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Essay/Term paper: Flat fee vs pay-per-use

Essay, term paper, research paper:  Internet

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Flat Fee vs. Pay-per-use

Most Internet users are either not charged to access information,
or pay a low-cost flat fee. The Information SuperHighway, on the
other hand, will likely be based upon a pay-per-use model. On a
gross level, one might say that the payment model for the Internet
is closer to that of broadcast (or perhaps cable) television while
the model for the Information SuperHighway is likely to be more
like that of pay-per-view T.V.

"Pay-per-use" environments affect user access habits. "Flat fee"
situations encourage exploration. Users in flat-fee environments
navigate through webs of information and tend to make serendipitous
discoveries. "Pay-per-use" situations give the public the incentive
to focus their attention on what they know they already want, or to
look for well-known items previously recommended by others. In
"pay-per-use" environments, people tend to follow more traditional
paths of discovery, and seldom explore totally unexpected avenues.
"Pay-per-use" environments discourage browsing. Imagine how a person's
reading habits would change if they had to pay for each article they
looked at in a magazine or newspaper.

Yet many of the most interesting things we learn about or find come
from following unknown routes, bumping into things we weren't looking
for. (Indeed, Thomas Kuhn makes the claim that, even in the hard
sciences, real breakthroughs and interesting discoveries only come
from following these unconventional routes [Kuhn, Thomas, The Structure
of Scientific Revolutions, Chicago: University of Chicago Press, 1962]).

And people who have to pay each time they use a piece of information are
likely to increasingly rely upon specialists and experts. For example,
in a situation where the reader will have to pay to read each paragraph
of background on Bosnia, s/he is more likely to rely upon State Department
summaries instead of paying to become more generally informed him/herself.
And in the 1970s and 1980s the library world learned that the introduction
of expensive pay-per-use databases discouraged individual exploration and
introduced the need for intermediaries who specialized in searching

Producers vs. Consumers

On the Internet anyone can be an information provider or an information
consumer. On the Information SuperHighway most people will be relegated
to the role of information consumer.

Because services like "movies-on-demand" will drive the technological
development of the Information SuperHighway, movies' need for high
bandwidth into the home and only narrow bandwidth coming back out will
likely dominate. (see Besser, Howard. "Movies on Demand May Significantly
Change the Internet", Bulletin of the American Association for Information
Science, October 1994) Metaphorically, this will be like a ten-lane
highway coming into the home and only a tiny path leading back out
(just wide enough to take a credit card number or to answer multiple-choice

This kind of asymmetrical design implies that only a limited number of
sites will have the capability of outputting large volumes of bandwidth
onto the Information SuperHighway. If such a configuration becomes
prevalent, this is likely to have several far-reaching results. It will
inevitably lead to some form of gatekeeping. Managers of those sites will
control all high-volume material that can be accessed. And for reasons of
scarcity, politics, taste, or personal/corporate preference, they will
make decisions on a regular basis as to what material will be made
accessible and what will not. This kind of model resembles broadcast or
cable television much more so than it does today's Internet.

The scarcity of outbound bandwidth will discourage individuals and small
groups from becoming information producers, and will further solidify
their role as information consumers. "Interactivity" will be defined as
responding to multiple-choice questions and entering credit card numbers
onto a keypad. It should come as no surprise that some of the major players
trying to build the Information SuperHighway are those who introduced
televised "home shopping".

Information vs. Entertainment

The telecommunications industry continues to insist that functions such
as entertainment and home shopping will be the driving forces behind
the construction of the Information SuperHighway. Yet, there is a
growing body of evidence that suggests that consumers want more
information-related services, and would be more willing to pay for these
than for movies-on-demand, video games, or home shopping services.

Two surveys published in October 1994 had very similar findings. According
to the Wall Street Journal (Bart Ziegler, "Interactive Options May be Unwanted, Survey Indicates," Oct. 5, 1994, page B8), a Lou Harris poll found that "a total of 63% of consumers surveyed said they would be interested in using their TV or PC to receive health-care information, lists of government services, phone numbers of businesses and non-profit groups, product reviews and similar information. In addition, almost three-quarters said they would like to receive a customized news report, and about half said they would like some sort of communications service, such as the ability to send messages to others. But only 40% expressed interest in movies-on-demand or in ordering sports programs, and only about a third said they want interactive shopping."

A survey commissioned by MacWorld (Charles Piller, "Dreamnet", MacWorld,
Oct 1994, pages 96-105) which claims to be "one of the most extensive
benchmarks of consumer demand for interactive services yet conducted"
found that "consumers are much more interested in using emerging networks
for information access, community involvement, self-improvement, and
communication, than for entertainment." Out of a total of 26 possible
online capabilities, respondents rated video-on-demand tenth, with only
28% indicating that this service was highly desirable. Much more desirable
activities included on-demand access to reference materials, distance
learning, interactive reports on local schools, and access to information
about government services and training. Thirty-four percent of the sample
was willing to pay over $10 per month for distance learning, yet only 19%
was willing to pay that much for video-on-demand or other entertainment

If people say they desire informational services more than entertainment
and shopping (and say that they're willing to pay for it), why does the
telecommunications industry continue to focus on plans oriented towards
entertainment and shopping? Because, in the long run, the industry believes
that this other set of services will prove more lucrative. After all, there
are numerous examples in other domains of large profits made from
entertainment and shopping services, and very few such examples from
informational services.

It is also possible that the industry believes that popular opinion can
easily be shifted from favoring informational services to favoring
entertainment and shopping. For several years telecommunications industry
supporters have been attempting to gain support for deregulation of that
industry by citing the wealth of interesting informational services that
would be available if this industry was freed from regulatory constraints.
Sectors of the industry may well believe that the strength of consumer
desire for the Information SuperHighway to meet information needs
(as shown in these polls) is a result of this campaign. According to this
argument, if popular opinion can be swayed in one direction, it can be
swayed back in the other direction

Popular discourse would have us believe that the Information SuperHighway
will just be a faster, more powerful version of the Internet. But there
are key differences between these two entities, and in many ways they are
diametrically opposed models.


The metering that will have to accompany pay-per-view on the Information
SuperHighway will need to track everything that an individual looks at
(in case s/he wants to challenge the bill). It will also give governmental
agencies the opportunity to monitor reading habits. Many times in the past
the FBI has tried to view library circulation records to see who has been
reading which books. In the online age, service providers can track
everything a user has bought, read, or even looked at. And they plan to sell
this information to anyone willing to pay for it.

In an age where people engage in a wide variety of activities online,
service providers will amass a wealth of demographic and consumption
information on each individual. This information will be sold to other
organizations who will use it in their marketing campaigns. Some
organizations are already using computers and telephone messaging systems
to experiment with this kind of demographic targeting. For example, in
mid-1994, Rolling Stone magazine announced a new telephone-based ordering
system for music albums. After using previous calls to build "a profile of
each caller's tastes ... custom messages will alert them to new releases
by their favorite artists or recommend artists based on previous selections.
" ("Phone Service Previews Albums" by Laura Evenson, San Francisco Chronicle,
6/30/94, p D1) Some of the early experiments promoted as tests of
interactive services on the Information SuperHighway were actually designed
to gather demographic data on users. ("Interacting at the Jersey shore:
FutureVision courts advertisers for Bell Atlantic's test in Toms River",
Advertising Age, May 9, 1994)


No one can predict the future with certainty. But we can analyze and
evaluate predictions by seeing how they fit into patterns. And an analysis
of the discourse around the Information SuperHighway shows remarkable
similarity to that which surrounded cable TV nearly a quarter-century
before. Though there is no guarantee that the promises of this technology
will prove as empty as those of the previous technology, we can safely
say that certain powerful groups are more interested in promoting hype
than in weighing the possible effects of the Information SuperHighway.

The Information SuperHighway will not just be a faster Internet; in fact
it is possible that many of the elements that current Internet users
consider vital will disappear in the new infrastructure. Though the
average consumer will have many more options than they do from their home
television today, attempts at mass distribution will likely favor
mainstream big-budget programs over those that are controversial or appeal
to a narrower audience. It is possible that diversity available from all
sources will decrease and independent productions will be even further
marginalized. And the adoption of an asynchronous architecture
(a ten-lane highway coming into the library or home with a tiny path
leading back out) would pose a significant barrier to those seeking to be
information providers, and would favor a model of relatively passive
consumption. And the kind of massification and leveling of culture that
will follow is likely to be similar to the effects of broadcast television
on culture.


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