[iDC] Murdoch's Move

Wed Nov 25 23:09:56 UTC 2009

I think Tom Matrullo's idea of the utility model coupled with micropayments
is a very good one.  I'd add on a few thoughts about the layers of the
internet highlighted by the Murdoch move.

The potential Murdoch/Google alliance echoes an earlier
proposed joint venture called "ClearWire".  As of 2008, Google
had co-invested with Comcast and handset manufacturers to develop a new
network. In return for its participation, according to one news
story, “Google's search engine [will] get[] its own button on the phones.”
(This may still be in the works, I'm not up to date on it.)   Another
proposed deal would “make Google the default search provider on Verizon
devices and give it a share of ad revenue.”

As the landscape of internet competition rapidly shifts, we should expect
more vertical integration of all layers of the internet.  Etiolated
antitrust and competition laws have very little purchase on this type of
conduct.  So what layers can integrate, and what are the implications?
 Jonathan
Zittrain (in *The Future of the Internet--And How to Stop It, *available
free online) described a physical layer, the “actual wires or airwaves over
which data will flow;” an application layer, “representing the tasks people
might want to perform on the network;” a content layer, “containing actual
information exchanged among the network's users;” and a social layer, “where
new behaviors and interactions among people are enabled by the technologies
underneath”.

Is there anything more disturbing about, say, a search-hardware-carrier
alliance (ala Clearwire) than a content-search alliance (ala Bing and
Murdoch)?  I don't think so, and that's one reason why there are growing
calls for "device neutrality" and "search neutrality" to complement "net
neutrality." The libertarian internet theorists have been among the first to
understand this development, as this piece by Berin Szoka and Adam Thierer
shows:
http://www.pff.org/issues-pubs/ps/2009/ps5.11-net-neutrality-MAD-policy.html

But where they see "mutually assured destruction" of business entities
(each trying to use vestigial regulators (like the FCC) to handicap
rivals), I see a small glimmer of hope that regulation in the public
interest can be achieved.

 As a purely economic matter, vertical integration makes a lot of sense for
the entities involved and perhaps for many disadvantaged consumers (who may
well get phone service for free in exchange for pervasive marketing-driven
monitoring of conversations, just like gmail is supported by computerized
scrutiny of one's email).  But there is more at stake in the delivery of
content than getting the most bits out to the most people at the cheapest
price.  Jerry Kang has argued (in Race.net Neutrality) that  other key concerns
include the importance of media diversity, independent gatekeepers, and
“distribution of communicative power and opportunities among private
actors.”   Top to bottom control of a communications network by a vertically
integrated company only increases its temptation to unfairly prioritize its
own content, hand off personal data to government in what Elkin-Koren and
Birnhack call the "invisible handshake," or curry favor with politicians
that can grant it favors.

As Preston Galla noted, “The Center for Public Integrity compiled a list of
the top 100 money-givers to Congress between 1998 and 2005, and telcos
dominate the list: Verizon Communications: $81,870,000, SBC Communications:
$58,035,037, AT&T Corp.: $53,349,499, Sprint Corp.: $47,276,585, BellSouth
Corp.: $33,732,827, Qwest Communications: $24,523,480.”  Imagine the
"synergies" of political influence these behemoths can offer once they are
"harmonized" into larger conglomerates of media, search, and applications
providers.

I've done a series of articles on some of these topics; these two are a good
introduction:

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1134159
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=888327

And, on the utility theory, a co-authored piece:
Federal Search Commission? Access, Fairness and Accountability in the Law of
Search <http://ssrn.com/abstract=1002453>

But overall I am beginning to worry that we don't even have the regulatory
infrastructure to understand the types of alliances now being crafted, much
less influence them.   A monitoring system will be the foundation of any
future accountability in this field.  And I fully expect the law of trade
secrecy to pose an extraordinary barrier to the effectiveness of that
regime...just as the law of state secrecy has undermined the potential for
democratic control of law enforcement and national security.

---Frank

Frank A. Pasquale
Professor of Law, Seton Hall Law School
One Newark Center
Newark, NJ 07102
(973)-642-8485 (w)
(201)-988-5774 (c)

On Tue, Nov 24, 2009 at 8:03 AM, Tom Matrullo <matrullo at gmail.com> wrote:

> Mark Andrejevic says: "Pipelines are useless without some kind of content "
>
>
>  Thereby releasing a hobby horse I must delurk to foolishly jump on: I
> have offered the similar thought that the separation of Internet into
> mechanical pipes and "free" content is simply untenable.
>
> Bear in mind that the pipe owners fail to see that our willingness to pay
> for the delivery system only makes sense if content is there. Content
> creators fail to see that in paying high rates for "connectivity", we (end
> users) are persuaded we have already paid for "content."
>
> A Murdochian system in which each content creator bills users separately
> would fail - few could afford it. Pulling out of search engines is merely
> suicidal. The ensuing despair might provoke a salutary reaction, however.
>
> If the private corporate owners of the pipes are unable/unwilling to share
> money they make "on the backs" of content creators, their profits might be
> better employed if they were redirected into publicly owned or regulated
> facilities, on the creaky model of utilities - (or something more up to
> date).
>
> In view of the looming possibility that the owners of the pipes will own
> Content (see Comcast's latest moves<http://news.google.com/news/search?aq=f&pz=1&cf=all&ned=us&hl=en&q=comcast+nbc+universal>),
> why not consider an alternative - a blind pool that moves funds via micropay
> from the profit centers of the pipe owners to help fund those who produce
> content.
>
>  - notes on this here:
>
>
> http://interimtom.blogspot.com/2009/07/haque-and-doc-on-news-evolution-and.html
>
> http://interimtom.blogspot.com/2009/07/fuck-piper.html
>
> elsewhere:
>
> http://interimtom.blogspot.com/search?q=big+pipe
>
>
> Tom Matrullo
>
> http://interimtom.blogspot.com/
>
>
>
>
>
>   On Tue, Nov 24, 2009 at 3:08 AM, Mark Andrejevic <
> markbandrejevic at gmail.com> wrote:
>
>>   One of the things that I had hoped to bring up at the conference's
>> final de-briefing session before we ran out of time was the fact that while
>> both the notions of work and play got worked over fairly well, the third,
>> featured term in the title got a bit less attention -- at least in terms of
>> considering how it might continue to change in the near future. The internet
>> itself seemed largely to function as a taken-for-granted platform in the
>> way, that interestingly is no longer the case for the media that it has
>> helped to transform, such as radio, TV, and newspapers.
>>
>> It seems worth pointing out that the internet has changed quite
>> dramatically in the past few decades and is likely to continue to do so for
>> the foreseeable future. The recent, seemingly jarring news from the
>> disconcerting duo of Microsoft and NewsCorp (
>> http://www.nytimes.com/2009/11/24/technology/internet/24soft.html?hpw) drives the point home, and was probably not so difficult to predict. Given
>> the difficulties media outlets are having in leveraging their online
>> presence into advertising revenues it's perhaps not surprising that the
>> models that are making money in the new media environment such as that of
>> the successful search engine may find themselves in the position of
>> subsidizing content. In this case, I suspect the deal, if it goes through,
>> is a misconceived one: the advertising model that works online is
>> based on volume of users, and chopping up the pool of potential users looks
>> like a losing proposition. It's a swipe at Google, but in the long run, it's
>> a swipe at the logic of the search engine. Not to mention the fact that the
>> Fox News/New York Post demographic is probably not the best demographic bet
>> for online advertising.
>>
>> But the underlying logic that such a deal hints at might be a bit more
>> robust: find the business model that works and use that to subsidize
>> content. Newspapers have long been complaining that people aren't willing to
>> pay for online content, but that is perhaps only part of the story.
>> Consumers have demonstrated a growing willingness to pay for pipeline (at
>> rates much greater than the cost of a daily newspaper): for monthly mobile
>> phone subscriptions, pay TV, and broadband access. Pipelines are useless
>> without some kind of content -- and an important part of the content, as the
>> conference highlighted, has been provided by free labor of various kinds.
>> When it comes to professionally produced media content, down the road, and
>> legal hurdles aside, the obvious tendency would be toward the control of
>> content providers by the companies that are making the money: those who own
>> and operate the pipelines (perhaps also the major search engines?). The
>> broader point is that the infrastructure and operation of the internet
>> is dynamic and subject to transformations in accordance with commercial
>> imperatives (challenging the principle of net neutrality, etc.) --  the
>> functioning of the "platform" is in play -- along with the activities that
>> it supports. It's not just what we mean by work and play that need
>> clarification and exploration, but also what we mean, projecting into the
>> future, by "the internet."
>>
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>
>
>
> --
> Tom
> ==
> matrullo at gmail.com
>
>
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