Tag Archives: net neutrality

Payola for the Duopoly

up-need_to_know.jpg ISP meddling with net neutrality could unite indy musicians and record labels against the duopoly:
For the music business, the failure of net neutrality presents several big problems. Musicians are at the vanguard of digital distribution of music files, video files, and other space-gobbling content. Traffic throttling will almost certainly result in placing severe limitations on the amount and kind of content musicians can put out there — and it’s pretty likely that musicians will then be forced into partnering with businesses that have fewer limits and greater access, no doubt for a fee, to get their gear online. Another issue is that, as covered recently in this column, we are seeing a whole new universe of music-related business models, and we need to see some predictability in terms of licensing methods and how artists and copyright owners get paid. One of the most compelling proposals is that P2P music sharing should be rendered commercially viable and copyright-legal by the imposition of a blanket license that would be paid at the gate (i,e., through the ISPs). Institutionalized throttling would take this plan out at the knees.

Another problem is that record labels, distributors and retail chains who are already in desperate jeopardy can’t compete with ISPs and cellular providers who, having launched their own music stores, have all the incentive in the world to steer music consumers to their own services rather than open the pipe for folks to shop elsewhere.

— Net Neutrality, By Allison Outhit, Need to Know, June 2008

This observation comes from Canada, where current attempts by some to pass legislation similar to the U.S. Digital Millenium Copyright Act (DMCA) has suddenly gotten noticed as a path to something music lovers have seen before:
McKie is referring to proposed changes modelled on the American Digital Millennium Copyright Act (DMCA), which call for a much heavier-handed approach to interpreting what kind of content uses are protected by copyright. At the same time a Canadian DMCA would accord “safe harbour” status to service providers to shelter them from a potential onslaught of copyright litigation provided they act quickly to block infringing and illegal actions on their networks. A Canadian DMCA could impact net neutrality by putting police power in the hands of the networks, while providing ISPs with strong incentives to prefer privately-negotiated content distribution deals over the chaos of user-generated traffic. The bottom line is that musicians have come to rely on the net as their number one go-to distribution and marketing tool. The net got that way by being neutral to all comers. Whether you were a platinum seller on Universal, or a couple of unknown basement-dwellers, your video had an equal chance of going viral. Without net neutrality, all the good pipe will get eaten up by whoever has the power to make the deal. Which sounds a lot like the payola days all over again.
Yep, that’s what we’ll get if we don’t have net neutrality: payola for the duopoly.

-jsq

Porter’s Five Forces and Net Neutrality: What If Distribution Channels are Open?

brief.jpg Here’s a take on why telcos so adamantly oppose net neutrality:
The eager and almost rabid application of Porter’s “Five Forces” (Supplier Power, Customer Power, Threat of New Entrants, Threat of Substitute Products, Industry Rivalry) to technology products and services has bred an entire generation of MBAs in marketing positions dedicated to developing and maintaining closed systems and closed hardware platforms. This is particularly egregious in the case of business models that are effectively based on distribution channels. In conventional analysis there is nothing wrong with making your living on distribution channels. Remember, that in 1979, when Porter developed the Five Forces framework, distribution channels were highly expensive to create and maintain and, owing to these costs, constructing them effectively presented a significant barrier to entry. Your product didn’t even have to be particularly good, because the threat of substitutes was reduced via the difficulty and expense of the competition actually getting those substitutes (however good they might be) to your customers. Suppliers, if they wanted access to your customer base as a proxy to sell their raw materials, had to go through you. New entrants had to build an entirely new distribution channel. Customers were stuck. You owned the market. But you had to guard this distribution channel carefully. And you had to make sure you hadn’t forgotten something simple and critical. That’s not part of a conventional Porter analysis. But why would it be? Conventional distribution channels are quite physical, antique and boring.

— The Five Forces/Circles of Hell, a Private Equity Professional, Going Private, 27 April 2008

The article goes on to detail how Blockbuster used the old Porter model of closed distribution channels and Netflix used an existing open distribution channel: the U.S. Postal Service.

To spell out the telco connection:

Continue reading →

Exogenous Technological Change

Here’s a good backgrounder video on where the Internet came from and where it may be going: Humanity Lobotomy. See especially the part by Larry Lessig about how printing presses in the early days cost about $10,000 in 2007 dollars, and lots of people had one and published books and pamphlets.

What did the telephone companies have to do with inventing the Internet?
Nothing.
The browser?
Nothing.
The World Wide Web?
Nothing.
What have they had to do with the Internet from the beginning of time?
Nothing.

–Bob Kahn

What did they invent? Continue reading →