Monday, December 24. 2007Economics of the Aethernet
I am usually a great fan of the Economist's Tech sections, as they so often have their fingers on the pulse and it's almost as well written as broadstuff
....but on reading this piece today I was left spluttering into my latte...its quite vague by their standards. Marc Andreessen has voiced some major concerns on this piece....I don't think it's that bad, and he is underplaying the bandwidth issue imho - but then he would, wouldn't he Anyway, I wanted to pick up these key points as predictions of Points of Conflict going forward: First, the impact of Rich Media and Poor Pirates.... Legal or otherwise, swapping multi-gigabyte high-definition video and movie files is becoming increasingly common. And not just for TV - I pointed to a similar problem in the photo-images market following the Lane Hartwell/Richter Scale hoo-ha. We must expect to see advert based, and other offset based business models increasing on the net in 2008 and directly attacking all the rich media areas - this too will be a Big Thing Secondly, who shall pay....
Yes and no.....yes the video traffic is increasing, but I cannot recall how many presentations I have sat in over the last few years talking about the bandwidth glut that was built in the Millenium Buggeration period. What is more germane is that the battle about who will pay for switching on the bandwidth will become up close and personal in 2008, as the Telcos do feel that Service Co's make billions from "Free Ride" economics over their pipes with the emergent rich media services. We can confidently predict that all the resultant issues - throttling, net neutrality etc etc - will not go away in 2008 either. Thirdly, the emerging play for the Aether-'Net Earlier this month, Google bid for the most desirable chunk (known as C-block) of the 700-megahertz wireless spectrum being auctioned off by the Federal Communications Commission (FCC) in late January 2008. The 700-megahertz frequencies used by channels 52 to 69 of analog television are being freed up by the switch to all-digital broadcasting in February 2009. OK, Google hasn't actually bid yet...but its a sign of something else we pointed to that will start to be an issue going forward - ie that a lot of companies are looking at the Oligopolic and sadly Ossified Planet Mobile with covetous eyes, and see the auction of old analog TV spectrum as a chance to by-pass them - risk is is all we get are other different monopolists. And its not just the US, these are coming free in many countries over the next few years, UK included. Personally I'm a convert to Lawrence Lessig's view that we should open these spectra to a managed commons, as that - like the Open FixedNet - has been shown to drive the best innovation over the last 10 years. The US seems far ahead of us in the UK in lobbying for this, sadly. Fourth, the continued impact of Open Source: Pundits agree: neither Microsoft nor Apple can compete at the new price points being plumbed by companies looking to cut costs. With open-source software maturing fast, Linux, OpenOffice, Firefox, MySQL, Evolution, Pidgin and some 23,000 other Linux applications available for free seem more than ready to fill that gap. By some reckonings, Linux fans will soon outnumber Macintosh addicts. Linus Torvalds should be rightly proud Without doubt this will be a continuing impact in the back-end Infrastructure layers - I don't know about 2008 for the Presentation Layer (to consumers) though...Linux is still present in only a tiny number of consumer facing devices (as the BBC admitted to its cost judging by the wails of the Linoids) Fifth, the true Millenium Bugs: millions of gadgets are joining the human hordes. Any gizmo worth its silicon these days has its own internet connection—so it can update itself automatically, communicate autonomously with other digital species, and anticipate its user’s every whim. This is a slow burn for 2008, but as Moore's Law brings prices down, this will be a very big play - work we did earlier this year in work on the Digital Home and Digital City projects showed that as staged price points whole ranges of devices will want to start having conversations with you. You think you're being nagged by Big Brother now, just wait till all these little buggers get online Saturday, December 22. 2007At last - a business model for blogging !
From FakeSteve on the subject of Think Secret's settlement with Apple to stop blogging
Follow in the brave footsteps of Nick Ciarelli. Strike a blow for freedom of the press. Become a standard-bearer for journalists everywhere. Accept money in exchange for shutting the fuck up. Stick it to the man, baby. EFF lawyers are standing by, ready to take your calls. Update.....apparently many bloggers were taken in and thought this Fake Steve article impled FSJ would actually sell to Apple for silence. Must say I thought it was unlikely. There goes a darn good business model Predicting the future of Media
Interesting post from Dave Winer about a bet made 5 years ago re the future of media, in 2002:
So, 2007 has rolled around and the results are about even (see here), but there is a strong probability that the NYT would have cleared the boards if the paywall had been down earlier (and in 2007 Wikipedia - effectively nonexistent in 2002) - took more hits on the subjexts than either NYT or. However, I wanted to pick up two other points that he mentions in his summary: The world that I hoped would come about did not. While blogs have broken many stories, they have not, in general, turned into the authoritative sources I hoped they would in 2002. When the blogosphere resembles journalism it's often the tabloid kind. This actually doesn't surprise - if you look at the history of new media it tends to go populist first.......I'm actually surprised there's been so much good stuff and relatively little porn ! The interesting thing is that Winer predicted a duopoly, but in fact what seems to be happening is that the MSM is starting to take on blogging characteristics. As Bill Gates once noted, revolutions are always a little underwhelming in 2 years, but in 10 years the impact is revolutionary There was also an interesting point in the original predictions: The pervasive big publishing philosophy of Dumb It Down, forces all stories through too narrow a channel to model the diverse and complex world we live in. When the Times covers my industry it seems they only know three stories -- Microsoft is evil, Java is the future (or open source or whatever the topic du jour is) and Apple is dead. Now its Google who is Evil, Apple are the Future, and Microsoft is dead..... Time passes eh Friday, December 21. 2007The *Real* Semantic Web
Mike Masnik at Techdirt shows how various WebCos are trying to patent words in webspace - here is Amaxzon with "blurbs":
The details show that the patent is for personalizing these "blurbs," but it's difficult to see what's patentable here. Reading through the claims, there doesn't seem to be anything that's new here. All it's really doing is creating personalized blogs based on a combination of external blog content, catalog content and user reviews. In other words, it's aggregating a personal feed of content from a variety of sources (Didn't Technorati do Blurbs...will Amazon sue?) This joins Google with "Snippets": "methods and systems for generating textual information," ..and there was Flickr with "Interestingness". I wonder if Twitter has patented "Tweets" ? It is actually a bit worrying with all these Web Co's trying to pass off their various messaging processes as patents - but its even worse that they are trying to patent them with naff words I suspect this marks a new wheeze in patent lawyerdom - given that you probably can't patent the messaging per se due to prior art, or trademark the words, you can patent the combo of process and word you use to describe it. Anyway, its very clear that we will be probably having semantic skirmishes fairly soon as no doubt everyone will rush to patent their semantic shiftiness So this is how the Semantic Web will be done..... The commercial irrationality of professional photographers
If you've been reading this blog over the last week, you'll know we've been following the very interesting copyright / fair use issues brought up by the Lane Hartwell / Richter Scales saga. I won't recap on all the rights stuff in this post, but readers can go to these previous posts for the start, the middle, the end and the next churn of this tale.
However, TechCrunch wrote a summary post on all this last night, and I was most struck by some of the resulting comments from photographers and their supporters , which seemed tantamount to economic and commercial irrationality of the first order. I won't quote individual people, but to summarise their position it seems to be that the logic is:
Leaving aside the issues around point (iii) which have exercised us all over the last week for the moment, I am increasingly left scratching my head about the the mental model in points (i) and (ii) - it strikes me that Photography is a part of the media industry in even greater denial than music, movies and print. Consider the economic background in which this little tableaux is being played. - The cost of content capture has gone down by 2-3 orders of magnitude - we all take snaps on mobile cameras now, and the intelligence of these devices has ramped up quality In other words, the industry is commoditising hugely, so the value of any individual photo must have fallen significantly over the last few years, unless it has some unique subject or art that differentiates it. If not, the market value of any bog standard photo, when it is competing with a huge number of similar images, must be near-zero. So sadly, the wish to make a living as a photographer may fly in the face of economic reality today, unless the photographs are of some rare merit, subject or some other "USP". However, by definition that will be rare - so point (iii) - Copyright - is increasingly being (ab)used to create an artificial barrier for the bulk of commodity images (as it is in Music and Video as well). Leaving aside the point that this is not what the point of copyright is, just look at the history of trying to extort value from something that is a commodity by using artificial barriers. A cursory study of this in related areas shows that it seldom works in the medium term, and won't even work in the short term if there are alternatives - and boy, are there alternatives. Added to that is the odd behaviour of the photographer as a service provider - in nearly every service business I have worked in, the idea is to make it very easy for the customer to use you - here the gig seems to be to make it harder for a customer, even when there are near free alternatives available. However, the value of something you won't buy is actually zero. In fact, it seems that the value to these photos is only added when someone else does use them and creates the value - eg in the Richter Scales example. Clearly, any system where monopoly rents are extorted when others create the value is just not going to work if there are alternatives Not only that, but for any individual photographic service provider, there seems to be a total unwillingness to allow "taster" or "teaser" work to be samples, In every other service industry I know of, people give away sprats to catch mackerels. And lastly, a very good point is made by Michael Gray in this post re reputation management - Lane Hartwell's Google reputation is going to brand her as a "difficult" person to do business with for a long, long time as in the online world you play globally, and the memory is persistent. And in a world of choice, we tend to not choose "difficult" people Seems to me that pro photography is a non sustainable business as is, certainly at the jouneyman level, and needs to change its ways radically to survive. In this respect its no different to any other media. And then I thought about how Pro Photography would work if it worked like any other service business I know. - You'd give way samples - use my photos for X impressions, help yourself. Lets talk if the volume hits huge levels and you can afford to pay me Sorry Lane et al, that's actually how service businesses work in every other area where competition exists. (To be fair, I suspect that is how many photographers work in reality) Update - Looks like Mike Masnik at Techdirt went through much the same thought pattern at much the same time as I did - but Mike added in something I had decided to omit ie that we consultants are in the same boat...stuff gets reused by others all the time. As Mike points out, we don't mind, for many reasons. In fact we want people to use our stuff sometimes...all these photographers could do well by reading this paper of ours on new media economics for example. But there is something Mike omits too - much of the really high value stuff we just don't put up on the blog...its as simple as that. If we put up all our reports on the blog, we're not naive enough to think people would drop £1,000 wodges on us each time they took some. Update II - Paul Kedrowsky makes a parallel point re the Hollywood Scriptwriting hoo-ha - at just the time TV is under threat, this is not the time to drive off your audience. Shutterbugs could usefully learn a similar lesson, esp in the light of Mike Butcher's comment below.
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Ambient Intimacy meets Reality Mining
There is an interesting article from Sandy Pentland of MIT (pointer via Nick Carr).
The subject is Reality Mining:
So far so good...in fact Telcos have been doing this for decades (remember Friends and Family), and the Mobile aspect has been around awhile so no surprises there. However, predicting what an individual will do next is emergent - the sheer processing power and data required has made this impractical in the past. But here's where it gets even more interesting... Just look at a cell phone. It knows where you are, and this is obviously sort of useful. But the generalization is that maybe it can know lots of things about you. Take your Facebook friends as an example. The phone could know which ones you socialize with in person, which ones are your work friends, and which friends you've never seen in your life. That's an interesting distinction, and reality mining can make it automatic. It's about making the "dumb" information-technology infrastructure know something about your social life. All this sort-of Web 2.0 stuff is nice, but you have to type stuff in ... This reminds me of the thoughts I had when I was listening to Leisa Reichelt talk about Ambient Intimacy at FOWA, ie the "intimacy filters" are just too coarse today. We had earlier done a piece of work on what we called a "Multimedia Directory", ie something that links all the directories you have into one system. I was well aware of the level of analysis a network operator can apply to a social net then, so at the time I wrote: ....If presence data is persistently out there, it means others can potentially see every 'phatic transaction you ever made, a thing which we humans have devised a huge number of routines around keeping fairly private in real life - or at least we have always worked in social nets where it is non persistent so memory fades (so I can't count the number of times Leisa poked Jyri rather than me in the last 10 years, for example) - so making it extremely clear where we stand with each other in relation to others is potentially quite explosive. In a way Twitter measuring all the @xxxx links is an early day implementation of these concepts However, reading this article tonight has pushed my thinking further. If you take the transactions going on by definition in any ambient intimacy world, deep monitor the way you attend to the stimuli, and hit the events with reality mining, you get a system which is Beacon on steroids (Beacon does not yet see your ambient comms across all media). And as Pentland notes: "The people making policies don't know what is [technologically] possible, and they don't necessarily make policies that are in our best interest ... These capabilities are coming, but we have to come to a new deal. It doesn't do any good to stick your head in the sand about it." And as we have learned with Facebook Beacon, there are people who are fully aware of what these systems can do, and are desperate to do it despite "smart user" concerns as it is clear the rank and file don't know / don't care. Thus I think we need to start to think very clearly of how to obfuscate our ambient intimacy tracks, because UM / SocNet systems like Twitter and Jaiku are the start of these sorts of systems, and if Facebook, Google, or even Yahoo can get their hands on your composite online and telephone activity together, then, as Nick notes: The commercial value of reality mining is far too great to restrict the technique to the ivory tower. The resulting intrusions into personal privacy could well be dramatic
Posted by Alan Patrick
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Thursday, December 20. 2007Web 1.0 to Web 2.0 - Transformation in Finance sector
Today marks the next step in transforming a business from a Print / Web 1.0 world into an integrated Web 2.0 world.
Today the Moneywise Online website launched in a "public alpha", moving print content from Moneywise magazine online. Its been built in Drupal and other open source components. The initial "Broadband Web" elements we have incorporated are the blogs, Web TV advice, and a community forum (aka a Social Network in this day and age). The idea is to get the basics up early, and iterate as the new features come onstream and customer feedback helps define the direction This follows the launch a few weeks ago of iBall, a (now daily) WebTV service covering investment news. When we started this transformation work several months ago, it was clear that the Investing and Personal Finance sectors had great potential in Web 2.0, and its been interesting watching the developments of startups in the space, such as Wesabe and Mint winning TechCrunch 40 awards, and Kublax in the SeedCamp arena. I now note people like Fred Wilson are noting the sector is getting interesting. There are many interesting lessons in taking a major existing web player from a "Web 1.0" to a "Web 2.0" environment for anyone looking at Enterprise 2.0 transformation, but the ones that stand out for me in this early period are: (i) You have to be your own startup - the scary competition are going to be focussed, nimble startups using other people's money to get big or go bust. That dynamic has to be matched, as that is their core advantage. An established players' advantage is existing infrastructure and customer base - ie cost of launch of a new service is lower, and (potentially) initial traction is far higher - so long as extraneous costs are minimised. The other interesting thing in such a Transformation is it has to be done while ensuring the business as usual keeps on bringing in the readies, so there are far more diversions on a management teams' time.
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Here comes another lawyer?
Omigod.....Its* not over yet....the Photographer's RIAA Appreciation Society (aka PDN) has rushed to the defence of its own (pointer courtesy BoomTown), and alleges that other photographers are Deeply Upset and may Even Sue. Clearly attribution is insufficient, and only cold hard cash will do.
This is actually highlighting a very important issue, as sorting out how copyright and fair usage works in the online medium is going to a major driver - or inhibitor - of the development of media going forward. What is being continually (and conveniently) forgotten by the shutterbugs here is that copyright is not a licence of total control over all distribution, its a balance between incentive to create and allowing others to stand on the shoulders of what has gone before. Now a lot of the Photomafia has wailed about the ethics of all this (without, I submit, a lot of knowledge of the history of copyright law), but I think we need to turn it around - i.e. how can anyone argue for the ethics of being able to stop significant creative effort via having a veto (automatic takedown) if a marginal work of total commodity value (eg snapshot of something that is available in large measure in the public domain anyway) is used for a non-material proportion of that work. (Addendum - the strategic issue imho is this - in most cases, these photos are actually of minimal value, as plenty of alternatives exist in the open market and substitution costs are minimal - but this worked when content capture, search and transaction costs were high. However, the broadband 'Net has reduced these costs by 2 orders of magnitude, so the shutterbugs are now trying to protect pricing that is just not sustainable in the new market. To do so they are attempting to (ab)use copyright law to create an artificial barrier. Its just not sustainable I'm afraid, in a world of User Generated Content, Online search and digital media. One could in fact argue that the only reason this picture of Lane Hartwell's had any value was because Richter Scales used it. ) What I would also like to raise is the ethics around whether the images of the subjects of these photos, often snapped without release of their copyright, with minimal artistic input, should actually legally be sold for profit.** One of the benefits of a digital world is that the original content creator (that's YOU) can find these shutterbugs and take them to task for unauthorised plagiarism of your lifework. One can hardly argue there is parody, transformation or marginal usage in a snapshot, so it ain't Fair Use It would be interesting to sue the photographers for attempting to sell these works as well without paying you your due. And the legal argument over that would be interesting when applied to that of re-use of he images in, say a further derivative work like a video. * The Lane Hartwell/Richter Scales Saga, that is **One could argue that this practice, ethically, is somewhat akin to people who "sit" on url names - the words existed before them, they have just taken the .com and assigned themselves the rights to use the name. The difference is that in the case of photos there is usually an alternative source, so the "monopoly rents" are minimal. Wednesday, December 19. 2007VC or not VC....starting up in London 2008
Mike Butcher has written a very good article on the London VC / startup scene over at TechCrunch UK. Some excerpts and some comments:
A few VC firms are starting to realise they have boards packed with people who don’t contribute anything to the bottom line of the firm and aren’t actually able to keep up with the fast pace of developments in the market today. If you are a startup looking for VC backing, look into who is on the board. If the board has people on it who reflect the right kind of knowledge about the broad issues of entrepreneurship and the tech market then this is a good sign. If it is stuffed with a lot of old suits who did well in the 80s but barely understood Fax machines when they launched, think again. Perhaps that sounds harsh but these are the people your personal VC contact may have to convince about your startup. I think this is a very pertinent point, I would add that an entrepreneur should also be very wary about who they wish to put on your board, and also who they may want to send in as advisors - I have seen some serious damage done in this way - still makes me cross thinking about some of 'em Advertising, despite many nay-sayers, is going to be a deeply interesting business model for some time to come. The simply fact is that there remains billions of dollars which have not been spent online, but which economic issues like the credit crunch will start to push online. Why? Because online is measurable, off-line it is not. Exactly...the issue right now is not metrics per se (there are gazillions of 'em, if anything its the choice that confuses) but understanding what those metrics actually mean, which are key, how to use them predictively etc. However, there are some things to know:
In other words, advertising in a me-too will not work unless there is serious traction - for e.g our analysis show that Web TV is getting CPM's nearly 2 orders of magnitude higher than Social Networks (thus its odd that the relative valuations are inverted - fashion plays a bigger role in this arena than many acknowledge) But the smart ‘western’ startups are finding ways of working in a pan-European manner. I have lost count of the startups I have met in continental Europe who say things like “Our head offiice is in Copenhagen, but our developers are in Warsaw, our VCs are in London and we have a biz-dev office in San Francisco”. Outside of the US, all of these people are an hour or so away on a plane (remember to carbon offset your flight though!). It is precisely this “Think Europe” attitude which I personally would like to see more UK startups take on board (I will not bother lecturing my Irish friends about this - by and large they already do it). I don't know if anyone has read "The World is Flat" or books of similar ilk, but the real advice is to Go East, but don't stop at Slovakia - keep on going, that's where tomorrow's customers are. But let’s be in no doubt that the era of turning up to an OpenCoffee event in a loud shirt, talking loudly about “Web2″ and your social networking startup for owners of three-legged dogs is pretty much over. The same goes for the guys who have a great idea marketing to Gap year students who want to blog their trip… Did I tell you about our silent mode startup selling loud shirts to Gap year students via social network blogs Fred Destin, VC with Atlas Ventures, says “brace yourselves for a tough 2008“. His view is that investors have done a lot of deals in the last two years and now what faces them is a period of uncertainty. That means entrepreneurs need to get tough and “make their cash work even harder.” In other words getting funded is still going to be like getting blood out of a stone Couldn't possible happen here of course.... Its an interesting balance...a McKinsey survey of the dotcom boom noted that no money was made (on a net basis across the industry) in SV VC after c 1998 - it was the people in early, taking the flyers when things were very unclear, who made the real money. A little recession is no bad thing for the internet entrepreneur. Less able to fritter their time and money away in the real world, more people arrive online to swell the ranks of the potential audience. Plus office rental gets cheaper. And Europe’s base of angels and investors is likely to grow exponentially, as pointed out by Nic Brisborne of DFJ Esprit. Give me another bubble any day (check out this song)......I recall trying to get funding for stuff in 2002/3 that were funded a few years later (and too late). I recall one conversation where the VC was concerned that the proposed business had (gasp) no profits yet. When we pointed out politely that if there were indeed profits, then taking VC money would be an unnecessary option, it was clear we were in Deep Fear country Just one request......can we have company names without double-vowels and missing "e"'s before the obligatory "r" at the end. Update - to be fair, I don't think the VC community is really where the UK's problems lie - imho its at the "Equity Gap" between "friends and family" and VC's - ie at Angel level - where London (and the UK) is broken, plus the unwillingness of the funders to help mitigate the Entrepreneurs Discount in the UK - so be keen to read Mike's post on that arena.
Posted by Alan Patrick
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Fair Use....some lessons
So the other shoe has dropped in the Lane Hartwell / Richter Scales saga (see here for our original post). Lane Hartwell's disputed snapshot has been replaced by one of Kara Swisher, and the video has been reposted. This is exactly what we thought would happen:
Richter Scale...take her photo out, get the guy to send you one of his own, and resend your brilliant video... Here are some lessons in the 'Net economy, and I think they need to be Noted Well. (i) You can't stop people building on the media on the 'Net. The takedown impacted YouTube, the piece of media instantly popped up elsewhere (ii) A piece of media, even if copyrighted, has zero value if the friction of using it is too high and the cost of replacement is very low. If anybody wants to grandstand on component media they need to ensure that it cannot be replaced easily, ie adds significant value to the new work. (iii) I believe it eventually became clear that Fair Use was correctly applied here, which has interesting implications going forward - ie if you don't want your stuff re-used, don't put it on the 'Net.. (iv) However, it is considered polite to reference sources, even fairly immaterial ones - this was the major hit Richter Scales took. (v) The Neteconomy game is different - Lane Hartwell's (re)action, though understandable, was very Old Economy - i.e. try and control it, rather than try and use the marketing kudos to buff up her karma in the Netspace. In fact, I think she has hurt herself even more, by now trying to bill Richter Sounds - she has (probably, imho) signalled that she is now someone quite a few companies would not want to work with - too much friction. (vi) An oldie but goodie - lawyers are a last, not a first resort.
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