In an earlier post I lamented publishing’s near-total silence after a court ruling overturned the U.S. Federal Communications Commission’s “net neutrality” rules. There, I claimed that “access to the internet could soon be determined by the companies [publishers] fear most.”
“VC Pitches In A Year Or Two”
Most publishers are too preoccupied with their traditional models to care about net neutrality. For those who are listening, I can recommend “VC pitches in a year or two“, a sobering post from venture capitalist Fred Wilson.
In it, Wilson presents three hypothetical conversations between a potential funder and a startup looking for capital. The first case looks at a better music streaming service whose founders are told that Spotify, Beats and Apple have bought market access, allowing them to offer their services for free.
The second entrepreneur, planning a curated collection of humorous videos, hears that “YouTube, Hulu, and Netflix have paid all the telcos so that their services are free via a sponsored data plan.” The end result: no innovative entrant gains access.
Wilson’s final example describes a launch that lets friends ‘disappear’ popular photos, a kind of Snapchat in reverse. The venture capital response? Nice try, but since “Facebook, Instagram, Twitter, and Snapchat have paid the telcos so the photos that are served up in their apps don’t use up any of the data plan”, we’re not going to fund you.
Net Neutrality: Implications for Publishers
The close to Wilson’s post makes my own concern look optimistic:
This is Internet 3.0. With yesterday’s court ruling saying that the FCC can not implement the net neutrality rules they adopted a while back, this nightmare is a likely reality. Telcos will pick their preferred partners, subsidize the data costs for those apps, and make it much harder for new entrants to compete with the incumbents.
Imagine an environment in which the platform subsidizes the cost of distributing eBooks. Wouldn’t that give the platform a first-mover advantage? If you don’t know the answer, feel free join the rest of us in guessing whether Amazon’s share of the eBook market in the United States is north of 70%, 80% or 90% of titles sold.
File this under the heading, “Just because you’re paranoid doesn’t mean they aren’t after you“.