Friday, November 04, 2005

Compensation paradox: Show me the money!

You run a website. You put some effort into publicizing it, and your audience grows. Then—a breakthrough: your site has been featured on slashdot. And in an hour hundreds of new visitors get server errors, as your bandwidth is maxed out for the month.

Monetary infrastructure at first appears orthogonal to the technological infrastructure; but in reality, it's not. Universal free access is impossible, because it ends up being neither free nor universal. Someone has to pay the electricity bill, since the utility company doesn't believe in universal free access. Scalability on the Web is not cheap: underinvestment leads to poor quality of service for everyone.

By adding a monetary component to each transaction, the virtual economy becomes more balanced; several classes of attacks remain possible but simply become too expensive. If every request costs money to originator, denial of service attacks and spam are generally not as profitable as the alternatives. It doesn't matter what currency is involved: hashcash, "play" money with limited supply, or real cents and dollars: the critical step is going from "free" to "almost free".

The problem of payments has been well-researched: Google Scholar returns over a thousand hits for [micropayments]. The best mechanism can be selected in due time; the important thing is that the mistake of ignoring compensation altogether will not be repeated.

On the Web, the task of building scalable web services is difficult and expensive. The goal of the next platform is coming up with the right economical model, the right programming model and the right deployment model so that many services can scale on demand: as more request come in, additional computational resources are provisioned and paid for with the service usage fees, transparently to the operator who doesn't lift a finger and doesn't invest upfront. In a healthy economic climate, many more content and service providers can prosper, and administrators will welcome the slashdot effect, not fear it.

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