July 22, 2024

Stimulus transparency and the states

Yesterday, I testified at a field hearing of the U.S. House Committee on Oversight and Government Reform. The hearing title was The American Recovery and Reinvestment Act of 2009: The Role of State and Local Governments.

My written testimony addressed plans to put stimulus data on the Internet, primarily at Recovery.gov. There have been promising signs, but important questions remain open, particularly about stimulus funds that are set to flow through the states. I was reacting primarily to the most recent round of stimulus-related guidance from the Office of Management and Budget (dated April 3).

Based on the probing questions about Recovery.gov that were asked by members from both parties, I’m optimistic that Congressional oversight will be a powerful force to encourage progress toward greater online transparency.

Possible Opportunity for Outstanding Law Graduates

We are constantly looking for scholars of digital technology and public life to join us at the Center for Information Technology Policy. We’ll be making several appointments soon, and look forward to announcing them. Meanwhile, I wanted to highlight a possible opportunity for graduating law students who have a strong scholarly interest in cyberlaw (reflected in student notes or other publications) and who find themselves in a position to pursue a research project over the coming months.

A growing number of law firms are pushing back the start dates for graduating law students who they have hired as new associates. In some cases, the firms are offering stipends to pay for these new hires to do public interest or academic work in the months before their start dates.

If you happen to be in the overlap between these two groups—a cyber-inclined graduating law student, with support from your firm to do academic work in the coming months—then you should know that CITP may be a logical home for you.

This is part of our larger openness, in general, to externally supported research fellowships. Under the right circumstances, we can provide an intellectual home, complete with workspace and Princeton’s excellent scholarly infrastructure, for exceptional researchers who have a clear project in view and who have a continuing affiliation with their long-term employer (in this case, the law firm).

If you want to know more, feel free to contact me.

New Podcast: CITP Conversations

Over the last few months, as the pace of activity at CITP has increased, we’ve fielded a growing number of requests from points around the web, and around the world, for podcasts and other ways to “attend” our events virtually. We hear you, and we’re working on it.

Today, I’m very pleased to announce a new CITP podcast, which will carry audio of some of our events as well as brief conversations recorded expressly for the podcast feed. Currently, those conversations include one with Paul Ohm on Net Neutrality and the Wiretap Act, and another with Ed on “Rebooting our Cyber-Security Policy,” drawing on the themes of his recent Thursday Forum talk.

We are also working to offer more of our events in video formats, and we remain open to exploring additional options. Stay tuned!

Final version of Government Data and the Invisible Hand

Thanks to the hard work of our patient editors at the Yale Journal of Law and Technology, my coauthors and I can now share the final version of our paper about online transparency, Government Data and the Invisible Hand.

If you have read the first version, you know that our paper is informed by a deep disappointment with the current state of the federal government’s Internet presence. A naive viewer, like we once were, might look at the chaos of clunky sites in .gov and entertain doubts about the webmasters who run those sites. But that would be—was, on our part—a mistake. We’re happy to set the record straight today.

Barack Obama’s web team is certainly one of the best that has ever been assembled. His staff did a fantastic job on the campaign site, and produced an also excellent, if slightly less dynamic, transition site at Change.gov. On its way to the White House, however, a team comprised of many of the same people seemed to lose its mojo. The complaints about the new Whitehouse.gov site—slow to be updated, lacking in interactivity—are familiar to observers of other .gov sites throughout the government.

What happened? It’s not plausible to suppose that Obama’s staffers have somehow gotten worse as they have moved from campaign to transition to governance. Instead, they have faced an increasingly stringent and burdensome array of regulations as they have become progressively more official. The transition was a sort of intermediate phase in this respect, and the new team now faces the Presidential Records Act, the Paperwork Reduction Act, and a number of other pre-Internet statutory obligations. This experience teaches that the limitations of the federal web reflect the thicket of rules to which such sites are subject—not the hardworking people who labor under those rules.

One of the most exciting things about the new administration’s approach to online media is the way it seeks to enable federal webmasters to move beyond some of the limitations of dated policies, using their expertise to leverage government data online.

My coauthors and I look forward to continuing to work on these issues. We are humbled to recognize the remarkable reservoir of talent and energy that is being brought to bear on the problem, from both within and beyond government.

The Future of News: We're Lucky They Haven't Tried Macropayments

Regular readers will know that the newspaper industry is in dire shape: revenues off by 20% in just the last year, with more than 15,000 jobs lost in that period. This map tells the story better than any writing could. The market capitalizations of newspaper firms, which reflect investor expectations about future performance, have fallen even more precipitously. In short, it’s hard to exaggerate how dire the situation facing the industry is. If you were in charge of a newspaper, survival in any form possible would rationally be your all-consuming focus.

Walter Isaacson, the former editor of TIME magazine and current President of the Aspen Institute, wrote a column last week arguing that newspapers should squeeze revenue out of their web sites through “micropayments.” It’s an idea with a long, but not very successful, history: Isaacson himself points out that Ted Nelson, the inventor of hypertext, imagined micropayments for written content back in the early 1960s.

Small payments, on the order of a dollar, work well for some kinds of highly valued, contextualized content, like a book to your Kindle or a song to your iPod. But “micro” payments on the order of a nickel—the figure Isaacson mentions for a hypothetical news story—have never taken off. Transaction costs, caused by things like credit card processing, are usually cited as the reason, but I’ve never found that view persuasive: It’s not hard to set up a system in which micro transactions are aggregated into parcels of at least a few dollars before being channeled through our existing credit card infrastructure.

The Occam’s razor explanation for the persistent failure of micropayments is much simpler: People hate them. The niggling feeling of being charged a marginal amount for each little thing you do exacts a psychological cost that often suffices to undermine the pleasure of the good or service you receive on an a la carte basis. That’s why monthly gym memberships, pay-one-price amusement parks, and subscription services like Netflix or, come to think of it, regular cable are popular, even when a la carte options would be (financially) cheaper for consumers.

Michael Kinsley, the former editor of Slate, responded to Isaacson in a piece headlined You Can’t Sell News by the Slice. His basic message: We tried getting users to pay for content online—in Slate’s case, as an inexpensive annual subscription—and it didn’t work. One problem noted by both Isaacson and Kinsley is that readers have come to expect content to be free, and when individual papers have tried to start charging, they’ve failed.

What can the papers do? Isaacson is on to something when he says:

Another group that benefits from free journalism is Internet service providers. They get to charge customers $20 to $30 a month for access to the Web’s trove of free content and services. As a result, it is not in their interest to facilitate easy ways for media creators to charge for their content. Thus we have a world in which phone companies have accustomed kids to paying up to 20 cents when they send a text message but it seems technologically and psychologically impossible to get people to pay 10 cents for a magazine, newspaper or newscast.

If struggling news outlets were really bold—and grimly realistic about how little they have to lose, from a business point of view—they might decide to seek revenue at the ISP level. The plan: Begin segmenting site visitors by ISP, and charge ISPs for content. Under this plan, if your ISP has paid the news syndicate, you get to see the news. If you try to visit one of the participating sites and your ISP has not paid the syndicate, then you see a different page, possibly a page that urges you to call your ISP and demand access to the syndicated content. It’s the same model controversially adopted by ESPN360.com (go ahead, check and see if you have access or not). I imagine a hypothetical where a handful of top papers, such as the New York Times, Washington Post, and LA Times, jointly with TIME and Newsweek, form a syndicate that charges ISPs a fixed rate per user-month of access. ISPs, in other words, would make a small number of large (“macro”) payments to content providers, and these would be a primary source of revenue for these outlets, along with advertising.

I am, as Paul Ohm might urge me to say, NAL (Not a Lawyer), but I suspect that such a syndicate might well pass antitrust scrutiny. The syndicate would certainly not make it hard to find news on the web: it would simply make it hard to find certain high quality sources. Participating publications might elect to offer free access to certain population segments, who cannot pay or would experience a concentrated public interest harm, such as users from developing countries. ESPN360, for example, reportedly gives free access to anyone who surfs in from a .edu domain. (No doubt this is also a marketing tactic.)

For some definitions of the term “net neutrality,” such a move by news providers would be a violation of net neutrality. Other definitions of the term would place this behavior outside of its scope. But no matter how you look at it, the substance of such a move would be troubling: it would amount to removing these great sources of journalism from the Internet proper, and placing them instead in a kind of walled garden. If that trend took off and became very widespread, it could amount to a return to the bad old days of walled garden services like AOL and Prodigy.

A second good argument that this situation would be undesirable is that it would force all users of a particular ISP to pay for content that only some users want to access. There’s a sense in which such cross-subsidies are already the norm: those who use their ISP subscriptions for email and web browsing subsidize the heavier network usage of video aficionados and other leading-edge consumers who are way out on the tail and use the lion’s share of the bandwidth. But this, in its deliberateness, would be a new and different level.

A third good argument against this idea is that it would introduce awkward relationships between news outlets and ISPs, in a manner that would impair news coverage of the Internet and telecommunications industries.

Fourthly, there’s the possibility that people will pirate the blocked content systematically by using systems like TOR to access the news content via approved endpoints. (My own thought is that this probably isn’t the strongest argument, since many users are uninterested in this sort of maneuver or even the easy Firefox plugin that would likely arise to enable it. Plus, the content syndicate would pool its resources toward aggressive litigation to stem this trend. Plus, the payments would be extracted from law abiding ISPs, not individual users.)

I can imagine a potentially compelling case being made that such behavior by content providers should be regulated or outlawed. But today I think it is neither. And given the news industry’s desperation, the fact that such a move would be unpopular could turn out to be moot if they can persuade ISPs to pay. If someone capable and hardworking set out to sell the idea to a group of newspaper and newsmagazine publishers, I fear they might prove quite persuasive.