If the online industry wants to avoid government restriction, it must regulate itself. This is a good time to explore other attempts at industry self-regulation and its effects. Some self-regulatory efforts have been bureaucratic at best, while others have been completely ineffective. The medical industry’s most recent self-regulatory effort in the name of consumer protection around the HIPAA privacy law, is an example of good intentions spoiled by bureaucratic enforcement. It was actually reported in the New York Times that birthday parties in nursing homes in some states have been canceled for fear that revealing a resident’s date of birth could be a violation of the HIPAA law.

Other industry self-regulation attempts, like the Tobacco Industry’s “We Card” program, have been pointless. The program did little, if anything, to curb tobacco sales. When looking for a self-regulatory success story, the online industry should follow the example of the Motion Picture Association of America (MPAA).

Looking back at the history of Hollywood, there are similarities between the online ad industry today and the censorship of the film industry in the 1930s. In response to the threat of government intervention in 1930, the movie industry created a regulatory system around a “code of conduct” known as the Hays Code. The code was a set of restrictions on the content filmmakers could produce. The Hays Code was written with conservative and religious principles in mind, with restrictive clauses such as, “the clergy cannot be portrayed as comic characters or villains.” When the Hays Code came under scrutiny in the late 1960s for its strict rules and infringement on free speech, the industry ultimately dismantled it and created our current rating system.

A voluntary “code of conduct” is exactly what the Department of Commerce Internet Privacy Task Force is asking the online industry to create, and what industry trade groups are also espousing. What is most applicable to the online industry is the fact that the self-regulatory system the MPAA created and still uses today puts the user in charge of deciding what they are going to see.

The user-in-charge system is a concept that Apple’s Steve Jobs relates to. When asked to weigh in on the privacy issue at the recent D8 conference, he said, “Privacy means people know what they are signing up for in plain English. Some people want to share more data. Ask them. Ask them every time. Let them know precisely what you are going to do with their data.”

With the online world becoming more social than ever, user data is central to advertisers. Online marketers are no longer content with abstract metrics like clicks or impressions. They want to find out about individuals to give them a personalized experience. However, if advertisers want access to consumer data it should be done in a privacy-compliant way. This means the online ad the industry must develop clearer privacy practices and give users the ability to opt in to receive ads.

And as a start, users must be shown a clear way to opt out. For this reason, the issue of online privacy can’t be relegated to the legal team. The issue should be resolved by people who can design a user interface that is elegant, simple and crystal clear. The design and user interface teams must be involved at every step in the process so as to provide users with clear and transparent mechanisms to help them understand what data will be collected, what will be done with the data and how they can opt out of data sharing altogether.

If the industry wants to self-regulate to avoid being federally regulated, it should start by designing a clear, opt-in system that puts the user in charge. Let’s not wait for a giant carrot or a big stick. Self-regulation has worked before–there’s no reason it can’t happen now.

But there could be a problem: Fat fingers.

According to a survey released today, 47 percent of mobile app users say they click or tap on mobile ads more often by mistake than they do on purpose.

Accidental clicks obviously come with the territory. Today’s smartphones often have large displays, but it’s still to easy to accidentally click on a banner instead of a link.

In fact, screen limitations led Steve Jobs to criticize seven-inch tablet screens recently (vs. the iPad’s nine-inch screen), by saying users will have to file down their fingers to achieve ultimate accuracy.

Apple is only one of many companies that are investing heavily in mobile with the hopes that it will produce the next big advertising goldmine. While filing down fingertips isn’t a practical solution, there is a way to avoid spending on clumsy clicks.

To do so, advertisers are increasingly paying for mobile ads based on action, like a user providing an email address or watching a video. The survey was conducted by Harris Interactive on behalf of Pontiflex, which is pitching its own solution for this problem.

It measures advertising through what it calls “cost per lead,” meaning advertisers don’t pay until users sign up and share their contact information.

Other findings from the survey:

• The vast majority of apps that are downloaded are free–95 percent of mobile app users download free apps, while only 41 percent pay.
• 71 percent of mobile app users said they prefer ads that keep them within the app they are using, instead of ads that take them to the browser.
• 96 percent of mobile app users with a household income of $75,000 or greater said they use free apps.
• Almost two-thirds of mobile app users selected ads that contain coupons, deals or newsletters as their preferred in-app mobile ad type.

Photo Credit: herbrm.

Evidence: Last night’s “VC Demo Day,” where investors paraded themselves, pageant-style, in front of a room full of would-be Twitters at AOL’s New York headquarters. The goal: To convince the assembled digerati that they were worthy of writing their fledgling company a check.

Even mighty Union Square Ventures, which lands deals like Twitter, Zynga and Foursquare, sent partner Brad Burnham out to explain why they’d like the chance to do more.

Clever idea for a networking event, and a smart inversion of start-up pitchfests like Y Combinator’s Demo Days.

And if it felt slightly weird to see investors clamoring to spend money less than two years after the economy fell into a dark hole, no one was letting on.

Most entertaining pitch? No contest: That would be GreenHill SAVP’s Brian Hirsch, who put together this video featuring some of his portfolio companies (listed below the clip). Make sure you get at least a minute into this one.

In order of appearance:
Jed Alpert–founder, Mobile Commons
Dan Drechsel–CEO, FTRANS
Len Ostroff–CEO, Three Stage Media
Nick Pahade–CEO, TRAFFIQ
Eric Frank–founder and president, Flat World Knowledge (cartoon)
Apar Kothari–founder/CEO, MyNines
Roshan Bangera–co-founder, Pontiflex

One day I’ll get to stop writing this, because Twitter is slowly starting to sketch out some revenue plans.

But for now, it still holds true: Almost all of the money Twitter is generating is being generated by companies other than Twitter. They’re members of the growing ecosystem of companies that base their business on the microblogging service, but don’t pay Twitter a dime.

Here’s another one: Pontiflex, a lead-generation start-up that hoovers up names and other info from users who visit its network of publishers and then sells the data to marketers. The Brooklyn-based company is rolling out a Twitter product that lets marketers compile a list of interested Twitter users.

Sound simple? It is. All Pontiflex is doing is adding a Twitter “handle” field to its lead-generation forms (see example at right). Armed with these data, a marketer can follow Twitterers who say they’re interested in their products, and…not much else.

Since the users aren’t actually signing up to “follow” any of the marketers, said marketers can’t send them direct messages. The marketers could try to “at reply” their leads–the equivalent of shouting out the name of someone you think might be at a loud cocktail party but can’t actually see. But that’s about it.

So what’s that information worth? Depends, says Pontiflex CEO Zephrin Lasker. Probably more than an email address, but less than a phone number. He says pricing will depend on clients, volume, etc., but he figures he’ll be able to sell each Twitter handle to his consumer packaged goods clients for a couple bucks a pop. Call it anywhere from 50 cents to $5 per name.

Per usual, Twitter won’t see a penny of that.

Like most other Twitter ecosystem ideas, this one only works if Twitter really crosses over from novelty to mainstream and stays there. And the jury’s still out on that.

But in the meantime, marketers want in on the new hotness, and Lasker is happy to oblige.

“This is one of those things that people don’t know how to participate in, but they want to be there,” he says. “So, that’s where we can help.”

Also, just because we’re talking about leads, and I use any excuse I can get, here’s Alec Baldwin’s awesome “Always Be Closing” speech from “Glengarry Glen Ross.” (Warning! Contains salty sales language.)