Delusions of net neutrality

A mathematics professor at the University of Minnesota, Andrew Odlyzko, has a pretty blistering critique of Internet Service Provider's (ISPs) arguments against net neutrality and about their love of streaming over download. It's worth a read of the abstract if nothing more - his paper, The delusions of net neutrality (caution, links to a pdf) destroys many a myth of the internet and video. Having been to many a conference lately where the best minds in the room can only imagine the internet making a better tv, I appreciate some astute analysis of the reality.

Odlyzko shows that ISPs and others are pushing for a world where the goals of the internet are reduced to streaming movies, in relatively walled envrionments, and that the costs to build a network capable of this demand that net neutrality be curtailed. As he states:

Service providers argue that if net neutrality is not enforced, they will have sufficient incentives to build special high-quality channels that will take the Internet to the next level of its evolution. But what if they do get their wish, net neutrality is consigned to the dustbin, and they do build their new services, but nobody uses them? If the networks that are built are the ones that
are publicly discussed, that is a likely prospect.

What service providers publicly promise to do, if they are given complete control of their networks, is to build special facilities for streaming movies. But there are two fatal defects to that promise. One is that movies are unlikely to offer all that much revenue. The other is that delivering movies in real-time streaming mode is the wrong solution, expensive and unnecessary.

He goes on to show why their argument is wrong and along the way, makes some astute analyses. I'll quote here, because his argument is better than what I could make:

What if you build it and they don’t come? ... that is almost bound to happen if net neutrality is blocked, and service providers do what they have been promising, namely build special facilities into their networks for streaming movies...The public stance of the service providers, a stance that appears to be accepted as valid by the press, research community, and decision makers in government and industry, is based on two delusions. Both delusions are neatly captured in a single sentence by Jim Cicconi, one of AT&T’s senior executives... He said that net neutrality “is about streaming movies.” The first delusion here is that movies are the most important material to be transmitted over the Internet, and will determine the future of data networking. But video, and more generally content (defined as material prepared by professionals for wide distribution, such as movies, music, newscasts, and so on), is not king, and has never been king. (italics added) While content has frequently dominated in terms of volume of traffic, connectivity has almost universally been valued much more highly and brought much higher revenues. Movies cannot be counted on to bring in anywhere near as much in revenues as voice services do today.
...

Even if we allow video the dominant role in shaping the future of the Internet, we have to cope with the second delusion captured in Cicconi’s quote, namely that movies should be streamed. This is an extremely widely shared assumption... However, there is an argument that except for a very small fraction of traffic (primarily phone calls and videoconferencing), multimedia should be delivered as faster-than-real-time progressive downloads (transfer of segments of files, each segment sent faster-than-real-time, with potential pauses between segments). That is what is used by many P2P services, as well as YouTube. This approach leads to far simpler and less expensive networks than real-time streaming.
...
The general conclusion is that the story presented by service providers, that they need to block net neutrality in order to be able to afford to construct special features in their networks for streaming movies, is simply not credible.

Pretty interesting for those of us who think about this. It's also interesting to me because I keep arguing with people about the value of streaming. We now offer it at Reframe, but only because currently an audience exists for it. But long-term, it seems a ridiculous option. I'd far prefer to get progressive downloads and be able to watch it again later on the plane, when not connected, and not have to rely on an internet connection.

I'm also interested because of his idea that video and content as such is not king. He says that people pay for connectivity (phone or twitter) not content. This seems counterintuitive in some ways, but he shows that in aggregate this is definitely true - i.e. more revenue comes from things like VoIP and phone than will ever come from Hollywood. "For all the hoopla about Hollywood, all the movie theater ticket sales and all the DVD sales in the U.S. for a full year do not come amount to even one month of the revenues of the telecom industry. And those telecom revenues are still over 70% based on voice, definitely a connectivity service."

Undoubtedly true, but as I deal in indie arenas, the little dollars matter. That said, what he says is true for me as a consumer - I value email, twitter, and other participatory communications on the web more than finding web content. What I like even more are ways to combine the two - conversations and participation with video content. I don't think it's as separate as he makes it seem.

In his conclusion, he has some interesting thoughts:

The two myths, that movies are a gold mine, and that they should be delivered in streaming mode, are very widely held. But at the same time, it seems clear that service providers are aware this is not even the most promising avenue to explore in search for new revenues and profits. They have been devoting a lot of attention to the potential of DPI (deep packet inspection). Now DPI is not needed if you believe that you cannot have a successful video service without special channels for streaming delivery. If you do believe that, then you just build a network in which you control access to those special features that enable quality streaming. On the other hand, you do need DPI in either of two situations:
– You want to prevent faster-than-real-time progressive downloads that provide low-cost alternative to your expensive service.
– You want to control low-bandwidth lucrative services that do not need the special video streaming features.
Communications service providers do have a problem. But it is not that of a flood of video.

He argues that all of this is a cover-up for what they really want to do, and I think he may be right. Anyway, Odlyzko's article has been discussed many places, but not in the film world, where it seems to really matter so I thought it was worth linking to from here.

Stealing Films to save filmmakers

Just back from Power to the Pixel where I was lucky enough to meet Jamie King of Steal this Film (I and II). This was one of those moments where you feel like the last man on earth to learn about a global phenomenon, as I had only heard of Steal this Movie, and had no idea about this particular film or experiment. Check it out online, but the short of it is that Jamie and friends have put their film about intellectual property online for free, encouraging people to steal it, get it for free on Bittorrent sites, etc. There's nothing new to giving your film away these days, with many people pushing to give away at least part of your film to push sales of DVDs, but Jamie has been steadfastly NOT trying to use this as a PR scheme to also sell his DVD. They are just giving it away.

And guess what - it's made them money. They barely have a website, where they encourage donations, but they've gotten lots of responses thus far. According to Jamie, the film has been seen somewhere between 5 and 10 million times (estimates vary, but there seems to be agreement on this), and they've received at least $30,ooo pounds, which is roughly $50,000 US. This may not seem like a lot with so many people having seen the film, but think about it more. Most documentary filmmakers I know get an average of $10-15,000 US as an advance on their film if they are "lucky" enough to sell it to one of the better known doc distributors. This is a high number, by the way, with many distributors paying less and few more. They also seldom see more money than this. So Jamie and friends have built a better business model for their film by just giving it away and encouraging piracy!

You may think I'm joking, but I'm not - this is a model to explore. Of course, not every film fits this model, but with things increasingly trending towards free, and with the film world continuing to duplicate the mistakes of the music world, it's something worth exploring. Jamie is exploring it further. The first step is VoDo - for voluntary donation - a system to make it easy for people watching films on peer-to-peer sites to donate to the filmmakers. Not a requirement, just a voluntary, and anonymous, donation. From their site:

VODO’s aim is to provide a revenue stream for creators of media content, in a world in which the systems for distributing, copying and viewing that content are cross-territorial, rapidly changing and difficult to predict or control.

If the architecture we are working on proves workable, we will be able to let consumers of media shared through P2P networks make voluntary donations to creators. Our aim is to combine a series of technologies to smoothly connect would-be donors to creators wherever their works are shared.

Good goal, I think and worth further exploration. Jamie is working with several people to develop further business models around free, P2P and piracy, and I think it's worth following his movements. The technology isn't going away, piracy isn't going away (unless we wake up and make it legal and not piracy), P2P isn't going away, the film business isn't getting any better and at least one person is figuring out a new model Kudos to Jamie.

I have to close with a last thought from Jamie. In a conversation we had, he commented that he, and friends of his, often will hear about a film and wonder if it's any good. The first thing they do is search PirateBay - if the film isn't there, they figure it must suck - if no one is pirating it, it can't be worth watching. I don't think Jamie is alone in this, and filmmakers should acknowledge it and build upon it.