Economics of Disinformation and Propaganda 

Economics of Disinformation and Propaganda

Disinformation has a Janus face. Its other side is the money behind it. Most of public attention focuses on the content of conspiracy theories, trolling and online bullying.

There are studies that explore fake narratives so surreal that could become scripts for another Borat movie. A fascinating classification of pro-Kremlin narratives in Belarus by Andrei Yeliseyeu makes an important contribution to the genre. The stories could have been even funny if not the serious consequences for politics and for the economy. By now people who make a living out of it disinformation made a corrupt business model out of it.

In other words disinformation is possible because it is powered by mechanisms of digital ad fraud, shady sponsorship but also unethical crowdfunding. There are many global and local examples but ultimately they are usually tied to malign foreign influence.

During autumn 2020 protests in Warsaw there were swarms of protesters against the government and its anti-abortion policies. A few far right thugs led by Robert Bąkiewicz organised an online counter-campaign that portrayed themselves as defenders of church buildings, allegedly under attack. There was no reported interest in attacking any of the churches but the iconic image of «church defenders» against the so-called LGBT- and gender-ideology has helped to raise over 70 thousand euro in a matter of days.

Those funds were then appropriated by groups in Poland known for spreading anti-democratic narratives closely following narrative trends set up by the Kremlin. Although who would suspect Polish over-zealous catholic boys with shaved heads and military uniforms of anything but love for their country, such ideological allegiance is a known fact across Europe, also recently portrayed in a book by Anton Shekhostov.

For Moscow it is a smart way to make disinformation economically sustainable. Otherwise it would need to pour money from its own shrinking budget. Following this rather simple logic other revisionist powers can easily follow thus creating a whole market feeding us with their propaganda for our own cash. The disinformation networks are efficiently decentralised and charge increasing revenues from micropayments as well as hard to trace digital ad fraud but they are also propelled by legitimate news services that employ clickbait driven by need for ad revenue or disinformation for profit.

That is also a conclusion of a study concluded by the Prague Institute of Strategic Studies (PSSI) in March 2020 on disinformation as a business. The «fear entrepreneurs» in Czechia follow global trends most illustratively represented by schemes of Richard Bannon earning money from people who get scared by their fear mongering and bigotry. Several investigative reports in major newspapers have shown how copycats of PR companies build well prospering businesses employing people to troll and misinform for money raised from unethical companies but also electoral campaigns. Breaking one rule encourages a few more offences — especially if onone calls malpractice for what it is. This is an open invitation also for autocratic powers and their agents to exploit systemic weaknesses across the world.

Similarly, this is the case in Central and Eastern Europe. While in Czechia one conspiracy theory driven portal earns yearly over 80 thousand euro from advertising alone, the Global Disinformation Index estimates that some 20,000 websites identified as purposely spreading disinformation generate some 213 million euros annually solely from online advertising — remind authors of a PSSI follow up paper with recommendations from stakeholders on how to limit this corrupt practices.

Industry leaders in Czechia seem to agree that the national PR and advertising industries ought to establish common community rules — following the EU code of practice on disinformation guideliens. But in practice these initiatives are not welcomed enthusiastically, they are poorly staffed and funded. Unless, there is an economic incentive — for instance by regulation — to incentives marketing sector to pay for clean internet space, this will not take off.

Another finding by PSSI is that persistence pays off — sounds at first too simple but in fact this sector is largely driven by short attention spans that follow general demand for quick, new impulses that help sell. To work with this community, nonetheless a very creative one, on long term goals is daily practice of ice bucket challenge.

The real incentive one can only wish for may also come from advertisers who are worried about reputation loss to their brands. Steps taken by Unilever and P&G which over the last years cut millions of dollars from their digital advertising budgets for lack of accountability has resonated in various national boards of audits set up by advertising industries and media.

Unless national players will not find a way to repair the broken system themselves the steam of money may eventually drain out.

This motivation was already behind Polish industry leaders that united in spite of government permissiveness for disinformation. Led by major advertising agencies association they signed a common memorandum pledging to set up EU-wide accepted standards themselves [read their communication in Polish].

Finally, PSSI’s paper identifies a need to internalise the ethic code among industry professionals. A good call but with options to apply shrinking quickly as the time flies. The media and advertising markets have experienced a terrible blow with the pandemic. Revenues from advertising fell in CEE dramatically sinking by nearly 50 per cent in the first month of the crisis.

At the same time media revenues from subscriptions rose but rest assured that not enough to match losses from ads — most of the press is still uneasy with the digital subscription model and only to catch up with the new trends set up by Netflix.

But overall, the professionals in the sector become desperate for new revenue streams that come easier from sources that have earlier raised eyebrows. This systemic threat endangers democratic information sovereignty hollowing out norms from the public space and exposing media outlets to sponsorship ranked as sharp power.

In the past years the threat from such malpractices was coming primarily from Russia but as Albin Sybera reports the recent changes in the Czech media market expose democracy to influence from Chinese Communist Party and its subjects. Investors operating closely with China are using a market opportunity to purchase media and use them for lobbying for Beijing’s interests in Europe.

While advertising and digital advertising is important the myth that information is for free is finally going to die with the pandemic. On the upside this will mobilise a number of self aware internet users to pay and demand quality services. On the downside, by now the dominant information culture is permissive to disinformation believing it is free. The current economic downturn might be the last opportunity to make people aware that disinformation is stealing both their attention and money.

Wojciech Przybylski
the editor-in-chief of Visegrad/Insight

This article is published as part of the Prospect Foundation project «Online Media Literacy for Editors and Administrators of Social Media Public Pages», managed by iSANS and supported through grants from the International Visegrad Fund. The article is published on the partner’s site @visegradinsight.