December 2009

By Adam Thierer & Berin Szoka

The Wall Street Journal reports (see Financial Times, too) that “CBS Corp. and Walt Disney Co. are considering participating in Apple Inc.’s plan to offer television subscriptions over the Internet, according to people familiar with the matter, as Apple prepares a potential new competitor to cable and satellite TV.”

If Apple signs up enough networks to launch a viable service—still a very big if—it could ultimately alter the economics of the television business. The service could undermine the big bundles of channels that cable, satellite and telecommunications companies, including Comcast Corp. and DirecTV Inc., have traditionally sold in packages to subscribers.

And Brian Stelter of The New York Times says of the plan:

Broadband Internet subscriptions to TV networks could potentially destabilize the bedrock of the television business, which relies on subscribers paying for dozens of bundled channels.

As we have noted have noted here in our ongoing “Cutting the Video Cord” series, it’s just another sign that the video marketplace is vibrantly competitive and experiencing unprecedented innovation. So, why is Washington regulating this marketplace like we still live in the disco era?

The New York Times itself seems to be of two minds on this: Brian seems to recognize that the rise of Internet television means that cable providers no longer have any sort of special “gatekeeper” or “bottleneck” control over the programming available to consumers, just as his colleague Nick Bilton at the Times‘ BITS blog recently declared that “Cable Freedom Is a Click Away.” And yet, as Berin recently noted, when the DC Circuit struck down the FCC’s outdated 30% cap on the number of homes a single cable provider could serve (based on “gatekeeper” concerns) back in September, the  Times editorial page bemoaned the decision and demanded further regulation of the cable industry—even as Internet TV is fundamentally changing the marketplace for video programming and rendering moot “gatekeeper” concerns far more effectively than any law could ever do.

“Right hand, meet Left hand. Howyadoinnicetameetcha!”

Last week I commented on a severely one-sided FCC net neutrality hearing that featured a endless parade of horribles being prophesied by virtually every speaker. The litany of spooky stories became tedious and absurd. Everyone foretold of the impending doom that awaits unless government intervenes to save us from various corporate conspiracies to “silence” our voices.  Unsurprisingly, evidence was in short supply. It was pure Chicken Little poppycock.

This got me thinking again about what I have referred to as the “problem of proportionality.” I have discussed the problem of proportionality in the context of public policy debates about online safety and privacy, but it seems equally applicable to debates about net neutrality. Here’s how I explained the “problem of proportionality” in an earlier essay:

let’s think about how some of our lawmakers and media personalities talk about the Internet.  If we were to judge the Internet based upon the daily headlines in various media outlets or from the titles of various Congressional or regulatory agency hearings, then we’d be led to believe that the Internet is a scary, dangerous place. That ’s especially the case when it comes to concerns about online privacy and child safety. Everywhere you turn there’s a bogeyman story about the supposed dangers of cyberspace. But let’s go back to the numbers. While I certainly understand the concerns many folks have about their personal privacy or their child’s safety online, the fact is the vast majority of online transactions that take place online each and every second of the day are of an entirely harmless, even socially beneficial nature.  I refer to this disconnect as the “problem of proportionality” in debates about online safety and privacy. People are not just making mountains out of molehills, in many cases they are just making the molehills up or blowing them massively out of proportion.

Again, much the same is true of net neutrality. Indeed, it is even more true since actual net neutrality “incidents” are so hard to come by.  Continue reading →

As if we needed another. Over at Overcoming Bias, Robin Hanson points out that mandating balance leads to worse reporting.

We’ve spent a lot of time here at TLF talking about the sound economic arguments against net neutrality regulation. We argue that net neutrality regulation will result in worse consequences than leaving the internet relatively unregulated. But to me, the more important point is that net neutrality regulation is itself unjust.

Why do I make such a strong claim? Simply put, people own their stuff. People can decide what to do with their stuff. People can enter into mutually-consensual agreements about what to do with their stuff. As long as both parties agree on the terms, both parties are deciding what to do with the property they each bring to the table. All that is just. It is unjust, on the other hand, to take someone’s property. It is similarly unjust to use force upon someone (e.g. by taking their money, which is other property they own) as a punishment for doing something just. So, it would be unjust for me to reach into your wallet and take a “fine” from you because I don’t like that you sold your copy of Anarchy State & Utopia to Berin for what I think is far too low of a price. I could argue to you that Berin is giving you a bad deal or tell Berin to stop exploiting you, but it is unjust for me to steal from you to enforce my personal desires about the terms of your agreement. Continue reading →

If you don’t like sharing information about your interests with content publishers so they can sell advertisers a chance to win your attention, your remedy is closing your browser. It’s that simple.

But writer Kevin Kelleher has an economically challenged piece on suggesting that Internet users should try to charge content providers money.

He says users should email web companies the following terms: “By collecting, storing, selling, trading, reselling or exploiting for any commercial purposes any information about me, your site agrees to pay me a licensing fee of $100 per month.”

That’s a non-starter from the get-go because users might be worth $10 per year, depending on the company. Negotiating a deal where your use is actually tracked, a price is negotiated, and a payment is securely made would be more privacy invasive than the current state of affairs.

And that model has already been tried. It was called If ad rates rise again, an “infomediary” might be viable again, but we won’t get there with a silly “campaign” to undo the interest-data-for-content deal.

If you don’t like it, you can just close your browser, or pick carefully among the services that don’t use advertising (like Twitter, so far). That’s a perfectly acceptable choice, and life can be lived well without free Internet-based content.

So, go ahead! Live your values! Walk your talk! Close your browser.

2009 was not as big of a year for Internet and information technology (“info-tech”) policy books as 2008 was, but there were still some notable titles released that offered interesting perspectives about the future of the Net and the impact the Digital Revolution is having on our lives, culture, and economy.  So, like last year, I figured I would throw together my list of the 10 most important info-tech policy books of the year.

book covers collage 2009First, let me repeat a few of the same caveats and disclaimers that I set forth last year.  What qualifies as an “important” info-tech policy book? Simply put, it’s a title that many people are currently discussing and that we will likely be referencing for many years to come.  However, I want to be clear that merely because a book appears on my list it does not necessarily mean I agree with everything said in it. In fact, as was the case in previous years, I found much with which to disagree in my picks for the most important books of 2009 and I find that the cyber-libertarianism I subscribe to has very few fans out there.

Another caveat: Narrowly-focused titles lose a few points on my list. For example, if a book deals mostly with privacy issues, copyright law, or antitrust policy, it does not exactly qualify as the same sort of “tech policy book” as other titles found on this list since it is a narrow exploration of just one set of issues with a bearing on technology policy.

With those caveats in mind, here are my choices for the Most Important Info-Tech Policy Books of 2009. Continue reading →

Business Insider reports that, sometime next year, Scribd will launch a “seamless” interface that allows users to access Scribd docs on their Kindles.  That’s a major step forward for the startup, which aims to be the “YouTube for print”—and which Adam and I use to make all our PFF papers available online in an embeddable Flash viewer that’s much quicker to load than the full PDFs.  But it also represents a serious potential long-term challenge to Amazon, since Scribd is “quietly developing a strong e-book storefront to match its hoard of user generated content,” as Business Insider notes, and because:

If Scribd can put its books on the Kindle, this number should only grow, especially since it offers publishers a better business deal than Amazon.  Amazon reportedly offers a 50/50 sales split. Scribd only keeps 20% and allows publishers to set their own price.

So much for “The coming Kindle monopoly” the cranks over at Oligopoly Watch warn us about!

kindle-vs-nookIt would be more accurate to say that Scribd will be “Kindling” e-book competition within the base of Kindle users, and of course, competing devices like  Barnes & Noble’s Nook offer cross-platform competition, just as satellite television competes with cable.   In both cases, the platform operator has a strong incentive to compete for users by offering as much content (books/video programming) as possible at attractive prices.

On the one hand, one might say that inter-platform competition is stronger in the case of video delivery platforms, because users generally lease equipment on a month-to-month basis, while e-book users must buy their $250+ device up-front (making it therefore harder to switch from Amazon to Barnes & Noble, if one decides one doesn’t like the offerings or prices for e-books on the Kindle).  But on the other hand, if Scribd can compete head-to-head with Amazon in offering e-books on Amazon’s Kindle (and perhaps on the Note, too, someday soon), users don’t need to switch devices at all: They can just switch e-book providers. Furthermore since e-books are bought on an à la carte basis, users don’t have to switch completely, they can just switch for any particular book—meaning that Amazon needs to compete for every additional purchase they can get, which means lower prices and more choices for consumers.

Continue reading →

With the advent of new technology, newspapers are being threatened.  Many are expected to go out of business, and the rest will have to change substantially.  Many observers fear that journalism will become too driven by speed, and that judgment and deliberation will be lost.  Others said that news reporting would be devalued and only those providing analysis and opinion would survivie.  Worst of all, worries that the new technology will lead to a monopoly over information.

A description of the dire situation faced by newspapers today as they face the Internet?  No.  These are the concerns expressed in the 1840s as the telegraph transformed the news business.   This week’s Economist tells the story of how Samuel Morse’s invention was thought to signal the death knell for newspapers, and to thoughtful journalism.

As it turned out, the news business was tranformed.   But not in the ways many feared.   With faster communications, the quality of news, and of the information Americans received, improved.  Newspapers had to adapt, but survived and even prospered.  And no one ever created a monopoly over information.

 Good reading.

In a classic example of the 5:00 Friday news drop, the Department of Homeland Security has announced that it is extending the REAL ID compliance deadline. Forty-six of 56 jurisdictions, it reports, were not able to implement even the interim measures it proposed requiring by December 31st when it last extended the deadline in May of 2008.

The DHS statement insists that a full compliance deadline on May 10, 2011 remains in effect. What that really means is that there will be another false crisis as that deadline approaches, and the DHS will extend the deadline yet again.

The better alternative is to repeal the national ID law and the worthless, expensive pseudo-security it represents. It is not to revive REAL ID under its alternative name “PASS ID.”

We’ve all heard someone use the phrase “making a federal case out of” something. Often it’s used when people overreact–as in stop making a federal case out of this! And that’s the  reaction we should have to the complaint filed by EPIC, Center for Digital Democracy, and others with the FTC. Because they have literally made a federal consumer protection case out of what should be a a customer relations issue between Facebook and its users.

Facebook’s users are quick and vocal about Facebook’s privacy practices. And Facebook has been quick to respond. The Facebook blog on privacy highlights all its recent undertakings to respond to privacy concerns, including the Facebook Site Governance page, the Statement of Rights and Responsibilities, an open letter and other blog posts from Facebook founder Mark Zuckerberg. There’s even Facebook Principles that highlight the site’s mission. How many other companies have been so transparent and responsive?

Indeed, you could say that Facebook has been the gold standard of responding to consumers. In this most recent change to privacy settings, users were prompted to revisit their privacy settings. Facebook made some recommended changes based on where it sees its service going. Users (like me) could change these if they wanted.

And change is what the Internet and new web services are all about. Forcing Facebook or any other online site to perpetually maintain original settings prevents new and innovative business models and services (just ask Microsoft about how backward compatibility makes Windows innovation so difficult). Web 2.0 services like Facebook have to experiment with the ways that users publish and share information. If these sites go too far, their customers will leave–which is the best check on privacy compared to any law or regulation.

So that’s why I’m disappointed why these privacy groups are complaining to the FTC. There’s a high bar of specificity for FTC action, so it would have been far better to petition the Facebook community and let them unleash whatever fury they have. But my hunch is that these complaining groups don’t think that the FTC will actually do anything here. After all, making a federal case of actions by high visibility companies makes for a good publicity opportunity even if there’s no sound legal case.

Unfortunately–now that it’s a federal case–customer relations is now confused with consumer protection.