Macropayments: ISPs pay Content Providers for Access

EssJay writes: "A norwegian newssite (digitoday.no) has a story (norwegian) about a swedish company's filter-system which enable content-delivery sites to differentiate between different ISP's. This means that the ISP has to pay a fee to the site in order to enable the site's content to the ISP's users. Another story (also norwegian) discusses the implications of this. They report that the swedish company (Tric AB) will "act as a third party between ISP's and content-suppliers with the intent to let the content-suppliers get a share of the access-income. It will act as a clearinghouse where the income from the ISP's is distributed to different content-suppliers in relation to size and traffic". According to a swedish newssite (Ekonomi24.se), Tric has already gathered the largest content-suppliers in Sweden and they are already in discussions with the large ISP and telecoms in Sweden (Telia, Tele2 etc.) which are positive to this. The background for this initiative is the problem of financing the content on the Internet. So far it's all been advertising and subsidising from other parts of the companies, now it will be the up to the ISP and telecom-companies to share the income with other actors. This would also be the death of smaller ISP's that feed off the free structure of the net, given that this model is applied to the entire net. And not to forget the new business created: clearinghouses. We were just waiting for another level of complicity." Either your ISP pays a fee to the content provider (raising your access fees, of course), or the provider blocks access to itself from all of your ISP's users and you have to deal with their complaints. We'll probably see this in the U.S. soon, as the next stage in the media consolidation.

Comments

Re:I don't get it.

[Jason Earl]

It'll never happen. People think that Linux has a chicken and egg problem getting access to commercial applications. Any system that charges ISPs for access to content has a much larger problem. They have to sign up content providers that have content that a significant amount of an ISPs customers are willing to pay for, and then they have to convince that content provider that it is a better idea to sign up with their service (and pay the requisite commission) than to simply charge the end user themselves.

Fat chance of that happening.

Especially since many of the content providers already are access providers. AOL/Time Warner stands out as the best example. They are already using their "special" content as a hook to lure customers. Many of the other "large" ISPs have the same business model. One of their hooks is special proprietary information or tools. There is literally no chance that they are going to pay dues so that their subscribers can view their competitors for-pay sites, as they would rather have their customers see their own commercial sites. And without AOL's customers, and the customers from the non-complying normal ISPs the service will be severely limited in its market.

The fact of the matter is that once a product becomes a commodity, putting it back in the proprietary bag is nearly impossible. I am surprised this particular company isn't trying to charge for air and sunshine while they are at it.

Currently ISPs are running on razor thing margins. They aren't going to pay access fees for their users. Web companies are going to have to find a way to charge their customers directly, or they are going to have to find a way to show advertisers that their advertisements actually work. Micropayments isn't going to work, and macropayments are even less likely to work.

Re:Same old, same old...

[JanneM]

Well, that's not quite true. They haven't given up as much as largely been afraid to ask in the first place. There is a lot of 'conventional wisdom' that states that nobody will pay for content (excepting those sites that _do_ charge for content and makes a living from it).

A few mainstream sites have begun trying a subscription model (Salon is an example, pr0n is another). From the site operators perspective is that they probably will lose a good deal of their readers; the question is if they lose too many, making the model a losing proposition or not.

From the POV of us surfers, the question becomes wether we are prepared to pay for the offered content. That answer is probably heavily dependent on what the content is and how much it would cost. If it's information readily available at fifty other locations, we would probably not bother, while if it's a site with unique material - and that we have become dependent on - many might well be prepared to pay. That given, for newssites (like dn or nytimes), I'd expect to get the full text from the printed version and no banner ads.

This also ties in to the question of payment on the net in general, of course. It doesn't matter if the enformation is perceived as very cheap, if the hassle to actually pay for it is too great.

With the demise of some sites recently, and a subscription model being tried for others, I've started to really think about what sites I'd be prepared to pay for. In the end, it turns out that there's about four regular sites that'd get my money (given a reasonable fee), while another dozen would be dropped.

/Janne

Never Gonna Happen

[cybermage]

This will not happen in the US for several reasons, including:

1. The only sites that have enough of a percentage of any one ISPs user base that an ISP would even consider paying, are the ones already making money. Usually, it's is the big guys in price wars who give it away to eliminate competition (remember how Microsoft killed Netscape's 90% marketshare.)
2. There are better models under consideration. A better system is settlements. Like the current TelCo model, peers pay each other for the imbalance of traffic across their peering points. The concensus opinion on how to do it is to pass the charge toward the people consuming bandwidth away from the people providing it. This would ultimately drop the cost of being on the Internet for the people who are providing content. One of the chief reasons this hasn't happened yet was PSINet's refusal to go along with it (reason they offered free peering.) Now their failing and turning off peers.
3. Who is an ISP? Internet access comes in more forms than simply from a traditional ISP. It would be a major undertaking just to contact all of the people who control an access point to the Internet. There's something like 14M usuable Class C networks in the IP v4 address space. Even if the typical ISP has 10 of them, that's still 1.4M places to try to shake down for money. Good luck reliably figuring out which are in the US.

I don't get it.

[mikeage]

We all (well, many of us), got on the internet in an earlier time... and I'm not talking about last century. Originally, the Internet was meant to be about sharing... information, files, whatever... but sharing. That's a cooperative thing. Over the past five years, we've seen (I'd imagine) a decline in non-commercial pages... fewer (percentagewise, at least) people put up useful personal pages, and I don't think even those of us who use the internet for research (either technical or otherwise) really benefitted that much from the boom of the last 3 years. So why shouldn't an internet that's about big companies serving info to people charge? If the people don't give back to the big companies (which they don't) by putting up smaller, useful, web pages, shouldn't they give back money? In the geek circles, we give back to each other by helping each other out... which is why we do it in the first place... but what does a company get out of the internet if not money? I know someone will post a higher modded response talking about importance of communication, how the companies benefit, etc. etc. etc. But think for a minute... the outside worlds internet is, has been, and always will be a commercial venture. "Our" internet is about IRC, Freenet, .org's, and .edu's which will continue to be a community... I hope ;)

I built something like this years ago...

[General_Corto]

Back in the day (just before the AOL takeover), I was a contract employee for CompuServe Germany ('hi' to Robert Stabl, my boss!). CompuServe, at that time at least, was pushing a technology called RPA (Remote Passphrase Authentication) as a way to prove a user's identity to a third party website, without that third party needing to know anything about the user's passphrase (reasonably well designed too).

CompuServe GmbH also used this RPA technology to control micropayments to some of its more interesting (to some) content. The example that comes to mind was a site called Recht Online, which was a pay-per-view listing of all court judgements in Germany (I believe). However, there were many other areas of content which CompuServe wanted to sell, and not just to their own subscribers.

My job was to create an ISP authenticating proxy. The idea was that if you, as a user from ISP 'blinkenlichten,' wanted to view some pay-per-view CompuServe content, then you could as long as your ISP had a service agreement with CompuServe. It was the ISP's problem to figure out who viewed what, and how to pass the cost on to their customers.

Perhaps the most magical thing of that whole time was going onsite to a couple of ISPs (one in Frankfurt, the other in Dusseldorf), and seeing the highly sceptical sysadmins' jaws drop when I started happily connecting to expensive CompuServe content through their IP range.

Ironic part of the story: CompuServe lost the source code.

Re:Cable TV

[TGK]

I think the real problem would not be the 10,000 sites and nothing's on problem but more the fact that the web (we're not seriously considering content charges on routers are we?) serves a fundamentaly different purpose than TV. TV is not a content on demand medium. Thus, it's not terribly useful for much other than entertainment. The web contains a wealth of information that, without the free content model, will die out. The reason for this death is not that people are unwilling to pay to have the data. On the contrary, numerous specilized data services have proven that's not the case. The problem is that the internet is poorly cataloged (yes, even by Google) and has no journalistic responcibility for providing accurate information. I am willing to pay for the data I want when I want it. I am not willing to pay for the privilage of searching your site to discover that you don't have what I'm looking for. That's like (pardon the poor analogy) a cover charge for WalMart.

This has been another useless post from....