The Progress & Freedom Foundation Blog

In an essay I posted here back in October called "Cutting the (Video) Cord: The Shift to Online Video Continues," I reflected on an interesting piece by the Wall Street Journal's Nick Wingfield's entitled "Turn On, Tune Out, Click Here." Wingfield's article illustrated how rapidly the online video marketplace is growing and noted that so many shows are now available online that many people are cutting the cord entirely by canceling their cable or satellite subscriptions and just downloading everything they want to watch via sites like Hulu and supplmenting that with services like Netflix. In today's Washington Post, Mike Musgrove writes about these same trends and developments in a column entitled, "TV Breaks Out of the Box." Musgrove notes:

This has been a big year for both Netflix and online video services like Hulu.com, where people can watch episodes of popular shows such as "The Office" for free, though users do have to sit through a few commercials. When Tina Fey debuted her impression of Sarah Palin on "Saturday Night Live" last month, more people watched the comedy sketch online at NBC.com or Hulu.com than during the show's broadcast. Last week, YouTube announced that it would start carrying old TV shows and movies from the film studio MGM.

As for Netflix, it seems that somebody there has been busy this year. While most customers still use the online video rental site mainly for movie deliveries by mail, the company now has a library of online content available for viewing on your TV through a variety of devices. A $99 appliance from Roku that plugs into your TV set and connects to the Web has been popular among some folks dropping their cable subscriptions. A couple of new, Web-connected Blu-ray players from Samsung and LG Electronics also allow Netflix subscribers to instantly watch titles from the company's online collection.

Musgrove continues and notes that it's about more than just Hulu and Netflix:

A few months ago, I penned a mega book review about the growing divide between "Internet optimists and pessimists." I noted that the Internet optimists -- people like Chris Anderson, Clay Shirky, Yochai Benkler, Kevin Kelly, and others -- believe that the Internet is generally improving our culture, economy, and society for the better. They believe the Net has empowered and liberated the masses, sparked unparalleled human creativity and communication, provided greater personalization and customization of media content, and created greater diversity of thought and a more deliberative democracy. By contrast, the Internet pessimists -- including Nick Carr, Andrew Keen, Lee Siegel, and others -- argue that the Internet is destroying popular culture and professional media, calling "truth" and "authority" into question by over-glamorizing amateurism and user-generated content, and that increased personalization is damaging deliberative democracy by leading to homogenization, close-mindedness, and an online echo-chamber. Needless to say, it's a very heated debate!

I am currently working on a greatly expanded version of my "Net optimists vs. pessimists" essay for a magazine in which I will draw out more of these distinctions and weigh the arguments made by those in both camps. I plan on concluding that article by arguing that the optimists generally have the better of the argument, but that the pessimists make some fair points about the downsides of the Net's radically disintermediating role on culture and economy.

So, this got me thinking that I needed to come up with some sort of a label for my middle-of-the-road position as well as a statement of my personal beliefs. As far as labels go, I guess I would call myself a "pragmatic optimist" since I generally side with the optimists in most of these debates, but not without some occasional reservations. Specifically, I don't always subscribe to the Pollyanna-ish, rose-colored view of the world that some optimists seem to adopt. But the outright Chicken Little-like Ludditism of some Internet pessimists is even more over-the-top at times. Anyway, what follows is my "Pragmatic (Internet) Optimist's Creed" which better explains my views. (Again, read my old essay first for some context about the relevant battle lines in this intellectual war).

See my take on the election and the prospects for capitalism in today's Wall Street Journal:

If Barack Obama ran for president by calling for a heavier hand of government, he also won by running one of the most entrepreneurial campaigns in history.
Will he now grasp the lesson his campaign offers as he crafts policies aimed at reigniting the national economy? Amid a recession, two wars, and a global financial crisis, will he come to see that unleashing the entrepreneur is the best way to raise the revenue he needs for his lofty priorities?

Update: Here's a brief radio interview on the topic with WTOP.

PFF friend and board member John Rutledge has authored a wonderful new book: Lessons from a Road Warrior. John has seen and done it all. How much is all? How about 15 million frequent flier miles worth. And the stories and people to match. I'll have a longer review later, but for now, if you want to learn about (plunging) asset markets, the global economy, private equity, China, non-equilibrium systems, and the "neuroscience of fear" -- you know, all the important stuff driving today's chaotic world -- along with generous, practical, and entertaining advice to young people just starting out, read the book. You will love it.

I've been re-reading Nicholas Negroponte's brilliant and extraordinarily prescient 1995 book Being Digital this week, and I just came to the famous section in Chapter 12 about "The Daily Me." It's his visionary discussion of a future of personalized filters for all things digital to perfectly tune news and entertainment to your personal preferences. Here's the key passage (again, remember that he wrote this in 1995, long before most of the digital things we take for granted today existed):

Imagine a future in which your interface agent can read every newswire and newspaper and catch every TV and radio broadcast on the planet, and then construct a personalized summary. This kind of newspaper is printed in an edition of one. [...]

Imagine a computer display of news stories with a knob that, like a volume control, allows you to crank personalization up or down. You could have many of these controls, including a slider that moves both literally and politically from left to right to modify stories about public affairs.

These cotnrols change your window onto the news, both in terms of size and its editorial tone. In the distant future, interface agents will read, listen to, and look at each story in its entirety. In the near future, the filtering process will happen by using headers, those bits about bits.

Well, that future came about sooner than even Negroponte could have predicted. We all have a "Daily Me" now; it's called our RSS feed. And there are other components to the "Daily Me," such as iGoogle and Google Alerts, which provide automated search results served up instantaneously. And there are many other digital tools and services out there today that help us personalize our media experience.

You really gotta hand it to Negroponte for being way ahead of the curve in foreseeing all of this at a time when most of us where still using Trumpet Winsock and 14.4 modems. Hell, Al Gore hadn't even built the Internet yet!

Back in the mid- and even late 1990s, I was engaged in a lot of dreadfully boring telecom policy debates in which the proponents of regulation flatly refused to accept the argument that the hegemony of wireline communications systems would ever be seriously challenged by wireless networks. Well, we all know how that story is playing out today. People are increasingly "cutting the cord" and opting to live a wireless-only existence. For example, this recent Nielsen Mobile study on wireless substitution reports that, although only 4.2% of homes were wireless-only at the end of 2003...

At the end of 2007, 16.4 percent of U.S. households had abandoned their landline phone for their wireless phone, but by the end of June 2008, just 6 months later, that number had increased to 17.1 percent. Overall, this percentage has grown by 3-4 percentage points per year, and the trend doesn't seem to be slowing. In fact, a Q4 2007 study by Nielsen Mobile showed that an additional 5 percent of households indicated that they were "likely" to disconnect their landline service in the next 12 months, potentially increasing the overall percentage of wireless-only households to nearly 1 in 5 by year's end.

And one wonders about how many homes are like mine -- we just keep the landline for emergency purposes or to redirect phone spam to that number instead of giving out our mobile numbers. Beyond that, my wife and I are pretty much wireless-only people and I'm sure there's a lot of others like us out there.

Anyway, I've been having a strange feeling of deva vu lately as I've been engaging in policy debates about the future of the video marketplace. Like those old telecom debates of the last decade, we are now witnessing a similar debate -- and set of denials -- playing out in the video arena. Many lawmakers and regulatory advocates (and even some industry folks) are acting as if the old ways of doing business are the only ways that still count. In reality, things are changing rapidly as video content continues to migrate online.

I was reminded of that again this weekend when I was reading Nick Wingfield's brilliant piece in the Wall Street Journal entitled "Turn On, Tune Out, Click Here." It is must-reading for anyone following development in this field. As Wingfield notes:

With continuing chaos on Wall Street -- and in Washington -- see my review at Forbes.com of Dave Smick's new book The World is Curved: Hidden Dangers to the Global Economy.

"Not So Flat After All" - Forbes.com - 09.29.08 - by Bret Swanson - Upload a Document to Scribd

"Hasn't Steve Jobs learned anything in the last 30 years?" asks Farhad Manjoo of Slate in an interesting piece about "The Cell Phone Wars" currently raging between Apple's iPhone and the Google's new G1, Android-based phone. Manjoo wonders if whether Steve Jobs remembers what happen the last time he closed up a platform: "because Apple closed its platform, it was IBM, Dell, HP, and especially Microsoft that reaped the benefits of Apple's innovations." Thus, if Jobs didn't learn his lesson, will he now with the iPhone? Manjoo continues: Well, maybe he has--and maybe he's betting that these days, "openness" is overrated. For one thing, an open platform is much more technically complex than a closed one. Your Windows computer crashes more often than your Mac computer because--among many other reasons--Windows has to accommodate a wider variety of hardware. Dell's machines use different hard drives and graphics cards and memory chips than Gateway's, and they're both different from Lenovo's. The Mac OS, meanwhile, has to work on just a small range of Apple's rigorously tested internal components--which is part of the reason it can run so smoothly. And why is your PC glutted with viruses and spyware? The same openness that makes a platform attractive to legitimate developers makes it a target for illegitimate ones. I discussed these issues in greater detail in my essay on"Apple, Openness, and the Zittrain Thesis" and in a follow-up essay about how the Apple iPhone 2.0 was cracked in mere hours. My point in these and other essays is that the whole "open vs. closed" dichotomy is greatly overplayed. Each has its benefits and drawbacks, but there is no reason we need to make a false choice between the two for the sake of "the future of the Net" or anything like that. In fact, the hybrid world we live in -- full of a wide variety of open and proprietary platforms, networks, and solutions -- presents us with the best of all worlds. As I argued in my original review of Jonathan Zittrain's book, "Hybrid solutions often make a great deal of sense. They offer creative opportunities within certain confines in an attempt to balance openness and stability." It's a sign of great progress that we now have different open vs. closed models that appeal to different types of users. It's a false choice to imagine that we need to choose between these various models.

Sorry if it seems like I am beating a dead horse here, but the folks at the City Journal asked me a pen a review of Jonathan Zittrain's new book, The Future of the Internet and How to Stop It. Faithful readers here will no doubt remember that I have already penned a review of the book and several follow-up essays. (Part 1, 2, 3, 4). I swear I am not picking on Jonathan, but his book is probably the most important technology policy book of the year--Nick Carr's Big Switch would be a close second--and deserves attention. Specifically, I think it deserves attention because I believe that Jonathan's provocative thesis is wildly out of touch with reality. As I state in the City Journal review of his book:

[C]ontrary to what Zittrain would have us believe, reports of the Internet's death have been greatly exaggerated. [...] Not only is the Net not dying, but there are signs that digital generativity and online openness are thriving as never before. [...] Essentially, Zittrain creates a false choice regarding the digital future we face. He doesn't seem to believe that a hybrid future is possible or desirable. In reality, however, we can have a world full of some tethered appliances or even semi-closed networks that also includes generative gadgets and open networks. After all, millions of us love our iPhones and TiVos, but we also take full advantage of the countless other open networks and devices at our disposal. [...]