cj#713.6> DEMOCRACY AND CYBERSPACE – part 6

1997-09-25

Richard Moore

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                     DEMOCRACY AND CYBERSPACE

                Copyright 1997 by Richard K. Moore


[part 6]

Cyberspace: who's utopia?
^^^^^^^^^^^^^^^^^^^^^^^^^
               The law doth punish man or woman
               That steals the goose from off the common,
               But lets the greater felon loose,
               That steals the common from the goose.
                    - Anon, 18th cent., on the enclosures.

One can think of digital cyberspace as a kind of utopian realm, where
all communication wishes can be granted.  The question is who's going
to be running this utopian realm?  We net users tend to assume we'll
waltz into this utopia and use it for our creative purposes, just as
we have Internet. But there are others who have designs on this
utopia as well.  It is a frontier toward which more than one set of
pioneers have their wagons ready to roll.

We're willing to pay a few cents per hour for our usage (and we
complain of _any_ usage charges), and our need for really high per-
user bandwidth is yet to be demonstrated.  The media industry, on the
other hand, can bring a huge existing traffic onto cyberspace - a
traffic with much higher value-per-transaction than email and web
hits, and a traffic that can gobble up lots of bandwidth.  We want to
pay commodity prices for transport, while the media industry is
willing to pay whatever it needs to - and it can pass on its costs to
consumers.

>>From a purely economic perspective, the interests of the media
industry could be expected to dominate the rules of the road in
cyberspace - just as the well-funded land developer can always out-
bid the would-be homesteader.  Whether it be purchasing satellite
spectrum or lobbying legislatures, deep-pockets tend to get their
way.

But economic considerations may not be most decisive in setting the
rules of the cyberspace road - the political angle may be even more
important.  Continued mass-media domination of information
distribution systems is necessary if the media is to play its
accustomed role as shepherd of public opinion.  This role, as we have
seen, is mission-critical to the continuance of the globalization
process and to elite societal control in general.

It is instructive in this regard to review the history of the radio
industry in 1920s America...

 |       In the 20's there was a battle.  Radio was coming along,
 |   everyone knew it wasn't a marketable product like shoes. It's
 |   gonna be regulated and the question was, who was gonna get hold
 |   of it? Well, there were groups, (church groups, labor unions
 |   were extremely weak and split then, and some student groups)...
 |   who tried to organise to get radio to become a kind of a public
 |   interest phenomenon; but they were just totally smashed. I mean
 |   it was completely commercialized.         - Noam Chomsky

Other nations followed a different track (BBC et al), but this time
around it is the U.S. model that is predominating, as we have
discussed.

The twin _drivers_ in the commercial monopolization process are
_economic necessity_ (squashing competition from independents for
audience attention) and _political necessity_ (maintaining  control
over public opinion).

The _mechanisms_ of domination include concentrated ownership of
infrastructure, licensing bureaucracies, information property rights,
libel laws, pricing structures, creation of artificial distribution
scarcity, and "public interest" censorship rules.  These tactics have
all been used and refined throughout the life of electronic media
technology, starting with radio, and their use can be expected as
part of the cyberspace commercialization process.

Indeed, the first signs of each of these tactics is already becoming
evident.  The U.S. Internet backbone has been privatized;
consolidation of ownership is beginning in Telecom and in ISP
services; WIPO (World Information Property Organization) is setting
down over-restrictive global copyright rules, which the U.S. is
embellishing with draconian criminal penalties; content restrictions
are cropping up all over the world, boosted by ongoing anti-Internet
propaganda; pricing is being turned over increasingly to "market
forces" (where traditional predatory practices can operate); chilling
libel precedents are being set; and moves are afoot to centralize
domain-name registration, beginning what appears to be a slippery
slide toward ISP licensing. And these are still very early days in
the commercialization process.

Consider the U.S. Telecom Reform Bill of 1996.  Theoretically, it is
supposed to lead to "increased competition" - but what does that
mean?.  there is a transition period, during which a determination
must be reached that "competition is occurring".  after that it
becomes a more or less laissez-faire ball game, especially given the
ongoing climate of deregulation and lack of anti-trust enforcement.
There is no going back, no guarantee that if competition fades
regulation will be restored.

Consolidation is permitted both horizontally and vertically - a telco
can expand its territory, and it can be sold/merged with content
(media) companies.  Prices and the definition of services are to be
determined by "the market".  It is well to keep in mind that the
Telecom Bill was pushed through by efforts of telecom and media
majors, and well to interpret "increased competition" in that light.
And it is well to keep in mind that the globalization process tends
to propagate the US media model.

 |       To communications companies, then, the act has been a big
 |   success. The U.S. commercial media system is currently
 |   dominated by a few conglomerates -- Disney, the News
 |   Corporation, G.E., cable giant T.C.I., Universal, Sony, Time
 |   Warner and Viacom -- with annual media sales ranging from $7
 |   billion to $23 billion. These giants are often major players in
 |   broadcast TV, cable TV, film production, music production, book
 |   publishing, magazine publishing, theme parks and retail
 |   operations. The system has a second tier of another fifteen or
 |   so companies, like Gannett, Cox Communications, Dow Jones, The
 |   New York Times Co. and Newhouse's Advance Communications, with
 |   annual sales ranging from $1 billion to $5 billion.
 |       That the 1996 Telecommunications Act's most immediate effect
 |   was to sanctify this concentrated corporate control is not
 |   surprising; its true mission never had anything to do with
 |   increasing competition or empowering consumers.
 |       ...A few crumbs were tossed to "special interest" groups
 |   like schools and hospitals, but only when they didn't interfere
 |   with the pro-business thrust of the legislation.
 |            - Robert W. McChesney, The Nation Digital Edition,
 |              author of Corporate Media and the Threat to Democracy

Just as the media industry is already becoming increasingly
vertically integrated (owning its own distribution infrastructure -
satellites, cables, and the like), so the media industry will seek
mergers and acquisitions in the telecom industry as the digital
network gets closer to implementation.

The ultimate direction is for a single media-communications mega-
industry, dominated by a clique of vertically-integrated majors,
following awesome merger wars among huge conglomerates.  Regulation
will indeed govern cyberspace but - in accordance with the globalist
paradigm - it will be regulation by and for the cartel of majors, as
we see presaged by the following recent announcement:

 |       BRUSSELS (Reuter) -- The European Union's top
 |   telecommunications official called Monday for an international
 |   charter to regulate the Internet and other electronic networks.
 |       "Its role would not be to impose detailed rules, except in
 |   particular circumstances (child pornography, terrorist
 |   networks)," he said.
 |       The charter would recognize existing pacts negotiated within
 |   the World Trade Organization and World Intellectual Property
 |   Organization and draw on principles agreed by other bodies such
 |   as the Group of Seven top industrial countries, he said.

>>From an economic point of view, the whole point of monopolization is
to create an all-the-traffic-will-bear marketplace - where products
are priced on the basis of "How much will the mass consumer pay for
this product?", without a need to consider under-pricing competing
products.  This is the market paradigm that operates today, for
example, in cinemas and in video rentals.  Films compete there on the
basis of consumer interest, not on the basis of price.  Copyrights
are the foundation of this regime, and WIPO is busily implementing an
industrial-grade version of copyright for cyberspace.

Majors _will_ compete with one another, but their competition will be
in the realm of content acquisition - seeking to have the most
successful product offerings, and coverage - seeking to extend their
market territories.  Consumers benefit - this competition brings them
ever more titillating entertainments, but as citizens they are poorly
served - the scope and "message" of their entertainments (and
information) is limited and molded by corporate interests.

WIPO's strict copyright laws basically mean that each consumer must
pay for delivery of each and every media product - it will be illegal
to save a copy (on disk or tape) or to forward a copy to someone
else, and there will be mechanisms (including technical provisions
and surveillance of communications) to provide effective enforcement.

The regulations being laid down for libel, copyright, and pornography
combine to make Internet culture ultimately untenable.  A bulletin
board, for example, could not be run in open mode - there would need
to be, in essence, a bonded professional staff to filter out
submissions to avoid liability to prosecution.  List owners would be
forced to become censors, and to verify contributor's statements as
do newspaper editors.  The open non-economic universe of today's
Internet seems destined to be marginalized just like America's CB-
radio or public-interest broadcasting, thus completing the commercial
domination of cyberspace and the corporate domination of society.

The power of monopolized ownership, in a laissez-faire environment,
translates into the power to define service categories, and to set
prices, according to whatever goals - economic or political - the
owners may have in mind.

The ability to distribute media products at reasonable rates to large
(but not quite mass) audiences translates into the ability to start
up a competing media company - a new film label let's say - with only
production costs standing as the major capitalization required.  This
is exactly the kind of situation media cartels wish to avoid -
discouraging distribution start-ups is what "control over
distribution" is all about.  In the case of television, scarce
bandwidth translated into expensive licenses and the cartel was easy
to maintain.

In the case of cyberspace, the cartel can maintain its traditional
distribution-control by defining services, and setting prices, in
such a way that media-distribution is artificially expensive, and
becomes only cost-effective on a massive scale - requiring massive
distribution capitalization.

In the case of non-commercial group networking, we're talking about
small distribution lists, say less than a thousand.  What do you
think it will cost you to send a message to one person in commercial
cyberspace?  My guess is that the "traffic will bear" about as much
for a one-page message as for a first-class letter.  This may seem
over-priced to you, but so what?  I consider my voice phone service
(and CDs) to be over-priced - c'est la vie in the world of monopoly
market forces.  And the advertising brochure will boast "Get your
message instantly to anyone in the world - all for one flat rate less
than a domestic postage stamp".

At 25 cents/recipient, say, you can see what happens to the Internet
mailing-list phenomenon: a 500-person list carries a $125 posting fee
direct from the poster to the telco.  You can play with the numbers,
talk about receiver-pays, and point out that corporate users will
insist on affordable networking, but it should be nonetheless clear
that monopoly-controlled pricing has the power to totally wrench the
foundations out from under Internet usage patterns.  We could soon be
back in the days when groups and small publications struggled to
scratch together postage for their monthly missives.

The media-com industry will make plenty of money out of 1-1 email
messaging, and plenty of money out of their own commercial products.
Whether or not they want to encourage widespread citizen networking
is entirely up to them - according to their own sovereign
cost/benefit analysis.  If they don't favor it, it won't happen -
except in the same marginalized way that HAM radio operates (only for
people with extra time and money on their hands - talking to each
other mostly about HAM radio).

One can presume that there will be some kind of commercial chat-room/
discussion-group industry, and one can imagine it being monopolized
by online versions of talk radio shows, presided over perhaps by an
Oprah Winfrey, a Ted Koppel or a Larry King - with inset screens for
"randomly selected" guests.  "Online discussion" can thus be turned
into a new kind of media product, and its distribution economics can
be structured to favor the cartel.

The prospects seem dim for both democracy and cyberspace, and
cyberspace itself seems to be more a part of the problem than a part
of the solution - as with many previous technologies.  I will
endeavor to address the question of "What can we do about it?", but
first let's consider a theme of the day: "electronic democracy".


[to be continued]
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Posted by Richard K. Moore - •••@••.••• - PO Box 26   Wexford, Ireland
         http://www.iol.ie/~rkmoore/cyberjournal            (USA Citizen)
  * Non-commercial republication encouraged - Please include this sig *
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