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Friday, June 12, 2009

Tech: Online Content Providers Figure There's More Dough In Your ISP Than You

Following the model of hitting up the cable companies instead of cable customers directly, content providers are now moving to shake down ISPs by cutting off customers of non-paying ISPs. Case in point: ESPN360.com, which has started refusing requests from ISPs that aren't forking over the dough. (Obviously, I don't seem to have any problem with this because of the "Powered by Verizon" logo in the upper right hand corner of their home page.) The cable companies aren't taking this lying down:
"Media giants are in the early stages of becoming Internet gatekeepers by requiring broadband providers to pay for their Web-based content and services and include them as part of basic Internet access for all subscribers," an ACA press release on the issue warns. "These content providers are also preventing subscribers who are interested in the content from independently accessing it on broadband networks of providers that have refused to pay."

Although the above quote uses the plural, the ACA filing cites only one media giant that it says has actually adopted this practice: the Disney-owned sports site ESPN360.com. But indeed, when Ars went to the site, a pop-up announcement cheerfully told us that "your internet service provider offers ESPN360.com" and that it is "powered by AT&T," one of almost 60 ISPs that feature the online live sports network.

Ars contacted ESPN for a comment on the cable protest, and we got one right quick. "It's typical ACA is making unsubstantiated claims, and this is another attempt to convince the government to give it valuable programming for free," a spokesperson for the company told us. "We don't force distributors—small or large—to carry any of our products. ESPN360.com is a business that would simply not exist but for this economic model, and it offers over 3,500 live events which would mostly not otherwise be seen."

Where this would seem to be going is ESPN is trying to force ISPs to become more like cable companies in their operation. That strikes me as a tremendously bad idea for a number of reasons, not least because it accedes to the whole nonsensical approach that various parties have thrown at Google, i.e. breaking network neutrality but from the content provider side.


Hmm, I'm not sure I agree that this is a network neutrality issue, Rob. It's kinda like the difference between an on/off switch and a pressure valve.

If an on/off switch is trying to interrupt your flow, you can tell immediately, because the flow stops. If a pressure valve tries to steal some of your flow, the theft might be so subtle you'd either never notice, or never be able to prove anything if you did. It's far more susceptible to abuse.

I don't find this sort of idea--where your flow gets cut off if you don't pay--as troubling as the idea that your flow could get slower if you don't pay.

I'm sure there are many other reasons this idea might not work, though. But the fact that this business model does work in an analogous setting makes me think that it's probably an experiment in capitalism worth trying. Especially because the web advertising model just plain sucks.
Regarding Ken's comments above, I agree with his pressure valve analogy, but I still don't like what ESPN360 is doing. He sees capitalism, while I see something more like socialism, i.e. ESPN360 is trying to use ISPs to socialize the fee for their service among all the ISP's customers. Why should I pay (in presumably increased fees) for a service I don't use?

If ESPN360's service is truly worth paying for, then ESPN should charge its users directly, as WSJ.com does. There's capitalism for you.
RSpencer-- Many newspapers have tried the Wall Street Journal's online strategy, and it's failing. Newspapers are dying as a result, with layoffs by the boatloads. So here's ESPN360 trying a different strategy at monetizing its content. Is that not capitalism?
Would someone like to explain clearly what this is all about? Or direct me to somewhere that does? It looks to me as if all of you responding, like Rob, are familiar with the issue. I am not, and I do not understand what it's about.
Herman, I really didn't mean to question Ken's definition of capitalism; it was just a rhetorical flourish intended to emphasize my objection to ESPN360's strategy. If it were successful, other sites would follow suit, and eventually the pricing structure of Internet service would mirror that of cable service: everyone would be compelled to pay for access to a lot of sites he will never visit.

WSJ's strategy works because they provide a service many people consider worth paying for. They have a lot of proprietary content that is unavailable elsewhere. Most newspapers don't have this kind of content.

Again, if ESPN360 is worth paying extra for, then let the people who want it pay for it directly. As I see it, ESPN thinks they can get a higher payment per customer if the charge is spread out among all customers of an ISP. I'm not willing to subsidize someone else's Internet service.

Berkowit28, I'm not sure what you don't understand about the discussion.
What sort of "requests" do ISPs make to ESPN360.com (you mean clicks to their website? or downloads of programs?), and what type of charges would ESPN360.com be making to ISPs? The ESPN360.com website is expecting ISPs to pay an annual fee to be able to connect to the website? Or charge them .0001¢ per download when a customer of the ISP clicks on it? I don't understand what Rob was telling us in his post.
"Everyone would be compelled to pay for access to a lot of sites he will never visit."

This is exactly why every attempt at micropayments on the web have failed, and why pay-per-view is not the norm on TV. Most people don't want the hassle of deciding whether or not to pay to watch or view a specific thing. They just want convenient access, and are willing to pay for that convenience.

Also, this is one area where cable TV differs from Internet access. With cable TV, the service providers can only estimate how many people are watching a given channel. With internet connections, you can know the exact number, and get a more precise pricing structure (price per download instead of annual fee).

Berkowit28--Net neutrality is an issue where ISPs want to send priority (i.e. paid) traffic over faster Internet routes, and redirect undesirable traffic (i.e. pirated movies, which hogs up about 30% of their bandwidth) over slower, lower priority channels. Right now, they all treat every Internet request with equal priority. The debate over net neutrality is whether ISPs should be allowed to do this.

The thing I questioned is whether blocking or allowing access to a web site depending on which ISP is routing them the request is a subset of that net neutrality debate. My point is that it is not quite the same type of issue.

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