I’ve always generally agreed with the conventional wisdom about micropayments as a method of funding online content or services: Namely, they won’t work. Clay Shirky, Tim Lee, and many others have made the case that micropayments face numerous obstacles to widespread adoption. The primary issue seems to be the “mental transaction cost” problem: People don’t want to be diverted–even for just a few seconds–from what they are doing to pay a fee, no matter how small. [That is why advertising continues to be the primary monetization engine of the Internet and digital services.]
That being said, I keep finding examples of how micropayments do work in some contexts and it has kept me wondering if there’s still a chance for micropayments to work in other contexts (like funding media content). For example, I mentioned here before how shocked I was when I went back and looked at my eBay transactions for the past couple of years and realized how many “small-dollar” purchases I had made via PayPal (mostly dumb stickers and other little trinkets). And the micropayment model also seems to be doing reasonably well in the online music world. In January 2009, Apple reported that the iTunes Music Store had sold over 6 billion tracks.
And then there are mobile application stores. Just recently I picked up a Droid and I’ve been taking advantage of the rapidly growing Android marketplace, which recently hit the 20,000 apps mark. Like Apple’s 100,000-strong App Store, there’s a nice mix of paid and free apps, and even though I’m downloading mostly freebies, I’ve started buying more paid apps. Many of them are “upsells” from free apps I downloaded. In most cases, they are just 99 cents. A few examples of paid apps I’ve downloaded or considered buying: Stocks Pro, Mortgage Calc Pro, Currency Guide, Photo Vault, Weather Bug Elite, and Find My Phone. And there are all sorts of games, clocks, calendars, ringtones, heath apps, sports stuff, utilities, and more that are 99 cents or $1.99. Some are more expensive, of course.
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by James Dunstan & Berin Szoka* (PDF)
Originally published in Forbes.com on December 17, 2009
As world leaders meet in Copenhagen to consider drastic carbon emission restrictions that could require large-scale de-industrialization, experts gathered last week just outside Washington, D.C. to discuss another environmental problem: Space junk.[1] Unlike with climate change, there’s no difference of scientific opinion about this problem—orbital debris counts increased 13% in 2009 alone, with the catalog of tracked objects swelling to 20,000, and estimates of over 300,000 objects in total; most too small to see and all racing around the Earth at over 17,500 miles per hour. Those are speeding bullets, some the size of school buses, and all capable of knocking out a satellite or manned vehicle.
At stake are much more than the $200 billion a year satellite and launch industries and jobs that depend on them. Satellites connect the remotest locations in the world; guide us down unfamiliar roads; allow Internet users to view their homes from space; discourage war by making it impossible to hide armies on another country’s borders; are utterly indispensable to American troops in the field; and play a critical role in monitoring climate change and other environmental problems. Orbital debris could block all these benefits for centuries, and prevent us from developing clean energy sources like space solar power satellites, exploring our Solar System and some day making humanity a multi-planetary civilization capable of surviving true climatic catastrophes.
The engineering wizards who have fueled the Information Revolution through the use of satellites as communications and information-gathering tools also overlooked the pollution they were causing. They operated under the “Big Sky” theory: Space is so vast, you don’t have to worry about cleaning up after yourself. They were wrong. Just last February, two satellites collided for the first time, creating over 1,500 new pieces of junk. Many experts believe we are nearing the “tipping point” where these collisions will cascade, making many orbits unusable.
But the problem can be solved. Thus far, governments have simply tried to mandate “mitigation” of debris-creation. But just as some warn about “runaway warming,” we know that mitigation alone will not solve the debris problem. The answer lies in “remediation”: removing just five large objects per year could prevent a chain reaction. If governments attempt to clean up this mess themselves, the cost could run into the trillions—rivaling even some proposed climate change solutions.
Instead, space-faring nations should create an Orbital Debris Removal and Recycling Fund (ODRRF). Continue reading →
In case you live under a digital rock (whaddyamean, you don’t check TechMeme hourly?), you have probably heard that EPIC filed a complaint with the Federal Trade Commission Thursday, alleging that Facebook’s revised privacy settings (and their implementation) constitute “unfair and deceptive trade practices” punishable under the FTC’s Section 5 statutory consumer protection authority. Specifically, EPIC demands, in addition to “whatever other relief the Commission finds necessary and appropriate,” that the FTC “compel Facebook to restore its previous privacy settings allowing users to:”
- “choose whether to publicly disclose personal information, including name, current city, and friends” and
- “fully opt out of revealing information to third-party developers”
In addition, EPIC wants the FTC to “Compel Facebook to make its data collection practices clearer and more comprehensible and to give Facebook users meaningful control over personal information provided by Facebook to advertisers and developers.”
I’ll have more to say about this very complicated issue in the days to come, but I wanted to share, and elaborate on, two press hits I got on this issue today. First, in the PC World story, I noted that “we’re already seeing the marketplace pressures that Facebook faces move us toward a better balance between the benefits of sharing and granular control” and expressed my concern “about the idea that the government would be in the driver’s seat about these issues.” In particular, Facebook has made it easier for users to turn off the setting that includes their friends among their “publicly available information” that can be accessed on their profile by non-friends (unless the user opts to make their profile inaccessible through Facebook search and outside search engines).
In other words, this is an evolving process and Facebook faces enormous pressure to strike the right balance between openness/sharing and closedness/privacy. While Facebook’s critics assume that it is simply placing its owyou and I saw an article that is as oldyou you as it isn financial interests above the interests of its users, the reality is more complicated: Facebook’s greatest asset lies not in the sheer number of its users and not just in the information they share, but in the total degree of engagement in the site. The more time users spend on the site, the better, because Facebook is rewarded by advertisers for attracting and keeping the attention of users. Continue reading →
So the Federal Trade Commission filed a lawsuit against Intel yesterday charging the company with violations of Sect. 5 of the FTC Act (unfair or deceptive trade practices). What you may have missed yesterday, however, is the rather ironically timed announcement from the Obama administration that it is launching new policies to spur more manufacturing it the United States. In a statement, Vice President Biden said:
“We need legal, tax and regulatory regimes that promote American manufacturing and do not place an undue burden on those who wish to manufacture products in America.”
Over at the ACT blog, Mark Blafkin writes why this is ironic:
Intel is one of the last great American manufacturers. While Intel does some manufacturing abroad, the vast majority of its chips are built by its 40,000 American workers. Most of Intel’s fabrication facilities are in the United States, including Arizona, California, Colorado, Massachusetts and Oregon, and the company has announced that it will spend $7 billion to build more facilities here.
The FTC filed its case on behalf of AMD and Nvidia, two companies who have decided to offshore nearly ALL of their manufacturing. AMD’s most advanced manufacturing facility is in Germany, and is “more of a German government fab than an AMD fab” after the German government invested more than $1.5 billion to build it.
When the European Competition Commissioner decided that Intel abused European antitrust law, she crowed that Intel should change its tagline from “Sponsors of Tomorrow” to “Sponsors of the European Taxpayer.” One would hope that the American government would not have similar designs on taking down a company that provides so many high paying American jobs.
As we’ve noted here before in our ongoing series on “Problems in Public Utility Paradise,” municipal wi-fi experiments and local government fiber investments don’t have a very impressive track record. The Philadelphia experiment, which I have discussed here before many times, has been particularly instructive. As Dan P. Lee documented in this spectacular Philadelphia magazine article last year, the city’s subsidized wi-fi system, Wireless Philadelphia, was a political and technical fiasco of the highest order right from the start. It unraveled fairly quickly after its 2005 launch and now, according to The Philadelphia Business Journal:
The city of Philadelphia said Wednesday it intends to purchase, for $2 million, the wireless network constructed by EarthLink Inc. to turn the entire city into a Wifi hotspot. The city said it intends to exercise an option in an agreement signed in August to buy the network from Network Acquisition Co. LLC, which took the network over from Atlanta-based EarthLink in June 2008. The city said the purchase will be the first in a series of steps to create a wireless network it will use to enhance public safety, improve government efficiency and provide Internet access in targeted public places. The city said creating that network will require it to spend nearly $17 million over its 2011 through 2015 fiscal years. The money would go to building out both the core fiber network it already owns and the wireless mesh network it intends to purchase from Network Acquisition Co…
In other words, taxpayers are stuck picking up the tab for this failed experiment and now have to hope that the city can somehow manage it into profitability. Well, good luck with that. Even Karl Bode of Broadband Reports, someone who usually has nothing but nice things to say about Big Government high-tech projects and regulation, is forced to admit that the script for muni wi-fi paradise didn’t quite play out as expected:
Network Acquisition Corporation purchased the network from Earthlink back in 2008, when Earthlink bailed (and we really mean bailed) on their muni-fi ambitions. The buyers briefly tinkered with free access and claimed they’d expand the network, but ultimately wound up being only a stepping stone between Earthlink and Philadelphia control. Philadelphia’s use of Wi-Fi as a municipal efficiency and communications tool is a growing trend among cities, many of which found that broad, free Wi-Fi for all simply wasn’t sustainable.
Do you mean to say that there is no such thing as a free lunch? I am shocked, shocked! Well, actually, I’m not. Continue reading →
The LA Times has come out swinging in a devastating editorial against Rep. Anna G. Eshoo’s (D-CA) Commercial Advertisement Loudness Mitigation (CALM) Act, passed by the House on Tuesday. As Adam Thierer and I have discussed (here, here, and here), and as PFF’s Ken Ferree notes here, this silly paternalist law would require the FCC to issue rules that broadcast and cable TV ads:
(1) … shall not be excessively noisy or strident;
(2) … shall not be presented at modulation levels substantially higher than the program material that such advertisements accompany; and
(3) [their] average maximum loudness… shall not be substantially higher than the average maximum loudness of the program material that such advertisements accompany.
The LA Times‘s pithy response: “Ads too loud? Try ‘mute.‘” Three cheers for trusting users to take advantage of the simple tools available to them to make these decisions for themselves (like the “mute” button on their remote), instead of leaping to legislative solutions:
Eshoo might have the public on her side, but as a representative of Silicon Valley, she should be more wary of having the government dictate technological solutions to problems that individuals can solve themselves. The market is already responding — more than 30% of TV viewers use ad-skipping video recorders. Besides, as dissenting Republicans on the House Energy and Commerce Committee pointed out,“Americans’ televisions still have volume control, and remote controls still have ‘mute’ buttons. Consumers do not need the government to come into their homes and operate their remote controls for them.” With all the challenges facing the country, you’d think lawmakers could find better things to do than invite themselves into their constituents’ living rooms.
Besides the broad philosophical precedent that this elitist law sets (consumers are too stupid and helpless to take care of themselves so government must do it for them), I explained in some detail five other reasons why this law is a terrible idea when I blogged about it in October: Continue reading →
Good ideas, supported by evidence, eventually matter.
That’s the conclusion I reached after reviewing the outline the FCC’s broadband task force presented to the commission yesterday. Here are some ideas perceptive scholars have been discussing for a long time that are apparently going to be part of the National Broadband Plan:
- “Private sector investment is essential; new funding is limited.” So I guess the Interstate Highway System won’t be the funding model for universal broadband. Whew!
- “Policy changes require the consideration of unintended consequences.”
- “Competition drives innovation and better choices for consumers.”
- Wireless broadband needs a big new chunk of spectrum, and policymakers need to consider reallocating broadcast TV spectrum and spectrum reserved for use by the federal government.
- “Market forces should be applied to all [spectrum] bands, though other policy objectives should play a role in allocation decisions.”
- Fundamental reform of the Universal Service Fund, which subsidizes phone service very inefficiently, should actually be done, not just talked about.
- Universal service reform should include reform of “intercarrier compensation,” the charges phone companies pay each other when they hand off traffic.
- “USF policies should be designed to achieve measurable outcomes with transparency, oversight, and accountability.”
Most of these ideas were considered wacky, ideological, politically unrealistic, or just not relevant a few decades (or even a few years) ago. Now they are the mainstream.
That doesn’t mean everything is wonderful with the National Broadband Plan. The FCC is supposed to plan how broadband will be used to promote consumer welfare, civic participation, public safety, education, health care, energy independence, community development, worker training, and a host of other legislative goals. In many cases there may be a fundamental tension between consumer welfare — a term of art in economics that means resources are allocated so that consumers get the selection of goods and services they are most willing to pay for, with the quality attributes they most prefer, at the best possible prices — and the other goals, which often involve planners deciding what consumers should want. Similarly, FCC Chairman Genachowski’s comments illustrate some decisionmakers’ disturbing tendency to conflate access (the service is available to those who want it) with adoption (everybody actually chooses to use it). Technophiles sometimes have an annoying habit of assuming that those of us who fail to adopt the latest info tech gadget or service must be ignorant rubes who don’t understand the glories of being hooked up to a fat information pipe 24/7 — rather than careful shoppers who have better things to do with our time than read Yahoo OMG! while driving. For this reason I fully expect to be annoyed by the National Broadband Plan, as well as gratified to see that some good ideas have finally made it from the Ivory Tower to real-world policy application.
But there’s enough good stuff in there to stick with “gratified” for at least one day.
As I noted here a few days ago, the Federal Communications Commission held a workshop on Tuesday about “Speech, Democratic Engagement, and the Open Internet.” It was a shockingly one-sided affair with the deck being stacked almost entirely in favor of advocates of Net neutrality regulation. Worse yet, those advocates shamelessly made up spooky stories about a future of “private censorship” that could only be remedied by using the First Amendment as a club to beat private players into submission. The token opposition at this Chicken Little circus was Robert Corn-Revere, a Partner at the law firm of Davis Wright Tremaine LLP in Washington, D.C. Bob set the record straight–both in terms of baseless accusations that were flying that day as well as the revisionist histories of the First Amendment that were being put forward. I’m happy to report that Bob allowed PFF to reprint his remarks as a new white paper entitled, “The First Amendment, the Internet & Net Neutrality: Be Careful What You Wish For.”
In his essay, Corn-Revere discusses the relationship between the First Amendment and regulatory policy, particularly the treatment of new communications technologies, and he warns that government regulation of broadband networks could “provide the vehicle for advancing new First Amendment theories for media regulation” and online speech and expression more generally. “It should not be forgotten,” he argues, “that the federal government’s initial impulse was to censor the Internet and to subject it to a far lower level of First Amendment protection. It pursued this agenda for more than a decade but was blocked by a series of First Amendment rulings.” The Communications Decency Act and the Child Online Protection Act are just two notable examples. Luckily, the courts determined that “the open Internet would be at great risk if the government is allowed to exercise such power,” he notes, and they struck down such laws.
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My friend Pablo Chavez, Managing Policy Counsel of Google, brings to my attention the fact that the Daniel Pearl Freedom of the Press Act (H.R. 3714) was pending before the House today, and I’m happy to note that it passed late this afternoon. The bill, which is co-sponsored by Reps. Schiff and Pence in the House and is co-sponsored by Sen. Dodd in the Senate, would expand the examination of press freedom worldwide in the State Department’s annual human rights report and establishes a grant program aimed at broadening and strengthening media independence internationally. Specifically, the bill would identify “countries in which there were violations of freedom of the press, including direct physical attacks, imprisonment, indirect sources of pressure, and censorship by governments, military, intelligence, or police forces, criminal groups, or armed extremist or rebel groups.”
This is a worthwhile goal and a fine tribute to a great journalist, a first-class human being, and someone I was honored to briefly count as a friend in this world before he was murdered by terrorist scum in 2002. Indeed, some of my fondest memories from the mid-90s are of the times I would meet Danny Pearl for beers at Cap City Brewery or other bars in downtown Washington, DC. He was an up-and-coming star reporter covering telecommunications policy for The Wall Street Journal and I was just starting to make a name for myself as a policy geek in this field. Because I was working very closely with a number of Hill offices at that time and helping to craft some of what eventually went into the Telecom Act of 1996, Danny knew I had a lot of good inside information. And like any great journalist, he knew that enough beers and late-night banter would eventually get me to spill the beans about something I wasn’t suppose to be sharing with a reporter! I didn’t mind being an “unnamed source” in a couple of his stories, and the fact that he sometimes quoted me in others gave me and my career an unbelievable boost. I still remember sending my family the first big WSJ story I was ever quoted in. It was a piece Danny wrote back in ’94.
Everyone now knows the tragic story of how Danny was abducted and murdered by terrorists in 2002. I remember how numb I went when I heard the news and still find it hard to fathom how such a gentle, down-to-earth soul could have been viciously murdered.
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As I pointed out here before (see, “And so the Comcast-NBC Merger Hysteria Begins: Help Me Document It!“), every time a media merger is proposed we hear all sorts of silly Chicken Little predictions of impending doom as well as preposterous conspiracy theories about supposed nefarious schemes to take over the media universe and control our minds. For good measure, there’s also plenty of talk of “the death of deliberative democracy,” or efforts to weed out one sort of perspective or another.
As history has shown, it’s all complete bunk. But that doesn’t stop critics from concocting asinine theories about media providers seeking to “silence critics.” Here’s two bits of Chicken Little-ism that I missed in my previous essay documenting this silliness. First, over at Huffington Post, Marvin Ammori tells us that America is about to become Italy or Argentina because of the deal:
Putting so much power in the hands of one company–and, specifically, its executives–is dangerous for a democracy. There is a reason why autocratic regimes control the media–media shape public opinion and define what is “possible” in politics. We have seen the problem of private media consolidation in many countries. In Italy, Silvio Berlusconi used his massive media empire to win elections and is now Prime Minister (Italy’s longest serving ever). In Argentina, the government had to pass a media consolidation law because of the power of one media company that happens to be far smaller than a combined Comcast-NBCU.
And then we have Wade Norris writing about the deal over at the Daily Kos, saying: “If you don’t want to see the progressive voices on MSNBC silenced, then join the ‘no merger’ petition.” Ah yes, another automated “stuff-the-online-complaint-ballot-box” petition. I love those gimmicks. But ignore fake complaints for a moment and focus on the accusations at hand here. The Ammori-Norris theory is: If Comcast and NBCU are allowed to marry (a) progressive voices will be driven off their platforms and (b) Silvio Berlusconi will take over America democracy will somehow suffer. Is there really any truth to this? Continue reading →
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