Category Archives: Internet

Did the Suits win the Internet?

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Alan Kay says,

this was just like two years before going to PARC. I finished my PhD. I started thinking about this. I said, “If we’re gonna do a personal computer”—and that’s what I wanted PARC to do and that’s what we wound up doing [with the Alto]—”the children have to be completely full-fledged users of this thing.”

Think about what this means in the context of say, a Mac, an iPhone, an iPad. They aren’t full-fledged users. They’re just television watchers of different kinds.

…how successful is the iPhone? It’s about as successful as you can get, so that matches you up with something that is the logical equivalent of television in our time.

Around 1995, the Suits discovered the World Wide Web. Their reaction: this is going to be television on steroids! Media giants will rule the earth, as the Internet becomes a vehicle for mass entertainment.

At that time, the Geeks thought differently. The architecture of the Net was peer-to-peer. You did not need large amounts of capital to build a business. Instead, personal computers, with access to the Net, were putting the means of production in the hands of the individual. Government would be powerless to control or censor the Net.

As of now, doesn’t it seem like the Suits were right? Maybe they thought that some of the old media powerhouses would do better than they have done, and maybe they didn’t foresee upstarts like Facebook. But the industry structure seems much more oriented to mass entertainment than those of us on the Geek side would have expected.

Today’s communication architecture

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Mark Jamison writes,

Netflix and other large edge providers are bypassing the internet. More specifically, they are building or leasing their own networks designed to their specific needs and leaving the public internet — the system of networks that only promise best efforts to deliver content — to their lesser rivals.

…Mobile internet is leaving wireline internet in its dust in numbers of users and traffic. Mobile internet increasingly bypasses the World Wide Web because about 90% of customers’ mobile time is spent in apps, not the web

Back in the 1990s, the term “walled garden” emerged as an expression of contempt for AOL and other companies that tried to combine control over infrastructure with content. We thought that the Internet would drive out the walled gardens. I am getting the sense that we were wrong about that.

I assume that the walled garden approach is emerging because it is more efficient economically than the 1990s Internet. One downside is that the walled gardens are conducive to censorship and regulation.

The Original Internet Architecture

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Tyler Cowen writes,

It remains the case that the most significant voluntary censorship issues occur every day in mainstream non-internet society, including what gets on TV, which books are promoted by major publishers, who can rent out the best physical venues, and what gets taught at Harvard or for that matter in high school. In all of these areas, universal intellectual service was never a relevant ideal to begin with

The original Internet architecture was “smart ends, dumb network.” The smart ends are the computers where people compose and read messages. The “dumb network” is the collection of lines and routers that transmits the bits.

Suppose you create a message, such as an email, a blog post, or a video. When your computer sends the message, it gets broken into packets. Each packet is very small. It has a little bit of content and an address telling where it is going. The Internet’s routers read the address on the packet and forward it along. In Ed Krol’s metaphor, the Internet routers and communication lines act like the Pony Express, relaying the packet to its final destination, without opening it up to see what is inside. The dumb network transmits these packets without knowing anything about what is in them. It does not know whether the packet is an entire very short email or a tiny part of a video.

When your computer receives a message, it consists of one or more packets–usually more than one. The computer opens up the packets and figures out how to put them together to form the message. It then presents you with the email, the blog post, the video, or what have you.

A connection between one end and the other end stays open only long enough to send and receive each packet. To transmit any given message, I may receive many packets from you, but those packets could come over different paths of the network, and thus each packet uses a different end-to-end connection. Think of end-to-end connections as being intermittent rather than persistent.

Some consequences of this “smart ends, dumb network” architecture:

1. The network cannot identify spam. It does not even know that a packet is part of an email message–if it did, spam could be deterred by charging email senders a few cents for each email unless the recipient waives the charge.

2. The network does not know when it is sending packets that will be re-assembled into offensive content. Otherwise, it would be easier to implement censorship.

3. The network does not know the identity of the sender of the packets or the priority attached to them. In that sense, it is inherently “neutral.” The network does not know the difference between a life-or-death message and a cat video.

I get the sense that this original architectural model may no longer describe the current Internet.

–When content is cached on the network or stored in the “cloud,” it feels as if the network is no longer ignorant about content.

–Many features, such as predictive typing in a Google search, are designed to mimic a persistent connection between one end and the other.

–When I use Gmail, a lot of the software processing is done by Google’s computers. That blurs the distinction between the network and the endpoints. Google is performing some of each function. Other major platforms, such as Facebook, also appear to blur this distinction.

The new Internet has advantages in terms of speed and convenience for users. But there are some potential choke points that did not exist with the original architecture.

Some questions about Google

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Salil Mehta writes,

On Friday afternoon East Coast Time by surprise, I was completely shut down in all my Google accounts (all of my gmail accounts, blog, all of my university pages that were on google sites, etc.) for no reason and no warning.

A couple years ago, Tyler Cowen linked to one of Mehta’s blog posts, and I linked to it also.

Mehta received a form letter from Google saying that he had violated its terms of service.

My questions:

1. If I search the terms of service for “terminate account,” I only find a reference to copyright infringement and “repeat infringers.” Otherwise, the terms of service do not appear to list any specific reasons for terminating someone’s account. What other offenses, if any, can lead Google to terminate accounts?

2. What is Google’s policy with respect to giving warnings prior to terminating accounts?

3. Google’s terms of service state that

We believe that you own your data and preserving your access to such data is important. If we discontinue a Service, where reasonably possible, we will give you reasonable advance notice and a chance to get information out of that Service.

I guess this refers to Google generically terminating a service for everyone, as they did with their blog newsreader. But what happens when an account is terminated? Does the individual have any way of recovering old blog posts, emails, and email contact lists?

[UPDATE] 4. As usual, I schedule posts in advance, and in the interim professor Mehta’s accounts have been restored. That raises the question of what prompted this decision (and the other three questions still remain unanswered).

Internet hopes, disappointed

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1. The death of distance. Supposedly, the Internet was going to reduce the importance of location. Instead, the economic importance of a few key cities seems to have increased.

2. Many of us foresaw the tebirth of highly decentralized markets, in which the small entrepreneur could compete on a level playing field with corporate giants. Instead, the Internet is dominated by key “platforms,” such as YouTube and Amazon, which rake in revenue. Those of us who try to use those platforms to earn our own living are more like Uber drivers than like entrepreneurs in charge of our own destinies.

3. A libertarian moment. The Internet would be a model of decentralized, unregulated human activity. Instead, we see corporations and governments discovering the ability to exert control. As I noted previously, the censorship that we thought was impossible 20 years ago is a reality today.

Thoughts on Internet censorship

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Tyler Cowen Alex Tabarrok writes,

When Facebook and Twitter regulate what can be said on their platforms and Google and Apple regulate who can provide a platform, we have a big problem. It’s as if the NYTimes and the Washington Post were the only major newspapers and the government regulated who could own a printing press.

1. Back in the 1990s, two cliches were “Nobody owns the Internet” and “the Internet interprets censorship as damage and routes around it.”

These are no longer applicable. For people who rely on smart phones for access, Google and Apple own the Internet. In addition, Google owns a major domain name server.

Although I do not have a confident understanding of the technology and business environment, it would seem to me that today censorship on the Internet is feasible. I infer that when I hear of web sites being “shut down” because of the hateful thoughts that they convey.

Reversing the company’s previous stance on not censoring content, founder and CEO Matthew Prince wrote in an internal email that he “woke up this morning in a bad mood and decided to kick them off the Internet. It was a decision I could make because I’m the CEO of a major Internet infrastructure company.”

2. I wonder how there can be overlap between the people and organizations that champion regulations intended to impose “net neutrality” and those that want to see hateful web sites shut down. I believe that such overlap exists, but it is hard to take those as intellectually consistent positions.

3. I would like to see those who provide Internet infrastructure refrain from censorship. But having government enforce non-censorship would not be a very libertarian way of going about it. I would rather see non-censorship as a social norm that has sufficient compliance to make an uncensored Internet available to everyone who wants it.

4. For those of us who don’t like Nazis, jihadists, etc., I recommend expressing solidarity with their intended victims and support for efforts to prevent and punish acts of violence. I do not see shutting down web sites as doing much to prevent violence. I see it as more of a futile gesture, akin to confrontational counter-demonstrations.

5. My generation is aging out, and the “snowflake generation” is coming into its own. Once the anti-censorship social norm starts to break down, my guess is that it will not stop with just a few fringe Nazi sites being shut down.

Sports and Media

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Ben Thompson writes,

The truth, though, is that in the long run ESPN remains the most stable part of the cable bundle: it is the only TV “job” that, thanks to its investment in long-term rights deals, is not going anywhere. Indeed, what may ultimately happen is not that ESPN leaves the bundle to go over-the-top, but that a cable subscription becomes a de facto sports subscription, with ESPN at the center garnering massive carriage fees from a significantly reduced cable base. And, frankly, that may not be too bad of an outcome.

Pointer from Tyler Cowen.

Read the whole post, which post surveys the media landscape. I used to pontificate on the topic, but now I am old and out of touch. The best way to forecast the media business is to observe young people. Years ago, I saw data that showed that young people were subscribing to newspapers at much lower rates than their parents had at similar ages. It was not hard for me to extrapolate from that.

I am surprised by Thompson’s optimistic outlook for sports. I think that pro sports on TV historically worked as a sort of focal point or lowest common denominator in households where the TV is always on in the background. People want something else to do while they’re chatting, so they turn on the game.

Nowadays, the TV is not the universal background noise. People have phones to keep them occupied. If you are going to watch sports, you have to be committed to it, and my sense is that young people are not as committed to sports as they used to be. Gambling on games, including fantasy sports, generates some commitment, but that is more of a niche than the sort of mass market that sports used to represent.

In recent years, when I have gone to baseball games, young people have been discussing homework, taking selfies, and watching the Jumbotron. I wonder if the passion for sports is something that is gradually fading away with the younger generation.

If ESPN is the future of TV, then TV may not have much of a future at all.

Why (some) Governments Protect Intellectual Property

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Sinclair Davidson and Jason Potts write,

We propose a new model of intellectual property based on the stationary bandit model of government. We argue that new ideas—of the sort that become patents, copyrights and trademarks—emerge as economic rights, born global as it were into a world of roving bandits. They seek protection from a stationary bandit, who extracts tribute in return. The key insight of our new model, however, is a sharper distinction of who those bandits are.

…vulnerable subjects seek protection for their private economic property from the banditry of other governments, by registering their property with their own government, whom they trust to be powerful enough to protect it as they peacefully engage in trade and commerce throughout the world.

In return, they grant that government an exclusive right to exploit them through perpetual taxation of the property.

Pointer from Scott Sumner. This theory suggests that the country that ends up with the largest sector of copy-able products (pharmaceuticals, movies, novels, etc.) will be the country with the largest navy. Hmmm…

An Outbreak of Laziness, or ?

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Andre Boik, Shane Greenstein, and Jeffrey Prince write (the link goes to an ungated but outdated version),

We find that higher income households spend less total time online per week. Our results suggest that a household making $25-35K a year spends 92 more minutes a week online than a household making $100K or more a year in income, and differences vary monotonically over intermediate income levels. Relatedly, we also find that the level of time on the home device only mildly responds to the menu of available web sites and other devices – it slightly declines between 2008 and 2013 – despite large increases in online activity via smartphones and tablets over this time. At the same time, the monotonic negative relationship between income and total time remains stable, exhibiting the same slope of sensitivity to income.

Think of allocating your time among three activities: work, online leisure, and off-line leisure (plus housework). Are we seeing some households choosing to work less and instead consume more online leisure (thus earning less income), or are we seeing households who earn less per hour worked finding offline leisure activities too expensive (Tyler Cowen seems to think it’s the latter).

Prizes Have Not Worked Well

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Timothy Taylor quotes from a paper by historian B. Zorina Khan.

industrial prizes faltered in part because of their lack of market-orientation, and even the democratic nature of economic institutions in the United States could not overcome such drawbacks in administered prize systems.Judges had to combine technical and industry-specific knowledge with impartiality, but even the most competent personnel could not ensure consistency; decision-making among panels was complicated by differences in standards, interpretation, capture, and risk-aversion. Such difficulties tended to lead to haphazard decisions, or were often overcome by simply making the award to the person or the firm with the most established reputation. Juries were not immune to the effects of outright bias, capture, cognitive dissonance, lobbying, and “marketing.” Prizes tended to offer private benefits to both the proposer and the winner, largely because they served as valuable advertisements, with few geographical spillovers. Winners of such awards were generally unrepresentative of the most significant innovations, in part because the market value of useful inventions would typically be far greater than any prize that could be offered by private or state initiative.

Suppose that the commercial value of an idea is highly uncertain before it has become embedded in a business product or service. This leads to what we might call market-valuation errors. You can think of many examples of companies that have come out with products that they thought would be successful but failed to excite consumers.

With a prize fund, these market-valuation errors are borne by whoever puts up the prize fund. For example, if the government creates a prize fund for somebody who develops a better wind turbine, but the wind turbine still fails to penetrate the market, then the taxpayers take the hit. Instead, if the wind turbine inventor is given a reward in the form of a patent, then it’s the inventor who suffers if the turbine fails in the marketplace.

Going from patents to prizes serves to separate two functions: guessing the value of a potential invention; and coming up with the invention. Separating those two functions may not be such a good idea.

Adam Smith raised this concern. See David Henderson’s response to Taylor’s post. Henderson writes,

Essentially, the problem is a central planning problem. A government that gives prizes has to know what to give prizes for. It could give a big prize for something that matters little or a small prize for something that matters a lot. It’s hard to know in advance. Patents, as Smith points out, solve that problem.

As Henderson indicates, patents are problematic also. They are susceptible to other forms of errors by governments.