Net neutrality is about more than small vs. big

tuxWith the FCC reportedly considering allowing paid “fast lanes” for internet traffic, the principle of net neutrality looks more at risk than ever. One of the big concerns of net neutrality advocates is that its absence might empower incumbent firms over newer, smaller, more innovative ones. That is a very valid and important concern.

But small firms represent only one sort of innovator, and arguably not the one most at risk from pay-to-play operations.

Here are a couple examples of the protect-the-startups meme in recent coverage. From NYT:

Consumer groups immediately attacked the proposal, saying that not only would costs rise, but also that big, rich companies with the money to pay large fees to Internet service providers would be favored over small start-ups with innovative business models — stifling the birth of the next Facebook or Twitter.

And here’s an editorial from The Financial Times, arguing that net neutrality may no longer be the right goal:

The fine detail of the FCC’s decision will matter. The regulator will have to ensure its reforms do not create barriers to entry for small and innovative companies – the internet giants of the future.

At The New Yorker, net neutrality advocate and media scholar Tim Wu goes a bit broader:

We take it for granted that bloggers, start-ups, or nonprofits on an open Internet reach their audiences roughly the same way as everyone else. Now they won’t.

To the extent that we can protect innovative new firms from being crushed by incumbents before they get off the ground, that’s great. But the next Facebook or Twitter, while at risk, also has the ability to raise capital and spend it on faster content delivery. (The details of the FCC regulations aren’t yet clear but it sounds like there will be a requirement that similar pay-to-play offers be available to all comers.)

An even bigger risk then is for non-professional content producers and for peer-to-peer, commons-based production. The bloggers Wu mentions could fall into this category, though if they’re using a proprietary platform like Tumblr or Medium they might not. A peer-to-peer project like Wikipedia has its nonprofit arm, but little ability to raise the capital necessary to ensure delivery. Less organized peer production efforts would be at even greater risk. A distributed network of independent bloggers might produce great content, but that content will be delivered slower than content produced by professionals, or by amateurs who’ve bought into a commercial platform. Suddenly, peer production is at a huge disadvantage relative to commercial production unless it has the weight of a commercial enterprise behind it.

The promise of large-scale production outside of firms or governments, from open source software to Wikipedia to independent blogging, was once one of the greatest promises of the internet. And it is even more at risk from the legalization of pay-to-play than are startups. Sure, incumbents might lean on startups who can’t afford to pay for faster delivery. But just as worrying is the thought that startups might raise venture capital to pay for faster delivery in order to crowd out commons-based peer production.

The net neutrality debate isn’t just about small vs. big. It’s also about commercial vs. the commons.

The promise of NYT Now

NYT now

There are few if any media outlets that can really go up against the big social networks and have a prayer of stealing away attention. The New York Times might be an exception.

When I first heard about NYT Now I didn’t think twice. It seemed like yet another addition to an already complicated, expensive offering. And its name suggested the reason I didn’t need it: speed is not the primary thing I’m looking for in consuming the Times’ content.

But a piece at Nieman Lab has me rethinking my skepticism:

NYT Now can be seen in part as an Empire Strikes Back play: It aims to take readership back from Twitter and Facebook.

In most cases, for most publications, this will be a losing battle. Still, I can’t help but feel that the moment is ripe for some modest progress here, and The New York Times might be the ones to do it.

I’m not the only one backing away from the social platforms, turned off by the chattering torrent therein. It seems harder every day to maintain a decent signal to noise ratio, which in theory is something the platforms themselves could change. They are developing better filters, and will continue to do so. But with their entire business strategies hinging on more eyeballs on more content for longer, they have a hard time actually making progress on this problem. Essentially, I want tools that make it easier for me to spend less time on Twitter and still find all that I want. That’s in conflict with Twitter’s business plan.

Of course, The Times wants eyeballs on its content for as long as possible, too. But the fact that its business model now includes a subscription component helps here. Once I’m paying for the content, the economics of providing a product I’m not obsessively checking constantly work better. So I’m hopeful that The Times might successfully offer a news feed app that works without being a hopelessly addictive time suck.

A big piece here is that NYT Now plans to include some stories from elsewhere, overcoming one of the biggest barrier to news apps in general, which is that no single publication can ever have all the content you want to read.

There’s also the price. My hesitation in paying for The Times is well documented, and can be summarized as:

1) As much as I like the Times, I don’t need it. And I’d rather be asked to support good journalism than forced to pay for it.

2) If I am going to pay money to support good journalism, I want to know that my money is going directly to that cause.

I wish The Times were structured more like The Guardian, with an endowment funding its efforts. But that’s not the case, and I’m more amenable to paying for it than I was a couple years ago, for various reasons. But at nearly $9/week, the price for the full digital subscription is still high for me.

My basic benchmark in terms of what feels reasonable is Netflix and Spotify: the $7-10/month range. Sure enough, NYT Now falls squarely in that range, at $2/week. That’s getting cheap enough that I might pay merely to support the paper’s mission.

The final reason I’m excited is that I’ve found Circa’s Android app more satisfying than I would have thought, in large part because it is sparing with its notifications. (It seems to only push out truly major news, as opposed to The Times, which pushes alerts about the Final Four.) The presentation in Circa is so clean and condensed that it for the first time has me inclined to see real value in the news app, above and beyond the content, where previously it has always seemed that an RSS reader or Twitter handles the app layer just fine.

For all these reasons, I could see NYT Now working for me (once it comes out for Android). It’s a relatively inexpensive way to support good journalism, and a less noisy way to stay on top of the news as opposed to social media. And they’ve finally learned the lesson that aggregation doesn’t dilute the brand. I may finally have found a news app I want to pay for.

(Note: here’s another Nieman review.)

Who cares if the stock market is rigged?

One of the most interesting bits of the debate over high frequency trading sparked by Michael Lewis’s new book is the question of why we should care that some Wall Street firms are ripping off other ones. One reason might be if Main Street’s money is disproportionately tied up in the funds that are getting ripped off. That raises the question of just who has how much money in the stock market. Not surprisingly, the vast majority of stock is owned by the wealthy.

Start with this overview of the stock market via Business Insider:

chart-of-the-day-who-owns-the-stock-market-november-2012The first thing to note here is how small the pension fund slice is, and how it has shrunk over time. So pensions make up a relatively small slice of stock ownership, but the average American still might be holding stock via a mutual fund or as individuals, right? Well, here’s a look at the percentage of Americans at each income level that own any stock or bonds, including via a mutual fund:

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And here’s a look at how much Americans have put away for retirement, by income level:

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As for the households piece, fewer and fewer Americans are investing in the stock market:

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So can we put this all together to get a sense of how much of the stock market is owned by whom? Here’s one attempt that goes beyond just stock by the Institute for Policy Studies via ThinkProgress:

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And here’s confirmation that that distribution holds for stock by The New York Times:

The richest 10 percent of households own about 90 percent of the stock, expanding both their net worth and their incomes when they cash out or receive dividends.

The point is clear: the vast majority of stock is owned by the rich, even once you take into account retirement funds. Of course, that doesn’t mean we don’t have to care about the stock market. Among other reasons, the small amount of money the non-rich have invested there represents a decent chunk of their wealth.

But it’s nonetheless worth keeping this distribution in mind when talking about who is ripping off whom in the stock market. For most Americans, the great economic injustice is stagnant wages, not high frequency trading.

UPDATE: Ben Walsh vs. Michael Lewis on stock ownership as it relates to HFT.