Can Silicon Valley Repeal The Laws Of Economics?
from the not-paying-attention dept
But some people are very confused about this. For example, writing in the New York Times, Jaron Lanier tries to blame Silicon Valley for setting the Internet up wrong. He claims that "we" could "design information systems so that people can pay for content." Apparently, Lanier hasn't been paying attention over the last decade. What Lanier is alluding to is micropayments, and micropayments have been tried over and over again. Silicon Valley was only too happy to offer consumers opportunities to pay small amounts of money for content. But it turns out that customers hate micropayments. They're a headache to deal with and they produce very little revenue for content creators. After years of trying to get customers to sign up for micropayments, websites finally discovered that it just works a lot better to give the content away and sell ads.
The other thing Lanier apparently hasn't noticed is that there's already a massive industry devoted to producing content and giving it away in order to sell ads. Last time I checked, a ton of people make a living in the television industry, despite the fact that virtually all the content they produce is given away free of charge. Yet inexplicably, Lanier seems to believe that giving away content and selling ads won't be a viable business model in the Internet age. The problem isn't that ad-supported content isn't viable. The problem is that a lot of incumbent media companies have executed their Internet strategies so ineptly that hardly anyone is visiting their sites. You can't sell very many ads if you've got a tiny audience. The solution is for them to come up with more appealing products (hint: dropping DRM is a good first step), not to once again bang their heads against the brick wall of micropayments.