Global POV: At the Intersection of Technology and Culture

Locking up DVDs

by David Holtzman

Yesterday's entry was cheap and dirty for me--I put up a link to an article that I had running on Business Week Online about the coming DVD wars. I was surprised by the number of comments on the BW site and thought that I might pursue the issue a little further.

Since we're talking about war, let's try and understand that most basic of battle conditions--when do you win? Under what circumstances would Sony and the other movie studios feel that they were victorious? I would suggest that it would be when the pirated movie (and music) industries were defunct. But that's not enough, because they don't want to alienate people on movies in the process, right? They still have to have a thriving business. So they have to stop all copying of movies and leave consumers happy in the process. That seems reasonable.

Now here's the problem...we (consumers) are buying devices that require movies to be copies. Think about using an ipod in an environment where you couldn't copy music. The same thing is about to happen to movies. As storage gets cheaper and people get more accustomed to using, transporting and streaming digital content, they're going to demand the ability to move their paid-for films into any device that they own that can display it.

That desire is completely at odds with Sony's win conditions. This is a battle that they can't win. The demand for copyable films will soon force this conflict to a head. I'd guess in about 3 years.

The answer here is obvious, they need a new business model.

Sony needs to change their win-lose scenario into a win-win one. Who cares about copying? They should focus on sales. If movies are copied onto say, three digital devices, then locked up, we'd all be happy.

What if someone invented a device that would "lock" a DVD into a carousel and permit copying anywhere on a home network as long as the device authenticated that it still had the original safe and secure? Something like would be a better win for Sony. They should focus on what's important, number one-please the customer. Number two-increase sales. Number three-stop pilferage.

Posted on May 31, 2006

Business Week article on DVD protections

by David Holtzman

I have an opinion piece in Business Week today on the new DVD formats and their "copy-protection" schemes.

http://www.businessweek.com/technology/content/may2006/tc20060526_680075.htm

Posted on May 30, 2006

He just don't get it

by David Holtzman

The story the other day about the VA (Veteran's Administration) worker who took a data file home with him that had the info on all 26,000,000 U.S. veterans got a little worse in my mind yesterday when the agency's director, Jim Nicholson, came up with a pretty good excuse for why an employee could walk out of the door with a laptop with unencrypted sensitive data on it.

"I'm so damn mad at the loss of veterans' data and the fact that one person can put all of us at risk," said Nicholson, an Army veteran who served in Vietnam. "I can't explain these lapses in judgment on the part of my people. . . . After the inspector general finishes his investigation and finds exactly what happened, I plan to take decisive actions. "

Whew. At least we know who to blame.

Doesn't anyone in this administration get this yet? if the security of an entire class of the U.S. population depends on reasonably careful behavior on the part of a single employee out of an agency with tens of thousands of workers, then from a security perspective, we as a nation are screwed.

Nicholson is going to start having employees go to a cybersecurity class. That conjures up an image of a bunch of pregnant women sitting at desks learning about sex-ed.

Security has to be organizational as well as individual. I think that an appropriate background in information security should be as much a requirement for these appointees as management or financial experience. Some things have to be understand at the top and not delegated and I'm afraid that this is one of them.

Posted on May 26, 2006

Tales from the crypto

by David Holtzman

Noted cryptographer Phil Zimmerman has released another controversial software program called Zfone that provides encryption for VOIP (Voice over IP) phone calls. VOIP is telephony from a computer to another computer using the Internet. Mr. Zimmerman is best known for releasing the program "PGP" or "Pretty Good Privacy" in 1991, which quickly became the gold standard for encrypting email traffic and earning Mr. Zimmerman years of being hounded by the U.S. government because he provided easy to use encryption to anyone who wished to use it.

What's most significant about this, IMHO, is that it is likely to be the stalking horse for what I suspect might be the next serious privacy battle with the current post-9/11 regime in Washington--outlawing encryption.

After all, most of the schemes in which the U.S. Intelligence community eavesdrops on people, corporations and governments works best when they understand what's being said (Traffic Analysis is another story). If everyone starts using encryption for important phone calls, it will rip lots of bigger holes in the surveillance net.

I predict that there will be an organized executive branch attack against public sector use of encryption for phone calls. This might be the starting point.

Posted on May 25, 2006

Desperate Television

by David Holtzman

An article in the Washington Post today talked about how Google and other web companies are beginning to sell online video ads, cutting into the television networks' traditional revenue source.

Television networks have outlived their usefulness and that should be apparent by the incredibly bad programming that's considered standard fare. Sure, they have popular shows like Deperate Housewives and occasionally even good shows like Arrested Development, but tune into any network show at random, and it's crap.

It's not the process, though. I've heard people argue that it's because it's hard to put decent TV on all of the time--that there's only so much creativity. But HBO is consistently good. I could name any of 5 shows on HBO that is easily as good, generally better than anything on broadcast TV. As another example, look at BBC. Isn't it interesting how every year for the last 30 years, we've taken a hit comedy in Britain and moved it over to the US airwaves (The Office, most recently)?

I think that institutions, whether they're tv or Congress, get into a rut. They scab over with hangers-ons from related industries, like conventional advertising and they start looking at their customers as marks, completely losing all respect for them as individuals.

It's time for broadcast television to reinvent themselves if they want to survive. As appalling as it often is, I suggest that they cast an eye towards reality programming. It's clearly more than just a fad, it's a trend. What broadcast TV could do well would be to integrate with other forms of media and program genuinely interactive entertainment.

Yeah. Right.

Posted on May 24, 2006

Cotton Mather in the VA

by David Holtzman

This is almost too easy. An employee of the Department of Veterans Affairs took a little work home with him, a data file containing the particulars of 26.5 million veterans including their social security numbers and disability status. A burgler broke in and tossed the house, taking among other things, a laptop and external drive on which the data file resided. link.

Let's put some perspective on this: that 26.5 million file covers ALL the veterans in the United States. Every single person that has ever served in the U.S. military just had themselves exposed for identity theft. That's 13% of the adult population in the U.S. Including me, because I'm a veteran.

With the information contained in that file, a crook could easily apply for and probably get a credit card in the veteran's name. Maybe a driver's license, probably a passport. Every veteran in the United States. It's mind-boggling that one guy could have all of that sensitive information on his laptop. The fact that the computer was stolen was irrelevant.

So does anyone think that this is an isolated incident? That the one guy who happened to have the one master file happened to forget and bring it home and accidentally got ripped off? Seems unlikely, doesn't it? I suspect that this was the culture at the VA, that people treated this information cavalierly and casually, not taking any security seriously.

So what should happen? First off, in true Cotton Mather style, we should have a witchhunt. Time to make an example. Someone, perhaps from the Justice Department, should go into that department with a blazing torch and teach bureaucrats not to take their trust so lightly in the future.

Secondly, these agencies need to practice good computer security. I can't imagine how a person should have been able to access all of that information, let alone casually stick it on a laptop. How about some computer security specialists in the department?

Thirdly, GAO or someone needs to publish a set of penalties for this kind of behavior, starting with fines, continuing through suspension and culminating in being tied to a stake, having piles of government regs heaped about their feet and being offered the ritual last cigarette.

Posted on May 23, 2006

Books redux

by David Holtzman

Books again. On Saturday I was at BEA, the Bookseller's Expo of America as a guest of my publisher (my book, Privacy Lost, is coming out in September from Wiley, preorder from Amazon). It was amazing...tens of thousands of authors, editors, books sales agents and those funny little people that go to all the trade shows and collect the cheap give-away stuff. Is it possible that they're all the same people at every show? What do they do with all of it? They must eat it, the spongy balls and bookmarks and canvas tote bags.

So, for me, the really interesting thing was Google. They had a big booth and they had little Googlemobiles, acting like taxis, driving attendees around the city for free. What a nice company.

There was a lot of talk at the show about the digital/analog problem with books; this discussion spurred on, no doubt, by the polite presence of Google, explaining their book search program. The Washington Post has an article on this this morning.

I'm becoming firmer in my belief that the progress of technology regarding entertainment content is inevitable. I can't imagine the tide being turned at this point, Yet, I'm not so sure the old word of reading as we know it is dead. It's not the same problem as movies, for instance. Nobody watches a VHS tape instead of a DVD if they have a choice. Yet cinephiles do occasionally prefer seeing reels, just as audiophiles like to use turntables.

Let's make a distinction between revenue and publishing. I think that the publishing industry will have to find alternate ways to make a buck from their books. No question in my mind. However, that doesnt' mean that there isn't a place for books in our future. We just might not be able to count on sufficient income from sales to justify the printing of the book.

Perhaps flash-in-the-pan bestsellers or what I'd call "beach books" could be distributed in the new ways and the John Updike books come out in paper. Libraries will always buy them as would bibliophiles.

I'm starting to realize how antiquated the publishing industry really is. It's not quite Dickensian, but it's not exactly the Jetsons, either.

The trick for publishers is to figure out how to embrace the coming digital wave and figure out how to make money by giving the consumers what they really want, because after all, isnt' that what capitalism is all about?

Posted on May 22, 2006

Venturing out with capital

by David Holtzman

The New York Times said something that I've been thinking lately--that VCs are up to their old tricks again, hyping companies.

The Times discusses a couple of recent cases of excess, notably Facebook, which was started for $12m and is now apparently trying to get $2billion.

The biggest story that was never told from the dot com bubble in the '90s was the role of the VCs. I have a secret--it was their fault. They bid companies up, then sneered at the valuations. They insisted that young CEOs spend money lavishly on pet monkey consultants and advertising, yet pointed to that spending later as a sign of failure. And after all that, and bad investment judgement too, they made money. In fact, they're the only class of people (other than investment bankers) who did. That's why they're doing it again.

So where does the money come from? Normal people. People who get in on a hype way after the fact when it's too late. People who invest in companies when the valuation is over $100 million or worse, buy the stock post IPO, post run-up. They are the fuel for our industries fire.

I wonder if it's happening again.

Posted on May 19, 2006

Books and crooks

by David Holtzman

Books.

I was thinking about them this morning as i continue to edit mine. Several articles have been flying around the press lately making much of Google's deep indexing of books, both those in the public domain and those that are not.

This never bothered me and I think that I know why. Reading a book is an experience. Those of us who truly enjoy reading find it to be one of the most pleasant parts of the day. We all have our little habits, our routines on how we read a book. Some people curl up in an armchair, I like lo lie back on a couch. Book reading is so tactile. The feel of the cover and the creak of the binding on a new book, the way virginal pages act when first touched.

Reading is immersive. It's like subtitled films. People that don't make a habit of watching them are usually surprised at how quickly they slip into a trance whereby the reading is just another form of sensory input blending into the visual and auditory stimulus.

Now what about non-physical books? I hate reading books on a computer. EVERYONE hates reading books on a computer. The usual reason given is the lack of a tactile experience as described above. But I think that it's more than that. Computers are about finding information quickly. Our brain works in concert with our mouse-clicking hand and our darting eye to quickly find the fact that we need. This is rotten frame of mind to be in when you're reading something for enjoyment.

The idea of indexing the world's books doesn't bother me at all. It will be used for research, for reference, maybe to win a bar bet. The idea that someone will download a book, say hacked from Google, for instance, then print the book on a laser printer, bind it somehow, sit down and read it, and then that they'll enjoy it as much as they would reading a fine leather-bound book is simply ludicrious. For one thing, it'll cost $5-$10 bucks anyway to print it. For another, you won't get look and feel of the original book or even the fonting, you'll get flat, boring text. For another, people who read, read. They wouldn't want to do this. The people who will steal and read a book and be satisfied with the laser printout will be the once-a-year book reader and they will undoubtedly be stealing the Da Vinci code anyway.

The experience of reading is special, pleasant and comforting for many of us. Substituting a digital equivalent is like drinking cognac from a jelly jar. Sure you can do it and it will intellectually taste the same as being drunk from a fine heaviy leaded-crystal snifter, but it leaves something lacking.

Posted on May 18, 2006

Fair Use, Fare Thee Well

by David Holtzman

XM radio just got sued for a new recording feature that it's offering on some of its radios. The new Inno radio from XM is able to search for music by name and record up to 50 hours of tunes.

The lawsuit by a coalition of the recording industry alleges what you think that it might--that XM is assisting in piracy.

I have two words for the recording industry: "grow" + "up".

The lame claim that artists are not being paid for their work falls on deaf ears, especially when I'm in Los Angeles and see fat recording executives driving in sports cars, sporting more bling on their fingers than Paris Hilton. Sure, the artists should get paid for their efforts. Who says that they aren't?

The right solution is to change the compensation model and cut back on the slice of pie going to the middleman--the vocal and litigiously challenged recording industry.

I empathize with XM (Sirius made an accomodation and wasn't named in the suit). But the one that I really feel bad for is me. What ever happened to the Fair Use Doctrine?

The music industry (and the movie people) are cutting back on our right to copy digital material that we've bought. Hey, I buy most of my music and I always buy or rent my movies. The problem is that today's digital world wants to swap the material between devices. It's made for that. If I buy a Neil Young CD and play it at home, I have to copy it to use it on my ipod. Newer car radios make me copy it to a hard drive there. I don't want to carry a CD around with me anymore, that's why I went to digital.

Somebody needs to stand up to the bullies of the entertainment industry. Who will champion the rights of consumers now that Ralph Nader is clearly crazy? it's a shame that we can't count on Congress. I guess that we're have to turn to the consumer advocates of the new millenia--the hackers.

Posted on May 17, 2006

The ABCs of domestic espionage

by David Holtzman

Brian Ross and Richard Esposito from ABC have a blurb today stating that a high level government source has warned them that the government is tracking their phone calls. They are doing this not to stop terrorism, but because they're trying to track down leaks in the Bush administration. Ross, by the way, is the network's chief investigative correspondent.

"It's time for you to get some new cell phones, quick," the source told them.

ABC news has a disclaimer in the article that they don't know how the government got their phone records, and they can't prove that this was part of the recent NSA brouhaha in which Bush admitted that the government had coerced the records from at least three major telephone companies.

I wrote a blog a few days ago talking about some of the damage that the government could do with what appeared to be the innnocent telephone records that listed the calls, times and numbers, but not the content. I missed this one.

What an obvious thing that the Bushies can do with these telephone records; use them to track down and squash domestic dissent and investigative reporting.

These people have to be stopped. Somewhere there's a line and I think that they've just crossed it. That line defines the demarcation between legitimate counterterrorism efforts and political abuse of the system.

If it turns out that what I suspect is true, is; that the Bush administration used these phone records in even ONE instance, to try to plug a leak or in any way spied on domestics with no direct connection to Al Quaddeh...if that happens, then I say that it's time to impeach President Bush and try him for illegal spying on Americans. Regardless of whether or not the Democrats take back the House this November.

Posted on May 15, 2006

A tale of three worlds

by David Holtzman

The world of technology products is a crazy one. Thinking about this other day, I realized that every product is actually designed by and for three completely separate constituencies.

First off, every gadgets is designed to placate lawyers. DVDs that block out menu functions while horrible, meaningless threats flicker on the screen in multiple languages, car GPS systems that disable important functions while the car is moving and force the driver to acknowledge that not looking at the road is dangerous while driving. Code is actually written to satisfy a lawyer. Manuals have significant amounts of gobbledy-gook in them, enough so that it's actually difficult to find operating instructions in English in most of them.

Technological stuff also has to please the marketer. It's very common to have buttons on devices and software functions that seem silly, yet marketers insist on them. That's how you end up with things like graphic equalizers on stereos. Marketers often insist that capabilities be built that make no sense to the developer, but the engineers do it anyway, because in most organizations, they have no power.

Lastly, is the user. Although most gadgets do do what they say that they will do, (radios play, cameras take pictures)., users are often disenfranchised by the other two constituencies, even though the marketers claim to be speaking for them. The truly amazing part, though, is how bad most technology products are at pleasing the consumer. Sure they all do what they say that they'll do, but for how long? How many cell phones lose coverage and PCs need to be constantly rebooted? I'm kind of a gadget freak--an early adopter. Every morning I realize that I could spend the whole day working on my "stuff" if I wanted to--downloading patches, configuring phones, you name it. Hey, life's too short.

What would be nice would be if technology products were built primarily for the user, emphasizing design, safety and maintainability. Especially the latter. I'd love to buy a phone that didn't drop a signal, for instance. I so very rarely run into a tech product that just works out of the box as advertised and doesn't need to be constantly fiddled with. It could be done, but it would take a different design philosophy. Keep the lawyer and the marketer the hell out of the room during product inception. Create a new class of technology worker that is empowered to promote usability and stability and genuinely represents the interests of the consumer.

Posted on May 14, 2006

NSA uses traffic analysis

by David Holtzman

So it now turns out that President Bush lied last month when he said that his authorization of domestic espionage only extended to Al Quadeh suspects, when at least one member of the phone call was overseas. Yesterday it turned out that NSA has been given the call records of hundreds of millions of Americans by three large telecommunications companies: Verizon, ATT&T and Bell South. Apparently Qwest refused.

So, which is more surprising; that Bush lied, that NSA is actually monitoring Americans or that Qwest refused to be involved. I go with the last one. Kudos to Qwest. Really. That took guts.

What was turned over was apparently not the calls themselves, but the details; presumably things like number from, number to, length of call, time of start, time of end.

I can hear someone saying, "why that's not so bad!'

Ah, but it is. For two reasons. The first is because of an intelligence technique known as "traffic analysis" (TA). TA is an underwhelming, but highly useful way of gleaning organizational information by charting out who talks to whom and when. These diagrams of phone calls fall into several well-known patterns like stars and the analysts can look at the figures and explain who's friends with whom, who calls the shots, etc.

They can also penetrate aliases. A classic use is to compare the diagram of a "working star" of aliases to other diagrams of known individuals. If there's a match, then it's likely that it's the same group. This approach even extends to families. Grandma always calls Junior, who later on calls Madge and MIdge...

The second thing that they could do with this information would be illegal, but worth thinking about. Let's say, hypothetically that NSA was able and willing to monitor the raw traffic from all American phone calls. Well, then the biggest problem would be how to make sense of all the information and how to pick which calls to surreptitiously listen to, because if it was too wide-spread, someone would blow the whistle to the newspapers (which happened anyway). So what you might do would be to use the call logs to pick the exact time and numbers of call that you were willing to take a chance and transcribe. This approach would allow them to use a very small number of analysts and a few computers, increasing the chances that they could keep it secret.

EIther way, these records are a major threat to privacy and clearly beyond any laws authorizing NSA to conduct surveillance. It will be interesting to watch General Hayden's confirmation hearings...

***

The Washington Post just released the results of a quickie poll claiming that 61% of the population are okay with this kind of domestic espionage because it fights terrorism.

I claim that a 500 person poll is a ridiculous way to create a headline news story and nobody understands the situation yet, let alone what can be gained from analyzing this information. This is a good example of media irresponsiblity...by running a story based on a limited polling sample of an uninformed group with a story that doesn't even have details yet, they lend support to the program before most people even know what it is. The Post headline is "Most Americans Support NSA's Efforts".

Posted on May 12, 2006

COPA and DOPA on the ROPA

by David Holtzman

Representative Mike Fitzpatrick, a Republican from Pennsylvania is introducing a bill called DOPA or Delete Online Predators Act. This legislation will make it illegal for children to access social websites like MySpace from public Internet terminals like schools and libraries.

FIrst off, I was born in Pennsylvania and would like to apologize to all fo the loony-toonyness that seems to orginate from that state. Secondly, note to Republicans--you are not losing ground because you're not crazy ENOUGH.

Remember COPA? The Clinton administration pushed a law called COPA (the Childs Online Protection Act) forcing librarans to put filters on library computers to block "objectionable" material. The Supreme Court struck it down. They said it was illegal.

What's the point of all of these heavyhanded attempts to stop people from doing what they want to do anyway? MySpace is hugely popular among kids, who put a lot of personal data up there. Okay, bad idea. It makes them a target. So why aren't the parents teaching their kids not to do this? Why do the nutcases always want the government to get involved and take over when their parenting skills fall short?

Most of all, what happened to the Republican party that believed in a balanced budget and a less intrusive government?

Posted on May 11, 2006

Back of the computer bus

by David Holtzman

EFF has been watching AOL/Time Warner's new email shakedown service, "Goodmail', like a hawk. For those who don't know, the service allows mass mailers (ie; spammers) to bypass mail filters--for a fee. There are two problems with this is, of course: First, that people who don't or can't afford to pay blood money to Time Warner won't be able to reach their mailing list. Second, they're clearly confused...we don't want any spam at all. There ought to be no goodmail, and if it was, it should be user configurable.

Going back to the first reason for a minute. If you think about the dual trends of pay-as-you-go spam filters and the current Net Neutrality debate, a disquieting future reveals itself...a two-tiered Internet. Net Neutrality is the codeword for changing some customers more than other customers, because they're more popular. Now they only charge more for OUTGOING traffic, if the telcos have their way and Congress lets them, then they will start charging more for INCOMING traffic.

Both of these plans and I'm sure many others like it are opportunistic. These companies have been characterizing their problems as a result of their early investment in the Internet, but that's bull. The early infrastructure providers for the Net were subsidized by the National Science Foundation. These companies are trying to use their seriously heavy lobbying power to blow apart the free market that is at the heart of Internet E Commerce.

In the next few years, you'll see more of these ideas. Sure, they'll all have consumer-friendly names, but that's the way they do things today. "Goodmail", "Patriot Act", "Defense Department." They're all oxymorons and the names are contradictory, too.

Watch for benignly named ideas that seem to incense Netizens. If they coincidentally are favorable for large companies, watch them closer. Bonus points if the company has executives under indictment.

Posted on May 10, 2006

Old pirates live on

by David Holtzman

CNET references a page that's pretty funny in retrospect--an archive for older anti-piracy ads, mostly aimed at floppy thieves.

Kind of points out how timeless the problem is and how silly too.

Posted on May 09, 2006

Bring me the head of Osama bin Laden

by David Holtzman

It seems appropriate to bring up the surprisingly seldom mentioned point that the Bush Administration has not yet captured the head of Al Quaddeh.

We have been in Iraq now for almost three years and there's rumblings around town that we might invade another four-letter region starting with 'I'. What's next? Presumably Iowa.

It's easy to list what's wrong with this White House. From the economy to the culture of opacity, the partisanship of legislation, even the collusion with energy executives. But let's not forget the one truly militant action that I and I suspect other Americans have been waiting for for FIVE years.

It is unconscionable that in a world that as John Kennedy prophetically said:

If anyone is crazy enough to want to kill a president of the United States, he can do it. All he must be prepared to do is give his life for the president's.

Shame on you Mr Bush. You've taken your eye off the ball and let go of the one thing that might have truly given you decent press throughout history--revenging our country.

Posted on May 08, 2006

Tear on the dotted line

by David Holtzman

IBM recently demonstrated a novel and innovative way to help preserve privacy. They have patented a device called a Clipped Tag RFID chip.

RFID chips, or Radio Frequency IDentifiers, are very small semiconducting devices that can be embedded in other objects and remotely interrogated. They are widely believed to be the future of inventory control, because unlike bar codes, they don't require immediate adjacency to be read. Unfortunately this remote sensing feature has privacy advocates up in arms because they have the potential to turn a consumer into a walking billboard, broadcasting personal information to anyone within dozens of feet with a receiver. Not only are these chips going to be used by retailers, but the State Department is putting them in all US passports by next year. In addition to inventory control (read: shoplifting), retailers are also looking forward to using RFIDs to facilitate returns and exchanges.

So what did IBM do? Their Clipped Tag has a perforation on it, inviting the customer to rip a piece of it off when they bring the purchase home. This effectively reduces the range of the chip's antenna from 20+ feet to a few inches, removing most of the privacy threat to the consumer, yet still permitting the chip to be read for exchange purposes.

Bravo IBM. It's been a long time since I can remember them innovating a product that addresses a social problem. It's good business and if it works the way it claims, a damn clever solution.

Posted on May 05, 2006

The relationship between social sites and tech

by David Holtzman

Youtube is the latest in a series of fashionable websites that have a different emphasis than seen in the past. Rather than trying to sell the participants things, they are social in nature. They are not B-B or B-C, they are true C-C sites, Consumer-to-Consumer.

It may not look like technology plays a big part in their makeup, but it does. Many of these sites exist not just because they allow social interaction, but also because they give people something to do with hi tech gadgetry that they buy.

Without Youtube, where would budding film directors put their video?

The explosion of digital appliances in the last ten years is really a series of pummeling waves: cell phones, MP3 players, digital video cameras. Each wave seems to take about 3-5 years to crest. At that point, the gadget is the Christmas gift de jour. Everyone has one even though they may not know how to use it yet.

But what do they do with it other than annoy friends and family with the ritual show-off scene?

It's especially hard because these gadgets are almost always content-driven; they function best when they're either loaded with content (MP3 player) or creating content (video camera).

I believe that this is where many of these social sites come in. They are inevitably locked to the spread of content-driven digital gadgets, following on the tail end of the wave, after adoption.

The point here is that when a new way of creating, acquiring or distributing digital content is introduced, the demand begins to be created for a website that facilitates same. People don't want to pay for it, they've already spent money for the gadget. Now they want to use it.

Posted on May 04, 2006

Gameopoly

by David Holtzman

I'm not sure how to classify this, but trust me, it's significant. A popular online role-playing game, Project Entropia, is offering a cash card that works in ATM machines, but draws its money from the virtual world of the game. link. Yes, that's right. Earn money in this alternative world and then spend it on something real. It also goes the other way around, you have to buy things in the game with real money. A gamer named Jon Jacobs recently bought a space station for $100,000. Yes. A hundred thousand real dollars. He says that he is developing it as an outlet for media companies to sell music and video for players.

So why is this significant? Most baby boomers have never seen one of these before, but they're big business, generating billions of dollars in revenue.

These games are models of the world with fun twists like magic. But most of them have economic systems. If you get ahead you can buy things like furniture, better weapons and bigger houses. Typically these currencies are self-contained, based on points earned in gameplay.

This is different. No one has ever crossed the blood-brain barrier between real and virtual world economies. Like Neil Stephensen's Snowcrash, this helps creates "avatars" or online personnas that have some standing in the cyber world, yet ties to the real one.

This economic cross-over is not only significant, but subversive. Nothing undermines institutional authority more than a new underground economy.

Posted on May 03, 2006

Branded in Hong Kong

by David Holtzman

A harbinger of things to come...what's a brand worth? NEC has some insight into that question. They've recently discovered the knock-off de tuti knock-off, even for Hong Kong--an entire fake NEC brand. A group of enterprising pirates were selling fake NEC appliances, but in a big way. They had contracted with over 50 electronics factories to build copies of NEC products and lashed together a consumer distribution network to sell them. Police raids found that the cloned company had been giving out fake NEC business cards and collateral sales material, had commissioned R&D studies and even produced official-looking documents granting distributors exclusive rights.

Interestingly enough, the copies were of high quality.

So, what's a brand worth? Obviously enough to do all that. The pirates had done all of the corporate heavy lifting themselves; they'd contracted with factories, built distribution networks, established a channel strategy, even launched research efforts for future products.

If they'd changed the designs a little and called it, say, "Daves", instead of "NEC", they'd have had a real company and it would have been legit. Yet it was worth it to them to take the risk, knowing that they'd get caught eventually. Why?

Brands are big bucks. This case illustrates why. That last little touch on electronics manufacturing...gluing the little logo on the case, is the most valuable piece of the pie. The brand adds more value and increases the price point more than better design, cheaper distribution, or in fact any other single part of the process.

Posted on May 02, 2006

The cacaphony of digital culture

by David Holtzman

I'm not sure what tomorrow's world will be like, but it's going to be noisy. Every new gadget seems to be equipped with a noisemaker; a buzzer or beep, that tells you, the owner, that you've done something wrong. Cars yell at you when you don't buckle your seatbelt. Many of them become shriller and more insistent until you do. Coffeepots beep when they're ready, waffle irons remind you that they're hot, cell phones chirp when they're out of batteries.

Think that's bad? You haven't seen nothin' yet. The rapidly lowering cost of chips are behind the rapid digitization of everything. As more and more common household objects become digital, they'll scream at you too.

It could be pretty bad.

What's worse, of course, are the trigger conditions for the noises. There's a certain paternalism in these companys' decisions on when and what to annoy you for. Why should you always have to wear a seat belt? Sure it's safer, but that's a choice, isn't it?

In many ways, it's about removal of free will and replacing it with some kind of computer conscience.

There's a sickness in our society that we think that it's a good idea to replace education and informed decisions with silicon nagging. Who's behind this?

Why, lawyers of course.

Posted on May 01, 2006