Tuesday, July 31, 2001
Monday, July 30, 2001
Imagine my surprise when reading through this old piece on LISP where it compares the "right thing" philosophy to the "worse is better" philosophy of computer language design. The "right thing" philosophy, like information architecture, has several rules requiring "simplicity," "correctness," "consistency," and "completeness." The "worse is better" philosophy places simplicity as the top concern all other elements should be subverted to support. Sounds a little like customer experience to me.
UNIX and C, built on the "worse is better" philosophy are still going strong. Sites with a good customer experience are winning. LISP is moribund. Sites with bad customer experience (but excellent information architecture) are dying.
XML-RPC, a language I will write more on soon, takes this "worse is better" philosophy to create a simple way for systems to talk to one another.
In my experience, customers have overwhelmingly preferred simple sites that let them do what they wanted to do. By using customer behavior to control scope, the technology could be kept simple and slim. This kept build and maintainance costs low. Simple, customer behavior driven technology will be increasingly important as the world moves from PC-based to network-based work environments. This will require abandoning monolithic bloatware and learning to handle bits (digital information) they way UNIX coders do: simple programs piping ASCII to each other. Check back soon and I'll tell you about porting the UNIX design philosophy to the front end (and why GNOME and KDE are seriously misguided).
Link to this column.
Thursday, July 26, 2001
Instead of placing ever more draconian authorization measures on unpopular devices, publishers should realize that, in the digital world, they're selling experiences not content. Reading a book on the Web is a worse experience than reading a paperback. Online, the text is harder to read, less mobile, and less convenient to access. A book on the other hand has excellent resolution, portability, and "always on" access. If publishers realized that the online and offline reading experience is completely different, maybe they would stop crippling digital media and start using the Internet to satisfy customers and make more money.
The same goes for music. Napter provided a better experience than over-priced, hard to find singles, but a worse experience than album length CDs, which came with liner notes, all the songs, and zero download time. Instead of improving the CD experience and using Napster to sell more songs, the record industry is creating experiences customers hate, crippling their music with metered pricing and tethered downloads.
You would think that DivX and the VCR would have taught the recording industry a thing or two about their business. The VCR did not kill the cinema because seeing a movie in a theatre is completely different from seeing it at home. Similarly, DivX, a DVD format that stops working after a few plays, provides a worse experience than renting a movie at Blockbusters because customers hate metered pricing. Hollywood's current paranoia at online movie sharing demonstrates how out of touch they are with reality: waiting 12 hours for a movie to download through a broadband connection I don't have just to watch it on a little monitor is a worse experience than just renting the bloody thing.
The sooner publishers realize that, in the networked world, they're selling experiences and not content, the better off we'll all be. Customers will start getting products and services they like. Publishers will stop obsessing over how to cripple media and start differentiating their experiences on different channels. And artists might even start benefiting from the sort of live experiences only they can create. In the digital world, experience is king.
Link to this column
Publishers should reconsider releasing their content in digital form. E-books are not popular, despite what the columnist claims. Non-crippled CDs will always allow online file sharing. Publishers are clearly unprepared for the business model implications of moving content from the physical world to digital media. The rest of us should not have to suffer for their inability to operate in the digital world.
This is false. Microsoft accustomed people to getting stuff for free long before the Internet. When I buy my computer, it comes with an operating system, a browser, a word processor, an email client, a spread sheet etc. etc. etc. Through bundling, the "price" of the software is hidden from the consumer, and so experientially speaking, the software is free. (Why experientially? Well, the price of the software is built into the price of the machine, and I never had to evaluate whether I want something or not, never compare different products to see which one is best value for money, etc. etc. Essentially, as far as the purchase experience goes, the software comes free with the computer).
Microsoft bundles software to maintain its monopoly. Even though their software is pretty bad, it isn't bad enough to be worth replacing for the home user (this is not true for the business user, but most businesses are clueless about how to use computers). Hal Varian describes the economics of bundling in this article (NYTimes subscription needed)
Tuesday, July 24, 2001
Entrepreneurs in particular often criticize their venture capitalists for making the company take stupid risks. Unfortunately, it is perfectly rational for venture capitalists to always force a company to take on more risk that its employees want.
Imagine a venture capitalist and an entrepreneur who are both equally greedy. It's still 1997, so the venture capitalist gives gobs of money to the entrepreneur (and several of her MBA classmates) who all go off and start various businesses. Everybody is interested in maximizing the return on their investment, but for each entrepreneur this means growing their company, and for the venture capitalist this means growing his portfolio of companies.
Just as a stock market investor can improve his returns by buying several different stocks, our venture capitalist diversifies away some of the risk unique to each individual company by owning a portfolio of investments (see figure 1). Note that our entrepreneur is not so lucky. Her success depends entirely on the success of her company, and her company alone.
One way to think about the utility of an investment (U) is to balance its expected return (E) with its riskiness (volatility, s, the standard deviation), magnified by some risk aversion constant (A).
So, U = E - A.s^2
All this means is that the value of an investment (U) is it's expected return (how greedy you are) minus how afraid you are of losing your money (see figure 2)
The thing is that even if the venture capitalist and entrepreneur are equally greedy (both have the same E) and equally afraid (both have the same A), the venture capitalist will still push the company to take greater risks than the entrepreneur. Because the VC has diversified away company specific risk through a portfolio, he expects a higher return for any given risk level. The entrepreneur on the other hand is completely invested in her company, and has to bear the full brunt of its riskiness (see figure 3).
The moral of this story is that venture capitalists aren't necessarily more greedy than the employees of the companies they fund, but are primarily interested in their portfolios as a whole, and (rationally) try to hit a home run with every company. This is bad news for the companies who might be quite content with just getting to second or third base. But of course, as VCs are acting perfectly rationally, the companies knew what they were getting into when they sought out and accepted the money.
Link to this column.
Monday, July 23, 2001
Part of the copyright battle is being lost in debate terminology. "Intellectual property," "piracy," "theft," are all "ideas as property" based terms that play into the hands of Recording Companies and other publishers who see their livlihood threatened by cheap, ubiquitous distribution. To win the public debate, those on the side of open distribution need to reframe the issue by introducing new terminology that substitutes "ideas" for "intellectual propert," "sharing" for "piracy," and "access," for "theft." The Dmitry case needs to be about "an individual sharing ideas about access," not "a pirate helping others steal intellectual property." This does not mean doing away with all copyright laws or saying that piracy is OK, but it should help shift the conversation back to notions of fair use, public domain, and the intellectual commons.
Also, some tips on organzing a protest (learned from the NYC event):
- LIST-SERVs are great organizers.
- Settle on the time and date early. It makes advertising the event easier.
- Organizers should bring their own signs and flyers for protestors to use.
- Tables and banners make the event look more photogenic. Giving newspaper photographers photo-ops is helpful.
Friday, July 20, 2001
RIP Napster The record industry could have made a friend of Napster by simply converting it into a subscription service that, when activated, let you download an entire song instead of the first 60 seconds. Customers would have open access to unlimited music, those who wanted to buy CDs could still use it as a sampling tool, and the record industry would get money for nothing, as Napster runs off its users' servers. Instead they shut it down. When Napster reopens, it will try and use a proprietary .NAP format instead of MP3 and fail. As folks seem to intent on creating standards monopolies, I'll run on story next week on how to do that.
A little new journalism at its best. This Boston Herald piece was put togther after the author spent a good bit of time on the free-sklyarov email list.
Thursday, July 19, 2001
Wednesday, July 18, 2001
- By criminalizing tools to crack code, the DMCA has essentially convicted gun owners of being murderers, and car drivers of being hit-and-run offenders. If China had this law, Amnesty International would be up in arms. Americans should be ashamed.
- Open sourcing software opens it up to scrutiny that will make it more secure than closed software. In fact, open sourcing software is the only way to make it truly secure. Good encryption cannot come from obscurity, it is a process built into the code.
- The battles over digital copyright are entirely over protecting business models, not protecting the public domain.
The thinking technical community is, of course, aghast at this news, but I wonder if the broader public is thinking any farther than "glad they caught the evil hacker." When it comes to authorized sharing and the DMCA, I don't think that the general public has an inkling of just how high the stakes have become.
Tuesday, July 17, 2001
But his most important innovation is the GNU Public License (GPL).
The GPL recognizes that programmers write better software when they can re-use existing code and fix each others' bugs. Therefore, programs released under the GPL come with their source code which can be freely reused and modified by others. The catch is that any software containing GPL'd code must also be released under the GPL if distributed. For example, an insurance company that created an in-house application using GPL'd code must release their program under the GPL as well if they plan to commercialize it.
Freely available source code undermines the commercial software business model based on selling programs as products that customers cannot modify or share. The GPL's "pass along" effect continually enlarges the code base GPL programmers can draw from when writing new programs. This is why Microsoft describes the licence as being "viral," "a cancer," and "unamerican"--it undermines the way they do business and keeps getting bigger.
Freely available soure code also undermines the research and development process that has driven software innovation ever since Microsoft established its desktop monopoly in the 80s. Instead of building products and hoping to be bought, coders are now launching innovative products directly into the marketplace, and leaving future development to the network, not to a proprietary software firm. Under this model, the market selects software based on its use value, not corporate best-guesses.
The GPL is a catalytic mechanism, defined by business author Jim Collins as galvinizing, non-beaurocratic means of turning objectives into performance, that changes the way software is built, sold, and maintained. Don't like a piece of software? Change it at will. Don't like the limitations of proprietary software? Use open software. Just make sure you contribute to the community. Microsoft has responded with its own "viral" licensing scheme, "shared source," which forbids any programmer who has ever looked at Microsoft code from writing anything which may resemble it or compete with it.
One can see software production splitting into two worlds. Microsoft recently banned any GPL'd code from being used in developing one of its applications. Coders who develop GPL'd software are wary of participating in Microsoft "shared source" projects, for fear of future lawsuits. Microsoft's viral strategy is more divisive, because it actually segments the community of developers, instead of just the body of code ("shared source" applies to minds, GPL just applies to software.) This restrictiveness seems unwisely antagonistic. Given that Microsoft has a monopoly on the PC, it's not clear which development model will ultimately dominate, but the catalytic GPL has accelerated the debate.
Link to this column
Monday, July 16, 2001
And before Americans start patting themselves on the back, note that the US government's own little working group on authorized sharing recommends exactly the same thing.
The saddest thing about all of this is how successful such brainwashing strategies have been in the past, particularly the notion that ideas are "property." Society benefits most when ideas are shared in the public domain, and copyright can and should support that. But even well meaning, intelligent individuals have bought the whole "ideas are property" con and cannot see how insidious and abusive current copyright regimes are.
Read the discussion on slashdot.
Friday, July 13, 2001
Thursday, July 12, 2001
Some existing business models profit off ideas by using the natural scarcity that comes with physical transmission (book publishers sell books which "bind" the information). That's fine. However, some business models profit from ideas by operating in secondary markets that freely shared ideas create (AOL offers ISP service over open-source TCP/IP). That's fine too. It costs money to impose scarcity on sharing ideas by having complex authorization systems. This is also OK. If a business benefits from imposing scarcity on ideas, and imposing that scarcity has cost (as it does not exist naturally the way it does for physical goods), then authorization and monitoring compliance is just the price of doing business, the same way paying someone for wood is part of the cost of making a chair.
Nevertheless, business models based on making ideas scarce should be under competitive pressure from business models that use the natural abundance of digital information to create secondary markets. Such business models authorize all sharing and so do not have to incur monitoring and compliance costs, which may give them competitive advantage over businesses that do. The most competitive business model will vary industry by industry. In some businesses, the demand for professional quality might justify carefully controlled authorization structures, while in others, secondary markets built on shared ideas might be more profitable than defending a primary market for the ideas themselves. But these different models must be allowed to compete in the marketplace, and may the best model win.
There are legitimate uses of Napster that the current court ruling does not acknowledge. By shutting it down, the court has ruled against a business model instead of against an illegal practice. Although RIAA lawyers say "intellectual property must be defended rigorously," in the world of CDs, unauthorized sharing (what they call "piracy") happens every time someone lends someone a CD, makes a mix tape, or listens to the same song twice. They do not pursue business models that outlaw these practices (and so do not call these practices "piracy") because 1) the cost of such enforcement is higher than its value to the record company and 2) the customer experience is not competitive--customers would flock to less draconian competitors. In the online world, they have managed to convince courts to push the cost of enforcement to others (Napster) and are pursuing business models that create non-competitive experiences (metered listening, tethered download etc.) This will fail because the cost of litigation against distributed sharing programs (such as Gnutella) is extremely high and cannot be pushed onto others, and ultimately, provided that the network remains open and people always have a choice, good customer experiences will win.
Link to this column
Wednesday, July 11, 2001
Tuesday, July 10, 2001
Economists argue that licensing software enables companies to sell it to different groups at different prices. For example, if they gave nonprofits a cheap version, but did not include a restrictive license, the nonprofit could then resell the software to a for-profit company at a discount to the corporate price (but above the nonprofit price). Therefore, the software company would need to sell the software at the same price to everyone, which limits the profits the company can make and reduces the number of customers who can use the software (as some customers are priced out of the market). Both consumers and producers lose. (Drug companies operate under similar economics. -- NY Times, subscription needed).
This argument makes no sense in the open-source development model, where the value-added comes from related services in a secondary market. Complex licensing schemes, when enforced through draconian methods, worsen the quality of the ownership experience, and help level the field between open-source and closed-source software.
Also, note that the school in the article above needed more copies of Windows solely to read word docs sent over from head office. Why should someone have to pay $200 to read word documents? Microsoft's upgrade policy purposefully introduces obsolescence and reduces the quality of software.
Monday, July 09, 2001
Even though Eazel has packed up, their code lives on, one of the benefits of open source.
The UK government has backtracked in their unthinking support of Microsoft. Turns out that Hailstorm does not give citizens the privacy protection they are entitled to.
The Economist twigs what readers of Kuro5hin have known for years: flat-rate streaming services lose more money as they get popular. We'll see how long it takes for that to sink into the larger conciousness. Shorewalker makes the same point. Clue to companies: sack anyone who thinks video-on-demand over IP is a good idea.
Here's a very long article that goes through .NET in detail from a functionality perspective. Clay Shirky comments on it here, Dave Winder here, and Webword here. Thanks to Webword for the article.
UCITA seems to have been stopped, at least for a while. Thank your friends at Americans for Fair Electronic Commerce Transactions coalition (http://www.affect.ucita.com).
Oh, and Microsoft continues to abuse its monopoly position, this time with Kodak.
Friday, July 06, 2001
Thursday, July 05, 2001
The problem is the focus on using the Internet as a primary market ie. insisting that the main profit generating activity be online. Instead, a better approach for many might be to capitalize on secondary (offline) markets, and use the Internet to support those through lowering the cost for all support services. The author of Sluggy Freelance is far more famous because of his website than he would be if he tried to break into the newspaper world.
Too much email Here's an NY Times article (subscription needed) about how people have too much email in their inbox. The reason for this is clear -- 1) people coming from the PC world do not know how to handle digital information in the networked world, and 2) Windows/Outlook has no easy way to move plaintext from email to the computer's file system. Instead of messing about with antiquated PC-based interfaces, open source GUI efforts like GNOME and KDE should draw from their network histories and build front-ends that help people manage digital information.
Tuesday, July 03, 2001
In the US, the key questions government institutions need to wrestle with are 1) who controls the Code, and 2) who controls the Network. The Microsoft anti-trust trial is grappling with the former in the courts, while the open-source movement deals with it in the marketplace. The Napster trial, DeCSS trial, and Microsoft's are tackling the latter in the courts, while Microsoft's .NET initiative has thrown down the gauntlet in the markets.
Monday, July 02, 2001
Online security An interesting look into secutiry guru Steve Gibson's run in with internet crackers.