Why It’s Important That The Internet Created Technopopulism

After finishing ITIF’s new report on technopopulism, I couldn’t help but think, isn’t this missing a couple of pages, about, you know, the Internet?

While there is much to like about the report, the missing piece, the missing message, as McLuhan famously quipped, is the medium.

Here is the basic gist of the report. In the old days, tech policy was decided by educated wonks who knew the finer points of policy and could  make reasoned arguments. Better outcomes and more nuanced policy proliferated. In the last few years, the debate has been morphed by good ol’ American populism. The new image of technology policy is one of individuals protesting in favor of network neutrality outside Chairman Wheeler’s house. To Rob Atkinson and his co-authors, the new discourse is long on cliches and short on analysis, much to the detriment of consumers.

Yes. I agree to a certain extent, but there’s more to the story.

It is nearly trite to say that the Internet has dramatically changed and continues to change how an individual relates to others and knowledge. Yet hardly a word is mentioned about this important change in this report.

The gatekeeper function of the media has been democratized with the Internet, creating new, expansive spaces to discuss any number of topics. And if there is one thing to unite people on the Internet interested in policy, it would naturally be Internet policy.

While Rob et al might lament the old days where there was balanced and thoughtful discussion, it was only possible because the high barriers to entry limited the number of people that could have possibly been involved in the conversation. Enforcing norms without formal institutional structures could be achieved when the absolute numbers were smaller due to the these constraints. Moreover, to be part of that group required a job that was dedicated to its study, such as an economist, a lawyer, or an analyst at the think tank. Of course, to get that kind of job required formal education that signaled interest and continued dedication to the topic area, which also helped to enforce a set of norms.

Once the conversation expanded via the Internet, the norms and the institutional requirements dramatically changed, leading to the world that the authors detail. Of course, there is still a core of educated discussants, but that has been supplemented by broader ethical and policy conversations over Twitter, discussion boards, Reddit, comment sections and countless other places. But let’s remember, this doesn’t mean the concerns are being translated onto the political stage. Even network neutrality, with its millions of FCC comments, is still largely unknown. Indeed, even after the President’s speech on the topic last November, 54 percent of those polled, including majorities of Republicans and Democrats, said they haven’t heard of the concept.

Indeed, what the report cites as instances of technopopulism is just a small fraction of the entire conversation. What is included are the issues that have, for one reason or another, garnered attention. For the most part, other important issues face far less outsider scrutiny. Take for example, the House Energy & Commerce efforts to update the Communications Act. Arguably, this new Act would be far more important than network neutrality, since it would determine how tech is governed. And yet, even the most commented upon subject, video law, only received 220 responses. Apart from network neutrality, FCC dockets are fairly technical and aren’t often commented upon.

All things considered, I still think we are toiling in relative obscurity. For now.

What Economic Environment Will TV Unbundling Create?

The Technology Policy Institute just went live with a video of their OTT event, exploring TV unbundling. There is a lot of solid material, but Laura Martin, a Senior Analyst at Needham & Company, explained what would happen if we went to an unbundled world:

  • As soon as you unbundle, you lose advertising revenue. Immediately, you have to double the cost because of lost ad dollars.
  • 1/2 of the revenues come from ads and the other 1/2 comes from subscription.
  • Currently, the market is $150 billion a year for TV revenue with a $400 billion in market cap.
  • Remember, in order for Nielson to measure for ads and thus calculate ad dollars, you have to reach 20 million homes.
  • By her projections, only 30 channels of 500 would reach this number. So, the other 400 or so would have to double their costs to consumers.
  • Currently, everyone one of those channels reaches the homes out of the 150 million, and there is an easy way to change channels.
  • Subscriptions are 5 year terms and tend to step up over time.
  • So, advertising moves away from TV the fastest in a la carte world.
  • Currently, the cost of content is $40 per household and what we would see is about 15 channels, which is generally the average around the world.
  • Everyone does consume the major 15 channels, but households tend to have passion channels that will lose out in this world.

Bruce Owen also noted that if we force suppliers to provide services a la carte, then how do we know if they are pricing the various channels correctly? We will have to look at costs because supplying the bundle costs less than supplying the a la carte channels. So, we are in a world of rate regulation.

Markets in Eveything Google Edition

Google is developing a data exchange:

Wall Street-like exchanges have revolutionized online advertising, but Google is taking the concept further, quietly building one for buying and selling data, the lifeblood of online advertising.

The exchange, known internally by the acronym “DDP,” is an attempt to create a liquid market for the data used to target display advertising, and it’s the latest move in Google’s attempt to build out the infrastructure that powers digital ads. Executives familiar with Google’s plans have described the initiative as one of the most ambitious in Google’s march to become a brand advertising giant.

Robert McChesney is Wrong

Talking about the 1400 and 1500s:

One fact must not be lost sight of: the printer and the bookseller worked above all and from the beginning for profit.

That is from Paul Starr’s book The Creation of the Media, stating the obvious: newspaper production has always been about profits. Contrary to Robert McChesney, they aren’t special in any economic sense and we should not treat them as anything other than businesses.

Apple and iAd

I really don’t know how this went past me, but I was watching Fast Money today and Kaminsky made note of Apple going into direct search. To make this a little more solid, look at this,

Trefis, an analysis tool that allows investors to estimate how much an assumption could influence a company’s stock price, has a price target of $294 for AAPL stock, and it estimates that 8 percent of that projected value represents paid and ad-supported software on its App Store. For comparison, the company has projected that the iPad will constitute just 4 percent of the stock price.

The always insightful Picard makes this more tangible:

The biggest problem of media business models today is not that the revenue model is diminishing in effectiveness, but that most media companies are still trying to sell nineteenth and twentieth century products in the twenty-first century. And they are trying to do so without changing the value they provide and the relationships within which they are provided.

Only time will allow us to understand how this is going to work out, but regardless, it is an interesting time to be in media.

One of the reasons why newspapers are going out of business

From the New York Times,

Mr. Tierney wants to hang on to the keys, or at least, he says, to deliver the Philadelphia newspapers to “someone who wants to be in the business, not somebody who bought the debt for 12 cents and is trying to flip it for a little more.” He has said, “I have a fiduciary duty, not just to the lenders, but to the employees and other people who depend on this paper.”

On Thursday, he called Angelo, Gordon “a secretive hedge fund that has its fingers on the throat of The Los Angeles Times and The Chicago Tribune and will someday, they hope, basically control the news in three of the four largest news markets in the country if they are able to capture Philadelphia as well.”