Strategies for a discontinuous future.

Consulting & advisory, research notes, in the press, about bubblegen,
next wednesdays.

Saturday, November 29, 2003

Digital Econ 101 and It's Problems

Here's a Slashdot post about my article that beautifully highlights the problems with orthodox technology strategy and economics:

"...The author tells us a story about the music market needing risk insurance, yet fails to consider the very notion of economic exchange in information goods. The problem with music is this. Consumers want music and indicate their preference for music by voting with their dollars. Yet, when the marginal cost of distributing the good is nil, and those that shouldn't be excluded from the market are being excluded, we have a problem. When you want to reward creators of music, and not exclude anyone from the market without specific reason, what is the right price you should sell your music?"

Ultimately, this poster argues that there's a market failure for all digital goods, and it has nothing to do with asymmetrical information - it's because digital goods are public goods. That is, they're like Central Park - you cant stop anybody from consuming them. Obviously, this isn't true - there's got to be some flaw in the argument, because there are plenty of functioning markets for information goods - porn, video games, and movies, to name just a few. But that's besides the point for now.

Furthermore, this guy is saying the following: it costs nothing to infinitely replicate an information good. Since price is based on marginal cost, which is zero, we shouldn't have to exclude anybody from the market. But some people are willing to pay a lot - and others only a little. So how the hell do we price our goods? Furthermore, since marginal cost is zero, how can we make any money? How can we avoid market failure?

This is the standard argument (and why econ breaks down for digital markets). It always leads to silly strategy, based on Deathstar DRM. Here's why, and here are the flaws in this argument:

1) Strategically, the cost of distributing information goods is not zero. The cost of replicating an information good is zero. Distribution is still a cost that's borne by the firm - at least in terms of the production externalities file-sharers impose on it. In fact, if you want to be strictly economical about it, the firm should charge the total fixed cost of an information good to the first buyer - since he can replicate it infinitely at zero marginal cost. Of course, strategically, this is an absurd proposition.

2) Consumers can't vote with their wallets - because they're forced to buy a risky contract under moral hazard. If they could, they might not - but they'd have to coordinate first. There's no coordination mechanism in this market, so what you've got is a massive coordination failure on the demand side - I may agree to vote with my wallet - but what about Joe and Mary? Unless I am sure that they will as well, I'm better off not doing so.

3) Economic orthodoxy is based around the notion of value through exclusion. This interpretation of value is highly questionable - any geek knows that value flows as much from inclusion as it does from exclusion. All the discontinuities in business models over the web are ways to create and extract value through inclusion. Think about eBay, or almost any other succesful business on the Net.

4) There is no 'right price'. Part of the point of my article is to look beyond one-price strategies. There are many ways to effectively charge different consumers different prices, and match value gained with value received - insurance is one.

5) Digital goods are not purely public goods. If anything, they're quasi-public goods. But even that's debatable. To get into this would take a hugely long discussion, so I'll just settle for saying that I think the distinction between public and private goods doesn't hold for digital markets (it's a fairly new one anyways) - and should be replaced by one focused around replication and plasticity (as opposed to private/excludable and public/non-excludable).

6) Approaching digital goods as public goods leads to simplistic strategies where you try and make them private goods - like everybody's favorite, DRM. The point of my article was to try and get past such obvious nonstarters.

Technology economics is nice - but it leads to questionable strategy. I much prefer old-school econ - which is what I based my article on.

-- umair // 6:26 AM //


OK. Here's a great Slashdot post about how not to get economics:

"...He says that music pricing needs to vary in order to convey information to customers about what they're getting. But the value of music isn't intrinsic to the music. What I may be willing to pay $1.25 for, you may only be willing to pay $.02 for".

That's the whole point - the value of music is different to different consumers. That's why prices convey information - because they tell me how much future risk I take and future value I stand to gain - in terms of my own preferences. But unless prices differ, you'll never know how much the market really values any good - and so you have little information about how you might value it either.

-- umair // 6:16 AM //


Slashdot Beats Me Up

My favorite comment so far from the Slashdot thread about my Herring article:

"And here I thought a double moral hazard would be an evening with the Hilton sisters".

This guy (Spoom) got exactly the point of my argument - the record industry's business model is dead.

"...The article talke about how customers can now simply go out and find their own music on the net, rather than rely on a brand to determine what is good music so they can sign them. Does anyone else think that that basically says it all? Labels are obsolete in their current form. What services do they provide, exactly?"

Surprisingly (maybe not), a lot of other people think I'm trying to somehow help the RIAA prop up the industry's dead business model.

So here's my reply to the thread so far, which might help explain my argument:

1) Moral hazard does not mean the record industry has 'morals'. It's a technical term - like grep, or chmod. It means that one party in a contract can take hidden action - like your babysitter - because you can't effectively monitor or influence them.

2) I'm arguing that the record industry should provide free music - not the other way around. Insurance is just another form of free music - whether you get reimbursed in money that you can spend on free music, or free MP3's, or free music vouchers.

3) An efficient market is not a monopoly. An efficient market for music is what all of us really want: a place where we can pay as much for music as the value we derive from it. The problem we're all facing is that the market for music is inefficient - that the music industry can price-fix, gouge, shirk on it's contract, and earn more profits by exploiting such tactics.

4) I'm not 'trying to give control to the RIAA'. In fact, it's the other way around. Read what DVD Jon has to say about buying into DRM - iTunes is nice, but by buying into it, you're also buying into DRM. I'm trying to argue that DRM sucks - and that entirely new business models are the only thing that will work - and iTunes is just the same old model wrapped in a nice interface. I'm trying to prove why the RIAA wants the game to stay the same - so it can keep selling the same old risky contract to all of us, in exchange for greater profits.

4.1) Not all MBA's are beancounters. Get over it.


-- umair // 3:59 AM //

Friday, November 28, 2003

Nice article about foreign capital markets becoming more and more attractive - in this case, to entrepreneurs for their less fickle IPO dynamics.

-- umair // 5:55 PM //


Sometimes, the best ideas are really simple (Pt 2): finance the future stars you think will succeed, by buying a note which gives you a revenue share. Brilliant.

-- umair // 3:08 AM //


Sometimes, the best ideas are really simple: let callers choose what ringtone you hear.

-- umair // 2:59 AM //

Thursday, November 27, 2003

Darwin Mag does social software. It's a pretty pointless read if you keep up with the various blogs on the subject. But mark this the official mainstreaming into the collective corporate unconscious.

-- umair // 6:51 PM //


Replication Wars - Simulation Wars?

Major League Baseball claims that gamecasts - text descriptions of a game - are really replication broadcasts. And it wants royalties. Is a simulation a replication?

-- umair // 6:03 PM //


The Guardian argues that DNS is the best namespace for applications like RFID and net-enabled devices. Why? Why not just use IPvX?? Why give everything a name?

-- umair // 5:57 PM //


The mass-market failure of the tablet PC - and how it's now largely a niche product.

-- umair // 5:50 PM //


Making money from playing massively-multiplayer games.

-- umair // 5:49 PM //


Nice piece about life simulators - There, Second Life, and the Sims Online (kind of).

-- umair // 5:42 PM //


Read this article about Google - not for the purported growing pains, which are it's point, but for all the juciy financial details it gives away. It even manages to reveal Google's own valuation for itself as of last month.

-- umair // 5:41 PM //


News of the Week

The President of Nigeria promises to stop the 419 scammers.


-- umair // 7:04 AM //


The Big Bang Theory of Advertising - aka be 'outrageous' - is the logical conclusion of the Red Queen race for attention from hyperaware consumers, and a nice way to justify invasive, loathsome push marketing.

Small wonder that marketing as theory is failing marketing as practice - both keep recommeding essentially recommending the same strategy: run faster to stand still. But what actually works is something totally, radically, different: highly targeted, noninvasive, microadvertising.

-- umair // 6:58 AM //


Net2Phone comes back swinging with a new franchising strategy for cable network operators to sell full VoIP services. Very nice.

-- umair // 6:51 AM //


The Economist looks at the history of Parker Bros.

-- umair // 6:43 AM //


Obligatory net tax ban rescinded post.

-- umair // 6:38 AM //


Forrester predicts DBA outsourcing. More buzz emerges. So what? Forrester's never right.

-- umair // 6:25 AM //


Bubble 2.0

More about the rebirth of e-commerce. Followed by more warnings that sound strangely familiar.

-- umair // 6:12 AM //


The mass-market view of Media Center PC's. Like I've said before, I don't think this concept is going to work in it's current incarnation - it will end up being a niche product, like the tablet PC.

There a lot of reasons for this - the foremost of which is the Deathstar DRM which makes these things useless to exactly the preadopters who should be driving their adoption.

-- umair // 5:58 AM //


More on organic (plastic) super-thin WORM memory.

-- umair // 5:56 AM //


A cool (academic) piece about one of the theories of consciousness, and how it might be the result of 'mutually self-modeling' processes.

-- umair // 4:08 AM //


Artistic Freedom Vouchers.

-- umair // 3:58 AM //


Another example of the internet doesn't enable price discrimination, but actually creates gray markets where price discrimination gets arbitraged away. This time, ski tickets.

-- umair // 3:50 AM //


Jaron Lanier on why VR failed - and also points out that it has been an industrial success, just not a commercial one (via Nooface).

-- umair // 1:22 AM //

Wednesday, November 26, 2003

Lessig on municipal ownership of businesses that work out to be natural monopolies - like fiber networks. Does this make sense?

Well - remember that, as Warren Buffett has argued, local newspapers and radio stations can be natural monopolies as well - because of weak network effects (like advertising economies). Should this rule apply to them too? Judging by the quality of most local papers, maybe it should.

Furthermore Lessig argues "most economists would leap from the premise of a natural monopoly to the conclusion that such a monopoly must be regulated". This isn't necessarily true - for instance, there are economic solutions to natural monopolies, like access pricing. They just never work.

-- umair // 11:36 PM //


Gawker's picked up on lovemarks. God. This was Saatchi's answer to Ogilvy style branding - it's waaay old. I think Gawker's lame - if it was cool, it would talk about massive new cultural influences, like cosplay and kigurumi.

-- umair // 10:41 PM //


News suggesting Sony is going to integrate motion sensing - perhaps via an integrated EyeToy - into the PS3. A new interface embedded in the console itself offers huge possibilities, and also gets around the big problem every new interface is up against - no user base. Good move.

-- umair // 10:28 PM //


The WiFi bubble's imploding, as network operators scale back their network plans, and try to price themselves into profitability:

"...The average price for monthly unlimited usage is much, much lower in Asia Pacific and the US than it is in Europe," Webb told Electronics Weekly. "It's around $17 versus $119. It seems crazy, doesn't it?"

-- umair // 9:53 PM //


CNet details it's plans for MP3.com - apparently, it will now be called music.download.com, and offer pretty much the same thing as MP3 - free hosting space, and bandwidth. Maybe no revenue share, though.

-- umair // 9:31 PM //


BW on another bubble-era concept that's experienced a bit of a rebirth - shopping comparison (or aggregation) sites. Their take is that it didn't work before the technology didn't work too well, connections were too slow, and trust was an issue. All valid reasons - maybe the truth is that the market just wasn't ready, for a huge number of reasions. Interesting piece.

-- umair // 8:59 PM //


The Reg argues that there is 'no search engine business', but that there's only an 'advertising business'. Semantics? I don't think so. Calling search engines 'advertising' delivery mechanisms misses the whole reason why Google succeeded - by delivering messages that are closely targeted enough to almost not qualify as advertising in the first place.

Is it just 'an intermediary between buyers and sellers', as the Reg claims? Nope - not in the traditional sense. It know the preferences of both buyers and sellers in much finer detail than any media buyer ever could - and this is where it creates massive value for both parties. That's why there is, and will always be, a search business on the Net - it's about consumers revealing their preferences, and smart firms collecting that valuable information.

-- umair // 8:32 PM //


Another way to monetize social software: use it to drive classifieds. Interesting, and also interesting to note that all the stakeholders now have different expectations - so it should be cool to see how this pans out.

Can it work? I have my doubts - where's the advantage over traditional Net classifieds - which work pretty well, as long as you find the microsite for the niche you're dealing in.

-- umair // 8:23 PM //


Rumour mill: Apple introducing a tablet PC for a mobile networked hub.

-- umair // 8:20 PM //


Wow. Killer Groklaw post analysing MS, various kinds of lock-in, tying up the BIOS, and antitrust regulation.

That said, I think antitrust is irrelevant to whether or not Phoenix builds rights management into the BIOS. Ultimately, DRM will let firms pursue strategies like this one - whether or not they're monopolists.

-- umair // 8:18 PM //


Orbitz wants an $82 million IPO. Forget it - if I could bet against this, I would, because I'd make a ton of money. Why? Well, apart from the fact that the IPO market isn't doing too well despite all the buzz and hype, I think Orbitz has seriously overvalued itself.

-- umair // 7:58 PM //



The thought of subdermal RFID chips for any purpose makes me extremely uncomfortable. Not because I'm a fundamentalist, but in this case I think they've got a point - the evil uses far outweigh the good ones. Hugely.

Think about what MS could do with a subdermal microchip that gave them medical and payment info about you.

-- umair // 7:49 PM //


Replication Wars - One Way or Another

Orrin Hatch sponsors a bill that would give the RIAA immunity from antitrust regulation..??!! I didn't believe the article until I read Hatch's proposal for myself. My jaw dropped...this is unbelievable.

Among other things, it also calls for 'trained' enforcement of IP infringement - read, FBI. Probably most importantly, it changes the definition of infringement to fraud against the copyright office. I never bold, so that's really important, because most of the replication wars issues are unresolved because the definition of infringement itself is unclear. Must read.

-- umair // 7:43 PM //


Rumour mill: Google might be SCO's next target. Now that would be hilarious. Between SCO and Phoenix, MS has really proved itself to be far more evil than even I ever thought possible. That is saying a hell of a lot. You should be very, very scared - put the dots together.

-- umair // 7:35 PM //


Umberto Eco on books (vs the WWW). Interesting. (Via MeFi).

-- umair // 7:27 PM //


The outsourcing backlash has officially begun.

-- umair // 7:25 PM //


Declan McCullaugh on DRAM and protectionism - Micron buys protection for the DRAM market against Hynix, who was heavily subsidized by the Korean government. Declan doesn't like this because he's into Adam Smith.

I don't know about this one. I think Micron's point was that that massive subsidies let Hynix engage in predatory pricing, or pricing below their marginal cost - not just price competition - which is dubious even if you're a Chicago style free-markets economist.

-- umair // 7:24 PM //


The End of the Replication Wars?

More on Phoenix's new (MS driven) strategy: building 'trusted' computing into the BIOS. I can't believe the Slashdot crowd isn't up in arms over this - this will end the replication wars dead. At least for a while.

"...More controversially, Phoenix said manufacturers will be able to prevent users from tampering with areas of the system used for copy protection. Phoenix recently said it is touting a BIOS with built-in DRM technology to major PC manufacturers.

In September, the company said it had developed a prototype of its CME including DRM from Orbid. The DRM would allow content providers to identify which PCs and devices are authorized to play particular files, more effectively controlling content distribution, file-trading and moving software from one machine to another, according to Phoenix."

-- umair // 7:17 PM //

Tuesday, November 25, 2003

Another piece (PDF) from a lawyer about how copyright is failing the needs of the public in favor of the corporate bottom line. The arguments aren't new, but the piece does a nice job of summarizing them. I think we are about to hit the tipping point soon.

-- umair // 10:26 PM //


Here's a milestone: the first ISP license for TypePad gets sold, to a Japanese ISP. Npw that's cool.

-- umair // 10:17 PM //


Check out peopleaggregator - a sort of visual degrees-of-separation networking site. Refreshingly, minus the hype and marketing nonsense most other social software services are full of.

-- umair // 10:10 PM //


Disney pulls out of new version of Peter Pan after the Gt Ormond St Hospital - which was assigned the rights from Barrie himself - asks for a share of merchandising revenues. Incredible.

And then the suits at Disney wonder why people think they're evil. Answer: because they think playing games with property rights is a strategy. It's not - it's just a way to generate short-term profits - but the price is steep: long-term alienation.

-- umair // 10:06 PM //


Why have young men stopped watching broadcast TV networks? Analysts, Nielsen, and the industry are in hysterics trying to find a reason. Nielsen says it's partly methodology: younger viewers in their households don't want to participate. Network execs aren't buying it.

I think the reasons are incredibly obvious:

"...The fears are particularly intense among the broadcasters because the decline in male viewers 18 to 34 was not found by Nielsen among viewers of so-called basic cable networks, channels like FX, MTV, Spike TV and USA that run commercials".

There are two reasons. First, everything about shows on broadcast TV sucks. When MTV offers cooler shows, where people can actually do things like have sex and swear, it's pretty obvious what guys are gonna watch. Second, the report cites DVD, video games, etc as having reached critical mass. This is only half true: the point is that guys can get what they want from DVD's and video games - sex, violence, music, action, plotlines worth a damn - and broadcast TV simply doesn't deliver any of those things, because it's too scared to.

Unless the loser TV industry takes a risk, it fully deserves the beating it's getting. I have absolutely no sympathy for these guys - sorry.

-- umair // 7:19 PM //


An interview with John Patrick on corporate blogging. He makes some good points, but misses the fact that corporate blogging is in some sense an oxymoron. His ideal of a corporate blog, I suspect, would suck the energy, viatlity and cool out of blogging - removing the reason people blog in the first place.

-- umair // 6:58 PM //


The NASD invites feedback on three changes to the IPO system - and gets a lot. Read this article if you want to know the problems with IPOs (spinning, valuation information, etc,) why the window hasn't opened, and why it probably won't until these are fixed. This is a great summary - it's dense if you don't know much about IPOs, but worth a read.

-- umair // 6:22 PM //


The downside of internal competition. The pendulum swings the other way...

-- umair // 6:08 PM //


Interesting piece about Lycos changing it's strategy to focus on a niche - second opinion. At the same time, LookSmart is hurting from MS rejecting, and so has teamed with Gale to release FindArticles - a targeted research search.

-- umair // 6:08 PM //


Pricing details for SBC's WiFi service: $25 for three sessions; $50 for eight sessions; and $100 for 20 sessions (each session is one day). I can't see serious mass market adoption at this price. They're going to announce an unlimited price in the near future, but if it's based on these numbers, forget about it - they've priced themselves out of the market.

-- umair // 5:58 PM //


IBM releases business infrastructure for online games. Good move. The games industry is in desperate need of tools like this.

-- umair // 5:49 PM //


The growing renaissance of e-commerce. The growing renaissance of complaints with e-commerce.

-- umair // 5:41 PM //


Thie Newsforge piece highlights how wrong the tech industry is getting service these days. Most of us have gone through something like this.

But instead of trying to fix it, they're digging an even deeper hole for themselves, by outsourcing it to the lowest bidder. Superior service right now could command a massive market advantage.

-- umair // 5:39 PM //


Phoenix unveils it's new strategy - concentrating on extending the BIOS horizontally, to provide "extensible firmware that provides the critical foundation of trust, manageability, and connectivity required for networked computing".

Be very afraid. Phoenix, unlike MS and Intel is the one firm that can make 'trusted computing' aka total corporate control over information and connectivity a reality. Furthemore, MS is a stealth strategic partner in this effort.

Here are two related Slashdot discussions.

-- umair // 5:31 PM //


Investors are warming to camera phones.

-- umair // 5:26 PM //


The Reg has a long piece detailing the history of ITU, ICANN, Net governance, and the stakes involved in the current tussle. It's unlikely that a Net standards war would break out, but an interesting read nonetheless.

-- umair // 5:06 PM //


Notice and agenda for the FCC's VoIP hearing on 1 December.

-- umair // 5:01 PM //


EVerybody's talking about the iTunes proto-hack that was released over the weekend. Of course, as I've predicted, everything gets hacked, and all of these hacks ultimately trickle down to the consumers, in a fairly user-friendly form. This is just the latest example.

But hacking iTunes has been trivial (even for me) since it was released. So I'm not sure how big a deal this is really.

-- umair // 4:58 PM //


An argument from the Reg in favor of bounties, assuming that they'll make life safer on the Net. I've argued that they'll have the opposite effect; read my cops and robbers article for more.

-- umair // 4:53 PM //


Diebold ATM's hit by Nachi worm - first case of infection of ATM's. Diebold, no less. Can someone kill this company already?

-- umair // 4:50 PM //


Massive switching didn't happen yesterday when number portability took effect. Probably because consumers are waiting to see what else they can get out of the network operators, and they're also waiting for everyone else to test the waters and discover the hidden costs first.

Or, if you're a conspiracy theorist, because people were getting the run-around - because the telcos are employing stalling and delaying tactics. Which is what some of the early reports indicated.

-- umair // 4:49 PM //


Does file-sharing really infringe on copyright? The debate goes on, and on, and on. I think the point isn't whether it does or not - it's that copyright isn't adequate for digital goods.

-- umair // 4:47 PM //


Bill Gates writes kind of a wierd editorial about spam in the Post.

-- umair // 4:45 PM //


I've posted a quick and dirty draft version of a new piece about accelerating adoption across tech markets, pointing to the fact that user needs aren't as different as marketers thought. This was the basis for the chasm concept - that there's a gap between the needs of geeks (innovation and pioneering) and the mass market (simplicity and limited functionality). Read this first, or this longer piece (PDF) if you don't know what I'm talking about.

I think accelerating adoption means that this distinction isn't valid anymore (if it ever was), and that marketers should consider a new model for an adoption lifecycle - preadopters, the mass market, and postadopters. In this model, users aren't either innovative or pragmatic - they're both, and whether they adopt sooner rather than later is a function of how connected they are, and what kind of benefits they stand to gain from adoption. Enjoy!

-- umair // 7:36 AM //


More on outsourcing beginning to erode Dell's driver of competitive advantage - it's deep service competence. They've switched some corporate service to call-centers in the States (which had been outsourced to India).

You could read this Metafilter thread for a decent discussion (especially if you think my view is based on some kind of bias, which is pretty retarded, considering my origins).

Hey, it's not like me to say I told you so, so I won't say it.

-- umair // 6:22 AM //

Monday, November 24, 2003

Question of the Week

I'd like to tap into the hive mind with the question of the week. Here's the setup:

We're seeing a lot of bubble-era technologies and concepts come back to life (or sputter in and out of existence, if you like). VoIP (remember Net2Phone?), convergence (remember the hype?), and social software (remember SixDegrees?), to name just a few.

This is not surprising - as Brian Arthur's eloquently pointed out, this is in fact the deepest implication of Schumpeterian dynamics - a boom, a bust, and then a long 'golden period' of technological growth. If you think about, it has to be that way. Of course, this is the critical implication many people miss when discussing 'creative destruction.

Given that, what are some other bubble-era (or earlier) technologies and concepts that you think will surface again soon (or be 'reborn', or survive the shakeout, whatever you want to call it)? Drop me a line - no comments system yet - and I will post a list of everyone's thoughts at the end of the week.

-- umair // 7:58 PM //


Winer, market power, complementary assets, and Google-hating.

-- umair // 7:29 PM //


News.com.com reports on a new Pew report which claims that early adopters are fueling the take-up of mobile and wireless devices. Look, this is wrong. First, the take-up curve is steepening everywhere - new technologies are being adopted faster and faster. What does that mean?

Well, importantly, that effectively there are no more early adopters. It's a mythical market segment that only exists for a very short amount of time. In short, a bankrupt concept. The mainstream is the early adopter - there is no more chasm.

Don't believe it? Take a glance at Pew's 3 categories of early adopters:

"...Young Tech Elite, Wired Baby Boomers and Wired Generation Xers".

That's, ummm, pretty much everyone with a computer and the money to buy said gadgets.

-- umair // 7:22 PM //


The Reg has a little tidbit about SC2003 and what grid computing might do for you. In this case, bring hard-core scientific computing to the masses. Useless? Absolutely not - think of the potential for games, interfaces, new kinds of software, etc.

-- umair // 7:18 PM //


BW runs a big special report on the troubled toy industry. This is very interesting to me, because my friends and I often chat the reason: toys suck these days. Toys were so much cooler in the 80s.

That's not just because we were kids then - it's because there was much more creativity, risk-taking, and real innovation then. In fact, many of they toys these companies are trying to hawk are direct descendants of ideas from the 80s. But they're not as good - because the industry forgotten how to innovate and take risks.

In fact, something the analysts haven't seen for quite a while is that the original toys of the 80s are now cool again - Transformers, My Little Pony, etc - because kids have seen how much cooler they are than what they're used to.

One other interesting thing is that toy entrepreneurs (who actually existed in the 80s) leveraged technology to build toys that excited kids and grown-ups alike. No one is doing that these days- although there are tons of new technologies ripe for the recombination.

-- umair // 7:13 PM //


Capital from India begins to flow back to the States - outsourcing firms are making (small) acquisitions in the US.

-- umair // 7:06 PM //


The University of Florida monitors student activity online and if it catches them downloading music or video via P2P, punishes them. By, among other things, 'educating' them about copyright law. Idiotic strategy, record industry - you're losing a whole generation of consumers.

-- umair // 6:59 PM //


SETI also gives ET's a way to hack into human systems. Idea of the week. (Via MeFi).

-- umair // 6:51 PM //


Newsforge links to this peek into the propaganda wars between the beancounters and the geeks in the ongoing SCO saga. Which is really about the same thing as what iTunes, Macrovision, and the Broadcast Flag are about: digital property rights.

'Viral' licenses are pressing the beancounters' buttons in this example. Of course, beancounters, who are always focused on exclusion as the sole of souce of value have no idea how viral licenses can help create value. Isn't it obvious? If not, read my property rights piece. (!)

I've also noticed in the last month or two a serious backlash from the geeks against the term 'innovation' - which they now believe stands for beancounter spin for...something evil. Interesting.

-- umair // 9:27 AM //


Outsourcing deals starting to be called into question. Everything costs - virtualization is not costless...yet. I talk about the dangers of outsourcing quite a bit, so I won't go on about this.

-- umair // 9:23 AM //


Monetizing social software through it's use a sales tool. Cheesy, and it undervalues the true power of this technology. But at least it's a start.

-- umair // 9:20 AM //


Recycling TV commercials - ThoughtEquity takes old ads, wipes product references, replaces them, and sells them to down-market firms on the cheap. Interesting proposition - arbitraging the residual creative value by leveraging it with novelty (which has massive power in media).

Or is it? I have my doubts - I think the market where this can work is the Thirld World, where people haven't seen these ads before. But here, they're just the same old ads with different names - they'll be just as tuned out by hyperaware consumers as they were before.

(Via /.)

-- umair // 9:11 AM //


Yeah, yeah - this NYT story about the 'first' voice synthesizer is getting around. As a digital audio-head, I can confirm for you that this is more marketing, less tech, and definitely less cool than you think.

-- umair // 9:07 AM //


Sender authentication schemes to fight spam being put together by various heavyweight consortiums.

-- umair // 9:05 AM //


What do consumers want from PCs these days? This article tries to get there, and so do the analysts quoted in it, but they talk too much like [email protected] to really get it.

People do want 'convergence', or combinatorial benefits, but that word has to mean something. So here's what I think - there are two kinds of combinatorial benefits people want from PCs - plasticity and connectivity. They want to be able to hook their computers up to all their other toys, and then play with the data across all of them.

-- umair // 9:03 AM //


Lessons in number portability from Hong Kong. Basically, higher churn (or lower switching costs), more price competition, and more price-sensitive consumer buying into mobile service.

The Slashdot post on this article says essentially 'yeah, it's great that number portability heightens price competition'. These are the same guys that hate Wal-Mart and the tech industry for killing jobs in the name of cutting costs. Note to Slashdotters: price competition, Wal-Mart, cost-cutting, and a lack of innovation are generally directly related.

-- umair // 8:59 AM //


Wow. Vonage hits the jackpot and raises $35 million, mostly from NEA. NEA must have realized that the telcos have announced VoIP, have nothing to back it up, and are going to start making acquisitions any day now. It's a good bet - the exit strategy is clear, short-term, fairly riskless, and they stand to realize a fair amount on their investment.

-- umair // 8:57 AM //


Analysts say Mickey Mouse is becoming less and less popular. How much do analysts cost in India these days? Come to think of it, you can hire my kid sister to tell you that for free.

If you ask me, Mickey is just about at the tipping point of being cool again. But expect a super-corporate Mickey campaign in the near future - which will just uncool Mickey right as he's on the verge...

-- umair // 8:54 AM //


Very interesting piece vividly depicting high switching costs in the cable industry. Not to mention what sounds like some fairly dubious accouting by the industry claiming that constantly increasing rates are due to capex and rising programming costs.

Come on, cable's a natural monopoly run by textbook evil corporations - I don't buy this for a second. If anything, programming costs should only be increasing for the very small number of winner-take-all networks that have emerged in the last few years - like HBO.

-- umair // 8:50 AM //


Obligatory alarmist NYT article about number portability going into effect tomorrow. Only read this for the quotes from analysts which clearly demonstrate that their interests still lie with pumping the stocks they cover, and the quotes from industry managers who are waaaay out of touch with strategic reality:

"...The most important criterion for his clients is low price".

That's only true because you've made it such a PITA to subscribe to mobile service for - well, since forever - that you can't compete on anything but price now.

-- umair // 8:46 AM //


The NYT on Comdex versus Supercomputing 2003, and how this is a leading indicator for the tech industry. I don't know about that - I think there will be plenty of innovation on the micro side of computing, as soon as the tech=cost-cutting virus eats it's hosts, and parasitizes itself out of existence.

-- umair // 8:42 AM //


NYT article about IronPort, which is playing both sides of the spam game.

This reminds me of what an exec at a major DRM firm said to me not so long ago: it doesn't matter if consumers hate it, or if the media industry loves it . The only thing that really matters is that DRM never really works - so money keeps being poured into it. That holds true for IronPort and spam as well - at least in the short term, because this kind of exploitative strategy leaves you open to massive disruption.

-- umair // 8:40 AM //


Like them or not, markets are a going to be a major driver of economic growth. Here's a super-cool one: a prediction market for films. This market turns up all sorts of interesting data that film execs otherwise could never get access to - because it reveals people's preferences.

Traders are trying to turn this into a real market (so far no money is actually traded) - that would let movie studios and funding partnerships hedge the risk they take making movies. And we might actually see some decent movies out of Hollywood. Interesting.

-- umair // 8:36 AM //



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