The proposed XM-Sirius merger continues to generate intense debate here in Washington. Broadcasters are aggressively pushing regulators to spike the deal, calling the proposed merger a “monopoly.” As I pointed out in my earlier essay on this, I just can’t buy that argument. I just don’t understand how anyone can honestly believe that satellite radio, terrestrial radio and digital music are not in fierce competition for our ears.
I recently stumbled upon two good essays that make the same point. One is by my former PFF colleague Randy May, who is now the president of the Free State Foundation. In his article, “Thinking ‘Siriusly’ About Satellite Radio Competition,” Randy argues that “the notion that satellite radio constitutes a discrete market for purposes of assessing the merger’s competitive impact seems problematical–and to defy common sense.”
Tim Farrar of TMK Associates agrees. In a new paper entitled “The Competitive Landscape for Satellite Radio,” Farrar argues that “the potential alternatives to satellite radio are, in essence, those technologies which provide (either live or recorded) in-vehicle audio content (i.e. talk, music, sports and information services such as news, traffic and weather).” He continues:
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My friend Steve DelBianco of ACT and NetChoice recently reminded me that the effort by state officials to impose a burdensome crazy-quilt of sales taxes on the Internet continues. Proponents call this effort the “Streamlined Sales Tax Project” (SSTP) by what it really is–as Veronique de Rugy and I argued in this 2003 Cato Institute report–is a giant sales tax cartel. The states basically want Congress or the courts to give them authority to impose parochial tax collection burdens on what it clearly national–sometimes global–commercial activity. And they want to administer it all together as one big cartel. (And you thought the Articles of Confederation were dead!)
Luckily, Congress and the courts haven’t caved to these demands and given state governments the right to ride roughshod over the Constitution and the Commerce Clause. But, in reality, the only thing that’s held back state and local efforts to impose such sales tax collection burdens on Internet vendors so far is an old 1992 Supreme Court decision, Quill Corp. v. North Dakota and a handful of other legal precedents. Those cases made it clear that it would be unfair to impose tax collection burdens on out-of-state vendors. Instead, state and local governments could only require tax collection if the entity they sought to tax had a “nexus,” or tangible physical presence, in their jurisdictions.
Seems fair enough, right? Basically the court was just restating the old “No taxation without representation” motto upon which our country was founded. Well, apparently a lot of state and local officials aren’t comfortable with that notion because they have spent years trying to evade that sensible constitutional admonition. And in recent years they have been trying to get Congress to agree to toss Quill and those other decisions (and the Commerce Clause) out the window so that they can adopt the SSTP and start taxing every Internet transaction is sight.
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I’ve been spending a lot of time lately thinking and writing about the contentious issues surrounding social networking sites, age verification mandates and online child safety in general. I recently released a major PFF working paper on these issues (“Social Networking and Age Verification: Many Hard Questions, No Easy Solutions“).
One of the people who has had a great deal of influence on my thinking about these matters is information security expert Jeff Schmidt, the CEO of Authis, a Reston-based authentication / identification firm. Jeff has 15 years of experience in this field and has worked for Microsoft, Ohio State University, and several other small technology companies. He is also a founder and the elected Director of the InfraGard National Members Alliance, which is the private sector component of the FBI’s InfraGard Program. (InfraGard is an FBI/private sector alliance dedicated to improving information sharing between private industry and the government on matters of national security). Jeff helped the FBI create the InfraGard Program in 1998.
So Jeff knows his stuff, and that’s what makes what he has to say about these issues–especially age verification–particularly important. Luckily, some of the essays he has penned on this subject and shared with me in the past are now online for all to see here. I thought I’d provide some highlights of the key conclusions from his papers, which are listed below:
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I’m excited to report that, as you can see here, I’ve been named an adjunct scholar at the Cato Institute. I’m not moving back to DC, but once my replacement here at the Show-Me Institute starts on May 1, I’m going to be spending about half my time at home doing tech policy research for Cato. The remainder of my time will be spent on a variety of freelance work. Initially I’ll be doing some freelance work for Show-Me to ensure a smooth transition, but longer-term, I’m hoping to be able to focus full-time on tech policy work.
That means I should be moderately more prolific here at TLF. Also, keep an eye out for my contributions to Cato @ Liberty and the sadly-neglected-of-late TechKnowledge, two great publications you ought to be reading whether I’m contributing to them or not.
While I’m perusing Henley’s blog, I see his co-blogger Thoreau touched on one of my pet issues:
Yesterday I flew from Maryland to Milwaukee, where my wife and I are visiting family for the week. I was surprised to discover that I now have to pass through two machines (the air blower as well as the metal detector), not just one, and that my belt buckle now sets off metal detectors. I don’t have one of those giant ornamental belt buckles beloved of Texans, just a normal belt buckle. Yet now I have to take my belt off, along with my shoes. It wasn’t always this way, so I assume they’ve upped the sensitivity of the metal detectors.
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Jim Henley helps the NYT out by revising their story on Tim O’Reilly’s slightly silly proposal for a blogging code of conduct.
Another sharp insight from Lefsetz:
When you’re a wannabe, when you’re starting out, you give your music away for free. Forget the fact that you want to be paid. The problem is, nobody knows who you are to buy your music. Your free campaign is a way to get traction. Revenue is down the pike!
Kind of like Google. There was no revenue at first. Just the truly great search engine. They got eyeballs, and then they came up with their advertising model. There’s already a business model in music, live, merch and the recorded music sales you can garner, but it pays to look at Google. Google is constantly releasing new products, that are free to use. Google News. Google Earth. Google Video, Blogs and a whole host of other features. You see they want you hooked, they want you to be a member of the club. They’ll figure out how to make money off you later. Funny, but this strategy not only decimated Yahoo, it put a huge dent in Microsoft’s online strategy.
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Via Chris Anderson, Bob Lefsetz provides a reality check to those who think that music distribution needs a “business model”:
I’m positively stunned at the blowback from business regulars about that chap giving his music away for free. Oldsters can’t understand the economics!
I’ll clue you in, THERE ARE NONE!
This is your worst nightmare. People who can follow their dream on sweat equity. Who with their computer and the money from their day job or mommy and daddy can compete with you. It’s like the North Vietnamese, all our military might couldn’t defeat individuals who would fight to the death. Same deal in Iraq.
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As a parent of two kids under the age of 6, I can very much relate to the questions going through Clive Thompson’s head. The Wired columnist’s latest essay is entitled “You Grew Up Playing Shoot’em-Up Games. Why Can’t Your Kids?” Like Thompson, I’m a first generation (Atari & Intellivision-era) gaming fanatic who is now raising third generation (PS & XBOX-era) gamer kids. (In case you are wondering, I define second generation gamers as the Nintendo NES & Sega-era.)
But also like Thompson, even though I’ve played just about every type of video game imaginable, I now find myself wondering how and when to introduce my kids to the world of gaming, including games with violent themes or action. Thompson begins his own introspection with the following funny story:
I was playing a round of Gears of War, trying to redo a level on “insane” mode, and the walls were painted with guts. I slaughtered my way to the boss, revved up my chainsaw, and sliced into his chest — releasing a fractal fountain of gore. Woo! At that instant, I heard the front door to my apartment open, and in walked my nanny… with my 15-month-old son, his eyes agog. Daddy, I could see him thinking, what are you doing?
Oh, nothing, son. Just kicking back with a mass-murder simulator. That’s all! So I hastily clicked off my Xbox 360, and avoided the nanny’s eyes. But it got me thinking: Eventually he’s going to want to play video games. And then I’ll have to face the traditional child-rearing quandaries that games present. When will I hand him his first controller? Will I let him play the gory combat games I love so much — and, if so, when?
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Over at TCS Daily today, Derek Hunter points out why a la carte regulation is going to backfire for those who support it in the name of “cleaning up” cable and satellite television:
Smaller religious and family cable stations do not subsidize MTV, VH1, and other channels some people may find objectionable. Rather, the opposite is true, MTV, VH1, et. al, subsidize the small religious and family stations. By bundling them all together, it exposes the smaller channels to people who otherwise wouldn’t choose them, netting them more potential customers. If providers were forced to offer channels individually, the small networks with few subscribers would fizzle out due to lack of exposure. Given the choice between channels, the majority of people would not pick those small channels, their potential audience would shrink dramatically, and less audience means smaller revenues. So that “solution” would actually make the problem worse.
That’s exactly right and I discussed why a la carte regulation would have such unintended consequences in my December 2005 PFF paper, “Moral and Philosophical Aspects of the Debate over A La Carte Regulation.” As I pointed out then:
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