Super-Fast Broadband

What's the point of giving everyone super-fast broadband?  The urge to "do something" about not-so-fast internet is a part of a broader issue Yglesias calls social policy nationalism.  We can't let Japan/South Korea/Scandanavia have better 'x' then us, so we need the government to step in and spend lots of money to give that to us.  

In the case of broadband access, I really don't see the point.  Connecting to the internet yields pretty large returns,  but the additional benefits of ever-faster internet are very diminishing.  Beyond the point at which you can load most sites within a few seconds, the additional benefits go entirely towards downloading illegal videos.  

But still, my willingess to pay for internet is probably very high.  Enormous consumer surplus here, part of a general picture over the last ~15 years in which technological improvements and gains from trade have tremendously improved quality of life without impacting measured GDP very much.  If America circa 1994 were a country, people would be immigrating here (maybe not right now).

Open Source Magic

Ok, lots of people talk about how open source can change the world, and many times they exaggerate things.  But check this out: A group of people is volunteering to translate the Economist into Chinese on a weekly basis on open source lines.  Given the length of a typical Economist article, the weekly frequency, and the skill sets required, this turns out to be a fairly significant (and, if you were to pay for it, very expensive) task, yet hundreds of volunteers turn out.  

You see this again and again whenever anyone asks volunteers for a useful service.  Wikipedia is an obvious example, but often people misread that and say "only a few people dominate discussions."  It's true that there is an elite that performs the majority of edits, the majority of which are minor changes.  But the bulk of the information was added by a large group of (presumably) specialists.  This is a great model--get many people to chip when they know something, and rely on some cadres to edit and present the whole thing (the problem is that the cadres have the political control, and keep trying to keep the amateurs out).  

The strange thing is that people are willing to accept tiny wages for working on a whole range of things when presented with a useful platform.  At Amazon's Mechanical Turk, you present a task (anything you like, generally menial internet labor) for people to pick up and do.  Wages for these tasks are extremely low, on the order of pennies.  Yet the workers are not (as far as I can figure) largely from parts of the world where this is not entirely worthless--they just find it more stimulating than fooling around online.  

In many ways, these trends make sense.  People have plenty of leisure time, and we're seeing a decades-long trend in which the cognitive demands of society, and the cognitive and computational skills, of people are growing.  This is the sort of stuff that people genuinely like to do, and the internet enables coordination like we haven't seen since the factory system.  

At the other extreme is a notion that such real-time, real-person offered solutions can also dominate.  Twitter enthusiasts, for instance, point out the wisdom of the Twitter crowd in offering information on the Hudson River plane and the Mumbai terror attacks.  Slate shows how these kind of micro-blogging solutions are often suboptimal for many of our searches--but other socially-generated solutions do often fill the gap.  

I realize I'm really late in talking about the 'micro' output method (Twitter, Facebook updates) and the social aggregation (the two are different, though related), and I can't even say how big these will get.  All I can say is that they seem to be diverging along two paths--on one hand, expert, specific commentary increasingly follows a power-law dynamic with the best pundits reaching wider audiences, and the best agglomerations of specific talent gaining power.  This follows a more general trend online for certain powerful 'portals' to dominate viewership (Google, Amazon, etc).  One the other hand, local networks are more important than ever for dominating social lives, purchasing decisions, tastes, and for coordinating actions.  The middle seems to be filled with Google and other trusted information intermediaries (NYT, etc.).  

An important aspect of internet economies I haven't seen mentioned, however, is how there's virtually no correlation between the welfare a given platform offers and its financial rate of return.  Tinyurl is going of out business, apparently, as are a host of other interesting fledging internet start-ups.  Ad revenue still doesn't make money online, so you can have crucial systems fail on the basis of profits.  That so much of the internet infrastructure doesn't fall apart despite zero accounting (and very negative economic) profits (the torrent sites, most of what Google does, this blog) is a testament to the willingness of millions of people to do things because they liked doing them, not because it necessarily made them rich.  

And in that sense, the internet is a very Communist economy.  We have spent the dominant part of our evolutionary history in environments that prize our ability to form reciprocal connections with close family and kin; it's not entirely inconceivable that we can act in ways that further our more aspirational goals.  Sure, the Soviet Union failed--that was a failure of economic planning in generating an incentive-compatible system of production in which it was in people's own interest to pursue the collective goals.  The self-forming character of the internet has, in many ways, generated exactly such a system, which does in fact work.  

Current crisis aside, we're headed for a world in which around ten percent of the population is necessarily to produce all the food and material goods we care for.  Figuring out how to organize and structure the remaining ninety percent of the economy in the services industry is the key issue for future economies, and it is one that will increasingly rely on relationships and information fueled by the internet.  And our financial system is failing us on delievering the platform of the future due to its concern for prices and profits.  Well, on the internet, all prices head to zero and no one makes profits--though everybody makes a living.  We're not getting anywhere near the level of innovation and growth we could be getting--and Wall Street will never fund it.  Either wealthy people start funding this, or we all take some time out of our day to build the new Internet.  Even as we don't understand the dynamic nature of current economies or social networks, we're about to create vastly more interesting ones.  

The Death of Newspapers

Along the general vein of fretting over newly lost industries from cars to investment banking (Seriously, housing's gone, no one cares about 'renewable' garbage anymore, retail is gone, what exactly is the economy running on?), there has been a lot of talk about the decline of newspapers.  Generally, people tend to blame the Internet for everything and diss management for failing to take advantage of counterfactuals like starting their own Craigslist.  

Yes, the Internet is a really big deal, a fact which Google trends makes very clear to me.  But big brands, as Yglesias notes, are doing really well.  Magazines have done alright too.  It's the combination of the Internet plus all sorts of other stuff that are putting journalists out of business.  After all, virtually every newspaper now puts their content on the web.  They've realized that they're not in the business of selling paper, but rather of selling media content, which can happen in any medium.  

Online media distribution has very different economics though.  For one, you don't have the crazy diseconomies of scale which have supported cozy regional oligopolies.  If I'm on the web and searching for news, I might as well go to the best source of news, while in my hometown I might be limited to a few local papers (no, you don't want that mail subscription to the NYT).  The best online sources of content have generally done pretty well with respect to page views.  The strategy of many news teams, however, has been to respond to budget crises by cutting back writers, which pushes more people to other online sources, which hurts the budget more, which causes another death spiral of cuts... the WSJ and NYT, however, have kept up pretty good news teams and seen plenty of visits their way.  

But newspapers would still be fine if they were able to just move their customers online and still make similar ad revenue per customer.  They'd perhaps be better off since the cost of a newspaper is pretty close to the production cost.  The big problem is that Internet advertising is nowhere near as profitable as print advertising.  You behave very differently on the Internet than other media places, and advertisers don't really know how to deal with that.  They might fix this one day; the first TV ads were rip-offs of radio ads and no one paid them any attention.  Perhaps the defining characteristic of the Internet is the network structure of links and the quick diffusion between sites; it's not crazy to think that someday we'll want to click on those links, since we click on everything else we see without thinking about it too much.  Probably the best way to get there is to data-mine personal information to deliver links that look like things I click on all the time.  I click on the news stories at the top of my Gmail account, for instance.  People are going to lose a lot of privacy, hands will be wrung and the occasional sob story will hit Newsweek and people will be better off.  But right now Internet advertising is less profitable for newspapers by a substantial margin; it's not that they've lost customers so much as they've lost the profit/customer. 

The Internet also takes away a lot of the reason for their being a newspaper, which is after all a bundled product of various smorgasbord news items.  This used to be the most efficient way to deliver a mass of information to a person.  These days, people tend to use specialized sources--ESPN (or, even better, deadspin) for sports, gawker for entertainment, Slate for contrariness, blogs for opinion, and so on.  There are a handful of aggregators, and of course the best media brands with international coverage draw attention, but there's much less reason to use a mid-size town newspaper for this purpose.  There's maybe less serendipity of coming into wayward news events online, but really people use the internet for a lot of random stuff.  If historical evolution went from the internet to the newspaper, old hands would complain that young folk no longer get the educative experience of browsing Wikipedia.   

Some newspapers have responded by increasing specialized coverage to appeal to wider audiences, and letting reporters write blogs to create some personal information channels.  In the long-run, the Internet is a very un-democratic institution which makes everything follow a power law.  So a few blogs dominate, and many of these tend to be run out of big media institutions (and staffed by Ivy Leage grads...); the remaining big blogs are mostly legacies.  Again, the problem lies in monetizing all of these people.  It tends to be only possible with extremely rich people, which is probably why Murdoch decided to keep the WSJ behind a wall (while silently redesigning the site).  Yeah, that leaves you without ammo in the daily link barrage, but your proprietary blogs can still participate in that while you focus on profits.  

This has all been great for consumers.  Following the general trend of globalization--kill local options while increasing choices for everybody through trade--it's easier to get quality everything than every before.  Probably investigative reporting will take a big hit, since bloggers are better at shifting through things in the public domain rather than adding original reporting, but who really cares.  The top-quality newspapers will do very well, as will niche publications and anything that caters to rich people.  

The big unresolved problem in my mind is coming up with decent personalized aggregators.  Sites which take a person's given preferences to deliver things that 1) All their friends are reading 2) Appeal on the basis of 'you really should know this' 3) Provide some random flavor 4) Are similar to things you have read 5) Go beyond fetching stories to summarize ongoing debates 6) Provide "Internet criticism;" broad, meta-criticism of overarching trends and themes.  Of course, you'll be able to make this as personalized as desired, vote up/down on stories, send to friends, etc.   Google News doesn't really cut it--humans might need to get involved at some point.  Naked Capitalism is nice for some finance/economics stuff.  Newser is pretty interesting too, but there's a lot of room to get better.  Slate does some of this, and a service similar to Slate, but for everyone and user generated, recently went bankrupt. 

Basically I'm waiting for the point where I berate people for not reading/creating blogs like normal people and instead twittering or some nonsense.