Playing massive multipayer online

Having written before about the trend towards web-based a.k.a cloud computing it's time to examine the green back of the issue: l'argent.

Business case: You are CEO of a large-ish software company. Your customers are twenty- and thirtysomething tech-savvy broadband users.

Option one is to go to the trouble of having plastic discs distributed with your software, including release-time bugs imprinted on them, and let users rip, I mean install and store them. One copy per customer, many users per copy. They pay you once, you bleed for years. Okay. You know this, you've been doing it for years, but it is a sub-optimal state of affairs to say the least.

Now option number two is to take a leaf out of the book of MMO games. You may distribute discs, but basically your software is either online or useless without a live connection. To use this software people pay a monthly fee. You now have subscibers, a.k.a. massively multipaying customers, tied in to your product for years to come. You invest once per version, and cash in for years. It requires a lot of upfront investment in datacenters, expertise and some reading up on how to protect your systems, but once your good to go you can start earning in earnest.

My oh my what to pick? Decisions, decisions... Option two!

Of course the above is a huge oversimplification, but the point is clear: delivering online is a very attractive model for software developers, because of the steady income of subscriber fees and the sterling piracy protection. No wonder everyone from Microsoft to garage startups are into this one: it's a sure thing. Everything from Office software to games (especially games) is now offered trough the internet for the low, low price of 1/Xth of a retail software DVD per month.
In other words, within x+1 months you, the kind customer, will have been skinned, used, abused, shaken out and taken for a ride by your friendly neighborhood software giant. On the other hand, if there is a significant upgrade around every x months you'll be better off, purely looking at the cost of owning software.

Fun detail: Software houses get to sue each other's socks off now that one has a patent for delivering gaming as a service¹.

But the multipaying doesn't quite end there. Two common species of tech company, the Internet Service Provider or ISP and the Content Delivery Network or CDN are waiting in the wings to go all Ebenezer on your wallet. You have to pay for your internet connection before you can use online software, that's where the ISP comes in. CDN's such as Akamai make sure the content you crave is delivered to a server near you^tm for easy downloading.

Now the ISP, thinking tuppence is tuppence, would like to charge both you and the CDN for the use of bandwidth, and/or would like to charge you a 'special rate' for using 'special services' such as online gaming, video and music. Instead of selling bandwidth as 'fast internet', ISP's want to sell the right to transfer a certain amount of data to and from your computer. As everything becomes more web based do you think your data usage will go up or down?

Now to be fair to the poor ISP's, when they started to attract customers with 'high-speed' a.k.a. broadband connections they didn't figure that people would actually use that bandwidth to have a very different online experience than they did using dial-up connections. So whereas the ISP thought it could sell it's capacity with a huge amount of overbooking, the reality turned out to be that their margins are threatened by people who live online and get everything, including their software and content, trough their broadband internet connection. Customers can and do use up a lot of what the ISP can give in terms of throughput by watching Bad Romance again and again while Skyping all their friends at the same time and listening to Grooveshark.

So who pays for what? Content providers pay content delivery networks who pay internet service providers. Customers pay content providers and internet service providers. Service providers win, customers loose, content providers and delivery networks do okay. Welcome to the internet, MMO-style.

The next step after the current death of net neutrality (it's nearly done, hippies, I'm sorry) is an internet fenced in by regulations and divided by selective bandwidth allocation. The government will let you watch wikipedia but not wikileaks, not without knowing proxy-fu. The ISP lets you watch youtube but not netflix, not without extra cash. Depressing, isn't it?

The good news is that the pendulum will swing back again. Especially once quantum computing and communication have been properly implemented, I cannot see a lot of censure going on by either government or commerce. Until then, the days of internet freedom are over for most of us, but, looking at the bright side: we do get to contribute a lot.