
Google takes the FTC to school  - jamesbritt
http://www.buzzmachine.com/2010/07/20/google-takes-the-ftc-to-school/
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ajg1977
_The large profit margins newspapers enjoyed in the past were built on an
artificial scarcity: Limited choice for advertisers as well as readers.._

Ironically, that sounds rather like the state of online advertising today,
where Google's large profit margins come from.

I wonder if/when we progress to discovering information that don't involve
typing a string into a box for a list of results, we'll see Google's profit
margins gradually begin to erode.

~~~
wmeredith
You're exactly right. The difference between the papers and Google is that
Google is well aware of the situation and is using those stratospheric profit
margins to enter dozens if not hundreds of other markets looking for revenue
streams. They aren't trying to bribe their way into a government enforced
status-quo.

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carbocation
Original link: [http://googlepublicpolicy.blogspot.com/2010/07/business-
prob...](http://googlepublicpolicy.blogspot.com/2010/07/business-problems-
need-business.html)

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bigmac
_Google restates the FTC’s dissection of newspaper revenue: 80% advertising,
17% newsstand, 3% subscriptions. “Pay walls,” it says, “could be an effective
way to raise the 3% revenue figure.”_

Amdahl's Law, anybody? Its not just relevant for software optimization.
Certain other hot topics could use a logical assessment like that (e.g.
greenhouse gas emission).

~~~
mrduncan
I'd never never heard of Amdahl's Law before so I looked it up on Wikipedia.

Essentially, Amdahl's law is used to find the maximum expected improvement to
an overall system when only part of the system is improved.

<http://en.wikipedia.org/wiki/Amdahls_law>

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wheaties
Google only is taking the FTC to school if they realize they're being taken to
school. Good luck with that!

~~~
Finster
The problem isn't that the FTC needs to be educated. As part of the ruling
class, facts are irrelevant. It's just one part of the ruling class (the FTC)
giving aid and comfort to another part (the newspaper moguls). They form and
mold the facts to fit whatever conclusion best increases their own influence
and power.

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uuilly
Schmidt makes great arguments for why government should not meddle with
newspapers. Unfortunately the same arguments could be made to say government
should not meddle w/ ISP's who charge web services for premium pipes.

~~~
Locke1689
How so? The argument isn't that ISPs aren't allowed to offer their own
services, simply that they're not allowed to degrade services for others. This
is delineating the nature of ISPs as two things: content providers and
utilities. The part that needs government regulation is the utility, not the
content provider. Personally, I believe we would all be much better off if the
government owned and was responsible for all the dark fiber and companies
simply leased control to provide services. Hell, there's even a considerable
argument to nationalizing all utilities which have a natural monopoly.

~~~
gojomo
Those who wish to regulate or tax search engines and aggregators for the way
they siphon revenues away from newspapers think that certain monopoly and
informational-public-goods arguments are relevant. In the absence of
intervention, they say, value is collected by undeserving
Google/HuffPo/Drudge, not the deserving traditional newsgatherers. Only by
intervening to curtail the distribution endpoints' new power over audience
access, they say, will we get the quality and competitive news we need.

That's a mirror in many ways of the argument for net neutrality regulations.
Neutrality advocates want to regulate one layer of providers -- the pipes --
for the way they intervene between content/service providers and audiences,
siphoning revenue from the endpoints. the absence of intervention, they say,
value is collected by the undeserving network tollkeepers, not the deserving
novel internet services. Only by intervening to curtail the midpoints'
chokehold, will we get the competitive and quality network services we need.

Does that help illustrate the contradiction?

~~~
yungchin
The issue here isn't whether search engines or ISPs or other middlemen collect
deserved or undeserved value; net-neutrality is not at all about capping the
ISP's income!

Net-neutrality rules are meant to ensure that the ISP will keep a level
playing field for all business passing through it. Google has kept the playing
field perfectly level for all news shops, it's just that the field has become
very bad for all of them.

~~~
gojomo
If an ISP wants to offer differentiated services X, Y, and Z, because it
thinks that will maximize its revenues, and then the FCC says that service mix
is illegal due to the costs it imposes on others, then yes, that 'neutrality'
enforcement is about curtailing the ISP's revenues, preventing them from
capturing the value others create, boosting other businesses.

The FTC's trial balloons around taxing aggregators, enforcing new 'hot news'
rights, or subsidizing news producers are also motivated by the desire to
provide a 'level playing field' for newsgatherers and story-originators, where
a near-monopoly like Google, or thinly-staffed all-cut-and-paste-no-research
aggregators, can't capture all the value news media create.

Once you invite committees and congresspeople to set rules to reallocate the
revenues from an activity, where do you stop? (Even if economist/philosopher-
kings can tell the difference between the right places to intervene, and the
wrong ones, can our political system?)

If the FCC can ban certain service packages in the public interest, why can't
the FTC force republishers to buy distribution rights from traditional media
in the public interest?

Google wants its pot-of-gold to be protected from meddling network operators
by new rulemaking. Why can't the newspapers ask for their pot-of-gold to be
protected from Google by new rulemaking?

~~~
Prolorn
That a loose analogy can be drawn between network neutrality and newspapers
does not mean both cases have equal merits.

One of the merits of each case must be their practicality, and at least to me,
net neutrality seems relatively straightforward compared to newspaper
regulation. It is more-or-less the default state of the internet today, I
believe, while newspaper regs appear harder to craft.

Regulators _could_ fail to discern the right vs. wrong places to intervene, as
you say, but that's all the more reason we ought to point them out.

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gigafemtonano
So this is an article about how newspapers need to learn how to deal with the
web as a source of news. A few years back I read Walter Isaacon's biography of
Benjamin Franklin and guess what - Franklin and plenty of other Americans back
in the day ran tiny newspapers comparable in content to today's blogs. I'm
going to end up doing a blog post about it at some point, but it kills me that
journalism and freedom of the press today are considered to be the _New York
Times_ when the founders were thinking more like the _Pennsylvania Gazette_.

~~~
Finster
Agreed. Welcome to the internet/technology committee of correspondence.

