The Monkey Lab
Powerset says f%$#ck you Google, your ass is grass and has $10 mill extra lunch money to do it.
Powerset is a startup that is raising some eyebrows in Silicon Valley. It’s led by a Barney Pell, a former NASA and SRI engineer, who recently served as an entrepreneur in residence at Silicon Valley VC Mayfield and left to form Powerset. Some of the “we’re better than Google” language is just good PR, but this raises the interesting question of where search is going. Natural language search has been hyped as a more intelligent mode of search, more similar to asking HAL from Space Odyssey 2000. For all the raves people give Google for their search engine and page rank, it still rather clunky in that results often take several iterations before users get to the information they need. Natural language search makes it easy for non-power users to get to information faster because the engine understands descriptions of what users are seeking.
But people are wondering if search is already “good enough” and that Google/yahoo already fills the needs of the average user. Also Google’s stickiness is not just from its search engine, not the least because of the recognizable interface, simple main page, and robust ad-engine. AskJeeves already offers natural language search and yet it is a distant fourth behind Googs, Yahoo, and MSN. Powerset has a ways to go, but we won’t see just how good it is until they launch. This is interesting though because there is substantial interested from other VC’s such as Foundation. Search is still not entirely mature despite the strong businesses and business models that evolved from search portals.
Mayfield has a pretty substantial history and portfolio of enterprise orientated companies too including Legato, MIPS, Webmethods, Broadvision, and 3com. Since he left Mayfield, I wonder if that has any bearing on the direction Powerset may take, i.e. Enterprise natural language search?
WTF!? - JonBenet Ramsey killer found...THIS JUST IN "That sex with young teens is not a strong taboo in some Asian cultures"
JonBonet Ramsey's killer has finally been found, in Thailand of all places. He was apparently arrested post-perverted-sexual-predator coitus, having just paid beaucoup Thai dinero to get meet his creepy needs. That's good.
But whoever wrote this article needs a firm slap in the face. I've never known a culture in the Asia who believes having sex with children is ok and the only reason it exists in places like Thailand is because of the monsters like John Mark Karr. This guy deserves alot worst than he's going to get I'm sure. Note his blankish unrepentant gaze. He's clearly going to hell.
Southeast Asia a haven for child sex predators
Corruption and culture blamed
August 17, 2006
BANGKOK, Thailand -- It's a photo that has become a staple in the tabloids of southeast Asia: the foreigner taken in by police after being caught in bed with a local boy or girl.
For many of the region's countries that derive huge sums of money from the tourism trade, it's a vivid illustration of its seamiest side -- child sexual exploitation.
The spotlight was on Thailand on Wednesday after a man suspected in the slaying of 6-year-old beauty queen JonBenet Ramsey was arrested in a surprise breakthrough in a decade-old U.S. case that some feared would never be solved.
U.S. officials identified the suspect as John Mark Karr, a 42-year-old American.
In countries such as Thailand, child sexual exploitation builds on a long-standing and vast prostitution industry and thrives where law enforcement is weak or corrupt. That sex with young teens is not a strong taboo in some Asian cultures makes fighting the problem even more difficult.
In recent years, poverty-stricken Cambodia has become a new frontier for pedophiles for this reason. The arrests of aging British rock star Gary Glitter -- real name Paul Francis Gadd -- first in Cambodia and then in neighboring Vietnam brought a rare international spotlight, though new cases come to court virtually every month.
In June, Glitter's child molestation conviction and 3-year prison term were upheld by an appeals court in Vietnam. He had been found guilty of committing obscene acts with girls ages 10 and 11 at a rented villa in southern Vietnam.
"This case sends a strong message to child sex offenders around the world that society will not tolerate any form of sexual violence and exploitation of children," said Carmen Madrinan, executive director of the Bangkok-based child protection group ECPAT International.
Vietnam does not have the reputation of Cambodia as a haven for sex tourism, but recent surveys by the government and the United Nations Children's Fund indicate that child prostitution, including child sex tourism, is on the rise, Le Hong Loan, head of UNICEF Vietnam's child protection section, said this year.
"I think the case of Gary Glitter is a historic case for Vietnam so it can be more vigilant about the situation of sex tourism," Loan said.
In Cambodia, there are about 33,000 child sex workers, according to UNICEF.
The U.S. State Department has listed Cambodia as among the world's worst nations at adequately addressing human trafficking problems, including the trade of child sex workers.
Peter Rip of Leapfrog Ventures on Web 2.0
Gartner has now officially anointed Web 2.0 a bona fide IT trend. BFD. Of course, they straddled the meme, by putting it at the peak of their 'hype cycle' graph. That is the consultant's version of plausible deniability. If it turns out to be real, they called it. If it is not, they still called it. This idea has picked up a lot of steam since I first noticed it ten months ago. Dion Hinchcliffe and Andrew McAfee are the real thought leaders, emphasizing the technologies and social/managerial impacts respectively. Dion Hinchcliffe does his usual masterful job of deconstructing some of the elements of this Gartner-validated wave.
Before we all jump on this bandwagon, let's exercise some intellectual restraint and rigor, and in the process perhaps abandon the use of 2.0 as a synonym for "new". The original moniker of Web 2.0 has been used to imply/describe/justify/motivate a collection of concepts that range from standards (like RSS) to technical methodologies (like AJAX) to social phenomena (like personal publishing, rating, and sharing). Web 2.0 has been as much about sociology as technology. But Enterprises are not just big "collections of consumers" and so let's not graft the same concepts and expect a thousand enterprise flowers to bloom.
First, dispense with the sociology. Enterprises have two core attributes that do not exist as widely in the public web -- purpose and accountability. So 'empowerment' and 'collective intelligence' are not end points. Nor are 'discovery,' 'networking,' nor 'sharing.' These are embedded in processes and are methods for creating context to purposeful transactions. A sales forecast is 'collective intelligence.' Mining customer comments is a form of 'discovery.' A internal blog post is more likely to be linked to a product release status than photos of my vacation. Viewed in this context, a lot of what passes for (aspiring) businesses in Web 2.0 are simply features of larger processes in the Enterprise.
So Enterprise 2.0 as a platform shift is mostly about the enabling technologies. Web 2.0 rode the back of Open Source and Moore's Law to crack the economic barrier in building web based services. What followed were technologies for making applications richer (AJAX), easier to build (Ruby on Rails), and easier to integrate (REST and RSS).
But only a tiny community of developers have built Web 2.0 apps using AJAX, ROR, or LAMP. It is really just a few thousand people -- and very few work in large enterprises or ever will, again. So how will the Enterprise 2.0 apps get built? I doubt it is from a startup like Jotspot who has no business process expertise nor business data management expertise. I doubt it is Oracle or SAP who pride themselves on selling Sherman Tanks as radiation-hardened compact cars. The users will build Enterprise 2.0 apps, not the vendors.
The question is who will "get it" first?
- Will the enterprise application guys (the IT dinosaurs) "get it" about embedding communication and social context in long-running transactions, or
- Will the web 2.0 guys (the IT plankton) "get it" about business processes being the purpose of enterprise community and communication?
Maybe there's a third choice. Maybe the users will be able to imbue business processes with social computing features.
The growing consensus is that web-oriented architectures in the form of "mashups" will be the first wave of Web 2.0 in the enterprise. Maybe, but I think these are going to be niche tools, not mainstream. Why? Because today's mashups are data mashups and once you have the data, you rarely need it again. As a test, think about how often you got back to a cool mashup you've seen to re-use it over again.
This is the promise of process mashups - user-driven, maybe even user-authored, collaborative applications that support core business processes. Data mashups are the New EII. Process mashups are the new EAI. (To be meme-compliant you may want to call them EII 2.0 and EAI 2.0. I don't.)
We are ripe for an breakthrough as big as Visicalc. The spreadsheet exposed the power of the microprocessor to millions of PC users. It was and remains the only significant programming tool used by millions of people who know nothing of linting, compiling, scripting, or even looping. It provides a simple method of assembling data sources to create a custom "application". The application is really part of a business process, most often a financial process. A spreadsheet for business processes would be a powerful way to unlock collaboration and process knowledge in Enterprise 2.0.
New grounds reached in gluttony
This is the famous 100x100 burger ordered at a Las Vegas In and Out burger. Notice there are 100 patties wedged with greasy melted, almost nauseating slops of cheese, but two lone buns on the top and the bottom. Apparently the box was assembled impromptu by the staff who had never had an order like that before in their life. As much as I wished I was capable of eating such junk, I have to say my current state of overeating and lack of strenuous physical exercise makes me think I'm pretty much guaranteed to collapse from a stroke upon reaching within a 1 foot radius.
Virtualization - Differing views on containers
Interesting stuff on virtualization from virtualizaiton.info reporting on the recent Linux Symposium:
What emerged since the very first day
of this year Linux Symposium is that various virtualization approaches have to reach a common standard before being considered for Linux kernel inclusion. In other words it's unlikely one technology will be chosen over others.
SWsoft is reporting different positions about the specific virtualization approach called OS partitioning, implemented by mentioned solution like its products Virtuozzo (commercial) and OpenVZ (open source), Sun Solaris Containers, UML, Linux-VServer and others:
Eric Biederman wants to have so-called namespaces in kernel. Namespaces are basically a building blocks of containers, for example, with user namespace we have an ability to have the same root user in different containers; network namespace gives an ability to have a separate network interface; process namespace is when you have an isolated set of processes. All the namespaces combined together creates a container. But, as Eric states, an ability to use not all but only selected namespaces gives endless possibilities to a user.
IBM people want application containers, and for them the main purpose of such containers is live migration of those. The difference between app. container and the ?full? (system) container is a set of features: for example, an application container might lack /proc virtualization, devices, pseudo-terminals (needed to run ssh, for example) etc. So, an application container might be seen as a subset of a system container.
OpenVZ wants system containers that resemble the real system as much as possible. In other words, we want to preserve existing kernel APIs as much as possible inside a container, so all of the existing Linux distributions and applictions should run fine inside a container without any modifications. Of course, the goal is not 100% achievable, for example we do not want the container to be able to set the system time.
Linux-VServer wants just about the same as OpenVZ, it?s only that their implementations of various components are different, and their level of a container resembling a real system is a bit lower (for example, in networking).
Read the whole article at source
Solution convergence is a huge problem here like in Xen / VMware server virtualization approaches. And an agreement seems too far at the moment.
MyNoteIt - Web 2.0 for students and workgroups
God I wish I had this when I was in college:
From the website:
MynoteIT is an extremely powerful utility for any student at any grade level. You can store all your school information in one place, and access it anywhere in the world instantly.
Here are some reasons why every student would benifit from mynoteIT.
* Tell us the scores you get on assignments throughout the semester and we will automatically calculate your grade.
* Instant access to your teacher's contact information.
* Our note taking area has an auto-save feature so you never lose any of your notes if your browser crashes. You can also lookup words you don't know, and translate words between languages, instantly inside your workspace.
* If you need help on a certain subject, use our community search to find what you need, even bookmark notes for later use. Need to find those notes you thought you would never need from two months ago? Use the Your Search option to search through your notes instantly.
* Build a friends list so you can easily get in contact with your classmates.
* Our calendar allows you to view all your upcoming assignments so you never forget what is due again. Create (or join) groups at your school so you can more easily share information with the people who need it.
Middle age for startups
A friend of mine has a hardware startup called PowerToad. Typical to any middle-aged startup, they are suffering from growing pains. It is imperative for startups to begin moving from the "sell it to anyone who sniffs at us" phase, to really focusing on just exactly, what type of market you are focusing on
? Those questions are the most salient for PowerToad as they have signed up a number of high profile clients, but as of yet it doesn't appear they are cash flow positive and need just the right marketing and sales effort to make it all happen. This post from Early Stage VC seemed to fit the bill. Jeff if you're reading, take a look.
Business Model, Schmizness Model
The term “business model” has bothered me for a long time. I have always found it to be a glib method of characterizing a company’s relationship with its various constituencies, e.g., customers, suppliers, competitors, etc. The problem isn’t really the concept. The problem is that it’s a complex, multidimensional structure that doesn’t really lend itself to a summary sentence, at least not if you really want to understand the business. Yet it one of those economic terms that has entered the popular lexicon as the rise of business schools in the 1970s and 1980s mainstreamed “businessperson” as a profession (like engineer, doctor, or lawyer).
Wikipedia does a decent job of summarizing the cacophony of ideas that are embodied in the term business model. I won’t recount them here. The reason the question “what’s your business model?” bothers me it that the inquirer often judges the answer based on its parsimony, as though simple is prima facie evidence of good. Occam’s razor applied to business strategy.
I myself will sometimes ask others the question, but I use it to test for complexity, not simplicity. I use it as a Rorschach to see how deeply the respondent has thought about the market and which aspects of the business appear most salient to him or her.
In preparing for this entry, I started to ask myself how do I think about a business model? And how do I test if business models are complete, coherent, and compelling? When I worked at Bain in the early 1980’s the firm then specialized in ‘strategy’ and ‘business definition,’ equally amorphous concepts. (Amorphous is good when you bill by the hour). We used to refer to three tests to define whether two companies were in the same business – similarities of cost structures, competitors, and customers.
So I sat down and drew this little graphic for myself to try and outline the key concepts that seem to appear in the “business models” of companies that I see in my practice. I don’t claim this is complete or some form of ‘ground truth.’ It is a snapshot of the concepts that I most readily gravitate toward when I think about “what’s your business model?” I am sure I have left out huge chunks that will become obvious when I go to my next deal pitch meeting tomorrow.
I am not going to explain every facet. Most of it is self-evident (I hope). However, a couple of things are worth noting. First, at the center are the terms “lever” and “return on equity.” I think of all these bubbles as knobs or levers in the machine that is a business. Not all are equally important, but all are impactful choices that Management has made about the business, even if the choice is to ignore this facet. Second, the objective I want to maximize is return on equity, not growth, not revenue, and not necessarily even market share, though these may be part of what generates ROE.
I have enumerated some of the common choices more for illustration than prescription. I should point out the category of “enterprise asset” because I think of this as a separate objective beyond barrier to entry. The “enterprise asset” is that intangible that is the difference between book value and enterprise value. It is the reason why an acquirer is drawn to the business beyond the NPV of the earnings stream. It is the strategic value or what accountants call goodwill. This box is particularly important in early stage investing, as the exits are so often around acquisition. The business should have a clear definition of its ‘residual value’ to a potential set of acquirers.
Hopefully some will find this useful as a checklist. There is nothing Web 2.0 about this framework. And there shouldn’t be. Business is applied microeconomics -- Web 2.0 or pest extermination (perhaps a poor juxtaposition – I need an editor.) Anyway I feel better for having shared my quick and dirty model of a business model. Thanks for listening.
So, quick, what's your business model, anyway?
20 Chinese firms in Fortune's top 500
Something of interest:
Twenty Chinese companies, including four newcomers, rank among the 500 largest firms in the world in Fortune magazine's latest Global 500 list to be published on July 24. China's three largest state-owned construction firms made the list for the first time, with China Railway Engineering debuting at 441, China Railway Construction 485, and China State Construction 486. Shanghai Automotive, at 475, also made the list for the first time, but China First Automotive dropped from 448 last year to 470. Sinopec remains the largest Chinese company on the list, rising from 31 to 23, followed by State Grid, up from 40 to 32, and China National Petroleum, up from 46 to 39. China's four state-owned commercial banks also moved up the rankings: Industrial and Commercial Bank of China jumped from 299 to 199, Bank of China from 399 to 255, China Construction Bank from 315 to 277, and Agricultural Bank of China from 397 to 377.
Comparatively, India only has 6 companies in the Fortune 500
: Reliance Industries Ltd, Indian Oil Corporation, Bharat Petroleum Corporation, Hindustan Petroleum Corporation Ltd and Oil and Natural Gas Corp. State Bank of India just joined at 498th. The highest ranked is IOC, or Indian Oil Corporation. None of India, Inc. makes the 500. Heavy industry still puts companies in the Fortune 500 it appears.
My favorite Overheard in New York post
No, Seriously -- Let's Hit It
Old Chinese lady: Ex-see-cus-see me.
Old Chinese lady: Ex-see-cus-see me!
Gangsta: Man, what are you excusing me about? Fck you!
Old Chinese lady: Fck me? Ok, take-a off the pant.
Stairway in silence.
Old Chinese lady: Ex-see-cus-see me!
Gangsta: Sure thing, ma'am. I'm sorry.
Chinese kid: And that's why we respect our elders.
--Canal St station
Music Industry: Big Market, Big Questions
Music Industry: Big Market, Big Questions
Despite complaints and panic-induced lawsuits against file sharing services such as Napster by major music labels in the United States, the U.S. and global music markets are flourishing. The global market has grown by 3.4% annually since 1991 and the U.S. music market is the largest in the world, having grown 71% in value since 1991 to U.S. US$13.2 billion in 1998 . More importantly, Napster use appears to be boosting music sales both online and offline. One study, commissioned by Napster and prepared by Peter S. Fader, associate professor of marketing at the Wharton School of the University of Pennsylvania, found that "over 91% of Napster users buy as much or more music than before they used Napster, with 28% purchasing more" . Even so, the major music labels and their mouthpiece the Recording Industry Association of America (RIAA) appear to be frantically searching for a strategy to maintain control and revenues. The industry is being challenged not only by technology innovators such as Napster, Gnutella, and MP3.com, but also by alliances of music artists and supporters such as the Future of Music Coalition.
Internet research firm Jupiter Communications suggests that if the music industry were to let players like Napster stand it would drive incremental sales, but if the industry partnered with networked music-sharing technology companies through licensing schemes, the benefit would be exponentially greater. Jupiter also proposes that "a subscription service to an online music community with high-quality digital music, virus protection, and a wide variety of content could eventually be a more successful driver of revenues for recorded music than individual downloads sold through an online store." Of the five biggest music labels, at least Universal and Bertelsmann seem to be paying attention. Bertelsmann announced at the end of October 2000 a legal settlement with Napster in which Bertelsmann's e-commerce group will partner with Napster to create a membership system to allow paid users to download high-quality songs from Bertelsmann Music Group's entire catalogue. Napster CEO Hank Berry suggested membership fees of US$4.95 per month, but neither party has released information regarding a start of service date. Universal may have swung an even sweeter deal with MP3.com. After watching Bertelsmann, Sony Music Entertainment, Time Warner's Music Group and EMI settle in court with MP3.com for approximately US$20 million each, Universal waited and eventually settled out of court with MP3.com for US$53.4 million. As part of the deal Universal also reportedly bought warrants for up to three million MP3.com shares.
The big question still remains: Will partnerships such as those engineered by Napster and Bertelsmann or MP3.com and Universal actually generate revenues? A July 2000 essay in the Economist argues that if the music labels can put their songs online in a format that is more organized and more appealing than their illegal competitors can, fans will be willing to pay something for that privilege . Although online sales - both CD and digital downloads - represented only 2.4% of total music sales for 1999, according to one survey 50% of online U.S. youths ages 16-22 report that they will purchase music online in the near future. Online Internet economy publication The Standard reports Jupiter's prediction of download sales in particular to increase through 2004, reaching 25% of total music sales in 2005 . Media Metrix forecasts that in 2005 76 million users will purchase US$5.4 billion of music online, and another US$1 billion will be spent on online music subscriptions. In October 2000 - before their dances with MP3.com and Napster - both Universal Music and BMG announced new online initiatives to capture some of this projected revenue, with BMG charging users per download. Singles are priced from US$1.98 to US$3.49, and albums are going for between US$9.98 and US$14.98. Universal is experimenting with a subscription model offering users unlimited access to more than 20,000 songs. The Universal plan is not offering actual downloads of music, however. Instead, users can listen to streaming song files, which are extremely difficult to record and share at high audio quality.
The online music file access strategies as currently conceived by the major labels, including the two joint initiatives with Napster and MP3.com, are likely to fail for three main reasons. First, few music consumers purchase music of only one particular label, so until the major labels create some form of low-priced, comprehensive access from one Web site to all of the songs in their combined catalogs, any consumer response will be tepid at best. Separate subscriptions or memberships to each of the four big labels will not be an attractive option. More importantly, BMG's current per song or per "CD" download model is priced at levels similar to CD costs in a physical store, giving consumers little incentive to move from existing no-cost file sharing services.
Second, streaming of music as planned by Universal will not replace the appeal of downloading song files because the ability of consumers to share music appears to be a major motivation behind current use of Napster, MP3.com and similar services.
Finally, current industry initiatives appear to make no concessions to music artists' increasing dissatisfaction with recording contract restrictions enforced by major labels and what many artists and supporters consider to be unreasonable percentage takes of sales revenue. Although it is not clear given the popularity of free file sharing services that music consumers feel compelled to pay artists for their music, if paid subscription access becomes the dominant model in the future there may be increased interest among consumers in seeing that artists get a better deal from the labels than in the past. Put differently, if consumers are forced to pay for digitally downloaded music, many probably will demand that artists get a fair deal. In fact, some well-known artists have declared a kind of unilateral divorce from the labels and have pledged to support innovative schemes by entrepreneurs that give artists more control and compensation for their art, and give consumers the flexibility and convenience of digital downloading.
To compound RIAA's headaches, researchers at Xerox PARC, Princeton, and Rice University recently claimed to have cracked four digital watermark technologies created by RIAA's Digital Music Initiative (SDMI) encryption scheme. Following this claim, the five major music labels driving the SDMI announced the results of a challenge posed by SDMI in which two of its five copyright protection technologies were apparently thwarted. Critics on all sides are attacking SDMI as a waste of time and resources, and many analysts believe that the effort will die on the vine. In the next section I describe some possibilities for music experience innovation using mobile Internet business models and technologies.
Congress takes a dump on network neutrality - What will the Senate do?
My thoughts are that this bill is simply a case of the combined long haul/RBOC's trying to recoup the cost of network buildout...really if you think about it, we are running on the corpses of the Global Crossing, MCI, AT&T, L3 etc's of the world....Every player that leveraged the hell out of their balance sheets to lay out fiber have essentially gone bankrupt or been acquired. There still "dark fiber" that has yet to be lit underground that are static assets for holding companies out there. Google has been slowly acquiring it over the past couple of years and I'm sure Yahoo/MSN has as well. Its a fiber layer's graveyard out there, but it has been for the overall good, since we all know that the content providers have innovated the shit on top of it, so there is certainly cause for some sympathy for the Verizons and Bellsouths of the world.
Of course there is the argument that network providers are the "gatekeepers," and by virtue control the quality of services such as VoIP and IPTV, and I am in agreement with this. However, a much better alternative to network neutrality is unbundling of local access which is what is being done in Europe. By unbundling local access and in effect giving the broadband provider the ability to determine speed and service. You no longer have the issue of network providers infringing on the ISPs ability to provide a certain level of quality/speed because the ISP (internet service provider) would rent this line (at a wholesale rate) and determine by itself the type of service it is willing to provide and charge you for. If ISPs wanted to provide advanced services, they themselves would have to install equipment at the local exchange. In my opinion, unbundling is a much better alternative to network neutrality as it fosters investment and only allows serious players to enter the market.
But we all know network neutrality not only has implications on the content providers...it has implications on the internet commerce as an engine of growth for the entire economy since it is so integrated into the fabric of modern commerce. It would definitely change the economics of doing business on the internet, not just for the Web 2.0 players such as Google, Yahoo, MSN, and Amazon, but also major brick and mortar guys who do a surprising amoung of business on the web such as Target, Walmart, Fedex, etc etc. Having seen the capex of alot these folks and it clearly would have real economic impact.
Any idea what the prospects of the bill is in the Senate? I'd imagine if there is any lobbying effort toward thwarting the bill it would likely be focused there.
June 9, 2006
House K.O.'s Net Neutrality
By Roy Mark
WASHINGTON -- Legislative language to make the controversial concept of network neutrality the law of the land failed in the U.S. House of Representatives late Thursday night.
In an amendment to an otherwise widely supported telecom reform act, lawmakers rejected by a vote of 269-152 a measure to require broadband providers such as AT&T and Comcast to treat all Internet traffic in a nondiscriminatory price manner.
Under the proposal by Rep. Ed Markey (D-Mass.), the telecom and cable giants that control virtually every broadband connection in the United States would be unable to implement their proposed business models to create a two-tiered Internet based on bandwidth consumption.
In a roll call vote, 58 Democrats joined 211 Republicans in turning back the measure. Only 11 Republicans joined the 140 Democrats voting for the amendment.
The overall bill, known as the Communications Opportunity, Promotion, and Enhancement Act (COPE, H.R. 5252), would permit national video franchising for Internet Protocol television (IPTV) providers in hopes of spurring competition in the pay television market.
Unlike the Markey statutory language approach, under the COPE Act the Federal Communications Commission (FCC) on a case-by-case basis would deal with allegations of network neutrality violations.
The legislation would also prohibit the FCC from creating additional network neutrality rules beyond the non-binding principles adopted by the agency last year.
"The bill... seeks to strike the right balance between ensuring that the public Internet remains an open, vibrant marketplace and ensuring that Congress does not hand the FCC a blank check to regulate Internet services," House Energy and Commerce Chairman Joe Barton (R-Tex.), author of the bill, said in introducing the legislation.
"We do need the FCC to stop the cheats without killing honest creativity. We don't need anybody to be the first Secretary of the Internet."
In addition, the legislation mandates Voice over IP ( define) providers make E911 services available to consumers and allows state and local governments the option to provide their own telecommunications, cable or information services.
The bill passed on a 321-111 vote, with 215 Republicans and 106 Democrats voting in the affirmative.
Both Verizon and AT&T have combined to invest billions of dollars into building fiber optic IP networks capable of delivering a competitive product to cable systems and millions more to lobby Congress to break from the historical treatment of Internet traffic by carriers.
Currently, all traffic is prioritized, treated and priced the same from the smallest of Web sites to Internet giants such as Microsoft, Google, Yahoo and Amazon.
Under the cable and telco scheme, fees will be imposed for heavy users.
"[The] overwhelming vote brings our nation one critical step closer to TV freedom, where consumers enjoy the benefits of real choice and competition for their video service," Walter McCormick, president and CEO of the U.S. Telecom Association, said in a statement.
"Consumers win when companies are free to invest and compete head-to-head by offering innovative products at attractive prices."
The defeat of the Markey amendment, while not unexpected, still caught technology executives flat-footed.
On Wednesday, House and Energy and Commerce Chairman Joe Barton (R-Tex.), author of the COPE Act, said he saw no way the bill could be voted on before Friday. He did nothing during the day Thursday to discourage that notion.
But while TechNet, the influential nationwide political network of IT CEOs and senior executives, lunched at the National Press Club and enjoyed afternoon meetings with top White House executives and FCC Chairman Kevin Martin, Barton lined up supporters and the House Republican leadership punched through a surprise Thursday night vote.
With TechNet members winging their way home, lawmakers closed the debate on the House side.
"Unfortunately, the House voted today to protect the big phone and cable companies at the expense of preserving an open Internet," the It's Our Net Coalition said in a statement.
"We are not surprised at the outcome, but we are disappointed that the House has abandoned net neutrality."
The issue now moves to the U. S. Senate, where Commerce Committee Chairman Ted Stevens (R-Alaska) has scheduled a third hearing on his own telecom reform package Tuesday morning.
Like the House-approved bill, Stevens' proposal showcases national video franchising. It leaves issues of network neutrality to further FCC study.
Senators Olympia Snowe, a Maine Republican, and Democrat Byron Dorgan, of North Dakota, plan to push for network neutrality language similar to Markey's to be included in the legislation.
"We are confident that the Senate understands and appreciates the importance of net neutrality to the Internet and to the American economy and will take steps to preserve the Internet as a vibrant... open marketplace," It's Our Net stated.
Excellent post from Emergic's Rajesh Jain:
Apparently, Google has scored Dell as a big distributor of the information vendor's software and services. Or so says several news sites this afternoon, including Wall Street Journal. The Microsoft doomsayers claiming fierce Google competition will have yet another sign to demonstrate that the sky really is falling (Has anyone at Microsoft ever heard of a character called Chicken Little?).
I don't doubt the situation stated by the Journal: "People familiar with Google's thinking have said the deal with Dell wasn't designed exclusively to strike back at Microsoft, but rather to increase use of Google's services." Google has more to gain by making its own business objectives the priority than making deals against Microsoft. The sky isn't falling, and Google isn't looking to get Microsoft.
By contrast, Microsoft's bigger business objective would appear to be about getting Google. Some friendly advice: Rather than launch zillions of new Windows Live products and services, Microsoft would be better off making the stuff it already sells much better and getting upgrades, like Windows Vista, out the door on time. I swear, too many Microsoft Chicken Littles grew up playing Risk when they should have learned Chess. Windows is a huge position of strength, but one which needs some fortification. No offense, but Microsoft is fighting a war with a fantom and weakening its position by not protecting its prized asset (Windows) and extending its strength.
While terms of the deal haven't been released--and may never be--it's a reasonable to assume that Google agreed to pay Dell a bunch of money for the PC bundling. Microsoft used to, ah, stipulate in its contract against subletting its property (Windows), but the Housing Authority (US Department of Justice) insists renters must be allowed to sublet. It's fairly common practice for software developers and/or service providers to pay a bounty for prime Windows desktop placement. Given recent quarterly results, Dell was a good prospect for subletting space on its consumer, SMB and (some) enterprise PCs.
Of course, the deal is good for Google. The company gets prime desktop and Web search, toolbar and other software placement from the world's largest PC manufacturer. JupiterResearch surveys show that more than 80 percent of US online consumers regularly use Web search. Google benefits in all kinds of ways--keywords and contextual advertising, for starters--and directly adheres more of its products, services and brand to consumers.
Last week, I tried to rationalize why Microsoft made yet another search announcement--and one oddly timed. Today's deal, assuming the news reports are right, creates context. Deals like Google on Dell ("Dude, you're getting a Google") don't occur in a vacuum. It's sure that Microsoft was privy to negotiates and may even have counter offered. It wouldn't shocked me--and, yes, I'm totally speculating--if Microsoft's most-recent future search announcement without products was pre-emptive.
By the way, deals like this would have been nearly impossible before Microsoft's US antitrust case. The landlord (Microsoft) covets his property (Windows). He doesn't like redecoration (changes to the desktop) or subletters (the likes of Google software or services bundled instead of Microsoft stuff).
Why wireless will end ‘piracy’ and doom DRM and TCPA – Jim Griffin
Interesting interview with Jim Griffin, former CEO of media company CherryLane. Lots of interesting viewpoints on music and digital media.
Don't worry about DRM and lock-down computing, says Jim Griffin. Historically they're doomed to fail. The former director of Geffen's technology group believes that wireless networks such as 3G, 4G and WiFi will provide the tipping point at which the entertainment industries come to the table to cut a deal - before political pressure forces a deal upon them.
The deal will involve one of the flat-fee models, such as 2002's Blur/Banff proposals [PDF, 473kb (http://www.nsu.newschool.edu/blur/blur02/reports/blur02_user_love.pdf)] or the model Harvard's Professor Fisher summarized here (http://www.theregister.co.uk/content/6/35260.html). Both of these envisage a pot of compensation money and a mechanism for divvying it up, permitting the free exchange of artistic goods. And with 'piracy' abolished, there's no need for DRM.
How newspapers can face online rivals: Is it too late to cooperate?
In the same vein as my prior posts on media, the issue of splintering audiences are a problem for music, television, and print. The could there be a need for all media to operate on a consolidated number of platforms? One for print media, one for music (iTunes anyone?) and one for television? Is it economically feasible, what does it mean for competition among labels? Big questions here...all I know is that litigation won't do a thing to slow down the digitization and capturing of data on devices.
How newspapers can face online rivals
Is it too late to cooperate?
Bambi Francisco [MarketWatch] | POSTED: 05.23.06 @09:31
In 1846, as the new technology of the telegraph system was catching on, newspapers pooled their resources to create a more efficient news distribution system.
Jim Kennedy, vice president of strategic planning at the Associated Press, which was born out of those efforts, says newspapers are facing a similar challenge today. "Fast forward 168 years later," Kennedy told attendees at a recent Las Vegas gathering, "that's the situation we face today."
Translation: It's time for newspapermen to stop fighting among themselves and cooperate if they want to survive in the era of splintering audiences, and search-engine news gateways, such as the popular news services created by Yahoo Inc. (YHOO) and Google Inc. (GOOG).
Yahoo News has held the No. 1 news property spot on the Web for the last eight months. It commanded 25.7 million unique visitors in April, up 10% from last year, according to Nielsen//NetRatings.
Google News was the No. 11 news site last month, with 9.7 million unique visitors, up 19% from last year.
Meanwhile, Knight Ridder Digital saw its audience base grow 13% to 10.6 million unique visitors while Associated Press grew a paltry 1% to 6.1 million unique visitors.
AP's Kennedy was spoke Friday alongside Tom Mohr, President of Knight Ridder Digital and Colby Atwood, vice president at Borrell Associates, a consulting firm specializing in local media. The panel was part of the Interactive Media Conference, hosted by Editor & Publisher and Mediaweek.
The panel was titled "5-year forecast: See the Future Today," but from the comments made on stage, it might as well have been "The final days of newspapers."
For offline newspapers, the writing is on the Web.
Email delivery of national and niche news on our computers or on our BlackBerry devices has made it less of a priority to pick up a printed newspaper, especially when traveling. Why bother with the added weight?
In 1949, newspapers accounted for 37% of the advertising market in the U.S., according to Atwood. Today, they account for 17% to 18%.
Given the choices people make on the Web, newspapers -- try as they might -- likely never will come close to having the same market share online that they once had in the offline world.
Atwood said that, surprisingly, newspapers still account for 35.8% of the online local ad marketplace, which he estimates to have been $2.4 billion in 2005.
About 90% of advertisements in newspapers are local. Increasingly, those offline dollars are seriously at risk.
"There's a big race to go after local ad dollars," said Atwood. "I'd say newspapers will likely lose their share," he said. "They're not as well organized as the large dot-coms."
Newspapers playing nice?
Having spent more time at Silicon Valley conferences with Internet companies and startups, I have to say that this gathering was relatively sobering. Attendees included executives from newspapers and publications with an online presence who wanted to know how to survive against the rise of social networks, vertical or niche-oriented Web sites, and those darn search engines, Google, Yahoo, and Microsoft (MSFT).
Don't get me wrong. The panelists were not sounding the death knell of newspapers. But they were provocative in their identification of the problems plaguing the newspaper industry and suggestions for potential solutions.
Mohr's presentation, in fact, came off like a rallying cry. Like Kennedy, Mohr encouraged the news organizations to work together to create economies of scale that take advantage of the same technology, in effect a co-op for newspapers.
"How are you going to get companies, like Dow Jones, to work with AP and Knight Ridder?" I asked Kennedy? "And, what's the incentive for us?" I added. (Dow Jones & Co. owns MarketWatch, the publisher of this column.)
News organizations could theoretically send their feeds into a system own by Associated Press, Kennedy explained. There would be technology to rank those stories based by authority.
I didn't have the heart to tell Kennedy that newspaper companies don't have much of a competitive advantage over engineering-powerhouses when it comes to creating search technology. But I did ask how he would propose this theoretical newspaper system measure "authority?"
"That's the question," said Kennedy. "We all need to think through how content is ranked."
Even with such a co-op, Google News would still exist, I argued. That is, of course, unless news organizations could show that their ranking system would be immeasurably better, which I'm a bit skeptical about.
Another suggestion, offered by Mohr, was to have newspapers operate on one technology platform to create efficiencies of scale. Of course, Mohr would like all newspaper companies to let go of their proprietary platforms and use Knight Ridder Digital's.
Both ideas -- a news search engine and one federated technology platform -- sound interesting. (Other ideas floated about, for anyone interested, included having newspapers step up their search-engine optimization efforts and buy keywords to drive up traffic.)
But it seems they all might be too little too late. Atwood said it best after wrapping up his opening remarks. The "consequences for mass media are... umm, well... troubling."
Bebo gets funding
Benchmark is taking another crack at social networks.
The venture capitalist invested in Friendster back in 2003, when social networks were just getting noticed. But Friendster has not been the success Benchmark would have liked. Instead, News Corp's (NWS) MySpace has become the No. 1 social networking site, and is one of the premier online destinations, rivaling portals.
Not to lose out in this social-networking bonanza, Benchmark just invested $15 million in Bebo, a social networking site that's growing faster than Friendster, and is popular in the U.K., Australia, Canada and New Zealand.
Bebo operates a lean house, with only seven employees in the U.S., and now three more in the U.K. It's profitable on sales that are below $10 million annually. But if Bebo's traffic follows in the footsteps of MySpace and Facebook, ad sales could surge. Facebook is expected to generate about $60 million in sales this year.
Watch for my video interview with Michael Birch, founder and CEO of Bebo on Tuesday.
Separately, if you want to get a job with a technology company outside of college, one way to do so is to create a technology and then sell it. That's what five fraternity brothers did. They started HipCal and sold it to Plaxo.
Downloading 'myths' challenged
Downloading 'myths' challenged
People who illegally share music files online are also big spenders on legal music downloads, research suggests.
Digital music research firm The Leading Question found that they spent four and a half times more on paid-for music downloads than average fans.
Rather than taking legal action against downloaders, the music industry needs to entice them to use legal alternatives, the report said.
According to the music industry, legal downloads have tripled during 2005.
In the first half of 2005, some 10 million songs have been legally downloaded.
More needs to be done to capitalise on the power of the peer-to-peer networks that many music downloaders still use, said the report's authors.
There's a myth that all illegal downloaders are mercenaries hell-bent on breaking the law in pursuit of free music Paul Brindley, The Leading Question The study found that regular downloaders of unlicensed music spent an average of £5.52 a month on legal digital music.
This compares to just £1.27 spent by other music fans.
"The research clearly shows that music fans who break piracy laws are highly valuable customers," said Paul Brindley, director of The Leading Question.
"It also points out that they are eager to adopt legitimate music services in the future."
"There's a myth that all illegal downloaders are mercenaries hell-bent on breaking the law in pursuit of free music."
In reality hardcore fans "are extremely enthusiastic" about paid-for services, as long as they are suitably compelling, he said.
Carrot and stick
The BPI (British Phonographic Industry) welcomed the findings but added a note of caution.
"It's encouraging that many illegal file-sharers are starting to use legal services," said BPI spokesman Matt Philips.
"But our concern is that file-sharers' expenditure on music overall is down, a fact borne out by study after study.
"The consensus among independent research is that a third of illegal file-sharers may buy more music and around two thirds buy less.
"That two-thirds tends to include people who were the heaviest buyers which is why we need to continue our carrot and stick approach to the problem of illegal file-sharing," he said.
Music to go
The Leading Question survey also asked 600 music fans what devices they would be buying in the next year. One of the challenges will be to develop the perception of the phone as a credible entertainment device Tim Walker, The Leading QuestionA third planned to buy a dedicated MP3 player, while just 8% said they would be buying an MP3-enabled phone.
Reasons cited for not purchasing a music playing phone included worries about battery life and concerns about losing the handset, and potentially their music collection.
The fact that phones tend to be frequently replaced also meant people had a low emotional attachment to them.
"The phone is not ready to replace the iPod as a serious digital music player just yet," said Tim Walker, director of The Leading Question.
"One of the challenges will be to develop the perception of the phone as a credible entertainment device," he said.
Providers need to look at features such as dual download to mobile and PC, back-up facilities and improved interfaces between PC and mobile, he said.
There is a huge potential market for MP3 phones. The survey found that 38% were interested in downloading full tracks to their mobile phones.
And people are happy with the storage possibilities of phones with only 4% wanting to store more than 1,000 songs to take on holiday.
Story from BBC NEWS:
Music's brighter future - Oct 28th 2004
The music industry
Music's brighter future
Oct 28th 2004
From The Economist print edition
The internet will eventually be wonderful for music buyers, but it is still a threat to today's dominant record labels
“DIRTY pop with wonky beats and sleazy melodies” is how the Sweet Chap, aka Mike Comber, a British musician from Brighton, describes his music. The Sweet Chap has no record deal yet, but he has been taken on by IE Music, a London music-management group that also represents megastar Robbie Williams. To get the Sweet Chap known, last year IE Music did a deal to put his songs on KaZaA, an internet file-sharing program. As a result, 70,000 people sampled the tracks and more than 500 paid for some of his music. IE Music's Ari Millar says that virally spreading music like this is the future.
It may indeed be, and nimble small record labels and artist-management firms will certainly get better results as they find ways to reach more people via the internet. But the question facing the music industry is when that future will arrive. And the issue is most urgent for the four big companies that dominate the production and distribution of music—Universal, Sony/BMG, Warner and EMI (see chart 1). So far they have been slow to embrace the internet, which has seemed to them not an opportunity but their nemesis. Rather than putting their product on file-sharing applications, they are prosecuting free-download users for theft. They have certainly been struggling: sales of recorded music shrank by a fifth between 1999 and 2003.
Today, there is more optimism. In the first half of this year, global physical unit sales of recorded music rose, albeit by a tiny amount. The industry claims that file-sharing has stabilised thanks to its lawsuits. The number of music files freely available online has fallen from about 1.1 billion in April 2003 to 800m this June, according to IFPI, a record-industry body. That said, internet piracy is rampant, and physical CD piracy continues to worsen.
But big music's attitude towards the internet has changed, too. Over the past four years the big companies have come a long way towards accepting that the internet and digital technology will define the industry's future. Thanks to Apple and its enormously popular iPod music players and iTunes download service, most music executives now believe that people will pay for legal online music. (Although they have mushroomed, legal online downloads account for less than 5% of industry revenues.) The big companies are trying to work out how they can harness the internet. Consequently, they are having to rethink their traditional business models.
In the physical world, the big companies have the advantage of scale. In addition to marketing clout, they own a large back catalogue of music that can be repeatedly reissued. They are also bolstered by music-publishing businesses, which collect royalties on already published songs used in recorded music, live performance, films and advertisements.
Historically, the majors have controlled physical distribution of CDs. Yet that barrier to entry will erode as more music is distributed on the internet and mobile phones. Artists can, in theory, use the internet to bypass record firms, though few have yet done this. The principal reason most have not is that they need marketing and promotion, which the majors also dominate, to reach a wide audience.
The majors have a tight hold on radio, for example, by far the most effective medium for promoting new acts. (Perhaps their lock is too strong: Eliot Spitzer, New York's attorney-general, is investigating whether the companies bribe radio stations to play their music.) Could the internet challenge them on this too? So far, bands have not been launched online. But that could change, and there is already evidence that data derived from the preferences shown on illegal file-sharing networks are being used to help launch acts.
Much will depend on whether the majors choose to address a problem that is just as important as piracy: these days they rarely develop new artists into long-lasting acts, relying instead on short-term hits promoted in mainstream media. That has turned off many potential buyers of new music. In future, using the internet, the industry will be able to appeal directly to customers, bypassing radio, television and big retailers, all of which tend to prefer promoting safe, formulaic acts. That could give the majors the confidence to back innovative, edgy music. But much smaller independent labels and artist-management firms can do the same, offering them a way to challenge the big firms head on.
Even in the physical world, the big firms are struggling to maintain their traditional market. Supermarkets have become important outlets, but the likes of Wal-Mart stock only a narrow range of CDs, choosing to shift shelf-space away from music in favour of higher-margin DVDs and videogames. That is a symptom of another headache for all music firms: they face ever more intense competition from other kinds of entertainment, especially among the young. In theory, then, digital technology offers the majors an escape hatch. With infinite space and virtually free distribution online, every track ever recorded can be instantly available to music fans. Of course, smaller firms will be able to do the same thing.
Where did all the music go?
According to an internal study done by one of the majors, between two-thirds and three-quarters of the drop in sales in America had nothing to do with internet piracy. No-one knows how much weight to assign to each of the other explanations: rising physical CD piracy, shrinking retail space, competition from other media, and the quality of the music itself. But creativity doubtless plays an important part.
Judging the overall quality of the music being sold by the four major record labels is, of course, subjective. But there are some objective measures. A successful touring career of live performances is one indication that a singer or band has lasting talent. Another is how many albums an artist puts out. Many recent singers have toured less and have often faded quickly from sight.
Music bosses agree that the majors have a creative problem. Alain Levy, chairman and chief executive of EMI Music, told Billboard magazine this year that too many recent acts have been one-hit wonders and that the industry is not developing durable artists. The days of watching a band develop slowly over time with live performances are over, says Tom Calderone, executive vice-president of music and talent for MTV, Viacom's music channel. Even Wall Street analysts are questioning quality. If CD sales have shrunk, one reason could be that people are less excited by the industry's product. A poll by Rolling Stone magazine found that fans, at least, believe that relatively few “great” albums have been produced recently (see chart 2).
Big firms have always relied on small, independent music firms for much of their research and development. Experimental indies signed Bob Marley, U2, Pink Floyd, Janet Jackson, Elvis Presley and many other hit acts. Major record labels such as CBS Records, to be sure, have signed huge bands. But Osman Eralp, an economist who advises IMPALA, a trade association for independent music companies in Europe, estimates that over 65% of the majors' sales of catalogue albums—music that is at least 18 months old—comes from artists originally signed by independents.
In the past, an important part of the majors'R&D strategy was to buy up the independent firms themselves. But after years of falling sales and cost-cutting, the majors have little appetite for acquisitions, and now rely more on their own efforts.
What Mr Levy calls music's “disease”—short-term acts—is not solely a matter of poor taste on the part of the big firms. Being on the stockmarket or part of another listed company makes it hard to wait patiently for the next Michael Jackson to be discovered or for a slow-burning act to reach its third or fourth breakthrough album. The majors also complain that the radio business is unwilling to play unusual new music for fear of annoying listeners and advertisers. And while TV loves shows like “Pop Idol” for drawing millions of viewers, such programmes also devalue music by showing that it can be manufactured. Technology has made it easy for music firms to pick people who look good and adjust the sound they make into something acceptable, though also ephemeral.
The majors could argue that they can happily carry on creating overnight hits; so long as they sell well today, why should it matter if they do not last? But most such music is aimed at teenagers, the very age group most likely to download without paying. And back-catalogue albums make a great deal of money. The boss of one major label estimates that, while catalogue accounts for half of revenues, it brings in three-quarters of his profits. If the industry stops building catalogue by relying too much on one-hit wonders, it is storing up a big problem for the future.
A new duet
There are signs that the majors are addressing the issue. Universal Music and Warner Music are starting up units to help independent labels with new artists, both promising initiatives that show that they are willing to experiment. Thanks to the majors' efforts in the last few years, their music has already improved, says Andy Taylor, executive chairman of Sanctuary Group, an independent, pointing to acts such as the Black Eyed Peas (Universal), Modest Mouse (Sony), Murphy Lee (Universal) and Joss Stone (EMI).
And yet even if they can shore up their position in recorded music, the big firms may find themselves sitting on the sidelines. For only their bit of the music business has been shrinking: live touring and sponsorship are big earners and are in fine shape. In the past 12 months, according to a manager who oversees the career of one of the world's foremost divas, his star earned roughly $20m from sponsorship, $15m from touring, $15m from films, $3m from merchandise and $9m from CD sales. Her contract means that her record label will share only in the $9m.
In 2002 Robbie Williams signed a new kind of deal with EMI in which he gave it a share of money from touring, sponsorship and DVD sales as well as from CDs, in return for big cash payments. Other record firms are trying to make similar deals with artists. That will be difficult, says John Rose, former head of strategy at EMI and currently a partner at the Boston Consulting Group in New York, because many artists, and their managers, see record companies less as creative and business partners than as firms out to profit from them.
Artists' managers will resist attempts to move in on other revenue streams. Peter Mensch, the New York-based manager of the Red Hot Chili Peppers, Shania Twain and Metallica, says “we will do everything and anything in our power to stop the majors from grabbing any share of non-recorded income from our bands.” Mr Mensch says that one way to fight back would be to start his own record company.
Independent labels are also gunning for the big firms. For one thing, they are fighting to stop further consolidation among the majors because that would make it even harder for the independents themselves to compete for shelf space and airplay. IMPALA will soon take the European Commission to court for allowing Sony and BMG to merge earlier this year. But the small firms are also optimistic that they can grow at the expense of their big rivals. The majors are cutting back in smaller markets and dropping artists who lack the potential to sell in lots of countries. That leaves a space for the indies. For example, Warner Music Group is thought to be readying itself for an initial public offering in 2005 and, as part of cutting costs in Belgium, it dropped artists this year. Among them was Novastar, whose manager says the group's latest album has so far sold 56,000 copies in Belgium and Holland.
The more the majors scale back, the more the market opens up. People who have left the big firms are starting up new ventures. Emmanuel de Buretel, previously a senior manager at EMI, is about to launch an independent record label called “Because”, with help from Lazard, an investment bank. Tim Renner, formerly chairman of Universal Music in Germany, will soon set up a music internet service, a radio station in Germany and possibly a new record label.
In the material world
Meanwhile, the majors are trying to plot their move to digital. Making the transition will be tricky. Bricks-and-mortar music retailers need to be kept happy despite the fact that they know that online music services threaten to make them obsolete. It is still unclear what a successful business model for selling music online will look like. People are buying many more single tracks than albums so far. If that persists, it should encourage albums of more consistent quality, since record companies stand to make more money when people spend $12 on a single artist than if they allocate $2 to each of six bands. Or it could mean that the concept of the album will fade.
Online pricing is unstable too. It is likely that download prices will vary in future far more than they do now. Apple forced the industry to accept a fixed fee per download of 99 cents, but the majors will push for variable, and probably higher, prices. Online prices will have an impact on prices in the physical world, which are already gradually falling in most markets. But the result of all these variables might be structurally lower profits.
Edgar Bronfman junior, chairman and chief executive officer of Warner Music Group, expects that paid-for digital-music services via the internet and mobile phones will start to have a measurable impact on music firms' bottom lines as soon as 2006. The new distribution system will connect music firms directly with customers for the first time. It will also shift the balance of power between the industry and giant retailers. Wal-Mart, for instance, currently sells one-fifth of retail CDs in America, but recorded music is only a tiny proportion of its total sales.
The best distribution of all will come when, as many expect, the iPod or some other music device becomes one with the mobile phone. Music fans can already hold their phones up to the sound from a radio, identify a song and later buy the CD. At $3.5 billion in annual sales, the mobile ringtone market has grown to one-tenth the size of the recorded music business.
But can paid-for services compete with free ones? The paying services need to put more catalogue online if they want to match the file-sharing networks with their massive music libraries. And it is still unclear how much “digital-rights management”—technology that restricts how a music download can be used—people will tolerate. Another key issue is interoperability: whether the various new devices for playing digital music will work with other online stores. Apple's iPods, for instance, work with iTunes, but not with Sony Connect or Microsoft's MSN Music Store. Too many restrictions on the paid-for services may entrench file-sharing.
Out of the more than 100 online music sites that exist now, a handful of big players may come to dominate, but there will be specialist providers too, says Ted Cohen, head of digital development and distribution at EMI. iTunes is like the corner store where you buy milk and ice cream, he says, but a customer does not spend much time there. Real Networks'Rhapsody, on the other hand, charges a monthly subscription in return for unlimited streaming music and gives descriptions that lead people to new artists. Recommendation services like these, as well as people sharing playlists, will eventually make the internet a powerful way to market music as well as to distribute it.
Jiving with the enemy
In September, according to comScore Media Metrix, 10m American internet users visited four paid online-music services. The same month another 20m visited file-sharing networks. The majors watch what is being downloaded on these networks, although they do not like to talk about it for fear of undermining their legal campaign.
Online music might truly take off if the majors were to make a truce with the file-sharing networks. The gulf between the two worlds has narrowed now that the industry sells its product online and allows customers to share music using digital-rights management. As for the file-sharing networks, “the other side is more willing to talk and less adversarial,” says an executive at one of the majors in Los Angeles.
Music industry executives say that Shawn Fanning, founder of Napster, the first file-sharing network, is working out how to attach prices to tracks downloaded from such services, with a new venture called “Snocap”. Mr Fanning tried to make the original Napster legal back in 2001, but the music industry decided instead to sue it out of existence. Sam Yagan, boss of eDonkey, currently the most popular file-sharing network, says he had meetings with three of the four major labels last summer about how his network could start selling their music alongside free content. As IE Music's experiment shows, that is not an impossible dream. Music executives may not have the confidence yet to make a deal with their arch-enemies. But eventually they have to get bolder. It seems clear that the only way for the majors to stay on top of the music industry into the next decade is to take more risks—both technological and creative—than they have done for a long time.
Finally an SaaS SAP attacking app
Intacct raises $7 million; promises guerrilla campaign against SAP/Oracle
Intacct is a company trying to undercut the big boys, SAP and Oracle, by selling cheaper Web-based financial applications.
The San Jose-based company will announce tomorrow that it has raised $7 million in a second round of venture capital, led by Emergence Capital and including existing investors Hummer Winblad and JK&B Capital.
Bob Jurkowski, chief executive, told us the company had a record quarter, and is working closely with Saleforce.com to acquire new customers. It lets Salesforce.com handle a customer's sales management applications, but Intacct wants to manage the "backend" needs of its customers, including things such as project management, and supply-chain management.
Jurkowski said he is launching some guerrilla marketing tactics, similar to those of smaller competitor Netsuite, which tried to fluster SAP last week by setting up a conference across the street from SAP's own SAPPHIRE customer conference (Netsuite failed to pull it off). For his part, Jurkowski didn't reveal any details.
Posted by Matt Marshall on May 21, 2006 08:22 PM | 0 Linking Posts
Space Ninja Sneaks in Japan
Anyone who remembers my post about making nunchuks when I was a kid knows this made me squeal with joy....
Space Ninja Sneaks
READ MORE: Asics, Gadgets, Ninja, Sneakers, Space, TOP, Tabi
- GizmodoWhen I was a kid, my Grandma made me a full ninja uniform complete with tabi boots. While I surely did look cool then, I can only imagine how I’d look now wearing these ninja-tastic sneaks from Asics.
These are actually made for astronauts. Yeah, you read correctly. Because standard sports shoes hurt in space—something about muscles and circulation—Asics designed a special pair that reduces strain. They’re not available to us non-space ninjas, however.
Japan Space Sneakers Are Ultra-High Heels [SpaceDaily via TheCoolHunter]
Monkee with a head of hair
So after a brief but inspiring converstion with my friend Harsh, I'm going to be growing my hair out Asian rockstar style and you my faithless readers will reap the entertainment rewards. Every two weeks I'm going to post a picture of my actual head to document my hair's growth. I'd venture to say at the end of 3 months I'll have a fantastic looking head of hair that would be the envy of all, including some females. Word up.
Walt Mossberg on the "the post-pc" era: Apple fanboy much?
This article from the WSJ by Walt Mossberg kind of got my goat. Beyond simply being among the biggest of Apple cheerleaders, he's just plain yanking at the wrong beanstalk.
The end to end model is how Ford and GM built their business way back in the Model T days. The era of the "integrated" players is pretty much over as you just can't squeeze out efficiencies in process and supply chain if you design, source, build, and assemble every component of a product. Granted Apple isn't really a pure end to end player in that they still source their CPUs from Intel (formerly IBM/Motorola) and some of the industrial design/assembly is sourced to Taiwan mostly, they still only occupy 3% of the total PC market share of the top of my head. If they increased it to say 50%, then no doubt Apple will have to drastically alter how they architect their supply chain to mimic that of the component model.
So the ability to manage a product's entire lifecycle is alot more simple if your turnaround isn't quite as frenetic as say a Dell's which has around 60 inventory turns a year.
After some further thinking, also, the reason Apple was able to dominate the personal MP3 player device is classic management consulting strategy. Although flash players existed before, they were among the first to market with hard drives, first to marketshare, first to mindshare. Then they built a platform in iTunes to bind it all. Coupled with fantastic industrial design, they were able to pull off a great win that has raised the tide for all of its products.
The same can be said when IBM introduced the modern mainframe in its S/360. Other mainframes existed before them like the Univacs used by the US government, but nothing before it was designed with such thoughtfulness to enterprise needs. For the next 20 years IBM rode its success until the client/server era changed all that up.
Apple is trying to do the same with the iPod, making it a hub, but the integrated model can only be successful a) if you live in the 1920's b) if you carve out dominant share in the marketplace. Even then, its pretty short lived the way tech evolves today.
For many years, there have been two models of how to make computers and other digital devices. One is the component model, championed by Microsoft. The other is the end-to-end model, championed by Apple.
In the component model, many companies make hardware and software that run on a standard platform, creating inexpensive commodity devices that don't always work perfectly together, but get the job done. In the end-to-end model, one company designs both the hardware and software, which work smoothly together, but the products cost more and limit choice.
In the first war between these models, the war for dominance of the personal-computer market, Microsoft's approach won decisively. Aided by efficient assemblers like Dell, and by corporate IT departments employed to integrate the components, Microsoft's component-based Windows platform crushed Apple's end-to-end Macintosh platform.
But in the post-PC era we're in today, where the focus is on things like music players, game consoles and cellphones, the end-to-end model is the early winner. Tightly linking hardware, software and Web services propelled Apple to a huge success with its iPod. Microsoft, meanwhile, has struggled to make its component model work on these devices and, in a telling sign, is using the Apple end-to-end model itself in its Xbox game-console business. Now, Apple is working on other projects built on the same end-to-end model as the iPod: a media-playing cellphone and a home-media hub.
The jury is still out on whether the end-to-end model will prevail in the long term. Many at Microsoft, and some outside analysts as well, believe the new devices will eventually succumb to the component model, and that Apple's success with the iPod will fade, just as its early dominance of the PC market did. Apple officials say history won't repeat itself if the company continues to make great products and avoid the business blunders committed by its past management.
I think the end-to-end model can prevail this time, both for Apple and other companies. Consumers want choice and low prices. But they also crave the kind of simplicity and integration that the end-to-end model delivers best.
Sure, you can get more variety in music players and in online music services if you opt for the Microsoft-based music instead of the iPod system. But the iPod, Apple's iTunes software, and the iTunes Music Store work so well together that users can just relax and enjoy the music. By contrast, the hodgepodge of players, software and online music stores on the Microsoft side frequently have trouble synchronizing between computers and players. Apple sells as many or more songs than the many stores that use Microsoft software.
Critics attack the iPod and iTunes as "closed" and "proprietary," because the songs Apple sells at its iTunes Music Store play only on iPods, and iPods can't play songs purchased from other music stores. But both the iPod and iTunes handle the two most common open audio formats, MP3 and WAV, and the most common open video format, MP4. They work well even if you never buy a song from Apple. And iTunes and the iPod work on Windows computers, not just Macs. So how is that closed?
Even the Mac isn't as closed as its critics charge. It's still designed to work with Apple's own operating system and software. But it can handle all the common files Windows uses, can network with Windows machines, and can use all of the common Windows printers, scanners, keyboards and mice. The Mac gives you the same access to the Internet as Windows. Heck, the newest Macs can even run Windows itself.
You do get a choice of more software with Windows. And that's great for hard-core gamers and users of corporate, or niche, software. But for mainstream users doing typical tasks, the Windows choice advantage is illusory. Mac users can choose among thousands of third-party programs, including multiple Web browsers, word processors and email programs. They can run Mac versions of popular software like Microsoft Office and the Firefox browser. How much more choice do you need?
Microsoft is hedging its bets. It has, in effect, created a little Apple inside Microsoft with the Xbox group. The Xbox team shunned Windows and wrote its own operating system and user interface, and built its own hardware. (The new Xbox was even developed using Macintosh computers.)
Some Microsoft officials dismiss this anomaly by claiming that the game-console business is a special case. But now, Microsoft has assigned the Xbox team to create a portable music player it hopes can knock off the iPod. Why? Because the company is frustrated that the component model, which separates hardware and software, has failed in the music market. It's looking for more integration.
Still, the end-to-end model isn't a lock. If Apple can't keep churning out cool products at reasonable prices, it could crash and burn. Unlike Microsoft, it doesn't have much help from other companies to succeed. But the iPod experience has shown that the PC model may not be best for all digital devices.
Amazon CTO Werner Vogels - Learning about the Amazon technology platform
A very long but worthwhile interview from ACM Queue with Werner Vogels, CTO, Amazon.com, discussing the Amazon.com architecture, their decision to build on a distributed services oriented architecture, and how they govern and manage development.
A Conversation with Werner Vogels
Learning from the Amazon technology platform
Vol. 4, No. 4 - May 2006
Many think of Amazon as "that hugely successful online bookstore." You would expect Amazon CTO Werner Vogels to embrace this distinction, but in fact it causes him some concern. "I think it's important to realize that first and foremost Amazon is a technology company," says Vogels. And he's right. Over the past years, Vogels has helped Amazon grow from an online retailer (albeit one of the largest, with more than 55 million active customer accounts) into a platform on which more than 1 million active retail partners worldwide do business. Behind Amazon's successful evolution from retailer to technology platform is its SOA (service-oriented architecture), which broke new technological ground and proved that SOAs can deliver on their promises.
Vogels came to Amazon from Cornell University, where he was working on high-availability systems and the management of scalable enterprise systems. He maintains that research spirit at Amazon, which regularly must solve problems never before encountered. "Maybe other companies call it research. We just call it development," he points out.
Interviewing Vogels is ACM Turing Award winner and Microsoft Technical Fellow Jim Gray.
Google the new Microsoft?
The Economist writes:
Google is thus starting to look a bit as Microsoft did a decade ago, with one strength (Windows for Microsoft, search for Google) and a string of mediocre "me-too" products. Google Video, for instance, was supposed to become an online marketplace for video clips, both personal and business, but has been overtaken by YouTube, a start-up that is a few months old but already has four times as much video traffic. Google News, where the stories are, characteristically, chosen by mathematical algorithms rather than by editors, perennially lags behind Yahoo! News, with its old-fashioned human touch. Google's instant-messaging software is tiny compared with AOL's, Yahoo!'s and MSN's.
Google thus finds itself at a defining moment. There are plenty of people within the company who want it to play the power game. "The folks who are closest to Larry and Sergey are very, very worried about Microsoft, as well they should be," says John Battelle, the author of a blog and a book on Google. Yet the company's founders themselves may not be prepared to drop their idealism and their faith in their own mathematical genius.
Open source gang forms to battle IBM, BMC and CA
Its interesting observing what's going on in the systems management marketplace. Some observers note that it resembles very much the middleware market years ago until Weblogic, Websphere, and more recently Jboss has emerged as the noteworthy players. Opensource has been a trend contributing to, not simplifying, complexity within the IT landscape. To paraphrase Lou Gerstner, CIO's are tasked with making several elephants dance in synch. Now CIO's have alot of little elephants too with the likes of Red Hat/Jboss, Novell, and MySQL in the mix. Invariably some opportunistic vendors have spotted the opportunity to replicate the MySQL and Jboss business model in Open Source Systems Management. Sourceforge.net can be a gold mine if you spot the right opportunity as we can observe with companies like Xensource among others.
Systems management has emerged as an extremely essential part of the enterprise, even as IBM with its efforts to link up Tivoli and Rational and vendors like BlackDuck and Spikesource build their business models around certifying open source IT stacks for enterprises. It becomes ever more byzantine when CIO's consider the possibilities in cost savings behind hard ware virtualization and to a lesser extent applications virtualization. The cost savings in server utilization and power demands are mitigated by the fact that you have 4 or 5 times more servers in your environment. That's where vendors like Opsware and Bladelogic come into play. The list of vendors offering similar components of the systems managment marketplace becomes long, however, when you look at incumbent vendors with positions of strength in other parts of the stack such as IBM, Microsoft, BMC, and the newly reconfigured CA under Swainson.
My prediction is more consolidation down the road as the hot trend in virtualization, from network to server, accelerates the need for operations and systems managment and vendors invariably attempt to be the one stop shop.
Open source gang forms to battle IBM, BMC and CA | The Register
The systems management market has clearly not been a favorite for customers over the years. You have to side with a vendor and then shell out hundreds of thousands of dollars or more for add-on packages to handle various tasks. An open source alternative would clearly give Linux savvy small- to medium-sized businesses a nice option.
The OMC pitch weakens in these early days when you realize that its the systems management crowd's attempt to mimic the LAMP (Linux Apache MySQL PHP/Perl/Python) stack that has become all the rage. Companies ranging in size from IBM and Red Hat down to services start-ups have put in a lot of work certifying the core LAMP software to work well together and then certifying additional packages that can fit into the LAMP combination.
There's no grand certification effort going with the OMC crowd. In fact, the initial run of OMC is really just a declaration that these open source vendors exist. They've set up a web site with limited information about the partnership, and that's about it at this point.
"I think the idea is that a formal structure will come about," said Mark Hinkle, a VP at Emu Software. "The first thing we have to do is come up with the conversation."
The organizations backing OMC do eventually plan to do more than just talk. They'll have joint sales and marketing programs and strive to make sure their applications work well together. In addition, they hope to add more companies to the group and even invite the likes of IBM and CA to see where they might contribute. In addition, OMC hopes to carve out some true "open standards" around systems management rather than relying on standards groups that require $100,000 a year for participation.
At the moment though, such plans are pretty far off. The OMC group seems set on using "conversation" as its key mechanism, which is a very open source thing to do, but we wonder how far that will carry them.
There's no question that open source systems management products deserve more attention. It's only natural that this part of the software market come under siege next with the OS, web server, application server and database conquered to a degree.
We wonder though how much IBM or CA will fear the open source "conversation." A more concerted effort to align the release cycles of all these open source packages and provide unified support around them would be welcomed and provide substantial competition against the giants.
That said, something like OMC had to happen. If done right, it will no doubt capture the attention of the dominant players
Can Microsoft Reinvent itself?
Great post from Ed Sim's from BeyondVC. Microsoft has a problem in that they are trying to build Google from the ground up within
Microsoft with .NET and Microsoft's own stack of client server infrastructure. Byzantine? We'll find out and Microsoft will find out as well. Think of it as the ultimate experiment as to whether a billion dollar company can effectively scale out on Microsoft products. The acclaim piled upon Microsoft Server 2005 and SQL server 2005 will come to a full test. The problem is investors haven't bought into the idea and actually believe that the 2 billion dollars can be put to better use.
From a strategic point of view, this is money well spent. Google is on top of the world and has allied themselves with some angry characters including the forlorn former high flyer Sun Microsystems -- who has been bleeding talent including Vinod Khosla and Bill Joy to Kleiner Perkins. Scott McNealy leaving the helm to Jonathon Schwartz may be too little too late....
Still this is beside the point...in my assessment MS is making the right bet, despite investor sentiment.
Can Microsoft reinvent itself?
Microsoft released its third quarter numbers the other day and while revenue growth was strong, the stock got hammered and dropped over 10%. Why? Microsoft plans on investing for the long term and putting another $2b into the Internet and other new technologies like the XBox. To sum it up, here is Rick Sherlund, Goldman Sachs' Software analyst, "It sounds like you're building a Google or building a Yahoo! inside the company."
Looking at the long term, I am quite excited about the prospects of all of this money coming into help grow the Internet sector and SaaS. First, having another big player push the concept of software as a service will only help further educate and soften the market, particularly business customers Secondly, this will mean that Microsoft will be aggressive with hiring and with acquisitions. I remember being at the Microsoft VC Summit a couple of years ago and hearing Steve Ballmer talk about his acquisition strategy. He would either do huge, billion dollar ones or look at acquisitions less than $20mm. That has been changing and will change rapidly with this renewed empahsis and focus. That only means good news for VCs and entrepreneurs. And as a VC, I wholeheartedly agree with Microsoft's CFO, Chris Lidell when he says, "Today, we believe we face the largest array of opportunities for growth and innovation the company has ever seen." I certainly feel the same way from a VC investment perspective.
Whether Microsoft succeeds or not is another story, but $2b invested in new technologies will go a long way towards solidifying their position. I would say that they did alright in 1995 when they decided to point their guns at Netscape to make sure the browser and Internet would not circumvent their monopoly on the desktop. The problem is that once they won the browser wars, Microsoft became satisfied, fat and happy. And as we all know, fat cats don't hunt. Others came around and outinnovated them - Firefox, Google, etc.
This is Round 2, which really started with Microsoft's purchase of Groove Networks and Ray Ozzie last year. To refresh your memory, I suggest reading Bill's email from October 2005 (also see the Ray Ozzie memo) where he leads the battle charge for the next generation web, the SaaS era.
Today, the opportunity is to utilize the Internet to make software far more powerful by incorporating a services model which will simplify the work that IT departments and developers have to do while providing new capabilities.....
However, to lead we need to do far more. The broad and rich foundation of the internet will unleash a "services wave" of applications and experiences available instantly over the internet to millions of users. Advertising has emerged as a powerful new means by which to directly and indirectly fund the creation and delivery of software and services along with subscriptions and license fees. Services designed to scale to tens or hundreds of millions will dramatically change the nature and cost of solutions deliverable to enterprises or small businesses.
And yes, it sounds alot like the memo Bill Gates wrote 10 years ago called the Internet Tidal Wave where he helped the big battleship called Microsoft reposition itself and point its guns at Netscape and others. Round 2 is no different from Round 1 but the stakes are higher and it will cost Microsoft oodles more cash this time to create a dent in this market. While we all know that memos often do not mean a whole lot, it is clear that Microsoft is quite serious as they are not afraid to piss off Wall Street and really put dollars to work for the long term position of the business. This will certainly be an interesting battle to watch over the next few years.
Also lifted from Don Dodge's blog:
Here is a list of the 22 acquisitions sorted by product group;
* VirtualEarth aka MapPoint - Vexcel and GeoTango do 3D imaging and remote sensing.
* MSN - DeepMetrix (web site stats), Massive (videogame advertising), Onfolio (web research), Teleo (VoIP), Media-Streams (VoIP), MotionBridge (mobile search), TSSX (China mobile services), SeaDragon (Large Image manipulation)
* Windows Live - FolderShare (file synch), MessageCast (MSN Alerts)
* Speech Server - Unveil Technologies (call center SW)
* Security - Alacris (Identity Mgmt), FutureSoft (Web filtering)
* Systems Management - AssetMetrix (License tracking)
* Business Intelligence - ProClarity (analysis and visualization)
* Microsoft Game Studios - Lionhead Studios (games developer)
* Exchange Server - FrontBridge (email security)
* Microsoft Project - UMT (Portfolio Mgmt)
* Storage Server - Stringbean Software (iSCSI SAN)
* Vista - Apptimum (Application transfer)
It appears that many of these acquisitions were focused on MSN properties and consumer based services. One thing to remember about Microsoft...the product groups run the company, and they all work largely independent of each other. They make the decisions about what to acquire and when. There are acquisition teams but they tend to be called in to execute the deal after the product groups have decided what they want to do. So, there will not necessarily be a high level strategy that all these acquisitions fit into, but they make sense on an individual basis.
Going to see the Black Spoons tomorrow...
Yeah these guys are pretty good....reminds me of David Bowie a bit.
They're on the Black Market label with The National and The Yeah Yeah Yeahs.
Check 'em out on Myspace here
China's most promising investments are in gaming
I'm a little embarassed that the hottest IPOs and the most dynamic companies in the country's fledgling technology economy are based around games. For example read these paragraphs from MSN money:
"NetEase.com Inc., a Beijing-based online gaming and e-commerce company posted better-than-expected fourth-quarter results Thursday, prompting two analyst upgrades and a 14 percent gain in its shares on Friday."
"Another large online gaming company, Shanghai-based The9 Ltd., also posted better-than-expected fourth-quarter earnings on Wednesday, but the results failed to impress investors. Following an after-hours spike in the company's American depositary shares that evening, the stock has more or less leveled off and was recently up just 11 cents at $21.21 on the Nasdaq."
"Going with the pack, Baidu.com Inc., a large Chinese-language search engine, also posted fourth-quarter results above consensus targets. The Beijing-based company said Tuesday it earned 9 cents per share, 2 cents above average analyst estimates."
"Sina Corp., a Shanghai-based operator of Chinese-language Web portals, bucked the upward trend and posted a 21 percent drop in its fourth-quarter profit Wednesday, as revenue fell 9 percent. The results were a penny below consensus estimates, and the company's first-quarter outlook also fell short of expectations."
So two of the top companies are in gaming and are trading on the Nasdaq. The other cool tech companies are e-commerce and in search, respectively. On top of the stories of kids in Korea and China living generally unhealthy lives cooped up in internet cafes or in their bedrooms spending at least 16 hours a day playing these things, it leads me to believe Asians are succeptible to these things. What is it, the gambling gene? Is there a certain percentage of Asians that have a gene that makes World of Warcraft like crack to them? How about that kid that killed himself because his game character died or something like that?
I think in terms of character building, Asian cultures fail in many ways. Music, sports, and being social on real terms are just as essential as being successful or having stable careers in medicine, business, law, computers, etc. There definitely needs to be some changes in philosophy.
technorati tags: Gaming, China, Investments, Baidu, NetEase, Sina, Corp