Trial By Fire

What has Three Hearts and Green Blood?

I'm sure Dana Scully would know.  She's so cute when she starts describing esoteric phenomena with that dead-pan look.  I wonder if she'd get this one though.

On Sunday, Grace and I were lucky enough to come eye-to-eye with a Giant Australian Cuttlefish at Linley Point while Scuba diving.  Even better, I snapped a very detailed photo of these creepy (but somehow majestic and intelligent-looking) creatures.

Click on the photo to get a big version.  It's worth it.  Grace and I just hovered underwater staring at this fellow for a good 5 to 10 minutes!  I'm not sure what he thought of us.  We were hoping to see him swim away but he just sat silently staring back at us.  A glimmer of sunlight passed by and was saw the most magical transformation in colour.

This was one of our great and amazing scuba diving moments.

Blogging: The New Social Club

The more I blog, the more I am reminded of one of the greatest and most ironic scenes in all of cinema, as Charles Foster Kane, his face in shadow in the publication rooms of the Examiner pens his "Declaration of Principles" for the front page of the morning edition.  As he is scrawling it, he emphazies that "no special interests will be allowed to interfere with the truth of that news".  I'm sure you believed it at the time, Charlie.

In the real world, The San Francisco Examiner began operating in 1865.  Just 7 years later, tired and bored of what the news world had become, five Examiner news reporters started a social club to promote a lively fellowship of jouralism and help "elevate journalism to that place in the popular estimation to which it is entitled".

That club is the "Bohemian Club" in San Francisco, the most exclusive and talked about men's club in the world.  Every Republican President since Herbert Hoover has belonged and the coveted roster of members reads like a Who's Who of Washtingon politics and West Coast elite.  To many socially-aware bloggers, clubs like this are the antithesis of what open media and politics should be about.

Ironically, at the Bohemian Club today, journalists are denied membership.

As one of the original founders of the blogging phenomenon, Doc Searls might as well have been one of those five Examiner reporters.  Today, in his post he says

To me this is a world where the only success that fully counts is in helping move good ideas along, in helping make this new world a bigger, better and more open place. And in helping others enjoy the privilege of participating in it.

At the same time, his post is full of melancholy reconsiderations.  It's a response to an excellent post by Seth Finkelstein called New Gatekeepers Are Still Gatekeepers in which Seth tells Doc in no uncertain terms that there is hierarchy, there is an A-list and a Z-list, and that the long-tail of online journalism does not spell democracy of media, but rather the same as media has always been, dominated by exclusivity.  I think Doc is feeling it too, even though he seems reluctant to admit it.

Seth is right.  Today's blogging world is a world of complex rhetoric, lightening-fast replies and discussion, and advanced search tools like Memeorandum that hone-in on exactly the kind of "converstaions" A-list bloggers have.  It's tough to keep up with the A-list crowd, and even tougher to engage in conversation.   There are myriads of new buzzwords: bloggers talk of "the edge", and of a new media economy based upon attention scarcity.  New economic thinkers like Umair Haque are creating a new lexicon of economics, media and technology, and a word coined only yesterday becomes mainstream discussion after 10 minutes of exposure to the "blogosphere".

Joining the Bohemian club involves an interrogation that one member said "would satisfy the KGB".  Thousands are on the waiting list eager to pay several thousand dollars to "get in".  For A-list bloggers, the price is the mastery of technology, terminology, rhetoric, and the discipline to dedicate hours of your day to reading, researching, and posting insightful new postings and replies.  To be on the A-list, people need to believe you matter, and the currency of the medium is intelligence and literacy.

I think bloggers should embrace this.  Rather than fearing that their idealistic vision of democratic media is crumbling, they should rejoice that a currency of intelligence and literacy is a breath of fresh air.  Scott Karp, whose posts I always enjoy, says it better than I can in his response posting There's Nothing Wrong With Gatekeepers.   Unlike many new media bloggers, Scott knows that the similarities between old and new media are just as important as the differences.

I'd rather start thinking of the A-list bloggers as Gate Openers.  Because in today's blogging world, that's just the way it works.  Scoble allows anybody to post comments.  So does Doc, Scott, Fred Wilson.  The A-list of truly good debaters and thinkers have the gate open wide, and anybody can truly join in.  I think the A-list needs to keep taking this responsibility seriously.  There is nothing wrong with a pecking order.  There is nothing wrong about having to prove that what is said is worthwhile, and to forcing people to practice their writing, their thinking, and self-analysis skills.  One thing we have far too much of on the net today is spurious, unresearched and unreliable information.  The A-list is raising the bar.

One thing though about human nature.  It hasn't changed.  And history does indeed repeat itself.  Don't think that new media is inherently impervious to corruption.  Quite the opposite, all the clichés are true.  Power does corrupt.  And the power of the A-list blogger is very, very real.

One of the most important tasks at hand is to scrutinize how this magical thing has happened, and figure out how to prevent the blogosphere of today from becoming the Bohemian Club of tomorrow.  Because unchecked, that's just what will happen, just like it did to Charlie Kane.

[tags: blogging]

Network Neutrality: The "Value Added" Myth

Let's get this straight: Network Neutrality assures that no online service adds value to anybody's network.  It was surprising to see Fred's post this morning on Network Neutrality.  Fred is one of my blogging icons, but to say that Google adds value to the carrier's network is just plain wrong.  Fred says:

Google is a value added service that runs on the carrier’s networks.  It ADDS VALUE to their networks. Without it, the carriers would have a LESS VALUABLE service.  And yet they want Google to pay them for improving their service.  This is nuts.

Not nuts.  Google does not improve their service.  It improves everybody's service.  And that's the problem the telco is facing.

While strictly speaking, Fred may be right, he is dead wrong to use a common commercial idea like "value added services" as an analogy.  Gasoline adds value to cars, yet no one car manufacturer receives any competitive advantage because their cars run on gasoline.

Commercially interesting value-added services provide both differentiation and competitive advantage.  Usually, both parties benefit.  For example, luxury car manufacturers used to bundle Blaupunkt stereo equipment in cars to attact customers.  Both parties win.  If all cars came with Blaupunkt equipment, only Blaupunkt wins.  You could say that a ubiquitous Blaupunkt system in all cars of all types "adds value", but only for consumers.  Clearly it gives no one manufacturer any advantage and thus does not allow the manufacturer to charge more, or to attract more customers by using Blaupunkt as a hook.

Similarly, Google, Skype and BitTorrent, cited by Fred, give carriers neither differentiation, nor competitive advantage.  The only advantage it gives them is exactly the same as all of their competitors: it increases demand for the services in the market as a whole.

Why should any company be interested in extensive investment in new networks to further the interests of their competitors?  Improving bandwidth requires money, and the market is dictating very competitive prices.  It's a low margin business and it's almost impossible to differentiate your 12mb DSL services from anybody else's 12mb DSL service.  You offer it, they offer it, we all charge the same amount.  Google wins, but the telcos don't.  Just as Blaupunkt would win and the car manufacturers wouldn't if Blaupunkt stereos were ubiquitous in all cars.

It's even worse.  The telcos are in a no-win situation.  If they limit access to Skype in preference for their own (inferior) service, they lose because they are adding value to their competitors internet access service where Skype is available.  If they allow Skype, they lose because their service is inferior and the superior service is one they have no ability to profit from.  They can't charge their customers more for Skype if their competitors don't.  Plus, they can't share in the revenue stream.

I don't like the telcos any more than Fred does, but I try not let my dislike of them cloud the issues.  I think they're merely doing business and getting more and more desparate.    I think that their position in the internet value chain, as the access provider, is economically dysfunctional.  Sure, maybe they asked for it.  Maybe they even orchestrated it!  Maybe they act counter-productively.  Surely their regulatory advantages and monopolistic tendencies are not helping.

Unfortunately everybody loses if the economics of the internet are stifled, and that is exactly what happens one the most critical component of the value chain is dysfunctional.  And the dysfunction is systemic.  Even new entrants in the "last mile" game will suffer unless they find a way to differentate their services.

Myths like "Google adds value to Verizon's network" as some sort of "telco greed battle cry" just don't cut the mustard.  There needs to be a clearer economic benefit to telcos for "offering Google" than "they must or they shall die!"

There needs to be recognition that differentiation and competitive advantage are meaningful business concepts, even for telcos.  Is the answer "charging Google for access"?  No, I'm sure it's not.  But the answer will only be determined when real issues, not myths, are driving our conclusions.

[tags: network neutrality]

Network Neutrality Counter-Point

Network neutrality is a pointless, emotionally-charged distraction from the real issues involved in monetizing Internet content.  The Internet is rapidly becoming a retail and marketing vehicle, just as shopping malls and other retail chains.  A sound distribution channel, with economic benefits and motiviations must be built which satisifes both the needs of telcos as well as those of content creators.  This adversarial relationship between the storefronts and the product makers will kill us.

Today's article by Daniel Berninger, Net Neutrality Not An Optional Feature of Internet is a fine example of the kind of emotional posturing that's leading us down a very dark path.

He super-charges his discussion with analogs about "arms dealers" and talks of telcos wanting "kickbacks" from content producers. Berninger talks of "tolls" when we need to be talking about "margins".  He talks of telcos trying to "protect their existing voice and video revenue streams from Internet enabled innovations" when he should be asking how everyone can participate in revenue-generating innovations.

While discourse like Berninger's may spur many content producers to demonize telcos and strengthen the resolve to combat these "extortionists", it is full of vacuous reasoning.   He is specifically choosing controversial examples, such theorizing what it would be like if "Intel charged a fee to enhance software performance".  Some participants in revenue chains are inappropriate, while other channel-model schemes work very well.  Choosing the Intel analogy does little to convince me that ISPs are not reasonable participants in the chain of value delivered to consumers.  I think my Walmart analogy below is far more productive.

Mistakes in Perspective

One enormous mistake is focusing too strongly on the assumption that telcos are hugely profitable companies who are looking to "extort" money from content vendors.  The implication is that their motives must clearly be greed and exploitation of their unreasonable locus of control.

It is much more important to look at the profitability of the internet service fraction of telco business to make reasonable assessments about the economic viability of Internet business models.  Telcos are too highly subsidised, regulated, and pursue a vast array of revenue schemes.  We are just looking at internet access, and the specific cost-center figures don't look so rosy.

While I agree that telcos are worthy of criticism and even do some reprehensible things, it is much more productive to look at them as businesses with typical economic motivations.  It is better to ask whether their participation in the value-chain wouldn't make the internet a better place for retail, not worse.  Why can bookstores take a portion of book revenue without falling prey to such attacks?  Why not ISPs?

Read some of the research about telecom issues such as that provided by The Yankee Group. The focus is on increasing investment in infrastructure, figuring out ways to monetize the digital supply chain, and how to implement technologies to make it feasible. These are mature businesses driven to solutions by problematic supply- and-demand relationships in Internet commerce.

My Walmart Analogy

A few days ago, I read Just Say No(thing) on Om Malik's blog.  Ed Whitacre of SBC/AT&T was making noises about charging content providers. I urged people to consider the following analogy:

Whitacre’s comments reflect commercial realities of product distribution. So, yes, he sounds confused a bit, and the the idea that content producer should start paying is not only offensive to the idea of open networks, but seems ridiculous from an economic point of view.

Or is it??

Let’s think more generally of what SBC/AT&T provides. They provide their customers access to products and services. Their customers pay them for access to the products and services.

Just like Walmart.

Imagine that Walmart allowed anybody to put products in their stores, and did not mark-up the goods, but instead charged customers to enter the store and allowed anybody to walk out with whatever they wanted. They then left it up to the customer to figure out how to get in touch with the toaster manufacturer to pay for their new toaster. This is the business model of the Internet.

The more you think about typical retail value chains, the more and more curious my analogy becomes.

Of course Whitacre wants money from the content providers. Just as Walmart wants margin on the products they sell. The whole reason value chains exist is so that everybody along the chain participates in the revenue.

What to do?

First, we need to look at the overall distribution model more wholistically and consider that the access provider may be a reasonable ally instead of an adversary.  If the access provider makes a distribution margin, they'll be motiviated to make access to the wider range of services more affordable.  The better it works, the cheaper access becomes, and I can even imagine truly free internet access paid for purely by discount margins on goods sold over the wire.

Second, build open standards that make it possible for telcos to link their access service payment systems to anybody's content services.  An open standard could make it possible for someone such as Amazon to offer a set of payment methods: Mastercard, Visa, On Your Monthly ISP Bill.  Anyone could use it, and it solves myriads of payment problems.  Go back and start re-reading the literature on micropayments from Web 1.0.  It wasn't all bad, there were just too many barriers and not enough vision.

Third, telcos must stop engaging in the negative "walled garden" thinking, and begin promoting an integrated retail distribution model where everybody benefits as revenue flows.  Resist closed thinking about particular telcos and embrace technologies and services which support this model.

In short...

Content providers and technologists better figure out how to satisfy people like Whitacre with business and revenue value chains that are more like retailing. That’s what the internet is. Content providers produce products, they ship them to an ISP, and ISP delivers them to the customer.

Where’s the margin?

Unless the value chain works, content providers should, rightly, feel very afraid. Any retailer like Whitacre will try to pick the most profitable products to sell. If they’re not getting good margin from one content provider, they’ll try to drop that “product line” in favor of another.

Berninger talks of an "end to innovation" because of the loss of network neutrality.  Instead, a constructive economic channel model for Internet distribution represents the beginning of innovation.

[tags: network neutrality]

Bloglag!

blog·lag (blŏg'lăg)

n. 1. The feeling that you should be commenting on another post, or creating one of your own coupled with the suspicion that you're too late and there's no point anymore since so many other people have responded already. 2. Any time you feel there is no point in blogging.  v. intr. 1. To render other bloggers impotent by creating comments and counter-posts more quickly than they can.

Being involved in "conversations" is tough!  Today I got involved in a series of posts that started with me reading Email vs. RSS on Fred Wilson's blog.  It probably all started with Dave Winer's How RSS can bust through and just escalated from there.  That was this morning.

Now, there is so much discussion, piles of comments and cross-posts that it's all turned to mush!  In fact, there was still more to say.  Most people are debating whether RSS will break through, but RSS is really a metaphor for the entire subscription content world.  People need to look at it that way.  I was about to write a comment, and suddenly I felt this pressure in my chest and a buzzing in my ears.  My breathing became heavy.  I wondered just what the point was of creating more mush when anything I say will get lost in the mire and the discussion is past the point of making valuable contributions?  So, I collapsed in my chair.

I had bloglag!

After pouring a nice rum and coke, I realized that there are some real technology problems here.  High speed blogging can be fun.  But dangerous!  Moreover, the pace of some blogs is slow while others are fast.   Had I kept my nose to the wheel all day everything would have been fine.  But, I had work to do!  Blogging isn't my job!

Solving this requires a few things.

First, multi-blog integration of posts and comments is essential.  Blog technology really is pretty primitive.  The (unbelievably cool) new beta product, coComment, is a welcome addition, but it's just the tip of the iceberg.  When I comment on somebody else's blog, there needs to be integration with my own automatically.  More importantly, when I want to comment, but realize that a post is better, there should be a way to "migrate the comment" to a posting, completely with automatic trackback implementation.  Only more integration will solve this.

Then, there need to be better comment architectures.  Kuro5hin has a threaded comment chain (like slashdot).  Maybe this is overkill.  But, the often huge collection of 40 or 50 "stream of consciousness" comments on blogs like the Scobelizer can completely bloglag anybody else that wants to get in.

That's just a start. 

Well, at least I tried to turn my headache into a productive post at the end of the day.  I think the rum really helped.

More Bridges, Fewer Roads

Today, Fred Wilson brought up the Email vs. RSS discussion again.  Fred's perspective is different than that of most technologists.  He sees the wider potential.  The problem is that most people building the technologies get far too caught up in building a newer, more powerful version of some advanced concept, and not so interested in all the people who are left behind.

The key to successful RSS take-up by the masses involves something I call building a technology bridge. What's needed is a way that people already comfortable with a concept (such as email) can become RSS users without any awareness of how or why it's happened, then gradually migrate their thinking into the new world based upon positive motivations. I'm not talking about email gateways such as those feedburner provides. Rather, I am talking about concepts such as an email identity bridge. A way to caplitalize on a broadly known concept (your email identity) to cross the bridge into better subscription content with a new reader interface other than the outdated and unmanagable inbox technology. The new reader interface can be something so simple as a consumer-oriented web service, or can attempt careful integration with email. The details aren't as important as the concept and the low viscosity of the solution.

As an example, Grace's company, Spider Eye, manages highly successful mailing lists for entertainment companies like Warner. One thing that is obvious to me is that people understand "their email address". Spider Eye goes to great trouble to protect their addresses, and keep the lists clean and perfect. That's why people use their service. If there were a way to link people's email identity (not their inboxes) to RSS feeds, that would be an adoption bridge. Let's say one of her clients sent out a regular mail to their consumer mailing list saying "Get more news about your favorite artists using our new blah-blah-blah feed". We know from experience that about 20-30% of the people on these types of lists would try it. Further, assume that the "bridge technology" were a bit smarter than email, not so vulnerable to spam, and provided obviously increased utility.  Adoption would begin.

This is just an example. Trying to "create new RSS tools" to make things easier will only go so far. RSS is an abstract concept which does not reveal its benefits easily to consumers. Without a bridge technology, it increases the time to adoption immeasurably. Consider how powerful CDs were as a bridge technology for taking consumers into the digital music world. Was it planned that way? Probably not. So, look at an RSS-to-email-identity bridge in a similar fashion.

Building such bridge technologies is hard, and the hardest part is that software builders (more than other engineering disciplines) have a very difficult time relating to the masses, and understanding that sometimes "less is more". Too many RSS tools are evolving upward rather than downward. So, doing something like this requires mass-market vision. Hard to come by in the online world.  Scott Karp's reaction to Dave Winer and Robert Scoble is a good example.  To Scott, it's obvious that the technical vision and the consumer vision are miles apart.

But, somebody will do it.  And, the company that not only understands RSS, but also understands the consumer and the need for bridge technologies will be the first to do it successfully.

This is a chronic problem with software technologists.  Too many roads.  Not enough bridges.