Limits of the First Amendment
How a couple of crusading journalists made a fortune selling adult escort ads and in the process became unlikely and widely reviled First Amendment advocates.
By PAUL DEMKO July 29, 2018

Many of the people quoted focus on the motivations of the protagonists (get rich, versus defend the First Amendment press freedoms...). I wonder what role if any those questions will play in the legal proceedings.


Here are my other posts about  Backpage and related matters.

Matching endorsements to endorsers

The NY Times reports on speed dating of Youtube influencers and brands (and on newly relevant "moral turpitude" clauses concerning both parties):

Inside the Mating Rituals of Brands and Online Stars
By Daisuke Wakabayashi

"Recently at the Anaheim Convention Center, about 50 people entered a room decorated as a stylish lounge for a speed dating event. They moved from table to table every 20 minutes, exchanging small talk and getting to know each other.
But the participants were not looking for love. They were YouTube stars and marketing executives from companies like Uber and Amazon seeking an advertising union.

"Deals between big brands and viral online video performers, once an informal alternative to traditional celebrity sponsorships, are quickly maturing into a business estimated to reach $10 billion in 2020.
...
"As the attention and money paid to stars on sites like YouTube and Instagram balloon, the stakes for both them and the brands to find the right match are rising. The speed dating event, held during VidCon, the online video industry’s annual convention, was one way the two sides are testing each other out.
...
"Most advertising deals with YouTube or Instagram stars now include a “morality clause.” One such agreement, shown to The New York Times, stated that a creator would agree to take down any content within 12 hours if the brand determined that the talent had promoted a competing product, posted “racy content” on social media or performed “an act of moral turpitude.”
...
Increasingly, [an agent] wants the same right for his clients because they have just as much to lose if a company becomes embroiled in scandal, such as the right to take down a video sponsored by a company if that brand’s executives are caught sexually harassing staff."
**********

Update: and here's a recent paper on the subject:

The Market for Influence

39 Pages Posted:  

Itay P Fainmesser

Johns Hopkins University - Carey Business School

Andrea Galeotti

University of Essex

Date Written: July 3, 2018

Abstract

Influencer marketing is the fast growing practice in which marketers purchase product endorsements from influencers, who are individuals with many followers and strong reputations in niche markets. This paper develops a model of the market interactions between influencers, followers and marketers. Influencers trade-off the increased revenue they obtain by posting more paid endorsements, with the negative impact that this has on their followers’ engagement, which in turn affects the price marketers are willing to pay for their endorsement. Our analysis provides testable predictions on how the price that influencers receive depends on the size of their audience, and how an improvement in the online search technology affects influencers’ competition for followers and marketers. We show that, in equilibrium, over- and under-provision of paid endorsements coexist. We evaluate the strategic effects of recent, trans- parency motivated, policy interventions implemented by competition authorities in the US and Europe, requiring influencers to clearly mark the content that is sponsored by marketers.

More Backpage (.com) news

From the Washington Post:
Backpage CEO Carl Ferrer pleads guilty in three states, agrees to testify against other website officials
"Carl Ferrer, the chief executive of Backpage.com whose name was conspicuously absent from an indictment of seven other Backpage officials unsealed Monday, has pleaded guilty in state courts in California and Texas and federal court in Arizona to charges of money laundering and conspiracy to facilitate prostitution. In addition, he agreed to testify against the men who co-founded Backpage with him, Michael Lacey and James Larkin, who remained in jail Thursday in Arizona on facilitating prostitution charges.

Backpage, in addition to hosting thinly veiled ads for prostitution since 2004, was accused of hosting child sex trafficking ads on its site and even assisting advertisers in wording their copy so they didn’t overtly declare that sex was for sale, federal investigators allege. In a remarkable three-paragraph admission in his federal plea agreement, Ferrer wrote that “I conspired with other Backpage principals … to find ways to knowingly facilitate the state-law prostitution crimes being committed by Backpage’s customers.

...

"Ferrer’s sudden capitulation launched a wild seven days for Backpage. A day after Ferrer’s first secret plea, the federal government arrested seven of Ferrer’s former colleagues, including Lacey and Larkin, and shut down Backpage’s websites in the U.S. and around the world. ...

"Then on Wednesday, President Trump signed into law “FOSTA,” the Fight Online Sex Trafficking Act, a bill inspired by the stories of children being prostituted on Backpage..."

**********************

And here's a story from Quartz that follows the work of economists researching the (not all bad) effects of internet marketplaces for prostitution.

The unintended consequences of a crackdown on sites selling sex work

Backpage.com, seized by the FBI and indicted by the Department of Justice

The latest development in the legal battle of Backpage.com, an online marketplace for sex and, apparently, trafficking in women and children, has resulted in the closing of the site.

On April 6 2018 the content of the site was replaced with a notice beginning “backpage.com and affiliated websites have been seized as part of an enforcement action by the Federal Bureau of Investigation, the U.S. Postal Service Inspection Service, and the Internal Revenue Service Criminal Investigation Division, with analytical assistance from the Joint Regional Intelligence Center.” 
The accompanying indictment (https://www.justice.gov/file/1050276/download )suggests that the proprietors of Backpage.com may have helped write the site’s content, and thus not be protected by the 1996 Communications Decency Act. 

In a parallel development, in March (of 2018) the Senate passed (by a vote of 97 to 2) and forwarded to the President for signature the Fight Online Sex Trafficking Act of 2017, as previously passed by the House of Representatives. It amends the Communications Act of 1934, “to  clarify  that  section  230  of  such  Act  does  not  prohibit  the  enforcement  against providers and users of interactive computer services of Federal and State criminal and civil law relating to sexual exploitation of  children  or  sex  trafficking…” https://www.congress.gov/115/crpt/hrpt572/CRPT-115hrpt572-pt1.pdf .  

Online markets for prostitutes, including children are difficult to abolish

Illegal markets are hard to close down, and that goes double for advertisements for illegal markets, in which free speech issues and third-party issues ('we just post ads, we don't vouch for the advertisers') may also be in play.

In this regard, see some of my earlier posts about the website Backpage, which is in various sorts of legal battles.

Some followups:

In the Washington Post: A movie about online sex-trafficking might actually get laws changed

"It’s tough getting a consensus on anything these days, but child sex abuse and human trafficking are generally considered indefensible crimes. So who’s defending them?

According to “I Am Jane Doe,” that would be Google. And Microsoft. And Facebook. And Yahoo.

Directed by Mary Mazzio (“Lemonade Stories,” “Underwater Dreams”) and coming to Netflix May 26 after a theatrical run earlier this year, the documentary advocates for victims of online trafficking while taking principal aim at the classified-ad website Backpage.com, a notorious venue for sex ads and transactions, many involving children. In its indictment of Backpage.com and the tech companies that are indirectly supporting the website, the film may also give a public relations boost to members of Congress working to tighten laws surrounding Internet liability.
...

According to Section 230 of the 1996 Communications Decency Act, online service providers cannot be held liable for third-party content. But that means if someone sells a 13-year-old on its pages, Backpage says, it isn’t responsible. And so far, court after court has agreed — to the relief of First Amendment absolutists, and the Silicon Valley companies mentioned above, which support, financially, organizations defending Backpage’s position.

...
Backpage was once part of Village Voice Media and is now owned by a Dutch firm, although founders Michael Lacey and Jim Larkin and chief executive Carl Ferrer have been named in the suits. “I Am Jane Doe” picks up the Backpage saga in 2010 with lawsuits filed by girls who were trafficked on its pages, and continues through a Senate subcommittee investigation led by Sen. Rob Portman (R-Ohio) in January, as well as criminal charges of pimping and money laundering brought by then-California Attorney General Kamala D. Harris, now a Democratic senator. It also focuses on the effort that has thus far made the most headway — a civil suit that continues in Washington state, piloted by lawyer Erik Bauer. Backpage will try to get that case dismissed during a summary judgment hearing Wednesday. A jury trial is scheduled for Oct. 9.
************

In the meantime, the closing of Backpage's "adult" ads section hasn't shut down other ads:

Fox News: Prostitution still thrives on Backpage despite site shutdown of 'adult' section

The NY Times : Backpage’s Sex Ads Are Gone. Child Trafficking? Hardly.

"In the midst of a Senate investigation, a federal grand jury inquiry in Arizona, two federal lawsuits and criminal charges in California accusing Backpage’s operators of pimping children, the website abruptly bowed to pressure in January and replaced its sex ads with the word “Censored” in red.

Even so, Tiffany — a street name — did not stop using the site, she said. Instead, her ads moved to Backpage’s dating section. “New in town,” read a recent one, using words that have become code for selling sex. “Looking for someone to hang out with.” Other recent dating ads listed one female as “100% young” and suggested that “oh daddy can i be your candy.”

In the fight against child sex trafficking, shutting down an epicenter like Backpage was a major victory, but one against a relentless foe that quickly unfurled new tentacles. The demise of Backpage’s adult ads undermined the trade, but it also illustrated how difficult it is to stamp out the practice of selling children for sex. The crime is rarely punished with the full force of the law — charges like rape or statutory rape — officials say; in many places it leads to just a citation, instead of an arrest.

For Tiffany, 18, the demise of Backpage’s adult listings has made things far more unpredictable — and dangerous, she said. The old ads allowed her to try to vet customers by contacting them before meetings, via phone or text message. With far fewer inquiries from the dating ads, she said, her first encounters with men now take place more often on the street as she gets into cars in red light districts around the Bay Area."

Thank a scientist: ad campaign from National Academy of Sciences

Series Update: From Research to Reward From Research to Reward, the NAS series of articles and videos about the human benefits that arise from discoveries made through scientific research, is being promoted through Washington Post ads, broadcast messages on Washington’s NPR station, placement of ads on social media, and a telephone campaign aimed at making prospective partners aware of the availability of the materials for their own use. All products to date focus on the social and behavioral sciences. A new phase of the project will concern the geosciences and other natural sciences. Here's a picture of the Washington Post ad about economics, featuring kidney exchange: , (Here's my earlier post on the NAS video from which that picture comes: The human side of kidney exchange: video from NAS (5 minutes)

Backpage closes it's marketplace for sex

Yesterday I posted about the legal battle brewing over whether Backpage.com is in violation of the laws against pimping and prostitution, and today comes the news that it is shutting down those ads. Here's the Washington Post story:
Backpage.com shuts down adult services ads after relentless pressure from authorities

"Fighting accusations from members of Congress that it facilitated child sex trafficking, the classified advertising site Backpage.com abruptly closed its adult advertising section in the United States on Monday, saying years of government pressure left it no choice but to shutter its most popular and lucrative feature.

"The decision came shortly after a Senate panel released a report alleging Backpage concealed criminal activity by removing words from ads that would have exposed child sex trafficking and prostitution. The Senate Permanent Subcommittee on Investigations is scheduled to hold a hearing on the report Tuesday morning. Backpage’s founders and executives will appear in the hearing but do not plan to testify, according to their attorneys.

...

"The federal Communications Decency Act provides immunity to website operators that publish third-party content online, but multiple lawsuits have argued that the 1996 law does not protect Backpage because the site contributes to illegal activity — claims Backpage has vigorously denied.

"The Senate subcommittee raised similar concerns Monday. Its report alleged that Backpage knowingly hid child sex trafficking and prostitution by deleting incriminating terms from its ads before publication. The report found that the company used a feature that automatically scrubbed words such as “teenage,” “rape” and “young” from some ads, while manually removing terms from others."

Classified ads as a marketplace for sex

Here's a story about a classified ad sex site whose publishers were recently arrested, in a case that pits freedom of the press against accusations of making a market for illegal prostitution, and very illegal trafficking in children. The case may extend the criminal definition of illegal pimping to the owners of a newspaper that no one seems to dispute is used to advertise prostitution, among consenting adults and possibly also by nonconsenting adults and children.

Digital Pimps or Fearless Publishers?
The owners of Village Voice Media gamed the online classified business with Backpage.com and made millions. But when it became a breeding ground for child rape, the publishers became something else: defendants.  by Kate Knibbs

"Backpage is the most prominent online destination for on-demand paid sex in the United States, and according to the arrest warrant for Ferrer and others, it made nearly 99 percent of its over $50 million revenue in California from January 2013 to March 2015 from charging for erotic classified ads. It is, in essence, an escort advertising network nestled in a Craigslist knockoff.
...
"“Backpage and its executives purposefully and unlawfully designed Backpage to be the world’s top online brothel,” California Attorney General Kamala Harris said in a statement in October. Her office had brought the charges against the men in the middle of what would turn out to be her successful campaign for U.S. Senate.

"Backpage general counsel Liz McDougall called the arrests an “election year stunt.”

"Whether or not it was designed to be a brothel, and whether its owners are neutral web hosts attacked for political gain or nefarious pimps adept at skating the law, is what the court must decide.

...

"The executives at the National Center for Missing and Exploited Children (NCMEC) were also gratified.

The nonprofit views Backpage as so tightly tied to the sale of children for rape that the website is now the first place it searches for children reported missing. In a 2016 amicus brief, the organization outlined the ways in which it believes that Backpage has been deliberately optimized to keep the child trafficking industry going, including having relaxed posting rules for escort ads while requiring other sellers to provide valid telephone numbers. It also describes a case in which one child was “sold for sex more than 50 times on backpage.com beginning when she was 12 years old.” The organization has worked on more than 420 cases in which children were trafficked through Backpage.

“I don’t know that anyone really believes that there’s a way, with a website offering those services, to completely eliminate [the sex trade],” Staca Shehan, the executive director of the NCMEC’s Case Analysis Division, told me. “But there’s a lot to be done to reduce the likelihood, to reduce this website as a target to buy and sell children for sex.”

The relationship between Backpage and NCMEC was originally cooperative, but Shehan says it soured in 2013, when the center decided the site’s crackdown attempts were theater. She said that Backpage would voluntarily report that it took down one advertisement for a minor, but that her researchers would discover the same image of the child in many other posts that remained online and untouched. This infuriates Shehan. “Why would you report one, and not all the other ones that your website is hosting? Why wouldn’t you remove that ad if you suspect that a child is being sold for sex and block the individual user?” she said.

In March, the Senate voted unanimously to hold Ferrer in contempt for failing to comply with a subpoena for a separate investigation into Backpage’s activities — the first contempt authorization in more than 20 years. This investigation paints Backpage as a deliberately sinister operation, claiming that the company edits advertisements to make them look less like sex trafficking. “Our investigation showed that Backpage ‘edits’ advertisements before posting them, by removing certain words, phrases, or images. For instance, they might remove a word or image that makes clear that sexual services are being offered for money. And then they would post this ‘sanitized’ version of the ad,” Senator Rob Portman said in a statement. “In other words, Backpage’s editing procedures, far from being an effective anti-trafficking measure, only served to sanitize the ads of illegal content to an outside viewer.”

While lawmakers like Portman see Backpage as a demonic helpmate for rapists and abusive pimps, the website has a reputation as a valuable safety tool within some sex worker communities.

Consenting, adult sex workers often praise Backpage for helping minimize the risks of their job. Sex worker advocacy groups have condemned the prosecution of Ferrer, Lacey, and Larkin. In San Francisco, sex workers and supporters gathered to protest the Backpage arrests. “This culmination of a three-year investigation by the California government is a shocking waste of resources for a political stunt that leaves sex workers and trafficking victims stigmatized, isolated, and more vulnerable to violence,” the Urban Justice Center’s Sex Workers Project said in a statement condemning Ferrer’s arrest.

The phantoms of other shuttered and beleaguered sex ad sites worry sex workers who view digital classifieds as instrumental to their safety. RedBook, a long-running Bay Area hub for sex work ads, was shut down after an investigation by the IRS and FBI in 2014. “Authorities say the San Francisco–based website, which primarily served California and Nevada, facilitated prostitution and had to fall. Sex workers say the site provided a meager safeguard against predators, pimps, and cops,” the Sacramento News & Review wrote. “When it disappeared, the most at-risk workers — those of limited means and greatest need — were displaced to the streets.”

...

"While lurid and sad, the arrest report for Ferrer, Lacey, and Larkin has another striking feature: None of the incidents recounted involved the men arranging for or paying for sex, nor did they involve the participation of the men authorities describe as “pimps.” There is no mention of “pimping” in the traditional sense, the act of controlling sex workers, or arranging meet-ups, or taking a cut of their income. The men were arrested as pimps simply by dint of owning and operating a website where other people pimped, even though Backpage’s disclaimer instructs users to report underage trafficking and illegal activity.

The arrest warrant describes how a California Department of Justice agent personally called Ferrer to alert him of an illegal ad. Upending expectations, the warrant notes that the CEO promised to promptly remove this ad — and then kept his word and promptly removed it. So it isn’t that the website lacks moderation; the allegation is that Backpage’s moderation isn’t sufficient enough, and that insufficiency is tantamount to the act of pimping.

It is an unusual stretch of the definition of a very old crime. By arresting Backpage’s current and former executives, Harris was sending a message: If the definition of pimping hadn’t yet changed, she was trying to change it."

HT: Scott Cunningham