How Free is a Free Market?
by DT - February 21st, 2006 1:01 pm
From its inception, the Internet held great promise for democracy and freedom of speech. Along with that of course was envisioned a completely free marketplace too – not just for ideas but for all the goods and services on offer to the web-surfing public.
But of course in the real world there is no such thing, not for long anyway, as a pure democracy – or a completely free market.
First, though, the relatively good news. Things are working out pretty much as they should, in some areas. An emblematically small and sleek company like Bella Pictures of San Francisco, which is only three years old, can do really well in transforming itself from being a classic “little guy� (providing wedding pictures in its local, Bay Area market) into a business providing a national service, recognized as a high-quality vendor. So much so that it gains the admiring attention of the Main Stream Media – namely a glowing write-up in a one-off New York Times section about small businesses.
In what is rapidly becoming a tried and tested method for a start-up to zoom up, Bella markets itself by buying keywords (obvious little tags like “wedding photography�) on those essential web search engines, Google and Yahoo. Without the web, of course, the company probably wouldn’t have grown at all; it gets its growing pool of photographers by advertising for them on Craigslist.com, and it maintains two-way contact with its customers, every single one of whom will have highly-individualized requirements, though a web-based customer relations management program. The company’s income is funneled and tracked by user-friendly software from Salesforce.com, a firm that has grown specifically to meet the needs of small businesses like Bella.
Anecdotal evidence like Bella’s story is often presented to remind us of the great shift that has taken place – not least in the way that new-generation internet technologies are reducing the cost of communicating and of finding anything that’s wanted, and how this kind of cost-leveling allows small companies to compete with big ones. That’s exactly what happens, yes?
Well, only “Up to a pointâ€? – as senior staff used to say to the novelist Evelyn Waugh’s fictional media magnate Lord Copper (never daring to use the word “Noâ€? in his demanding presence).
It turns out in fact, perhaps simply because of human nature (or our old friend corporate greed) that the level playing field is already in danger of being turned back again into the old familiar, uneven landscape of privilege and disadvantage.
It’s internet providers – the ever-growing biggies of the territory, like Verizon, and Time Warner’s Roadrunner or Cablevision’s Optimum service – who stand ready to put the clock back. They could implement a kind of industrial-strength version of buying special placement on the web, something a lot more fiercely discriminating than the small-potatoes “search engine optimizationâ€? that Bella and many others use. In this case an ISP like Verizon could instigate what’s being called in the business “access tiering” – charging substantially differing rates for different levels of access.
A big rich website like Amazon.com could get very fast connections, while a smaller online store with less ability to pay higher-tiered rates (say for instance “Littlecornerbookstore.com�) would end up being accessible to its customers via one of those really slow connections we have all known, the ones that are like sucking treacle through a straw.
It’s a very real prospect. A Verizon executive did recently complain, according to the Washington Post, that because of the current, level pricing system for internet access, websites are “enjoying a free lunch�.
Oregon’s Democratic Senator Ron Wyden is to be commended for the “Internet Neutrality Bill� he intends to introduce in Congress. It would prohibit ISPs from favoring content providers who pay them special fees.
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