Author: JP

….Forum, that is. Not any more.
Esther confirms what the market has been whispering.

I hadn’t been able too make that many PC Forums, despite having booked for quite a few. It wasn’t just a conference, it was a rite of passage for the industry. So farewell PC Forum; and a big thank you from me to Esther and the team.

Some of you may have seen Chris Messina’s recent post about conferences and gender diversity; others may have followed the hullabaloo about Office 2.0 in a similar context. Now I don’t believe that it was ever done from a viewpoint of political correctness or anything as orchestrated as that, but it’s worth taking a look at the speaker lists at past PC Forums. I think it’s a worthwhile soft indicator as to how things changed over the years, in terms of real diversity in all kinds of things: age, culture, gender, discipline, perspective, you-name-it.

One thing I will be doing next year is attending Flight School, especially now that I know the dates (June 21 and 22). I’ve been lucky enough to make the first two. Why? I don’t know how to fly. I don’t make enough money to rent a plane, much less buy one. In fact I don’t even know how to drive. So why would I go to Flight School?

Simple. Passenger aviation shares a number of characteristics with other markets, characteristics that make it a very interesting petri dish:

• A fundamentally bankrupt business model
• A model architected on hub and spoke rather than distributed
• An oligopolistic market
• The potential for significant impact on environmental issues
• Regulatory overflows and conflicts all over the place
• State interventions and protections all over the place
• Pretend-competition as a result
• Outdated concepts of information technology and its value
• Tired and frustrated customers held to ransom

The list is the same for many other industry segments or markets. Financial services. Telecommunications. Healthcare. Aspects of welfare and education. Even government.

But there is hope, as we learn more about P2P models, more effective forms of communications, more affordable infrastructures, safer ways of doing things, better ways of doing things.

There is hope, as we find that this time around, everyone is involved. Almost everyone. As with any other market the elephant that isn’t in the room is the incumbent.

There is hope, as we find that this time around, issues are global, as are their solutions.

So I will be at Flight School. To learn about many markets.

Records of customer “past” behaviour appear to hold some value. If this was not the case, why would anyone spend money “mining” the information?

Records of future customer intention appear to hold some value. If this was not the case, why would anyone spend money on “market research”?

Identity is for sure a personal thing. If this was not the case, why would we speak of identity theft?

Privacy and confidentiality are very deeply rooted in trust. Trust that is conferred, sometimes tacitly, sometimes explicitly, by the individual. Who has a personal identity.
Modern web applications create value out of customer information. Granted, some of the value comes from the aggregation. Some of the value comes from the connections. But some of the value still comes from individual customer history and preferences and intentions and activity.
So.

How long before this value gets converted into a price? How long before this value can be traded? How long before individuals trade their information?
David Bowie only sold his back catalogue.

Maybe one day Generation M will be trading their back- and front- catalogues.

As we look deeper into identity and privacy and confidentiality and value creation from customer behaviour (both past and present) we may need to think about this as well.

Sometimes “Follow the money” is a good way to find solutions to difficult problems.

Just a thought.

Let me take a random list of events, some current, some not-so-current:

• Jason Fortuny and his nefarious Craigslist “experiment”
• Second Life being hacked
• Alarms about Bebo and MySpace
• Pushback against Facebook facilities
• Leaking of Google searches
• Confidential records being leaked accidentally
• “Pretexting” to hack into confidential records
• Embarrassing e-mail leaks

Lots of leaks. Lots of leaks that affect Web 2.0 companies. Lots of worried people. What is it they have in common? [No, please do not start a conspiracy theory for all this; if you feel like that, then please take your Grassy Knoll and park it in the Mare Tranquillitatis….]

Trust. Yes, again, it’s all about trust.

People are comfortable with sharing all kinds of things, via social networking sites, via Flickr, via blogs, via last.fm, via LibraryThing, whatever. They go further, they share feed lists using OPML, share sites they visit via StumbleUpon, the list goes on and on.

So what’s the big deal? Why do people get so upset with the leaks mentioned above? It’s not as simple as “people don’t mind good things coming out, they don’t like bad things coming out”. For example, “Black” credit information has been shared for much longer than “white”. So what is it?
Trust.

It appears to me that sharing of digital information takes place when four trust questions are answered correctly:

• Did the person or group tell you that the information was being collected?
• Did you agree to it being collected?
• Did they promise you not to share it with others?
• Do you have recourse if they fail to keep that promise?

The questions and answer need not be explicit, but they must, at the very least, be tacitly agreed.

This trust, even if based on tacit agreements, is very specific. It is between a person and a group. That group may be a group consisting of one person. A small community. A firm. Whatever.

Which brings me to my musing. Two questions:
If information is power, and personal information has value, then you can aggregate this information to get greater value. Can such aggregated information reach monopoly levels, become an antitrust issue? Can we start expecting antitrust rulings based on “information power share”?

This information, with all its power, gains that power at least partially as a result of a tacit agreement between the information donor and the information aggregator. How does this affect M&A? Take a hypothetical example. Say I’m comfortable with sharing purchase patterns with Company A but not with Company B. So I have an agreement with Company A but not with B. Then B tries to buy A. Do I get my information back? What happens?

If we take this to its logical conclusion, then take a look at government departments. We share information with them, allow them to collect it and store it and do various unspeakable things to it, on a tacit agreement. No unauthorised sharing. Which is why people like EFF and ACLU are so up in arms with what happens with, say, medical and psychiatric records.

I can see only one way out. But I want to see what others think.

There’s a fascinating article by Nobel laureate Joseph Stiglitz in the latest New Scientist. Yes, of course it’s hidden behind a paywall, what did you expect? Here’s the stub.

I quote from the article:

• Locking up products with patents is an unfair and ineffective way to reward innovation.
• There is a growing sentiment that something is wrong with the system governing intellectual property.
• Recent years have seen a strengthening of IP rights…..The changes have been promoted especially by the pharmaceutical and entertainment industries, and by some in the software industry….
• …[some] patents take what was previously in the public domain and “privatise” it — what IP lawyers called the new “enclosure movement”.

And finally:

• In any system, someone has to pay for research. In the current system, those unfortunate enough to have the disease are forced to pay the price, whether they are rich or poor. And that means the very poor in the developing world are condemned to death.

I think we need something different. Whether it’s a new form of tax, a voluntary donation or a prize, or even all three, we have to stop this madness. It is unenforceable, wastes resources, gives IT a bad name because of all the unintended consequences of putting in poorly-thought-out DRM. And in some cases it is immoral.

And on to Vancouver, where Nettwerk are based. Clarence Fisher told me about this via his blog; thanks, Clarence!

Fundamentally, Terry McBride and gang at Nettwerk, having already challenged a number of traditional models in the music business, now go a step further. Put the album up for sale on MySpace. Give people the tools to play with it, remix it “their” way, do what they like with it. Encourage them to upload their remixes. And get the original band to comment on them. Co-creation.

Here’s the Wired article that covers the phenomenon. A few choice quotes:

• “The labels were never in the business of selling music,” says David Kusek, vice president of Boston’s Berklee College of Music and coauthor of The Future of Music. “They were in the business of selling plastic discs.”
• Musicians generally make very little from the sale of their records. The costs of production, marketing, and promotion are charged against sales, and even if they go multiplatinum and cover those costs, their cut of any extra revenue is usually less than 10 percent. On top of this, the labels typically retain the copyrights to the recordings, which allows them to profit from the musicians’ catalogs indefinitely.
• “The future of the business isn’t selling records,” McBride says. “It’s in selling music, in every form imaginable.” 
• ….the new model frees him and his artists from the overgrown bureaucracy of the music industry, and that means more money for everyone. He can book tours, sell ringtones, peddle songs to advertising agencies and, yes, give away free downloads without any of the complex, multiparty negotiations that once gummed up the works. “It used to take months to sell a frickin’ ringtone to Bell Canada,” McBride says. “With BNL, one phone call gets the job done.”
• “What other business splits up its key assets and sells them to separate businesses that wind up in conflict with each other?” asks Duncan Reid, a venture capitalist who now helps run UK-based Ingenious Music.

Read the article for yourself. And see why changes are necessary, and why people like Terry McBride and BNL and Nettwerk do what they do.