June 2009

There is No Free Lunch! No Advertising, No Media

by on June 25, 2009 · 633 comments

Adam Thierer and I have been trying to drive home a simple message in the ongoing debate about targeted online advertising and privacy:  “There is no Free Lunch!”  We don’t have a lot of friends in this debate, since nearly everyone else seems to assume that online content and services will just continue to fall like manna from heaven if politicians strangle advertising online.  So I was particularly heartened to read the following from Shelly Palmer:

This is the most serious question facing content producers today. Content costs money to produce. Third-party advertising/sponsor support is one model, promoting your own products is another, subscription is a third. At the end of the day, there are only three ways it works: I pay, you pay or someone else pays. Unfortunately, there is no business model called “no one pays.” In the case of MediaBytes, the model is “I pay.” It works for me as stated above. But, apparently, a fairly large number of people in my audience are uninterested in seeing even relevant product offerings. Is advertising over? If so, what’s next?

Amen! Shelly hosts a daily Internet talk show on technology and media called MediaBytes.  He  recently tried inserting a short ad at the beginning of the show to cover the significant costs of production:

The show is produced every business day and requires a research staff, a writer (me), an editor, an encoding/distribution manager and an affiliate relations staff. The reason for the production overview is that, this particular two-minutes may look like a talking head combined with some graphics and clips, but the work flow for any given show takes approximately 6 hour and all of the people involved in the production are on salary here at Advanced Media Ventures Group. And, for the record, MediaBytes, and the associated production materials, takes up approximately 25% of my day.

Unfortunately, Shelly’s audience seemed to feel entitled to receive the fruit of his hard work for free—without suffering the agony of watching… horror of horrors: advertising!. Continue reading →

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A Comcastic Mailer

by on June 24, 2009 · 9 comments

I received a mailing (see poorly taken iPhone photo) from Comcast a few days ago and I thought it was worth talking about from a libertarian perspective.

I’m all for companies taking advantage of the digital changeover to make a little extra scratch, so long as they’re honest in doing so.  This mailer never explicitly lies, but it’s not exactly forthcoming about what the digital conversion really means and it certainly didn’t mention the possibility of buying a converter box to continue getting broadcast TV for free.

Instead, the octagenarians who occupy most of the other units in my building were met with this sort of language: Continue reading →

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Technology Fatigue, Tyler Cowen, & Autism

by on June 24, 2009 · 30 comments

You hear it all the time.  People complain that they can’t get away from Facebook, Twitter, or even email—that the technology we own ends up owning us, or some similar cliche line about the digital dystopia that is consuming our humanity one bit at a time.  I can’t stand these people.

Thankfully there are people like my colleague Tyler Cowen who realize that—despite cultural reflexes that would have us do otherwise—we should embrace these new technologies as means to be more selective about what information we absorb and therefore welcome the increased volume of bytes into our lives.  In his new book Create Your Own Economy: The Path to Prosperity in a Disordered World, he explores technology as a vehicle to help you determine what you really value, not a series of a email-powered torture devices.

To make the material even more interesting, the book uses autism as a touchstone—one the chapters is even entitled “Autistic Politics”—as autism proves to be an effective analogy when talking about ways of absorbing and processing information.

For more about the book, you can visit the site I just finished building—CreateYourOwnEconomy.org—or pick up the book at Barnes & Noble, AbeBooks, or Amazon.com.

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Don’t Believe ‘Special Access’ Hype

by on June 24, 2009 · 27 comments

A new coalition, NoChokePoints, has been formed to lobby Congress and the Federal Communications Commission to further regulate the prices that incumbent telephone companies (Regional Bell Operating Companies or Incumbent Local Exchange Carriers) can charge for special access services purchased by businesses and institutions.  Special access circuits are dedicated, private lines.  For example, Sprint purchases special access circuits to connect its cell towers to its backbone.

According to a coalition spokeswoman,

Huge companies like Verizon and AT&T control the broadband lines of almost every business in the United States. The virtually unchallenged, exclusive control of these lines costs businesses and consumers more than $10 billion annually and generates a profit margin of more than 100 percent for the controlling phone companies, according to their own data provided to the FCC. This hidden broadband tax results in enormous losses for consumers and the economy, and this country cannot afford it; especially now.

An analysis prepared by Peter Bluhm with Dr. Robert Loube under contract with the National Association of Regulatory Commissioners (NARUC) disputes this conclusion.
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Exclusivity Inspired Smart Phones

by on June 24, 2009 · 9 comments

Small cellphone operators want Congress or the Federal Communications Commission to prohibit larger carriers from becoming exclusive providers of popular handsets, like the Apple iPhone (AT&T), Blackberry Storm (Verizon Wireless), Palm Pre (Sprint) and Samsung Behold (T-Mobile).

John E. Rooney, President and CEO of United States Cellular Corp., testified at a recent Senate Commerce Committee hearing:

These arrangements harm consumers in rural areas and decrease competition nationwide and do not enhance innovation.

Let’s examine these arguments.

Rural Consumers

Rooney bemoans the fact that

many rural residents of Alaska, Arizona, Colorado, Idaho, Kansas, Maine, Montana, Nebraska, Nevada, New Hampshire, New Mexico, North Dakota, South Dakota, Utah, West Virginia and Wyoming are not served by AT&T network facilities

while Victor H. “Hu” Meena, President and CEO if Cellular South, Inc.,  claims that

Vast portions of America – including all or part of Alaska, Arizona, California, Idaho, Kansas, Maine, Minnesota, Montana, Nebraska, Nevada, New Hampshire New Mexico, Oregon, Vermont, Washington, West Virginia and Wisconsin – are not served by any of the largest carriers, so Americans in these areas are prohibited from acquiring the newest and most innovative devices.

There are advantages and disadvantages no matter where one chooses to live.  The fact that someplace is without a particular amenity traditionally hasn’t justified limiting the ability of private entities to exercise their own judgment as to parties with whom they will deal.  While I am fortunate to have the opportunity to own an iPhone, I don’t get to live in a pristine rural setting with a wide open outdoors, low housing costs, etc.

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Some Random Thoughts on “Sponsored Blogging”

by on June 24, 2009 · 15 comments

Over at SiliconAngle, my friend Andrew Feinberg has posted an interesting column defending federal oversight of “sponsored blogging,” or blogging that might be in some way be tied to a financial interest.  The Federal Trade Commission (FTC) is now looking into that matter and threatening to bring the blogosphere under the thumb of federal regulators. In his essay, “Why the FTC is Absolutely, 100 Percent Right on Sponsored Blogging,” Andrew argues that:

The Federal Trade Commission wants to keep an eye out for unscrupulous behavior by corporations and media. This is their job. They could leave well enough alone for fear of being accused of meddling with the internet, but they recognize that as technology changes, the rules that govern the relationship between marketers and consumers must be made to fit those changes.

This is not always easy. The Federal Communications Commission has had a rulemaking open on embedded advertising (product placement) in children’s programming for some time now. It is well know that it’s unlawful to market directly to children during certain times, and on certain programs. But FCC efforts to adapt the rules have been stymied by a cumbersome process and a lack of authority (the FCC may only regulate content on broadcast television).

On the other hand, the Federal Trade Commission has much broader authority. And their job is to keep things fair.

I responded in the comments to his piece as follows:

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Barbara Esbin: Exclusive Handset Deals Are Pro-Competitive

by on June 20, 2009 · 17 comments

Last summer, my PFF colleague Barbara Esbin and I explained that, while many consumers dislike not being able to get popular smartphones like the iPhone on the wireless network of their choice, such exclusive deals actually benefit consumers. Barbara summarizes her testimony (PDF) as follows:

the dynamic created by the exclusive arrangement between Apple and AT&T that produced the iPhone allowed the two companies to bridge the gap between the technologies of today and the disruptive innovations of tomorrow. Moreover, it is undeniable that the breakthrough success of the iPhone has spurred a wave of competitors. If every wireless carrier had been able to sell the iPhone when it was initially released, I noted, it seems unlikely there would have been as much carrier support for developing competing products like the Google G1, RIM Blackberry Storm, Samsung Instinct or Palm Pre.

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Mike Palage: ICANN 3.0 Should “Refocus” on Original Purpose

by on June 20, 2009 · 21 comments

PFF Adjunct Fellow Mike Palage, who served on the ICANN board from 2003 to 2006, filed these comments (PDF) on the NTIA’s recent Notice of Inquiry regarding ICANN’s future.  Mike’s four key points were as follows:

  1. ICANN’s Periodic Review of its internal operations and supporting organizations has failed, and has become nothing more than a “perpetual motion machine of public comments and documentation producing no meaningful results.” Only a second Evolution and Reform Process can solve ICANN’s current deficiencies;
  2. ICANN must hardcode into its policies and its contracts the principle that its policies cannot supersede national laws;
  3. ICANN must cease any operational role in technical infrastructure as required by its bylaws and focus instead on its mission as a technical coordinator; and
  4. Congress must avoid “kicking the JPA can down the road” and instead provide much-needed leadership by creating a solid foundation for ICANN 3.0 in legislation after proper consultation with the Government Accountability Office.

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Transparency Comes to Government Contracting

by on June 20, 2009 · 11 comments

I previously lauded the Sunlight Foundation for its intention to bid on the contract for updating Recovery.gov. There’s been extensive excessive discussion of it on the Open House Project Google group.

The general theme among the one or two critics has been “leave the incompetence to the experts.” They’ve been a bit curmedgeonly, frankly.

But an informative and balanced comment highlights the practice of “wiring” government contracts. The contracting authority gets together with the preferred contractor and they collaborate to make it very difficult for anyone else to win the bid.

Well, that’s why Sunlight’s bid is so interesting and different. As I said, “[T]he contract award will now be subject to public scrutiny. Value-for-dollar to the taxpayer will be easily discernible, and that will raise the political risk if the contract is awarded based on cronyism or go-with-whatchya-knowism.”

Government contracting officials aren’t used to encountering public scrutiny and political risk for their award decisions. They’re going to experience it here, and they should get used to it for the long haul. I am eager – nay, giddy! – to report on what happens.

Kudos, and carry on, Sunlight.

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TPW 44: Unsafe at Any Setting (A Conversation with Chris Soghoian)

by on June 19, 2009 · 5 comments

chris soghoianIn episode #44 of “Tech Policy Weekly,” Berin Szoka and Adam Thierer engage in a debate with Internet security expert Chris Soghoian, who is a student fellow at the Berkman Center for Internet & Society at Harvard University. He is also a Ph.D. candidate at Indiana University’s School of Informatics.

Chris is an up-and-coming star in the field of cyberlaw and technology policy as he has quickly made a name for himself in debates over privacy policy, data security, and government surveillance.  He straddles the line between academic and activist, and the role he often plays in many tech policy debates is somewhat akin to what Ralph Nader has done in many other fields through the years. Except, in this case, instead of “Unsafe at Any Speed” it’s more like “Unsafe at Any Setting,” since Chris is often raising a stink about what he regards as unjust or unreasonable privacy or security settings that various online websites or service providers use.

On the show, Chris talks about two of his recent crusades to get certain online providers to change their default settings to improve user security or privacy: (1) His effort this week to get major email providers—and Google in particular—to change their default security settings on their email offerings; and (2) his earlier crusade to create permanent opt-out cookies to stop behavioral advertising by advertising networks.

There are several ways to listen to today’s TLF Podcast. You can press play on the player below to listen right now, or download the MP3 file. You can also subscribe to the podcast by clicking on the button for your preferred service. (And do us a favor, Digg this podcast!)

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