“The beauty of the Internet is that anyone with a computer and an Internet connection has the power to start a business and make an impact on the world. For those who are driven and passionate, the possibilities are endless. To limit net neutrality would drastically reduce the freedom, openness, and possibility of the Internet as we know it.” – Startups for Net Neutrality
Not only does the issue of Net Neutrality impact the ability of beauty entrepreneurs but it also, impacts the ability of larger and independent brands to bring to market and sustain innovate customer experiences such as Poshly and L’Oréal’s Makeup Genius App.
To date the Internet exists with minimal regulatory oversight. In 2010 the Federal Communications Commission (FCC) attempted to enact and enforce net neutrality regulations, however earlier this year a federal court struck them down. As a result, in May the FCC introduced a proposal allowing broadband providers to charge websites for faster service as long as the arrangements are “commercially reasonable.” The Internet Association was one of 647,000 respondents submitting public comments charging that the proposal would undermine “the Internet’s level playing field” by overshadowing the guiding principle that all information transmitted on the Internet be treated equally.
At the center of the debate is the online video streaming company Netflix. Netflix noticed that their ability to stream content was delayed and videos weren’t being delivered with the same rapidity as they once were to their Comcast subscribers. Once Netflix identified the problem and attempted to find a solution with Comcast, a public battle ensued involving Congress, the FCC, startups, and technology communications companies or Internet Service Providers (ISPs). With no regulatory recourse, Netflix paid Comcast an undisclosed free for the ability to have their access unblocked or speed up allowing customers to quickly stream content, thus creating “fast lanes”. Eventually, those costs were passed along to consumers in the form of a higher monthly fee.
What It Means For The Beauty Industry
Using the social sharing site Instagram as an example we can see the potential hurdles. Instagram users on average share 60 million images every day. In order to provide a cosmetics company’s potential and current customers with images that display quickly and with pristine clarity as they scroll, Instagram relies on bandwidth from a number of ISPs.
To prevent sluggishness in their service, Instagram would know how to include in their overhead costs service fees to every ISP such as Comcast, Verizon, Time Warner, AT&T, Cox, Cable One, and CenturyLink – just to name a few. To make that revenue back, they would, like Netflix, have to either introduce more advertisements into the viewer’s stream and/ or will begin to charge users for access or charge cosmetic companies fees to use the photo sharing site.
While established businesses can afford ISP access fees, what’s a beauty app startup to do? Or what is a new cosmetic entrepreneur do when they want to share their products with their customers but cannot afford the monthly charges to use a social media platform?Or don’t see any benefit in charging their customers with user fees. Challenging competitors with “faster lanes” on the Internet means more business and capital obstacles. Without a competitive environment, there is no incentive for existing players to introduce new features, repair technical bugs, nor to inspire conversation with beauty customers.
Although we have yet to reach this point, the likelihood of this occurring is very much a possibility. What are your thoughts on Net Neutrality? How do you see it impacting entrepreneurship and/or the beauty industry?