4 ms·

Them wanting people to believe that this will lower the cost of internet service is laughable. Have TV ads lowered the cost of cable? We need to think of the i

by prklmn 10y ago

Them wanting people to believe that this will lower the cost of internet service is laughable. Have TV ads lowered the cost of cable? We need to think of the internet as a public utility. How absurd would it be if every time you used water in your home, you heard an advertisement playing from a speaker in the faucet.

hackuser 10y ago
> Them wanting people to believe that this will lower the cost of internet service is laughable. Have TV ads lowered the cost of cable? It's a very important point; this false argument is often used. In truth, in the marketplace, goods are not priced at 'cost-plus'; i.e., they aren't priced by taking the cost to the vendor and adding a profit margin. Goods are priced at the point that will maximize profit for the vendor; economists would say at the point that maximizes marginal profit. Colloquially, they charge as much as they can. The fact that the vendor has another stream of income from Product B doesn't cause them to reduce their prices for Product A. Microsoft doesn't cut the price of Windows because they are making so much from Office.
- aero142 10y ago
  This is only half the argument, though. Yes, companies charge as much as possible, but prices go down when a competitor can offer a comparable good at a lower price. Some markets clearly have features that make competition harder.
  - hackuser 10y ago
    Agreed, but how do you see that applying in this situation? Privacy regulations apply either to all competitors or none.
    - aero142 10y ago
      I think both sides just argue past each other. Democrats promote government regulation as the solution without discussing the problems. Heavy regulation often leads to stagnation and lack of innovation. You also have to deal with regulatory capture since your politicians now have huge influence and are worth bribing. Republicans argue for "free-market solutions" which are actually government granted or encouraged monopolies where no competition exists. There lots of examples of free market capitalism making the world a better place and markets failing as well. There are examples government run services providing great consistent services and there are examples of government bureaucracies soaking up budget and graft in their own or lobbyists interest. Which tool do you think will work best in this situation and why? How do you plan to deal with the inherent problems of government involvement in ISP regulation? I'm just tired of "free market solves all" vs "corporation are evil, government is universal solution". We learn nothing and convince no one.
  - awqrre 10y ago
    What competition in the ISP space?
- astrodust 10y ago
  > Microsoft doesn't cut the price of Windows because they are making so much from Office. Microsoft did cut the price of Windows to get people to adopt it early on because they would be making so much money from Office. Microsoft Word vs. WordPerfect, Excel vs. Quattro Pro and Lotus 1-2-3. These battles were won because of Windows and that cemented their position as industry leader. Now that Microsoft is in a dominant position they don't cut the price of Windows as much, but to remain on top they do give the OEMs a very sweet per-unit deal they really can't refuse.
  - hackuser 10y ago
    > Microsoft did cut the price of Windows to get people to adopt it early on because they would be making so much money from Office If that's true (and that's not my understanding) they did it to gain marketshare and maximize profit, not because they already had enough profit. In that scenario, they cut the price of Windows to make even more from Office.
    - astrodust 10y ago
      They cut short term profits in order to cement long-term ones, so yeah, they were maximizing profits but over a longer time-scale than one transaction.
  - slededit 10y ago
    They didn't cut the price. Rather they made a windows runtime available so you could run office on DOS. This was also available to third party ISVs.
    - astrodust 10y ago
      Bundling for free is cutting the price.
- daveFNbuck 10y ago
  The profit-maximizing price drops as the profit margin goes up. As service providers make more money by selling customer data, they'll be able to increase profits by lowering prices and bringing in more customer data. Of course, this assumes a significant amount of customers who have the option to switch providers or choose not to have internet access.
mundo 10y ago
Every time I hear someone argue for the efficiencies of privatization, I think of my water utility emulating mobile carriers and billing me for "Anytime gallons" and "Nighttime gallons" and "Weekend gallons".
- twoodfin 10y ago
  Instead, if you're in a drought-prone area, you get water bans.
  - omginternets 10y ago
    ... which is perfectly reasonable. What's your point?
    - elipsey 10y ago
      I think his point is that price economics would allow you to at least have _some_ water if you wanted it bad enough to pay more. EDIT: Perhaps more importantly, dynamic priceing could be more efficient than a regime in which you can use huge amounts of water at a low fixed cost, and then suddenly none when it runs out.
      - omginternets 10y ago
        >I think his point is that price economics would allow you to at least have _some_ water if you wanted it bad enough to pay more Right, and the point of a water ration is to ensure that everybody limits their water use to some prescribed amount. What you and the OP are describing is arguably a bug, not a feature. The point of contention here is not of price economics per se, but of politics. At issue is whether or not one should be able to circumvent a ration by virtue of his monetary resources. Some people (including myself) find this notion distasteful.
    - splintercell 10y ago
      > ... which is perfectly reasonable. What's your point? It shouldn't be this way. It serves no purpose. You first claim that everybody has access to resource X at a reasonable price (because we don't want to discriminate against poor people), then when resource X starts to run out, they enforce bans instead of charging more to people willing to pay a premium (and getting the resource first) and then using it to expand production and access to everyone. This story plays out everywhere, whether in Soviet Russia or in California or in NHS.
yuhong 10y ago
ISPs don't have to pay the content providers that cable does though.
cwyers 10y ago
> Have TV ads lowered the cost of cable? Almost certainly.
- curiousgeorgio 10y ago
  So true. It's easy to forget this point. Do the math: Take all the content available to a cable subscriber, and the money that goes into producing that content. Take out the ads and split the bill (in addition to the relatively low costs of operating/maintaining the cable company itself) among the subscribers. That's just covering costs; now add a bit of profit to motivate those companies to stay in business. There's no question you'd be paying more - a lot more. We just don't think the ads are saving us money because we don't know any different - that's just the way TV has been since the beginning.
  - cwyers 10y ago
    Another way to prove this to yourself is to think, could there be broadcast TV without ads? And of course, the whole broadcast model falls apart without advertising. But without broadcast to compete with, is it likely that basic cable would be as inexpensive as it is? Even if you're of the view that costs don't matter to price, only what the market will bear, it seems self-evident that the market will bear less when there's a free substitute of reasonable quality available.
mikeash 10y ago
Even if it did lower the price of the service, those advertisements aren't going to be purchased unless there's profit in it, and there isn't going to be profit in it unless they convince the people exposed to it to spend money on stupid crap. Those poor people will pay one way or another. Given the indirectness and inefficiency involved in the advertising approach, I wager they'll pay more that way. And it'll be less fair: people with less willpower will pay more. Advertising makes sense when direct payment is impractical. Broadcast TV is the classic example. It's really hard to charge money for it, so ads let you indirectly collect money from your viewers. On the internet, paywalls are practical technologically, but tend to add too much friction, so we get ads instead. But there's no reason for it here.
sfifs 10y ago
The TV Industry by and large cannot survive without funding by advertisers. Check the P&L of any channel. Without ads, you'd be paying a lot more - or in other words, the content wouldn't exist because of lack of market
em3rgent0rdr 10y ago
haven't internet ads lowered the cost of pretty much everything on the internet?

by prklmn 10y ago

hackuser 10y ago

> Them wanting people to believe that this will lower the cost of internet service is laughable. Have TV ads lowered the cost of cable? It's a very important point; this false argument is often used. In truth, in the marketplace, goods are not priced at 'cost-plus'; i.e., they aren't priced by taking the cost to the vendor and adding a profit margin. Goods are priced at the point that will maximize profit for the vendor; economists would say at the point that maximizes marginal profit. Colloquially, they charge as much as they can. The fact that the vendor has another stream of income from Product B doesn't cause them to reduce their prices for Product A. Microsoft doesn't cut the price of Windows because they are making so much from Office.

aero142 10y ago
This is only half the argument, though. Yes, companies charge as much as possible, but prices go down when a competitor can offer a comparable good at a lower price. Some markets clearly have features that make competition harder.
- hackuser 10y ago
  Agreed, but how do you see that applying in this situation? Privacy regulations apply either to all competitors or none.
  - aero142 10y ago
    I think both sides just argue past each other. Democrats promote government regulation as the solution without discussing the problems. Heavy regulation often leads to stagnation and lack of innovation. You also have to deal with regulatory capture since your politicians now have huge influence and are worth bribing. Republicans argue for "free-market solutions" which are actually government granted or encouraged monopolies where no competition exists. There lots of examples of free market capitalism making the world a better place and markets failing as well. There are examples government run services providing great consistent services and there are examples of government bureaucracies soaking up budget and graft in their own or lobbyists interest. Which tool do you think will work best in this situation and why? How do you plan to deal with the inherent problems of government involvement in ISP regulation? I'm just tired of "free market solves all" vs "corporation are evil, government is universal solution". We learn nothing and convince no one.
- awqrre 10y ago
  What competition in the ISP space?
astrodust 10y ago
> Microsoft doesn't cut the price of Windows because they are making so much from Office. Microsoft did cut the price of Windows to get people to adopt it early on because they would be making so much money from Office. Microsoft Word vs. WordPerfect, Excel vs. Quattro Pro and Lotus 1-2-3. These battles were won because of Windows and that cemented their position as industry leader. Now that Microsoft is in a dominant position they don't cut the price of Windows as much, but to remain on top they do give the OEMs a very sweet per-unit deal they really can't refuse.
- hackuser 10y ago
  > Microsoft did cut the price of Windows to get people to adopt it early on because they would be making so much money from Office If that's true (and that's not my understanding) they did it to gain marketshare and maximize profit, not because they already had enough profit. In that scenario, they cut the price of Windows to make even more from Office.
  - astrodust 10y ago
    They cut short term profits in order to cement long-term ones, so yeah, they were maximizing profits but over a longer time-scale than one transaction.
- slededit 10y ago
  They didn't cut the price. Rather they made a windows runtime available so you could run office on DOS. This was also available to third party ISVs.
  - astrodust 10y ago
    Bundling for free is cutting the price.
daveFNbuck 10y ago
The profit-maximizing price drops as the profit margin goes up. As service providers make more money by selling customer data, they'll be able to increase profits by lowering prices and bringing in more customer data. Of course, this assumes a significant amount of customers who have the option to switch providers or choose not to have internet access.

mundo 10y ago

Every time I hear someone argue for the efficiencies of privatization, I think of my water utility emulating mobile carriers and billing me for "Anytime gallons" and "Nighttime gallons" and "Weekend gallons".

twoodfin 10y ago
Instead, if you're in a drought-prone area, you get water bans.
- omginternets 10y ago
  ... which is perfectly reasonable. What's your point?
  - elipsey 10y ago
    I think his point is that price economics would allow you to at least have _some_ water if you wanted it bad enough to pay more. EDIT: Perhaps more importantly, dynamic priceing could be more efficient than a regime in which you can use huge amounts of water at a low fixed cost, and then suddenly none when it runs out.
    - omginternets 10y ago
      >I think his point is that price economics would allow you to at least have _some_ water if you wanted it bad enough to pay more Right, and the point of a water ration is to ensure that everybody limits their water use to some prescribed amount. What you and the OP are describing is arguably a bug, not a feature. The point of contention here is not of price economics per se, but of politics. At issue is whether or not one should be able to circumvent a ration by virtue of his monetary resources. Some people (including myself) find this notion distasteful.
  - splintercell 10y ago
    > ... which is perfectly reasonable. What's your point? It shouldn't be this way. It serves no purpose. You first claim that everybody has access to resource X at a reasonable price (because we don't want to discriminate against poor people), then when resource X starts to run out, they enforce bans instead of charging more to people willing to pay a premium (and getting the resource first) and then using it to expand production and access to everyone. This story plays out everywhere, whether in Soviet Russia or in California or in NHS.

yuhong 10y ago

ISPs don't have to pay the content providers that cable does though.

cwyers 10y ago

> Have TV ads lowered the cost of cable? Almost certainly.

curiousgeorgio 10y ago
So true. It's easy to forget this point. Do the math: Take all the content available to a cable subscriber, and the money that goes into producing that content. Take out the ads and split the bill (in addition to the relatively low costs of operating/maintaining the cable company itself) among the subscribers. That's just covering costs; now add a bit of profit to motivate those companies to stay in business. There's no question you'd be paying more - a lot more. We just don't think the ads are saving us money because we don't know any different - that's just the way TV has been since the beginning.
- cwyers 10y ago
  Another way to prove this to yourself is to think, could there be broadcast TV without ads? And of course, the whole broadcast model falls apart without advertising. But without broadcast to compete with, is it likely that basic cable would be as inexpensive as it is? Even if you're of the view that costs don't matter to price, only what the market will bear, it seems self-evident that the market will bear less when there's a free substitute of reasonable quality available.

mikeash 10y ago

Even if it did lower the price of the service, those advertisements aren't going to be purchased unless there's profit in it, and there isn't going to be profit in it unless they convince the people exposed to it to spend money on stupid crap. Those poor people will pay one way or another. Given the indirectness and inefficiency involved in the advertising approach, I wager they'll pay more that way. And it'll be less fair: people with less willpower will pay more. Advertising makes sense when direct payment is impractical. Broadcast TV is the classic example. It's really hard to charge money for it, so ads let you indirectly collect money from your viewers. On the internet, paywalls are practical technologically, but tend to add too much friction, so we get ads instead. But there's no reason for it here.

sfifs 10y ago

The TV Industry by and large cannot survive without funding by advertisers. Check the P&L of any channel. Without ads, you'd be paying a lot more - or in other words, the content wouldn't exist because of lack of market

em3rgent0rdr 10y ago

haven't internet ads lowered the cost of pretty much everything on the internet?