Join 3,500 readers in helping fund MetaFilter (Hide)


"If we're going to get 21st century economic policy right... we have to start moving to a model that measures value creation rather than value capture."
October 9, 2012 4:34 PM   Subscribe

The Clothesline Paradox: A Conversation with Tim O'Reilly - "The thesis is simple: You put your clothes in the dryer, and the energy you use gets measured and counted. You hang your clothes on the clothesline, and it "disappears" from the economy. It struck me that there are a lot of things that we're dealing with on the Internet that are subject to the Clothesline Paradox. Value is created, but it's not measured and counted. It's captured somewhere else in the economy." (a full text transcript of a video interview)
Here's another good example that affects Internet policy. We hear a lot about "free content" on the Web, and the idea that users are getting something for nothing. "They don't want to pay for their content." And yet, most people access the Internet by paying an Internet service provider $60, $70, $80 a month. You think of a company like Comcast. The user pays them $80 a month and watches television, and we say, "Oh. They're paying for content." They pay $80 a month for access to the Internet and we say, "Oh. They're getting their content for free." Something is clearly wrong with that picture!

In fact, the reverse is actually true. The free rider is Comcast. If people watch television, the Cable company has to pay money downstream to content providers. When people watch YouTube, or use Facebook or Twitter, or just surf the Web, they pay nothing for content. So it's not users who are getting the free ride, it's these big companies. That's just one of many implications that come to light when you start thinking about the Clothesline Paradox.
------------------------------------

O'Reilly's keynote at OSCON in July 2012: The Clothesline Paradox and the Sharing Economy (YouTube video, ~24 min.) - PDF of slides with notes
O'Reilly's Google+ post description:
This was my keynote yesterday at #oscon , the O'Reilly Open Source Convention. I talk about what's wrong with our economy - the ecosystem failure that occurs when companies think it's OK to take more value out than they create - and contrast that with sharing economies like open source software. I use the analogy of "the Clothesline Paradox" - Steve Baer's wonderful account of how solar energy is left out of our energy accounting, treated as if it were a tiny slice when in fact it is the root of all - to explore how creative economies create value that they don't capture.

I talk about my conversation with Hari Ravichandran of hosting company Endurance International Group, which led to a partnership to study Bluehost customer data to examine the impact of open source software and web hosting on small business as an example of how value created but not captured by innovators shows up elsewhere in the economy.

I also talk about evidence of economic acceleration coming out of other sharing economies.
posted by flex (77 comments total) 65 users marked this as a favorite

 
pro tip - it's actually possible to dry your clothes on the clothesline in january in michigan on the right days

this is more relevant to the metaphor than you think it is
posted by pyramid termite at 4:41 PM on October 9, 2012 [4 favorites]


When you hang your laundry on the clothesline, the electric company sues you for dampness infringement.

That's how it's supposed to work, right?
posted by 0xFCAF at 4:41 PM on October 9, 2012 [22 favorites]


So whenever I see some clothes hanging on a clothesline, they are free to take?
posted by perhapses at 4:43 PM on October 9, 2012 [5 favorites]


I have a patent on fusion-assisted evaporation, so this is a trade secret and my lawyers will be contacting you directly.
posted by mhoye at 4:45 PM on October 9, 2012 [7 favorites]


The internet tubes are more like roads. Government should make sure everyone has free access.
posted by perhapses at 4:47 PM on October 9, 2012 [10 favorites]


My great-great-great-etcetera-etcetera-grandfather invented the clothesline. You all owe me royalties for infringing my intellectual property.
posted by mullingitover at 4:49 PM on October 9, 2012 [4 favorites]


If only we could measure and harness the boundless energy of engineer's disease.
posted by srboisvert at 4:49 PM on October 9, 2012


Comcast didn't build that!
posted by perhapses at 4:49 PM on October 9, 2012 [4 favorites]


Right, so the clothesline metaphor is dumb. It also takes up all of thirty seconds in the video, or half a paragraph in the article, and the rest of it (even if wrong) is a lot more interesting. Maybe read before commenting?
posted by nebulawindphone at 4:50 PM on October 9, 2012 [11 favorites]


It's really is pretty interesting. The work of creating value is performed for free, free content, free software, metafilter comments. The money is captured somewhere else that is much easier to measure, hardware, bandwidth, power. Google creates a massive amount of value simply by indexing but right now we don't know how to quantify monetize the value they create, we need to fall back on old metrics. Google can't say, "hey TWC, without us nobody would want cable modems", a massive amount of the value google creates simply dissipates. The same goes for all of us here.
posted by Ad hominem at 4:51 PM on October 9, 2012 [3 favorites]


"When you hang your laundry on the clothesline, the electric company sues you for dampness infringement."

No, they raise rates because you're not consuming enough electricity to cover fixed costs and provide an adequate return to the shareholders.
posted by MikeMc at 4:51 PM on October 9, 2012 [12 favorites]


so what happens when your ISP can't afford to pay the RIAA for the good shit

also how does this relate to "net neutrality" now that everyone's forgotten the phrase "net neutrality"
posted by This, of course, alludes to you at 5:05 PM on October 9, 2012


The only reason we need to quantify it at all, is because we're afraid someone might be getting away with something. Measurement is to keep it fair, and we've all seen how well that has worked out.
posted by Obscure Reference at 5:08 PM on October 9, 2012 [3 favorites]


Well look, you are creating value for facebook (or linkedin, or myspace, or metafilter). The network is the value. Don't you want a cut?
posted by Ad hominem at 5:10 PM on October 9, 2012


MikeMc : No, they raise rates because you're not consuming enough electricity to cover fixed costs and provide an adequate return to the shareholders.

For those who don't get it - Mike has described the reality of the situation. In most of the US, "public" utilities have guaranteed margins. They may "only" make 8%, but they will make that 8% even if every single one of their subscribers needs to donate a goddamned pint of blood to provide it.
posted by pla at 5:21 PM on October 9, 2012 [7 favorites]


Right, so the clothesline metaphor is dumb.

no, it's not

Maybe read before commenting?

maybe check the economic weather? - it's turning cold, isn't it?

here's the thing - when the economic system starts breaking down, people end up resorting to things like clotheslines to get what they have to get done - if the corporate world isn't going to make things work well for us, then we have to turn to each other to make things work

sometimes we're all we have to keep each other warm

and january's coming
posted by pyramid termite at 5:21 PM on October 9, 2012 [12 favorites]


pla: "They may "only" make 8%, but they will make that 8% even if every single one of their subscribers needs to donate a goddamned pint of blood to provide it."

But they magically manage to make far more through neat accounting tricks!
posted by wierdo at 5:29 PM on October 9, 2012


It's really is pretty interesting.

It's really not. Or at least it is nothing new at all to economists. It is however new to engineers playing at economics. This issue of the unmonitized contributions to the economy comes up every time somebody or some group realizes something they do either isn't valued monetarily or isn't valued enough. It has come up with good Samaritans, caregivers, soldiers, emergency workers, aid workers, child rearing, housework, Wikipedia and so on. And every time people come up with some sort of weird metaphor or theory as if there has never been any work done on these topics before.

If they are successful, attractive and charismatic enough and tell people something they want to hear they may even get invited to TED. If they are not attractive enough there is always TEDx.

There are people who are trained and educated economists who study this stuff full time and publish books and peer reviewed articles on it. They don't get to give talks at TED because the work is analytical rather than metaphorical and practical rather than 'visionary'.

Engineer's disease is where engineers ignore the work of other disciplines and imagine that their skills or tools are transferable to another domain and are what is necessary and sufficient. I'd say this is a textbook case but given the topic I'll say it is a free open sourced wiki'ed example and their are enough of these things on the internet that it would probably constitute big data.
posted by srboisvert at 5:46 PM on October 9, 2012 [36 favorites]


Think about this - Rich Little's entire career is a paradox. He got paid by "sampling" voices and paying nothing for them.
posted by davebush at 5:47 PM on October 9, 2012


For nine years now we've dried our clothes on the line, or the rack, all year 'round. We don't own a clothes-dryer that uses electricity or gas. When we don't use that form of energy to dry our clothes, we increase our disposable income - we use less electricity, so we pay less. This increases our disposable income, which we turn into beer or bike parts or wine or shoes and so on. The beer, bike, wine, or shoe companies could measure the value of our drying our clothes on the line, if we would make a point of telling them when the beer I'm enjoying is in fact the fruit of my clothes-line. Thus I siphon value off of my clothes-line and into my pocket, which I then exchange for a tasty beverage.

The point is that no good nor service that has been monetized somewhere just disappears if I find an alternative, seemingly "off-the-grid," way of obtaining said good or service. Unless I'm "off-the-grid" and entirely unmonetized in my entire existence, every time I find an alternative way to "dry my clothes" I add value to the system. And I collect that value using the money I didn't spend on drying clothes, on buying beer, or making my bike better. Which are more than fair trades, I'd say.
posted by kneecapped at 5:58 PM on October 9, 2012 [6 favorites]


srboisvert : Engineer's disease is where engineers ignore the work of other disciplines and imagine that their skills or tools are transferable to another domain and are what is necessary and sufficient.

Sorry, can you elaborate on what you mean? It sounds like you have a point, but... I don't quite see how it relates to the linked article.

Yes, engineers tend to overvalue their skills (largely because we can "get the job done", if not always as optimally as a seasoned pro, for just about any job you can name). But I fail to see what that has to do with the perception of a given task as having no value.

If anything, I took TFA as a nice description of why every new house in the US doesn't face squarely South and pave the roof with (now fairly cheap) solar panels... Because, as 99% of newsstand magazines have demonstrated, people value a $1.99 book of ads far more than they value the local free 'zines.
posted by pla at 6:00 PM on October 9, 2012


The fallacy of the never broken window?
posted by roboton666 at 6:01 PM on October 9, 2012


It's really not. Or at least it is nothing new at all to economists. It is however new to engineers playing at economics

I apologize for being intersted and consider myself chastened.
posted by Ad hominem at 6:11 PM on October 9, 2012 [7 favorites]


I intend to make a substantive response when I have the time, but for now:

and january's coming
pyramid termite gets a point for avoiding the Game of Thrones reference.
posted by JHarris at 6:21 PM on October 9, 2012 [1 favorite]


In the game of clotheslines, you hang 'till you dry?
posted by mikurski at 6:24 PM on October 9, 2012 [3 favorites]


An excellent demonstration of "value creation without value capture" is the traditional newspaper.
posted by Miko at 6:26 PM on October 9, 2012 [1 favorite]


I apologize for being intersted and consider myself chastened.

...


Sorry, can you elaborate on what you mean? It sounds like you have a point, but... I don't quite see how it relates to the linked article.


I am just ranting that this is a former engineer turned publisher talking about economics in a weird vague metaphorical way and completely ignoring the existing discipline that actually studies this topic.
posted by srboisvert at 6:30 PM on October 9, 2012 [3 favorites]


where is Al Gore when we need him?
posted by TMezz at 6:41 PM on October 9, 2012


He was here, and we didn't want him.
posted by carping demon at 6:47 PM on October 9, 2012 [6 favorites]


I think srboisvert's point is that economists have had decades to figure out how to tell people that what they do is relevant and interesting, and they still suck at it. So, everyone else in the world has reinvented economics a million times, and ignored the existing knowledge locked in economics journals that would help them. By 'engineers disease', he is trying to say that engineers are even more likely to do this than other people.
posted by jacalata at 6:56 PM on October 9, 2012 [8 favorites]


I am just ranting that this is a former engineer turned publisher talking about economics

I know. I'm just teasing you.
posted by Ad hominem at 7:02 PM on October 9, 2012


Ohh, I get it now. He's trying to quantify the value of the profit lost by the other hand while that first one is clapping, and identify a predictable monetary stream in order to capture that loss and turn it into revenue for a non-competing market.

Riiight.

So instead of just growing up with the philosophical bullshit, now we have to endure engineering and/or economic bullshit now too?
posted by Blue_Villain at 7:31 PM on October 9, 2012


economists have had decades to figure out how to tell people that what they do is relevant and interesting, and they still suck at it

I'm not an economist, but I am an academic, and I'd generally suppose that if someone finds a certain question relevant and interesting, then they'll be able to figure out for themselves that the academic field that studies questions of that type might contain other things relevant and interesting to them, and might even have something nonobvious to say about the very question that first attracted the person's attention.

But, yeah, I guess some people might need to be told that — like, if they don't know that other people think about things, or if they don't know that other people are smart, or if they don't know that they're not the first person to have an idea, ever.

See also.
posted by stebulus at 8:27 PM on October 9, 2012 [2 favorites]


Would one of those who complain about this article and how it ignores the contributions of economists provide links to relevant theory by economists?

I think the point about economists failing to communicate their discoveries (and now this one in particular) is a legitimate one. I think quite strongly that academics do have a degree of responsibility of ensuring that important ideas in their field get to the general public so those ideas can inform public discourse.
posted by Anything at 9:23 PM on October 9, 2012 [4 favorites]


Tim O'Reilly is an "former engineer"? I thought he started as a writer before going into publishing. His official bio says he majored in Classics.

While O'Reilly doesn't use standard econ jargon in his talk here, the actual content is pretty close to what economists have to say regarding consumer surplus from the Internet. The "clotheline paradox" (which is not O'Reilly's invention; he credits an old article by Steve Baer about his solar power work) mirrors the old economics parable about the man who marries his housekeeper, and is a perfectly valid (if commonplace) observation about value creation that is hidden from standard economic benchmarks.

In short, I don't see any economic heterodoxy or "engineer's disease" in this short on-camera conversation. It may not cover new ground for readers who already know the relevant economics, but it's not bad as a pop-sci treatment of these issues.
posted by mbrubeck at 9:42 PM on October 9, 2012 [5 favorites]


If I were to try to dry my clothes on a clothesline, my HOA would go apeshit because it's "unsightly" -- even though no one can look in my back garden without a ladder.

Stupid, stupid rule. Grrrrr.
posted by potsmokinghippieoverlord at 10:27 PM on October 9, 2012


If I were to try to dry my clothes on a clothesline, my HOA would go apeshit because it's "unsightly"

Cue all the non-merkins giggling about the "land of the free" again...
Sorry, can you elaborate on what you mean? It sounds like you have a point, but... I don't quite see how it relates to the linked article.

Yes, engineers tend to overvalue their skills (largely because we can "get the job done", if not always as optimally as a seasoned pro, for just about any job you can name).
Actually, that's a good example of engineer's disease right there, that overestimation of your own abilities because you're an engineer and underestimation of the skills and knowledge that is needed to do somebody else's job.

It usually manifests online as somebody deciding that just because they're smart enough to catch an error in a simplified pop science explenation of evolution|relativism|tectonics|the Holocaust they can now dismiss a whole field out of hand and use their big brain to propose alternate theories. Best example: James P. Hogan, who started out with using Velikovskian theories to drive the action in his first Giants novel, ended up believing it and who at the end of his life had started to get interested in Holocaust denial...
posted by MartinWisse at 10:59 PM on October 9, 2012 [4 favorites]


I really don't understand how the clothesline creates a Paradox? (Paradox: paradox is a statement or group of statements that leads to a contradiction or a situation which (if true) defies logic or reason)

Ok, so Air-drying doesn't use electricity and hence does not contribute to measures of national GDP whereas using a clothes dryer does contribute to GDP? How is that a paradox?

So the paradox that consuming electricity is thus 'good' for the economy? - This is not a paradox though. Consumption is seen as being good for the economy. That's what the whole Stimulus package is about. propping up consumer demand.

I don't get it.
posted by mary8nne at 1:31 AM on October 10, 2012 [4 favorites]


I had the same question mary8nne. I poked around and the paradox is that when we discuss energy consumption, we only discuss the energy which flows through a meter. Every day we are using all sorts of energy: in our food, in the food of work-horses, and when we use the sun to dry our clothes. The paradox (and I think it's a bit of a stretch to use the word) is that in our accounting, the energy consumed for clothes drying disappears, even though in reality, we are still using energy to dry our clothes.
posted by molecicco at 1:39 AM on October 10, 2012 [1 favorite]


Reading the article more it does come across as he has never heard of the idea of public goods or "the Commons". Has he really never read anything about Youtube / User Content being the new "creative commons". As a shared resouce of the community that can be utilised by anyone (provided they are not destroyed by an particular user).
posted by mary8nne at 1:45 AM on October 10, 2012 [2 favorites]


So I built that really means I own that.
posted by fullerine at 2:02 AM on October 10, 2012 [1 favorite]


mary8nne : So the paradox that consuming electricity is thus 'good' for the economy?

Only as half the picture - Yes, consumption helps the economy by "stimulating" it (whatever the hell that means); but consumption of energy ends up sending money out of the country; and consumption of energy for such mundane tasks as "keeping the lights on", or in this case, drying the laundry, amounts to pure waste in that it doesn't "produce" anything.

That said, others have mentioned that economists already have ways to deal with that. Still no links to such theories that explain it with even close to O'Reilly's eloquence, but, have faith!



MartinWisse : overestimation of your own abilities because you're an engineer and underestimation of the skills and knowledge that is needed to do somebody else's job.

Without any other information about them, would you rather have an engineer, or a French lit professor, try to help you when your car breaks down? Would you rather ask an engineer friend, or an anthropologist friend, for help on your taxes? ;)

I realize I gave an example of exactly what he described; I just didn't see how it related back to O'Reilly's point except insofar as Anything points out - Economists may "know" about this, but they've done a piss-poor job at explaining it, much less dealing with it.
posted by pla at 3:50 AM on October 10, 2012


pla "Only as half the picture - Yes, consumption helps the economy by "stimulating" it (whatever the hell that means); but consumption of energy ends up sending money out of the country; and consumption of energy for such mundane tasks as "keeping the lights on", or in this case, drying the laundry, amounts to pure waste in that it doesn't "produce" anything."

What? I'm still confused on where the paradox is?

The Electricity used in drying clothes is the Product that GDP is measuring. In fact if the Electricity was actually used to produce something else (as an input in that other items production process) then it would possibly be an "intermediate good" that is not directly contributing to GDP.

And secondly consumption of energy does not necessarily send money out of "the country" (in my case being England not the USA), that really depends on two things
1. where the natural resources came from - and
2. who owns the majority share in the company that extracted that resource from the ground.
posted by mary8nne at 4:05 AM on October 10, 2012 [2 favorites]


If I were to try to dry my clothes on a clothesline, my HOA would go apeshit because it's "unsightly"

Clearly you need to spend some money on better clothes and/or fancy lingerie, thus stimulating the economy and resolving the paradox.
posted by Dr Dracator at 4:31 AM on October 10, 2012


Without any other information about them, would you rather have an engineer, or a French lit professor, try to help you when your car breaks down? Would you rather ask an engineer friend, or an anthropologist friend, for help on your taxes? ;)

Given your framing, I don't want any of them. They could be cannibals, using my distress for a chance at a meal....

Slightly more seriously, for the first question, it really depends on the type of engineer. A civil engineer, for example, will blame the breakdown on wear caused by poor pavement design.

For the second question, I would never want an engineer to help me with my taxes. Engineers believe reading the manual is a sign of weakness.

As for engineers' all-encompassing competence, have you ever watched a non-engineer try to use an interface constructed solely by engineers?
posted by GenjiandProust at 4:31 AM on October 10, 2012 [3 favorites]


This metaphor works better when considering the argument that drivers sometimes make against cyclists: that should be taxed specifically for cycling on the roads (which, in this argument, are intended exclusively for cars). In fact, the taxes that cyclists do pay help maintain the highway system, and (in the case of the US) actually subsidize gas prices.

Arguments of this nature come from resentment of the perceived "free rider," but are in fact the result of misunderstandings of the nature of the fees drivers actually pay, as well as the ways in which infrastructure is funded.
posted by TheWhiteSkull at 4:37 AM on October 10, 2012 [1 favorite]


Yes, engineers tend to overvalue their skills (largely because we can "get the job done", if not always as optimally as a seasoned pro, for just about any job you can name).

Politics, maybe not so much
posted by IndigoJones at 4:55 AM on October 10, 2012 [3 favorites]


I feel like the problem with this kind of stuff is that while we may be able to create many different kinds of value, we're only able to price scarcity.
posted by Diablevert at 4:57 AM on October 10, 2012 [2 favorites]


Without any other information about them, would you rather have an engineer, or a French lit professor, try to help you when your car breaks down?

If you mean a lit professor who's French, I'd choose that one every time. Citroen, Renault, Fiat, Peugeot: these are good experience for fixing cars. And like GenjiandProust, I'd never ask an engineer's help with taxes unless I looked forward to an IRS audit.

In general, in my experience, engineers do a fantastic job overestimating their competence outside their fields.
posted by me & my monkey at 5:55 AM on October 10, 2012 [2 favorites]


In general, in my experience, engineers do a fantastic job overestimating their competence outside their fields.

To be fair, Lord Kelvin did this, too, so it's not just engineers....
posted by GenjiandProust at 6:18 AM on October 10, 2012


mary8anne, Tim O'Reilly has obviously heard of the tragedy of the commons, the Creative Commons movement, etc. In fact, the Creative Commons foundation quotes him on their web site and his foundation is one of their long-time supporters.

I feel like some people are treating this as a reviewed paper that needs to cite sources. It's a transcript of a very short on-camera interview, so it's kind of weird to expect it to mention every related concept or academic work.

(I do agree that there's no paradox in the "clothesline paradox" though.)
posted by mbrubeck at 7:15 AM on October 10, 2012 [1 favorite]


Sorry, I mean mary8nne. Stupid short edit window!
posted by mbrubeck at 8:05 AM on October 10, 2012


So, what I've learned from this thread is:

1. Someone wrote an article about a concept that has been explored before in human history.

2. That person is bad because they lack the proper schooling or career to write on the subject.

3. Economists are great, although they are poor communicators.

4. Engineers are diseased, can't do taxes, and all French people are good at car repair.

5. Mefites love prejudging people, as long as it's not on the basis of race, religion, or sexual orientation.
posted by IAmBroom at 9:05 AM on October 10, 2012 [5 favorites]


We hear a lot about "free content" on the Web, and the idea that users are getting something for nothing. "They don't want to pay for their content." And yet, most people access the Internet by paying an Internet service provider $60, $70, $80 a month.

I paid $600 for the computer that I used to read this article. That does not mean that I paid $600 in order to read articles at Edge.org, nor does it imply that I would ever be willing to pay to read articles at Edge.org.
posted by straight at 11:31 AM on October 10, 2012


I think considering Comcast a "free rider" here is reasonable. Without the content provided to them free by the various channels online, they'd have nothing much to sell. And yet there's no financial structure for them to share that back in the form of royalties. Meanwhile, radio stations purchase licenses from music licensing agencies in order to broadcast that music, and a portion of the money for those licenses makes its way back to the originators of that music. This is a model in which a content creator gets a bit of the compensation when a bundler or delivery service - what a Comcast essentially is - makes money selling that service.
posted by Miko at 11:48 AM on October 10, 2012



So, what I've learned from this thread is:

1. Someone wrote an article about a concept that has been explored before in human history.

2. That person is bad because they lack the proper schooling or career to write on the subject.

3. Economists are great, although they are poor communicators.

4. Engineers are diseased, can't do taxes, and all French people are good at car repair.

5. Mefites love prejudging people, as long as it's not on the basis of race, religion, or sexual orientation.

IAmBroom

You've drawn the wrong lessons, so think on it again. The issue that isn't no topic should be touched on by non-experts or that it's wrong to have interest in something. The problem is that this is a topic that has been studied before, but it and these various "insights" into it are being presented as if they are something novel and fresh.

This does seem to be a particular problem with things like TED, and srboisvert is right: it seems to be particularly bad with engineers. There does seem to be this marked tendency for engineers/"hard science" practitioners to barge into other fields and "solve everything" by applying their logical engineering brilliance. It's most acute with economics: "It is however new to engineers playing at economics" could be shortened to "libertarian" as every hardcore libertarian I've ever encountered in real life or online is some engineer who thinks they've logically worked it all out and all economists are fools. But it's bad in other fields too: some guy like Sam Harris comes along and suddenly he's solved all the problems of philosophy. Or law, or sociology...it's all so simple, it turns out!

It's something I do see other fields doing, but not nearly as much engineers. There seems to be something about the engineering fields that engenders the attitude of "let me apply my practical logical brilliance and I will solve it all no matter what it is!". I can tell you as a lawyer it's particularly grating to hear such discussion about my own field; I imagine those in this thread complaining about it have felt such annoyance in theirs.
posted by Sangermaine at 11:48 AM on October 10, 2012 [2 favorites]


I think considering Comcast a "free rider" here is reasonable. Without the content provided to them free by the various channels online, they'd have nothing much to sell.

It makes me unbelievably sad that lots of people think the purpose of an internet connection is getting access to "content" defined as some sort of commodity that ought to have a dollar value.

Is the phone company a "free rider" because I pay them a monthly bill even though they don't pay any of my friends to talk to me?
posted by straight at 1:20 PM on October 10, 2012


What would you pay Comcast for an internet that only let you make direct-message personal connections with people whose address has been shared with you?
posted by Miko at 1:59 PM on October 10, 2012


Is the phone company a "free rider" because I pay them a monthly bill even though they don't pay any of my friends to talk to me?

Wait... you get people to talk to you without paying them?

I've been such a fool!
posted by GenjiandProust at 2:31 PM on October 10, 2012 [2 favorites]


But the thing is, Tim O'Reilly is not an engineer, nor is he some random pundit. He's a businessman who founded a very successful media company and has been running it for the past 34 years. He's also served on the boards of successful internet and software businesses, non-profit organizations, and the U.C. Berkeley I-School. He's led lobbying efforts on software policy, and is respected as a visionary in at least some parts of the free software and free culture movements. In what world is this person not qualified to comment on media businesses, internet policy, and open data?

In this Edge interview he may not be sharing original academic research, but he's saying "here's some stuff I think is important that I want to focus on." Anyway, I found it interesting despite the rambling format.
posted by mbrubeck at 2:58 PM on October 10, 2012 [2 favorites]


What would you pay Comcast for an internet that only let you make direct-message personal connections with people whose address has been shared with you?

That is the internet I pay for. Every time I click a link, I'm making a direct connection with someone whose address has been shared with me.

Wait... you get people to talk to you without paying them?

No, but it's not bundled into the price of my telephone service. I have to pay my "friends" separately.
posted by straight at 7:59 PM on October 10, 2012 [1 favorite]


That is the internet I pay for. Every time I click a link, I'm making a direct connection with someone whose address has been shared with me

That's a serious oversimplification.

But I will continue to play your little game. Let's make it: all you can do is email. You can't access an archive, you can't file transfer, you can't build anything collaboratively.
posted by Miko at 8:08 PM on October 10, 2012 [1 favorite]


The problem with this theory is that the Internet is really different from TV and Radio. It is not really like all this stuff is being broadcast to you by one cable company.

We have been paying ISPs for longer than most of the free content has existed. - before Youtube or Tumblr I still paid about the same or more for my internet connection. Was your ISP still a Free-Rider when the only content was email and Geocities?

I think in a lot of respects an ISP is more like someone from whom you hire / rent a "radio" device that allows you to access the "radio waves". But in a world where everyone is allowed to broadcast their own show.

Sure Google make some money off your content. - but you could also go and fund your own show by Hosting your own website for about $20 a year. Then you could do what you like with it.
posted by mary8nne at 12:13 AM on October 11, 2012


Let's make it: all you can do is email. You can't access an archive, you can't file transfer, you can't build anything collaboratively.

If that were the case, then sure I think that having an Internet connection would be a lot less valuable to people.

But I think my problem with the article is that it's acting like "value" is this brand new thing, this alternative measure of worth, when as far as I can see it's the same thing as "demand".

And demand can be incredibly high -- people can "value" something very much --- even or especially if the price is zero. Because price is two dimensional; it's where supply crosses demand. The greater the supply the lower the price, and if supply is infinite price is zero, no matter where you stick the demand curve.

So the argument in the article --- surely we can all agree that we like this content, that we want it, therefore there must be a price for it on which suppliers could make a living --- doesn't ring true to me. I pay Comcast cause I gotta. When it comes to Internet content there are billions of substitute goods out there I can access, and millions of those suppliers are willing to do so for free --- because it scratches other itches for them. So I don't see how coming up with a fresh ephamism for the demand curve changes anything.
posted by Diablevert at 11:21 AM on October 11, 2012


You can't access an archive, you can't file transfer, you can't build anything collaboratively.

But all those things still sound much more like direct connections I would make with individuals or organizations, like via the telephone or the post office.

Say I'm writing some music with a friend in another state. We call each other, talk about our ideas, hum snippets of melody, play guitar parts, discuss lyrics. Sometimes we'll put on a commercial recording and say, "Listen to this!"

This guy seems to be saying that paying my phone bill is the same thing as (and could be replaced by) spending that same money to buy the recordings my friend played for me. As if you could best describe what we were doing as "using the phone to avoid buying music."
posted by straight at 12:12 PM on October 11, 2012


We have been paying ISPs for longer than most of the free content has existed. - before Youtube or Tumblr I still paid about the same or more for my internet connection.

Long before YouTube or Tumblr, I played MUDs, checked the weather, ftp'd song lyric files. That was also all before commercial ISPs even existed.

Commerical ISPs were developed to take advantage of the fact that there was increasing content and services available online, and they could link users to the Internet through phone lines rather than only through terminals, and make money off of that.

They therefore were exploiting the freely available content to skim profit from members of the public who desired to access online content and services, and needed a means of configuring that access.

Without the content and services available online, why would anyone want or need an ISP? ISPs are dependent on the content that's online - without it, there is no reason to want the access they are selling. No one would buy access to nothing, and not very many would buy access or to a very strictly limited range of services (such as direct emailing people whose addresses you already possess). That's why it's reasonable to call them free riders. They are using the value generated by a third party as the basis of their case to collect money from you.

All analogies are going to be imperfect, because the use of each technology is slightly different. But the radio analogy is still a fairly good one. You don't pay the license that supports the broadcast rights for the music you hear; the station does. Similarly, why couldn't ISPs be asked to pay royalties to licensing agencies that could then distribute that reward across the creators on the web?
posted by Miko at 12:41 PM on October 11, 2012


Miko: "They therefore were exploiting the freely available content to skim profit from members of the public who desired to access online content and services, and needed a means of configuring that access. "

And reciprocally providing content that their customers wished to publish. Funny how that works. It's called the network effect, get used to it.

Miko: "Similarly, why couldn't ISPs be asked to pay royalties to licensing agencies that could then distribute that reward across the creators on the web?"

This strikes me as much like claiming that Netflix should pay Verizon to accept traffic that Verizon's customers request. It's a system of mutual benefit, and nothing at all stops an individual or company from attempting to monetize content they publish on the Internet.
posted by wierdo at 1:16 PM on October 11, 2012


And reciprocally providing content

I'd agree with that except that it's so false. Fewer than 10% of people actually create any content aside from personal messages and comments. Very few people create entire web destinations which thousands of people seek out. Some of us are producers. The vast bulk of us are just consumers.

Netflix should pay Verizon to accept traffic that Verizon's customers request

No, Netflix should pay the originators of the content being requested by Verizon's customers.
posted by Miko at 5:15 PM on October 11, 2012


Social Technographics ladder

A very few people make everything else happen.
posted by Miko at 5:19 PM on October 11, 2012


Fewer than 10% of people actually create any content aside from personal messages and comments.

I don't know about you, but personal messages and comments is a very significant chunk of what I buy internet access for.

From your Social Technographics link:

26% of users create music, video, write stories, articles and blog entries.
33% post stuff to Facebook and Twitter
37% contribute to forums, comment on blogs, review stuff.

I wouldn't call 25-40% of all internet users "a very few people." The stuff we get on the internet isn't produced by a handful of networks or a few dozen publishers or a few hundred authors. We regularly get stuff from tens of thousands (or more) of independent, discrete sources.
posted by straight at 12:42 PM on October 12, 2012 [1 favorite]


Miko: "No, Netflix should pay the originators of the content being requested by Verizon's customers."

In your view, shouldn't the ISP pay Netflix? After all, they do organize the content in a way that is easy to find and then pay the content owners for the privilege of streaming it to their (and the ISP's mutual) customer. There's nothing different about that than most newspaper websites that are largely made of of feeds from the news wires.

Or should ISPs only pay for certain content? What's the standard here?
posted by wierdo at 2:42 PM on October 12, 2012


I don't know about you, but personal messages and comments is a very significant chunk of what I buy internet access for.

No, you don't know about me.

In your view, shouldn't the ISP pay Netflix?

Yep, but I expect it would be a piggyback agreement passed through to people who contract with Netflix to broadcast their stuff. They should be paying anybody who bundles and organizes.

What's the standard here?

There's no standard, friend. I'm just encouraging you to think about it. We're not going to solve it here.
posted by Miko at 7:25 PM on October 12, 2012


Interesting. Will my ISP also be required to pay Amazon?

I admit I'm quite skeptical. After all, I think that broadcast TV stations shouldn't get paid by the cable company given that the cable company is the one bringing the eyeballs. Even more so for basic cable stations that get paid to have people delivered to their content. In the case of both the Internet and TV, the intermediary is actually providing a service to both content provider and content consumer.

In the case of the Internet particularly, without the intermediary there is no medium at all.
posted by wierdo at 8:27 PM on October 12, 2012


the cable company is the one bringing the eyeballs

To what? An empty screen?

without the intermediary there is no medium at all.

Not really - an ISP, after all, isn't necessary to experience a lot of what's on the internet. Hardware used to do it (my earlier point). An ISP isn't a "medium," it's a convenience.

But even if we take the current state of affairs where most people access through ISPs, what is it exactly they are trying to access? An empty file directory?
posted by Miko at 8:40 PM on October 12, 2012


Not such an out-there idea. The issue has come up in Canada. Interesting case study with SoundExchange, Sirius and ISPs as well.
posted by Miko at 8:51 PM on October 12, 2012


Miko: "But even if we take the current state of affairs where most people access through ISPs, what is it exactly they are trying to access? An empty file directory?"

Perhaps I'm sharing files peer to peer with a friend. Perhaps I'm playing a video game with them. Perhaps I'm exchanging files with a business partner. Maybe I'm making a telephone call. Maybe I'm broadcasting video or viewing broadcasted video. Perhaps I'm videoconferencing with another company. Maybe I'm paying my credit card bill. None of these necessarily involve third party content.

Either way, ISPs of one sort or another are the Internet. Very few companies or even large public organizations run their own national backbone. Most businesses, most people, connect through ISPs. They all interconnect at shared meeting points, often public ones. The Internet is, by definition, a network of networks.

To be fair, I also think that settlement charges are pretty dumb on the telephone network, too. The caller and the callee are both receiving benefit from the interconnection, as are the companies being paid by their users to interconnect them.

If you want to charge for content charge for content. If you think that natural person with an Internet connection should pay some amount to artists to offset the effects of piracy, it sounds like a tax would be right up your alley. Having ISPs pay makes zero sense to me.
posted by wierdo at 1:16 AM on October 13, 2012


Sangermaine:
So, what I've learned from this thread is:

1. Someone wrote an article about a concept that has been explored before in human history.

2. That person is bad because they lack the proper schooling or career to write on the subject.

3. Economists are great, although they are poor communicators.

4. Engineers are diseased, can't do taxes, and all French people are good at car repair.

5. Mefites love prejudging people, as long as it's not on the basis of race, religion, or sexual orientation.

IAmBroom

You've drawn the wrong lessons, so think on it again. Blah blah blah ENGINEERS! blah blah blah DON'T TALK ABOUT MY FIELD blah blah blah.
1. (He isn't an engineer.)

2. Now, back to your engineer-bashing! That's what this thread is about!

3. Aww, somebody is discussing your field, and you think they're underinformed. Want a hankey?
posted by IAmBroom at 7:11 AM on October 16, 2012


« Older Full episodes of T-Rex frontman Marc Bolan’s 1977 ...  |  "The six CIA officers were swe... Newer »


This thread has been archived and is closed to new comments