Net economics

Eric, Doc and David are discussing economics and the net.

Firstly, I don't understand why commoditizing something is deemed to a be a bad thing. If something is a commodity, it basically means that a market is operating well, and that its price has stabilised at an equilibrium; it is the things that aren't commoditized that are problematic- their values fluctuate wildly through fashion. A commodity business is predictable enough that you can employ MBAs to run it.

If we could commoditize connectivity, that would be great. Joel's essay on 'Commoditizing your complements' is interesting here, and explains some of the forces that move things towards Open Source or Infrastructure.

Eric says the internet is *truly* economically destructive in the sense that it bends the assumptions of supply and demand to the point that making money gets progressively harder over time (since the public domain chews everything up).

This shows a profound misunderstanding of economic value. Value is created by exchange. If I buy a sushi lunch, I value it more than the $12 it costs me. Conversely the sushi chef values the $12 more than the sushi. If this wasn't true, one of us would not make the trade. Thus, by trading, we have increased the total amount of value in the world.

The net enables these kinds of exchanges to happen more easily, reducing friction and delays, as well as enabling other value-creating ones like this conversation.

Arbitrage is when you move things from one place where they are less valued to another where they are more valued, and keep the differnce (less transport costs). This 'taking between' is the literal meaning of 'entrepreneur'. The net, by easing communication, reduces the opportunities for these kinds of gains.

This article explains how things play out by using economic data derived from web sales. You get commoditized, low-cost operations, and premium, high-service operations coexisting, just as you do in the real world.

This is what David was getting at with his recording industry example. It is the distribution side that gets squished, as that is all about moving things around. The creating music and discovering artists part is still valuable, but it no longer needs to be tied up with the distribution based companies. Which leads me neatly to mediAgora.

Elcomsoft not guilty

Elcomsoft have been acquitted of DMCA violation. I do hope this sets a precedent. The DMCA's over-reach needs to be ended.

Douglas Adams on digital ID

It was an Ident-i-Eeze, and was a very naughty and silly thing for Harl to have lying around in his wallet, though it was perfectly understandable. There were so many different ways in which you were required to provide absolute proof of your identity these days that life could easily become extremely tiresome just from that factor alone, never mind the deeper existential problems of trying to function as a coherent consciousness in an epistemologically ambiguous physical universe. Just look at cash point machines, for instance. Queues of people standing around waiting to have their fingerprints read, their retinas scanned, bits of skin scraped from the nape of the neck and undergoing instant (or nearly instant --- a good six or seven seconds in tedious reality) genetic analysis, then having to answer trick questions about members of their family they didn't even remember they had, and about their recorded preferences for tablecloth colours. And that was just to get a bit of spare cash for the weekend. If you were trying to raise a loan for a jetcar, sign a missile treaty or pay an entire restaurant bill things could get really trying.

Hence the Ident-i-Eeze. This encoded every single piece of information about you, your body and your life into one all- purpose machine-readable card that you could then carry around in your wallet, and therefore represented technology's greatest triumph to date over both itself and plain common sense.
mostly harmless, 1992

Why I miss Douglas

It was, of course, as a result of the Great Ventilation and Telephone Riots of SrDt 3454, that all mechanical or electrical or quantum-mechanical or hydraulic or even wind, steam or piston-driven devices, are now requited to have a certain legend emblazoned on them somewhere. It doesn't matter how small the object is, the designers of the object have got to find a way of squeezing the legend in somewhere, because it is their attention which is being drawn to it rather than necessarily that of the user's.

The legend is this:

`The major difference between a thing that might go wrong and a thing that cannot possibly go wrong is that when a thing that cannot possibly go wrong goes wrong it usually turns out to be impossible to get at or repair.'
mostly harmless, 1992

Commodity connectivity

Over at Supernova they are debating 'stupid networks' - commodity connectivity - versus value-added services.
This links in a weird way with what was said at the Harvard 'Managing Innovation' conference I attended - that Business School management can't do disruptive innovation.
So, what we need is business school managment doing the commodity connectivity business, with their 6 sigma quality and 5 9's uptimes and leave services to crazy individuals who like the risk of being in the fashion business.

Email Tony Blair

There is a long and interesting discussion of exactly how unwired the UK Prime Minister is at Tim Ireland's weblog. Tim registered a likely-looking email address to make the point, and now gets loads of email for Blair - and was in the odd position of reviewing and forwarding it to Blair's office for a while.

He missed the obvious solution though - the TPC fax gateway (which Demon sponsor to any fax machine in the UK):
email Tony Blair by fax

Fool.com: Sony's Death Grip

When an investment site picks up on how bad DRM is for business, things are looking up:
Sony Music Entertainment [announced] the advent of its new "Label Gate" digital rights management (DRM) package. Beginning in 2003, all CDs released from Sony Japan will carry this protection.

Label Gate is a one-two punch: Every track on a protected CD will be encoded, and the customer must use Sony's proprietary software to play back the tracks on a computer. This prevents people from converting the music tracks ("ripping") into other formats, such as MP3 or WAV, and sharing them over the Internet. Sounds pretty good, right? Wrong. Not for consumers, and, ultimately, not for Sony.
[...]
Unfortunately, this sort of action on Sony's part only hurts consumers --those that legitimately buy their products -- by making listening to music a hassle. Further, it violates the doctrine of Fair Use -- the ability to use a product you have legally purchased in any legal way you see fit. Sony has effectively made it impossible for a user with a couple of computers and an MP3 player to make copies of songs he has legitimately purchased. Further, DRM software actually encourages people to search for "unrestricted" copies of tracks online, through peer-to-peer networks. Unrestricted tracks would allow you to listen to the songs wherever and whenever you please.

If the record companies want to compete with peer-to-peer networks, they're going to have to find a way to give customers fast, inexpensive access to music. Restricting access and hassling customers is bad business, no matter how you look at it.

Iain M Banks knows best

In this 1994 piece he commits a classic error very lucidly.
Let me state here a personal conviction that appears, right now, to be profoundly unfashionable; which is that a planned economy can be more productive - and more morally desirable - than one left to market forces. The market is a good example of evolution in action; the try-everything-and-see-what-works approach. This might provide a perfectly morally satisfactory resource-management system so long as there was absolutely no question of any sentient creature ever being treated purely as one of those resources. The market, for all its (profoundly inelegant) complexities, remains a crude and essentially blind system, and is - without the sort of drastic amendments liable to cripple the economic efficacy which is its greatest claimed asset - intrinsically incapable of distinguishing between simple non-use of matter resulting from processal superfluity and the acute, prolonged and wide-spread suffering of conscious beings.

It is, arguably, in the elevation of this profoundly mechanistic (and in that sense perversely innocent) system to a position above all other moral, philosophical and political values and considerations that humankind displays most convincingly both its present intellectual [immaturity and] - through grossly pursued selfishness rather than the applied hatred of others - a kind of synthetic evil.

Intelligence, which is capable of looking farther ahead than the next aggressive mutation, can set up long-term aims and work towards them; the same amount of raw invention that bursts in all directions from the market can be - to some degree - channelled and directed, so that while the market merely shines (and the feudal gutters), the planned lases, reaching out coherently and efficiently towards agreed-on goals. What is vital for such a scheme, however, and what was always missing in the planned economies of our world's experience, is the continual, intimate and decisive participation of the mass of the citizenry in determining these goals, and designing as well as implementing the plans which should lead towards them.

Used to planning plotlines across many galaxies in his novels, Iain completely misses the point that in a market economy, the intelligent planning is done by all the individuals in parallel. Some plans work out better than others, which is fine, and clearly better than us all having to agree the same plan, and stick to that. You can't plan innovation collectively, becasue you don't know what form it will take.

As for 'treating people as resources' - that is exactly what centrally planned economies do. Banks should read the Gulag Archipelago or any of Robert Conquest's histories.

Church Turing halts Domesday doomsday

BBC News and Slashdot are reporting that the BBC Domesday project has been 'saved for posterity' by emulation.

I worked at the Interactive Television Unit (the BBC department that was founded for the Domesday Project) for the last 3 months of its existence in 1989 before it was spun out into the MultiMedia Corporation in Jan 1990 (I then worked at MMC until 1997, when it became a shell company owned by the stockbrokers, but that's another story).

When we left the BBC, they had all the original video data on Broadcast quality masters, and all the digital data preserved on VAX tapes. They must have thrown those out in the intervening 12 years (which wouldn't surprise me).

I know of two former MMC directors who have CD-ROM backups of the digital data and working Domesday systems.

Which is not to decry the work in emulating it - that is the real long-term answer. This is the technical (as oppossed to the economic) reason why DRM is futile. The Church-Turing thesis (that any universal computer can emulate any other one), when combined with Moore's law (that Computer power doubles every 18 months) means that we will always be able to run old software in emulation. The corollary is that emulation is often the best solution, even compared to recompilation of the original source. As I've said before, MAME is the most impressive example of this truth, though the 68000 emulator running inside the 'Classic' emulator on OS X is another worthy example.

0wned

I have 100% Googleshare on "DRM destroys value".

This is a shame - still, other people are picking up on the idea.

Welcome Microsoft, seriously. The sooner you stop pretending to the publishing industry that DRM is a good idea, and they should buy yours, the sooner we can move on to making a real marketplace for media

Missing the point

Cory points toLiterary Devices, a short story by Richard Powers.
It's well written, and worth reading. I'll wait while you do....


...OK then The problem with it is the author's barely-masked contempt for any real writing online, in his pursuit of the chimerae of dead literature mediated through AI. Had he connected with other living writers online, he would have realised that their conversations were what he was missing, rather than the simulcra he found. The implication at the end that we cannot tell stories except in person, and that new media cannot help at all is so wrong that it jars the rest of the piece.

Washing-up gadgets

I know some people blog about mechanical tools to help them wash up, but I have found the ultimate. It's a high-pressure steam cleaner that Rosie bought for cleaning floors, walls and windows, but there's nothing like superheated stream at 4 atmospheres for getting baked-on gunk off roasting dishes and pyrex cookware.

Keep Dancing

Jonathon Delacour wrote about the song For a Dancer
Here is a performance of it by Clive Gregson and Christine Collister (Love is a Strange Hotel, the CD I got it from, has been deleted; you might find a copy on eBay or Amazon auctions).
Today is Thanksgiving in the US. Give thanks for those we have known, and those still dancing with us.

filtering out the noise

Jakob Nielson
we asked users to find the supplies they'd need to install a new kitchen floor. One user was a particularly sad case: On a page that asked for the square footage of the area to be covered, he was swearing as he tried to calculate his floor area by hand. Next to the form he was struggling with was a large animated graphic with flying words, including "room planner," "set up room size," "length," "width," and several other terms indicating that the box linked to an application for computing floor sizes. Too bad this user didn't see it. Nor did our other test users. To get usability data about the actual Flash design, we had to force people to launch the application.

The problem is clear: users try to avoid anything that's overly hyped or promoted, especially if it looks like an advertisement.

I find this very encouraging, though if Advertisers take it to heart, we'll have a lot more stealth advertising.

AlienAid - Chocolate - UK to US

I was going to write about how most US chocolate tastes like wax, and how we have the good stuff smuggled in from England by visitors, but Orson Scott Card wrote the AlienAid chocolate piece for me.
However, he doesn't mention Joseph Schmidt of San Francisco,who make the yummieat chocolate in the world. (note that they don't ship on Thursdays or Fridays so it doesn't melt in the post - no wax there).