The Upholstering Papoose

How to value Skype (hint: it's not worth $8.5bn)

2011-05-10T03:03:00.000-07:00

Maybe it's because I've been looking at Greece's sovereign debt nightmare so much in the past few days that the $8.5 billion that Microsoft agreed to pay for Skype didn't seem like such a big number at first, but it is. Not only is it 32 times EBITDA for a company that has yet to make a profit, it's more than three times the $2.75 billion that it was valued when eBay sold the majority of its shares in 2009 to a group of private investors who are currently laughing all the way to the bank. Remember that eBay had paid $3.1 billion to buy Skype from its founders in 2005. Ouch.

So what happened in the last two years to take Skype from a $2.75 billion valuation to a $8.5 billion valuation? OK, Skype has 145 million active users but most of these people don't actually pay for anything nor do they view any ads. On the other hand, they don't cost much either. Comparisons with Facebook and its half-a-billion-plus users are tempting but Facebook needs some really beefy server infrastructure to serve up its rich interconnected data set. Skype calls need none of this; Skype just gets you and the person you're calling together, after which you just communicate with each other and provide little to no additional load on Skype's infrastructure.

Then there's the 10 million paying customers who pay Skype to make calls from their client to traditional phone numbers or to rent a phone number that is reachable from those traditional phone numbers. This looks like a business model at first, but there are huge problems with this approach: First, it puts Skype in direct competition with both traditional telcos and cheap VoIP calling-card peddlers that are scrambling to offer and market the cheapest calls per minute to anyone who's interested. Second, it rather awkwardly diminishes its revenue stream as Skype's user base grows. The more people who are on Skype, the fewer calls they will make to traditional phones and the less they will pay. Granted, this is a very long-term thinking, but if you're paying eight and a half billion dollars you'd better be thinking long-term.

The fact that we can't make free calls to anyone anywhere from any device connected to a network these days (free as long as you've paid for the network, of course, but that's usually a flat monthly fee) is down to some technological inertia but mostly due to the way telecoms companies are protecting their current business model by charging termination fees to anyone who wants to call their users. If your phone company decided to offer all its users unlimited calling for a flat monthly fee, every time they called a number in a different network that network would demand payment by the minute which could be just about anything. It's a perfectly viable business model for the industry, but nobody wants to move first, so we're still stuck paying something like 50 cents for a 140-byte text message between two phones in different countries when a 5,000,000-byte email with photos, sent between those same two phones, is free. The problem with Skype in this brave new world that is going to roll around sooner or later is that Skype already uses other people's networks for its calls. When you Skype your friends the call goes over your ISP's network. If the phone service is free then Skype adds no value.

The reason we don't have a good, open, standard way to do voice, text messaging and video chat over the Internet is because everyone's trying to own this somehow. In the long run it's as futile as trying to own e-mail. E-mail wouldn't be e-mail if one company owned the service, or the client software, or the network infrastructure. Similarly, VoIP and IM won't be ubiquitous unless they're open services. Microsoft has lost that game once already with Hotmail versus G-Mail: Even if you manage to have such a huge user base that you're the de facto owner of VoIP, someone's just going to offer a better, cheaper alternative because the barriers to entry are so low.

In the end, Microsoft is buying 145 million active accounts: People who have a username, a password, a public Skype address and use them regularly. Can they turn them into Live accounts and merge them their other online services? Probably, though many of these people will already have Live accounts and many more won't bother. Can they convince them to turn into profitable paying users or advertising eyeballs? Probably that too.

Will this stop tomorrow's unspecified free-or-thereabouts, open, commoditised VoIP behemoth? Not a chance in hell.

And in the end, what's $8.5 billion divided by 145 million?

$58.62 per user.

And that, dear readers, is over the odds.

All your base are belong to Zuck

2010-11-17T07:00:00.000-08:00

So Facebook announced that it's launching a new messaging platform that will combine e-mail, IM and social network messaging. Where have I heard this before?

Damn, I loved Google Wave. Well, maybe not; I loved what Wave could have become. The potential Wave. The Wave That Could Have Been. The platonic ideal of Wave. I did not for a second have any love for the buggy, poorly-designed pile of dog poo that Google released to the masses to universal cries of "Huh?"

Last year I wrote a quick wish list for a Wave-like replacement for e-mail and IM. The things I longed for:

It has to seamlessly support multiple public identities
It has to support conversations in a native way
Users should be able to slip into and out of live chat seamlessly, without advertising their presence
It should require encryption and cryptographic signing

The wave federation protocol had some amazing stuff to handle wish #1, but all of it was missing in the Wave web client that Google released. You got one address and that was it. It did #2, and did it very well. As for seamlessly switching between a messaging and chat paradigm, Wave did it this too but you still got annoying privacy-invading "who's online" crap. Finally, cryptography was added late in the game to the Wave protocol, and since the Google service was the only implementation, it was a bit of a moot point.

In hindsight, I'd like to add:

It should integrate with existing protocols.
It should be relatively easy to implement, especially on mobile devices.

These were by far Wave's biggest failings. There's no point in making an e-mail replacement if you can't use it to e-mail anybody. And Google's insistence on the anti-feature of character-by-character updates (which put off most users who actually quite enjoy the ability to review what they just typed before casting it off into the void) and complex extensions not only made implementation horrendously complicated - in most cases, especially on mobile devices, impossible.

Imagine a Google Wave that could send and receive e-mails and IMs, manage multiple identities and got rid of the character-by-character updates. Never mind extensions that add interactive maps or games or bots that check your spelling and all the other geekery that was being worked on - you shouldn't be doing any of that until you tackle the basics. And you can't do any of it unless you encourage an ecosystem of clients and servers that just couldn't flourish when it had to support a complex JavaScript engine just to show what to most people was a simple message. I'd buy that for a dollar.

So Wave died and was hardly mourned by anyone who used it, and now Facebook has come to fill the void.

How does the new Facebook Messaging compare with my wishlist?

It miserably fails #1, multiple identities. With Facebook, you only have one identity which is almost always labelled with your real name. It seems to be able to manage #2, native conversations and #3, the message/chat duality - the extent of this remains to be seen. #4, strong crypto, is nowhere to be found. It does hit #5, legacy protocol support, pretty sweetly, but #6 doesn't even apply - the only ones who can implement this are Facebook themselves.

Of course, not all items on this wish list are meant to be necessary ingredients for success. But I can't see anyone who doesn't already use Facebook messaging extensively being tempted to use this platform for anything. All it will do is allow these people to almost completely drop traditional e-mail and just use their new Facebook e-mail address instead. For anyone who is not already an Facebook user, I just can't see the appeal - you'll have to get inundated in all the Facebook stuff that refuseniks actively despise, and despite the half-billion with a Facebook profile (most of them never log in anyway) there's a hell of a lot more people without one.

In any case, no technology has ever become established without the ability to use it as a platform. Aside from their half-hearted attempts at a federated identity service and the two or three apps that actually were successful (Farmville, Farmville and another one that begins with "Farm" and ends with "Ville") instead of just devaluing their brand by messing up the clean design that prevented them from being yet another MySpace clone, Facebook doesn't really want to open up to an ecosystem of developers and partners, or at least hasn't figured out how to yet.

One of the more successful aspects of Facebook as a social network is its ability to encourage people to use their real identities on their profiles. Sure, some people use a nickname or abbreviate their last name to an initial but for the most part you're not pretending to be someone else on Facebook. Granted, almost everybody's pretending they're a prettier, sexier, more interesting, sociable and fun version of themselves, but they're still themselves. Very few cases actually invent a completely distinct persona.

While this works wonders for a social network that aims to mirror real life social connections to as close a degree as possible, it will fail as a communication medium where anonymity and especially multiple personas (friend-me, family-me, work-me, professional-me) are part and parcel of how we communicate with others.

So, once again, ignore all this talk of Facebook Messaging being a GMail killer. It'll just allow a small subset of Facebook-obsessed teens (a dying breed as most people learn to see Facebook for what it is and nothing more) to stop logging on to their e-mail accounts since their grandparents can now just email them at their @facebook.com address. Let's not get carried away here.

The next e-mail and IM killer app is still coming. It has to come. It wasn't Wave, and it's not going to be Facebook either. Don't you just love the suspense?

A wave of buzzing: Has Google finally lost the plot?

2010-02-11T06:17:00.000-08:00

The phrase "Google is the new Microsoft" has been bandied about by the tech media so much lately that it has become a cliché in its own right. With the latest addition to their stable of online services, Google Buzz, it seems to me to be increasingly true.

Now, before I explain why, I'd like to ask my readers a question: What is Google's primary business? If you're like 90% of the people out there, you immediately answered "Oooh, I know this one! It's the search engine!" You probably have a smug, satisfied look on your face too.

Of course, you'd be completely wrong.

Google is an advertising broker. Advertising revenue remains its biggest and only significant revenue stream. I'm not just talking about the ads that appear on their sites, I'm talking about AdWords and AdSense.

In case you haven't heard of these before (don't worry, most people haven't), Google AdSense is a service that allows website owners (and increasingly, mobile application providers, video distributors, and in fact anybody who offers any kind of content in which ads can appear) to let Google manage the ads that appear next to their content. Its sister service, AdWords, allows anyone who wants to advertise to get their ads on AdSense.

People pay to display their ads via AdWords and Google pays people to display those ads via AdSense. Minus the vig, of course. This is how Google makes money. About 57% of the ads on the Internet, at the latest count, are provided by AdSense.

That's Google's primary business. For all intents and purposes, it's Google's only business. Google, as a company, has one simple strategy to maximise revenue:

1. Get as many ads as possible bought through AdWords
2. Get as many ads as possible displayed through AdSense (including on its own sites)
3. Increase the perceived relevance of the ads displayed so that more people click on them.

Point 3 is important, and it's what Google is really good at. The more relevant the ads, the more likely people are to click on them. The more they click on them, the more advertisers pay for AdWords. The more people pay for AdWords, the more people get paid for AdSense, and so on. Yes, you may never click on 99.9% of the ads you see on the Internet, but if Google manages to get that down to 99.8% it just doubled its revenue, and since it also increased ad revenue for its AdSense partners, it's likely to get more of them, and hence more people advertising via AdWords, and hence even more revenue.

How does it do that, and why does it offer all these services like Google Search, GMail and YouTube for free? The answer to both questions is the same.

Because of these services, Google knows what you search for. It knows what's in your email. It knows what you chat about. It knows what you watch on YouTube. It definitely knows what ads you've clicked on in the past. It's got a veritable army of very, very smart and very, very well paid people working night and day to find ways to translate that information into increased click-through rates for ads, and another army of equally smart and well-paid people coming up with new services that it gives you for free in exchange for more information that it can use to target ads to you.

Most people positively freak out when they realise this, because they think there's this guy in an office in Mountain View, CA that goes to work every morning and pulls up people's personal information. "Ah, Joe Bloggs of Liverpool in the UK was searching for DIY plumbing instructions yesterday, and here he is emailing his father about a leaky tap. Perhaps this ad from Merseyside Plumbing would appeal to him."

Fortunately, there's nothing of the sort going on. There's so much information in Google's servers that getting an actual person to look at it would cost way, way, way more than any money they'd ever make from ads. It's also important to realise that this information isn't as clean and tidy as you imagine. Most of the time, it's not personally identifiable. They don't really care what you're called, except in the context that people named Joe are more likely to buy Brand X, if that's even the case. They don't really care that there's a record of you from the time you spent browsing from your mother's PC mixed up with her data and missing from yours; Google plays the numbers game, trying to get that 99.8% to 99.79%. The data is noisy, it's disjointed, it's incomplete, and most importantly there's so much of it that the only way to process it is to use the type of large, distributed computer systems that Google is so good at designing. There's no clear cause and effect here, and no direct human intervention.

People who search for term A aren't necessarily going to click on an ad for product B, but as long as they're slightly more likely to, it's good enough for Google to feed into their algorithms. The type of information you really consider private and personal - your name, your address, your bank account number - is actually a lot less valuable to Google than how many times you mentioned the word "iPhone" in your emails, blog posts and tweets in the past six months.

So, Google is an advertising broker, and everything else it does - purportedly out of the goodness and generosity of its own heart - serves to increase its ad revenue. With this established, let's go back to the whole "Google is the new Microsoft" thing.

If you know anything about the IT world, you can immediately see the similarity. Windows and Office are to Microsoft what AdWords and AdSense are to Google. Just like Google loses money on YouTube so it can make more on AdWords, Microsoft loses money on Internet Explorer or SQL Server so it can make more on Windows.

They're not the only ones either. Every major IT behemoth has a similar business model: Build a solid revenue stream out of a monopoly and then spend gazillions on R&D to give away free stuff that loses you money but makes people more likely to spend even more money on your main business. With Google it's ads. With Microsoft it's operating systems and office suites. With Apple it's shiny gadgets - from iPods to Mac Pros. With IBM it used to be (and to a certain extent still is) mainframes.

The problem with this approach is that it makes these companies rather single-minded. Everything that might affect their primary business model is a threat that must be eliminated. Like Microsoft before it, Google has been on an acquisition rampage for years. Any company that comes up with something that competes with any part of Google's advertising business - or any service that drives the data collection that makes the ad business profitable - is either bought up, has its top employees poached, or, if all else fails, finds itself competing with a free service from Google that benefits from an R&D budget ten times its turnover. Look out - you just got Netscaped.

Mind you, when I say that's a problem, I don't mean it's a problem for Google, just like Microsoft's utter dominance of the IT industry in the 90s wasn't a problem for them either. But like Microsoft, if you build this huge organisation with an excess of cash hell-bent on maintaining your primary revenue stream by launching loss leaders in any field that's even remotely related to it, cracks will start to appear. There's a certain amount of organisational schizophrenia kicking in because the people making all the cool stuff you lose money on either don't realise they're only doing it to secure your main revenue stream or would rather not think about it - and in the end, most of them would rather work for a company that wants their project to be a commercial success, not just a way to put competitors out of business.

Add in the fact that you'll often pour large amounts of time and money into initiatives that you think will drive more money to your revenue stream, or prevent money from flowing away from it, but actually do nothing of the sort, and you get into the kind of mess Microsoft has been in for the last decade or so. Massively delayed projects (Vista, anyone?) entire loss-making divisions of questionable value (XBox, anyone?), product initiatives that turn into complete failures (Zune, anyone?) and a high staff turnover mean that sooner or later, you start bleeding serious amounts of cash. Yes, Microsoft is still profitable and dominant, but nowhere near where it used to be. Take a look at MSFT's stock price for the last ten years and you'll see that overall, it's been pretty flat.

It happened to IBM in the nineties, it happened to Microsoft in the naughties, is it Google's turn in whatever we're calling the coming decade? There are signs. Google has branched out to just about everything. Smartphones. Operating systems. A full-blown DNS service. And now this Google Buzz thing. On its surface, it makes sense: Google wants the data that now sits on Facebook and Twitter's servers to drive its ad matching algorithms. And yet, just a few months ago it was all about Google Wave, which seemed to be more or less the same thing. Who made Buzz? Did they talk to the Wave people? How come Buzz integrates with email, Facebook and Twitter while we're still waiting for proper Wave extensions that do the same?

As for Chrome OS, I've already covered it in a previous post. The whole Andriod / Nexus One thing? Partner up with Motorola and their ilk to compete with the iPhone, and then release your own (sort of - the hardware is built and designed by HTC) competing phone that keeps the more advanced features for itself?

For most people, the fear is that Google is going to turn evil and abuse the vast amounts of data they have on everyone. I find that scenario highly unlikely. What I'm increasingly worried about is how Google has lost its focus and is beginning to thrash around the IT industry with questionable initiatives - albeit ones that are backed by billions of dollars of cash and aimed squarely at anyone who threatens their dominance of the online advertising business.

Just like Microsoft. And just like Microsoft killed innovation in the 90s and fought the tide of the Internet revolution, I'm afraid Google is doing the same, and fighting the revolution that's about to happen in the coming decade: That of people paying real money for content and services online. Just like Microsoft knew that if everyone did all their computing in a browser they wouldn't need to buy Windows any more, Google knows that if people can sell their content and services online they won't need to buy ads from them any more. Both were right, but both were also wrong. People still need Windows. People will still need ads. But when corporate schizophrenia is coupled with corporate paranoia, bad things happen - and the prognosis for Google is not at all good.

iPad Launch: It's the business model, stupid!

2010-01-29T04:43:00.000-08:00

In 2001, when Steve Jobs went up on stage to introduce the original iPod, he left his audience struggling to see the point. The iPod wasn't the first personal music player on the market. It wasn't the smallest, or the lightest, or the one with the biggest storage capacity. It only worked with Macs. Almost everyone thought it was doomed to failure.

When Jobs took the stage again on Wednesday, before performing an equally unconvincing presentation of Apple's new iPad, he dropped an interesting little factoid on the audience: Since that underwhelming launch in 2001, Apple has sold 250,000,000 iPods. By now, the music industry is wondering how Apple is making more money out of music than they are - it's hard to find good numbers, but worldwide music sales in 2008, online and off, were about $10 billion. Going on its latest quarterly figures, announced just a day before the iPad, Apple is a $60 billion/year company, and at least a quarter of that can be linked to music.

Compared to some of Apple's more phantasmagorical product launches - especially the original iPhone launch - it was a bit of a snooze. Barely five minutes into it, everyone was trying to understand why we were watching Jobs browse through the New York Times and National Geographic websites - this was nothing new, nothing unexpected - but it was fast-paced action compared to watching Phil Schiller edit a spreadsheet on the iPad. Much like the iPod launch all those years ago, somebody forgot to bring the wow. It's a big iPod Touch. So what? The iPad has that distinct feeling (so uncharacteristic of Apple products in the Jobs 2.0 era) of being a solution in search of a problem.

As did the iPod all those years ago.

Much like the iPod, the significance of the iPad is not immediately apparent. Much like the iPod, it's not first to market, nor does it offer any single feature we haven't seen before. Much like the iPod, there will be a bunch of knock-offs within a few months that will beat it on price and headline features. The device itself is not the issue. The issue - and it's a huge issue - is how content is going to be distributed, consumed and most importantly how it's going to be paid for in the years to come. To paraphrase Bill Clinton, it's the business model, stupid!

Now, I don't think Apple will sell a quarter of a billion iPads any time soon, if ever. In fact, I predict rather lukewarm sales figures for the first year. It'll take a while for a few of the more glaring limitations - such as running third-party apps in the background - to be fixed with a software update, and I'm pretty confident the second generation of the device will add things like a built-in camera, microphone and speakers [Update: thanks to fufurasu for pointing out that the iPad already has a mic and speakers] to the mix and bring the price down even further. I don't think Apple cares. It'll make good money from the fanboys and the early adopters.

But that's not the point. The point is that Apple has already changed the way we buy and play music with the iPod; but the revolution was slow, it was stuttering, it's far from over, and it's far from perfect. The main reason is that Apple had to strike deals with the music labels to make the iTunes store possible in the first place. For me, the true revolution came with the App Store. Here, Apple was unfettered by the problems of agreeing licensing deals with existing rights holders, and it managed to completely re-invent the way we buy and consume software.

As a software engineer by trade, I cannot stress enough what effect this has had on the industry. The idea that a small group of people, or even an individual, could write a simple but useful piece of software and make money off of it - not by showing annoying ads all over it or partnering with an affiliate program, hoping their users will buy stuff from others of which they get a tiny cut - but real, hard cash from retail sales; this idea was unheard of a couple of years ago. But when the right model appeared, with the right end-to-end experience, on the right device, suddenly this entire ecosystem of small mobile app developers sprung out of nowhere and a profusion of innovative software has suddenly come into existence. Most importantly, this is no bubble. These app vendors aren't the next Twitter, leveraged to the hilt by VC capital in the vain hope that their immense popularity will somehow be translated into profits. These companies are making cold, hard cash and turning real profits from a business model that is entirely sustainable.

Go back and read that again if you missed its immense significance. If you're still missing it, try and follow this reasoning: What if the App Store wasn't confined to the iPhone? What if we could get these apps on larger devices - tablets, laptops, set-top boxes. What if people dropped their $0.99 on apps that could run on all of these? Now, what if Facebook, or Twitter, weren't websites, but apps that sold for $0.99 (I still don't understand why Facebook's iPhone app is free - or crap). Would we still be making a big deal about Facebook being "cashflow positive" (code for "not really profitable, but getting there, honest") or have every tech pundit waxing lyrical about the wonders of Twitter, all the while ignoring that it's a huge black hole into which investor capital disappears, never to be seen again?

The Web is great at getting information out, but the only way people have figured out how to run a business by doing that is advertising. Advertising is OK, but it won't support content that has a high production cost (music; TV shows; movies; scientific research; high-quality journalism; the list goes on) and it just doesn't scale to profitability unless you're Google, or at least Facebook.

If you still don't get it, go back to the presentation and pay particular attention to the New York Times app. All these years and newspapers have been trying to find a way to sell their stuff online, and here it is. An app running on the iPad - all the high-quality content, with all the goodness of the electronic format (search, copying, embedding of video, multiple views, the works) in a form factor that you can actually read on the train to work or on your breakfast table. And the best bit? It's got a revenue model built right in. As Jobs pointed out, Apple has twenty-odd million people with their credit cards on file at the iTunes store, ready and willing to buy music, movies, TV shows, apps - and now books and periodicals too.

The iPad won't take over the world, it's not going to sell anywhere near the numbers that the iPod and the iPhone have, but in the next couple of years we're going to see entire industries wake up to the fact that they now have a way to make money in the digital world. The model will be copied, and it will appear in other platforms, but Apple will have been first, will make a tidy profit and will continue to dominate the high end of the market while Taiwanese and Korean manufacturers fight over the leftovers. And if Jobs and his amazing team are still in charge, in a decade's time he'll be up there presenting the next thing that people just don't get, but ends up changing everything forever.

The Great Firewall of the West

2010-01-18T09:06:00.000-08:00

At some point in the past, a network engineer decided to call a system he was working on a "firewall". I'm sure he was a very competent network engineer, but really he should have been in marketing. The term has caught like wildfire, if you'll excuse the horrible pun. There's even a Harrison Ford movie of the same name; in fact these days it's hard to find a popular culture reference to computers that doesn't mention a "firewall" of some sort, usually in completely the wrong context. It's one of those things; people just love saying "firewall". It sounds cool.

Thus the conglomeration of systems that allows the inhabitants of the People's Republic of China to only access those parts of the Internet deemed suitable for them by the Party has been dubbed "The Great Firewall of China". Search for "Tiananmen Square" on images.google.cn and you'll get pictures of happy tourists taking snaps against the beautiful backdrop of the historic square. Search for the same on images.google.com and you'll get the usual lines of tanks running students over during the 1989 student protests; the difference being, if you're actually in China, you can't get to images.google.com, or any of millions of other sites banned for reasons big or small. All you get is the sanitised version.

This state of affairs has caused much consternation in the liberal West by people who like to point their finger at China and tut with disapproval. These people are fond of pointing out that the Internet doesn't work that way; to get the benefit of the Internet you need to allow unrestricted access to information. They also point out that it's a rather futile effort that mostly causes frustration; anyone determined enough (e.g. most American and European expats I know living in China, who want to check their email now and again) can get around the filters rather easily, and anyway the rate at which "objectionable" content appears is much, much higher than the rate at which the government censors can identify and block it. I happen to completely agree with these objections, but come on, this is China, are you really surprised?

The People's Republic has a very different concept of human rights than most developed nations; their censorship of the Internet is merely a side-effect of this. Over here in the West we pride ourselves on being much more liberal. Short of child pornography, you can basically send and receive anything on the Internet without any barriers, legal or technical.

Well, anything that isn't copyrighted. At least, not without the copyright owner's permission, and on the copyright owners terms, however ridiculous they might be. As it so happens, the vast majority of material produced over the last century is copyrighted (repeated extensions of the term length of copyright have ensured this) and the vast majority of the copyright holders don't want it on the Internet. Those that do, however, are doing more harm to the Internet than China ever could.

You see, copyright owners are beginning to wake up to the fact that putting their stuff on the Internet might be a good idea. Of course, other people have woken up to this fact a long, long time ago, but I digress: Sites like Hulu in the U.S.A. and BBC iPlayer in the U.K. allow people to access video content - the same content they see on TV - via the Internet.

Good job, that. I can testify that the iPlayer is a very useful site. Unfortunately, I have no opinion about Hulu, because I can't access it. In fact, whenever I'm outside the UK, I can't access iPlayer either. You see, neither of these sites are available outside the countries they operate in.

This might seem normal to most people who are used to pre-Internet media distribution. Hollywood movies always opened in the U.S. first. When I was a teenage music fan growing up in Athens, I had to take a 90 minute bus ride to the city centre to visit record shops that had a rather pitiful selection of vinyl, so the first time I visited an HMV in London I felt like a kid in a candy store. The reasons are well understood; it costs money to ship vinyl, CDs, books and all the other media all the way out to Greece where the market is tiny. In fact, I'd wager my experience wouldn't have been much different to that of an American living in rural Montana as opposed to one in Manhattan. Economies of scale: The big cities get all the new stuff.

With the Internet, however, this is not the case. By its very design, anyone on the Internet can access anything on the Internet. To actually limit this access - either by geography, as the US and UK do, or by content, as China does - actually requires extra effort. For a website like Hulu to identify which country an incoming Internet connection is coming from is quite a difficult thing to do, and easily spoofed.

I find it hypocritical that the West criticizes China for crippling the Internet by trying (in futility) to enforce their laws with insufficient technical means when the US, the UK and several others are doing exactly the same; or perhaps, exactly the opposite; ironically, mirroring their respective political views, the West is on a futile quest to keep content in while China is on futile quest to keep content out. In either case, the same criticism applies: "You're missing the point, people!"

Why can't I get Hulu here in the UK? Why can't I get iPlayer when I'm in Greece? Why can the farmer in rural Montana now download any music he wants via iTunes or Amazon MP3, but the farmer in rural Patagonia can't? Why does the iTunes store have a different selection of content depending on which country you're in?

Does this make sense, even from a business point of view? There's no point in doing a cost-benefit analysis here. As I mentioned before, it actually costs more to limit access than it does to allow it. If some guy in Trinidad & Tobago fancies spending $0.99 on an iTunes track, is his money not as good as anyone else's? Wouldn't this actually allow the copyright holders to make more money?

The real reason for this is, of course, that copyright holders are very closely tied to their existing, pre-Internet distributors. Cable channels, radio stations, record stores, they're all so closely intertwined that the copyright holders dare not compete with them. Hence every effort to get copyrighted content online has had ridiculous restrictions placed upon it in order to placate the distributors that are (rightly) afraid that they can't compete.

Perhaps this all seems wistful when taking about pop music and sitcoms, but digital bookstores have similar restrictions; the value of the BBC's video news and reporting cannot be underestimated for so many people with no access to any news source of a similar standard. The fact is that the Internet has the potential - already being realised in so many places - to level the playing field and allow people in far-flung or impoverished parts of the world to access the same information - if not the same goods and services - as those in the richest, most cosmopolitan corners of this planet. Placing geographical restrictions on content solely to appease distributors is not just bad business - it's just bad.

Update: Google has announced that, after detecting a concerted attack against its infrastructure apparently by the Chinese government in order to spy on human rights activists in China and abroad, it will start negotiations with the aim of either offering fully uncensored Internet search or pulling back from China. Good for them. If only iTunes and Amazon MP3 could stand up to the Big Content lobby as easily as Google is standing up to the Chinese government. I mean, come on, they don't even have nuclear weapons.

Say goodbye to your privacy - and perhaps good riddance?

2009-12-03T03:06:00.000-08:00

The Greek media is awash with news of an appointee of the newly elected government that was fired only a week after his appointment due to posts he made on Facebook on election night criticizing the party. People are wondering - is it fair and just to fire someone for expressing a personal opinion on a public, but restricted, social networking site when he is otherwise perfectly qualified for the job?

This is far from being a Greek phenomenon. Stories abound of people getting fired or refused work due to Facebook updates or blog posts. Even 5 years ago, most people never published anything. These days everybody's a prolific published author of one sort or another. Photos, status updates, tweets, blog posts, comments - most of us provide a constant stream of information to the world at large.

George Orwell got it wrong. When he saw television he thought, what if you could transmit as easily as you could receive? But his thinking was still trapped in the centralised model of old media. The Internet does allow anyone to be published, but it doesn't go via any central choke point - in fact, it's exactly because it doesn't suffer from centralised control that it allows this. Orwell saw a totalitarian regime forcing people to share their private lives with a central authority - ironically, today regimes are scrambling to find ways to stop people from sharing their stuff, and finding it increasingly difficult, even impossible to do so.

Remember, this technology is still in its infancy. It's not going to be long before we have the storage capacity and network bandwidth to record - and transmit - full, 3D, high-definition video and audio of every moment of our lives. Will we have a choice? Probably. But which choice will we make? In the end, nobody took our privacy away, we gave it away willingly because we yearn to communicate and share.

Sceptical? 10 years ago I still knew a lot of people who swore they'd never get a mobile phone. Just look at them now.

Our kids will probably not even understand the concept of privacy, and the irony is that it won't be Big Brother that will take it from them by force, it will be themselves that give it up. Us old codgers will whine and express outrage at what we perceive as the loss of our God-given privacy, but I doubt a generation raised in a world of ubiquitous networking will even know what the hell we're talking about. The question is not if, but how this will change our society.

The pessimist view is not hard to come by, nor is it hard to understand. We're all obsessed with our public image, and the more public our lives are - politicians, athletes, entertainers, what have you - the more we try to hide behind a veneer of respectability.

And yet... maybe I'm just a glass-half-full kind of guy, and believe me when I say I share most people's fear of living my life on public record as much as the next guy, but maybe it's not such a bad thing after all. Maybe, just maybe, putting yourself out there will help people understand you more, and help you understand - and accept - others more. We pride ourselves in living in a society where someone can be openly gay, openly secular, openly communist, openly critical of the government and just generally open and honest about their preferences, actions, opinions and beliefs, but we're far from being truly tolerant. Yes, you're not going to be thrown in jail for being any of these things, but as we well know you might well lose your job, your friends, and you sure as hell aren't going to hold public office. Why? Because most people are still - for well understood, if not justifiable reasons - afraid of, even hostile to those who don't conform to their idea of normality.

Perhaps the pessimists are right. Perhaps our increasingly public lives will lead to more fear and oppression as we struggle to conform to this idea of normality in a world where we have little to no chance to be ourselves in private. But maybe, just maybe, if we can't be ourselves in private, we'll start being more comfortable being ourselves in public. Maybe when everyone - not just celebrities - lives in the spotlight, we'll learn to stop criticising and poking at every little detail of each other's lives and learn to accept each other for who we truly are.

Privacy? It's a notion on its way out. The question we have to ask ourselves is not how we can stop this - it's what good we can make of it.

An open letter to Kyle McSlarrow

2009-11-20T06:17:00.000-08:00

Ars Technica featured an article by Kyle McSlarrow, head of the National Cable & Telecommunications Association, stating the case for Selectable Output Control. Here's my response.

Mr. McSlarrow,

iTunes, Amazon MP3 and many other services are making a brisk trade selling "unprotected" content. People flock to these services even though there are "free", illegal alternatives because of the convenience and high quality of the offering. I still hold that these services are overpriced and that lowering prices would give you increased revenues through more sales, but even today they are popular and profitable.

It's a false claim to say that anyone can "easily" use a BitTorrent tracker to download a new film and watch it. It's a tedious, inefficient, bandwidth-hungry process that would pale in comparison to the experience offered by services like iTunes or Netflix if they were stripped of DRM. I can clog my upstream broadband connection and download dodgy, mislabeled, low-quality, malware-infested files from a P2P site for "free" or I can download high-quality, easy-to-find, instant-play content from a legal source for a reasonable fee. People value their time, and they will pay for saving it, if only you'd allow them to.

In addition to DRM, geographical restrictions to online distribution are just as ridiculous. There are 1.9 billion people on the Internet today, but all your legal services are available to only a tiny fraction of these people for no sensible reason whatsoever. To make things worse, the people in countries without legal download services tend to also be the people without access to good cinemas, cable channels and other means of content distribution - i.e. the most likely to flock to an online service for content they can't get elsewhere.

Here are some undisputed facts:

1. DRM doesn't stop the determined copyright infringer. This is a simple fact of life. From a technical point of view, playing a media file and copying it are one and the same thing. If you can play it, you can copy it. End of story.

2. What DRM does do is inconvenience the casual, paying user. It makes time-shifting, format-shifting, backing up etc. very hard for them.

3. More importantly, it makes the things we haven't thought of yet very hard. People will come up with innovative ways to use your content in the future, just like portable music players were an innovative way to use your CD library. If music CDs had DRM, the PMP would never have taken off. I'm sure the music industry would have loved that, but nobody can claim that it would have been good for the consumer. DRM kills innovation by limiting content to currently existing uses.

You need to offer unprotected content at a reasonable price. The P2P networks can never match you on convenience and quality, their need to evade detection and offer things for zero cost guarantees that, and you can use legal channels to go after the biggest infringers. Some people will not pay to see your movies. That's OK. People buy second-hand DVDs or borrow them from friends, or just go over to their house and watch, all the time, you don't see a cent from that. That's fine, it's all baked into the price of the DVD, and you still turn a profit. Stop worrying about catching every last person that watches your movie without paying full price - that's futile. Concentrate on making it so simple, cheap and flexible for your paying users to get your content that they won't bother.

I don't want to "rent" your movie for 30-days-or-48-hours-after-start. I don't want to "stream" your movie to my browser. I don't want to download a file that won't play on half the hardware I own today and most of the hardware I buy tomorrow. I just want the bloody file with your movie in it.

There is nothing stopping you from doing this. You don't need laws, restrictions or DRM schemes to "enable" you to do this. You can do it today. You're already enabled. So please, just do it.

I hate books, and you should too

2009-10-20T16:40:00.001-07:00

I hate books. I hate books.

Don't get me wrong; I love reading. I go through at least a couple of books a month, sometimes a dozen. So in one sense, I love books, as in long-form texts. But in the sense of bound stacks of paper printed with ink, as a mechanism to deliver said long-form texts, I absolutely despise them. There's so much to hate about them I wonder if one blog post is enough.

First, they're fricking huge. A single book is bigger than any pocket in most of my clothes. And they're heavy, I mean really heavy. I remember carrying textbooks around in a huge, heavy bag when I was in school, textbooks that could fit a million times over in something smaller and lighter than a key fob. I might just need one chapter from a couple of them that day, but I had to carry the whole damn lot anyway. Even the paperback books I carry around every day to read on my commute are the biggest and heaviest single item I have with me when I leave the house.

And that's just talking about the books you might need in a day, or a few days. Your entire collection? Some people have dedicated rooms. Hell, there are these places called libraries that are entire buildings that just store one or two copies each of a few thousand or million titles, when you can fit all of that in your average mobile phone.

You actually have to go to these places, physically, just to access a piece of text. And you're never going to believe this: When one person is reading one of these books, nobody else can! There's no easy way to make a copy. There's stores too, where you can buy them, but get this: Due to their ridiculous size and weight, every store can only carry so many titles. More often than not, they won't even have the one you're looking for, or someone else has already got the last copy! Then you have to order them from somewhere else and wait several days until they're delivered.

But that's not all!

Sometimes, especially for older or less popular books, they won't be available at all. Because get this, it costs real money, well over a dollar, to produce books in batches less than a few tens of thousands, so people just don't do it unless they're sure a lot of people will buy them. If you want one of these "out of print" books, you have to find someone who bought one before they went out of print, and actually convince them to stop having it so that you can have it. I mean, seriously, why?

Do you understand the ridiculousness of the situation? Books are actually unavailable. Get this: Many books don't ever become available because no one is willing to take the risk that at least a few thousand people read them.

We're not even close to being finished.

You know trees, those helpful organisms that consume carbon dioxide, produce oxygen, and generally contribute to a healthy and vibrant ecosystem? You have to cut them down and destroy them, by the millions, to make books. You actually have to destroy forests to make books.

I'm not kidding. It's true. Look it up. It's horrible.

There are 3.3 billion people in the world - more than half the population of this Earth - with a mobile phone, TODAY. The vast majority of these people have very limited access to libraries, bookstores or any other varied source of printed books. We have the ability, TODAY, to give each and every one of these people access to every book ever written, every book that will every be written, in any language. This is not some "5-10 years from now" technology that's "in the lab", it's in your pocket RIGHT NOW. And yet because of our unjust laws, it's impossible to give the world access to this information that can only make their life better, and all the while we're destroying our forests by the millions of acres to print more of these hateful anachronisms.

Let's stop this madness. I want my children to not be constrained in their knowledge by where they are or when they want it.

My wishlist for an e-mail replacement

2009-10-01T05:32:00.000-07:00

E-mail is crap. By far the biggest problem is, of course, spam, but there are countless others. E-mail is one of those technologies that was designed by copying the functionality of a pre-computer system: Actual, physical mail, usually referred to as "snail mail". E-mail works like snail mail, except slightly faster. You write a message, send it off, someone receives it, writes a reply, sends it off and so on. It might be faster than snail mail, but it's not qualitatively better.

Instant messaging has come around to supplant this with equally flawed design. All IM applications I know of start out with a basic concept: "Who's online?" Straight away, to participate in any of these communications networks, the first thing you have to do is advertise to everyone that you're available. Most of them will even happily inform everyone on your contact list when you're away from your computer for longer than 10 minutes. The privacy invasion is horrific. Imagine if whenever you picked it up or put it down, your phone advertised the fact to everyone in your phone book. Most people just don't bother.

Here's my wish list for a possible replacement for both of these useless technologies. Yes, I know Google Wave probably does most of what I ask for, but until the boys at Mountain View deign to give me beta test access I can only fantasise.

1. It has to seamlessly support multiple public identities

By public identity I mean an address through which people can reach me and a small set of optional information that I may choose to publish along with it like a name, a job title, an organisation I belong to or a physical address. All users should be able to have multiple identities - one for close personal friends, one for websites that only need the most basic information, one for work, on for your second job - as many as they want and need for their particular circumstances. When I say "seamlessly" I mean it should be possible to view, search and organise communications from all your identities in one place if you wish to do so; your identities should be completely separate as far as other people are concerned, but you should be able to manage them all from one place.

2. It has to support conversations in a native way

People don't send solitary e-mails, they're almost always part of a thread, or a conversation if you will, that consists of several messages and may involve more than two people. Support for this in e-mail and IM is very patchy and hacked-in; mail software will try and organise e-mails into threads, but most of the time it's just guessing that two e-mails with the same subject are part of a conversation, and it often gets things wrong. Most mail software tends to quote (copy) the entire message when replying, sending the same information out again and again while making it hard to actually get up to speed if you join it later on. And of course, if you want someone to join an active mail thread, the best you can do is copy them on your reply, but that doesn't let them look at the previous messages nor does it notify other people in the conversation, who may forget to include him in their replies.

What I'd like to be able to do is start a conversation with someone, add messages to it without having to copy all previous messages in every new one, and whenever I invite people to the conversation they can just browse through what was said before. I should be able to easily split a conversation at any point, or merge two conversations into one.

3. Users should be able to slip into and out of live chat seamlessly, without advertising their presence

If I want to have a live chat with someone, whether as a new conversation or continuing an existing one, all I have to do is click a button that will send a request to those in the conversation. They may accept, they may be unavailable, they may ignore me, or they may reply with a quick message saying they're busy. You shouldn't have to pre-emptively advertise your availability to all and sundry just because you want to talk to one or two people. Your instant messages and your longer, pre-composed messages should blend in seamlessly in the conversation.

4. It should require encryption and cryptographic signing

All messages and conversations should be cryptographically signed so that you can verify with absolute certainty if two messages are coming from the same source. Getting your public key signed by a well-known, trusted source can also verify that you are who you say you are, but you should also be able to use a self-signed certificate for anonymous work. Making this a basic requirement of the system and making the user interface for it a first-class item for any implementation is important if we're ever going to get end users used to using cryptography for their own security.

AT&T asks you to pay so it can use your broadband connection

2009-09-22T05:37:00.000-07:00

AT&T announced the availability of its new "3G MicroCell" device in the U.S. this week. It does something fairly simple, frankly self-evident: you hook it up to your broadband connection and it acts as a mobile phone mast in your home or office, offering excellent coverage in an approximately 40-foot radius. Anyone with an AT&T mobile phone in range of the MicroCell that makes or receives a call will have it routed via your broadband connection. Verizon and Sprint have similar devices on the market, but this is the first UMTS-compatible femtocell to hit the market from a major carrier, with carriers in the rest of the world are sure to follow soon.

This kind of device appeals to me; I was recently forced to install a landline in my house because of poor mobile reception, but as I've complained of before, this just leads to hassle. If I had a penny for every time I've said "I can't hear you very well, call me back on my landline" the past few weeks, I could probably afford to check my voicemail while roaming. If I was living in the States I could get Google Voice and have one number for both my mobile and my landline but unfortunately Google Voice won't be coming to anywhere outside the U.S. any time soon because people outside the U.S. aren't used to paying for incoming calls and text messages.

However, what really got me is that AT&T is actually charging you for the use of this device. It costs $150 to buy, and you are essentially letting AT&T use your broadband connection to extend its network (not just for you; any nearby AT&T customer can route their calls through your femtocell). You also have the option of paying $20 a month to get unlimited calls while in range of the femtocell - but other people still get to share your broadband connection whenever they happen to pass by your house.

Femtocells are one way to achieve what I've been calling for in this blog for ages, i.e. to allow third parties to extend mobile coverage to areas where there is none instead of waiting for the major carriers to put up a mast nearby. In my view, AT&T should be paying you for using your bandwidth, not the other way around. Not only would this compensate you for when a random passer-by starts using his (up to 3.6Mbps) 3G data service to gobble up your bandwidth, it would also offer an incentive for enterprising companies to get an Internet connection and stick a femtocell (or a bigger device with slightly larger range) on the end of it to places where there is demand for mobile service. AT&T gets more calls and customers, the participating companies get a share of the connection fees, and suddenly there's a market - and an incentive - for truly ubiquitous coverage.

Somebody who works at a major carrier has to make the conceptual leap sooner or later. I'm waiting for the other shoe to drop.

T-mobile/Orange merger indicative of the mess that is mobile

2009-09-08T04:42:00.000-07:00

After months of speculation about T-mobile UK's future, a merger deal with Orange was announced today. Pending regulatory approval, the two carriers should start merging their operations within the next few months. Executives from both companies are trumpeting the increased efficiency that the merger will bring to their customers. The two companies can now shut down many of their overlapping antennae, customer service centres, retail shops and offer their customers better service at lower cost. It makes sense if you think about it. Instead of running two networks with mediocre service, they can run one smaller network with excellent service.

If you accept that merging the two networks will bring increased efficiency, then it follows that the current set-up - two separate networks and operations serving two separate sets of users - is inherently inefficient. If you accept that, the question that immediately presents itself is, if merging these networks will bring increased efficiency and lower costs for everyone, why stop? If reducing the number of networks from five to four will increase efficiency, why not go further?

At some point, of course, the anti-competition watchdogs will start barking because of their very simplistic view of competition, the belief that if you just make sure companies don't own too much of a market, any market, everything will be fine. You need to take a step back and look at the big picture to realise how fundamentally flawed the whole system is.

The inefficiencies are real. Here I am, in the middle of the City of London, and a simple glance at Ofcom's Sitefinder tool shows that I am in range of about ten different mobile phone masts, yet the reception I'm getting is rather poor. If I pop outside and hop on a train from Liverpool Street station, I will immediately be out of range while in the tunnels, and even once above ground in the open countryside I'll mostly be getting poor reception, and not a hint of 3G. And yet, if I pop my Greek SIM card into my phone and walk around, suddenly the picture changes. Five bars everywhere, 3G coverage throughout. What happened? Well, with my foreign SIM card I'm suddenly free to roam on all five networks. Suddenly it's obvious that we have a ton of masts around, more than enough to cover everyone, except that we insist that each phone use only one of the networks. All this time, money and effort expended to build five times the infrastructure (and then expended again to upgrade it to 3G, and soon to be expended again to move to LTE) and we insist on making each phone use only a fifth of it. What's more, the existing carriers are currently busy upgrading this infrastructure when they should be concentrating on expanding coverage to areas were there is none - rural towns, the countryside, underground, public transport.

The carriers are not to blame for this situation; unable to take advantage of existing infrastructure, they each have to build their own, separate networks in the primary areas before they expand into the fringes. To understand why this is the case, it's important to realise that the market for mobile communications is one defined and created by the state. In order to offer mobile phone service, you need to own a license to transmit radio waves at specific frequencies. These licenses are given out by the government, but you can't just apply for one; there's a specific number, they are perpetual, and they have all already been auctioned off for billions of pounds to the carriers we all know and hate.

The government is squarely to blame for this mess. It has created five different networks, each with an identical mission to create infrastructure, yet unable to share resources for fear of being punished for anti-competitive behaviour. The situation, frankly, is quite ridiculous. We have a government-mandated, perpetual oligopoly, all in the name of the free market and competition.

So, what's the solution? Actually, I've already mentioned it: Roaming. Domestic roaming. Every mobile phone should be allowed to connect to any carrier's network in its home country just as it does when it finds itself abroad. Only then will the competitive forces of the market truly work their magic. First of all, this will allow small start-ups to serve the low-margin areas that the incumbents refuse to go near, where coverage is lacking. It will make it possible for companies to build masts in rural areas, on the London Underground, on overland trains, make a modest profit from the roaming revenues while the big boys keep their existing, lucrative inner-city infrastructure. Now you can have real, proper competition; if a company starts charging exorbitant rates for using their masts, a competitor can just stick up another mast and drive the price down towards the cost. Suddenly all the money being spent upgrading the existing infrastructure - which is more than sufficient to provide everyone with perfect coverage in heavily populated areas - will be shifted to expanding the infrastructure to where it's needed the most, and a vibrant market of enterprising companies serving niches in the market will thrive.

Please, let's stop this madness. Write to your MP. Write to Ofcom. Let's stop building five times too much infrastructure in major cities while letting the countryside languish in obscurity. Let's make it possible for enterprising people to get us coverage on the tube, on the train and anywhere else where it's needed. Let's make mobile sane.

Skype and Google Voice: The black sheep of the VoIP family

2009-09-02T03:50:00.000-07:00

In case you haven't heard, eBay is selling Skype.

Most technology pundits are just going "I told you so" and a glance at the reports of the original, $2.7bn acquisition from 2005 will quickly show that everyone was scratching their heads trying to figure out why an online auction house would want to buy a loss-making VoIP company (Voice-over-Internet-Protocol, for the buzzword-challenged, which basically means a telephone that works over the Internet).

I have very few hopes for Skype in the long run, or for any other VoIP firm for that matter. Looking into my crystal ball, I can tell you that in the distant future (let's say 20 years from now) there will be no such thing as a telephone company, because routing telephone calls over the Internet means routing them over a network you've already paid for, so what exactly would this telephone company be selling? You see, VoIP is one of those unfortunate technologies that will undoubtedly benefit all of its users but not make anybody any money. It's all about using a tiny portion of your Internet connection, which you've already paid for, instead of an additional telephone service - except every telephone company in the world, fixed or mobile, is fighting it tooth and claw because it knows it will make them obsolete, and there's nobody (of any consequence) fighting the other corner. Yet.

Your ISP doesn't really care, since you already pay them for your Internet access - frankly they could do without the hassle of supporting VoIP on top of that. Anyway, these days, half the time your ISP is also your telephone company, so it would rather you still paid them some ridiculous amount per minute to call abroad, thank you very much.

The only money to be had in the VoIP transition is in facilitating calls from VoIP users to traditional phone lines and vice versa, but guess who the gatekeepers are there? Yup, that's right, the telephone companies. If you want to call a traditional phone line from your VoIP phone you have to pay the phone company, and it's no surprise they're not in a hurry to let you do that on the cheap. This is still Skype's one and only business model, and it's unsurprisingly not managed to make it an appealing package.

Is there hope on the horizon? Perhaps, mostly coming from Google and Apple. Pay no attention to the bickering about approving Google Voice for the iPhone, I'm here to tell you Apple would love nothing more than to allow the iPhone to work with Google Voice - except not as a separate app, but as a full-blown replacement for the carrier's voice service. Apple's agreements with AT&T and its other exclusive carriers are running out and it must be looking at the figures that show that it's selling a hell of a lot more iPhone in countries were users have a choice of carrier, and I'm sure their PR guys are tired of fielding constant complaints about the approved carriers' lacklustre service.

Sooner or later Google, or Apple, or both, are going to come out with a device that's going to go around the phone companies. You'll sign up for an unlimited data plan with a carrier (and I predict it'll be Verizon first with its brand spanking new LTE network) and the phone will just route all your calls over that. The phone companies will moan and whine and probably sue, but either of these companies will soon have the clout to make them accept the new world order.

Wishful Thinking: iTunes subscriptions on 9 September?

2009-08-26T09:45:00.000-07:00

It's more or less confirmed that Apple will be hosting one of its events on the 9th of September. The ever-present Tablet rumour mill flared for a bit when this was announced, but it's becoming clear that Teh Steve will not be announcing anything of the sort; instead, we're looking at music-related product announcements. Most probably, refreshed iPods (including an iPod Touch with a camera and microphone, which should delight a few App Store developers) and iTunes 9.

What exactly will be in iTunes 9 is a bit of a mystery; rumours abound of a service called "Cocktail," the details of which are sketchy, though some sources have reported it will aim to promote full album sales at the expense of single track downloads.

Now, this is a bit of a puzzler for me since most studies I have seen show people are very much still in the habit of buying full albums from the iTunes Store and would need little prodding to continue to do so; iTunes already has "album-only" features (so you get some album-only songs, and possibly music videos and digital booklets when you buy a whole album) that seem to do the trick.

What I'm thinking (though, to be honest, mostly hoping) is that Apple will be the first to announce a subscription download service. A recent survey for UK Music by the University of Hertfordshire has shown that consumers would flock to such a service, and I have already talked of Virgin Media's announcement of a similar service, planned for a holiday launch. All that's missing is the agreement of the music labels, and if Apple has proved one thing with iTunes, is that it's good at getting what it wants from them. Perhaps they will beat everyone to the punch, and put streaming services like Last.FM and Spotify out of business in one fell swoop?

I have no inside sources, only a hunch, but going on the quality of most Apple rumours that's better than most, so, you heard it here first: Apple will announce a subscription service on 9 September that will give you the ability to download a set (I'd say unlimited, but that's just pushing my luck) amount of music every month for a fixed fee.

The iPhone may be the last jack of all trades

2009-08-12T17:21:00.000-07:00

(Everybody's been complaining that my posts are too long, so I'm trying to keep them short and to the point from now on.)

This device is friggin' amazing, I'm still astounded by how it's changed how everybody thinks about ubiquitous computing. Everybody and his brother are stumbling over each other to clone it and improve on it in any way they can.

Still, I was handling a Nikon SLR camera and an Amazon Kindle e-book reader (sadly still a rare sight for me as it remains unavailable outside the US) in the past few days and I've been thinking about how the iPhone and its ilk will be obsolete in a few years. The iPhone (and other similar touchscreen smartphones) is great at being the one device that covers all your needs adequately, but the next few years will see the basics - phone service, a multitouch screen, a micropayment system for content transactions, and a wireless Internet connection - be included in every device, from our digital camera to our large-format e-ink screen. These devices should (and soon will) be interchangeable, with different trade-offs in form factor according to your needs. The only thing that's missing is the software infrastructure that will allow us to carry our Digital SLR or our e-book reader instead of (not as well as) our smartphone depending on what meets our needs better at the moment, the only functionality change we see being whatever is dictated by the physical characteristics of the device. The iPhone makes a particular compromise in the trade-offs of the quality of the camera, the screen, the keyboard, the speakers and the microphone on one side, with the weight, size and battery life on the other. Different times in one's day call for different types of compromise, but now this means carrying a whole bunch of devices around, which most people are loathe to do.

Seriously, the number of people I know who carry around a Blackberry or similar and a "personal" phone is stupefying. They all hate having to do this, too. Don't get them started on the half-dozen chargers that go with this gadgetry.

I want an iPhone built into every device I own! And so does everyone else, even if they don't know it yet.

Of course, a lot of people know this. I'm excited about what they're about to come up with. I think we all know for a fact that Steve Jobs has gone up a mountain, and we all know what the last famous guy who did that brought back with him. Amazon has the right idea with the Kindle, selling a device and a service for other devices with the two loosely coupled. I wonder who will get on the bandwagon with high-quality cameras first? Sony has the right expertise, but with their track record I bet they come up with something that has its own memory, wireless and cable standard that they will try to get everyone else to adopt before you can use their product. Yuck.

Greetings from the sunny Greek islands (which might explain the lack of posts recently).

The cloud for dummies (or, why Google isn't taking down Microsoft)

2009-07-09T02:36:00.000-07:00

I read about Google's announcement of their Chrome OS on the tech news sites a couple of days ago, chuckled to myself about how they seem to have lost the plot a little bit, and then went about my day. Yesterday, however, the mainstream media got wind of this. Stop the presses! Google took a shot across Microsoft's bow! This morning it was on the cover of the frickin' Financial Times for gods' sake; above the fold, no less.

Let's get this straight. Google Chrome OS (terrible name) isn't going to compete with Microsoft Windows any time soon, or ever. I won't go too deep into the details of why, though if you're interested I think Dan Lyons a.k.a. Fake Steve Jobs at The Secret Diary of Steve Jobs and Andrew Orlowski at The Register have written the most entertaining and succinct explanations of why it isn't going to make even the slightest dent in Microsoft's bottom line.

I'd like to take a moment to muse about the contrast between IT pundits and weather forecasters. Predicting the weather for the next 24 hours is a pretty exact process. Going out to five days, it gets slightly vague. Anything over a week and even the most capable forecaster will put his hands up and surrender; anything goes. With IT predictions, it's the other way around. Any techie worth his salt can describe the world we'll be living in 15-20 years from now pretty accurately. If you don't believe me, go back to the early 90s and read some stuff about how e-mail will be the primary means of communication in business and how everyone will have broadband at home - they didn't call it that yet, of course - and do their shopping online. People laughed at that, yet here we are. Go back to the same time and read predictions about what the world would be like in the late 90s, and it's all completely off.

So let me peer into my crystal ball - it's not that special, Google has one too - and tell you that 20 years from now nobody will be using computers anymore. We'll be surrounded by different size screens, cameras, touchscreens, keyboards, mice, trackballs, buttons, dials, speakers, microphones - the same input and output devices we use today, and perhaps a couple we haven't thought of yet - but instead of them being tied to a computer or a phone or a set-top box as we understand it today, they'll all be connected using insanely high-speed networking. No matter which screen you use - the huge one on your living room wall, the medium-sized one on the back of the airline seat in front of you, the tiny one in your pocket - what you'll see on it will be the same. Your e-mail, your documents, your photos, your music, your games. Your data will follow you around, accessible from any device. The only thing that will change is the size of the screen, the convenience of the full-size keyboard, the volume of the sound, etc.

You're used to thinking of a screen as an accessory to your computer, a peripheral. Your stuff - the information you create, the information you get from others and the software to process it all - is in the computer, and the screen is a portal into it. If your hard drive malfunctions or the computer goes up in smoke, it's all gone. If you want to access it somewhere else, you have to e-mail it, or upload it, or put it on a memory stick and take it with you, or burn it onto an optical disc and stick it in the mail.

Your kids, however, will think of the computer as the accessory to the screen. Their data and their software will be somewhere else. Sure, the computer will still be there, and their data will get copied and stored inside it while they're using it, but they'll be no more aware of the details of how this works than you are of which cell tower your mobile phone connects to when you make a call. Your data and your software (which, as any computer scientist will tell you, is just more data) is stored somewhere else, on the network, with backup copies all over the place so you never have to worry about another hard drive crash or leaving that important document on your home computer, and it will magically appear on whatever output device you come across, and be manipulated by any input device you happen to have handy.

People have taken to calling this amorphous, invisible computing service the cloud. It's all the rage right now, and Google is buying into it wholesale. You can see the first glimpses of the cloud already, and Google's services are prime examples. If you use GMail, your e-mail isn't on your computer; it's in the cloud, accessible from anywhere. With Google Calendar, your schedule is in the cloud. With Google Docs, your documents and spreadsheets are in the cloud.

In this world, the operating system will be very similar to Google's description of Chrome OS. All it has to do is start up and hook you up to the cloud. There is no future for Microsoft Windows as we know it in the cloud, and everybody knows it - Microsoft included.

The thing is, an this is the important bit, we're not there yet. We're not even close. Networks are too slow. Wireless coverage is pitiful. Most of our input and output devices are pretty dumb. Most of the software we use is nowhere near being ready to be used in the cloud, and in many cases the computers just aren't fast enough - sure, you can make an e-mail reader in the cloud, you can even create a very basic word processor or spreadsheet application, but if you think Adobe Photoshop or World of Warcraft, to name but a couple of examples, can be used in this model with today's technology you're just deluded. One day they will, there's no doubt about it, but not today. Not next year either, in fact probably not in the next ten years.

This isn't a new idea, and it isn't the first time people get all hyped up about the cloud - though they called it various other names back then. Back in the 90s when the Internet first came out people were going on about the exact same stuff - they called it the "thin client model" back then. Sun Microsystems even made it their corporate slogan: "The network is the computer." Looking back on this today, trying to create a cloud-based world using huge, slow desktop computers and wired dial-up connections seems laughable, and anyone who bet the farm on it back then had to pack up his stuff and move out of the farmhouse when the bubble burst.

The second bout of cloud hype that we're seeing today has come about because of the wide deployment of wireless networks and smartphones and netbooks and set-top boxes that look remarkably like fully-fledged computers that we're seeing today - people now have multiple devices and they want to access their stuff on all of them, so unlike in the '90s, the demand is actually there. But like most failed IT initiatives, Google Chrome OS and the cloud-based computing future it espouses will fail because it's long before its time. The technology and the infrastructure isn't there, and it's not going to appear overnight.

People aren't going to buy into a cloud-based computing model until it lets them do everything the desktop model does today, and that's not just e-mail and Facebook - it's video editing and 3D gaming and a bunch of other stuff too. The technology of the web is laughably unsuited for these kinds of things, and building an operating system that assumes that the web is all you need is just wishful thinking. The software architecture that this cloud-based future will be based on will be one of virtual machines, remote execution, distributed storage, massively parallel processors and numerous tiny thread-like objects being dispatched all over the place; it won't be HTTP, XML and JavaScript, for Pete's sake, and watching Google try to do it like this will one day seem as laughable as Sun's efforts in the 90s to get us to give up our desktop computers for a CRT screen and a modem seem today.

So, Microsoft isn't, and shouldn't be, worried. Windows and Office will go the way of the dodo in due course, but they know it's not time yet, and you can bet they have a strategy in place to dominate whatever replaces them. Whatever it is, you can bet the farm it won't be Chrome OS.

Skip to the end - the Video Codec Wars are coming

2009-07-07T02:42:00.000-07:00

Today I'm going to be trying my hand at predicting the future, at least for the next five years.

This week the Mozilla foundation released Firefox 3.5. In addition to the slew of performance and security improvements, this new and improved version comes with support for the HTML 5 video element.

At just about the same time, tech sites are awash with news that attempts to standardise on a video codec for use with HTML video have hit a brick wall. Apple and Google are pushing H.264, which is arguably the most technically competent of the proposals, the open source scene (including Mozilla) and Opera are pushing Ogg/Theora because it is (as far as they can tell) patent- and royalty-free, and Microsoft is doing the usual, i.e. nothing, because even though IE is broken in more basic ways than web video most people use it anyway because that's what they get when they turn on their new computer for the first time.

Now, it's been over a decade since it was my job to pour over everything that comes out of the W³C and wax lyrical on who or when was ever going to implement it, but I can't shake the depressing sense of déjà vu. JavaScript vs. VBScript, Java vs. ActiveX, CSS vs. the blink tag, it's the same story. Somebody comes up with a cool hack that allows you to do something interesting, then attempts to standardise it are sabotaged by incumbents that push their own agenda and five to ten years later the dust settles and the standard emerges, and everybody can finally do what they've been technically able to do for ages without all the hassle.

I've been following this stuff long enough to be comfortable looking into my crystal ball and making a prediction as to how this is going to play out: YouTube (the killer app in the web video space) will go H.264 because, well, it's Google and they bloody well can if they want to (and they want to, if only because their bandwidth costs will be cut in half and they can afford the royalties) and Apple will rub its hands in glee as its existing investment in H.264 makes Macs and iPhones have the best out-of-the-box YouTube experience.

Enter an army of copyright lawyers marching in lockstep, brandishing the DMCA in one hand and pictures of poor, starving artists in the other, preaching doom and gloom about how this will be the death of TV and movies because standard video codecs will mean anyone can save and share streaming web video, all the while conveniently ignoring the fact that you can already do this with FLV and that anyway, if this is free streaming video available on the Web, who the hell cares if you can save it and share it? Regardless, these guys have to make a living, so cue a couple of high-profile, multi-million dollar lawsuits that climb the appeals ladder all the way to a District Court in the US, with a red-tape-adorned sideshow in the EU and a couple of random countries like New Zealand or South Korea passing oddball laws that nobody else understands before being beaten into submission by the WIPO.

The freetards start causing a fuss and wearing "Ogg till I die" T-shirts in their own little echo chamber which the rest of the world comfortably ignores. Microsoft still doesn't care, or to be more precise is loving the fact that it can rain on Google, Apple and Mozilla's parades simultaneously just by sitting on its arse and doing nothing (though I'm giving odds on IE 10 or so having a broken, incompatible HTML 5 video implementation that only supports VC-1 and throws yet another spanner in the works).

Of course, this isn't the 1990s, and Apple controls the de facto standard mobile environment, plus it's got every iPod user (and gods know there's a few of those) installing QuickTime + iTunes on their Windows boxen, so it'll sneak an IE plug-in that does HTML 5 video + H.264 through that delivery channel. Debian users will still grumble, some of them downloading plug-ins separately, others remaining stark refuseniks that just don't watch Web video (which is no great loss to them anyway because they've probably only read about the evil that is YouTube on the FSF newsletter) while the more open-minded Linux distributions bite the bullet and provide a plug-in anyway.

Cue yet another army of lawyers - patent lawyers this time - and at least one upstart company that nobody has heard of with an attorney-to-employee ratio in the double digits that claims it invented video before the camcorder. More litigious absurdity ensues. Eventually lawsuits are settled, patents expire and somebody finds a way to provide an as-free-as-makes-no-difference implementation.

Adobe, in the mean time, is scratching its head, wondering how it had its runtime installed on 90% of the desktops out there and spectacularly failed to make anything out of it. Expect some panicked lashings out, possibly involving yet more lawyers, until it just calls the whole thing off and goes back to concentrating on what it does best, i.e. making money off of Photoshop and InDesign.

Of course by this time, with Macs, Windows boxes with iTunes, iPhones, most Linux boxes and a bunch of other platforms being able to play H.264 and content providers pushing it, it's become a standard. I estimate we're around the year 2015 by now, so the same realisation will probably be dawning on Hollywood that dawned on the music industry around 2009, and they'll be offering all their stuff in DRM-free formats too.

Right about this time most video on the Internet will be H.264, with just about every platform except Windows and Debian being able to play it out of the box, and a simple one-click install being available for those too. A few years later Microsoft may even capitulate and stick it in there too. At this point, I estimate about five to seven years from now, we'll have a standard way to deliver video on the Internet, and no one company will be able to control it. Of course, by then, H.264 will be laughably obsolete and we'll be starting the whole dance again over whatever is flavour of the month, I don't know, 3D video or something.

So there you have it. Make some popcorn, sit back and enjoy the show. We've all seen it all before, but that's not stopping anyone. As fun as it is, however, it's just so depressing. Do we really have to go through this rigmarole every time someone comes up with a new technology? Does it really need to take 5-10 years before we can use it without the hassle? Do we really need to spend billions on lawyers and lobbyists and have a whole bunch of companies go bust just so we can do what we can already do right now?

To quote Battlestar Galactica, all this has happened before - and all of it will happen again.

But to quote Spaced, can't we just skip to the end?

ISPs giving content providers a free ride? Quite the opposite!

2009-06-26T04:53:00.000-07:00

Nothing annoys me more than companies that complain when they can't continue doing business the same old way in a changing world.

Working in IT can be both exciting and treacherous. This is probably the only industry where the entire landscape changes completely every five years, garage-based start-ups can become household names in less than that, and international behemoths can be humbled, bankrupted or swallowed whole in the blink of an eye. If you work in this field, you have to be prepared to switch your entire operating model around at the drop of a hat when the same thing that was churning out the billions yesterday has become laughably obsolete by lunchtime.

Internet Service Providers (ISPs), the companies that provide the connectivity that makes the Internet possible, have been the quiet worker bees of this massive hive for at least two decades now. Their industry has gone through a few transitions, most notably the move from dial-up to broadband, but the basic economics remain the same. At the retail level, punters pay their ISP a fixed fee per month (in the UK, this usually ranges from £5 to £20) and get a broadband connection to their home - what, in my day, we used to call a phat pipe. Through this connection you can access anything and everyone who is connected to the Internet anywhere else in the world. Video chatting to your mate in Tokyo, browsing through the catalogue of the U.S. Library of Congress (though sadly not the contents, and you can blame our stone age copyright laws for that), downloading Wacko Jacko's (R.I.P.) entire discography for your own personal mourning marathon - all this and so much more is yours for the same monthly price.

This idea of hooking up at one end of the Internet and getting access to everything - and the flip side of the idea, that you can offer a service and immediately have it available to everyone - is at the core of the Internet, and what makes it work so well. The content providers put their content up (and make their money through advertising, subscription fees, or by selling you Real Stuff through their online shop front) and the access providers - the ISPs - connect people to this content, and never the twain shall meet. This separation of the access market and the content market is the key to the success of the Internet, because it avoids the monopolistic tying of content to access that plagues other media such as television. You'll never have to switch ISPs because yours won't let you access YouTube; you'll never be forced to buy from Amazon because your ISP partners with them. This separation is what allows market capitalism to work its magic on both ends of the equation and provide the vibrant economy of the Internet.

But all is not well in the magic kingdom. John Petter, managing director of BT Retail - one of the largest ISPs in the UK - is annoyed that his customers are using their broadband connections to watch television on the BBC iPlayer because it's causing so much traffic that it's hurting his profit margins. For those not in the UK, iPlayer offers all the BBC's television programming from recent weeks on demand, and is quickly replacing BBC TV for many people as they enjoy watching shows whenever they have time as opposed to whenever the shows are on. Mr Petter told the Financial Times, "We can’t give the content providers a completely free ride and continue to give customers the [service] they want at the price they expect."

BT retail is not the only ISP to whine about content providers getting a "free ride," and the phenomenon is hardly confined to the UK. Google's YouTube service has also been the target of similar complaints by US ISPs. On the face of it, Mr. Petter and his colleagues have a point, but a basic knowledge of the way the ISP business works - which I would expect BT Retail's MD to have - is all that is needed to show how patently wrong they are.

First of all, none of these services get a free ride. The main reason that content and access providers are separate is that from a practical point of view there is absolutely no difference between a content provider and an end user on the Internet. Think of it this way: when you and your hypothetical Tokyo-dwelling friend start a video chat, you're just two end strands of the vast web that is the Internet. Assuming a relatively simple case, you pay your ISP in the UK, and he pays his ISP in Japan. Both of your ISPs have connections with a large international backbone ISP whose network spans the divide between Old Albyon and the islands of the Rising Sun. These connections will probably be based on what is called a transit agreement, where each of the small ISPs pay the big ISP so that they can send it traffic which it will route through its network and deliver at the other end. The small ISPs take your money, give some of it to the big ISP for transit, everyone adds on a bit to make a profit, and everybody's happy. In reality, there may be several ISPs between yours and his, but the principle is the same.

What's important to realise is that having a video chat with your friend in Tokyo is no different to watching a video on YouTube. YouTube (and iPlayer) pays for internet access just like you and your friend do; the fact that it serves up massive amounts of video may affect the size of its ISP bill, but it doesn't affect the way things work. On the Internet, sending and receiving, or download and upload, cost the same. The ISP that has one big customer like YouTube that uploads terrabytes of data and the ISP that has millions of small customers like you or me who download just megabytes each, each pay the same transit fees for the traffic to be routed through the Internet via the other ISPs they connect to.

One of the things that ISPs do to add value to their service is abstract all of this away and offer consumers a flat monthly rate. Their cost structures can be complex with each byte you transfer being anything from (incrementally) free to hideously expensive for them depending on where it's coming from or going to. ISPs average out these costs and present you with a fixed cost at the end of the month, reasonably adding a margin on top for their own profit.

But ISPs can also do a lot to make these bytes cheaper. In our example above, if the two ISPs in the UK and Japan found that a lot of their customers were transferring data between themselves, they could create a connection between themselves and sign a peering agreement. Peering, unlike transit, is free, but only transfers data between the two peers - it won't forward it on to the rest of the Internet, and they'll have to continue using transit agreements for that. If the cost of maintaining a direct connection between the two peers becomes less than what the big ISP is charging them for transit, they can cut out the middle-man and increase their profit margins by peering, probably giving their users faster service while they're at it.

This wonderful, elegant and simple system of peering and transit - one free, one paid for - has allowed the Internet to grow as fast as it does by giving anyone an incentive to lay down a connection wherever there is demand for it. Any shrewd businessman can start out small in the ISP market by getting some customers and buying transit off one of the big boys, and grow his business by getting more customers on one end, and striking peering deals and finding cheaper transit on the other. Low barriers to entry, few externalities, no capacity for preferential exclusivity agreements - market capitalism at its absolute finest.

So we can dismiss the idea that iPlayer and YouTube are getting a free ride. Not only do they pay their ISP bills just like you and I, but their mere existence is what drives the demand for people to get hooked up in the first place. For every byte of video a BT Retail customer watches on iPlayer, iPlayer pays its ISP, the customer pays BT Retail, and through the magic of transit and peering agreements the ISPs that link the two together each get their proper cut to cover the cost of moving the data around.

So why all the complaining? If iPlayer causes increased traffic, but that traffic is paid for on both ends, what's everyone complaining about? If you've been reading carefully, you've probably already spotted it: BT Retail charges a fixed monthly fee to their customers. Up until very recently, this fee was based on your connection speed - an 8 megabit connection goes for about £10/month, a 16 megabit connection goes for £15, etc. BT Retail, like all ISPs, arrived at this number by figuring the cost of its infrastructure and adding on the transit fees it has to pay to the ISPs it connects to and dividing it by the number of users, adding in a profit margin - with competitive forces keeping that margin narrow and driving prices down.

An 8 megabit (per second) broadband line can theoretically transfer 1 megabyte (1 byte = 8 bits) per second, or 60 megabytes per minute, 3.6 gigabytes per hour, 86.4 gigabytes per day, so about 2.6 terrabytes of data a month. For traditional "unmetered" broadband, your 10 quid a month theoretically allowed you to download all of this. In practise, most users will download only a tiny fraction, with their broadband lines sitting idle most of the time - not just because they'd have nowhere to put all that data, but also because there just isn't that much stuff out there they want. Before MP3s, this fraction added up to maybe a few dozen megabytes per month. Before YouTube and iPlayer, perhaps up to a gigabyte. However, now that we use the Internet for video, and you can rent HD movies clocking in at 5-10 gigabytes each from iTunes (let alone download them for free off BitTorrent, which actually costs your ISP twice as much since you're uploading them at the same time) it's completely reasonable for an average home user to download 20, 30 or 100 gigabytes in a month.

So the problem has nothing to do with content providers getting a free ride - it's more to do with ISPs charging you by your connection's theoretical maximum speed (which most users are unlikely to ever see anyway) when their costs depend on the actual amount of data transferred, all the while assuming you'd only use about 0.01% of the actual capacity. When you suddenly increase your usage a hundredfold to 1% of your line's capacity because you've gone from sending e-mails and reading the news to watching YouTube and iPlayer, their transit fees go up but your access fee stays the same.

That's nobody's fault but your own, Mr. Petter, and whining about the content providers will achieve nothing. For years you've been trying to upsell people to 2, 4, 8, 16, 24 megabit connections that they had no use for by assuming they'd use about a hundredth of a percent of the bandwidth they were buying, and when the supply side caught up and gave them something to do with their bandwidth, you complain.

So what should ISPs do? Well, for a start, what they're already doing; if you're paying attention you'll notice that most ISPs have de-emphasized the maximum bandwidth of their connections and are already pricing them based on maximum traffic per month (so from 8 megabits per second, the headline figure is now 10 gigabytes per month). Also, what they've always been doing; if 7% of BT Retail's traffic is coming from iPlayer and it's killing them in transit fees, perhaps they should strike up a peering agreement with the Beeb and fix those costs, probably improving the experience for their users in the process as they get a direct, high-speed line to the iPlayer servers. Once that is done, you can go even further by striking a deal with iPlayer to mirror their content on local servers so it costs even less to stream it to your users.

What annoys me most about these complaints is that looking at things right now, it's the content providers that are getting the short end of the stick. Sure, BT Retail may have to adapt a little to keep its profit margins, but as I've shown above this can be done pretty easily. On the other hand, both YouTube and iPlayer are operating at a loss - one as a loss leader for Google, the other funded by the TV license fees that all UK residents who own a TV must pay - while BT Retail sells broadband to people who want it so they can access YouTube and iPlayer - and the latter don't see a penny.

If anything, it's the content providers that need a way to get a slice of the ISP's revenues, not the other way around. I've already talked about this in previous posts, but it's important to do this in a way that doesn't mess with the Internet's basic separation of content and access, or we will lose precisely that quality that makes the Internet such an innovative place. How can ISPs achieve this?

The answer is to charge content providers not for the use of their network infrastructure (which they already pay for, indirectly) but a much more important asset: Their billing system. ISPs already send you a bill for your Internet access every month. What the Internet needs is a standard - as open and egalitarian as the peering and transit system - that will allow content providers to tag on subscriptions to their content - think Wall Street Journal or Financial Times, think Spotify, think academic journals - to your ISPs bill so you don't have to enter your credit card details and get a separate bill every time you sign up to a premium content service. Set up a global clearing system (a job for the folks at Visa or SWIFT perhaps?) and everybody's happy - content providers can easily sign up subscribers, ISPs get a cut of the subscriptions for handling the billing, and users can pay for content (and even goods) on the Internet in a simple and secure way.

So, please, all you ISP managers, stop whining about free rides and get together to figure out how to make your most important asset - your billing system - available to those who need it the most.

The beginning of the end? Virgin to offer subscription-based DRM-free downloads

2009-06-15T06:11:00.000-07:00

Regular readers of this blog will know that I am a strong advocate of subscription-based, DRM-free downloads of copyrighted content, something that remains unavailable anywhere in the world today.

In a press release today, Virgin Media, the UK's largest cable provider - which also acts as an ISP for most of its subscribers - is planning to offer exactly this to their customers. The idea is, you pay Virgin a fixed monthly cost, and can download as much music as you want in a DRM-free format that is technically free to be used in any way you wish.

Now, there's a lot of faults to be found in Virgin's offering. Only one of the four major music labels - Universal Music Group - have signed up for it, though Universal is the biggest of them all. The service itself won't actually arrive until Christmas, leaving plenty of time for things to go wrong. The pricing hasn't been announced - The Register reports unnamed sources quoted a price equivalent to "a couple of albums a month", which indicates something in the neighbourhood of £15-20, which may or may not seem a bit high depending on whether other labels and indies sign up to the service, but Virgin also says that there will be a cheaper price plan that will only allow a small number of downloads per month. Finally, the service is only going to be available to customers who get their broadband from Virgin in the UK, so is hardly going to solve the problem of digital availability of content on the global scale.

There is also the fact - implied but not stated outright - that Virgin got Universal to agree to join this service on the condition that it would crack down on file sharing users on its network. With the recent ruling in France that its own three-strikes law was unconstitutional, this shows another alarming attempt by the Big Content lobby to bypass law enforcement and the judiciary and enforce copyright law themselves, but I'm going to save my paranoia until I see what actually comes of this.

Despite all of the above, which I accept as valid concerns, I still find this announcement to be as momentous as when Apple announced that the iTunes store was going DRM-free for music back in January. I have always believed that the subscription model was the way to go for music in the digital age (and, possibly, video and text as well, though these are less clear-cut) but all attempts at implementing this in the past decade or so have been hampered by DRM files that would only play on one or two devices and often would be useless if the service ever went out of business. Offering this service via your ISP is also a very smart move; not only does this allow ISPs to get more money from their customers in exchange for something that has real value, it also allows them to offer their users super-fast downloads at little cost to themselves since all the content will be available on their own network.

If this service gets the support of the other major labels and the indies - and I don't see why it wouldn't - it will essentially be what everyone wants: File sharing without the hassle. You will get access to the musical cornucopia that we were first exposed to 12 years ago with the original Napster, except this time not only will it be legal, it will also mean high-quality, properly labeled, virus-free files that download almost instantly and don't cripple your Internet connection for days. I'd pay a tenner a month for that service in an instant - too bad I'm not a Virgin subscriber!

The most important thing this service will achieve, however, is to allay the baseless fears of Big Content that it will lead to the massive pirating of their copyrighted material. Astute readers will probably have already noted that this won't happen because it already has even without these services. The music labels have nothing to lose by offering these easily copied files to people because easily copied files are already out there - just not from any source that earns them revenue.

Will some people freeload? Sure, but people already do that, and usually out of necessity, not choice - and if the price is right most people will go for the convenience and safety of paying the subscription and enjoying their music, knowing that the cost is controlled and that they can go and sample new artists without getting charged extra. When their hard drives fill up, they can delete their seldom-played music safe in the knowledge that they can download it again if they ever change their mind at no extra cost. This is the way it was always supposed to be, even if it took the music industry thirteen years to get here.

Virgin's service isn't going to put all those BitTorrent trackers out of business overnight, since the vast majority of music listeners will have no access to it or anything similar, but I believe that once the floodgates open, similar services will soon launch that will be available to more people. I would not be surprised if the labels band together and offer any ISP the chance to start such a service with an easy package and well-defined costs, thereby solving everyone's problems with one go - the labels make money from people downloading their music, while the ISPs no longer see their expensive transit pipes clogged with P2P traffic and finally manage to raise their infamous ARPU with an extra service that people may actually be willing to pay for.

Personally I'm keeping a very interested eye on the movie industry at the moment. As broadband speeds have increased to make video delivery over the internet possible, the TV (production) and movie industries find themselves in the same place the music industry was a decade ago, but rather frustratingly they seem to be repeating the same mistakes the labels made: offering DRM-ridden files that can only be played in your web browser when most people prefer to enjoy their video on their big screen TVs while sitting on the sofa. The different usage patterns of video - you tend to watch TV shows and movies only once, and never more than a handful of times, while you will listen to most of your music countless times - may mean the model will have to be slightly different. The final question is how the publishing industry - still fumbling in the dark with the Amazon Kindle and similar limited solutions - might join the game if this becomes the norm in digital distribution.

As of today, I live in hope.

Paying the piper, having your cake and eating it too

2009-05-12T08:56:00.000-07:00

A few posts ago I talked about telephone price plans and how ridiculous they are if you compare them to broadband price plans. I've also talked about how (legal) digital download services like iTunes and Hulu are flawed in their business models. Recently, we've all been hearing news of doom and gloom from the newspaper industry which is still trying to find its place in a world of bloggers and free online news. Just this week, the Wall Street Journal announced it is trying a new micropayment system. In this blog post, I'll try and put all that together and propose a solution to all of these industries' problems.

With broadband, you pay a flat fee and get "the whole Internet." With phones, you get charged per call, text message, or anything else you do. The reason telephone companies do this is because, since just about every person in the developed world has a mobile phone by now, the only way they can grow their business is by raising what's called average revenue per user, or ARPU, and they have been trying to do this by persuading users to pay for so-called "premium" services - overseas calling, video calling, ringtones, you name it. The trouble with this plan is that people are very inflexible about how much they're willing to pay! Users have a more or less fixed budget for their telecoms needs, and only when the cost of having a phone drops beneath it do they stump up the cash. They are rarely, if ever, drawn to premium services until they fall within that budget.

Of course, this isn't the whole picture. Most phone companies offer you bulk price plans that allow you to pay a fixed fee every month for (one hopes) enough talk time, text messages and data traffic for your needs. Broadband providers, on the other hand, are slowly (and sanely) transitioning from a model where the price is based on the speed of the line to your home (8 megabit, 16 megabit etc.) to the amount of data you download (3 gigabytes per month, 10 gigabytes per month and so on).

The reason the broadband providers have such a simpler model for the customer is because they have a much better model for sharing the costs between themselves. I won't go into the details, but the system of peering and transit that governs who pays whom to get packets across the Internet is a wonderfully simple and elegant system that allows anyone to lay down some cables and build a data centre and start making money if he's helping grow the network. It won't be long before the Internet gobbles up the telephone network and they become one and the same. As I have said before, I firmly believe the internet model will prevail. Still, broadband providers have the same problem as phone companies - when everybody has broadband and won't pay for more services unless they become as cheap as what they get today, how do you grow your business?

Telecoms companies move the bits around with no regard as to what they contain and what the cost is of producing them - and this is a Good Thing. They invest in network infrastructure and present (or, in the case of telephone companies, should present) consumers with simple price structures: $15/month for low usage, $25/month for high usage or $50/month for unlimited usage, whatever that means. It's up to them to build their networks and strike deals with other networks to make the profits out of that.

Of course, this still leaves everyone stumped for a higher ARPU. The reason is because they're ignoring both the biggest problem with the Internet and the biggest asset both ISPs and telcos have that can fix the problem. When I was talking about telecos and their insane pricing, I mentioned there was a way they could make more money - and here it is.

The problem is that everything I've been talking about covers the cost of moving all this information around, but nobody has found a good way of covering the cost of producing this information in the first place.

Video footage shot from a home camera of something trivial can be several gigabytes in size. A scientific research paper could be just a few kilobytes - millions of times smaller, and hence cheaper to move around - than that video. However, the cost of producing the research paper can easily be a million times the cost of producing the video if it is the product of years of laboratory research. If that video was instead a major Hollywood movie - the same size as your home video - it would again have cost millions to produce.

When I lambasted Big Content for their pitiful attempts at providing legal downloads of music and video (this applies to text too) I mentioned how the lack of tiered price plans was a major disincentive. You see, tiered price plans aren't just there for simplicity and consistency. If you're on a prepaid plan, it means you don't have to make a purchasing decision every time you want to use the service. My satellite TV subscription means I don't have to worry about the incremental cost every time I want to watch a movie. My mobile talk time plan means I don't have to worry about the incremental cost every time I make a phone call. This is value above and beyond the discount that these bulk price plans offer over pay-per-use price plans. Time and again, consumers have shown that they like the idea of paying a flat monthly fee and not worrying about anything else.

What they should offer me is a subscription that I will choose based on my usage habits - am I movie freak or a two-a-year guy? Am I a news junkie or did I just pop in to check out something interesting?

Who can offer me this service? You guessed it, the same people that get the data to me in the first place. Why does this make sense? Because they already control the billing! I have a price plan for data to my home and a price plan for data to my mobile phone, I get the bills and they get paid from my bank account, or if my credit rating is crap I can pre-pay. We've already established that most people won't pay above and beyond the standard $10, $20 or so a month for these services. However, if the data providers open up their billing structure, and allow the content providers of this world to charge for their content, they can take a cut of that - and everybody makes more money. Techically, this couldn't be simpler - the same company that delivers the data to your house or mobile device can charge you for accessing the expensive, copyrighted content.

This is not a new idea - Japan's NTT DoCoMo has applied it very successfully in its i-mode system (though when telcos tried to bring that technology over to Europe they made a horrible mess of it), Qualcomm has had the ill-fated BREW platform that had a bit of traction with Verizon, and just this week Vodafone announced that it will be offering a similar service as part of the efforts coming out of the Joint Innovation Lab (with partners Softbank and China Mobile). Hopefully they can make this stick - opening up their billing structure is the only way mobile operators can increase their ARPU, and if this happens they'll abandon their hopeless campaign to charge us for so-called "premium" services that you can get for free on the Internet. What the ISPs of this world need to do is get in on this action so that I can use the same mechanism to pay for content on my mobile device as I do on the devices (computer, TV, whatever) in my home.

In order to entice users to flock to this service, however, they need to aggregate big bags of content, grouped roughly by the cost of producing it (all movies in one place; all TV shows in one place; all music in one place; all news in one place; all science papers in one place) and offer tiered price plans.

It makes little sense for your telecoms provider to charge you different rates for different types of content, when it's all bits and bytes to them. It makes even less sense that the producers of this content have no easy way of recouping their costs when they make this information available on the Internet. With this model, the telecoms companies offer aggregation and billing, linking the creators with the consumers in a friendly price plan.

The content creators can put their stuff on the Internet knowing not only that regular users will consume it, but that casual users can stumble upon it as easily as a YouTube video - because it's included in their monthly plan, these casual visits are hassle-free for the end user and still monetised by the producer. The search engines, academic institutions and aggregators can access all this premium content for a flat fee - and possibly make money from referals too, if their service helps people get to the content. And finally, the telcos get a fair cut for providing their billing services and connecting the creators to the consumers, in addition to charging people for the privilege of using their network to move all those bits around as they do already.

Let's see how long it takes the content and telecoms industries to get this system up and running - and for everybody to start making money from producing content again. Anybody got odds on the next decade?

Apple partnering with Verizon? I don't think so

2009-04-28T03:47:00.000-07:00

It's that time of the year again - Apple's Worldwide Developer Conference (WWDC) is coming up and the rumour mill is spinning like a dervish on speed. One of the rumours gaining a lot of traction, reported by USA Today, is that Apple is going to partner with Verizon for a new mobile device. In case you're wondering, this isn't going to happen.

Verizon (and Sprint) use a mobile technology that is incompatible with (roughly) the rest of the world, including the other two US mobile carriers (AT&T and T-Mobile). In fact, Amazon's decision to use Sprint's network for its Kindle e-book reader is the main reason that device is only available in the US right now - and will require significant re-engineering before it can work anywhere else. I seriously doubt Apple will decide to develop hardware that only works in the US when it has already committed to the worldwide GSM standard with the iPhone, in fact Apple COO Tim Cook specifically said so in the recent analyst conference call when Apple's quarterly results were announced. What probably sparked the USA Today rumour is an earlier statement by Verizon CEO Ivan Seidenberg to the Wall Street Journal about possible co-operation with Apple; not only do I think that's wishful thinking on his part, he was talking about the time (a couple of years from now) when Verizon moves to the new LTE standard that will finally bring them in line with the rest of the world.

But hey, any run-up to a major Apple conference is when the speculators go crazy, and the analysts feed the frenzy. One of the clips Jon Stewart used in his infamous Jim Cramer interview specifically mentioned Apple conferences and how speculative trading makes AAPL jump up and down as rumours are first reported, then spread, then refuted, then finally confirmed or denied. Just in case you were wondering, the crap that brought about the credit crunch is still around and no stimulus package is going to make it go away. I don't trade, and I won't offer you any advice as to how to make money off this, but perhaps it's an illustration of how broken the financial system is. In the end it doesn't matter if the rumour is obviously false - the traders will have their fun (and risk your money) with it anyway.

The noise about Apple and carriers is not limited to Verizon, however; Apple's exclusivity deal with AT&T is due to expire next year and the buzz on the street is that AT&T is anxious to extend it. At a personal level I'm against it; the fact that the iPhone is tied to specific carriers has caused me no end of grief as an iPhone user, first because I'm tied to a different carrier and second because I often travel abroad and like to use my iPhone with local carriers. I can, however, understand why Apple signed a deal with the devil in the first place - they needed a solid data network and a reasonable price plan to launch the damn thing (otherwise everybody would be complaining about slow network access and dropped connections, which I often get on my non-Apple-approved carrier), and they needed carrier co-operation to launch some features like Visual Voicemail.

But this is not 2007, we're not in Kansas anymore and Apple has done the impossible: Made the wireless carriers go to handset manufacturers begging for them to bless the networks with their phones instead of the other way around. Before the iPhone, it was the Nokias and Motorolas of this world who had to go to the carriers and have their designs approved before they built them, because the carriers were the sales channel. Everybody thought that this was now the way of the world, because (short-lived fads like the original Motorola RAZR notwithstanding) very few mobile phone users actually set out to buy a specific handset; they got a list of subsidised handsets from their carrier and picked one. If Vodafone didn't put Nokia's new gadget on its list, Nokia wouldn't sell in any volume.

Apple changed all that; for the first time in years they managed to create a handset that users wanted. For the first time, people went shopping for iPhones and signed up for AT&T service because it comes tied with the phone instead of going shopping for AT&T service and getting whatever handset was tied to that; the balance of power has shifted perceptibly, and AT&T has seen a huge boost in subscriber numbers clearly attributable to the iPhone. Apple probably has enough clout already to tell AT&T and all its other partners to go hang and sell the iPhone to all comers, but knowing how protective it is of its seamless end-user experience I think they'll be extending the AT&T contract for a while - but don't be surprised if they attach a few conditions to that now that they have the leverage.

Specifically, Apple will be looking at network upgrades to ensure AT&T's network gets better data speeds by deploying new technologies faster. I also wouldn't be suprised if they argued for cheaper price plans (I talked about how ridiculous those are in my last post) especially when it comes to data roaming and text messaging. More importantly than that, many of the things the iPhone could do are currently disallowed because the carriers don't like them. Remember when the iPhone originally launched and you couldn't buy music unless you were connected to a WiFi network? This was because the carriers viewed the iTunes store as competition for their own (overpriced and generally disappointing) music stores. The carriers have relented on the music purchasing thing since, but other items like instant messaging, audio and video chat and anything else that the carriers offer or would like to offer as a premium service are no-nos because if they go over the data network, the carriers can't charge extra for them.

Sadly for the carriers, that business model will never fly. Experience has taught us that most users have a fixed budget for their mobile phone and won't use newfangled services until the price drops to within that budget. The carriers have to accept that what they sell is bandwidth, and what users choose to do with that bandwidth will eventually be none of their business - just like the way it works with home broadband providers (or at least, the saner ones). As we saw last time, the carriers have a government-mandated monopoly of the namespace (phone numbers); they also have a government-mandated monopoly on the network layer (spectrum licenses) so up until now they've been resisting the deployment of all these services in order to protect their business model, desperately trying to find the premium features that will make users spend more on their phone bills. Expecting them to realise the futility of this approach is probably asking too much, but with Apple (and others close behind) pushing them from the handset front and VoIP providers pushing them from the services front they will eventually have to relent (there is a service the carriers can offer that can make them more money, but it's not along the lines any of them are thinking - and I'll deal with that in the future).

So, don't expect Apple to be partnering with Verizon until the latter has a functioning LTE network, which could be several years down the line. Expect Apple to renew its exclusivity agreement with AT&T for a couple of years longer, but also expect it to attach some conditions to the agreement that no carrier would have accepted a couple of years ago. When that exclusivity agreement runs out, if Apple continues to have this unbelievable momentum in the mobile space that it has today, expect it to shake AT&T down for all it's worth - and probably do the Right Thing and start selling iPhones to all the carriers.

How much are you paying for a number?

2009-04-23T08:24:00.000-07:00

A friend of mine who lives in Athens is in New York this week, and last night he called me (I'm in London). We chatted for about half an hour on our mobile phones.

Now if this was a regular mobile-to-mobile call, it would probably have cost him somewhere north of 100€ considering he's roaming and calling abroad. Instead, we both used the Skype app on our iPhones, so the incremental cost of the call to either of us was zero - though his host and I still, of course, pay a flat monthly fee for broadband to make this possible; I try to be careful about throwing the term "free" around!

There's something wrong with this picture and a lot of people are beginning to realise this. It's been true for years that two people with Internet connections can talk - even video chat - for as long as they want without paying a dime above their flat Internet access rate, regardless of where they are in the world. Doing this on a plain old telephone, for some reason, costs an arm and a leg. Doing it on a mobile phone, well, just don't ask.

Not that mobile pricing makes any sense anyway. If I pay T-mobile UK £5 a month I can download up to 3 gigabytes (a little over 3.2 billion bytes) of data to my phone. For the same price (actually £1 more, but I'll cut them some slack), I get 100 text messages, each limited to 140 bytes. That's 14 thousand bytes. What I'm trying to understand here is why text messages are two hundred and thirty thousand times more expensive than Internet traffic in T-mobile's price plan. Anybody got an answer? Didn't think so.

Now that the Internet has reached mobile devices and appliances, and mobile and landline cordless phones come with VoIP software, people are realising the ridiculousness of traditional phone pricing. The most ridiculous thing about it is that most services are priced out of the market. What's the point of offering me the ability to roam, or make video calls, or send picture messages with my mobile phone at a cost so high I'm just going to end up not doing it? Nobody I know ever uses his phone's video calling features even though they're standard on most phones today. Almost everybody I know who spends more than a couple of days abroad usually buys a local SIM card for their phone, neatly side-stepping the issue at the cost of the slight inconvenience of not being able to use his phone number.

Which brings us to the crux of the problem: The reason the dinosaur telcos haven't been eaten alive by these VoIP startups already is because they control the all-important namespace: The telephone numbers. Even though anybody can route phone calls (or video calls, or text messages, or emails, or anything else for that matter) over the Internet for trivial costs, the minute you want one of those old-fashioned phone numbers at either end of the call you have to deal with telcos and their ridiculous pricing models.

This whole thing with the phone numbers is really stupid anyway. I get very poor mobile reception at home but I still don't want to use my landline for several reasons: First, I need to give people two numbers, and they have to bother trying them both. Second, there's a privacy issue - just because I'm willing to take your call doesn't mean I want you to know I'm at home right now. Third, I'd have to get a second voicemail, second missed-call list, second everything. The list goes on, but what it all boils down to is that although I like having a landline phone (because of reception, but also because I can have a handset with big buttons, a big screen and a big battery since it doesn't have to fit in my pocket) I can't live with the idea of a landine phone number.

Not that I want one number to rule them all and in the darkness bind them. There's a flip side to this; a colleague of mine, who is also a personal friend, has a mobile phone from work that she uses for work calls and her own personal phone for personal calls. She has to carry both around with her, keep them charged, turn them to silent at the same time, and for several people who have both of her numbers this leads to no end of confusion and frustration. She has the opposite problem: She needs two phone numbers but is inconvenienced by the need to have two phones.

This strong tying of device to phone number is completely unnecessary in this day and age. Just like you can have 5 different email addresses but read all of them from your home computer, your work computer, your laptop and your phone, you should be able to have any number of phone numbers (one for work, one for the part-time job, one for close friends, one for your mother-in-law that just goes straight to voicemail) and be able to make and receive calls on them from any phone you own. If you're living in today's imperfect world of telco dinosaurs and you happen to live in a different country to where you grew up, it would also be nice if you could have a number in each country and route between them over the Internet so your family could call you without paying exhorbitant fees.

Well guess what? Now you can. Google Voice, the re-branded name for a company Google bought a few months ago that used to be called Grand Central, has just launched - although presently just for old Grand Central users - and offers you just what I described: As many numbers as you want, as many devices as you want, in any combination you want.

Unfortunately the dinosaurs are still around, and this is only possible in the United States. Why? Because in the US it's the norm for mobile phone (excuse me, "cellphone") users to pay for incoming calls, which Google Voice can continue to do - the termination charges that are the norm in the rest of the world would quickly put Google out of pocket to the dinosaurs quickly.

So it's here, but not quite yet - and unfortunately, not quite complete. The next logical step is to be able to merge these phone numbers (and why does it have to be a number? Can't it look like an email address or domain name instead, so it's easier to remember?) so that I can use it for IM, email, even this blog. What we need is an online identity system with a matching namespace - not so everyone can have a unique public ID, but so everyone can have as many public IDs as they want but be able to access them all from anywhere. One day the dinosaurs will wake up, or even better, be eaten up. In the mean time, you can reach me at one of the following twenty numbers, addresses and IM handles...

How to make people pay for music and video in 3 easy steps

2009-04-22T07:24:00.000-07:00

A study was published today that shows how people who download music from peer-to-peer networks are actually the biggest spenders on legal music. Most media reports characterise this as "surprising", but I am just surprised at everyone's surprise. My own experience shows this to be true - the same people that download music and video from P2P sites are the ones that buy CDs, legal downloads and DVDs in large quantities. The explanation is simple - though price is a factor, most people download from P2P sites not because doing so is free, but because it's more convenient, and usually the only option.

I've often said that the music industry has offered no credible alternative to P2P sites, and I stand by that statement. Many people bring up iTunes, Hulu, Amazon MP3 et al as counter-examples, but these services can never compete with P2P because they are horribly crippled. In order to get the majority of P2P users off the file sharing networks and back into the world of paid music and downloads, you need to offer everything P2P networks offer, and a few things they don't, and can't.

Nobody likes using P2P services. They're slow, they cripple your internet connection (because unlike legal sites they use the upstream part of your broadband connection which is normally several times slower than the downstream part) the files are mislabeled and hard to find, you often get trojans, and although the availability cross-section is different to the legal sites, they're still a lot of stuff that's hard to find. Not to mention, it's illegal, and this matters to a lot of people because of personal ethics as well as an increasingly realistic fear of prosecution.

Here are the three simple things that digital download services need to offer to be competitive with P2P:

1. Sell globally, sell instantly

All the legal download services are initially offered in the US, then slowly trickle down to major European and Asian countries, and (we hope!) eventually to the rest of the world. To compound the problem, all of these services have regional variations in availability - some things are available in some countries but not in others. Meanwhile the vast majority of music consumers have to go to P2P sites because legal downloads are still unavailable in their country. Big Content needs to offer a service that sells to anyone with an Internet connection regardless of which country they live in.

Also, forget about this nonsense of staggered releases. If you release to CD first and to MP3/iTunes second, or to pay-per-view first, DVD second and iTunes third, then everyone will just go to a P2P site and download the rip instead of waiting for you to release it in the format he wants.

2. Lower costs and offer bulk price plans

There's no two ways about it, digital download services are too expensive. Way, way too expensive. I can get a satellite subscription from Sky for £16.50/month and watch, say, two hours of TV every evening - doing the same by buying content off the iTunes Store will cost me about £130/month. I can pay an extra £17/month and watch, say, one movie a night (ad-free!) on Sky Movies. Renting these movies on iTunes will cost me around £150 a month. Of course, nothing's stopping me from watching even more on Sky for the same £17-40/month - in which case iTunes goes from being 10 times more expensive to 20 or 30 for someone who really likes his TV. Yet somehow Sky seems to be profitable for everyone, but still several times cheaper than iTunes.

Additionally, what Sky offers me that iTunes doesn't is the ability to sample content at no incremental cost. If I want to check out a show or a movie I'm not sure about, I can do that without paying for something I might not like as long as my subscription is active. What I should be able to do in iTunes is sign up for a monthly price plan where I can get, say, 50 TV episodes and 20 movies a month at a cheaper price than if I paid for them individually - similar to the way your mobile phone bill works. This way I would be able to spend my unused quota on sampling new things that I am now reluctant to buy. Heavy users would opt for a monthly plan, while occasional users can still cherry-pick content and pay per download.

3. Remove copy protection

Copy protection (what Big Content euphemistically calls "Digital Rights Management" or DRM) is the most ridiculous idea ever. As any computer scientist will tell you, preventing copying is impossible - you can only make it convoluted and hard, but any determined person will eventually circumvent this because playing a file is, as far as a computer is concerned, the same thing as copying it, and you can't prevent one without preventing the other. The only result of offering files with DRM is that users will be unable to copy them between their own devices - portable music players, set-top boxes, their second computer or whatever comes up later on - or use them with their own choice of software, which means they'll just go download the same file, DRM-free, from a P2P site instead.

In 2009, the music industry finally woke up to this fact after a decade of fighting with failed DRM scheme after failed DRM scheme. All music purchases from major online stores are now DRM-free, but videos are still encumbered with the same stupid schemes. Why can't I play iTunes videos on my Playstation 3? Why can't I watch Hulu.com shows on my Apple TV? Because of DRM, which stops me doing all these things with my legally purchased videos but has spectacularly failed to stop these same videos being available on P2P sites - in formats that allow me to play them anywhere.

These three simple things have to be done before legal download services offer a credible alternative to P2P networks. There's more you could do (for instance, iTunes could remember which movies I've bought so that they can stop taking up space on my hard drive, and I can just download them again when I decide to re-watch them) but these three things are absolutely essential in order to de-cripple legal download services.

Until Big Content wises up to this, people will continue to flock to P2P sites that offer them content they can't get from a legal service in a usable format at anything approaching a reasonable price - if at all.

Oracle buys Sun (and why I'd rather it was IBM)

2009-04-21T07:34:00.001-07:00

Few IT companies command more respect from me than IBM. Although it has, in the distant past, been a bit of a dinosaur, I think they have the healthiest approach to technology of any major player today. They've managed to reform an antiquated behemoth of a company as it existed in the early 90s into a robust business built around services and high-end research. The two things I admire most about them:

1. They don't exhibit technology ownership paranoia. They have repeatedly embraced technologies without trying to control, limit and guide them for their own purposes. The communities they have built around Linux, Java (and especially Eclipse) and many other technologies tell me that they understand that it's best to have a piece of a big cake than all of a cookie. Even in markets that they compete in (AIX, DB2, POWER) their services arm is more than happy to use a third party or open source alternative if it best suits the needs of the project.

2. They're not afraid to cull failing businesses. Their ThinkPads were my favourite brand of non-Mac laptops and had a sterling reputation and considerable market share, but the division was still losing money. IBM were shrewd enough to realise that the PC business (Apple's high-margin niche notwithstanding) was irrevocably commoditised. When you're getting killed by cheap Chinese manufacturers, it's best to pack up and leave the building, and that's what they did: Sold the PC division to Lenovo. The company that introduced the PC got out of the PC business, just like that - because it made sense, and any desire to hold on to the past in a futile attempt to maintain the status quo just didn't figure in the decision. Applause all round.

I'm also a big fan of a lot of technologies that have come out of Sun Microsystems; most notably Java, but also DTrace and ZFS. However, I've never been a fan of the company itself - they've come up with all this wonderful technology over the years but have not only failed to find ways to make it prosper (for them and for the world at large), but usually actively bungled things in spectacular ways. This hasn't been helped by their tendency to change strategy on everything every six months. This hilarious little doodle from Ars Technica really says it all:

Image from Ars Technica, linked without permission.

So I was quite disheartened by the fact that Oracle, not IBM (who made an initial offer a few days ago), will end up owning Sun and all the wonderful technologies that have suffered under its stewardship. I am ambivalent about this; though I have great respect for Oracle and its products, and it's also a company that embraces third-party technologies with openness (Java and Linux have both benefited greatly from Oracle's support), it is still a company built around a rather inflexible business model of selling high-cost software licenses for big, monolithic applications. The prospects of Java and ZFS on the desktop, which I'd really like to see because I think they have great potential to revolutionise how we develop software and how we store our data, will probably languish under Oracle's stewardship as it focuses solely on the enterprise.

Still, it could be worse. Anything is better than what Sun has been doing with its crown jewels the past few years, and hey, at least it's not Microsoft!

Missing the point entirely - The Pirate Bay verdict

2009-04-20T09:02:00.001-07:00

You have to wonder about what passes for a legal system in most western democracies these days.

As you probably know, the operators of The Pirate Bay, one of the Internet's most prolific BitTorrent trackers, were given jail time and multi-million-dollar fines after being found guilty of aiding copyright infringement in a Swedish court.

The music and film industry is patting itself on the back and the freetards of the blogosphere are screaming bloody murder. I think they both need to be hit with a clue bat, but I'll start with the freetards.

I am not a lawyer, much less an expert on Swedish copyright law, but I vaguely understand the concept of secondary liability. In other words, if you start a tracker called The Pirate Bay, encourage people to post copyrighted materials on it and create a culture that thumbs its nose at any attempt to curb what is clearly illegal behaviour, you can't complain when you're sued and convicted. TPB is not WikiLeaks. It's a site built and run for the purpose of sharing copyrighted material on a massive scale, and claiming anything else is just wishful thinking. Yes, a knife has significant non-infringing uses, but if you open a knife store called The Stabber's Cove in the middle of a gang district and refuse to help the police when they investigate the murders that 90% of your knives are used for, you can't play the angel.

Not that I'm equating copyright infringement with murder, which brings me to the Big Content lobby and their smug gloating.

Jail time? Millions in damages? These guys ran a torrent tracker and were a little belligerent. People get off with less for armed robbery. You're just victimising and giving free media exposure to three guys in Sweden who were mostly having a laugh.

Copyright infringement is not piracy. You might as well call it rape or high treason. Piracy is murder on the high seas, and you show no respect for all the people who have died in the Gulf of Aden or the Straight of Malacca when you paint someone who copies a pop album or a Hollywood movie in the same brush as warlords that board ships with automatic weapons in order to kill, steal and hold people for ransom. Piracy is a violent act of theft, and copyright infringement is nothing of the sort.

Punishing copyright infringement with the severity that we have seen recently is deplorable, and indicates a complete lack of effectiveness of all our various legal systems. This is compounded by the scare tactics that Big Content has employed recently, bullying file sharers with cease-and-desist letters that come with demands for hefty settlement fees without any regard for due process. 12 years after Napster, the music, movie and publishing industries still offer no credible alternative to file sharing, and until they do they should stop spending money on litigation and start spending money on developing a digital distribution mechanism worth using.