Net Neutrality

Imagine this:

You sit down at your laptop one day and go to your favorite video streaming website. But instead of getting clips of hilarious cats, you get a message telling you that you have exceeded your streaming allowance for the month, unless you would you like to purchase some extra streaming credits.

This is a scenario that we were promised would never arise by the opponents of net neutrality, and yet it's one of the first things that happened when the US legislature failed to protect the concept. Immediately, a legal wrangle opened between Netflix and Comcast. The Internet service provider attempted to negotiate rates with the movie streaming service due to the high volume of traffic it was being asked to handle. 

Within a free market, Comcast's position makes sense. There is a demand, they are the supplier, and they should be able to price their service accordingly. And Netflix can't play the victim in this scenario; they are on the brink of becoming one of the largest media companies in the world, so surely they should contribute to the infrastructure that supports their business model. Right? Netflix decided to give into this notion, as they struck a deal in February that put an end to throttling of traffic generated by their site. 

The argument of ISPs (and the companies behind them that provide infrastructure) is that they need to invest in order to provide the best possible service to their customers, and that certain websites make this more difficult. Therefore, in a free market, they should be able to charge those larger sites, or manage traffic accordingly. 

But the Internet is more than Netflix, Facebook, Google and Amazon. The open web has operated on a free and equal access ever since Tim Berners-Lee developed HTML. It has fostered the open atmosphere that allowed bloggers and startups to thrive. The internet is a place where a good idea done well can take on the giants of any field. The end of net neutrality is not Goliath beating David; it is a sign outside saying "No Davids".

An image created by Reddit user Quink displays in stark detail how the Internet might look for users in the future. It may seem far-fetched but it is actually based on common advertisements for cable packages. This is a model that already exists and there is no reason that it cannot be applied to Internet services. 

Consider how this new Internet looks for you, if you run a business website or tech startup. Where do you fit in? Do users get free access to the service you provide? Or do they have to pay extra just for a pageload? What about personal sites and non-profits? Where there is competition, what happens when one company pays ISPs for preferential treatment?

The unknown elements of a post-neutral web are scary. Nobody can really predict how it will look. All we know for sure is that the level playing field of the early Internet will be gone, and this is as much a concern economically as it is politically. Business thrives on fair competition and a closed Internet is inherently unfair. 

It's not too late though. Just recently, the European Union have enshrined net neutrality into law. Lawmakers in the US may yet see the advantages of an open web and struggle to protect it. Not only does net neutrality strengthen constitutional ideals such as freedom of speech and freedom of assembly, but it's good for business and essential for innovation. Let's hope that our government make the right decision, and protect the free and open internet that we have come to cherish.

ESPN vs Cable

In this economy, the cost of cable television is more of a pain than a benefit. With the introduction of lower cost alternatives such as Netflix and Hulu, more and more people are deciding to cut the cord.  However, there is one problem, one obstacle — where will sports fans go? As it stands, the only way to "legally" watch real-time sporting news and events is to sign up for a cable TV service. This is because the 1992 Cable Act requires that consumers sign up for regular cable service before they can enjoy the benefit of having premium channels like HBO or ESPN.  However, consumers who want cable (and aren't that interested in sports) are being forced to pay tax on ESPN — and they aren't happy about it. 

The Problem that Just Won't Go Away...

Sports lovers want ESPN, others don't, but everyone's paying for it. As it stands, cable viewers are up in arms about having to pay a tax on the channel whether they want it or not. In fact, Bloomberg Businessweek stated the ESPN charges cable operators $4.69 per month, although I've seen much higher rates from other publications) for it. That charge trickles down to the viewer. The bad news is that this price is predicted to grow as ESPN announced its plan to broadcast Monday Night Football for the next eight years. As of now, it seems that the ESPN problem just won't go away. 

Or Can It?

So you want to be a cord-cutter, but you love your sports. This is a dilemma that many sports fans have. Not to mention the problem of having to pay for basic cable just to get ESPN. So what could solve this revolving issue? A subscription only option perhaps? If cable TV doesn't impress you, but you want to watch your Monday or Thursday night NFL games whenever they're on, this may serve to be the best way forward. This option would provide an outlet that allows you to just watch (and pay for) what you really want — ESPN. The upside to this solution is that only fans who want the subscription will pay, and people who aren't that interested in sports will no longer have to. Although ESPN has no interest in doing this for the time being, many cable providers are pondering it over. When asked about this very prospect in an interview in Bloomberg, Suddenlink Communication's CEO, Jerald L. Kent, said the following:

“If I could offer high-cost channels like ESPN as stand-alone channels, à la carte, I’d do it.”

Another option that could work to keep you off of the tube and into your smartbox is a Go option. 

The good news is that subscribers can still enjoy the flexibility of ESPNGo. As of now, ESPNGo can only be viewed if a person has subscribed to basic cable, but a standalone option could change that. ESPN-only subscribers could log into their cable account on the ESPNGo app and enjoy any game, any time, any where. 

What an ESPN Only Option Means for Everyone

For one, people who don't want it, will no longer have to pay for it. So, ideally a subscription-only option will save cable subscribers at least $5 a month. On top of that, those who only want ESPN won't be forced to pay for channels they don't want, which could range from $40 to $100 a month! A downside to this option is that some cable companies enjoy the inflated rates of bundling channels because after all, that's how they keep the revenue flowing. The other downside is that they could potentially charge consumers more per month to "unbundle" as they try to deter viewers from cord-cutting. 

All in all, a standalone ESPN option is a feasible solution to everyone involved. Cable companies can retain sports fan, who account for a significant percentage of their earned revenue, and sports-fans can take their games on the go. Will cable companies catch on? We can only wait and see.  I for one would be willing to pay a large portion of my current cable bill to have a sports only subscription.

InstaCommerce vs AdStagram

According to its site, Instagram is a "fast, beautiful and fun way to share your life with friends and family.” And that’s great! But Instagram just announced that they will be introducing ads into the user's experience, is the best model Instagram could use to generate revenue?

Introducing AdStagram

Placing ads around content is a tried and true way to generate revenue while offering a free service. Google does it, Facebook does it, mobile apps do it, and even little blogs with a unique viewership of 20 people try to do it. So, why shouldn't Instagram do it, too?

Instagram can attract plenty of brands to spend advertising dollars. There's little doubt about that. But, if they take that route, they will run the risk of subjecting their users to potentially unwanted ads for the sake of revenues.

With that said the medium of expression that Instagram provides lends itself well for brands to increase awareness and engagement.  Let's take a look at H&M, they have over 1M followers, however a large number of those followers also follow hundreds of other accounts.  Therefore, there is a fair chance that a brand's followers may miss a fair portion of their posts.  

Employing a Twitter like suggested follower or suggested list ad unit would allow brands a mechanism to pay to acquire potential customers.  They could also take a page from Facebook's playbook and allow brands to pay for "suggested" posts, where a brand could pay to insert a photo into your feed.  The latter strategy could be seen as much more disruptive to the user's experience.  To prepare their users for such ad units, Instagram could begin to insert photos that your friends like into your feed to make the "suggested" post feature seem less intrusive.

It’s an easy route to go, as long as Instagram is generating the traffic to make it worth their while.  That's not the problem, since they have well over 150 million users.

The problem is that ads could potentially degrade the experience of Instagram users.  Keep in mind that these visitors are used to an ad-free Instagram experience.  Now consider that Instagram provides users with the opportunity to display works of art to a global audience.  Ads could also distract users from the aesthetic experience they crave seek from Instagram. 

Introducing InstaCommerce

There are other ways to generate revenue online, even while offering a free service.  eBay comes to mind here.  eBay is free to shop, but requires payment from sellers.  Like the advertising model, a commerce model could potentially degrade the Instagram user experience, if a user's feed begins to be flooded with photos of folks just looking to sell a myriad of items.

This model does require a bit more creativity to make it work.  Luckily for Instagram, they have an advantage.  Real sellers are already using Instagram to showcase their work!  Up and coming fashion designers are using Instagram to reveal their work to the world.

Want to see for yourself?  Check out these fashion fellows worth following:

In order to generate revenue, Instagram would need to find the right balance between commerce and the artistry and communication that is the heart of their site.  Giving users who wish to sell items an option to add a "Purchase" button right next to the "Comment" button seems like a natural move.

Innovating Success

Instagram has already announced that ads are coming.  It sounds like Instagram will roll this out slowly and will give users the options to block ads that they do not wish to see.  It’s possible, but I'm not convinced a soft approach would generate enough revenue to protect the user's experience.

So, maybe it’s time to take a step back.  Bridging art and commerce is a business tradition even older than hosting ads.  It’s a way for people to appreciate beautiful things, whether they can own it or not.

It’s also a way for those who can afford those beautiful things to keep the Instagram experience ad-free for the rest of us.  With a little innovation, Instagram could embrace the commerce while keeping the artistry intact.  All it takes is a little creativity and that’s what art and business have most in common.

I'm looking forward to see the monetization progression of Instagram, it has great potential to be a real revenue driver for Facebook.  What are your thoughts?