From the New York Times Sunday Magazine:

The Post-Money Era


By MATT BAI
Published: April 29, 2007

Money is the great corrupter of American politics, turning candidates into the puppets of soulless corporations and selfish millionaires — unless, of course, you happen to be on the side that has more of it. Which is why Democrats who have long railed against the venality of their better-financed opponents now find themselves trumpeting their own superiority in presidential fund-raising. There are probably several reasons why Hillary Clinton and Barack Obama each managed to raise more than $25 million during the first quarter of 2007, easily surpassing their Republican rivals: outrage over the war in Iraq, the new primacy of the Internet (Obama hauled in 50,000 donations online) and a shift at the highest brackets. (According to a new Pew poll, there are now about as many affluent Democrats as there are Republicans.) Whatever the reasons, though, it seems likely that the nominees of both parties will ultimately decide to spurn federal matching funds in the general election, leaving them free to raise as much as they want — and effectively destroying the last vestiges of the system that has governed campaigns for the last 30 years. To put it another way, that distant rumble you're hearing is the sound of the dam that once held back a torrent of campaign cash, tumbling down onto itself.

Still, the coming flood may not alter the terrain as much as you might think. That's because this exponential rise in political money comes at exactly the moment when that money is beginning to count for less and less. The obscene costs of modern campaigning have been driven almost entirely by broadcast advertising, which consumes more than half of your average campaign budget. But even the people who make ads for a living now admit that they are losing their mystical hold over the electorate. This isn't so much a political phenomenon as a societal one. As a New York ad executive recently told The New York Times, "The dirty secret is, people have been avoiding commercials, bad commercials in particular, for a very long time." By the end of this decade, according to the Web site emarketer.com, more than one in three households will have TiVo or another digital video recorder, meaning that a sizable chunk of voters will be skipping commercials altogether. (True, a recent study found that a lot of early DVR users still watch the commercials, but that will almost certainly change as more viewers get used to fast-forwarding through them.)

In this new world, the most effective political ad makers may be amateurs like Phil de Vellis, the Internet consultant who recently took it upon himself to make a powerful pro-Obama ad, based on a famous Apple spot from 1984, that portrayed Hillary Clinton as Big Brother. The ad, which de Vellis made on his Mac in a single afternoon, ricocheted around the Web, reaching millions of Democratic voters. It cost nothing. "This ad was not the first citizen ad, and it will not be the last," de Vellis later wrote on the Huffington Post blog. "The game has changed."

A friend of mine who makes political ads tells me I'm being, as Alan Greenspan might say, irrationally exuberant about all of this. The argument that expensive ads are losing their relevance is classist, he says; sure, wealthier voters may be able to ignore broadcast ads, or watch amateur videos online, but working stiffs can't afford digital recorders or broadband. Such thinking, though, defies the natural arc of technology, which inevitably becomes cheaper and more widespread. When I started reporting at The Boston Globe in 1995, the paper kept six cellphones in a locked case in the newsroom, and they were the size of your forearm; now you can buy pocket-size phones at convenience stores and throw them out when you're done. There may be, as John Edwards likes to put it, "two Americas," but it's hard to believe that one America will soon be ignoring political ads while the other is forced to sit and endure them.

Of course, having a record sum of campaign cash is still a whole lot better than, say, not having it. Money still confers legitimacy on a candidate among the media and party activists, and with the primaries resembling, more and more, a national campaign, a candidate probably needs to reach a significant threshold ($50 million?) just to compete. Eventually, campaigning online will almost certainly get more expensive, too, as well-trafficked sites and Internet consultants dream up new ways to cash in on the migration of politics to the Web; where there's money to be made, someone generally makes it. And yet, the very nature of the Internet — its limitless capacity for distributing content, compared with a defined number of networks — means that the online era will almost certainly be cheaper than the broadcast age. It's arguable that, beyond a certain base line, how much you stockpile as a candidate — whether you have $75 million in the primaries, or even $100 million — will soon matter less than ever before. You can use that money to throw up ads on every late-night lineup in the Midwest, or spend it on plush offices or layers of consultants, but what does all that really get you, other than an inflated sense of your own success? Ask Howard Dean, who outraised all his 2004 primary opponents and ended up winning one state: his own.

"The need for money is probably going to reach some diminishing return, and it's probably going to be a pretty low ceiling, compared to past campaigns," predicts Peter Leyden, president of the left-leaning New Politics Institute. In other words, the emerging high-tech marketplace may yet bring us closer to what decades of federal campaign regulations have failed to achieve: a day when candidates can afford to spend less time obsessing over the constant need for cash and more time concerned with the currency of their ideas.

Matt Bai is a contributing writer for the magazine. His book "The Argument: Billionaires, Bloggers and the Battle to Remake Democratic Politics" will be published in August.