Xref: utzoo comp.archives.admin:108 sci.econ:3999 Path: utzoo!utgpu!news-server.csri.toronto.edu!rpi!think.com!compass!worley From: worley@compass.com (Dale Worley) Newsgroups: comp.archives.admin,sci.econ Subject: Re: Economics 101 Message-ID: Date: 24 Jun 91 14:40:26 GMT References: Sender: root@compass.com Distribution: world Organization: Compass, Inc., Wakefield, MA, U.S.A. Lines: 77 In-reply-to: nelson@sun.soe.clarkson.edu's message of 21 Jun 91 15:01:42 GMT In article nelson@sun.soe.clarkson.edu (Russ Nelson) writes: You mean we don't pay for it now? Does that mean somehow we're not paying $20,000/year to NYSERNet? Well, you are probably paying $20,000/yr, but that probably doesn't cover the fraction of the backbone that you're using. What is the total budget of the backbone? Ahhhh, you mean pay-per-usage. Not necessarily. Whole books have been written to explain the previous paragraph, so I don't expect you to absorb it all at once. I'm glad to know that you think so highly of me. In fact, the point you make is pretty obvious and is referred to in about a thousand articles in the popular press on such topics as air pollution, land-use management, and transportation policy. Now, when you decry those who think information should be free, you are partly saying that you don't like flat rates. That's fine, but I think you'll find yourself in the minority. Well, as far as flat rates go, I seem to remember that the Internet is perennially plagued by over-utilization. Or perhaps the most recent upgrade to the backbone capacity (paid for by NSF) has solved that problem for all times... On a more subtle level, flat rates have an interesting effect -- they price small users out of the market. For instance Clarkson can afford $20k/yr for network access, but my company can't, because it only has 50 employees. (See "barriers to entry" in your Econ book.) -------------------- Unfortunatly, you're missing my central point. (Although that may be because I didn't explain myself well.) The question isn't the payment for *communication capacity* but payment for *information*. The expensive part about comp.archives is not *distributing* the information in it, it is *creating* that information. And while technology will make the distribution ever cheaper, the creation will never become cheaper (relative to the average person's income). We need to start considering how to efficiently pay people for creating information, if we're going to have increasing amounts of useful information created. Fortunately, we have certain possibilities available to us that have not been available to people before. For instance, in many businesses, the costs of advertising and billing consume a large fraction of the customer's dollar, leaving very little money to pay for the creation of the product the customer wants. This is inefficient, in the economic sense -- the customer pays far more for the product than the producer demands to produce it. With an electronic network, it is possible that the process of billing could be 100% automated. (For instance, each query to the database charges your credit card 1 cent.) If the infrastructure of billing for small transactions were well-developed, it is possible that 90%+ of the customer's dollar could go to the producer. An example of how this works is the long-distance telephone business, where calls are remarkably cheap, even though they are billed individually, but ATT, MCI, and Sprint are making serious bucks anyway... Dale Dale Worley Compass, Inc. worley@compass.com -- Q: Why does Internet raise issues of academic freedom and free speech? A: Anything you can write publish, broadcast, or yell from the top of a building, Internet can propagate further, faster, more elegantly. Thus, age-old issues of freedom of speech and expression vs. public safety and moral sensibilities have moved into this high tech arena. -- Joe Abernathy [And in an intensified form.]