Berin has already done a fine job tearing apart this latest effort by 10 activist groups to break the Internet by imposing burdensome regulation or punishing legal liability on Internet operators for the crime of trying to deliver relevant advertising to users that can actually pay for the content and services given away to users for free. To that, I would add my deep disappointment that the Electronic Freedom Foundation (EFF) choose to join this cabal. After all, the other members of the coalition are frequently heard calling for regulation of one variety or another. But EFF always prides itself on supposedly avoiding online regulatory schemes. That’s what makes it so surprising that they chose to jump on this bandwagon for an Internet industrial policy in the name of “protecting privacy.”
EFF’s embrace of regulation is particularly inconsistent given their excellent filing in the FCC’s “Child Safe Viewing Act” proceeding this summer. As I’ve previously noted, this proceeding raises the specter of “convergence-era content regulation” with Congress authorizing the FCC to look into “advanced blocking controls” for “wired, wireless, and Internet” platforms. EFF’s comments rightly stressed dangers of expanded content controls or Internet regulation, and noted the many “less-restrictive means” available to the public that provide compelling alternatives to government regulation: “Blocking technologies are widely available in the market and do not require further government support.” And EFF has been instrumental throughout the years of making the case in courts for applying the less-restrictive means test and strict scrutiny when it comes to government efforts to regulate speech.
Why, then, does EFF take the diametrically opposite position when privacy concerns enter the picture? Continue reading →
A few gems from George Gilder’s 1990 masterpiece Microcosm: the Quantum Revolution in Economics & Technology as I work my way through the book:
Predatory Pricing. Gilder details how early microchip manufacturers created wholly new markets put Say’s law into action: supply creating its own demand. Not only did these companies introduce new technologies, but they created demand by slashing the prices of those technologies by multiple orders of magnitude (10-10,000x) even before they figured out how to lower production costs enough to make even a small profit. While such practices would later give rise to charges of “predatory pricing” and “dumping,” Gilder explains:
Selling below cost is the crux of all enterprise. It regularly transforms expensive and cumbersome luxuries into elegant mass products. It has been the genius of American industry since the era when Rockefeller and Carnegie radically reduced the prices of oil and steel. (122)
The Learning Curve: Gilder explains the dynamic by which prices drop so consistently in innovative new industries:
Early in the life of a product, uncertainty afflicts every part of the process. An unstable process means energy use per unit will be at its height. Both fuels and materials are wasted. High informational entropy in the process also produces high physical entropy.
The benefits of the learning curve largely reflect the replacement of uncertainty with knowledge. The result can be a production process using less materials, less fuel, less reworks, narrower tolerances, and less supervision, overcoming entropy of all forms with information. This curve, in all its implications, is the fundamental law of economic growth and progress. (125)
The Curve of the Mind: Gilder explains the broader implications of the Learning Curve to the competitiveness of the market economy, and how easily yesterday’s giants can become tomorrow’s easy prey: Continue reading →
I ponder Canadian health care and directions for U.S. reform on the Convergence Law Institute Blog here.
I’ve been looking for something nice to say about Ted Kennedy. I thought I found it in the eulogy he gave at his brother Robert’s funeral (MP3) —only to realize that the most rousing parts of that oration were quotes from a speech RFK gave in 1966 in South Africa. While generally taken as a mantra for American social democrats—mild democratic socialists who, having already stolen the word “liberal,” found it necessary to steal the word “Progressive,” too—RFK’s speech contains one passage that is as relevant to RFK’s vision of perpetual “Social Progress” as it is to the reality of perpetual technological progress:
surely we can begin to work a little harder to bind up the wounds among us and to become in our own hearts brothers and countrymen once again. The answer is to rely on youth—not a time of life but a state of mind, a temper of the will, a quality of imagination, a predominance of courage over timidity, of the appetite for adventure over the love of ease. The cruelties and obstacles of this swiftly changing planet will not yield to the obsolete dogmas and outworn slogans. They cannot be moved by those who cling to a present that is already dying, who prefer the illusion of security to the excitement and danger that come with even the most peaceful progress.
It is a revolutionary world we live in, and this generation… has had thrust upon it a greater burden of responsibility than any generation that has ever lived.
RFK wasn’t talking about the Digital Revolution, but the same words could have come from Virginia Postrel, the Mary Wollstonecraft of the Internet era, whose 1998 book The Future and Its Enemies rallied “dynamists” against “stasists” to embrace technlogical change. RFK’s call for courage and imagination needs only to be tempered by a pragmatic recognition of the challenges such change creates. As Adam Thierer declared in his Pragmatic (Internet) Optimist’s Creed:
I believe that the Internet is reshaping our culture, economy, and society – in most ways for the better, but not without some heartburn along the way.
I believe that the world of information abundance that has dawned is vastly superior to the world of information poverty that we just left. But I also understand that not all information is equal and that that the rise of abundance raises concerns about information overload, objectionable content, and the role of “authority” and “truth.”
With these important caveats, those of us who believe in both Progress and Freedom can embrace Kennedy’s bold futurism, which his brother John called the “New Frontier” in his electrifying nomination acceptance speech at the 1960 Democratic National Convention: Continue reading →
The Tennis Channel and ESPN have teamed up to offer live coverage of the US Open online. Not only is this a wonderful thing for consumers, but it also demonstrates just how easily content creators (including traditional television programming networks) can completely bypass cable companies, who once supposedly used their “bottleneck” power to act as “gatekeepers” over the content Americans could receive. If this was ever true, it certainly isn’t true in the era of Internet video!
The venture will, of course, be ad-supported. But just how much content such a model can support will depend heavily on whether Internet video programming distributors like this venture (or Hulu.com) will be able to personalize the ads shown on their videos based on the likely interests of users. Ad industry observer David Hallerman has predicted that spending on behavioral advertising:
is projected to reach $1.1 billion in 2009 and $4.4 billion in 2012 [a quarter of U.S. display advertising].The prime mover behind this rapid increase will be the mainstream adoption of online video advertising, which will increasingly require targeting to make it cost-effective.
The problem isn’t just the expense involved in streaming online video, it’s that contextually targeting advertising (based on keywords) is easy when the content is text but far more difficult when the content is video.
So if you’re hoping to cut the cord to cable and save the expense of a monthly cable subscription, you’d better hope the privacy zealots don’t wipe out advertising model necessary to make Internet video a true substitute for traditional subscription video sources!
A coalition of ten self-described “consumer and privacy advocacy organizations” today demanded legislation that would restrict the collection and use of data online for customizing advertising based on Internet users’ interests. I’ll have more to say on this but here are my initial comments:
These so-called “consumer advocates” are actually anti-consumer elitists. Not only do they presume that consumers are too stupid or lazy to make their own decisions about privacy, but they ignore the benefits to consumers: more relevant advertising plus more and better content.
Advertising has been the “mother’s milk” of media in America since colonial times and the future of media depends on the ability of publishers to replicate that revenue model online. Micropayments, donations, subscriptions alone simply can’t fund a vibrant marketplace of ideas. Only personalized advertising can sustain publishers through the Digital Revolution.
Regulatory advocates haven’t demonstrated any harm to consumers that would justify such sweeping preemptive regulation. By strangling funding for new media, such regulations would amount to an “Industrial Policy” for the Internet. Instead, policymakers should focus on educating consumers and empowering them by promoting development of better privacy management tools.
The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology.