Matt Yglesias

Open Access Needed

Enjoying fast, fast broadband in Stockholm (my photo, available under cc license)

It’s pretty well-known at this point* that despite the fact that the Internet was largely invented in the United States and that most of the iconic Internet brands are US companies, that America is only a mediocre performer in terms of quality of broadband access and depth of broadband penetration. These points are, however, often made in a pretty superficial way. This recent major study from the Berkman Center (see more discussion) breaks the information down in a more sophisticated way. That shows that some things aren’t quite as they initially seem—Canada and Norway both look worse, for example—but that the US remains a middling performer.

Their main policy conclusion is that “open access” policies of the sort the United States had in the mid-1990s but then abandoned are common across all the high performing nations:

Our most surprising and significant finding is that “open access” policies—unbundling, bitstream access, collocation requirements, wholesaling, and/or functional separation—are almost universally understood as having played a core role in the first generation transition to broadband in most of the high performing countries; that they now play a core role in planning for the next generation transition; and that the positive impact of such policies is strongly supported by the evidence of the first generation broadband transition.

The importance of these policies in other countries is particularly surprising in the context of U.S. policy debates throughout most of this decade. While Congress adopted various open access provisions in the almost unanimously-approved Telecommunications Act of 1996, the FCC decided to abandon this mode of regulation for broadband in a series of decisions in 2001 and 2002. Open access has been largely treated as a closed issue in U.S. policy debates ever since. Yet the evidence suggests that transposing the experience of open access policy from the first generation transition to the next generation is playing a central role in current planning exercises throughout the highest performing countries. In Japan and South Korea, the two countries that are half a generation ahead of the next best performers, this has taken the form of opening up not only the fiber infrastructure (Japan) but also requiring mobile broadband access providers to open up their networks to competitors.

In leading countries like Sweden and the Netherlands, following the earlier example of the United Kingdom, regulators are addressing the complexities of applying open access policy to next-generation infrastructure by pushing their telecommunications incumbents to restructure their operations and functionally separate their units that sell access to network infrastructure from their units that sell connectivity directly to consumers. Moreover, countries that long resisted the implementation of open access policies, Switzerland and New Zealand, changed course and shifted to open access policies in 2006.

We should do this! The main common denominator, I think, is that the high-performing countries are generally places where electronics manufacturers have more political clout than telecom firms and thus are able to force implementation of these open access policies. The United States, meanwhile, is really shooting ourselves in the foot. The software/media nexus of industries is very important to our economy—these are the things we do well—and we’re letting ourselves be stifled by basically useless telecom firms.

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Skipping the Ads

Research says that even DVR users have a tendency to watch the ads:

Against almost every expectation, nearly half of all people watching delayed shows are still slouching on their couches watching messages about movies, cars and beer. According to Nielsen, 46 percent of viewers 18 to 49 years old for all four networks taken together are watching the commercials during playback, up slightly from last year. Why would people pass on the opportunity to skip through to the next chunk of program content?

The most basic reason, according to Brad Adgate, the senior vice president for research at Horizon Media, a media buying firm, is that the behavior that has underpinned television since its invention still persists to a larger degree than expected.

“It’s still a passive activity,” he said.

Kevin Drum characterizes this as people being “too lazy to bother” skipping them. I suspect the real truth is that people don’t always bother to skip the ads because they’re not always watching the show. If I’ve Tivoed something I really want to watch, I’ll sit on the couch watching the show, paying attention, and skipping the ads. But if it’s time to tidy up the house, I might put on an episode of a show I’m not all that into and keep half an eye on it while unloading the dishwasher, using the dust buster, putting books back on the shelves, etc.

Part of which is to say that one problem with all studies about how new technology (DVR vs live TV, reading a newspaper online vs reading a paper newspaper) impacts people’s advertising is that I don’t think our understanding of the baseline is all that good. Of the ads people “watch,” how many really get watched. When my dad and I watched the Giants-Eagles game yesterday it’s not like we were staring blankly at the Ford 150 ads—the breaks in a football game are when you talk to your friends, get a drink, check your email, whatever.

A Public Option for Broadband

A friend joked yesterday after a frustrating experience dealing with Comcast that “I think we need a public option for cable/wireless companies.”

But there’s a real issue here. The United States gets very mediocre results in terms of broadband price and speed compared to other industrialized countries. It’s true that some of this has to do with the difficulty of wiring a relatively sparsely-populated country. But lots of places in the United States are as dense as Stockholm, and in Sweden the average is 18.2 mbps, which you won’t find anywhere in this country. As Mark Loyd has written:

The United States will not meet President Bush’s goal of universal broadband by the end of 2007—not by a long shot. The number of subscribers to Internet services is growing faster than the adoption of “dial-up,” yet for the most part these subscribers are not connected to the broadband technology Congress described in 1996 as a two-way communications service capable of high-speed delivery of data, voice, and video.

This failure to connect over half the country to advanced telecommunications service is not a technological failure. It is a 21st century public policy failure. In the 1990s, policies established by the Clinton administration to encourage public/private telecommunications partnerships, to connect schools and libraries to the World Wide Web, and to allow competitive service providers onto the networks of the local telephone monopolies all sped up the deployment of broadband around most of the nation. These policies were either deliberately abandoned or hampered by the Bush administration.

The increasing noise from Washington about the lack of a U.S. broadband policy obscures the fact that a policy choice was made by the Bush administration to rely entirely on “market forces” to determine how and where advanced telecommunications services would be deployed. That policy has failed.

It’s no coincidence that the cable company is always a go-to liberal example of private sector dysfunction. I would ditch Comcast in favor of a rival cable company except . . . there isn’t a rival cable company that served by neighborhood. Nor does my window face the right direction for DirectTV. So it’s Comcast or nobody, and thus the quality of Comcast’s offerings and customer service tends to be extremely bad. Appropriate regulation and public investment have a big role to play in this field.

Producer vs Consumer Viewpoints on the News Business

It’s true, of course, that the people complaining that Google is somehow “stealing” revenue from newspapers are being deeply dishonest or deeply uninformed. There is literally nothing stopping any news organization on the planet from taking its material off Google. Nor, indeed, is there anything stopping anyone from making online material only readable by paid subscribers. The problem most news producers have is simply that they don’t do that stuff because they couldn’t make money that way and they know it.

That said, I don’t think it helps anyone to pretend that the source of the complaints is completely mysterious. The intuition driving them is that if news aggregation websites disappeared from the planet, there would still be newspaper websites and people would still read them. But if the news organizations all vanished, there would be know news aggregation sites. Therefore it seems “unfair” that Google, essentially the world’s most successful aggregator, is making all the money. To a newspaperman, this is as if the paper boy were getting all the credit for the reporting happening in his town.

The trouble is that when journalists talk about journalism, they talk about it from the producer point of view. What Google does, from the media-as-production point of view really isn’t much better than what the paper boy does. But from the consumer point of view, having a paper boy who will fetch any paper you want in the world, for free, at any time, and open the paper to the page you were looking for is a massive improvement. For example, from a producer point of view essentially every newspaper in the United States has gotten worse at covering European news. Foreign bureaus have been closing, and resources have been redirected to the Middle East. But as a consumer, suppose I want to follow up on my notion that Jan Peter Balkenende would be a good candidate for the new office of EU President?

Thanks to Google, I read in the Guardian that the main alternatives to Tony Blair are considered Balkenende from the center-right and Finland’s Paavo Lipponen from the center-left. But Balkenende is thought to have a better chance than Lipponen in part because the new head of NATO is from the Nordic region and in part because there are more center-right governments in Europe. The Independent says Angela Merkel prefers Balkenende to Blair. And a Balkenende candidacy is popular among Dutch voters. We also learn in the Telegraph that there’s a political controversy in the Netherlands over the Crown Prince’s plan to build a lavish villa in Mozambique and “almost 50 per cent of people want Jan Peter Balkenende, the Dutch prime minister, to demand that the Prince withdraw from the project.”

Without Google, I never would have seen any of that. There’s been basically no coverage of this issue in the American press. And, fine, most Americans aren’t interested in it. But I am interested, and thanks to Google it’s easy for me to follow the issue.

I think it’s interesting that journalists seem to have no problem following this dynamic when it comes to the car industry. This has been a terrible 12 months to be in the business of building cars, either as a worker or an owner or a manager. But it’s been a fine time to buy a car. There’s no car shortage. And there’s not going to be a car shortage. Drivers are in great shape. And it’s about the same with the news. Has there ever been a better time to be a news junkie?

Kindle Fail

And here I was smugly thinking that the Kindle was a great solution to the problem of trying to drag enough reading material for a three week multi-city trip to Europe:

Now the thing looks like a busted etch-a-sketch. Is there some way to fix this?

A Country After the Blogosphere’s Heart

Germany not only features supertrains that can carry you swiftly from city-to-city, but some of the trains in question—including the one I’m currently on—have Wifi. Admittedly, not the fastest connection I’ve ever seen but pretty useful nonetheless.

Why Social Networking

What do people do with social networking sites?

The biggest discovery: pictures. “People just love to look at pictures,” says Piskorski. “That’s the killer app of all online social networks. Seventy percent of all actions are related to viewing pictures or viewing other people’s profiles.” [...]

Piskorski has also found deep gender differences in the use of sites. The biggest usage categories are men looking at women they don’t know, followed by men looking at women they do know. Women look at other women they know. Overall, women receive two-thirds of all page views.

This is because on the savanna it was very important for men to be familiar with what strange women looked like in case of a chance encounter while out hunting for gazelle.

The Coming Air Force Crisis

David Petraeus makes a joke:

Come to think of it, in fact another bedrock element of the Marine Corps is unquestionably having the best recruiting ads on television. But this concept is not just an advertisement. The marines’ sense of toughness permeates the Corps’ lore as well as its reality. To recall an illustrative story, a soldier is trudging through the muck in the midst of a downpour with a 60-pound rucksack on his back. This is tough, he thinks to himself. Just ahead of him trudges an Army ranger with an 80-pound pack on his back. This is really tough, he thinks. And ahead of him is a Marine with a 90-pound pack on, and he thinks to himself, I love how tough this is. Then, of course, 30,000 feet above them an Air Force pilot flips aside his ponytail. Now — I’m sorry. I don’t know how that got in there — I know they haven’t had ponytails in a year or two — and looks down at them through his cockpit as he flies over. Boy, he radios his wingman, it must be tough down there.

As Robert Farley says, this kind of thing is a pretty typical ground forces joke but “the AFA whining reveals a certain insecurity.”

It’s worth observing that this issue is going to become much more severe in the years to come. Air Force officers are already sensitive to the accusation that their service is less physically rigorous or risky than other forms of combat. And of course there’s some real truth to the accusation. Looked at rationally, this is the appeal of air power and always has been. Why try to blow something up at relatively close range on the ground from a base that’s located inside the war zone when you can blow it up from the relative safety of the sky, and then have the vehicle retreat to a far-off base where it can be serviced by people who are at relatively little risk of being killed?

The trouble is that advanced technological developments are driving this logic even further forward through the use of unmanned aerial vehicles. From a rational point of view, UAVs piloted from afar from operators far from the field of battle are a huge win. Since there’s no pilot in the UAV, the cost of having one shot down is relatively low, so it’s viable to use cheaper planes and just resolve to build more if you need them. And since the pilots are safe, you never have to worry about losing your best-trained veterans in combat. Pilotless planes can also do aerial moves that might kill a human being.

At the same time, as you see in Petraeus’ joke and the reaction to it, the military—like all effective military organizations I’m familiar with—is an institutional culture that puts a great deal of stock on honor, courage, and difficult physical work. A service that consists of guys sitting in cubicles playing video games is going to have trouble holding its head high amidst a warrior ethos. And consequently, the Air Force is tending to resist the technological imperative to go more remote. Ultimately, however, that resistance is doomed and it’s not really clear what will come of it.

Beyond “Bloggers”

Tina Dupuy conveys an interesting point from Jay Rosen:

We asked Rosen what he thought of the term “blogger” and how there is not a word to distinguish a journalist who blogs and a numbnut who blogs.

“Blogger will become such a broad term it will lose all meaning,” he told FBLA.

So in five years will “blogger” be synonymous with “writer?” Will telling someone you’re a blogger need the same follow up question as there is for when you tell someone you’re a writer?

That seems about right. One thing you see even within the smaller universe of the “netroots” is that at each annual Yearly Kos / Netroots Nation convention there’s larger and larger amounts of divergence between what people are doing. Some of the folks who are newer to the game don’t totally appreciate this dynamic, but I recall how back in 2002-2003 there was a pretty undifferentiated mush of “liberal bloggers” that’s become a much more elaborated ecology of people and institutions doing pretty different things.

Restricting Digital Content Down Under

I had just sort of casually assumed without thinking much about it that one important consequence of the rise of digital media would be to radically reduce the importance of place in terms of consumption of a lot of cultural products. And I suppose it still has, but apparently to a lesser extent than I realized until I read this post from Erin Riley:

That’s right. Hulu, like many other digital content websites, is restricted by region. The site determines the country you are browsing from, based on your IP address, and simply doesn’t let you watch it if you’re outside the United States. Once again, as an Australian viewer, I was left with two options: download the show illegally (since it wasn’t available to purchase on the very limited Australian iTunes store), or pay $100 for the DVDs.

It’s not an uncommon experience for those of us who live- and access the internet- from outside the US. And it’s not just Hulu- music sites like Pandora and Spotify, and television stations also restrict their content.

It’s all about licensing. Australian channels buy the exclusive right to air a program in Australia. This exclusivity prevents the content being available online to its audience without its explicit permission. While deals between US networks and online content providers are generally easier to negotiate, because the content would only be available online after it airs, significantly later air dates in Australia mean the commercial networks risk being trumped by online channels. In some cases, shows are made available to purchase on iTunes only after their Australian air date- sometimes more than a year after they’ve aired in the US. The time constraints, though, that hardly explains the music stations: in that case, I suspect it’s a matter of the difficulties in obtaining the necessary licensing far outweighing the benefits.

Seems bad. Also note that the success corporations have in executing this kind of segmenting and curtailing of the internet has not-so-great implications for the general idea that digital media will undermine repressive states.

The Two Political Blogospheres

Pittsburgh, PA (wikimedia)

I don’t really understand why conservatives insist on holding their blogger conference in the city same as ours on the same week. It just seems to invite unflattering comparisons. Here’s Timothy McNulty from the Post-Gazette:

Even though conservatives are holding their own convention of online activists in Pittsburgh this week, they are not trying to directly compete with the giant Netroots Nation. If they did, they would be squashed.

The RightOnline conference starting tomorrow morning at the Sheraton Station Square will have about a quarter of the 2,000 attendees at the liberal conference in the convention center, and only about 20 speakers to the 400 at Netroots. Liberals are throwing multiple parties at the Warhol and a gay-lesbian kiss-in. Conservatives end Friday night with a film criticizing Al Gore.

Basic demographics just make it way harder for the right to compete online. The over-60 demographic is a hotbed of conservative sentiments, but it’s also very disinclined to go online. The stereotype of progressive bloggers and blog readers as “young” tends to be wildly overstated, but what is true is that the online universe contains relatively few senior citizens, and the current version of the conservative coalition contains quite a lot of seniors.

Tim Berners-Lee Says CERN Never Tried to Sell the Internet

I’ve twice now made reference to the time I was told by the current head of CERN that at one point they tried to put the World Wide Web concept up for sale only to discover that there were no buyers. Aaron Swartz asked Tim Berners-Lee about this and he says that’s not what happened:

No, they did not try to sell it it as far as I am aware. There was a certain amount of agonizing that CERN didn’t really have a story about what to do about spinning out technology. There were some arguing that the IPR should be kept by CERN, but no real plans as to what to do with it. Hey, if they had been MIT they might have encouraged me to spin it out as a startup, with the help of some experienced people who had done it before, and well, maybe the world would have just waited 17 years as it did for RSA. I am sure in fact a bunch of competing systems would have ended up without a single interoperable space.

Don’t want to be in the position of spreading wild rumors, so I thought y’all should know.

Island Wall Entertainment Unveils iHymen

Because the world is a very strange place, someone decided that the world needs a “purity ring” application for iPhone. Jessica Valenti says “I know I shouldn’t be surprised that there’s a iPhone “purity ring” application – after all, I’m all too familiar with the various ways virginity fetish reveals itself in American culture. But this still managed to skeeve me.” I will, however, cop to some level of surprise that this is actually a British application:

For just 59p, consumers can download an application that allows them to take a purity pledge and then display a silver ring on their phone to prove their commitment to abstinence. [...]

The company’s director, Henry Bennett, said: “We’re not charging for the idea. We’re just covering our costs. It’s all about reaching a new market. If you wanted to buy a purity ring, you could spend as much as £100.”

I suppose the fact that you could spend as much as £100 on a purity ring isn’t really any crazier than the underlying idea behind the purity ring. But still.

Will Pervasive Social Networking Turn Museums Into Pickup Hot-Spots?

Guggenheim Museum (cc photo by Ernst Moeksis)

Michael O’Hare thinks there should be more of a singles scene at museums:

In fact, I wonder that museums haven’t become a favored place for educated young people to meet strangers : you’re assured that anyone there is enough like you to be worth at least some schmoose, it’s safe, and all the stuff in the previous paragraph. As a former museologist, I always watch the visitors as much as the displays and I see surprisingly little of this. I bet the typical single museum visitor in his or her twenties would be more amenable to chatting with a stranger than the strangers seem to fear: try it! If you go alone to a bar and come up empty, you’ve wasted the evening and hurt your liver. If you go alone to a museum and don’t meet anyone, you still meet Vermeer or a real gigantotherium. The principle is analogous to Edith Stokey’s recipe for how to never ever wait in line: carry a book!

I think there are two practical hurdles here. One is that a relatively large proportion of people in your average museum are visiting from out of town. The other is that it’s simply a coordination issue—because this sort of thing isn’t normally done, people looking to meet people aren’t necessarily out at the museum, and advances would be “weird” relative to them being made in another context.

But consider this issue raised by Julian Sanchez:

We’re at most a few years off from broad adoption of augmented reality applications in widely-used smartphones, which will have all of us radiating reams of data to anyone in our physical proximity who actually cares. Your Facebook profile will dog you like one of those floating Sims icons. You won’t just know what the girl sitting across the coffee shop is blasting on her iPod, you’ll be able to listen in. All the tech is actually here already, if not in quite the fancy form it’s implemented at the link above. All it would take is for someone to integrate the location-sensitive functions of an app like Loopt into the apps for Facebook or Last.fm, and you’ve got a point-and-profile system. The real question is whether people actually want to signal that much in the physical context. Some of us are chary of giving every stranger in ping-shot a pretext for striking up a conversation.

Of course the answer to Julian’s worry here would presumably be that you could use some kind of setting to signal implicitly or explicitly that you’re not interested in strangers talking to you. And the same feature could transform the dating scene; people not interested in amorous advances could broadcast this fact to the audiences, while those who are interested could also broadcast that. This, in turn, could change the dynamics at places like museums that aren’t customary places to meet people.

And of course it could have a really transformative impact on infidelity and ways to snoop around and see if your partner is cheating on you.

The Kindle and Cultural Display

I’ve said before that thought I love my Kindle, it deprives me of the signaling fun that comes along with reading traditional books. I’m going through Infinite Jest, as are a lot of people this summer, but I can’t visibly display the book on the Metro or around my house. James Wolcott has a good essay on this:

Books not only furnish a room, to paraphrase the title of an Anthony Powell novel, but also accessorize our outfits. They help brand our identities. At the rate technology is progressing, however, we may eventually be traipsing around culturally nude in an urban rain forest, androids seamlessly integrated with our devices. As we divest ourselves of once familiar physical objects—digitize and dematerialize—we approach a Star Trek future in which everything can be accessed from the fourth dimension with a few clicks or terse audibles. Reading will forfeit the tactile dimension where memories insinuate themselves, reminding us of where and when D. H. Lawrence entered our lives that meaningful summer. “Darling, remember when we downloaded Sons and Lovers in Napa Valley?” doesn’t have quite the same ring to it. The Barnes & Noble bookstore, with its coffee bar and authors’ readings, could go the way of Blockbuster as an iconic institution, depriving readers of the opportunity to mingle with their own kind and paw through magazines for free. Book-jacket design may become a lost art, like album-cover design, without which late-20th-century iconography would have been pauperized.

Now I’m pretty sure the world will survive this transition. But it’ll be interesting to see how it happens. I note that one thing a lot of people, myself included, sometimes do is use the Adium feature that automatically sets your IM chat status to the title and artist of the song currently playing on your iTunes. One way to think about that is as a substitute for the old game of visually displaying the physical records or CDs you own in your house. It’s a way to turn your music consumption into something quasi-public. Perhaps reading books in groups and writing blogs about what you’re reading will be the new way to share your cultural consumption with the world.

The Last Manned Fighter?

Mike Mullen thinks the F-35 may be the last manned fighter. Various stakeholders don’t like that idea, but Robert Farley thinks it’s right:

I guess I’m with Mullen; there are currently jobs that manned warplanes can do that drones can’t perform (human pilots are more visually capable than even the best drones, for example), but a) drones are getting better, b) drones are so much cheaper, and c)taking the pilot out means that you can do a lot of funky, interesting things with an advanced airframe. This isn’t to say that the F-35 (or even the F-22) have no role; they’ll continue to be useful frames for the jobs they’re intended to do for a substantial period of time. But I don’t think there’s a next “next generation” of fighter aircraft. And in any case, it appears that the A-10 will remain the platform of choice for fighting the giant robots that undoubtedly will afflict us in the future…

I’m with Farley on this. The point about cost savings is not totally intuitive and I don’t think it’s widely appreciated in the broader political/policy universe at this point but it’s extremely compelling. Given the long-term budget outlook it’s going to be really vital to start taking a real look at ways to get more bang for our defense buck and shifting to more reliance on unmanned aircraft is a very appealing way of accomplishing that goal. The cost differential is large enough that drones don’t need to be “as good” as human pilots before the fact that you could just have a bunch more of them starts to weigh more heavily.

Google Chrome OS

Overnight, Google announced the latest element of its drive for world domination, a new open source operating system aimed at the netbook market:

Google Chrome OS is an open source, lightweight operating system that will initially be targeted at netbooks. Later this year we will open-source its code, and netbooks running Google Chrome OS will be available for consumers in the second half of 2010. Because we’re already talking to partners about the project, and we’ll soon be working with the open source community, we wanted to share our vision now so everyone understands what we are trying to achieve.

Speed, simplicity and security are the key aspects of Google Chrome OS. We’re designing the OS to be fast and lightweight, to start up and get you onto the web in a few seconds. The user interface is minimal to stay out of your way, and most of the user experience takes place on the web. And as we did for the Google Chrome browser, we are going back to the basics and completely redesigning the underlying security architecture of the OS so that users don’t have to deal with viruses, malware and security updates. It should just work.

I have to say that I’ve never totally understood the appeal of the netbook concept. The low cost is nice, but you can’t use it as your main “go to” computer. So if you have to buy another computer anyway, you may as well invest in a decent laptop. It’s not as if my 13 inch MacBook Pro is so crippling heavy I can’t take it around with me. And I get around town by walking/biking—what does America’s car-dependent majority need with an ultra-light computer?

Meanwhile, on substance I gather it’s not really clear how much this differs from just adding a new Linux distribution. At the same time, I think you could imagine the Linux world having much greater mainstream appeal with a strong brand and a deep-pocket company like Google behind it even if on substance Google doesn’t add a great deal. Marketing matters a lot in life.

Competition, Profit Rates, and Freeness

Having read some excerpts (e.g.) from Chris Anderson’s Free and also Malcolm Gladwell’s takedown review, I think the whole subject could stand to benefit from a little less good writing and a bit more plodding distinction-drawing. There’s a basic valid point underlying what Anderson is talking about. In a competitive market, the price of a good ought to converge toward its marginal cost of production. And in a digital universal, the marginal cost of production is close to zero. In other words, there are fixed costs involved in creating a blog post or a song or a film or a piece of software, but the cost at the margin of distributing the good to a new consumer is almost zero. Anderson adds to this shopworn piece of economic knowledge, the insight from behavioral psychology that while people react similarly to a price of $10.15 and $10.25, human behavior when faced with a price of free is quite different from human behavior when faced with a price of ten cents. Consequently, when market competition starts pushing prices down to nearly zero, someone will realize they can gain a huge competitive advantage by pricing the good at free.

Where Anderson goes off the rails is in his suggestion that this “give it away” business model is actually a promising business model. Gladwell demolishes some of Anderson’s examples, but the problem with Anderson’s argument is completely theoretical. The convergence to marginal cost of production is predicated on the idea that you’re operating in a highly competitive marketplace. But the thing about operating in a highly competitive marketplace is that it’s impossible to make tons of money by doing this. That fact tends to get obscured in popular discussion of business in the United States, because we (or, perhaps I should say, because journalists who want to make money getting corporate speaking gigs) are very invested in a heroic model of capitalism in which wealthy entrepreneurs get rich through their competitive awesomeness. In reality, the reason that competition is good for customers is that it destroys profits. The way you make real money is by getting into situations where you’re insulated from competition. A license to operate a bar in Adams-Morgan is like a license to print money—no new bars are allowed to operate, and restaurants that make too much money off booze are getting shut down. On a grander scale, Microsoft has been able to entrench its position through “network effects” and price key software way above its marginal cost.

As sectors turn to a Free business model, they’re just going to become way less lucrative. That doesn’t mean the sectors will vanish. Nobody makes a fortune running a dry cleaning business, precisely because dry cleaners operate in a highly competitive marketplace. But dry cleaning services are very widespread, and customers benefit greatly from the fact that it’s relatively cheap. But the mere fact that dry cleaning is very successful as a technique doesn’t mean that the dry cleaning business is a good business to be in. Consider the case of YouTube, which Anderson labels a quintessential example of Free. Gladwell points out that YouTube actually loses money—it’s a terrible business. But what’s really noteworthy about YouTube, to me, is that as it exists it’s actually competing with several other, also Free, also money-losing video services. But since Google as a whole can easily afford to cover YouTube’s losses, it’s hard to see the percentage for Google management in shutting down a market-leader, or in destroying its position by trying to charge people to use it. But conceivably YouTube will just operate indefinitely as a money-losing subsidiary of a large profitable firm. And since it’s there losing money but not going out of business, it will probably be impossible for any competitors to ever beat it. And if YouTube does go out of business some new money-losing free video site will become the market leader as long as there’s some investor out there somewhere who believes, wrongly, that he’s smart enough to figure out a way to make money out of this thing. Meanwhile, as the underlying technology gets cheaper the scale of the losses should get smaller, making it ever-more-realistic to run the business at a loss and thus ever-less-likely that the money-losers will be driven out of the market and create the possibility for monopoly rents.

That’s the real lesson of Free. The combination of competition, the near-zero marginal cost of production, and the psychological significance of the zero bound means that the market-leader in video is bound to lose money. To win the market, you need to make your product Free. But while your marginal cost is near-zero, it’s not actually zero, so you’re losing money.

Infinite Pagination

Last night I was reading various people’s tweets about Infinite Summer and found myself caught up in the enthusiasm and suddenly burning with a desire to read Infinite Jest. Since using the Kindle is really the only practical way to buy a book at 11 PM, that’s what I did. Then I read some before going to sleep. And in doing so, I think I stumbled upon an inadvertent flaw in the Kindle. Namely, what when you read really long books—particularly as part of a quasi-group enterprise—you want to either brag about how many pages you’ve read or else whine about how many pages you’ve fallen behind. But the Kindle doesn’t have pages! Just, um, locations.

So I read 1,100 locations worth of the book. But nobody knows what that means. Normal people won’t even know if that’s a lot or a little.

In general, the Kindle strikes me as somewhat hobbled by an overly generous view of why people buy books. Not only is there this problematic lack of bragging, but with the kindle edition of the book I can’t have a handsome volume laying around the house as if to say to visitors, “why, yes, I may be a professional political pundit but I’m also a man of culture.” And I’ll have nothing on my shelf. Amazon should at least send you a sticker when you buy a book on Kindle so you can maintain some kind of display wall of all the impressive books you’ve read. People sometimes lament that element of signaling in the book buying/reader process, but I think that’s misguided. Signaling is a powerful human motivator, and often motivates people to do genuinely worthwhile things—read great books, go to college, get a haircut, etc.

Technology and Political Change

Henry Farrell is skeptical of the “twitter revolution” narrative:

As someone who has thought a reasonable amount over the past few years about the relationship between information technology and political action, I am somewhat skeptical of these claims (I also don’t know what the word ‘protagonal’ means, but that’s a whole different issue). First – while Twitter (like SMS) can be used to organize protests on the fly, I haven’t yet seen any evidence that it made a substantial difference to organizing efforts in Iran. This is not to say that it didn’t – but we need good evidence (which will require Persian language expertise, obviously) of correlation between specific bursts of Twitter communication and forms of social protest etc before we can really be sure that there was an effect. What we can say is that previous instances of ‘color revolution’ relied much less on technology than you would have thought from reading Western media. New technologies tend to be less reliable and more easily disrupted than traditional forms of organizing – while they are surely becoming more important over time, I think it is fair to discount some of the more breathlessly enthusiastic reporting until the actual evidence comes in.

Another issue is getting causal direction right. I frequently use my personal Twitter feed to coordinate plans with friends. Anyone interested in seeing such-and-such a movie? But it’s not as if the existence of Twitter caused me to start seeing movies with friends. Thanks to Twitter I now never use one-to-many SMS in order to organize movie going, and I use email for that purpose somewhat less than I once did. And thanks to email and Twitter and SMS, I never arrange movie plans over the phone, which is what I used to do. But, again, what’s going on here is the same old thing happening in a new medium, not the new medium actually allowing new things to happen. Insofar as Twitter becomes a more popular communications tool, popular protests will increasingly have a Twitter component. But that’s not the same as saying that Twitter is actually driving the political events.

China to Require All PCs Include Internet-Censoring Software

For quite a while, I subscribed to the theory that China’s capitalist development would require the diffusion of modern information technology, and the diffusion of modern information technology would necessarily tend to undermine the Communist Party’s dictatorship. But over the past few years, the dictatorship has proven itself to be much more resourceful about squaring this circle than a lot of us used to assume was possible. The key factor is that the Chinese market is so enormous that China can impose rules like this new one and know that many companies will want to play along:

China has issued a sweeping directive requiring all personal computers sold in the country to include sophisticated software that can filter out pornography and other “unhealthy information” from the Internet. The software, which manufacturers must install on all new PC’s starting July 1, allows the government to update computers regularly with an ever-changing list of banned Web sites.

This also highlights why political developments in China are so crucial for the entire world. If, say, Iran tried to do this it almost certainly wouldn’t fly. But companies will fall all over each other to cater to the Chinese market. Then, once the technology is in place other autocracies can try to piggyback on work that’s been done in and for China. But absent China, almost all of world output would be happening in democratic nations, and it would be easy to structure the global economy in the kind of way optimists were hoping it would work for China.

Internet Before the Definite Article

Very interesting early nineties CBC report on the rise of “Internet”—a time before broadband and before Internet became the Internet:

I was a sufficiently early adopter that I have some vague recollections of Gopher and WAIS as well as Prodigy.

Competing Against Free

It’s pretty widely understood that the huge success of Craigslist has hurt big city daily papers badly by robbing them of precious classified advertising revenue. In part, that’s because Craigslist is really useful. But part of the picture, as Barron YoungSmith observes, is that Craigslist doesn’t try to maximize profits which makes it extremely difficult for a “normal” business to compete with:

Now, along comes Craigslist, which sees cutting these sorts of intermediaries out of the equation as a form of public service. It considers that mission so important that it is willing to forego huge potential profits and compete against classified pages everywhere while charging virtually nothing for what it offers. In that kind of environment, it’s pretty ludicrous to think that newspapers could survive.

I think this ultimately may wind up being an even bigger problem for efforts at commercial media on the content side than it is on the revenue side. After all, profit-maximization is not a natural form of human behavior. I think it’s best understood as a very idiosyncratic kind of pursuit. It happens to be one that’s economically rewarded because with money to invest tend to want to invest it with would-be profit-maximizers. Thus, in fields of endeavor where the ability to raise large sums of capital on reasonable terms is a huge advantage, a profit-maximization impulse winds up being a huge advantage.

But in the world of websites, it’s not clear that the ability to raise large sums of capital really is a huge advantage. The startup costs of a decent website are pretty small in the scheme of things. And there are lots of people and institutions—academics looking to bring their research to a wider public, think tanks and advocacy organizations looking to influence the public debate, corporations like Google looking to express their views on policy debates, students trying to get an edge in the job market, authors hoping to promote a book—with perfectly good incentives to run websites that don’t aspire to maximize profits.

Under the circumstances, I think it may prove very difficult for commerce-oriented enterprises to succeed over the long term. Someplace like a dry cleaner is able to make money because it doesn’t need to worry about being undercut by competitors who aren’t trying to earn a profit. If for some reason Bill Gates decided to pour $5 billion into a foundation dedicated to offering not-for-profit dry cleaning services to Washington, DC then the existing dry cleaners would be in huge trouble. They don’t have that problem because nobody wants to run non-profit dry cleaners. But lots of people want to write about political issues for reasons that have nothing to do with profit-maximization. And my sense is that organizations are increasingly doing this. CAP/AF was a think tank early adopter in terms of building robust in-house new media capacity, but to the best of my knowledge just about every think tank and advocacy shop in town would like to get in on the action. And ultimately, a proliferation of content that’s not supposed to make money is going to make it even harder than it already is for those trying to make profits to do so.

Obama in Cairo

I caught the speech on the gym this morning and wanted to jot down some thoughts before exposing myself to too much RSS and listserves that contaminate me with other people’s ideas. For one thing, the underlying idea of this speech seems a bit odd. It’s hard to know how to even characterize what it was.

But the execution first and foremost reminded me of why Obama has always been the writers’ candidate in American politics. This is a guy who’s not afraid to try to express complicated or difficult ideas. He wasn’t afraid to do it in Dreams From My Father and now that he’s long past writing his own material as a solo act, his whole team is clearly imbued with the same spirit and that same mandate to try to really explain the complicated and difficult ideas rather than sweep them under the rug.

This seems connected to me to the remarkable way in which this speech is being pushed out in multiple media—on television, but also on Twitter and on Facebook and via SMS and all in multiple languages—to a global audience. Part of the rise of Obama is the rise of a post-television, post-sound bite technological paradigm. You can deliver a speech at 7 AM Eastern Time and know that even though relatively few Americans will be up to see it, anyone who’s interested will be able to Google up a transcript. And if people like the speech, it’ll become a YouTube classic. It creates a whole new world from one in which the point of a speech is just to field test a couple of zingers in hopes that one or two of them gets picked up for the evening news.

Curmudgeons Should Keep Their Sites on Television

Kevin Drum waxes curmudgeonly:

I’d love to be wrong about this. But I’m not. If you want to understand the world, not just collect endless factlets, you still need to read books. If you do, the internet makes you smarter. If you don’t, it makes you dumber.

Two things about this. One is that to an extent only time will tell. At the moment, even though a lot of people write on the internet, a great many people who write aren’t writing on the internet. And many of those people are extremely smart and you can learn an enormous amount from them. If you really want to understand what Christopher Leinberger has to say about urban policy, you really need to read his book just as if you want to understand Donald Shoup’s ideas about parking there’s no substitute for reading The High Cost of Free Parking. But a big part of the reason is that those guys aren’t writing blogs. If they were writing blogs, their blogs might be good sources of information about their work. But they’re not. So the books are vital.

In the future, thanks to generational turnover, I think we’ll see a higher-and-higher proportion of the smart people doing writing on the internet. So the internet will become a more valuable resource.

So I don’t entirely want to prejudge this issue. A really knowledgeable person, writing day-in and day-out about the issues he’s expert in, can convey an enormous amount of information via sustained blogging. But my guess is that Kevin’s right. I follow Mark Kleiman’s blogging very closely but reading his book was still hugely valuable. But my guess is that books and the internet are mostly complements. I think the internet tends to mostly crowd out reference books (which are a special case and clearly made obsolete by digital technology) and other kinds of “newsy” writing like newspaper op-eds and magazine articles. And I think that’s largely as it should be. There are good op-eds out there, but that’s primarily because good people get asked to write op-eds sometimes—there’s nothing virtuous about the format.

At any rate, if you want to be curmudgeonly about anything, I think television is still the right thing to be curmudgeonly about—just as it was fifty years ago. TV, unfortunately, is pretty awesome. And modern developments like high-definition, 300 channel digital cable, Tivo, and Netflix-on-demand make it all the more awesome. But it’s really not very informative at all. But it sure does suck you in. If televisions somehow all vanished, I bet we’d all be twice as smart within a year.