Thursday, July 16, 2009

Fuck the piper (an immodest proposal)


Google Inc. (GOOG 429.53, -13.07, -2.95%) on Thursday said its second-quarter net income rose to $1.48 billion, or $4.66 a share, from $1.25 billion, or $3.92 a share in the same period a year earlier. Net revenue in the period ended in June rose to $4.07 billion from $3.9 billion, Google said. Excluding special items, earnings were $5.36 a share. Wall Street analysts had expected Google to post earnings excluding special items of $5.09 a share, and $4.06 billion in net revenue, according to data from Thomson Reuters. #

I'm not understanding why everyone thinks Google is brilliant but no one seems to grok the model.

It would be edifying to know how many stories at the NY Times site have been clicked on by users (or by bots) over the past decade, if that's how long they've been available. Must be in the hundreds of millions. Let's say 300 million [add: that's way low - see here]. Had they charged $.007 per story accession (i.e., click), the Times would have made $2.1 million. That's $2.1 million more than the ZERO their content has earned for them thus far (offset by whatever grand total their short-lived scheme of charging for Rich, Dowd, etc. brought in).

But who would agree to pay them even $.007 per access? you fairly ask. And my model says - it doesn't matter. Because the money would not come directly from the end user's pocket, but rather from those funds spent by all of us to all the large corpses who bring bits into the home, by whatever means - Comcast, Verizon, etc. Because these companies right now are thieves. They are making money hand over fist from users. But users do not pay them in order to see dark screens (that bliss is for television). We pay the Comcasts and Verizons in order to access content. Their mega-earnings are contingent upon their parasitism of Content.

Does it not seem appropriate that the pipers pay for that which enables them to exist? I have put forth this model before, (also a bit here) and of course it's patently absurd. However, I assure you, it's the only fair way to make sure that there is quality content on the Net. As of now, that assurance is lacking. The black holes of internet service providers are threatening to suck down all the light. They are making vast profit while thinking only about metal and fiber and trucks. All of those who are trying at least to think, to tweet, to make something or do something or read something, sit atop an enormous pile of bupkis. This is wrong.

The only fair way is to let every click on the net - to anything, except closed sub sites (like JSTOR), and sites featuring socially challenged content (bestiality, child porn, Republican Senators) - move a bit of micromoney from piper (a general fund fed from all pipers) to contenter. And, the same amount. Equal bits. Let's not quibble over how much more quality one finds in the NY Times. You provide content, you get clicked on, you get the everybody micro$, period.

This in no way obviates Big or Small Content from selling ads or running contests or selling t-shirts. It is simply the addition of a revenue stream that wasn't there before, taken from the profits of Big Pipes. You know the gold is there.

My argument would be improved by containing actual numbers of clicks for some content providers. But I don't think it would change the underlying logic. Please now tell me why I'm wrong so I can remove this chimera from my skull.



[Update] from the Man who Knows Everything:

Free is for the masses; the elite will pay for high quality content in news, information, education and entertainment. Digital feudalism...

Labels: , , , , ,

42 Comments:

Blogger Zo said...

I'm sorry, but I don't think I can do that.

7/16/2009 10:35 PM  
Blogger Tom Matrullo said...

Yes you can.

7/16/2009 10:58 PM  
Blogger bmobmobmo said...

We are in a period where Big Pipe is appropriating the Internet, making it theirs. It's hard to see sometimes.

Big Pipe - which had no interest in the internet in the beginning - has two motivations: as corporations to make money, and as carriers of information to maintain social control. For Power. Private Money.

'We' seem to have taken our eye off the ball on this point. A point that is being conceded too easily.

Q. Can Power - which in this part of the world is representative of Money - ever serve the Public Good?

No. But that's maybe just me.

Still, Humanity - 99% of us - always seems to be running uphill against the wind, in opposition to the heavy breathing of the godly One Per Centers.

So...what?

Only if it is in the hands of the public will the internet survive, let alone thrive.

The InternetWebs need to be reclaimed as Public Space for the Public Good and that the Public Good is a value or right superior to Private Interest.

Can Flow - Public Good - be reclaimed from Pipe - Private Good?
(I doubt it.) Can Pipe ever again be seen as Public Space?

Still, to your point. Public Good and Public Space. Would your model work for the public good? Yes. It's that simple.

Hold that model in your head. It's healthy.

We moved away from their shit to make our own. To claim our existence. To create meaning.

They don't like that.

7/17/2009 11:28 AM  
Blogger Tom Matrullo said...

Precisely bmo3 - thank you. I can't get this model out of my head. Currently Big Pipe drops its load - once - and commands tithes forever and a day. Content makers large and small produce new stuff every day, and make mostly nothing, because horseshit like "information wants to be free" makes the Kevin Kellys of the world think it's a love thing.

See the Internet as One. To be healthy, everything including the money has to circulate, rather than to accumulate in infrastructure profit centers, which have no incentive to improve what is already bringing home the flatulent bacon.

If Comcast, Verizon et al will not surrender a piece of the action, the action will surrender them. Not nationalize, but people-ize. I truly, perhaps absurdly, believe this is unavoidable.

We are already paying for content, only it's going down the tubes of the Pipes.

Big Content must give up any idea of selling proprietary wares. Big Pipe must share the treasure. Surrender all around offers the sole hope of this not flickering out.

7/17/2009 12:04 PM  
Blogger Tom Matrullo said...

This topic seems to be bubbling up today:

Financial Times editor says most news websites will charge within a year

http://www.guardian.co.uk/media/2009/jul/16/financial-times-lionel-barber

7/17/2009 1:23 PM  
Blogger Mike Cane said...

Sorry to explode your naivete. But if your plan goes through, here's how it would be handled. The pipers would lobby Congress for a "content tax" to be added to everyone's monthly bill. THEY wouldn't pay a thing. WE would. And that tax would probably increase yearly as the numbers roll in. "Oh, we can't do per-click, what about streaming video? Look at how many bytes *that* takes up!" Etc.

7/17/2009 1:24 PM  
Blogger Tom Matrullo said...

On the contrary, Mike, if I'm captive to my naivete, I'll be delighted that you explode it. Perhaps, perhaps. But you assume Big Pipe must remain calling the shots. What if we, the Internet, decide to allocate our resources otherwise? Sort of a "public plan," you know...

7/17/2009 1:31 PM  
Anonymous @hilljohng said...

It makes sense in a way, but I think it's a pipe dream to think Big Pipe would ever allow this to happen. Keep noodling. Maybe there's a twist that will work?

7/17/2009 1:56 PM  
Anonymous Kent said...

Tom,

The NY Times has an annual revenue of somewhere between $2 billion - $3billion.What impact would your model have on the NY Times income and ability to adequately compensate the journalists that work for them?

Without knowing the existing cost structure of many companies that "employ" journalists, it's hard to determine whether or not an addition tax or fee would improve the livelihood of their writers.

Furthermore, "The paper industry is the 4th largest contributor to greenhouse gas emissions among United States manufacturing industries, and contributes 9% of the manufacturing sector's carbon emissions." [ The Daily Green ]

If additional revenue streams (from the internet-pipes or other sources) are used by the newspapers to propagate the existing inefficient and outdated production/distribution system, then the collateral damage will be adverse environmental impact and costs.

It hard to see how a bunch of writers/journalists couldn't put out a pretty good web page with $3 billion or $2billion or even a measly $1billion per year.

Before we tax the internet, we should ask why more of the money isn't trickling down from the top of the existing big-journalist-employing machines.

7/17/2009 4:40 PM  
Blogger Tom Matrullo said...

Kent, what the NY Times does with lumber and ink, trucks and vending machines offline is not my concern. If they wish to dabble in whaling or other fine endeavors, they will have to make them pay however they can. What matters is how they can get something in return for putting their content online, for which they now receive whatever their ad revenues and "old news article" purchases make for them.

The only thing I am looking at is the logic of the situation - the details of their costs and revenues are outside that.

Try it this way: if every content provider begins to charge users what they need to charge in order to stay afloat (as Andrew Keen claims they will in the cited tweet), we users will soon find ourselves facing monetary demands everywhere we go online. We will have to reduce our content intake in order to not be bled dry.

As we reduce our consumption, their readerships will dwindle, and their advertisers, seeing this, will jump ship. Death spiral.

Meanwhile, as I noted above, from our perspective, that of the user, the Internet is not Pipes, it is Pipes and Content, one seamless totality, which we already believe we are paying for, because we are. Only the part of our payments that we are giving to or for Content never arrives, because the Pipers pass nothing of their charges along, thinking that even if no one posted anything, we'd still cheerfully spend substantial yearly sums just for their Pipes, sans a useful bit. This utter lunacy is called the Internet Service Provider business.

The Pipers need to revise their grasp of reality, but so far, Big Content has failed to bring that fact to their attention. The Business Model has them all snookered, losers as well as winners.

When you see that there is one organism, and the money that nourishes it must give sustenance to all, and that right now it's only reaching half the organism, and the other half is starving, then one sees it is not a matter of taxing, but a matter of shifting existing revenues - money that is already going into the system - to parts of it that are currently deprived.

If Comcast, Verizon et al fail to see this necessity, they doom themselves - or, if we do wish to have an Internet with content that doesn't nickle and dime us to death (like healthcare), we may need to make the infrastructure something that we pay for -- not to private corporations, but rather to ourselves as the trustees of a brave new net. There is no Internet without us. It is us. Maybe it's time we made that clear.

7/17/2009 11:49 PM  
Blogger Tom Matrullo said...

I had a feeling my number for Times' page views was way low:

See, e.g.:

Consumption of news on mobile devices is on the rise. At The New York Times, there were 60 million mobile views in April, nearly double the number from April 2008.

The paper gets about 10, no, 20 million views per month on the iPhone alone, a Times spokesperson told Beet.TV (the original number was incorrectly reported, apologies). These are internal traffic numbers.

According to The Nielsen Company, there are 53.4 million mobile Internet users in the United States with 22.3 of them using their mobile to access news.

New Nielsen numbers find CNN is by far the biggest player, with 11.6 million unique mobile users. Following CNN is msnbc.com with 3 million, The New York Times with 2.4 million, the Wall Street Journal with 1.7 million, and the Washington Post with 700,000. (Nielsen reports only uniques, not total views.)


http://www.beet.tv/2009/06/the-new-york-times-had-60-million-mobile-views-on-april-10-million-on-iphone.html

See also:

http://startupmeme.com/new-york-times-need-13-billion-pageviews-per-month-to-survive/

And:

how many page views would nytimes.com need to garner as much ad revenue from the online version as from the print product?
The answer is six times as much as now. Yikes.

According to a story in Mediapost (another organization I write for), at the level of 1.3 billion page views, it would rival msnbc.com and Yahoo News in size, and be able, at a $25 cost per thousand, to make $300 million in ad revenue per quarter.


http://industry.bnet.com/media/1000509/can-the-new-york-times-increase-page-views-sixfold-doubtful/

So again conservatively let's assume 200 mill clicks per month, or 2.4 billion per annum. X $.007 = $16.8 million per year, just from clicks. And that's still lowballing it.

7/18/2009 12:35 PM  
Anonymous Anonymous said...

I think your logic is mixed up: your pipe monthly fee goes towards infrastructure payments to make the Internet run. It has nothing to do with content (at least today, when net neutrality is basically intact). That is an entirely different layer of the stack.

7/18/2009 6:48 PM  
Blogger Tom Matrullo said...

Anon.: What is your understanding of the fact that, if you are only paying for infrastructure, when you make that payment and connect, you access an extraordinary variety of Content at no additional charge? What is the viable underlying economic model to that part of the "stack"?

7/19/2009 8:07 AM  
Blogger Tom Matrullo said...

This topic remains hot - e.g., today's NPR story about the NY Times's efforts to make a buck.

7/19/2009 10:22 AM  
Blogger Tom Matrullo said...

Newspapers haven't been charging readers for the cost of creating content since the 1830s, says Jeff Sonderman.

7/19/2009 10:35 AM  
Anonymous Anonymous said...

For Kent:

The NY Times has an annual revenue of somewhere between $2 billion - $3billion.

If that were true Kent we wouldn't be having this discussion.

7/20/2009 9:27 AM  
Blogger Tom Matrullo said...

Kent is not mistaken: The total operation of all NYT's various efforts to make a dollar (which include forestry, real estate, radio, TV, other regional papers etc.) do amount to between $2-$3 bill a year:

NYT gross, debt, negative earnings, etc. here:

It would be helpful to see numbers relating solely to the online side. I suspect we'd see low costs, but still losses.

While looking for the company's annual report, I used Bing to search - got a story about Paula Abdul not returning to her show. hmmm...

7/20/2009 11:14 AM  
Blogger Juke said...

Still mulling this, having just now emerged from the sylvan glade and hit yer email.
Starting with: ...we users will soon find ourselves facing monetary demands everywhere we go online. We will have to reduce our content intake in order to not be bled dry...
Well there's that Boston Tea Party thing? All them colonial boys ranting and raving on and so on.
One thing I see is the frame must begin at its edge with the tightest and clearest definition possible of what it is we're discussing. The "Pipe" as it were is and maybe will be.
What is that?
We're bringing our naive experience to it, seeing it as what I dunno TV and newspaper racks and radio but maybe that's wrong, maybe we should be seeing it as something more like actual air, that which carries the sound waves of speech and the photonic particles of reflected light that is signage. Because that makes it real obvious that anybody trying to meter the process is a scammy parasite. The idea that we could have something like a speech tax, or language royalties or a vision fee, this is absurd from the get. But we're close to that with the 'net as now conceived.
Trudeau the Doonesberry has had a patrician-flavored grudge v. "bloggers" since way back, now ridiculing "twitter"(a word I have even more trouble typing than "blogger" which I still have a lot of trouble typing) which pretty clearly was engendered by the threat to his revenue stream taking eyeballs from the paper media posed, this confirmed by the more smugly rendered scorn cast twitter-ward. Blogging scared him, twitter(verb form) irritates him. He's all about the chat and the email though. Inasmuch as he represents a wide swathy chunk of the audience he's worth analyzing for those sentiments and lacunae.
Still mulling.
Well for now anyway I think we, the us that thinks about these things, need to champion freedom in its particular right now buddingly possible form, because of course whatever it is that's pushing this discussion will morph and mutate, or be channeled and bred down into servility, or any of the many up-and-or-down spectral iterations possible. Human communication and transfer of info is even yet more basic and essential than even technological progression init?
So we're talking about non-participatory agencies - middlemen, warehousers, brokers, at best - making the most dimes off what are essential and therefore necessary and therefore inevitable human acts. Which is more vampiric than simple parasitism.
Contributions of amalgamation and facilitation, sure, but the content, the info, the speech and knowledge transfer - that's coming from the two ends of the pipe, or Pipe. Inserting oneself into that transfer and bottlenecking it may be currently an established and accepted way of making a living or fortune or empire, but it isn't vital and it isn't at all necessary to the ongoing drive of the ding an sich of human gathering and expressing.

7/20/2009 3:25 PM  
Anonymous Kent said...

@Tom - if you haven't already pointed to this article in the New Yorker, Malcolm Gladwell argues your point: free may not be the future.

7/21/2009 7:58 PM  
Blogger Tom Matrullo said...

Mr. @Kent, Thanks, I had seen Glad's article, and I think he's a bit too facile in dismissing Kelly and Anderson, although I don't cotton to their models.

Gladwell misses the point that the Internet only offers a rational economic model if we cease to think of it as Tube Monopoles over here, and a an assortment of starving content wannabees over there.

We users experience the net as One, and pay for it as one. Comcast, Verizon et al are currently being subsidized, indirectly, by all the content out there. The beggars in rags are giving it all up - to outdated monopoly parasites.

A monopoly that's also a parasite - is that an economic freak?

7/21/2009 8:50 PM  
Blogger Tom Matrullo said...

Juke,

The only model most of the content providers know is that of the middleman - they have been leaning on advertising since before any of us were born, and lack imagination.

There is no reason the Pipes should not be paid for their service. But why are we paying them far more than it costs them to provide it? Because that way they can seem to justify the price. We pay that much because they want that much.

What's their real margin? Huge. Let's not bother noting their own content efforts are uproariously unpersuasive. They don't understand content - I know this from the inside - been there.

7/21/2009 9:19 PM  
Blogger Tom Matrullo said...

Kent, thanks for pointing to this from yr blog:

http://scienceblogs.com/denialism/2009/07/free_rip.php

it seems this topic is at a boiling, if not a tipping, point.

7/21/2009 9:22 PM  
Blogger Tom Matrullo said...

Last for now - promise.

From this:

Comcast Corp., the largest U.S. cable operator, said third-quarter profit increased 38 percent as the company cut capital spending and added Internet and telephone customers

Net income rose to $771 million, or 26 cents a share, Philadelphia-based Comcast said today in a statement...

Capital spending on Comcast's video, voice and data networks dropped $260 million.

Through nine months, Comcast had generated $2.8 billion in free cash flow, enough to exceed its goal of a 20 percent increase for all of 2008 from $2.3 billion reported in 2007.

The company continues to predict revenue and operating cash flow growth of 8 percent to 10 percent for the year.

7/21/2009 9:49 PM  
Anonymous tom matrullo said...

Yet another tale of the Times looking for $$:

7/22/2009 11:14 AM  
Blogger Tom Matrullo said...

"...individuals are not simply consumers, they are owners of the very markets wherein all transactions occur."

Just gathering some armaments here.

http://udpo.blogspot.com/2009/07/corporations-versus-free-market.html#links

7/22/2009 2:41 PM  
Blogger Tom Matrullo said...

Dave Winer sees the hopelessness of anyone trying to control commerce on the net. Couldn't resist a comment.

7/22/2009 3:48 PM  
Blogger Juke said...

The Otis Elevator Co has all the IP/commercial-investment/have-to-make-a-living yadda that anybody else does.
They put in the elevator and they get paid for that.
They service the elevator and get paid for that.
But they don't charge you (us) each time you (we) use it (them).
There's no ethical why not, because...why not?
Once it's installed, it's (the elevator's) kind of like the air as posited above - the medium through which comes and goes whatever etc.
The initial installation's a goods-and-service issue. Provider content.
Maintenance and energy costs are another issue.
But the actual usage is "free", amortized into the whole magilla of multi-story buildingness and use of said buildingness.
Pay toilets inhabit the pretty much exact neutral space in this.
Pay toilets are very very unpopular.
For some reason.

7/22/2009 4:48 PM  
Blogger Tom Matrullo said...

So by your analogy, once the Internet was installed, and sold (to ___?), the builder should no longer be in the picture. Or be there to maintain. Still it goes bit by bit, house by house. They think it requires sales, marketing. When all it really requires is an actual, affordable business model, public ownership, and wise administration.

7/22/2009 11:16 PM  
Blogger jonhusband said...

From bmo:

The InternetWebs need to be reclaimed as Public Space for the Public Good and that the Public Good is a value or right superior to Private Interest.


This is what public media should be, could be, will in all likelihood never be.

7/23/2009 3:30 PM  
Blogger Juke said...

Or why not the road system?
Everybody who works on it gets paid, city county state or interstate but you don't pay each time you leave your house etc.
What's going bye-bye is the generation of attention-getting content for pay, because the pay-out isn't being reimbursed like of yore in the ad-soaked print media.
And to milk that relict media a while longer various old-school interests and entities seek now to make toll roads out of everything that has a sufficient pass-through quantity of eyeballs.
So let's just dress up like Indians, throw the damned over-taxed tea into the bay, and let the fun begin.

7/23/2009 3:34 PM  
Blogger jonhusband said...

Pay toilets inhabit the pretty much exact neutral space in this.

Pay toilets are very very unpopular.


Not quite so, Juke, in many of the major and minor European cities *at least those I have visited and gotten to know).

The small fee you often pay does, however, ensure that they are decently clean at all times.

7/23/2009 3:37 PM  
Blogger Tom Matrullo said...

In addition to the polarity of public/private from bmo and jon, consider the matter of priority.

E.g. Google is a private company, but in many ways it acts like it's thinking about what is best for the functioning of the net, then figures out how to make a buck off what it does.

As opposed to M$oft, which has put the capture of profit and customer first, then thought it could (Bing!) tell us today how we could go where we wanted to go yesterday.

And now is having it all harpy-like roost and dine on its arse. Not only can it not own the cloud, but the more it tries to offer "cloud-friendly" warez, it approaches...the GOOG.

#FAIL.

7/23/2009 3:55 PM  
Blogger Tom Matrullo said...

Would that every U.S. newspaper publisher could meet in a bathroom somewhere and talk bluntly for fifteen minutes, this would be a hell of a lot easier.

Desperate measures advocated by David Simon:

http://www.cjr.org/feature/build_the_wall_1.php?page=all

7/24/2009 10:11 AM  
Blogger Juke said...

Point taken, Jon. The humorous possibilities inherent in a snide contrast between someone being more familiar than someone else with public facilities in exotic locales shall be left in potential and to the reader's imagination.
Pay toilets in my experience - in the urban bus stations of the mid-to-late-mid-20th c. in California, where necessity and urgency often collided with lack of appropriate funding - were highly resented.
But yeah, clean restrooms, of course. My hick naivety and unsophisticated parochialism in action.

7/24/2009 3:48 PM  
Blogger Tom Matrullo said...

Arthur and Janet explain the Times' $1 billion debt to staffers.

7/26/2009 11:19 PM  
Blogger fpaynter said...

Holey moley! Quite a discusssion here!

Check out Bruce Kushnick's testimony re. Verizon's great rip-off...

Taxes were collected that went straight into the telco pockets. By now we were all supposed to have 45Mb fiber to our houses here in the USofA

http://www.youtube.com/watch?v=N_6EiEMLDQc

7/27/2009 11:25 PM  
Blogger Tom Matrullo said...

muy interesante - gracias, Frank.

From one of many related links:

During the quarter, Verizon reported income of $1.48 billion, or 52 cents a share, down from $1.88 billion, or 66 cents a share, from the Q2 2008.

link

7/27/2009 11:45 PM  
Blogger Tom Matrullo said...

Relevant issues regarding senior cits, retirees and access to services, which requires affordable access to the Net.

http://isoc-ny.org/wiki/NYCBAC_Brooklyn_hearing

7/27/2009 11:56 PM  
Blogger Tom Matrullo said...

Two more links:

Vivian Schiller on why charging for online content is "delusional":

http://www.newsweek.com/id/208703/

Me on some interesting thoughts of Umair Haque, and Doc:

http://interimtom.blogspot.com/2009/07/haque-and-doc-on-news-evolution-and.html

7/28/2009 1:27 PM  
Anonymous Kent said...

Here's a loosely related TechCrunch article,comments and links at What If: The New New York Times

7/30/2009 9:49 AM  
Blogger Tom Matrullo said...

Kent,

Apart from the naivete of the article regarding NYT's (or any serious journalistic project's) expenses, I think the defenestration of the atomic level is the direction they should be looking at. Somewhere I noticed that to have a reporter in Baghdad cost the Times a ton of $ - they essentially had their own private army protecting their people and stuff. There's way more to it than just personnel and office equipment.

So I appended my by now tediously automatic appendage.

7/30/2009 10:36 AM  
Blogger Tom Matrullo said...

Haque updates his Nichepaper post here.

I'm still captive of the thought that until journalism discovers that it is subsidizing the pipes, its content, no matter how much in any public interest, will still fail to accrue the necessary stable revenue flow.

7/30/2009 10:49 AM  

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