Intellectual Property Law

Web Toolbars: The Future of Political Fundraising?

By Cynthia Brumfield

In an election year already dominated by Internet fundraising, a new idea has emerged: customized toolbars that generate revenue from searches and online sales. The GOP, not necessarily on the cutting-edge of all-things-Web, has cut a deal (see WSJ, TechPresident) with a company called Free Cause to provide a toolbar that enables users to donate to the GOP "without opening your wallet."

Each Yahoo search conducted on the toolbar will kick a few cents (presumably $.023) back to the Republican National Committee, with 1% to 8% of the online sales conducted through the toolbar going to RNC. Wondering how much this kind of toolbar fundraising could generate? Let's see, according to the most recent Comscore stats, Yahoo accounted for 2.2 billion U.S. searches per month.

Assuming that Republicans and Democrats engage in the same amount of searching per month (an assumption that could be wrong, given the big-D Democratic tilt of the Internet) and that 40% of searchers identify as Republicans, that would mean Republicans account for 880 million of Yahoo's searches. Assume further that 5% of those Republican searches flow from the customized toolbar (110 million searches).

At $.023 per search, the monthly revenue generated by the toolbar would be around $2.5 million. On an annual basis, that's about $30 million, or just under a third of the $95 million cash on hand the RNC reported earlier this month. This estimate covers only search revenue and doesn't include the shopping sales splits.

It's not clear to me what safeguards are in place to prevent abuse of this system. What's to stop a hardcore group of operatives from ginning up millions of phony searches just to generate revenue from the GOP?

If Google, which accounts for 6.7 billion U.S. searches per month or over three times the number of Yahoo searches, were to agree to a similar deal with the DNC (the political license rights for the technology is owned by a former McCain strategist who under FEC rules is apparently obligated to license it to Democrats too), the fundraising capability of this tool could fatten the coffers of Democrats to the tune of $60 million per year (assuming that Dems account for 60% of searches).

Full post as published by IP Democracy on July 25, 2008 (boomark / email).