Day: March 17, 2009

Would You Pay $12.99 for 5 Hours of Facebook?

/ Adam Nash / 2 Comments

This is a note I meant to post over a week ago, but didn’t get around to it.

The question is, would you pay $12.99 for 5 hours of Facebook?

The reason I ask is, until a couple weeks ago, I would have assumed the answer was no.  Facebook has become the latest in a line of great, free internet products.  It flows open and free, like a trillion pages of Niagara Falls, unimpeded by usage charges.

Then I flew Virgin America to JFK & back.  5-6 hours each way.  And the flights had Wi-Fi.

(The Wi-Fi was fantastic, by the way.  I got a phenomenal amount of work done on the plane, and having live access to email and the web was incredibly useful.  Having realtime access to Twitter wasn’t as useful, but certainly was fun.  I also saw some funny behavior patterns – like people watching live sports on the laptops while their seat-back television was on CNN or CNBC.  Anyway, I digress…)

For $12.99 you got wi-fi… for about 5 hours.  Worth the cost most likely to make the flight productive for work, especially compared to an $8 snack pack.

Next to me on the plan was a woman, likely 20-25 years of age.  As soon as we were allowed to use our laptops, she flipped hers open, paid the $12.99… and went to Facebook.

I was sitting one seat away from her, so I could see what she was doing.  She spent about 3 hours on Facebook, with a small amount of miscellaneous web surfing mixed in.  But it was almost all Facebook.

It was interesting to me, because the economics of Facebook have been fodder for discussion in the Valley for a couple of years now.  And here I was, watching someone pay $12.99 for Facebook.

It then occurred to me how much money the “dumb pipes” of the internet are really making.  How many people upgrade their internet service to broadband because they want to make YouTube faster?  How many people are effectively paying the service providers to access content created by others?  How many people pay charges for internet service at hotels, airports, coffee shops?  To wireless providers, cable providers, satellite providers, phone providers?

It’s an interesting counter-balance to the argument that the service providers give for bandwidth throttling and other pricing power maneuvers.  They would still argue they aren’t getting enough of the pie.

Still, I’m pretty sure that Facebook got 0% of that $12.99.

Makes you realize why AOL actually worked back in the day.  You know, in simpler times.

Two Thoughts on the AIG Bonus Scandal

/ Adam Nash / 2 Comments

I normally don’t comment on politics here, but wanted to share a couple thoughts I had about the recent churn and furor over the $165M in bonuses paid out to approximately 370 employees in the AIG financial products division.  As everyone now knows, this is the same division that apparently ended up with such large unhedged exposure that it required $170B of US government “investment” to prevent global economic collapse.

Now that’s chutzpa.  World record chutzpa.

Obama is pushing hard to get this reversed.  Trouble is, the contracts were signed before the bailout, and Connecticut actually has a law that requires double payment of withheld compensation.  Way to go, worker protection laws.  A couple thoughts:

  1. Avoid Bankruptcy at your own peril.  Our legal & financial system is like a giant, complex distributed system.  As anyone who works on distributed systems knows, common definitions and patterns are essential.  We have a pattern that’s been built over more than a hundred years for having debts greater than ability to pay.  It’s called bankruptcy.

    The problem is, AIG never went bankrupt.  That means all of the common agreements and assumptions, both written and unwritten, about failed businesses no longer apply.  In a bankrupt company, all debts are subject to negotiation, including wages and compensation.  Every state is different, but the lattitude to control the existence of prior contracts is huge.  By not letting AIG go bankrupt, we’ve probably actually limited the number of options we have in this and thousands of other situations tremendously, because there isn’t a hundred+ years of legal precedent for businesses that “should have failed but didn’t because of US government investment”.  Nope.  None.  As a result, a lot of laws that apply to companies that don’t go bankrupt apply here.

    This should be a giant warning flag to anyone who thinks keeping the auto companies in pseudo-bankruptcy is a good idea.  (They themselves are beginning to realize that negotiations with creditors, suppliers, distributors and the UAW are very complicated when you can’t invalidate contracts…)

  2. Sunshine may be the best disinfectant. I’ve heard a variety of proposals on this topic, ranging from the fatalistic (you can’t take the money back) to the extreme (we’ll fire anyone who takes the bonus.)  I’m skeptical that the latter really has teeth (Here.  Take $3M.  Don’t come back!), and I’m concerned the former declares defeat.

    Here is a middle proposal.  Publicity.  Cuomo is right on this one.  Give in to the subpoena. Publicly list the name of every single employee of AIG that receives a bonus over $5000 this year.  Name, Title, City, State.  Give them the option of declining the bonus, or appearing on the list.

    In this economy, with this attention from the public and the government, that list is one place I wouldn’t want my name to be.  It would follow you forever, and that’s assuming the government doesn’t directly target you.

Just a thought.  It might be naive, and I’m not sure of the legality of putting names on a list like that where a lynch mob might literally come out with torches and pitchforks.  But it’s a thought.