Universal Search: Clueless! – ISP’s act like AP, Greed for Money Upfront will lead to a Kick in the Rear
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Written By Noah Mallin | June 17, 2008 | Share This
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The recent kerfuffle involving bloggers and the AP fired some interesting connections in my neural net. The attempt to levy a tax on bloggers for the right (nay the privilege!) of linking to the AP’s content smells a lot like the recent attempt of a few internet service providers to charge extra to high-bandwidth users.
The common thread between these two hair-brained schemes is an attempt to force old-school ideas about economics onto the new world of the internet. The irony is that the Internet at its best is probably the closest human beings have come to the perfect marketplace envisioned by Adam Smith in The Wealth of Nations.
In Smith’s ideal marketplace, all buyers and sellers have access to the same information and equal access to the marketplace, allowing prices to find their natural/optimal level. In a broad way that has been mostly true online whether we are talking about the cost of advertising a product or the product itself. In fact, the auction-based search model is about as close as you’re gonna get.
In the current online marketplace bloggers have pretty much decided that the value of links to news content is free thus AP’s dumb idea to charge users $12.50 to use as few as 5 words from one of their articles is strictly D.O.A. When bloggers have made the choice to link to an AP article, it has actually benefitted AP more than it has the blogger. With all the sources out there including archrival Reuters, every link confers authority and value. This value is passed on to AP’s actual paying content subscribers who expect to draw viewers with their newsfeed. Yet the AP appears content to feign ignorance, and to continue try to control the use of their information.
The approach Internet service providers are taking to the marketplace has a potentially bigger distorting effect. In theory Smith’s perfect marketplace fosters innovation as that differentiates one product from another in a price-leveled playing field. Network gear maker Cisco has said that they think web bandwidth use will increase sixfold between now and 2012 due to innovative new technology offerings like web video. Parks Associates, a web research firm sez,” “As of 2007, 50% of
Think of it from the perspective of universal search, which is becoming more commonplace and robust. It obviously takes more bits to display these results than it does to display regular search results. As universal results become even more commonplace and inclusive the overall demand on bandwidth will increase, unless of course the ISP’s don’t build out the bandwidth or choose to charge for it. Nearly instant innovation stifling achieved.
Good news for Cisco which would be called upon to help build out the required upgrades to bandwidth, that is if the ISP’s wanted to upgrade. Problem is they don’t see why they should be the ones to pay for a more robust Internet. They’d rather make you pay, upfront, and then build a fatter pipe (maybe) in the future.
The main offender here is Time Warner Cable which is testing usage-based pricing in
My biggest concern with penalizing heavy users for bandwidth is that it changes the economic equation not just for users, but for Web site managers and publishers. If every bit has a cost (or even a potential cost), then advertisements may become an unacceptable way to pay for viewing content and using Web sites. The ad blocker software business will flourish, and the economics for content sites and advertising providers could be affected.”
Instead of taking a new path, Time Warner and Comcast, which has begun arbitrarily limiting bandwidth to those it deems as high users during peak use, are simply trying to bulldoze over the reality of net economics. Raising the cost of bandwidth at a time when it is likely to be in higher demand could have the effect of stalling the growth of broadband penetration and also curtail new technology sampling. We at SearchViews have advocated for the idea of integrating behavioral marketing at the ISP level. Now that would be a creative way to make more money. Perhaps they could take a lesson from Google who will soon be offering an ISP monitor so that customers can see exactly what’s happening and if they are being choked off by their ISP. The expected cost? Free, natch.
As for the AP, we got your number too. Learn to make more by giving it away like Reuters does. The increased traffic and link love will allow you to charge more to your customers for content who in turn will be able to charge their advertisers more.
Topics: Advertising: Behavioral, Advertising: Online, Blogging, ECommerce, Media Convergence, Online Video, Publishing, Reprise Media, Search: Innovations, Technology |