Viewpoint West Partners

SAI - Michael Arrington on Copyright: Wrong!

From: Silicon Alley Insider
by Hank Williams

Michael Arrington's position on copyright seems to be that people are going to steal, no one should do anything about it, and that copyright based businesses are going to die and that's not bad.

In January, Michael wrote:

Personally, I think a new era of free recorded music and paid live performances is a very good thing. Recorded music will become a marketing tool to get people to pay for concerts and merchandise. Overall the music industry will be smaller in terms of revenue. But the artists who are driven to create their art will continue to do so, and many will make a very good living from it.

First, if music goes down, so will every other form of copyrighted material including ultimately books, movies, TV, etc. What we will be saying is in the Internet era, copyright doesn't matter. And this is good?

Second, there is no evidence *at all* that free music on the Internet is an effective (i.e. successful career building) marketing tool. There have been no blockbuster successes that have come from, for example Garageband availability. I don't think you could even count more than a handful -- if that -- internet-based artists making a living from music. I believe several of the American Idol contestants have been on indie music Internet sites, but you cannot attribute their success to the Internet.

Third, if the recorded music industry goes down, concert sales will not grow -- they will shrink. This is because the money that goes into creating concert demand (all from record label marketing) will disappear. People *will* see fewer concerts and they will cost less money because of reduced demand. So not only will the recorded music business disappear, but so will the much of the live music business. So there will be no "live music windfall" to share. Revenue in live music will shrink substantially from where it is today.

In a continuation of the theme, today Mike writes:

My position is that it’s bad to criminalize natural behavior. And watching a clip of The Office, whether it’s legally on Hulu or illegally on YouTube is natural behavior. The only question is whether or not people are getting sued, or going to jail, for doing it.

There are several problems with the above statement. The first is that no one is criminalizing the viewer. In all p2p cases and in the YouTube case, the entity being criminalized or sued is not the viewer but the "facilitator". This means the person who posted or makes available the content, or the service itself. I do not believe there has ever been a case of someone being charged with anything for receiving, watching or listening to pirated content. So on the face if it, this is misleading.

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Financial Times: Web 2.0 Fails to Produce Cash ...

Many members of the Web 2.0 generation of internet companies have so far produced little in the way of revenue, despite bringing about some significant changes in online behaviour, according to some of the entrepreneurs and financiers behind the movement.

The shortage of revenue among social networks, blogs and other “social media” sites that put user-generated content and communications at their core has persisted despite more than four years of experimentation aimed at turning such sites into money-makers. Together with the US economic downturn and a shortage of initial public offerings, the failure has damped the mood in internet start-up circles.

“There is going to be a shake-out here in the next year or two” as many Web 2.0 companies disappear, said Roger Lee, a partner at Battery Ventures.

“These are challenging macro-economic conditions,” said Shawn Hardin, chief executive of Flock, a browser maker that raised $15m in venture capital last week.

Yet that has not stopped a continuing round of venture capital fundraising and acquisition activity at high valuations as investors and corporate acquirers hunt for businesses capable of rising above a crowded field.

“If you look at some of the valuations, you wonder what fantasy of revenues they’re based on,” said Mitchell Kertzman, a partner at Silicon Valley venture capital firm Hummer Winblad.

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Social Network Death Spiral: How Metcalfe's Law Can Work Against You

Metcalfe's Law
Does everyone remember Metcalfe's Law? It was formulated by Bob Metcalfe, the inventor of Ethernet and co-founder of 3Com, who stated:

The value of a network is proportional to the square of the number of users of the system (n²).

For those that are interested in the math behind it, basically the idea is that if every new node in the network connects with every pre-existing node, then as you gain nodes, you non-linearly increase the number of connections that everyone has with everyone else.

That's pretty neat, and for the social networking folks who are aggregating large audiences and treating their businesses like communication utilities, it's both logical and helpful to think that these social communities abide by network effects like Metcalfe's Law. In fact, it's a DIRECT reason why these networks want to get as big as possible, and have a social graph that's as comprehensive as possible, and why they should ultimately be opposed to Data Portability. And I think we'll see these players' strategies ultimately reflect these strategies.

But Metcalfe's Law can also affect social app creators. Let's discuss how this might play out for folks who are building apps on social platforms, rather than operating the social platforms themselves:

"Jumping the shark" and Metcalfe's Law
In a previous post, I wrote a bunch about how dangerous (and easy) it is to jump the shark in an enclosed space like the Facebook Platform.

Here's the good scenario:
Let's say that you retain users well, and you don't get a sharkfin graph on your traffic. In that case, if you combine the two ideas - Metcalfe's Law and with the viral loops on the social platforms - you can imagine that in the success case, you are creating N^2 value with very large N.

For folks building application on Facebook, Opensocial, etc., it's nice to think that your new app is gaining value much faster than if you built your own destination site. This allows you to get the N^2 benefits of Metcalfe's Law without incurring significant costs of acquisition as you scale N up to a large number. This the best of both worlds.

Here's the bad scenario:
Let's consider the other case, where your app's retention sucks, and you are going through the sharkfin graph of rapidly acquiring users, hitting a peak, and then falling down:

Now all of a sudden, Metcalfe's Law works against you - for this, I will introduce the corollary, Eflactem's Law.

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NYT - In Web World of 24/7 Stress, Writers Blog Till They Drop ...

By MATT RICHTEL

Published: April 6, 2008

 

SAN FRANCISCO — They work long hours, often to exhaustion. Many are paid by the piece — not garments, but blog posts. This is the digital-era sweatshop. You may know it by a different name: home.

A growing work force of home-office laborers and entrepreneurs, armed with computers and smartphones and wired to the hilt, are toiling under great physical and emotional stress created by the around-the-clock Internet economy that demands a constant stream of news and comment.

Of course, the bloggers can work elsewhere, and they profess a love of the nonstop action and perhaps the chance to create a global media outlet without a major up-front investment. At the same time, some are starting to wonder if something has gone very wrong. In the last few months, two among their ranks have died suddenly.

Two weeks ago in North Lauderdale, Fla., funeral services were held for Russell Shaw, a prolific blogger on technology subjects who died at 60 of a heart attack. In December, another tech blogger, Marc Orchant, died at 50 of a massive coronary. A third, Om Malik, 41, survived a heart attack in December.

Other bloggers complain of weight loss or gain, sleep disorders, exhaustion and other maladies born of the nonstop strain of producing for a news and information cycle that is as always-on as the Internet.

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iPhone 2.0, iPhone 3.0 or iPhone Nano - A Clamshell/Flip Phone?

When talking about how Apple is gonna take over mobile phone industry, one of the things that is very rarely talked about, is iPhone form factor. There’s a reason we have mobile phones in tens of shapes and sizes, and a number of form factors. Some people prefer to have a clamshell or slider in their pocket.

And iPhone is just one pretty wide candybar, the phone factor that can appeal to many, but may not be suitable to even more.

So can Apple come up with something as appealing as iPhone, in another form factor, e.g. - clamshell.

Yes:

The drawings above, are Photoshop renderings, based on a device described in a recent Apple’s patent application, called “Dual sided trackpad“.

It shows that Apple may indeed be working on a clamshell iPhone device. But with a twist.

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Google News, YouTube Blocked in China Amid Tibet Riots ...

China has blocked access to Google News and YouTube in an apparent attempt to stop the spread of video footage related the rioting going on in several cities in Tibet, including the capital Lhasa. Demonstrations in the city started on March 10, a day commemorating the anniversary of a 1959 uprising against Chinese rule after which the spiritual leader of the country, the Dalai Lama, fled to India.                                   

China has said the Dalai Lama is to blame for rioting in the country, and puts the civilian death toll at 13, while adding that police and security forces have also suffered casualties.          

The Dalai Lama has denied involvement in the rioting, and said he has "no such power to stop it," in a video of a recent news conference posted on his Web site.                   

"Whether the Chinese government admits it or not, there is a problem," he said "The Tibetan nation, an ancient nation with an ancient cultural heritage, is actually dying."                                      

China's decision to block access to the sites follows similar government censorship of protests by Myanmar. Last September, Myanmar cut off Internet access entirely to block people from viewing pictures and videos or sending them out of the country. Some analysts at the time said the protests likely spread through the help of the Web, in addition to winning global condemnation of the violent crackdown on protesters there.                   

Google said it is aware of reports of users being unable to access YouTube in China. "We are looking into the matter, and working to ensure that the service is restored as soon as possible," YouTube said in a statement.                   

"We believe that YouTube offers citizens the world over a vital window on their cultures and societies and that they should not be denied access to video information," the statement also said. Google did not address additional questions about its involvement in the block or its support of governments that limit access to the Internet. Google only commented on the blockage of YouTube without mentioning any problems with access to Google News in China.

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Google Says Microsoft's Yahoo Buy Might Hurt Internet ...

BEIJING (Reuters) - Google Inc, the world's leading search engine, said on Monday it was concerned about the free flow of information on the Internet if Microsoft Corp were to succeed in acquiring Yahoo Inc.

Last month, Microsoft proposed buying Yahoo in a deal originally worth $44.6 billion, but Yahoo's board has rejected the offer, saying it was too low.

"We would be concerned by any kind of acquisition of Yahoo by Microsoft," Chief Executive Eric Schmidt told reporters.

"We would hope that anything they did would be consistent with the openness of the Internet, but I doubt it would be."

Schmidt pointed to Microsoft's past history and "the things that it has done that have been so difficult for everyone", but he did not elaborate.

Last year, a European court upheld a landmark 2004 decision that Microsoft abused the near-monopoly power of its Windows operating system to damage competitors, along with a 497 million euro ($695 million) fine.

"We are concerned that there are things Microsoft could do that would be bad for the Internet," said Schmidt.

Microsoft Chief Executive Steve Ballmer pledged earlier this month that his company would gain market share against Google in online advertising and Web searching, even if led to his "last breath" at the company.

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When Social Just Means Another Way To Hype Yourself ...

When Social Just Means Another Way To Hype Yourself

Ever since becoming active on Twitter and FriendFeed I have noticed something that really makes me wonder if in the long run what Robert Cringely wrote the other day might in part be true. In his post Robert equated the clamoring around social networks; and the various offshoots, to the popularity that was enjoyed for a brief time by CB radios. As one who was heavily involved at the time with the whole citizen band radio subculture (who can forget the tweaking to get those bouncing signals from around the world) I can to an extent see the comparison.

While Robert foresees the decline due to the lack of value I look down a different road as to why I think that while social networks might be here to stay they are also creating their own stranglehold that will take much of the life out of them.

The whole purpose; or at least the purpose that is pimped out to the general internet public is that things like Facebook, Twitter and even FriendFeed are a great way to create new friendships, keep in touch with all these new and old friends and to have a conversation with everyone involved. To an extent among the average users this might be the case but in watching these services for some time now I have come to the conclusion that for the early adopter crowd and other A-Lister types conversation is the last thing they are interested in.

For this very large group this whole social engine is nothing more than another way for them to hype themselves and whatever conference/project they happen to be working on at the time. I first got an inkling of this self-gratifying promotionalism as I got involved with Twitter because of my work on TwitBox. Sure there were conversations going on but it was on a two tiered level with very few of the top tier players showing any real interest in the rest of us users. You could see this by checking out the Follower/Following ratio of the people you want to follow.

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WSJ - Stock Sales at Google Send Shivers ...

Stock Sales at Google Send Shivers

Google Inc. insiders have sold billions of dollars of company stock since the company went public in 2004, but one analyst who tracks insider data didn't see those sales as a strong bearish signal.

Until now.

Jonathan Moreland, research director at InsiderInsights.com and subadviser to Ladenburg Thalmann Asset Management, is now recommending that Google shares be sold short in the face of continued insider selling, declining share price and concerns that an economic slowdown will hurt Google's advertising revenue.

Short selling involves the sales of borrowed shares, producing profits when prices decline as the short seller replaces the borrowed shares at a lower price.

Mr. Moreland said the nearly constant selling of shares by insiders of the Mountain View, Calif., Internet giant, along with the utter lack of open-market purchases, had always bothered him, but the company's soaring stock price -- until November -- had persuaded him not to short the stock.

"And when that momentum finally starts breaking down, see what the insiders do," Moreland said. "And if they continue to sell, that's when you act on the signal."

Google's share price climbed to a historical high of $747.24 in November, a little over three years after it priced its initial public offering at $85 a share. The company's shares closed on Tuesday at $444.60, down $12.42.

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WSJ - Bill Gates Quits Facebook ...

Bill Gates Quits Facebook

Microsoft Chairman Bill Gates has stopped using the Web site Facebook, the most damning indictment in a week full of bad press for social-networking technology. Microsoft Chairman Bill Gates has stopped using the Web site Facebook, the most damning indictment in a week full of bad press for social-networking technology.

Social-networking Web sites, which help people share and find information about one another, were supposed to change the way people use the Internet and the way we work. But lately, all we’re hearing about are the problems.

Workers who created profiles on Facebook are horrified to find out they can’t be erased, the New York Times reports. Even if you deactivate your account, Facebook still keeps a copy of all the information you ever posted. And, the Times reports, it’s still possible to contact people through deleted Facebook pages.

And it’s not just older worker who realize they’ve inadvertently given colleagues insight into their private lives that are upset: The MySpace generation is getting sick of MySpace, too, according to MSNBC. They’re turned off by too much advertising on social-networking sites. That’s one reason the amount of time the average person spends on a social-networking site has dropped 14% over the last four months, according to Internet research company comScore.

If that weren’t enough, Computerworld recently regurgitated a handful of reasons why the sites aren’t appropriate for the workplace. The highlights: They use up too much bandwidth; they cause employees to waste time; and there’s a chance that someone will disclose sensitive information.

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