> The problem is that this arrangement would have businesses paying money to ISPs that they didn't choose, and can't walk away from. From a consumer's perspective, if a web site is slow, it looks like the website's fault rather than their ISP's fault, which distorts the incentives.
If a website is using significant resources, it shouldn't be on the ISP to subsidize their engineering. There have been plenty of websites throughout history that took up significant amounts of traffic relative to the total traffic. They always paid for leased lines (your third diagram) -- it's only recently that one very well liked company running almost entirely off Amazon decided that leased lines were extortion. If you compare the physical infrastructure of Google's YouTube or MLB.tv to Netflix, the difference is huge.
Also, money doesn't always flow like that. If data is flowing equally (in bit-miles), there is generally no exchange of money. If it's not, money should flow the other way. Many of those backbone providers also were in the business-ISP market, and were leveraging their settlement free peering for more competitive pricing. When video streaming caused them to be pushing more data onto the networks than they were taking - the consumer ISPs wanted to be paid since it was no longer qualifying for settlement free.