[iDC] Murdoch's Move

Frank Pasquale frank.pasquale at gmail.com
Thu Nov 26 00:17:24 UTC 2009

Sorry for the typo--I meant to say Murdoch/MS alliance in the third
sentence, as it appears below.

On Wed, Nov 25, 2009 at 6:09 PM, Frank Pasquale <frank.pasquale at gmail.com>wrote:

> 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/MS 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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