Tag Archives: business

Stuck in the Middle with Neil

Oy. Neil McAllister is at it again, saving the online world by describing how Mom & Pop shops can compete with the Amazons of the world. With retail giants like Tesco and even Sears building out programming interfaces (APIs) that will allow people to buy mattresses and microwave ovens with their mobile phones (srsly. ed.) , he claims that small businesses are more vulnerable than ever.

(You know, I once thought Fatal Exception was a quirky title for a column, but now I realise it’s just an accurate description of the cognitive processes of its author.)

McAllister writes:

Ask any company that hosts an open source software project how many outsiders actually commit code changes on a regular basis and you’re likely to hear a discouraging figure.

His conclusion is that low uptake makes opening APIs a high risk activity. That’s as may be, but isn’t it equally possible that these organisations aren’t successful because they’re doing it wrong?

Unless I have some kind of moral ownership stake in the project (such as I might have if I maintained a Linux software package, for example) what incentive to I have to invest my time? I understand the reasons for it, but many large businesses today are notoriously unreliable when it comes to strategy. Driven as they are by quarterly returns and subject to the whim of an increasingly sociopathic class of managers driven by MBA culture to abstract all decisions into monetary terms, why in the hell should I, the lowly FOSS developer, want to hitch my wagon to their star?

(More accurately, they’re asking me to hitch my horse to their wagon, without giving me any say on the destination or even the route.)

There are a few organisations who really get how community relations and management work, but they are a tiny minority. The overwhelming majority baulk when they come to the realisation that FOSS means sharing ownership and control.

None of this is news to us geeks. What gets me riled up about this article is that someone who should know better spends his time chiding FOSS processes for being inappropriate to business status quo instead of explaining to business how they’ve got to adapt to a new set of circumstances.

The reason McAllister doesn’t want to say that is because he’s holding out for a new set of actors in the online world: Middlemen who build out standardised (but presumably proprietary) API and data management services for small and medium businesses so they can keep up with the Amazons and Tescos of the world without having to build their own data infrastructure.

McAllister is, in other words, trying to reinvent the Distributor in an environment that was invented precisely to remove the need for intermediaries. My only response is to apply an aphorism from another age of commercially appropriated social phenomena: ‘You’ve come a long way, baby.‘

The Supply Question

I write for two newspapers, and love nothing more than flipping through the pages over a good cup of coffee. But I still get the vast majority of the commentary, analysis and hard news I read in a day from my computer. None of that is going to change.

That said, it’s hard to imagine how this essay by Nicholas Carr could be more wrong. While his analysis is dead on, his conclusions consist of little more than wishful thinking.

From his post:

“The fundamental problem facing the news business today does not lie in Google’s search engine. It lies in the structure of the news business itself.”

This is exactly right. The digitisation of publishing and distribution militates strongly in favour of bytes over atoms. While holding a newspaper in one’s hands is not without a certain appeal, the desire for specific information, delivered quickly and at low cost, trumps the old approach most of the time.

Carr thinks the problem is supply, and he’s right, as far as that goes. But he’s dreaming if he thinks there’s any practical way to arbitrarily limit supply in an economy defined by ubiquity and ease of access. The problem is mechanical in nature: Bytes are infinitely replicable and transportable. Reducing the number of bytes requires that we control all sources of replication and I can’t see this happening even in a police-state online environment.

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Again With the Micro-Payments

Rex Sorgatz posted a quick and dirty re-think of how micro-payments could be made to work in a present-day web-browsing scenario. Again, I question the premise of the problem micro-payment purports to solve.

My fundamental objection to online payment is that most people won’t pay for something of unknown value. Speaking for myself (and a few others I know), the moment a website starts putting obstacles between me and the content I want to access, it’s easier for me to move on than it is to leap whatever interface hurdles are barring my path.

That’s because:

  1. I refuse to buy something sight unseen. In the material world, I can at least take a look at the package and compare with a few competing products before I pull out my wallet. On the Web, I can’t really know whether something is worthwhile until I’ve had a look. For a bit of writing of less than 5000 words, that means I need to see most – if not all – of it before I decide what it’s worth to me. For a short video, that means all of it. (The mere idea of a trailer for a 15 minute video makes me shudder.)
  2. The whole point of micro-payment is that the amount is ‘throw-away’ money. Increments so small that we don’t even have to think about it. Forcing someone through the UI equivalent of a toll booth creates an impediment that’s out of scale with the benefit.
  3. As I mentioned before: Online payment is not really payment, it’s reward. So much comes free with the price of admission (i.e. an Internet connection) that the only way we can assess the value of content is in the context of a gift economy. Think of it as a pay-as-you-exit performance, or busking, if you like. Modulo a few stingy, poorly socialised freeloaders, anyone who really enjoyed the show will happily toss a few coins into the hat. But not before they’ve seen the show.

To sum up: It’s best to leave interface and program flow issues alone until we’ve established the proper intellectual framework. Conceptualising a rewards system generates very diffierent results than a payment system. Given that reward and payment systems are both easily circumvented, the only thing we can rely on is the visitor’s goodwill. Place a little box at the exit, allow people to click right past it if they want, and you’ll never have any complaints about access to data.

More to the point, everyone who gives, gives gladly. This is more than just a moral point. The importance of goodwill from one’s website visitors cannot be understated. Remember: karma comes first, reward later, when it comes to online success. In fact, karma is the primary reward. Cash is just a symbolic representation of the goodwill people feel toward you.

P.S. If we’re honest with ourselves, we can accept that others’ failure to give us money is not an interface failure, nor is it a failure in their judgement. For better or for worse, if people aren’t willing to give money of their free will, then the failing is ours, not theirs.

I suspect that some manifestation of the Endowment Effect underlies most efforts to control access to online content. It’s irrational in the online context, but it’s human nonetheless to say, “I worked hard to produce this. I have a right to be paid for it.”

Those of us who have more or less grown up online have fewer reservations about the benefits of sharing content without precondition, and I suspect such expectations will become the norm for at least a significant subset of society before too very long.

Boom or Bust?

[This week’s Communications column for the Vanuatu Independent.]

We need fiber, and we need it soon.

No, I’m not talking about changing the nation’s diet. I’m talking about fiber-optic cable. Made of very long strands of glass fiber, this kind of cable has the unique ability to allow light to turn corners. This means that we can shoot tiny laser pulses into one end of it and have them emerge intact from the other end, even if it’s thousands of kilometers away.

The result? Fast, very high-capacity communications become possible. In laboratory experiments, researchers have achieved rates of up to 14 trillion bits of data per second. Current commercial implementations don’t go nearly that fast, but even a single thread of fiber a few millimeters wide can carry billions of bits every second. Just a few strands would be enough to increase Vanuatu’s total available bandwidth to a large multiple of its current capacity.

So what’s the catch? Why haven’t we invested in a fiber connection yet? Fiji has it, and so does New Caledonia. Why not Vanuatu?

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The Rules

[Originally published in the Vanuatu Daily Post’s Weekender Edition.]

There is only one thing worse than a badly played football match: a badly refereed match.

What makes a bad referee? Players the world over agree that it’s not strictness or laxity; what makes a referee really bad is when he’s inconsistent and unpredictable. The ref consistently calls offsides in favour of the defence? Not great for the strikers, but a team can adjust and try different approaches to the net. The ref calls them consistently in favour of the offence? Drop the zone defence and mark your man carefully.

But when neither team knows how the play will be called, it creates uncertainty, which leads to sloppy play and sometimes a little opportunistic cheating, hoping that this time the ref won’t call a questionable play.

This principle applies everywhere. In numerous business surveys, company leaders consistently report that continuity and predictability in economic management and government affairs matter more to them than the economic structures themselves.

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Island Hopping

[This week’s Communications column for the Vanuatu Independent.]

Denis O’Brien, owner of the Digicel Group, graces the cover of the August 11th issue of Forbes Magazine. Their profile, titled ‘Babble Rouser’, begins with a tone of detached and vaguely supercilious astonishment at the risks that Digicel has incurred in the course of its lightning-quick expansion across the island nations of the world. It quickly sobers, though, when it reports that the Digicel Group earned $505 million in operating profit on $1.6 billion in revenue in the financial year ending March, 2008.

Forbes leaves it to O’Brien himself to explain his damn-the-torpedoes philosophy:

“Get big fast. [Damn] the cost. Be brave. Go over the cliff. [The competition] doesn’t have the balls.”

I suspect he used some word other than ‘damn’.

Most anyone would enjoy downing a beer with the honey-tongued chancer from Cork, but Denis O’Brien didn’t make the cover of Forbes merely because of a flamboyant devil-may-care attitude. He’s noteworthy because he saw an opportunity where others didn’t, and he got rich capitalising on it.

The idea is simple enough: If you give everyone – literally everyone – access to mobile services, you can make money everywhere. In O’Brien’s world, there is no such thing as low-hanging fruit. Every single market gets aggressively cultivated. The fruits of such labours are truly remarkable.

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Walk Like a Dinosaur

Michael Krigsman’s most recent entry in the IT Project Failures blog is an interesting, colourfully-illustrated and upside-down look at the relationship between IT and traditional business.

His question, based on numerous similar postulations, is whether IT is becoming extinct. His answer (you knew it was a rhetorical question, right?) goes like this:

Since the days of punch cards, IT has believed itself to be guardian of precious computing resources against attacks from non-technical barbarians known as “users.” This arrogant attitude, born of once-practical necessity in the era of early data centers, reflects inability to adapt to present-day realities. Such attitudes, combined with recent technological and social changes, are pushing IT to share the fate of long-extinct dinosaurs.

The list of arguments he offers in support of this thesis are all valid to some degree, and all supportive of what he’s positing, but he somehow manages to miss the point that means most to business:

Monolithic, top-down, IT-as-bureaucracy approaches are being subverted by recent changes in technology and services, but so too is business in general.

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