Dis - Aggregation

Caught this on Steve Hodson's grumpyblog - have no idea if its true, but it makes you think

I heard from an employee close to the deal that the Mormon church’s genealogy business made an unsolicited bid to acquire Facebook.

The Mormon Church maintains the largest genealogical database in the United States and apparently has the cash reserves necessary to make an offer of the magnitude necessary to acquire Facebook.

The latest update to the story is as of 2:04AM

UPDATE (2:04 am): My inquiry a couple of hours ago to an old college friend who works for one of the interested parties has indicated that there is more at play here than meets the eye, and definitely more than just a kernel of truth to this rumor.

Its a more off-the-wall example than usual of the Offset Economics that underpin the "FreeConomics" of Web 2.0 (ie someone has to pay for the free lunches if the users won't), but given that the whole FreeConomic model requires people with money in other pockets to fund it, I suspect we will see more of these more "interesting" deals. The combination of social network and genealogical database gives rise to all sorts of fascinating Sci-Fi plots as well.

Of course, there would also have to be a small restructuring of the way the social graph treated family groups........

Jeff Jarvis on "the myth of the creative class" taking the "Triumphalist" view and posing the opposition as "curmudgeons" Someone has to argue the view from the centre, and it may as well be me I suppose - ho hum, once more unto the breach....I shall have to write a proper "View from the Centre" later, but for now I hope that these thoughts will hold:

Internet curmudgeons argue that Google et al are bringing society to ruin precisely because they rob the creative class of its financial support and exclusivity: its pedestal. But internet triumphalists, like me, argue that the internet opens up creativity past one-size-fits-all mass measurements and priestly definitions and lets us not only find what we like but find people who like what we do. The internet kills the mass, once and for all. With it comes the death of mass economics and mass media, but I don’t lament that, not for a moment.

It seems harder and harder to stay in the middle ground - disagree with the Triumphalists and you are instantly a Curmudgeon, and vice versa. What also concerns me is the polemical nature the discussions move to - the Internet cannot kill mass economics, as much of real world economics is physical - and even the digiital world has limits to how free it can go - its cheaper, but it ain't free, and as bandwidth rises costs go up too,

The curmudgeons also argue that this level playing field is flooded with crap: a loss of taste and discrimination. I’ll argue just the opposite: Only the playing field is flat and to stand out one must now do so on merit - as defined by the public rather than the priests - which will be rewarded with links and attention. This is our link economy, our culture of links. It is a meritocracy, only now there are many definitions of merit and each must be earned.

This "meritocracy", in most digital playing fields I've examined anyway, from music to microblogging, is far from flat - it actually resolves into more of a "rich get richer" power law in structure in nearly every area you care to look at, a point which is always glossed over by the triumphalists. "Meritocracy" is in theory the equality of opportunity, and the equal reward for equal input/ability/etc. This clearly is not the case in a power law system, which resembles a Feudal structure more than anything else.

The culture of links, given very low transaction costs, is a culture of a small number making out like bandits while the majority sit in the long tail. As to being flooded with crap, it ain't only curmudgeons who are arguing that, its boring old economists who look at this as just another market - I've tried to summarise the arguments here.

We have believed - I have been taught - that there are two scarcities in society: talent and attention. There are only so many people with talent and we give their talent only so much attention - not enough of either.

But we are shifting, too, from a culture of scarcity to one of abundance.

No, we had a brief hiatus (probably fuelled by absurdly cheap credit) of abundant money. And the real economic limits underlying society - energy, water, food, disposable income - are starting to re-assert themselves again. In the West we have benefited from a 500 year Long Wave that started with India and China being knocked off their pedestals as global superpowers - that is over now.

We are actually moving into an age of relative scarcity on most vectors, except the ability to get digital goods far more cheaply. True, there has been a major step increase in digital comms productivity, and this will drive efficiencies across the economics space, but these other, greater, limits will eventually be reached again, despite the benefits of digital productivity gains - there is a real limit to datacentre size and those economics for example. There is comparative abundance in the digital field but it rests on, and is bounded by, the real economics of real things.

(I added the next two paragraphs later to better explain my thinking)

Where I do agree with Jeff is where he says the 'Net dosn't increase creativity, it increases access:

The internet doesn’t make us more creative, I don’t think. But it does enable what we create to be seen, heard, and used. It enables every creator to find a public, the public he or she merits. And that takes creation out of the proprietary hands of the supposed creative class.

But I'm not sure who this creative class here is though - the creatives by and large are the ones making stuff, its a different bunch of people trying to prop up the old aggregation industries. And one could argue the new aggregators like Google etc are just more of the same from the creative point of view - most of today's artistic creative class suffer from the same power law structures, ie a small number capture nearly all the value in any field. The 'Net, Google, etc do nothing to dissolve this structure though, which makes me think that it's the "meritocracy" argument in creative endeavours that is largely a myth.

Anyway, back to the original post:

I’ve long disagreed with those who say that copyright kills creativity, for I do believe that there is no scarcity of inspiration. But I now understand their position better. I also have learned that when creations are restricted it is the creator who suffers more because his creation won’t find its full and true public, its spark finds no kindling, and the fire dies.

I assume that the book Jeff is writing will therefore be under no copyright and of course available to all online, or has the Pauline conversion been brought about by a deeper understanding of cashflow - or lack of it - in a zero copyright world

The easiest way to turn the creative class into a disappearing myth is to remove its means of sustenance. Its not just the creative fire that dies, its the creator too if he or she don't make no money!. There may be free lunches in the digispehere, but they don't buy real food. Starving in garrets is tres romantique, but its not long term sustainable.

Lets all agree the Internet is the biggest shift in communication economics for at least 100 years (the Tripos of trains, cars & telegraphs were pretty high impact 100 years ago), but lets keep it all in perspective!

This revolution primarily impacts communications industries, especially those where physical goods are tarnsformed into digital (print media, CD's and DVD's) or where the signals over the ether go over the ethernet (Radio, TV). It increases the productivity of a part of the cost pie of other industries who have extensive comme elements, but does not re-make them and hardly touches industries where comms is a tiny part of what they do.

Afterthought - All comms revolutions shake up our social networking methods, which longer term changes our settlement patterns etc, and that is probably where the biggest economic shifts come from - but, as the author Richard Florida (of the original work on Creative Classes) notes, its not comms that drives that:

Why do some places become destinations for the creative while others don't? Economists speak of the importance of industries having "low entry barriers," so that new firms can easily enter and keep the industry vital. Similarly, I think it's important for a place to have low entry barriers for people---that is, to be a place where newcomers are accepted quickly into all sorts of social and economic arrangements. All else being equal, they are likely to attract greater numbers of talented and creative people---the sort of people who power innovation and growth. Places that thrive in today's world tend to be plug-and-play communities where anyone can fit in quickly.

I would argue that its the Creative Classes who have embraced the Net most, and thus they will be the ones who drive its future, and not vice versa.

(Next exciting installment - tilting at Andrew Keen and the Back to the Future gang. The centre is nothing if not Quixotic )

It was with some sadness I read this morning of William Patry (we are distant admirers of his work) deciding to end his blogging (and even more so that he decided to turn off 4 years of informed opinion on copyright law). Clearly being Google's chief counsel has made life increasingly difficult, as has the increasingly clear trend towards copyright law being written by the richest incumbents. as he notes:

Copyright law has abandoned its reason for being: to encourage learning and the creation of new works. Instead, its principal functions now are to preserve existing failed business models, to suppress new business models and technologies, and to obtain, if possible, enormous windfall profits from activity that not only causes no harm, but which is beneficial to copyright owners. Like Humpty-Dumpty, the copyright law we used to know can never be put back together again: multilateral and trade agreements have ensured that, and quite deliberately.

I think a number of us non lawyers have been increasingly concerned about where copyright (and patenting) is going, so its a real reality jolt when a rational lawyer confirms our fears (as did Larry Lessig).

But what also struck me was this point:

On top of this there are the crazies, whom it is impossible to reason with, who do not have a life of their own and so insist on ruining the lives of others, and preferably as many as possible. I asked myself last week after having to deal with the craziest of the crazies yet, "why subject yourself to this?" I could come up with no reason why I should

Last week I wrote up some of the thinking from the Diginomics session at the Wealth of Networks Conference, and the view that digital content today is Akerlof's Law gone wild - ie low transaction costs and free content have led to adverse selection of quality - which Akerlof showed inevitably leads to crap stuff driving out good. This is how it happens in digital media - sane people get driven out by a**holes who can access media too easily and cheaply - leaving the digital sphere increasingly awash with cr*p.

(Another lesson here - I used to refer to some of the back catalogue, and now its gone. Digital content that I don't own can be whisked away.....)

Says the Financial Times (pointing to BT's own Press Release):

BT today announced it has acquired Ribbit Corporation, a Silicon Valley-based 'Telco 2.0' platform company, for $105 million in cash, on a cash-free, debt-free basis. The acquisition will accelerate BT's strategy to transform itself into a next- generation, platform-based, software-driven services company.

Looks like Confused of Calcutta wasn't that confused on this one....

JP Rangaswami, managing director of service design at BT, said: 'Silicon Valley is emerging as a hotbed of telecommunications innovation. With Ribbit, not only do we extend our presence in the Valley, but we also gain a groundbreaking platform, a growing community of developers and a world-class team that share a common vision. Buying Ribbit lets us accelerate that vision.'

This makes sense in a number of ways for BT - as well as adding to the "what services can we offer on a 21st century network" portfolio, getting another finger into the US pie never hurts.

I'm sure the guys at STL Partners (who we work with quite a bit) will be heartened by the description of it as a "Telco 2.0" play given their hard work in promoting the concept

I have more thoughts on this but limited time right now - so this is a marker (to GigaOm) for when I can get back to it.

OK, time for more thoughts over afternoon tea. Firstly, though, a disclosure - we have been working with a number of Telcos to look at the services that are possible on top of 21st century-like networks, and have worked with the Telco 2.0 guys over the years on a number of areas. So we both know of what we speak, but may be funnelled by our previous experience.

The strategic thing is this - once you have a huge pipe that runs packets very fast and very reliably, a whole lot of things in the layers above above it fall into the "You wouldn't build it this way if you started from here" department.

This starts with datacentre architecture layer - the network truly can be the computer, and the storage facility, and the firewall, and a whole host of Web Hosting things which now literally can be hosted on the web. Call it the Grid, the Cloud, the whatever - it becomes the sort of thing a Telco can easily run as a utility, especially if you are trying to manage multi-media (fixed, mobile, voice, data etc).

Next up is the transaction/messaging layer - right now this is split between the telco, the application, and your computer. But in theory you can break up applications and put them all over the Web. You can break up the functions in your computer and do likewie (run apps from here, store data there etc)

This clearly radically changes the way you would design software, web services, and end user devices. And how you would run directories, social graphs, blog commenting systems and other "common" systems that today live in walled gardens ad infinitum.

This then has an impact on how you can operate the trust/identity/presence/security subsystems required - and when push comes to shove. most (ie non early adopter) users still trust Telcos a lot more than startups and for-profit ITC corporates to run these better and with more integrity (according to all the market research we have seen, anyway)

The issue of course is this is early days, and despite the hyperbole in some quarters you have to build this step by step as nothing works less well than early failure - as the continued waxing and waning of the "network PC" play has shown over 20 years.

A reasonable first step is to combine Voice functions with web services. A good way to do that is to buy something that looks like its succeeding, and its at a reasonable price (Ribbit may be a 2006 company but the guys have been building a Big Soft Switch for a long time) owing to the £/$ exchange rate (assuming that "cash free" here implies BT will actually pay for it* )

Will it work? Telcos are notoriously bad at initial execution (though they usually eventually get it right) but right now 60% on GigaOm's poll reckon its the best approach for BT

* Cash Free, Debt Free means BT grabs the remaining cash and assumes the debts and pays $105 m on top of that

This is one of the most interesting articles I've read in months, and the most interesting on the print media since reading Flat Earth News earlier this year. Its a study from journalist Tyler Marshall and the Pew Research Center’s Project for Excellence in Journalism, about in the US print newspaper sector today.

Its a fairly detailed piece and well worth reading, but the outcome is summarised in the article I've linked to on Journalism.org's site - key findings are:

- The majority of newspapers are now suffering cutbacks in staffing, and even more in the amount of news, or newshole, they offer the public. The forces buffeting the industry continue to affect larger metro newspapers to a far greater extent than smaller ones. In some cases, these differences are so stark it seems that larger and smaller newspapers are living two distinctly different experiences. Fully 85% of the dailies surveyed with circulations over 100,000 have cut newsroom staff in the last three years, while only 52% of smaller papers reported cuts. Recent announcements of a further round of newsroom staff reductions at large papers, including the Los Angeles Times, the Chicago Tribune and the Washington Post, indicates these differences may be widening further. Our survey found that more than half of the editors at larger papers and a third at smaller ones expect more cutbacks in the next year. But a weaker-than-expected economic performance during the first half of 2008 and grimmer forecasts for the rest of the year suggest some of those cutbacks have already been implemented and darken these projections even further.

- Papers both large and small have reduced the space, resources and commitment devoted to a range of topics. At the top of that list, nearly two thirds of papers surveyed have cut back on foreign news, over half have trimmed national news and more than a third have reduced business coverage. In effect, America’s newspapers are narrowing their reach and their ambitions and becoming niche reads.

- The culture of the daily newspaper newsroom is also changing. New job demands are drawing a generation of young, versatile, tech-savvy, high-energy staff as financial pressures drive out higher-salaried veteran reporters and editors. Newsroom executives say the infusion of new blood has brought with it a new competitive energy, but they also cite the departure of veteran journalists, along with the talent, wisdom and institutional memory they hold as their single greatest loss. Clearly stretched to describe what is unfolding in their newsrooms, editors use words like, “exciting,” “extraordinary,” “nerve-wracking” and “tumultuous.”

- Newspaper websites are increasingly a source of hope but also of fear. Editors feel torn between the advantages the web offers and the energy it consumes to produce material often of limited or even questionable value. A plurality of editors (48%), for instance, say they are conflicted by the trade-offs between the speed, depth and interactivity of the web and what those benefits are costing in terms of accuracy and journalistic standards. Yet a similar plurality (43%) thinks “web technology offers the potential for greater-than-ever journalism and will be the savior of what we once thought of as newspaper newsrooms.”

This is essentially a description of an industry in the process of creative destruction - this is not the endgame, its the end of the beginning of the process. We have seen this occur before in other industries such as manufacturing in the 1980's and later IT in the 1990's, as their value chains were restructured by new technology and cheap offshore labour.

The endgame will be driven by the fundamental economics of online Media, which are:

(i) Content is now a commodity - if I want say foreign news or tech news I can get it in spades
(ii) Distribution of digital media is 2 orders of magnitude lower than print media - you can't compete with those economics
(iii) Customer attention is increasingly moving online, pulling revenues with it.
(iv) With the end user devices of today it doesn't really lend itself to reflection, but to byte sized consumption - and the interactive nature seems to reinforce this "Continual Partial Attention" model.

In other words, in the value chain, the value of content creation, distribution and consumption are dropping - leaving merely the Aggregation function as a value creation engine - and that is where we believe the Online Media endgame will reside. Aggregation has 3 key functions:

- Finding the relevant media you want,
- Ensuring that what you get is the best quality, and
- Making sense of it

In other words the searching, winnowing and organising that is the core of the editing function. All the world may not be journalists, but they are certainly writing. As Technorati notes, there are 70m blogs in the world and some of them must be good - the trick is to find them. Also, as there is now such a slew of contradictory content, the importance of making sense of it all rises.This we believe is the endgame of the Media - to be excellent aggregators.

And in the convergent comms emerging, the media will be on video, audio, text etc.

I'll reference here an earlier Gapingvoid post on the subject, which I thought was quite perceptive (ie agreed with me ):

Yes, again, it's all about what Clay Shirky said four years ago, in a wonderful interview he did for Gothamist:

"So forget about blogs and bloggers and blogging and focus on this -- the cost and difficulty of publishing absolutely anything, by anyone, into a global medium, just got a whole lot lower. And the effects of that increased pool of potential producers is going to be vast."

I had coffee with Clay a couple of weeks ago. A totally great guy. We didn't talk about blogs much. Nor did we talk much about Twitter or Facebook.

We talked about something conceptually far simpler: Cheap. Easy. Global. Media.

CheapEasyGlobal is the big story. And it's here now. It has arrived. And it's permanent. And there's not a damn thing anyone can do about it, save for a nuclear holocaust.

Some people will do very well by it. Other people will prefer to stay on the sidelines instead, using the internet to yak yak yak endlessly on about what other people are up to, holding the "players" to far higher standards than they will ever attain themselves. These lovely armchair quarterbacks will be swiftly forgotten by history. Same as it ever was.

Restating that in the economic terms of the value chain above:

- Easy - cheaper, easier to use gear makes everyone a potential content producer
- Cheap - lower entry and transaction costs makes content collation and distribution economics a low barrier to entry
- Global - the content, and the audience, can be found everywhere

(By the way, this also implies that as well as every person being a journalist - in - writing, just about every company in every industry will be a media business too )

One can register concern that all this is also driving a dumbing down of the media we once had, and there is some validity in that argument - but the unpleasant truth is that a large number (majority?) of human minds seem to like being dumbed down (cf average TV program ages etc, the rise of Sleb magazines). Ditto it is now possible to consume news that is already pre-slanted to your own predilections without an opposing thought ever seeing the light of day (a move from "Broadsheets" to "Narrowsheets", as Chris Hambly notes in the comments section).

But one suspects it was ever thus, and the "qualities" will thus also emerge in their own right, be they blogs, 'zines, or online newspapers - and these may have to be paid for, as pure Ad driven media usually dives straight for the lowest common demographic (compare the London free papers and the paid for others for example) - though it looks like the rise of the Freesheet is ending, if Kristine Lowe's post is on the money..

What is quite interesting is to think about where paper media will remain - no new media totally replaces the old - at least not immediately - so the real issue will become "where is there still additional value in the printed medium". We see 5 major areas over the next few years:

- where one cannot get easy access to high enough quality online displays (ie some media can go mobile, but much cannot)
- where it is still hard to read long and/or complex tracts easily with todays' devices
- where Advertising economics still favour print
- as a status marker, or a sign of higher value (we can imagine upmarket media for example differentiating itself via being printed - No FT, no comment....)
- where privacy / exclusivity is key - or at least low cost repeatability is the last thing one wants - and has value in its own right that comes from being in print.

But one thing is for sure, if you were building a media empire today from a blank piece of paper, you wouldn't structure it the way most are at present. And for anyone in the industry, its a sanguine exercise to think how you would build a media organ today, note the differences, and note your part in the value chain. Things will not change overnight, but as this study shows, they are changing quite fast.

Very interesting article on the Patent Law blog re changes going on in the US patent system with respect to the software / business model patents - essentially they argue that even Google could be impacted by the changes:

The apparent death of Google’s pioneering PageRank patent under the PTO’s new rule for patentable subject matter may be a cause for celebration among those who are philosophically opposed to property rights in innovation and are eager to confine the patent system’s ambit. It will surely be cause for mourning among those who believe that allowing patents on cutting edge technologies has served the country well for more than two centuries and that a radical departure from the traditional approach would be unwise. And it is likely to generate puzzlement among business people and innovators, who may wonder how agency decisions supposedly premised on the need for ensuring that “that the patent system be directed to protecting technological innovations”[22] have ended up rendering unpatentable innovations in search engine technology, computer modeling, bioinformatics and many other innovations in cutting edge fields related to software and information technology.

I would counter this by arguing that the current regime, or rather that operant over the last 10 years or so, has been abused in the opposite directions - people have been allowed to patent what is essentially prior art merely by arguing it is in a new software medium, and it created a market for patent trolls, corporate patent banking and so on - the activity by the US Patent Office in rescinding much of this is to be applauded in my view.

As with all pendulums, the risk is that it swings too far the other way, but 'tis - in our view anyway - better that it swings, as right now it is far too easy to enclose common knowledge .

Now something I did not know re Google's technology is also alluded to in the article:

Stanford owns the patent, and Google holds a perpetual license on the technology that is exclusive through at least 2011

Now those words Stanford owns, Exclusive and 2011 are very interesting - there is a sense that all this is happening at a time when it is fairly moot for Google anyway, they have potentially far greater risk here. The Search market from 2009 - 2011 will be a very interesting one indeed methinks......

Steve Rubel's comments on free-agents ruining the larger analysts' party:

Charlene Li, an influential Forrester analyst who tracks digital trends, blogged that she is leaving the research firm to go independent. Some believe that the growing ranks of free-agent analysts may spell trouble for traditional research firms.

The reality is that many of the tools that workers need to do their jobs are becoming free or low cost. This extends into verticals as well. For example the Google Ad Planner, which launched last week, theoretically could allow anyone to become a nomadic media planner.

Digital Nomads are growing in numbers and they will create ripples.

We resemble that remark - after backgrounds in consultancy and digital broadband media we set up Broadsight 3 years ago as a 21st century business - virtual, very light footprint on the ground - because we could! In 2005 you could already get, via the Web, access to the sort of data that a few years before required large in-house research departments and/or copious analysts reports. Four years ago being web workers was much harder, as many of the tools, from wifi, wifi PC's, software etc were unavailable. Now they are near ubiquitous. Thus, our "buy" side has seen a massive reduction in cost and increase in efficiency.

That same revolution expanded our sell side as well - via the company website, this blog, and other social networks we have a massively magnified reach compared to the % increase the Analytics companies have achieved. We happen to believe we know our sector as well, if not better than (m)any of them, and can afford to be more independent as well.

A typical Analysts report sells for $'000. We wrote one on Online Advertising last year because we were actually doing work in the space and thus felt we knew more than any analysts did, it sells for about 1/2 the price and we have sold a healthy number of them, but our costs are probably far lower so margins are probably comparable.

At the other end, the market for 4 pager briefings for $100 or so is probably also under severe threat when you can just put a few good bloggers in that field together. Because the data is now so much more readily available, its much simpler for a smart person who knows the industry well to spend a bit of quality time on the Web, Linked In and Excel and get the 80/20 of the Analysts job done.

Steve's point on recessions driving trends - especially where there is economic advantage - also resonated:

Recessions often accelerate social shifts that are already percolating under the surface. One of the key trends I have been watching is the growing number of Digital Nomads.

Its simple Coasian Economics - as transaction costs come down, the size of the firm required to deliver a service reduces. I've yet to see an analyst's report say that about their own industry though

PS I liked Steve's title so I sto.. I mean adapted it

One of the interesting things about the emergence of the Social Media scene is that it has driven a lot of Londoners of quite wide backgrounds to physically meet up at the Tuttle Club, and one of the outcomes of that has been a flowering of collaborations in all sorts of interesting projects - musicians working with marketeers, film makers with PR people - and in our case we have been working with others on a project on the Female Web - it is our hypothesis that there is an arbitrage as there are many women as customers, but far fewer people developing services that give women the UI / UE they prefer.

And one of the really good things about this collaboration is that other people can write some of the posts on the blog So, here is a thought piece by Janet Parkinson of Talking Voices that sets the scene:

It's common knowledge that women make up only about 20% of the technology industry - the reasons usually given amounting to 'women just aren't interested' or words to that effect. But with comScore reporting that online women now outnumber online men in the US, I decided to dig a little deeper to check out other possible reasons for this discrepancy and came across the following:

At the Blackberry Women & Technology Awards last month (according to Ian Williams of vnunet ) Charmaine Eggberry, the creator of the Awards commented on the fact that although nearly 90 percent of girls aged 11 to 16 believe that using technology is 'cool', with just over a third chatting about the latest technology on a daily basis, "there is still a lack of understanding about the phenominal opportunities that a career in, or associated with, technology has to offer".

She went on to say that over two thirds of girls aged 11 to 16 believe that there is a gap between the playground and the careers centre because the UK lacks smart female role models in the technology industry, and that over half think that there should be fewer celebrity role models and more inspirational business role models.

This is spot on. Role models for all teenagers form an intrinsic part of growing up and of making life choices. So what role models are currently being presented to teenage girls? Teenage magazines seem to continue to feed the predictable celebrity hype, latest fashion 'must haves' and 'how to grab a guy' columns, while in the media generally both offline and online let's just say it's difficult to find many female role models worth aspiring to....

Teenage girls are moving from hard copy magazines to the internet and are happy to take control of what they do there and what they read - the bright young women of today are not necessarily ready to be dumbed down continuously. If what Charmaine Eggbury says is true then perhaps the magazines should take the plunge, remove Britney or Jade from the front covers once in a while and replace them with a few successful women from technology. And girls, make sure to tell everyone what you 'really really want' - you've heard it often enough 'Because you're worth it'.

This is a theme that has also been driven up by people such as Sarah Blow & team who have been driving Girl Geek Dinners, trying to help women build up a supply side network and hopefully provide some alternatives to the Britney model (and dispel the notion that women can't be technical).

You can imagine a Richter Scales style skit on this using the Clash's "I'm so bored with the USA".....anyway, this post by Fred Wilson on A VC caught my eye:

I read a comment on my “Looking For Inspiration” post this morning that suggested I was just getting bored with Web 2.0 like many others. It’s something I’ve considered a lot lately....

....I am a bit jealous of friends who are working on finding and funding alternative energy or biomedical technologies that have the potential to address the serious problems facing the world. At times it seems that helping the web become more social, intelligent, mobile, and playful is not as impactful.

....And certainly there is much about “web 2.0” that doesn’t seem to address that need. Throwing food at your friends on Facebook or twittering about the length of the line at the shake shack lands squarely in the “banality” camp that Kirby railed about in his essay on “pseudo modernism” that I blogged about last week.

Fred has been seduced by Umair's thoughts about using the Web to:

Organize the world's hunger.
Organize the world’s energy.
Organize the world’s thirst.
Organize the world's health.
Organize the world's freedom.
Organize the world's finance.
Organize the world's education.

I commented on this last week (see here), and have been mulling a Part II for it - the issue is in how do we organise - ie what structures are used - so here are the thoughts on how this might be done. First, the caveats - technofix is not for everything, nor is the hammer of Big IT - but one of the benefits of the more modern technologies is that they have a lighter touch, ie they avoid these issues better:

People would rather live with a problem they can't solve than a solution they don't understand
One of the professors on my MSc program used to say this about implementing successful change programs - ie an externall imposed solution seldom takes root as well as something developed by people in the situation. Ie its not enough to give people fishing rods etc, they have to be left to define which ones to use, how they will fish etc.

There is a risk of applying the most modern technologies to problems that can be more simply solved....
In the early 70's E F Schumacher wrote "Small is Beautiful", which showed how simple, locally produceable technology trumped large scale technology in developing countries. The lessons were largely ignored by aid organisations then (as most aid programs require recipients to spend money on the donor countries' technology) and by and large still are.

That said, I think there is quite a bit modern technology can do to drive change. A cursory glance at history will tell you that shifts in economics drive huge sociopolitical change. Communication technology has driven huge changes in these economics since the Industrial Revolution, but the benefits, like the future, are unevenly distributed. In my view Web media have especially high impact potential as they:

- Reduce Transaction Costs
- Give people access to correct information
- Allow people to self-organise
- Impact energy and resource usage
- New financial structures

Reduce transaction costs
Reducing transaction costs doesn't just allow people to be banal on Twitter - the uses are far more transforming than that, Ronald Coase showing in the 1930's that reducing transaction costs allow much smaller organisations, with lower capital formation, to be sustainable. In other words people can now create change with small organisations that don't need high capital formation. This is driving the Web 2.0 startup scene, but its also driving for example home-working, micro-credit, global action networks (of which terrorism is the dark side example) and should allow major increases in the ability of small groups of people in developing countries to organise themselves.

In many ways this is the Prime Mover for much of what we see today, but there are some of the specific benefits of reduced transaction costs that have major magnification effects - these are the ones noted below:

Access to Correct Information
One of the downsides of "social media" is that groups can become infected with "groupthink", ie "This is the way we have always done this" - so being able to independently acquire correct information, at low cost, must have a major part in any plans to impact these issues. Not only this, but ease of information transfer allow a greater understanding of global issues so hopefully allows the formation of systems that can re-allocate resources etc to where they are required, allows people to reign in dangerous leaders, etc. Today Wikipedia, what can tomorrow bring?

There is another side to correct information - there is a lot of cr*p information out there, but as more data is digitised and exposed, it can be crunched to hopefully ascertain the real facts rather than opinion broadcast by those who have access to media, which pervades too many areas today.

Allow people to self organise
Clay Shirky's "Here Comes Everybody" is the latest book from a long line of people who have understood that allowing people to self organise to solve their own problems is a powerful tool. Web 2.0 systems based around social networks will be one of these tools as they evolve - in fact in my view the only way we are going to mobilise sufficient resources to solve the issues Umair lists is by using these sorts of tools. (This is also a long wave system - long after Facebook and Twitter have gone the way of telex and faxes, these systems will underpin much of the underlying comms structures we use.)

This is not to say that self organising is a panacea, history shows this is best used for protest/resistance movement structures and not to actually run things, but to run things ongoing probably also requires derivations of these social media tools.


Energy and Resource Usage
One cannot of course have a discussion about "saving humanity" without talking about climate change etc. I'm still sceptical about mankind's alleged influence on all this, but I do buy the argument that continuing consumption of resources at the level of today's Rich West and then expanding it to the rest of humanity is unsustainable. I personally think we'll run out of resources (and water) long before we bake and/or drown ourselves in any new global Jurassic period. The comms technology we are building must have some capability to help here in terms of, for example:

- reduce energy usage by removing the need for so many journeys - online ordering / home deliver in urban areas is more efficient that car journeys, a flight saved by a webcast is always useful

- allow us to redistribute used goods far more effectively - it is always far more resource intensive to make something new than use something already made (take cars for example - ignore the Pious, buy a good second hand sports car and be virtuous ). Today eBay, tomorrow the world

- there must be all sorts of other small efficiencies possible just by accessing correct infomation and being connected to other people

New Financial Structures
You don't have to be a banker or economist to sense that there is something seriously wrong with the world's financial structures (in fact it probably helps not to be) but the combination of reduced transaction costs and being connected may help us to avoid if not replace the worst of the financial system's excesses. By this I don't mean makin' whuffie (too fluffy imho, we evolved out of gift economies for good scalability reasons) but by making it easier for people to find correct information and organise effectively sans middlemen (think of replacing brokers by online trading etc and magnify that) and having more say in distribution of our money. Imagine if you could vote for where your tax money went - how many foreign wars would we see?

This is not to say that new ICT alone helps - and just getting networked is an issue still in much of the world, as is affording the gear - but the arrival of the $5 mobile phone and $100 PC can't but help, as is the emerging skein of global wireless networking, brought about by sheer scale economics. initially paid for by richer people. My thought is more that people building a large ecosystem of Web 2.0 services that cut their teeth by throwing sheep etc allows the darwinian evolution of robust, low cost services that become very useful ongoing. Top down services designed to fix big problems always seem to struggle. That said however, I think if Fred and his fellow VC's are prepared to fund "GreenWeb 2.0" businesses that could be very interesting.

I was reading Umair Haque's thoughts on 21st Century Capitalism....its an interesting post, and I think these points are well made:

The great Joseph Schumpeter argued that growth happens through a process of creative destruction. There’s a simpler word for that: turbulence.

I think there’s a problem with this thesis. In an interconnected world, there are more and more players creating and destroying – as a simple example, the pool of workers in export-oriented industries has tripled, from 300 million to about 900, over the last 20 years. And so, today, turbulence is intensifying.

Creative destruction has two sides – the costs of destruction as well as the benefits of creation. And as creative destruction intensifies, the costs of this great tradeoff are going to sharpen. The price of growth, it seems, is a world that’s always riskier, more uncertain, and more brutal at the margin.

And the outcome is fairly predictable too:

When the last bubble was in internet technology, welfare was minimally affected – jobs were lost. When it shifted to housing and credit, welfare was affected more – houses and saving were lost.

Today, it’s shifting in large part to energy and food. What happens when hypercapitalism causes a food bubble? What happens when the masters of the universe in Greenwich bid up the price of food for India, China, and Africa's huddled masses?

Here’s the answer: marginal starvation. Lives are lost.

Its alluded to in the newspapers, and more bluntly in City bars, but we all know that speculation is driving some of the price rises for raw materials and basic foodstuffs (not helped by daft biofuel subsidies), and that this is tipping the point at which people starve.

But no national government, nor the UN, has the power to stop food commodity speculation - and not all even have the will, as starvation is not impacting the world equally. The poor are getting poorer, the rich are getting richer and own an increasing amount of the planet's assets, and globally the middle classes are slowly sliding into peasantry as their share of real incomes erode and they live more and more in debt.

Here comes Feudalism 2.0..... So what is to be done?

Its been clear, even before I was at Uni (remember the Club of Rome) that the whole system of growth-chasing is unsustainable as is, but the belief has been throughout the last few decades that technology in one way or another will save us. What is becoming clearer today is that it may (or may not - the "how" is still unclear) , but before that happens a lot of "us" will lead very uncomfortable lives, if not die.

Umair's view of the solution:

What happens when we think of using new DNA to reorganize structurally inefficient industries? A blueprint for the next industrial revolution emerges. Here’s what it looks like.

Organize the world's hunger.
Organize the world’s energy.
Organize the world’s thirst.
Organize the world's health.
Organize the world's freedom.
Organize the world's finance.
Organize the world's education.

That's not an exhaustive list - it's just a beginning. What's important is the logic behind it. Let's make that as razor-sharp as possible.

I looked at Umair's answer, and I think those are by and large the right areas to go after, but I'm not sure about how the "organise" bit works in practice - it implies central controls and smacks a little of "Marxism 2.0" to me as is - probably needs some fleshing out. I know Umair thinks for eg Google is very benign and is a model to cleave to, but I'm afraid I see any large public corporate caught up in the current structure as probably structurally unable to sort things like these out. I suspect we need new organisations with new structures to solve these problems.

Answers have I none yet - need to mull this one over a bit, but I suspect a part of of the solution is in the use of small scale, local, user owned structures, as E F Schumacher hypothesised when he looked at the issue years ago.

Another bit must be to peg back some of the freedoms of the financial markets, they were nowhere near this powerful or dangerous when the Club of Rome wrote its report in the 1970's. I think one thing that is cyclical over a Kondratieff wavelength is the wax and wane of the power of oligopoly, and we are living in a world akin to the turn of the 20th century in terms of power and wealth concentrated in the fewest hands, and that accountability needs to be returned to the people it has been eroded from over the last 30 years or so.

And another bit must be this Internet thingy - revolutionary new comms tools have tend to drive socioeconomic and political change throughout our history, so why not this time?

Incidentally, I do hope everyone realises that its not the planet we are saving from extinction, but our own sorry little genes - the planet will do just fine if we gas ourselves to death, its taken bigger hits before.

Anyway, more tomorrow......

So its tomorrow, and the overnight thought was this - The Earth is one giant Tragedy of the Commons test for humanity. Thus the answers can be framed roughly as "what is required to prevent Tragedy of the Commons occurring" and that will be Part 2 of this series a its a post in its own right.

But to be clear, failure of the test may mean extinction of the species, and will definitely mean extreme misery for many members of our and other species, and probably a major reduction in numbers. Its happened before in microcosm (even to extinction), and we are not dreadfully well structured to sort it out collectively (as Jared Diamond has recorded in Collapse). More thoughts on what "organise" means in Part 2 therefore, but some initial scribbles here:

- We seem (historically) to find it difficult to self organise early within a situation before fairly major catastrophe occurs

- I don't therefore believe that "here comes everybody" modes are the answer long term - traditionally these movements are protest based rather than structured to run things sustainably, and tend to be short lived

- However, it may be that this sort of mass approach is required to tip things onto a new plane.

- We can't expect the financial system to assist - its structure is a power law, the rich grow richer until it tips over (cf Great Depression)

- Ditto the public corporate value chain system - its causing most of the problems

- Not clear if current (Western) political structures can work - they are too gummed up in lobbyism and are probably not split along the right lines today.

- Also not clear if other models in say China or Russia will work - benign autocracy is wonderful in theory, but autocrats seldom stay benign if history is any guide

- Sadly, most of the people who need most of the help have no resources to get it and others need to fight their corner

- Those others need to persuade their own countryfolk to give up a huge amount of what they have, for a very uncertain future and benefit. For eg, US produces c 25 of man's carbon emissions, with c 5% of population - ask them to reduce by 4/5 and hand over to Asia and Africa? Aint going to happen

Uh Oh - Part 2 is going to be no cakewalk