Reflections on class, 7-21-08

July 23, 2008

Mike Culver’s presentation about Amazon’s foray into web and Mechanical Turk services was an interesting look at Amazon’s diversification strategy. Neither is an obvious logical extension of Amazon’s core business, and both are good examples of lateral thinking on how to leverage brand assets. As Mike explained, web services arose from asking the question, “What have we learned from having to deploy all these servers, bandwidth and XML apps?” In that respect, Amazon is leveraging their intellectual capital. It’s more challenging to connect the dots from Amazon’s core business to Mechanical Turk. Was the question, “What’s another way we take advantage of all this traffic?” Or was it an inspiration that appeared from completely outside the box?

Mechanical Turk: the definitive Long Tail employment agency.
I registered to provide labor on Mechanical Turk today but haven’t been inspired to take advantage of any of the, um, opportunities, such as:

Provide links to RV park information for $0.01
Extract meeting data Information from websites for $0.08
Write a review of a car you’ve driven for $0.20

I did a rough calculation of the time it would take me to test drive enough cars to review at $0.20 each in order to earn what I would earn from one hour of writing a car commercial . If I drove and reviewed 3 cars per day (I’d have to do this part-time, of course), it would take me nearly six months. My inner net-economist says that this would not be a good career move. Extracting meeting data from websites for $0.08 may be the way to go.

Bless you, Malcolm Gladwell.
I do some consulting through another consultant who helps companies and non-profits sort out their branding and positioning. He conducts workshops with the client’s staff to identify key values, positioning statements, product benefits, customer propositions, prospective visual themes, brand identity colors, etc. He then tests these online through Survey Monkey with several hundred respondents who represent a demographic roughly approximating that of the client company’s target market. If, say, one visual theme scores a narrow victory over the visual theme #2, it is declared the winner and the one that should be deployed in creative executions, which is my department. Convincing him that a creative execution using theme #2 would be more effective for a particular application is always a struggle because “the research says that the audience responds better to #1.” I will now tie him to a chair and make him watch Gladwell on the wisdom of “perfect sauces” – plural. Thank you, Kathy.

Information should be free.
No it shouldn’t. Information should be reasonably priced, and reward the creator well enough to enable and encourage her to create more, and long enough after her death to get her kids through college and provide for her pets to be cared for in a Leona Helmsley Pet Hotel. But I had my say in class, so I’ll turn this one over to the student blogosphere.


Abstract: Information and Intellectual Property Protection: Evaluating the Claim that Information Should Be Free

July 21, 2008

(Apologies for the non-abstract length – it got away from me.)

Kenneth Himma’s essay assesses the validity of the now popular platitude, Information Should Be Free, a variation of the inspired original line attributed to Steward Brand, Information Wants to Be Free, from his comments at the first Hacker’s Conference in 1984:

“On the one hand information wants to be expensive, because it’s so valuable. The right information in the right place just changes your life. On the other hand, information wants to be free, because the cost of getting it out is getting lower and lower all the time. So you have these two fighting against each other.”

I’m not sure what technology was lowering the “cost of getting it out” in 1984. Xerox copiers were standard office equipment by then. 1984 also happened to be the year when HP introduced the first LaserJet printer — for only $3,495, which in today’s dollars would be $7,360. Obviously, neither of these content-reproduction machines were household items at the time. It was also the year of Apple’s iconic “1984” Super Bowl commercial which depicted the Macintosh as liberating us from the shackles of IBM PCs and Microsoft. Freedom was in the air.

The variation, Information Should Be Free, that Himma tackles in this essay is credited to Richard Stallman, a software developer and information liberationist who started the Free Software Foundation. In 1990, Stallman said:

“I believe that all generally useful information should be free. By ‘free’ I am not referring to price, but rather to the freedom to copy the information and to adapt it to one’s own uses… When information is generally useful, redistributing it makes humanity wealthier no matter who is distributing and no matter who is receiving.”

Himma opens by saying that his critique of the reasoning behind Information Should Be Free (ISBF) is not meant to suggest that current intellectual property law is not problematic; only that ISBF is a wobbly pulpit from which to attack intellectual property rights.

Himma’s focus is:

“…not whether there are moral rights to intellectual property, but
whether it is morally permissible for the state to use its police power to enforce intellectual property rights.”

For the purposes of his argument, Himma defines “information” as “propositional content … that is capable of being either true of false.” Copyright law protects the expressions of ideas — e.g., Himma’s essay, not the ideas themselves, e.g., that ISBF is no basis for criticism of copyright law. This is a problematic definition; Himma acknowledges that this does not adequately address works of art, yet he later goes on to use artistic works as examples in his arguments.

Great idea, bad interpretation
For me, the poetry of Brand’s original Information Wants to Be Free was that it expressed a truism of our relationship with information. It seems to be our nature to let information lose, an impulse that itches in everyone from the office gossip to the sociopathic hetman in the interrogation room.

Unfortunately, otherwise sensible people like John Perry Barlow, a founder of the Electronic Frontier Foundation and lyricist for the Grateful Dead, used the line to impute liberationist desire to information, as if it were a caged bird chirping the jailhouse blues and just waiting for us to leave the door unlocked.

Himma sums up the Barlow position as holding that “living information objects” have interests and desires and deserve to be liberated. He devotes a whole page to explaining why we should hold this silliness to be self-evident, when a sentence would have sufficed.

Barlow may be where the notion of Free as in no cost entered the dialog. If information wants to be free, I shouldn’t have to pay for liberating it. In fact, I’m doing information a big favor — it should pay me.

Himma takes less time to dismiss the next two common arguments for ISBF:

• Information objects are unlimited and can simultaneously consumed without reducing supply; and

• Humans beings have an interest in information.

According to Himma, It does not follow from either of those true statements that we have a right to anything we have an interest in — happiness, money, sex or Grateful Dead CDs. The non-rivalrous nature of digital information does not make it an exception.

• The price of information should reflect the cost of making it available to users.

This is a popular argument because the cost of making digital information available is virtually nil. Himma correctly counters that while pricing in the free market reflects the marginal costs of the sellers, a “fair price” is ultimately negotiated between buyers and sellers who are “at moral liberty to decide what the object is worth to them.” Also, things like Batman movies cost a lot to produce and distribute and this must be factored into the cost of “making them available.” I would add that while a digital product may infinitely harvestable, it was manufactured from scarce or expensive resources, such as the creator’s time, talent and training, and all are real production costs.

• Thou shalt not restrict the peoples’ access to the Information Commons

Himma says that the above arguments are frequently bundled into the case for the Information Commons — that information should be regarded as a morally protected resource for all to use. Requiring a fee effectively removes it from the Commons, effectively depleting it. Himma says that this argument fails to consider the significant difference between traditional, physical commons resources such as land, water and air, and intellectual ones, such as Fermat’s Last Theorem and A Tale of Two Cities, which did not reside in the Information Commons until someone went to a lot of trouble to put them there.

I suggest that we think of it rather as an Information Pool, which began as a hole that had to be dug, surfaced, plumbed, filled, chlorinated and filtered. So stop whining about there being a cost of admission and, please, shower before entering.

Himma points out the obvious fairness in the idea that the creator of an information property has invested resources in the production of it and is entitled to compensation and some measure of control over it. Any assessment of intellectual property protections must consider “everyone’s interest in a particular piece of content — and that includes the interest of the author in controlling access to it.”

Finally, Information Should be Free as rant against state restrictions on the free flow of information simply defies common sense. As Himma puts it, “ISBF is inconsistent with ordinary intuitiions about information privacy.”

The way I put it to ISBF advocates is, “You’ve convinced me, and I’d like to demonstrate my conversion to ISBF by posting your medical records on my website.”

Is Benkler advocating ISBF?

I haven’t finished The Wealth of Networks yet, but I do not see evidence of Benkler taking his stand on the ISBF positions that Himma very effectively refutes. In framing the battle between the industrial information economy (IIE) and the networked information economy (NIE), Benkler aggressively advocates that Information Should Be Free-er. The IIE has authored current intellectual property law to help the rich get richer at the expense of Information Commons. What we are entitled to, Benkler seems to advocate, is a more reasonable balance between market and social interests, that would both incentivize the creators of information properties and those who provide the distribution infrastructure, and provide ready access to information and resources that will enable society to self-actualize its collaborative information networking potential for the benefit of mankind.

Refelections on class, 7/14/08

July 16, 2008

T.A. McCann has obviously devoted a great deal of attention to focusing on how we use technology, particularly collaborative technology all the way down to email, to identify our pain and how his entrepreneurial efforts might alleviate it.

His business focus on the nexus of Community, Communication and Data Assets is a result of asking Where is all this going? (Community); What’s essential to facilitating it (Communication); and What can I provide that the people who want to do this better will pay for (Data Assets).

His latest venture, MineBox, squarely answers those questions, while also tapping into the leading issues on Chris Anderson’s Top Trends List: the Long Tail, and the limitless sources of information competing for our limited time and attention. MineBox seems like a killer app for T.A.’s low-hanging fruit — power salespeople and those who want to have any advantage over everyone else in the room when it comes to having the latest scoop on everyone else in the room.

Getting betting information in less time, and spending less time on low-return activities are current priorities of mine, so I followed T.A.’s link to the interview with Tim Ferris, author of “The Four Hour Work Week,” which I read a few months ago. Ferris outsources the labor of filtering his email.  I recommend the interview for the time-challenged like myself.  Or do I?  I devoted 30 minutes to watching the interview and another 30 to checking out various outsourcing and time-tracking sites Ferris mentioned — an hour I had scheduled to use for a work-related task that I can’t outsource, and which I now have to claw back by bumping something else on my To Do list.  Be careful our there.

Discussion questions on “The Long Tail’

July 14, 2008

1. Cite examples of Long Tail business success that have emerged in the two years since the book was published.

2. Agree or disagree: our ability to satisfy our niche appetites in the Long Tail is diminishing the cultural significance of “hits.”

3. Is cultural fragmentation a healthy development, or is the narrow pursuit of one’s personal taste, as Anderson quotes Christine Rosen as saying, “making us incapable of ever being surprised… [encouraging] not the cultivation of taste, but the numbing repetition of fetish.”  (p. 190)

Book review: The Long Tail

July 14, 2008

Chris Anderson’s “Aha!” moment that inspired “The Long Tail” seems to have come while he was looking at a graph representing a month’s worth of customer usage data for the Rhapsody music service. “I realized that the curve was unlike anything I’d seen before,” he writes in his Introduction.

He saw that a small number of hits that had been downloaded the most were at the head of the curve, which then fell off steeply but never reached zero as the long tail of the curve extended to include the total number of tracks available on Rhapsody. Even the 400,000th track was being downloaded a few times per month.

It isn’t until deep into “The Long Tail” on page 180 that Anderson sums up the significance of this new business model for the consumer:

“The Long Tail is nothing more than infinite choice.”

Anderson traces the roots of the Long Tail to the Sears & Roebuck catalog, an agent of infinite choice for late 19th century America. Enabled by the simultaneous maturity of the railroad and postal systems, the Sears catalog broke the tyranny that geography had held over consumer choice. By 1897, it offered 200,000 items to rural Americans who were previously limited to the provisions of the local general store.

Anderson portrays Amazon as the modern-day inheritor of Sears’ legacy and, by far, the most successful Long Tail purveyor of physical goods. Unlike, Rhapsody and iTunes, Amazon is a “box shifter,” and must deal with the cost-incurring problems of inventorying and distributing things made of atoms instead of bits.

Amazon has succeeded by effectively passing this buck to affiliates who participate in the Amazon Marketplace programs. Retailers and distributors of any size and stripe can have their stuff listed on Amazon, but they bear the cost of warehousing and shipping it. This aggregator strategy is key to Amazon’s success, which Anderson sites as comprising 40 percent of the company’s retail sales volume at the end of 2004.

Anderson relies heavily on the success of Amazon and other Long Tail superstars such as ITunes, Rhapsody and Google to hold out the promise of the Long Tail as a viable business model. He acknowledges that end-to-end digital offerings such as music present the fewest challenges and biggest advantages over their “brick and mortar” counterparts. In WalMart music resides in CDs that have to be shipped, warehoused, displayed on shelves and handled by clerks before getting to the customer. It behooves WalMart to devote the resources and real estate required to offer the 3000 CDs that can be displayed in one store to the “hits” most likely to be in demand that day by greatest number of customers.

ITunes and Rhapsody, meanwhile, can cheaply store and distribute an unlimited selection of digital song files in increasingly narrower genres, because there is no penalty for carrying products that don’t sell.

To Anderson’s credit, this prospect of the consumer finding a “Paradise of Choice” in the Long Tail is as close as he gets to promising any utopian outcomes from Long Tail economics. Throughout the book, he avoids the giddy exuberance that paradigm-shifting phenomena can inspire in authors and, the publisher would hope, readers. After all, books about The Next Big Thing that promise to upend the status quo would seem to have a better chance of creating watercooler buzz and becoming hits.

For example, Anderson acknowledges that infinite choice comes bundled with infinite crap, and stresses the importance of filtering mechanisms such as search tools and recommendations  to increase the likelihood of a painless, low-risk and satisfying customer experience. The consumer’s plea, says Anderson, is “Make everything available. And make it easy for me to find it.”

Anderson cites the three essential forces of the Long Tail as: the production of more stuff to lengthen the tail, the distribution to make the contents of tail available to the niche markets, and the connection of supply to demand — a process of using our attraction to hits to increase demand for niche stuff to satisfy our most individual appetites.

The way to get more stuff made, he argues, it to democratize the means of production. He cites the role of amateurs and peer production in the success of Wikipedia; the “exposure culture” of the Web, in which getting noticed is everything; and self-publishing and accessible audio and video technology as blurring the lines between producers and consumers. Yet, Anderson never adequately connects this democratization of production and distribution to a successful Long Tail business model. Wikipedia is non-profit and YouTube, the platform for all that nouveau auteur video, gets plenty of eyeballs but, to date, cashes few checks.

Toward the end of “The Long Tail,” Anderson seems to be aware that he has relied too heavily on examples from the digital entertainment sector to convey the promise of the Long Tail business model. He gives us a chapter of other success stories, but these are either less convincing (KitchenMaid and Lego) or one-off category dominators (Ebay and Google Adwords), which, like Amazon and iTunes seem unlikely to be rivaled or replicated any time soon.

“The Long Tail” is a well-researched and generally balanced treatment of a very big idea, a work that intelligently frames a phenomenon that is challenging the dynamics of conventional economics. The only thing that kept me from turning the last page and exuberantly declaring that “This is the future!” was my inability to think of a fresh example of profitable Long Tail success that has emerged in the two years since the book was published.

Reflections on Class – 7/7/08

July 9, 2008

I hadn’t read “Should You Invest in the Long Tail?” by class time and didn’t initially grasp the heart of the Elberse’s position from the abstract presentations. Now that I’ve read it and the authors’ responses to each other, I see why the discussion leaders were challenged to sum up the disagreement, since Anderson and Elberse have differing definitions of the Head and Tail.

What I think is valid about Elberse’s position is her general caveats to not assume that :  1) hits are going away anytime soon, or that they have less significance in shaping consumer buying habits; or 2) because obscure products are more discoverable and purchasable out there in the Long Tail, enough people are going to buy them to make a Long Tail business model viable, unless your aggregation and distribution costs are near zero.

Jeff ‘s discussion on “How Not to Build an Online Market” was also cautionary, a good summary of what when wrong when propane entrepreneurs  tried to eliminate the middle man, only to discover that the middle man also served as the Customer Service department in a highly problem-prone transaction chain.

What is it about cautionary Internet tales that have a subjective appeal for me?  Perhaps it’s a personal weariness with a type of irrational exuberance among a breed of digerati who are over-eager to declare that “X is now dead!”  Examples of X include Advertising, Broadcast TV, The Water Cooler, Movie Critics, Boy Bands and Paying Sticker Price.

Whatever annoys you, there’s bound to be a digital trend watcher predicting that the Internet will do us all a favor any day now by shoving X onto the cultural ice flow.  These prognosticators are, of course, hoping their prediction will be a hit, as epitomized by Anderson’s deserved success with “The Long Tail.”  This may be why the most feverish of them can’t just get excited about the new thing that’s on its way in; the new thing/trend/Web 2.0 phenomenon must be cast as being so revolutionary that it will drive a stake through the heart of some current, irritating or unfair thing so as to make a little more room for us to embrace it.

But I have to admit that one great thing about this Internet is that I can make sweeping opinionated generalizations like that without citing any sources.

Personal learning goals for Net-centric Economics

July 2, 2008

My goals for the class are to acquire an understanding of:
• the principles classic economics theory
• how the dynamics of net-centric economics conform to and diverge from the principles of classic economics
• specific reasons, related to the above principles and dynamics, why various net-centric business models have succeeded or failed
• the strengths and weaknesses of networked production models

• enhance my ability to evaluate the viability of net-centric ventures, especially the ones that pop into my head
• get over my proprietary resistance to the concept of user-generated content (specifically in advertising) and identify opportunities to harness it for the benefit of my clients and my business