[ih] History of the Economics of the Internet?

[Scott Bradner]

this covers some of the current discussions over the Internet's economic model 
within the regulatory world (at least in the US)

https://isoclive.substack.com/p/fcc-ip-transition

Scott

> On Jul 30, 2026, at 1:38 PM, Jack Haverty via Internet-history <internet-history at elists.isoc.org> wrote:
> 
> Good questions!  Adding some more...
> 
> The Economics of The Internet seems to be pretty complicated.  In the ARPANET era, ARPA paid for everything.   When NSF joined in they created the notion of ISPs with their mandate to become self-sufficient or die.  I'm not sure it's true worldwide, but from what I've seen the "flat rate" model for ISPs is pretty common, with levels of service (and cost) perhaps tied to maximum speed rather than usage.   I'm not sure if satellite services still have "usage caps" to limit consumption.
> 
> But I think the economics are more complex than just the ISP payments.  If you think about the typical human sitting at a desktop or using a phone to do something on the Internet, the economics have become complicated over time.  That human does pay one or more ISPs to use the Internet.  But that's not the only monetary flow involved.
> 
> If you're the human, you use the Internet to get something you want, e.g., a document, email, news article, video, teleconference, etc. When the content you want arrives on your screen, you've paid someone, including the ISP, to get at that content.  Perhaps you needed to pay for the content or have a subscription to something in order to have it appear on your screen.
> 
> But in addition to whatever you wanted, part of your screen fills up with other stuff that you didn't ask for at all.  Someone else wants you to see that content, and they've also paid someone to create and deliver it to your screen.  That's the basis of the advertising industry on The Internet.
> 
> In effect, when you use the Internet, your screen real estate is used by multiple users.  You may think you're the user, paying to your ISP for Internet service.    But there are also possibly many other "users" paying someone for the use of some part of your screen for some period of time.
> 
> The Internet also seems to be stuck in a "subscription" mode of its economics.  Everyone wants you to pay every month for something. ISPs demand monthly payments, no matter how much you use the 'net. Web sites offering news articles demand monthly payments in order to see more than the headline.
> 
> This economic model of The Internet has evolved over its life, from the early days when ARPA paid for all to today.  That story would be the "History of the Economics of the Internet".
> 
> I fear the time if and when The Internet takes over the restaurant business.  Can you imagine restaurants with a subscription "all you can eat, all the time" business model?   Your favorite Italian restaurant will deliver as much great food as you want whenever you want it, as long as you pay them the monthly fee.  If you sometimes instead want Chinese, that's also available, but only if you also subscribe to the Chinese restaurant.   Same with Mexican, Fast Food, or all the other "content" that's available.
> 
> Over time, I think the economic model of the Internet has changed, with new monetary flows being introduced and new "users" present in every use of the 'net.  The "why", "when" and "how" of that evolution would be an interesting aspect of Internet History.   It will change in the future also, as that article I mentioned predicts ( https://www.fastcompany.com/91579817/dead-internet-theory-is-real-web-agents )   Understanding the history may be important.
> 
> /Jack Haverty
> 
> 
> 
> On 7/28/26 17:35, Brian E Carpenter wrote:
>> I think there are some really interesting economic questions, such as:
>> 
>> - why did advertising, and charging for domain names, become major factors in Internet economics?
>> - how has the design of BGP4 affected carrier economics (competition vs collaboration)?
>> - why did flat-rate charging become the dominant model for ISPs?
>> - what fractions of application layer revenue come from advertising, subscriptions, pay-per-view, etc?
>> - why does anyone trust cryptocurrency?
>> - how will AI change Internet economics?
>> 
>> I think email and spam are actually minor, economically speaking.
>> 
>> Regards/Ngā mihi
>>    Brian Carpenter
>> 
>> On 29-Jul-26 08:39, Jack Haverty via Internet-history wrote:
>>> On 7/25/26 15:39, Ofer Inbar via Internet-history wrote:
>>>> On Sat, Jul 18, 2026 at 12:51:04PM -0700,
>>>> Jack Haverty via Internet-history <internet-history at elists.isoc.org> wrote:
>>>>> Over the last decade or two, I've suggested, several times, to
>>>>> several ISOC administrations, that ISOC "walk the walk" with email
>>>>> by serving as a prominent example of "how to do email right".   That
>>>>> of course might require policies to possibly be changed, technical
>>>>> flaws to be addressed, educational efforts, and even perhaps
>>>>> governments' actions.
>>>>> 
>>>>> Most Internet users today likely experience things like phishing
>>>>> attacks, emails with forged sources, and other such effects that
>>>>> make email untrustworthy in their views.   Most of the Internet
>>>>> users have no idea how to protect themselves from such attacks.
>>>>>    Most regulatory and government authorities seem to have no idea
>>>>> what, if anything, they can do about it.
>>>> A majority of younger Internet users (at least in the English speaking
>>>> world I'm familiar with) - perhaps not an overwhelming majority, but
>>>> quite certainly a majority - simply do not use email to communicate.
>>>> They use it to verify their address for accounts, they use it to check
>>>> for a specific thing that they know is going to be sent to them by
>>>> email and that they know they want to see, and most of the rest of the
>>>> time, they let their email pile up and they ignore nearly all of it.
>>>> 
>>>> To actually stay in touch with friends, family, coworkers, groups
>>>> they're part of, etc. - all the things email used to be for - they
>>>> use messaging apps.  Discord, Facebook, Slack Instagram, and more
>>>> like that.  Or SMS/RCS phone texts.
>>>> 
>>>> All of the various problems with email today, including the ones you
>>>> listed, are I think dwarfed by one big one that has caused this:
>>>> spam.  This includes both scattershot scam-oriented spam, but also
>>>> lots of lists that sign you up without asking permission.  You donate
>>>> to a political candidate, and some sleazy "grassroots" database starts
>>>> selling your address to loads of other campaigns of the same party.
>>>> You pay for a meal at a restaurant with your phone, enter the email
>>>> address for your receipt, and now not only are you on the email list
>>>> for that restaurant, but also the next cafe or ice cream place or
>>>> whatever where the payment system recognizes your card and offers
>>>> to email your receipt and you didn't notice the small checkbox to
>>>> opt out of signing up.  You RSVP to an event on some sleazy site like
>>>> eventbrite, and now you're on several mailing lists for similar events.
>>>> 
>>>> The majority of email is assumed to be spam or otherwise irrelevant,
>>>> by people whose experience of email started after the explosion of
>>>> spam that I described above.  They never knew what it was like for
>>>> email to be relevant and worth checking, so they don't think of it
>>>> as relevant or worth checking.  Knowing this, they also don't think
>>>> it's a useful way to communicate with anyone they know.
>>>>     -- Cos
>>> 
>>> You're absolutely right.  The email world has fragmented into a gaggle
>>> of separate "messaging" services.  In the beginning, email was a
>>> universal service, and even "being on the 'net" meant that you had an
>>> ARPANET email address.  Even when other mail services were in use, e.g.,
>>> UUCP or even MCIMail, there were sometimes arcane ways to interoperate,
>>> using %, !, and the like to glue two messaging worlds together.  Today,
>>> there are lots of ways for people to communicate, and I've found few
>>> ways to make them work together.   The history of that evolution might
>>> be an interesting topic for some historian.
>>> 
>>> Spam is certainly an issue.  For history's benefit, spam was well known
>>> as an issue even in the early 1970s when email started on the ARPANET.
>>> Licklider at MIT pointed out (to me at least while we were implementing
>>> email) that every system needs some kind of "negative feedback" to be
>>> stable.   Engineers know this, whether they're building electronic stuff
>>> or steam engines a century ago.
>>> 
>>> Use of some resource, such as email, must have some "cost" associated
>>> with its use, to prevent rampant overuse.   We actually tried to
>>> introduce the notion of "stamps" to the develolping email standards in
>>> the 1970s to provide a form of negative feedback.  Even just a limit on
>>> the number of emails that one address could send over some time period
>>> would exert back pressure.
>>> 
>>> All such proposals were soundly rejected by the research community.  So
>>> no backpressure scheme was created and today it costs virtually nothing
>>> to send out hundreds or thousands of emails.   So corporations,
>>> politicians, charities, and entrepreneurs send them. Same with
>>> advertising, which does have a cost to the advertiser but little cost to
>>> the company injecting ads into web pages.  Most of such stuff would be
>>> considered spam by the recipients, to be scrolled past as quickly as you
>>> can.
>>> 
>>> This is all just one part of a larger History of Internet Economics, and
>>> it goes far beyond just email.  Yesterday I saw an article about the
>>> "dead internet theory" which characterizes the recent emergence of AI
>>> agents as disrupting the economics of the Internet as we've known it.
>>> See
>>> https://www.fastcompany.com/91579817/dead-internet-theory-is-real-web-agents 
>>> if you're interested.   The economics of the Internet are now breaking
>>> again and no one knows what comes next.
>>> 
>>> For example, I recall hearing presentations at some conference in the
>>> early 1990s about "micropayments" and the technical ideas and progress
>>> which were currently being tested.  Yet today, we are all barraged with
>>> content that we can't access unless we subscribe to something. Everyone
>>> wants a subscription and the continuous revenue stream it would bring -
>>> similar to the "all you can eat" philosophy sometimes used by
>>> restaurants if only for special events. Micropayments were touted as
>>> alternatives to subscriptions, so an Internet user could pay for one
>>> "meal" (article) at a time instead of committing to weeks or months of
>>> all-you-can-eat content.
>>> 
>>> What happened to micropayments?
>>> 
>>> Any economists out there?  Perhaps someone can relate the history and
>>> timeline of how the Internet Economy has evolved over the decades?   Is
>>> The Internet dying?
>>> 
>>> /Jack Haverty
>>> 
>>> 
>>> 
>>> 
> 
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