The Internet & free markets.

by Jimboot on January 20, 2011

Ooops.  Mark Pesce thinks I smoke crack. If you don’t know Mark he is a very smart bloke. Someone whom I respect and really enjoy hearing what he has to say and following him on Twitter. Doesn’t mean I agree with him on everything though. It all started by me responding to a link he posted by saying that I think the Net is an example of the free market in it’s purest form.

He responded with the “crack” comment, which was great because it immediately allowed me to take the moral high ground :) Thank goodness he insulted me first! The link he had posted was for a new book  The Telekommunist Manifesto from Dmytri Kleiner which I have not yet read but will.

Mark is claiming I’m delusional because at it’s essence the Internet is subject to the whim of Governments. The point I was attempting to make, is that if Governments had tried to control the online space the way they do the offline world we would not have seen the phenomenal growth of the web in the last 19 years. I think most Governments were caught napping. They’re playing catch up now though.

To extrapolate on my initial 140char btw remark, there is more freedom for a business to operate online than there is offline. Digital products and services are not subject to customs, local bylaws or regulations. Staff can be sourced from anywhere bypassing local labour regulations. I’m not saying that is a good thing, it’s just what is happening. This allows a business, I would argue to grow faster than at any time in history.

Take the media as a simple example. Newspaper & free to air TV & radio revenues have been severely shrinking over the last decade. Why? People can find content online which is preferable to mainstream media. They spend more time online than they do watching TV. There are an infinite amount of column centimetres and video minutes online. None of which are subject to local media laws. Nor should they be.

Mainstream media’s very existence is controlled by the state.

They have to pay massive license fees to the Government to exist. That is a pretty big barrier to entry for competition and I would argue not a true free market. Nor is propping up other industries from the public purse. “Too big to fail” is not a fundamental tenet of a free market.

Anyone can setup a blog without having a license. Mark argues that you do have to have a license to have a blog. That the terms of service (TOS) with your provider and their TOS with their provider etc somehow constitutes a license simply because at the top of the tree is the Government regulating the Telcos. To me that is a bit like saying, bag checking as a condition of entry to a shop is somehow a license. You understand that by entering the premises the shopkeeper has the right to search your bag. Then the shopkeeper has to pay rates to the Government & comply with the law of the land so somehow your license is with the Government. I’m afraid I don’t follow that logic at all. If you don’t like the TOS with blogger.com or WordPress you go elsewhere but you CAN’T start broadcasting on the FM band without a license.

I’ve had this argument before with mates, some who share @mpesce’s view of my mental state. They would argue that the airwaves belong to the public and therefore you should have to pay to use them and it needs to be regulated because it is quite technical and we don’t want mayhem on the airwaves. The technical argument does not wash with me. The Internet and more recently the web have thrived through community co-operation. The amount of innovation & collaboration is a direct reflection of the low barrier to entry. Who knows what innovation we may have seen in the  broadcast or other industries if the Government did not have such a tight control over them. Remember the Conroy / Stokes deal? That is real control over an industry. It restricts competition and variety. Don’t get me wrong I’m not proffering an argument for total deregulation of our mainstream media but I think it would be fun!

Yes  Governments have real control over the Internet. They could pass laws to have an Internet kill switch or simply steal domain names or intimidate your suppliers online like the US did with Wikileaks. That is tantamount to digital martial law though.

So an Internet where that happens is very different to what we have enjoyed so far. That is why I am so passionate about Governments not imposing regulations on the net.

Streisand effect is market driven

Mark argues that the ACMA blacklist is an example of Government control, I just think it is Government folly. It doesn’t actually block anything, it’s just a list. As far as Wikileaks goes it’s still operational and has a bigger audience than ever. Yes you can argue it’s the Streisand effect but the Striesand effect does not occur unless it is content that the market wants, good or bad. That’s a free market. You wouldn’t see it on the Telly but you would on the Net.

When I talk about the Internet being an example of a true free market, I’m asking you to see it as it has developed, not what controls are trying to be imposed on it now.  If products & services have thrived online it’s because they’re good. If they’re not, they will soon fall away. Just ask Lycos, eXcite, Looksmart, HotBot… etc etc. The trail to Internet business success is littered with multi-million dollar corpses.   You can’t fake it online or lobby a pollie to prop up your business. To me, that is a real free market.

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