A response to a post
Oct. 25th, 2006 12:47 am![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
garotePosted in response to a response to a previous post. Whoo!
My good man, we have had information economies since we have had information, and a means - any means - of commoditizing it. :) (There is great argument over what the term "information economy" even means ... my definition is a liberal one.) The only difference between now and the past is the level of independence that types of content have gained from types of containers. We used to only be able to broadcast morse code via wire, and the airwaves were right out. Nowadays we can broadcast damn near anything via wire and airwaves alike, and manage the ways and means it is stored with much more flexibility.
But just because the costs are not apparent at the granular scale doesn't mean that the costs are irrelevant. Consider what total junk the internet would be if we couldn't get electric power (or just couldn't pay for it). Consider the manufacturing costs of the high-end switching equipment that forms the backbone of our networks (and again, who pays for it). Consider how, as the breadth of our information supply increases, exponentially more processing time is required to derive useful results from it. It still is an economy of service and scarcity - it's just got a big bendy electronic joint in the middle, and at one end of that joint you have a bunch of programmers sitting at keyboards ... and among them the occasional fruit loop who thinks he's part of a "post-materialist revolution" on account of how much his job is like the one George Jetson had, where he would just push one button over and over until his finger got sore, and then clock out for the day.
Also, I'd never make the claim that, just because I can duplicate certain bits and bytes indefinitely, the media I have duplicated has no reason to be scarce anymore. In terms of economics, I think the argument should be approached from the other end:
So you can duplicate certain bits and bytes indefinitely. Why would you? What would be your reason for doing that? Are you doing it to keep a backup? That seems wise. Are you doing it to give it to someone else for free? Okay; whatever flips your cookie... Are you doing it for a fee, or so that your friend can avoid a fee? Congratulations, you are participating in an economy of scarcity. In the first instance, you're attempting to enforce one - and in the second, you're attempting to subvert one!
Welcome to the murky for-profit fist-fight of the "new economy", where we encounter such weird edge cases as fake "name brand" bags, patented gene sequences, generic drugs, and boxed copies of Windows XP h4x()r Edition selling for two bucks each, next to the hotdogs on a street vendor's cart. (Ol' Mr. Dibbler will even throw in Madonna's last album for free, and that's cutting his own throat; he swears.)
For what it's worth, I predict that the internet will eventually be paved over by amalgamated content providers, as we all undergo an intimately related transition: Our home computers will be replaced by set-top boxes that browse the web and run iTunes, and are all-too-aware of the latest high tech encryption and DRM schemes. We will pay one cent a month for each AIM account we have, ten cents per minute of video we watch, ten cents per minute of audio we download, and 40 bucks a month just to keep the thing online. And one hundredth of a cent for each google search we invoke.
I suspect these boxes will all be running OS X.
It's not a terrible future, not really ... though it is a significantly less flexible one. And we can pretty much kiss our "post-materialist" Valhalla goodbye. :)
My good man, we have had information economies since we have had information, and a means - any means - of commoditizing it. :) (There is great argument over what the term "information economy" even means ... my definition is a liberal one.) The only difference between now and the past is the level of independence that types of content have gained from types of containers. We used to only be able to broadcast morse code via wire, and the airwaves were right out. Nowadays we can broadcast damn near anything via wire and airwaves alike, and manage the ways and means it is stored with much more flexibility.
But just because the costs are not apparent at the granular scale doesn't mean that the costs are irrelevant. Consider what total junk the internet would be if we couldn't get electric power (or just couldn't pay for it). Consider the manufacturing costs of the high-end switching equipment that forms the backbone of our networks (and again, who pays for it). Consider how, as the breadth of our information supply increases, exponentially more processing time is required to derive useful results from it. It still is an economy of service and scarcity - it's just got a big bendy electronic joint in the middle, and at one end of that joint you have a bunch of programmers sitting at keyboards ... and among them the occasional fruit loop who thinks he's part of a "post-materialist revolution" on account of how much his job is like the one George Jetson had, where he would just push one button over and over until his finger got sore, and then clock out for the day.
Also, I'd never make the claim that, just because I can duplicate certain bits and bytes indefinitely, the media I have duplicated has no reason to be scarce anymore. In terms of economics, I think the argument should be approached from the other end:
So you can duplicate certain bits and bytes indefinitely. Why would you? What would be your reason for doing that? Are you doing it to keep a backup? That seems wise. Are you doing it to give it to someone else for free? Okay; whatever flips your cookie... Are you doing it for a fee, or so that your friend can avoid a fee? Congratulations, you are participating in an economy of scarcity. In the first instance, you're attempting to enforce one - and in the second, you're attempting to subvert one!
Welcome to the murky for-profit fist-fight of the "new economy", where we encounter such weird edge cases as fake "name brand" bags, patented gene sequences, generic drugs, and boxed copies of Windows XP h4x()r Edition selling for two bucks each, next to the hotdogs on a street vendor's cart. (Ol' Mr. Dibbler will even throw in Madonna's last album for free, and that's cutting his own throat; he swears.)
For what it's worth, I predict that the internet will eventually be paved over by amalgamated content providers, as we all undergo an intimately related transition: Our home computers will be replaced by set-top boxes that browse the web and run iTunes, and are all-too-aware of the latest high tech encryption and DRM schemes. We will pay one cent a month for each AIM account we have, ten cents per minute of video we watch, ten cents per minute of audio we download, and 40 bucks a month just to keep the thing online. And one hundredth of a cent for each google search we invoke.
I suspect these boxes will all be running OS X.
It's not a terrible future, not really ... though it is a significantly less flexible one. And we can pretty much kiss our "post-materialist" Valhalla goodbye. :)
![[identity profile]](https://www.dreamwidth.org/img/silk/identity/openid.png){kind=small}
no subject
Date: 2006-10-25 10:45 pm (UTC)no subject
Date: 2006-10-27 06:01 am (UTC)no subject
Date: 2006-10-31 03:50 am (UTC)Your wording ("whatever flips your cookie") seems to imply that sharing information is irrational; a quirk. First of all, those two things can be the same: if I spread some information more widely, then lose my copy, I'm more likely to find someone to give it back to me later on. Second, someone can use the information to make something I'll like: if it's a song, they can remix it; if it's a book on computer science, they can learn from it and write a useful program. Finally, by contributing to a culture of sharing in general, I can make it a bit more likely that people will share other, unrelated information with me.
As for your conclusion, you should post that on Slashdot and see what hilarious replies you get. They'll think you're completely serious. I assume you're not -- I expect a little delusion from someone working for Apple, but here your disconnect with reality is just too great.
heh
Date: 2006-10-31 05:15 am (UTC)Also, your interpretation of my usage of the phrase "whatever flips your cookie" - and thereby your response to it - is much broader in scope than I meant it to be. I said In terms of economics, I think the argument should be approached from the other end. Which was in response to your characterization of "pure information" as having no reason to be scarce anymore. I am merely pointing out that information still has plenty of reason to be for sale, and that you participate in the dispersal of free information in a commons based on your personal whim. I.e. you do it when it flips your cookie. ;)
If you want to contribute to a culture of sharing that's terrific. But it is not the only purpose for which the global network should be used; and furthermore I believe that a smaller and smaller proportion of network traffic will be devoted to it as we march into the future. I am serious when I predict that the majority of us will eventually be participating in a pay-as-you-go internet, just as we already pay a monthly fee for the electricity and the connectivity.
Re: heh
Date: 2006-11-04 05:54 am (UTC)So how do you propose that the internet will be "paved over by amalgamated content providers" and personal computers will be replaced bby set-top boxes with "DRM schemes"? Even if they are not the majority, there are a substantial number of people with substantial amounts of money who wouldn't want this to happen: most programmers; academics, librarians, privacy advocates; anyone benefitting from open-source software; indie musicians who collaborate and share work online; and really, lots of plain old regular joes who have found out they can do lots of cool things on the computer and won't want to give that up. Do you deny that these groups are significant? If so, why aren't they?
If not, what factor besides the free market will elicit this world of set-top boxes, paid content providers, and DRM? Will it be regulation -- super-DMCA-type laws, broadcast flag, and so on? Will it be monopoly -- hardware companies get together with publishers and say, "Oh sure, we'll build DRM into all our products from now on"? Something else, and if so, what?
The way I see it, only one thing makes iTunes viable: copyright law. They aren't really selling information, but the service of obeying the law as well, for whatever smugness, sense of security, and charitable feeling you get out of it. Not only is the whole business model supported by a law, it's an unenforceable law that most people break (I read in the paper last week that an industry group estimates only 10% of music downloads are legal). This doesn't seem to me like an industry with a bright and vibrant future ahead of it.
I hope you understand I'm not arguing with you at this point; I'm interested in getting to understand your point of view better. Thanks for taking the time to explain it to me.
Re: heh
Date: 2006-11-05 11:35 am (UTC)The people on your list are all excellent people and I count myself among them -- but though we benefit enormously from the expansion of the internet, the grim reality is that this same expansion is pushing us and our data to the sidelines. Remember when the internet was nothing but academics? When it was used as a collaborative tool between universities, with the occasional low-bandwidth game or pr0n collection wedged in a dark corner, and that was it?
Then it went kablooie in the 90's. Not because there was an incredible surge in research grants. Not because of a change in attitudes about the music industry, copyright law, or open-source software (those came later). But because savvy technicians and businessmen realized that they could
1. Make money by selling the middle-class access to it
then
2. Make money by selling stuff to those people through it.
The prototypical home computer was a business instrument, requiring upkeep and training. But a dozen years of evolution alongside the internet has made it a lot more robust and friendlier to the layman, while also multiplying the ways in which consumers can use it. And because this has always been about commerce, this evolution has also spawned a framework - from software to firmware to hardware to network topology - that commerce can take place in. End-to-end encryption and armies of OS engineers methodically locking down parts of the system so that the flow and integrity of certain information can be controlled according to the rules of a transaction.
But as you know, this whole meta-network can be in place and functioning perfectly ... and go absolutely nowhere unless it has customers. And customers won't arrive unless those customers believe that they're getting a good value for their money. And that is the problem that is presently being overcome, all around us.
iTunes isn't successful just because it provides a warm fuzzy feeling about "supporting artists". If that was what customers wanted, they'd buy CDs in the mail (more money goes to the artist that way). And it's obviously not about audio quality. It's about exactly what you and I know it's about: Convenience versus price. The price is just low enough to rope in the fraction of people who own computers and have leftover disposable income, yet are too unsophisticated to successfully pirate their music. If you want to grow that fractional customer base, you can do three things: Lower the price, make it even more convenient,... or make it harder to successfully pirate music.
Re: heh
Date: 2006-11-05 05:47 pm (UTC)(Is it really that hard to successfully pirate music, though? I was under the impression that Windows GUI programs made it easy and convenient.)
Re: heh
Date: 2006-11-05 08:50 pm (UTC)On the other hand, if you choose a demographic like "all college-age kids" - which would be fair, since they download the vast majority of online music - they're at least smart enough to download BearShare, get their PCs all choked up with spyware, and grab the Bloodhound Gang's discography. (Then maybe uzip it and tag it, before dragging it into WinAMP or iTunes.)
That's exactly the demographic that iTunes' price/convenience ratio is after, and a little slice of them are flush with enough disposable income to grab something through iTunes and not bother pirating it.
Re: heh
Date: 2006-11-05 11:35 am (UTC)Lower it to, say, 25 cents a month... And I'll shrug my shoulders and say "Okay, I can live with that." But that's not the point I'm interested in making. My point is: They know. They know how many instant messages you sent, because the network keeps a count, no matter where in the country you take the phone. That count has nothing to do with the distributed mechanism that the phone network operates by. It's a kludge. It's extra communications overhead grafted on to the network just for the purpose of determining how much money to charge you.
Now think of your electric service. Every house on your block draws electricity from the same communal grid. If you live in the 'burbs there's a glass box bolted to the side of your house with a sensitive little plate spinning around in it, and a row of dials telling exactly how much energy you have used. This, too, is a kludge. Except this time, the mechanism is not grafted onto the network, up on the poles where you can't see it - it's in front of your face. But electricity obviously isn't free, so you have no problem paying more than your neighbor if you leave your dryer running for a month.
Now here's, to my mind, the big billion-dollar question: What stops the router in your cable modem, or the switch back at the cable company's data center, from tracking bytes sent and received, and charging you based on both? Absolutely nothing, as far as I know. And if the price is right, this arrangement can be quite palatable. An ISP could deploy to a wider audience using the same network infrastructure, and charge a lower monthly fee, making up the difference in profit by charging more to a fraction of "heavy users", while simultaneously discouraging those heavy users from taxing the network for everyone else. The scale that works best for the vast majority of internet users is to charge almost nothing for downstream traffic, but charge aggressively for upstream traffic. Implement a pricing scale like this, and viola: You have created a financial deterrent to piracy between consumers. Especially if you add the even-more-artificial kludge of charging based on the number of sustained simultaneous connections.
At the same time, consumers wishing to host data for business purposes, legal collaborative purposes, or just for the sake of vanity, can offload their crap to their hosting box at their ISP - where it will run the gauntlet of automated and aggressive anti-piracy scrutiny that any decent-sized ISP can muster.
This arrangement does not interfere with your online gaming, your collaborative programming, chatting, and emailing. It doesn't interfere at all with web surfing or shopping. All of that can still be highly encrypted as well. And if the price is low enough and the service is reliable enough, this can become the standard fee structure. It's also fairer: You're charged according to your level of usage.
But I can guarantee you, it will be the death of non-commercial peer-to-peer networks, which is the fuel under the fire of media piracy online. The only stronghold remaining will be the newsgroups - and as they fall under the tiered pricing structure, they too will begin taking their anti-piracy edicts seriously and begin trimming their feed, simultaneously amputating most of their customer base (who is only there for the piracy, after all).
Re: heh
Date: 2006-11-05 06:00 pm (UTC)Online gaming uses upstream bandwidth quite heavily, for example, if you're hosting an FPS server. And that also uses a lot of sustained connections.
You're also forgetting the legitimate uses of BitTorrent: distributing popular stuff without costing the author much. If I transfer 2 TB of my own public-domain music, for example, right now it wouldn't cost too much. I could seed it myself and maybe transfer a few gigabytes myself. Under your plan, yes I could buy a box to host it on, and it would survive the anti-piracy audit... but I'd have to pay for 2 TB. So quite some legitimate use of the internet is lost here.
Re: heh
Date: 2006-11-05 08:59 pm (UTC)As for hosting an FPS server, you're right ... that would definitely be affected by this pricing. Perhaps we'd need to work out some "trusted computing"-like system for moving server daemons to our ISPs, though that would be very messy and restrictive. OTOH, battle.net-style setups that use proxies would be unaffected.
Re: heh
Date: 2006-11-05 11:36 am (UTC)(As an aside, note how there is a lackluster piracy scene for books - even though, data-wise, a book is vanishingly small. Once again, convenience versus price. Books are cheap. Cheeeeeap. And easier to carry than a laptop. On the other hand, note the much bigger piracy scene for audiobooks. Maybe it's not as much about information itself as we thought eh? Convenience versus price.)
I find it interesting that your list of people supposedly affected by this change is mostly unrelated to the businesses of music and movies:
* Programmers,
* Academics,
* Librarians,
* Privacy advocates,
* Anyone benefitting from open-source software,
* Indie musicians who collaborate and share work online,
* Regular joes who have found out they can do lots of cool things on the computer and won't want to give that up
You describe these people as having "substantial amounts of money", but I don't think that term applies to any of them, except maybe the programmers and the academics. So I don't know how well the "money talks" axiom applies here. But my question to you is, if the general public buys boxes that are DRM-aware, and pays a bit more per month if they spike their bandwidth usage, and pays for text-messaging and emails the same way that cellphone users already do... What great thing have they lost? Just what exactly will the regular joe be giving up, that he doesn't want to give up?
We already live on a pay-as-you-go internet, in some respects. The providers pay, the consumers pay, or both. The Braindead Monkeys are only online because Senor Chaz and I split the hosting fee - because it flips our cookie. Homestar Runner is "free" but of course all the swag costs money. You want full functionality on Livejournal or Slashdot or Flickr, you pay a yearly fee. You want to sell on eBay or get listed in Amazon, you pay a fee. Wikipedia is run by donations. Sourceforge is plastered with banner ads. There are scores of alternative "free" ways to accomplish things online, yes -- but as transactions and transaction fees become smaller, and payments become easier to make and accept, these alternatives will become less visible than their better-advertised, better-maintained companions.
Get WMV locked in as the sole media format on your computer, rip the DVD-burner out of the case, and stack the system in a heap on your living-room stereo. Viola, it's a set-top box. What have you lost? What will the consumers of the future lose?
Re: heh
Date: 2006-11-05 09:46 pm (UTC)Those groups of people I listed having "substantial amounts of money" may not be rich. I didn't mean they have huge amounts. But they're not, like, 4000 starving open source geeks nationwide.
You were claiming before:
* We will pay one cent a month for each AIM account we have,
* ten cents per minute of video we watch,
* ten cents per minute of audio we download,
* And one hundredth of a cent for each google search we invoke.
It's interesting that you claim Google will abandon the ad-supported model that made it rich. And AIM will abandon the same strategy, at which it was also successful. In fact, AOL is just now moving from being subscriber-supported to ad-supported. If your prediction is correct, it will be a big turnaround from the direction things are currently going. By the way, why measure audio on the amount downloaded but video on the amount watched?
I haven't taken a poll, so I can't resolve our at-odds conjectures about what most people will or will not tolerate. Anecdotally, however, it seems to me many people will be unsatisfied with the lack of choice and innovation from what you describe. Besides that, people use computers not just to consume, but to produce, whether it's short fiction, handy computer programs, academic research, electronic music (or indie bedroom rock music), touched-up vacation photographs, humorous photoshopped images and Flash animations, or new levels for their favorite FPS. Often people publish these and other things they make on the internet, and that supplies the bulk of the internet's unique value.
In other words, you seem to be saying that computers are only boxes for consuming, plus a few little gadgets that provide the ability to produce and publish. You're right, but those gadgets are the reason computers and the internet have anything in particular to offer.
Re: heh
Date: 2006-11-06 03:07 am (UTC)Nevertheless, I have personally pirated hundreds of technical books, mainly from Usenet.
20MB for a 200-page book scanned as 100k JPEGs is quite doable - though it's very rare. I once located and used a 3D Studio Max book like that. But you raise a good point that a sizable chunk of books pirated online are technical manuals whose users really want to use search functionality. JPEGs would be crap, for us.
Scanning books through OCR is not the typical way that books become redistributable, nowadays. Nowadays they're purchased in electronic form and then run through a DRM stripper. (It took a very long time to crack Microsoft's .lit format, but it happened.) Even so, technical manuals aside, e-books are not the hot piracy sector you'd expect them to be based on their size. (Even a huge book scanned as jpegs and concatenated into a PDF is half the size of your typical hip-hop album at 128kbps.) And that's due to, as I say, their price/convenience ratio, and as you say, the relative hassle of pirating them. We're both right. The interest is small, pirated or otherwise.
Still, it happens. 'Freakonomics', by Steven Levitt, exists on eDonkey as:
* a 250MB audiobook with 27 unique hosts
* a 26MB PDF with 61 unique hosts
* a 5MB PDF with 44 unique hosts
* a 977k PDF with 90 unique hosts
On the other hand, 'Roving Mars', a book written by Steve Squyres about the Mars rover missions, isn't on eDonkey at all ... though the soundtrack to the movie of the same subject by Philip Glass is a 210MB lossless download with 52 unique hosts, and the movie itself is present with 9 hosts. I know; two data points do not make a case ... But this at least illustrates the haphazard content of P2P networks.
Anyway, we're getting way off track here. :)
Those groups of people I listed having "substantial amounts of money" may not be rich. I didn't mean they have huge amounts. But they're not, like, 4000 starving open source geeks nationwide.
Certainly not. But my main point is, they wouldn't lose much of anything if they chose to/had to undergo what is essentially just a change in pricing structure for the services they use.
You were claiming before:
* We will pay one cent a month for each AIM account we have,
* ten cents per minute of video we watch,
* ten cents per minute of audio we download,
* And one hundredth of a cent for each google search we invoke.
I was mostly just pulling these numbers out of my ass. It shows, doesn't it. :) Maybe it'll be a thousandth of a cent for each google search. Or maybe they'll create a tiered model where you pay 5 cents for each month you invoke more than 100 google searches. The future I'm intrested in conveying is one where payments become more frequent, more convenient, much smaller, better aggregated (for the end user), and more often involve DRM of some kind that Mr Average Joe just won't bother trying to subvert.
It's interesting that you claim Google will abandon the ad-supported model that made it rich. And AIM will abandon the same strategy, at which it was also successful.
I never said they would. Did cable companies stop running commercials when they got enough users subscribed? Hell no. That's what I mean by: the providers pay, the consumers pay, or both.
Re: heh
Date: 2006-11-06 03:07 am (UTC)AOL's transition should have happened years ago. Telecom and cable companies ate their ISP lunch, despite their 100000 "Subscribe Now!" disks littering the earth. They didn't return to profitability because they shifted to ads, they returned to profitability because they stopped treating their users like garbage (spamming them, harrassing them) and trying to sell them inferior services that had become redundant. Now they've entered into a dizzying array of collaborations with the other branches of Time-Warner, and who knows where they'll go.
Your point seems to be that AOL abandoned charging its users for various e-services because it was no longer viable - and that it was no longer viable because, presumably, everyone else is giving those services away. But the problem wasn't that AOL charged anything at all - it was that they charged way, way too much. (And they were assholes.) Price-to-convenience was way out of wack. There's no reason they, or anyone else, couldn't create a more granular fee structure in the years to come. A fee structure based on a second-generation implementation of the email standard.
Would you consider it a fair trade to pay one cent per recipient for each email you send, if it meant transparently encrypting every message from end to end, and completely eliminating all spam from your inbox?
Anecdotally, however, it seems to me many people will be unsatisfied with the lack of choice and innovation from what you describe.
Exactly how will a different, more granular pricing system destroy choice or innovation? If you're talking about lack of choice due to DRM, remember that you're dealing only with copyrighted books, music, and video, and that music and video have seen incredible reductions in their perceived value that are probably here to stay, due to the drastically lowered barrier-to-entry in those markets. A catchy tune just isn't worth what it used to be, and now media outlets have to compete with that.
You could make the case that unfettered piracy has resulted in a more fertile creative landscape for a generation of artists and thinkers, but I'm not sure how seriously we should take that case. The real innovation wasn't piracy (which had plagued the PC industry for 20 years previously and almost single-handedly destroyed the Apple II platform), it was the quantum leap in device interconnectedness that made such rampant piracy possible. People got exposed to a whole lot of shit for "free" - but in retrospect it was more of a case like, people paid 1500 bucks to a computer company for a computer and 40 bucks a month to a phone company for dialup, and despite all the crap they got for "free" online, none of that money made by the computer company or the dialup company ever made it over to the record company, the book shop, or the movie studio. We went online as soon as we could afford it, but the money we spent in the process probably didn't go where it should have; know what I mean?
Re: heh
Date: 2006-11-06 03:08 am (UTC)Besides that, people use computers not just to consume, but to produce, whether it's short fiction, handy computer programs, academic research, electronic music (or indie bedroom rock music), touched-up vacation photographs, humorous photoshopped images and Flash animations, or new levels for their favorite FPS. Often people publish these and other things they make on the internet, and that supplies the bulk of the internet's unique value.
This is true. People do whatever flips their cookie. Now imagine if each indie band could collect one cent per end-user download of their music ... just enough to pay their ISP costs. Would this possible incentive stifle their creativity, or encourage it? What if they gave away the first three tracks of an album, and sold the rest for a penny each?
In other words, you seem to be saying that computers are only boxes for consuming, plus a few little gadgets that provide the ability to produce and publish. You're right, but those gadgets are the reason computers and the internet have anything in particular to offer.
As I said above - it's not piracy, or a lack of additional charges, that sets the internet apart from your local radio station or cable company. It's the device interconnectedness. People can broadcast as well as receive, write as well as read. Providing reliable, palatable tools for these people to attempt to derive monetary gain from their work is not going to cancel that innovation out. Just because you put someting online does not mean you have to put a price tag on it. Or, hey, if you wish, you can put a price tag of 0.00 on it and wrap it in keyed DRM just so that you can track where it goes.