[117833] in Cypherpunks
[Fwd: Re: ecash deployment thread (Re: BlackNet Markets -- Organs?
daemon@ATHENA.MIT.EDU (Howie Goodell)
Sun Sep 12 12:39:35 1999
Message-ID: <37DBD51B.BF8B3BFA@mediaone.net>
Date: Sun, 12 Sep 1999 12:30:19 -0400
From: Howie Goodell <goodell@mediaone.net>
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To: Digital Commerce Society of Boston <dcsb@ai.mit.edu>,
cypherpunks <cypherpunks@cyberpass.net>
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Reply-To: Howie Goodell <goodell@mediaone.net>
Hi --
Here's Dr. Odlyzko's response to (my response to) Anonymous's question
about the relationship of the "Marketing 101" principles (in his 9/7
Digital Commerce Society of Boston talk), and the prospects for the
rapid adoption of digital cash. If you follow his link to his
publications (an example of bundling?) you will see the Boston talk
was primarily an update of his 1996 paper, "The Bumpy Road of
Electronic Commerce", which should slake most thirsts.
Take care!
Howie Goodell
-------- Original Message --------
From: Andrew Odlyzko <amo@research.att.com>
Subject: Re: ecash deployment thread (Re: BlackNet Markets -- Organs?
Kidneys?
To: goodell@mediaone.net
CC: rah@shipwright.com
Howie,
Bob Hettinga forwarded your recent cypherpunks posting to the DBS list,
so I just saw it, but probably have not seen all of that discussion
thread. Let me just respond to your comments, then. (Feel free to
forward this message.)
Best regards,
Andrew
> Howie Goodell wrote:
> Note I posted these notes at
> http://people.ne.mediaone.net/goodell/howie/ideas/Dr_Andrew_Odlyzko.html
> As I understand it, Dr. Odlyzko's point is that companies' market
> power and government restrictions will cause the electronic
> marketplace to go somewhere quite different from the "Consumer is
> King" utopia we naively envision. Digital commerce will evolve in
> two directions, neither of which fits anonymous digital cash very
> well:
> 1. Expensive products like airline tickets or cars will be sold with
> complex pricing schemes in which the customer's identity is known.
> 2. Inexpensive products like phone service will be sold by simple
> flat-rate subscriptions in which the customer's identity is
> also known.
> In my much humbler opinion there will also be a large commoditized
> segment, emptor rex, and anonymous credentials *could* provide even
> the beneficial effects of price discrimination (products get produced
> that wouldn't be if uniform pricing is enforced) with far less loss of
> privacy.
> Take care!
> Howie Goodell
> --
Your summary of my views is very accurate. However, those views differ
less from yours than it might appear. I do expect digital cash to play
a
role in the future. That is why I worked on micropayments (even though
some of my papers, such as "The bumpy road of electronic commerce,"
which
cautioned against expectations of "frictionless capitalism," were
written
even before I collaborated with Stas Jarecki on the invention of the
probabilistic polling technique for micropayments). The issue is how
quickly digital cash will grow, and how large a role it will play.
Apparently in my talk I did not tie the two main strands of arguments
together sufficiently. The first strand is that there is a huge inertia
when it comes to payment systems. That's why (oversimplifying a bit) we
in the U.S. use lots of checks, while the Japanese use wads of cash, and
Europeans use Giro accounts. Just think how long it took credit cards
to become widespread. As another example, debit cards in the U.S.
really
took off only after banks started pushing them, usually in the guise of
a minor variant of Visa and Mastercard credit cards. In general, in
addition to the usual chicken-and-egg problem, you need somebody with
a strong vested interest to push a new payment scheme before it gets
accepted quickly. This is true even of obviously useful schemes, such
as credit cards. As another example, it appears that large denomination
coins got accepted only in those countries (Canada, U.K., France, ...)
that eliminated (by government fiat) the equivalent paper bills.
In one of my papers, "The slow evolution of electronic publishing,"
(available at <http://www.research.att.com/~amo/doc/eworld.html>)
I discuss how rapidly new technologies diffuse. Even though there
is a common perception that we live on Internet time, and everything
can change in less than a year, such rates of change are extremely
rare. They are associated either with something truly dramatically
better than alternatives (the Mosaic Web browser is the standard
example) or else some change agent (like a government) that forces
a change. In other cases, it usually takes a decade or two for
wide acceptance. (Just think of credit cards, cell phones, etc.
Even on the Web, just how quickly are things changing? How long
has HTTP 1.1 been the "standard of the future"? How about IPv6?)
The above is the first main strand. The second one you summarized
nicely, about benefits of price discrimination, bundling, etc. What
this strand then does is to eliminate the most likely agents who
might want to push for quick introduction of digital cash. If the
common
perception were true, and the bundles of news stories that we call
newspapers were sold as packages only to overcome the distribution
costs of physical goods, and there was a benefit for news agencies
in selling individual stories, then digital cash would be an essential
enabling technology for such microtransactions. In that scenario,
you could expect content providers to energetically push digital cash.
However, as I attempted to show in most of my talk, these content
providers have just the opposite economic incentives. Thus we are
left with a wonderful digital cash technology that lacks powerful
change agents with an interest in promoting it.
************************************************************************
Andrew Odlyzko amo@research.att.com
AT&T Labs - Research voice: 973-360-8410
http://www.research.att.com/~amo fax: 973-360-8178
************************************************************************
