Former Cisco CTO Judy Estrin Says Tech is Lame

Friday is a no blog day for me, but sometimes you have something you have to say. Today the New York Times has an article about a new book written by Judy Estrin, former CTO of Cisco. Here is an excerpt from the article.

Ms. Estrin traces Silicon Valley’s troubles to the tech boom. She said that’s when entrepreneurs and venture capitalists started focusing more on starting companies to turn around and sell them and less on building successful companies for the long term.

“Starting in 1998, there was such a shift in Silicon Valley toward chasing money and short-term returns,” she said.

Part of the reason, she said, was that Cisco and other fast-growing big companies started acquiring start-ups with innovative technologies instead of developing new ideas internally. Entrepreneurs began founding companies with the goal of selling to a big tech company, and venture investors encouraged that.

Ms. Estrin acknowledged that innovative ideas still appear all over Silicon Valley. But, she said, the technologies at the root of new products like Apple’s iPod or the Facebook social networking service were actually developed several decades ago. If entrepreneurs do not continue to develop groundbreaking technology, she said, the valley will be in dire straits in another decade. She compared the situation to a tree that appears to be growing well, but whose roots are rotting underground.

 Yup.

The problem is driven by an investment community too fixated on short term results. For example, what does it say when VCs will not generally invest in companies unless they have finished technologies ready for market? It says that only companies that can raise enough money from friends and family, or only companies that can self fund can get launched. This is small money. And little money can't generally fund hard stuff.

Hard does not always equal better, but real innovation is usually not cheap.

But what is worse, in this tech economy, real innovation is not respected. It used to be that if you talked about changing the world, people took notice. Now if you say such things with a straight face, you will be laughed out of the VC conference room. It seems almost silly to aspire to do something so great that it really moves the bar. And in fact, it is true that when most people today say such things, it is little more than hyperbole. The problem is that in the current environment there is little place for actually trying to *do* such things. There is little money for it, but more importantly, there is little patience even for the concept.

In fact, in our elevator pitch, fast money, thin veneer, social networking tech econonmy, real innovation is a dirty word. And I have no idea what to do about it.

A Great Blogging Month

As many of you have, I suspect, noticed, I am no longer blogging on Fridays. My schedule had been five days a week and now its down to four days a week. But I decided today to not write an article (which I am now writing) because so many people are away today and I have already had such a great month in terms of traffic, and most importantly, its nice to have an additional excuse to take a day off. That led me to the thought that I should do a "state of the blog" post, which this is.

I started this blog on January 2nd 2008. My goal was to get maybe a few hundred readers. I really had no idea anyone at all would be interested in anything I had to say.  The growth of the audience has been, and continues to be far ahead of my expectations. A few statistics for the first 8 months of this year:

• The growth has been steady, and, unless the Internet shuts down, 50,000+ visitors for August.
• 1398 feed subscribers.
• Technorati say authority is 399 which puts means an overall rank of 8990, or in their top 10k blogs
  
• The blog regularly hits Hacker News and occasionally hits Reddit.
• Its been linked to by ReadWriteWeb,  GigaOM and lots of other great blogs.
  
• It is regularly syndicated at Silicon Alley Insider and CenterNetworks .
• It occasionally hits TechMeme, though not yet their leaderboard.
  

The bottom line is this blog, which I started as a lark with a silly, ironic, tongue-in-cheek name has become a relevant, if not huge part of the discussion. I want to thank you, my loyal readers, for hanging out here.

Mousers vs. Keyboardists

Since the dawn of the graphical user interface there has been tension between those that favor the mouse and those that favor the keyboard. I am reminded of this as I explored the new experimental Firefox plugin from Mozilla Labs called Ubiquity.

Ubiquity was designed by human interface designer Aza Raskin, who is also the son of Jef Raskin also a famed user interface designer who was one of the early leaders/managers of the Macintosh project at Apple. This is only relevant because Jef’s work after Apple was very keyboard focused, and ubiquity reminds me of much of the gestalt of that work. The point is that Jef, who has since passed, and now son Aza have a high regard for the value of keyboard input.

The idea behind Ubiquity is that you hit a command key sequence like “ alt + space” and it opens up an overlay window where you can type commands. The commands input system is really smart. It provides lots of help like suggesting what commands are available based on the first few characters you type. You can also do operations on selected text. For example you can select an address and type “map this” and it will, in the ubiquity window, show you a Google map with that address marked.

But this piece is not a review of Ubiquity. In short, Ubiquity is a very interesting idea. I want to like it, and I may yet get to that point, but I have to admit am not quite there yet. This article, though, is really about the some of the thinking I have done about the role of the keyboard in human interface, which playing with Ubiquity got me thinking about.

Let’s start with this: keyboardists and mousers are different.

I am not a keyboardist.

Now don’t get me wrong, I am a fairly fast typist. But my problem is I can’t remember commands. Putting a keyboard command in my head is like putting sand in a sieve. The reason I love graphical interfaces is because I can’t remember shit. I wish I could, because I am sure I would be much more efficient. Keyboards are much faster than mice and GUIs. The problem is when you are staring at a keyboard you have to remember what to do. A GUI is for me a giant cheat sheet.

The thing is I think most people have brains that are similarly not wired for memorizing lots of commands without lots of effort. And so I am at least thankful that I am not alone.

At Kloudshare, I am a mouser. My associate, Will, is a keyboardist. I use Eclipse for development. He uses EMACS. He will never use Eclipse. I will never use EMACS. EMACS is for people that can remember lots of stuff. Eclipse is for people that need hand rails. Will has a much better memory for such things than me.

And so, bringing this back to Ubiquity, I see that Aza is trying to bring the benefits of keyboards to the keyboard allergic masses. He does not do a bad job at all, and I am going to give it a shot. But I must say I am skeptical this kind of design philosophy can go mainstream. If I am right, there are many more mousers than keyboardists and no matter how hard you try, you just can never convert people from one group to the other.

Arrington's Great Kindle Idea, and Why Android Should Have Done It Too

This morning Mike Arrington wrote a great advice piece to Amazon on the Kindle.

The gist of Mike's argument is that Amazon should offer Kindle up as an operating system and reference design. This would allow third parties to create Kindle compatible devices in the same way that Dell, for example, makes PCs compatible with Windows. This would create an ecosystem around the product which would be incredibly powerful. And at the same time, Amazon would still be doing what it really wants to do, which is to sell books. By offering their own product which they should continue to sell, they get to work out all the kinks without any meddling third party companies telling it what to do. But by opening up the platform, they really get to have their control cake and to eat their large marketplace cake too.

Interestingly, this is really what Google should be doing with Android. Google is indeed licensing the Android OS to third party phone manufacturers, but by not creating and controling an initial reference design they are leaving important pieces of the design to third parties, in a field (mobile phones) where important design elements can be critical.

Anyway, getting back to Kindle, I have been a fan of the product concept but I do believe it will be very hard for Amazon to build up the kind of market that they really need and should have with such a device without getting some help. I hope they take Mike's advice.

Mom's Verizon FIOS Install Took 11 Hours

My mom lives in Manhattan. Verizon just installed its FIOS Internet, TV, and telephone service in her building. Last Friday she got it installed in her apartment. The installers arrived at 9:20am. They finished at 8:15pm. For those of you a bit math challenged, that’s 10 hours and 55 minutes. Or one could just say it’s a long F’ing time.

I love FIOS, or I guess I should say I love the *idea* of FIOS since I don’t have it yet and I haven’t been over to her apartment to check it out. But anything like 11 hours per install in Manhattan is a killer to the bottom line, which has me concerned. Perhaps more importantly, it’s a killer to Verizon’s potential rate of installs, which delays my ability to ditch Time Warner. I certainly hope it’s not the norm.

And so the question of the day is for FIOS customers. For those of you specifically in Manhattan, and then in other urban areas, and then in suburban areas, how long has your FIOS install taken?

Music & Religion

There is a rumor that has been circulating that Apple is going to be introducing a music subscription service like Rhapsody. I don't know if it is true, but hope that it is. I love music subscription services, and am a current subscriber to Rhapsody, but I would switch to Apple in a minute so I could use my neat iPod with it.

But what triggered me wanting to write about this was not the rumor, but the reaction to the rumor by certain quarters. Specifically, whenever you read about subscription services, you always read vehement and angry comments from people that don't like the idea of subscriptions. It is certainly fine to not want it for yourself. But what is odd to me is the anger that said people have at the idea that I might want something different.

It's fascinating that this response always comes from the "free" music crowd, and yet I am confident, if they had a magic wand, they would make such services illegal, or so socially or politically unacceptable that they would not be offered.

This vehemence strikes me as strange because clearly I should have the right to buy something the way I want and a vendor should have the right to sell it to me in the way that s/he wants.

In short, it strikes me that the free music crowd is really more a religious movement than one based in logic and reason. It is very similar to the way that certain fundamentalist religious groups demonize people for different beliefs. Here the free music community demonizes subscription services because, by definition, subscriptions must use DRM, which is "evil". And the irrational zealous passion brought to bear is exactly analogous to the behavior of every out of control religious group in human history. Ok, they haven't gotten to burning people at the stake, but you know what I mean.

The point is, even if you have the wacky view that all music or intellectual property should be free, the idea that you should consider business and interaction models, and technologies like DRM that don't match your world view to be "evil", is, to me, bizarre. This is particularly true when the DRM *enables* a, compelling, at least for some, business model such as subscriptions.

As I see it, this movement would be more appropriately lead by a religious figure like Pat Robertson, or John Hagee, or Richard Stallman, or... oh wait, it is!

Overblown Semantic Web Community References To a "Thinking" Web

I love many of the ideas behind the semantic web even if I think most of the tools and products targeting the space are not polished enough, or useable enough or quite ready for prime time.

But one meme that drives me crazy is the idea that when we get to the semantic web, it will think for us. Some even have taken to calling it the "thinking" web. The problem with this kind of talk is that it sets expectations *way* too high.

Certainly the semantic web will be smarter than Web 2.0.  But we must be careful about our language and our expectations. I wrote the other day about the future of the web being about serendipity, and I think this is important. Serendipity implies a situation where you are unexpectedly happy to find some useful information or connection. But when you start talking about a web that "thinks" you are talking about a web that you *expect* to able to give you useful and correct answers.

It is really all about expectations, and designing user interfaces, and developing messaging that under promises and over delivers. Because doing the reverse is fatal.

Unfortunately I fear there are people talking about a "thinking" web  because they want more attention, and what better way to get it than evoking some HAL like future. But this kind of talk that gets expectations way out of wack with what is actually possible, and really hurts the process. And the truth is there are perhaps more pedestrian sounding, and yet incredibly useful benefits to the underlying ideas of the semantic web. The semantic web world doesn't need to blow smoke up people's butts to be impressive. In fact such smoke blowing either does, or will soon come to sound overblown and desperate.

Dell May Be Signaling New Type of Innovation WIth Lattitude-On

I have always thought it was at best foolish, and at worst irresponsible for companies like Dell, HP, and through the course of history, their smaller rivals, to rely exclusively on shrink-wrapped software from Microsoft to create their user experience.

For years, the big PC players have essentially offered no differentiators at all beyond price, sales channel, and support. In other words they abdicated almost all product development to Microsoft and Intel. As a result, Apple has had to itself the playing field of PC innovation, while everyone else on the PC side played me too.

Last week, Dell made an announcement that in my mind has not gotten nearly enough attention, and that suggests a change may be afoot. They announced a new laptop called the Latitude-On.

Ladies and gentlemen, this is a big deal.

The basic idea of the new Latitude is that the machine will have a second ARM based processor and Linux operating system along side the standard Intel processor and Windows OS. This machine within a machine will provide a super fast, lightweight, battery friendly environment for doing things like email, web browsing, and perhaps other communications tasks. It will be “instant on”, so you will always be able to get to your basic functionality, and yet you will get a battery life measured in days and not hours when in this mode.

And while the Latitude’s specific feature set does indeed sound enticing, what is really striking to me is the level of innovation involved here for a non-Apple PC vendor. This is a radical sea change for an industry that for at least a decade and probably more like 15 years, has done almost nothing innovative at all. Innovation in the PC industry has meant little more than going to the mailbox to download the next reference design or software update from Microsoft and Intel.

While, to be sure, this is no signal that Dell is about to become the next Apple, this kind of thinking puts Dell well ahead of their other PC compatible competitors. Dell certainly did not invent the instant on concept, but being willing to do something that does not come from MicroTel is a big step for a company that still really won't even buy chips from Intel competitor AMD.

Of course to really excel at this type of innovation requires a different type of organizational DNA than any of these companies have had. Doing software is very different than doing hardware. And doing integrated software is very different from typical desktop software. But while the challenge is great, the risks of continuing to add essentially no value add at all are far greater.

And so, while this is indeed an exciting signal from Dell, I will be very curious to see if this is just a one-off, or if this is indeed a realization of the necessity to innovate beyond the narrow template of the old school PC mindset.

Playing Whack-a-Mole With Arrington, Masnick, And The Free Music Crowd

Ok, I get that anger at the music business = page views. But it is, nevertheless, frustrating to listen to people make arguments that are internally inconsistent.

I feel like I am playing Whack–a–Mole because the arguments are so squishy. There are intellectually honest arguments for why free music is inevitable, like saying that you can’t stop people from stealing and so you have to get whatever little scraps you can. Too bad.

But that is not what you hear from the thought leaders like Mike Arrington from TechCrunch and Mike Masnick from TechDirt and others who offer advice and argue positions that are not consistent with themselves or with basic laws of business or self preservation.

This weekend, Arrington wrote again, as he has before, that music should be free.

Specifically, the article is about the royalty rate the record companies charge for playing radio music, and the statement by internet radio service Pandora that they will go under if the rate is not reduced. Specifically, Arrington Says:

For now the labels want to squeeze more revenue out of Pandora and others. But when these companies start to go under and the bird in the hand disappears, they may regret their overly aggressive negotiating stance. It’s time for the labels to die, and anything that cuts off another revenue stream is at least partially good. I’m reluctantly willing to sacrifice Pandora if it quickens the inevitable march of recorded music towards free. Let’s just hope it doesn’t come to that.

Ok, so the nub of it is Mike longs for the “inevitable” day when music is free. And the label’s current stance is overly aggressive. But if music will inevitably be free and that is what Mike is pushing for, then why would anyone who actually wants to make a living from music listen to Mike? He seems to be arguing that the labels (and indirectly musicians) are dumb for charging too much. But his entire thought process is driven by the basic notion that *any* price is too high for music.

Its hard to take business advice from a guy who thinks you oughtn’t be in business at all.

From there, we move to Mike Masnick from Blog and Internet consultancy TechDirt, who recently took Warner Music to task for their stance regarding music royalties for the hit game Guitar Hero. Honestly, this argument is even worse than Arrington’s.

Masnick regularly argues that the music business should be making money other ways than selling “shiny discs”. And yet in the Guitar Hero case, Warner wants a greater royalty for using their music in the wildly popular video game. So here, it sounds like Warner is taking Masnick’s advice, right?

But not so fast.

Again Masnick chides the Warner. He criticizes the company for their argument that they need to make a greater royalty on the use of their music in the video game. His argument is that Guitar Hero is great marketing for Warner Music to sell, err… shiny discs.

Ok, so, according to Masnick, its not smart or proper, or good or whatever to depend on selling music in the traditional way. And its also not proper to demand substantial licensing fees from a big profitable video game franchise, even when that franchise is entirely based around music. This demand is improper because said game franchise is helping sell those silly shiny discs. So each identifiable revenue stream should be forsaken because it is “marketing” for all the other supposed revenue streams.

You can see how this could get problematic.

At least between Arrington and Masnick, Arrington is more honest. He wants people to stop selling music at any price. If I were a musician or a label I wouldn’t take his advice, but though he seems in some way to be offering advice to the industry, he at least doesn’t hide his conflicting agenda.

On the other hand, Masnick, *says* he’s not against selling music, but when you look at his arguments, he really doesn’t leave much on the table. If you can’t charge a billion dollar company who can you charge? The bottom line is Masnick wants to be seen as a business advisor since TechDirt is a consultancy. But he also wants to pander to the free music crowd, perhaps because that brings page views. Unfortunately these two positions don’t always mix, and so illogical, “whackamolian” arguments, like this one often ensue.

Ru Roh! Adobe Screwed By EcmaScript Standards Agreement

Yesterday it was announced that The EcmaScript language standards body has killed the draft version, called 4.0 that was the basis of all of Adobe’s Flash related language technologies for the last several years. In the Adobe world, EcmaScript 4.0 was also know by the name ActionScript. And while this certainly does not make any of Adobe’s work any less valuable than it was, it is indeed a strategic black eye for Adobe.

Here’s the background.

Adobe’s Flash platform is all based around a programming language called ActionScript 3. Over the years as Adobe has moved from ActionScript 1, it has taken great pains to move the language forward in a standards compliant way. This strategy was important to mute complaints from some that Flash was attempting to re-implement the web in a proprietary fashion.

To gain the credibility of standards compliance, Adobe hitched it’s wagon to a proposed new language called from the standards committee called EcmaScript 4.0. Although the standard is called EcmaScript, it is really just the officially sanctioned name for JavaScript. And, for lots of reasons, Adobe wanted to be able to say they had, in essence, the early version of the next generation of JavaScript embedded in Flash.

Adobe provided support to the standards body in helping to define the standard, and most importantly, in creating an open source virtual machine called Tamarin that would run EcmaScript 4.0. But they did all of this before the standard was officially sanctioned. EcmaScipt 4.0 was nothing more than a draft proposal. But Adobe needed to make this bet because they needed a better language than the early ActionScript was, and the existing template, JavaScript, hadn’t moved substantively forward in years.

And so Adobe released Tamarin, the EcmaScript 4.0/ActionScript 3.0 running virtual machine, and a raft of products based it. These included Flash 8 and 9 and Flex, a bunch of applications written in the new language such as Acrobat Connect their conferencing platform, BuzzWord their word processor, and many others. In fact The Adobe CEO has stated they are moving their entire application suite in the next 10 years to the Flash platform, so this language spec is serious stuff.

Unfortunately, while the technology of EcmaScript 4.0/ActionScript 3.0/Tamarin is compelling, the politics sucked.

Adobe and Microsoft are bitter rivals, and the last thing Microsoft would be willing to accept is wide-spread adoption of a language that is strategically critical to a competitor. If EcmaScript was accepted, Tamarin would have been the gold standard virtual machine. Microsoft would have needed to build their own compatible VM – a long painful process – or they would have had to (insert “gulp” sound) adopt Tamarin. The battles over the standard were nasty, personal, and public. But unfortunately for Adobe, control over Internet Explorer is a much better bargaining chip than control over Flash. And Microsoft was insistent that they would never support EcmaScript 4.0.

And so this meant EcmaScript 4.0 was stillborn. It was dead even before it’s head began to crown, because it was a win that Microsoft could not bequeath upon its bitter rival. While the fighting over the EcmaScript spec has been going on for at least a year, it always seemed clear to me that this would happen. It really could be no other way.

In essence, Adobe has shown up to the prom, but its date has stood it up. ActionScript is now not based on any standard. It is its own, proprietary, albeit open source language. Adobe is on its own island as the rest of the industry moved to some watered down version of what it could have been. I understand why this was necessary. Brenan Eich, the father of JavaScript and the primary person driving the standard certainly didn’t want it this way. But Microsoft was never going to support 4.0.

And so the interesting question is what will Adobe do now. The technology they have is no less impressive today than it was a few days ago. But they are now totally on their own, which wasn’t exactly the plan.

This is indeed one hell of a chess game.

Is The iPhone Sexist?

For those of you who have been following along, my mom was seduced by Steve Jobs' iPhone. This was and is an astonishing thing, since my mom is very far away from being a techie.

On the day of the iPhone launch, she waited in line at an AT&T store (and I waited with her) to get her new phone.

My mom loves her phone, but one issue came up which triggered an interesting thought.  She had a hard time using the phone initially because of her fingernails.

My mom does not have big garish fingernails, but they were longer than any man's fingernails, extending perhaps a quarter or a half inch beyond her fingertips. The problem is that the iPhone screen requires touch by skin. the tip of a fingernail will not work. This is a problem because it means that the angle that your finger touches the screen at is such that the you end up making contact with the screen with a very large imprecise area of your finger. In short, my mom kept missing the intended screen  buttons.

Now in reality, my mom clipped her nails and everything was fine. But I guess my question is whether that is a reasonable expectation in the product design. Were there any women on the product team? We're there any *girly* women on the product team -- women that like the idea of painted fingernails that extend a bit beyond the fingertip?

I am sure many of you will say that is the price of technology. But I myself wonder if there were some equivalent male focused impediment if it would have been considered acceptable.

I am not sure that this is the perfect example, but this whole episode just got me thinking about design issues for men vs women. How many other, perhaps more subtle issues like this are there that I and other product designers/developers don't think about? It is indeed striking that such a basic issue for the iPhone, as far as I can tell, really has not been discussed at all. Will most of my male readers, or readers in general, argue that such issues are irrelevant?

UI Guru Jakob Nielsen's Site Is Unreadable

Ok, this is only half a dig. Jakob is one of the most respected writers and thinkers about user interface on the web. He is clearly bright, and he writes intelligent and useful things. In fact I quote Jakob and reference his work all of the time.

But I find his site unreadable.

It hurts my eyes.

What got my attention most recently was this new post on the year's 10 best application UIs.

Unfortunately, I have to say, Jakob has perhaps the worst site design I have ever seen. It is as if, while he is handing out the Oscars, he is wearing a plaid polyester suit. In truth his site is fine from an information architecture perspective. But from an aesthetics perspective it is awful. And aesthetics is important in UI. If you begin to look at something and want to avert your eyes, the site has failed.

In truth, Jakob's site has always been ugly. But this time it felt, to me, beyond ugly. I looked at the bulleted list of the top sites, and the bold cramped disorganized looking type starting each bullet, and I could not bear it.

I am sure some, and perhaps many of you will not think it is as bad as I think it is, but I defy any of you to say it is good. And so I ask the question. Do you judge a hair stylist or barber by his or her hair? Do you judge a cobbler poorly if he (or his kids - thanks Jeneane Sessum) has old beat up shoes, or none at all? (Ok so we don't have cobbler's any more but the cliche still works.) Do we judge Dr. Phil poorly if he gets a divorce?

And do we think less of Jakob Nielsen as an interface consultant if he seems to have no taste?

Is Customer Service *The* Business Model

It used to be that software companies had real information about you and they picked up the phone when you called. But that was before “free”.

In this new era, software companies decided they could no longer provide customer service for free. This is logical, but it somehow got switched to “we can no longer provide customer service at all.” And this is where things have gone off the rails.

The recent controversy over Nick Saber’s Google accounts highlights the issue. Basically what happened is that Nick’s Google account, which spanned gMail, gTalk, Google docs, and Google Checkout was suspended.

Nick tried to reach Google, but to no avail. Google’s initial response was wholly inappropriate, and while a proper answer ultimately did surface – his Google Checkout (a payment service) had been compromised – the fact that Google responded at all was primarily a function of the fact that the blogosphere exploded with discussion about the issue. But my goal here is not to pin the tail on the Google donkey here, because the issue is a systemic, Internet-wide problem.

Indeed It is maddening that there is rarely a phone number made available to customers of Internet services. And as this most recent incident shows, when Google kills your account, or there is some other problem, there is little you can do. I have most of my interesting data, aside from code, in some Google repository somewhere. I trust them, but it is out of convenience, and not pure hard defensive logic. Unfortunately, I am sure there are many of you out there like me. And while most of my data is also on my computer, email and transactions and contacts and other records are inconvenient to do that with at all times. On some level I have to trust in Google.

And so what this got me thinking about was whether what Google, and most other Internet companies treat as a potential burden could actually be, if treated properly, a source of real revenue.

I, and I suspect most people who use Internet services for business, would be happy to pay for the privilege of being able to pick up the phone to deal with a real problem. As important data and services are offered through the Internet, being able to reach a human being who has the authority and capacity to solve problems is critical.

As I see it, the reason this has been an acceptable status quo for so long is in part a desire for anonymity, combined with the fact that so many Internet services are really considered to be more curiosities than really important productive tools. For most new services, who cares if I lose my account. And why would I ever give *them* my personal information. But a problem arises when the services really do matter.

Anonymity is a problem when it comes to customer service. This is particularly true when, as in Nick Saber’s case, the problem was tied to someone apparently having hacked his bank info. It is critical for such services that they actually have a real verifiable physical phone number and address. Obviously a hacker is unlikely to have access to your home, office, or cell phone.

The solution to this problem is to go back to the way things used to be. Our important service providers should know who we *really* are. They should have our contact information – outside the Internet. And we should pay for services, either on a per incident basis, or on an annualized basis. And services should include backups, recovery, and whatever else is appropriate. Given all the business model fail out there, I see no reason not to roll things back and start developing real, “un-anonymous”, money paying relationships with our important vendors.

The Cat Fight Between The Music Biz Haves and Have Nots

The music industry is intriguingly divided on the artist side by those artists that already have a brand, and those that do not. The clearest divide is between the mega stars, and the unsigned. And though it would seem that both rich artists and poor artists play for the same team, in truth their interests are divergent.

Major labels have played and continue to play a critical role in the development of new bands. While that role is indeed anemic compared to how thing worked a decade or two ago, the label’s most important role is still as banker. They invest money in artists that typically don’t have any – both money for the artist’s pocket (profit), and money for the artist’s development.

Many new artist need this. We can certainly argue about whether there are some that don’t -- personally I don’t think there are that many. But there is little argument that to many, the per-record advance check, the validation of a label, the promotional budget, etc. are all critical. Despite the breathless arguments to the contrary, there are precious few artist that are anything close to successful (i.e. at minimum able to sustain themselves from just their artistry) without having had a label deal.

But what is really interesting here is that artists that are established enough that their touring businesses are substantively profitable don’t need the labels anymore. Many are excited at the idea of leaving. The reasons for this are primarily economic. If you can put out your own record, and you have a real fan base, even if you sell far less records, you can keep all of the money. So you can sell five or six times fewer records and still do better financially.

Of course the reason the label gets to keep so much money is because they invested early when no one else did, and the likelihood is that most artists are, as a business proposition, losers. This is not intended to offend, its just statistics. Most artists don’t make money for their labels, so economically, for most artists, a label deal is a windfall, because the odds are they were never going to make it anyway, and so that label advance really is pennies from heaven.

And just like all portfolio businesses, whether venture capital, or movies, or music, you make up for all the losers with the handful of winners. This is the Faustian bargain that artists make. If you have a crystal ball, and know you are going to be a hit, you still need to sign away most of your recorded music revenues because you need the label for exposure – and possibly to eat.

And so what is fascinating is to watch artists who don’t need the labels any more talk about them as though they never needed them. Whether its Joss Stone, or Lyle Lovett, or any of the others who proclaim to hate the system that has made them rich and famous, this tension is intriguing. Because the vast majority of new artists who don’t have a major label deal would indeed love to have one. Because, like it or not, there are few paths to fame and fortune for the unsigned.

Did The Court’s CableVision DVR Decision Give RedLasso A Business Model?

For those of you that don’t remember or haven’t heard, Redlasso is a company that until recently, operated an Internet based bank of servers that recorded content off of broadcast and cable television, and made it available to bloggers in the form of clips.

The broadcast networks didn’t like this at all, and several networks, after sending ineffective cease and desist orders, actually filed suit against Redlasso in July for copyright infringement.

Separately, Cablevision has been locked in a battle with broadcast networks over a service they created for allowing users to record TV shows “Tivo style” without having a physical DVR in the home. The idea is that Cablevision records the TV shows you want to watch on their servers. This has great cost saving benefits for Cablevision since it allows them to offer DVR service to customers with older cable boxes. The DVR capable boxes cost several hundred dollars.

As with Redlasso, the broadcast networks don’t like the on-demand DVR concept, and sued Cablevision. The networks won the first round at trial court, but several days ago they lost the second round on appeal.

And this is where the situation gets interesting. As I see it, this decision may very well have opened the flood gates to innovation and handed Redlasso a business model.

While Redlasso can almost certainly not operate the type of clipping service they were operating, this may be an opening to a much bigger opportunity. In essence the Redlasso technology is a virtual DVR, just like what Cablevision is offering. Technically, the only difference is that the content is delivered over the Internet. But these days, there is precious little difference between what the cable wire delivers to your TV set and what it delivers to your PC. They are all just digital signals coming from the cloud. It seems to me the courts would have a hard time saying that Redlasso could not compete in this market. That argument would likely raise anti-trust concerns.

Of course the one issue which would have to be worked out is whether the consumer has the *right* to view and therefore record a channel. The cable company has this billing information and Redlasso doesn’t. I think that Redlasso could actually force the local cable companies to provide them with what “rights” a given user has. That would mean that if you were a Cablevision customer, you could tell Cablevision to tell Redlasso that you have rights to certain channels like HBO, TBS, etc.

If Redlasso knew what rights viewers have, they could limit viewers to the recording of shows they do have rights to, but on their PCs instead of just through their cable boxes. If Redlasso opened up their APIs, this would then allow a new platform for innovation around the TV content.

Another service that Redlasso could offer is directly to smaller cable companies that don’t want to set up their own infrastructure. By innovating with their software, Redlasso could carve out a niche as an on-demand DVR service provider to the cable industry. In this scenario, Redlasso wouldn’t have to force the cable companies to do anything, and it would be more like a partnering opportunity where the cable networks get a better PC + TV offering for their on-demand DVR customers.

Interestingly, beyond just being a virtual DVR, Redlasso might ultimately be able to operate as a kind of national cable system, cutting deals directly with cable networks, particularly new ones that have a harder time getting distribution. This of course would be dicey when trying to play nice with the cable companies, but it is an interesting alternate strategy if being nice doesn’t work out so well.

As I see it the courts have provided Redlasso a fascinating opening, and it will be interesting to see what they do with it.

The Power Of Serendipity

I believe that a big part of the next phase of computing productivity will be around the serendipitous presentation of useful information to the user.

In the old days, we used to talk a lot about artificial intelligence, but the term has fallen out of favor because, artificial intelligence it turns out just wasn’t all that intelligent. Or perhaps the expectations were just too high. And yet today we have techniques both related to machine learning, and more broadly graph data models, that can substantially increase the ability of the user to discover relationships that they would otherwise not see.

Ideally, your software helps you to see latent actionable information. But in such a system, you don’t ever want to be dependent on the insights that the software may glean. When you are dependent, you are not at all forgiving. And so, whether it is a relationship that the software can see and present, or a recommendation that the software can calculate, it is critical that the information be presented in a way that is secondary – being available without being obtrusive.

This is the idea behind current recommendation systems implemented in Amazon, and Netfix, though they are very limited. You are happy when they suggest something that works, but it doesn’t upset you when none of their suggestions are particularly helpful.

The truth is our web systems tend to capture an incredible amount of information about us. And depending on the category of software, there are likely patterns and connections that we don’t see that the system *should* be able to see. The software, not being human, will tend to see things that it thinks are important that you may not. But every time it gets it right and suggests something really useful, you are happy.

Serendipity!

And so, in the next phase of the web’s evolution I believe a key element is going to be how to marry serendipity to user interface. When your systems have many more potentially helpful ideas, suggestions, and connections, how do you expose these artifacts in an unobtrusive way so that the process does not become a burden to users? Certainly at some level, the more insights you can present to the user the better. But that is only true to the extent that the insights both *tend* to be helpful, and when they aren’t helpful are not burdensome.

This tension between being helpful and being annoying is a common one, even among human beings and so it is on some level familiar territory. Solutions may to some extent application specific, but I do believe there is an opportunity to create generally useful metaphors for unobtrusively exploring latent insights and connections.

We have, at Kloudshare, been thinking a lot about this issue, which is why it has been on my mind. I think we have some interesting ideas in this area, which in the next several months we will certainly start to share. But that doesn’t mean we can’t have a broader conversation about the big picture right now.

What other tools do you use that are serendipitously helpful? What do you like and not like about them?

Apparently We Are Missing The Digital Revolution

This weekend I saw two commercials that really intrigued me. They caught my attention not because of what they were selling, or how well, or poorly they were executed, but because of what the commercials suggest about the advertisers perspective on their customers.

The first ad was for Flomax, a prescription medicine targeted at male urinary symptoms. The ad ran during Larry King Live.

I would have missed the ad entirely were it not for one of the last things the announcer said. He implored readers who wanted more information on Flomax to check out their ad in *Popular Mechanics*.

They did not provide a URL or suggest that people Google Flomax. They apparently believe their customers are more likely to go out and buy a copy of Popular Mechanics and search through it for the ad, than they are to seek out Flomax on the Internet.

Fascinating.

The next ad’s intriguing perspective was a bit subtler. It was for Western Union Money Transfer, and it ran during MSNBC’s Countdown with Kieth Olbermann. Western Union is a service which allows a sender to take money to a Western Union affiliated location, usually to a local check cashing spot or supermarket, and then allows a recipient to pick up the same amount of money at their local Western Union affiliated location.

In this ad, one of the key benefits to using Western Union is how fast the money gets to the pickup location. Apparently Western Union must use some *really fast* non-computer based delivery system to get the money from one location to another. Perhaps, say, carrier pigeons. I say this not with any insider knowledge, but because if they were actually using computers, it would not be at all impressive for a computer to credit one account with, say, $100, and debit another account with same in, perhaps a second or two.

So by my estimation either Western Union doesn’t use computers, or perhaps they just believe it more likely their target audience has entirely missed the digital revolution.

Nah, that couldn’t be it.