Continuing the ramble in open spaces amidst walled gardens

Cory pointed me towards this article in the New York Times, headlined Record Labels Contemplate Unrestricted Digital Music. [An aside: The retarded hippie in me just cannot comprehend the use of the word “contemplate” in a context where “navel” and “lint” are absent…]

Where was I? Oh yes, the New York Times article. Here are a few snippets from there:

Publicly, music company executives say their systems for limiting copies are a way to fairly compensate artists and other copyright holders who contribute to the creation of music.

But privately, there are signs of a new appreciation in the industry for unrestricted copies, which could be sold as singles or through subscription services or made freely available on Internet sites that support advertising.

The EMI Group said last week that it would offer free streaming music on Baidu.com, the leading Web site and search engine in China, where 90 percent of music is pirated. EMI and Baidu also agreed to explore developing advertising-supported music download services. This summer EMI licensed its recording to Qtrax, an ad-supported music distribution service.

I think there are two things here worth observing:

One, ad-based selling of singles is not as outrageous as it sounds. Ad-based selling of anything doesn’t sound that outrageous. Just look at Google. There is something Because-Of-Rather-Than-With about it that makes the model attractive. I can get something for free or at a reduced price, if I rent my eyeballs out. [In fact that is what I expected the iPhone to do; like any other handset, I can get it free or subsidised from a lock-in provider, or I can pay the unsubsidised price. But what do I know?]
Two, look at what happened when Sabeer Bhatia launched Hotmail, or when Niklas Zennstrom and Janus Friis let Skype loose. The revenue lock inherent in a particular business model just went and exited stage left, followed by a bear. But the new business model made money. In a strange kind of way, maybe that’s what Because-of-Rather-Than-With is about. Making money differently.

Someone will do this. I’m not sure “content owners”, or for that matter Wall Street, really understand the power behind today’s groundswell of opinion against bad DRM and bad IPR. Those walls will crumble. I love my Macs, I love my iPods, but I will not love them forever. iTunes will have to change. I will keep buying iPods because I want to, but from now on only if I don’t have to.

A related issue. I’m sad to miss the VRM meeting I had hoped to attend: doctor’s orders… I wish the participants every success. I think that what Doc and gang are working on is absolutely crucial, and in the current context it made me wonder about something:

If marketing as we knew it doesn’t exist any more, and if trusted recommendations are the new marketing…… Every one of us has so much “advertising consumption capacity”, and it all gets converted into iBalls or something like that. We start our lives with so much iBalls each. I spend my iBalls as I feel like: buy music, watch movies, read articles,  whatever. Sometimes I run out, I can buy spare iBalls from my next door neighbour. Or sell them.

It’s just capacity trading. But as human beings in markets, having Cluetrain conversations. Today’s been a Cluetrain day for me, for a variety of reasons.

Just a thought.

One million dollars and counting

How often do you visit Wikipedia? If you’re like me, you probably go there three or four times a day. In which case you’ve probably noticed the “thermometer bar” at the top of the page for the last month or so.

The Wikimedia Foundation ran its recent month-long fundraiser from 16 December 2006 to 15 January 2007; in typical open-and-transparent fashion they’ve now released a report on the fundraiser, and in Web 2.0 time as well. It’s definitely worth a read, you can find the entire report via this link. My thanks to Chris Locke for pointing me at it.

One million dollars in one month. Without counting the matching contributions.

  • Donations primarily between $10 and $50
  • Average donation appears to be around $30
  • Around a thousand donations a day

When it comes to building out infrastructure on a commons basis, we may need to look at approaches like this. I know that raising a million dollars in a month doesn’t sound like much….. when you take into account the global nature of the donations (albeit US-dominated, much like the early internet), the relatively low-key campaign, the purpose for which the campaign was run, the level of anonymity, and the absence of matching contributions in the figures, a million dollars isn’t too shabby.

I think we’re heading towards a time when many infrastructural projects are funded from four sources:

  • A seed from individual subscriptions, much like the campaign above
  • Matched funding from more affluent individuals
  • Another level of matching from the public purse, multi-government, multi-location
  • A final level of matching from truly global large corporates

Gaps in the market, in the open spaces amidst walled gardens

You may have figured out that I was born and raised in Calcutta. Lived there from 1957 to 1980. For much of that time, the roads there were less than perfect. So much so we used to joke that, when confronted with a particularly poor road, the smart way to drive was to stay in the potholes, avoiding the little bits of road that loomed up every now and then.

Nature abhors a vacuum.

Which is why, when we have walled-garden approaches to digital music sales, people find a way to operate in the open spaces. Take a look at this article in today’s Wired News, where Josh Madell, one of the co-owners of Other Music, gets interviewed by Eliot Van Buskirk.

Here’s an excerpt from the interview:

Madell: We will be selling high-quality files without DRM copy protection (our music is encoded at 320 Kbps rather than 192, the iTunes model, so the sound will be much better). All our pricing is not set yet, but we will definitely have to be a little more expensive than iTunes — probably $10.99 per album rather than $9.99. I hope we can more than make up for the price with our selection, service, knowledge, features and, of course, the quality files. As for the label deals, this business works on percentages; you split revenue with the label for sales, and typically labels make 65 to 70 percent of the retail price.

If you want to stay informed of their plans, here’s the link. In case you missed it, an earlier story about MP3s and DRM by the same author is also worth a read. Link.

And if you have no idea what kind of store Other Music is, then take a look at this video.

Tell me what you come here for, boy

Sean’s having trouble finding vendors that try to Keep the Customer Satisfied; in fact he seems to be doing better at finding Deputy Sheriffs, according to his recent post.

Deputy Sheriff said to me
Tell me what you come here for, boy.
You better get your bags and flee.
You’re in trouble boy,
And now you’re heading into more.

Sean’s example of CNBC.com and its archives policy made me wonder about something. Why would anyone do something like that? Why would anyone take something that was already made available for multiple devices and then pay to reduce the market opportunity?

Three possibilities:

  • One, incompetence. They didn’t know they were doing the restricting.
  • Two, greed. They were paid to use a walled garden.
  • Three, line-of-least-resistance. They could not find a way of implementing their DRM without restricting choice further.

Even the optimist in me thinks it is possibility 3. After all, we live in a world where people can come up with rank stupidities such as Region Coding.

EU Study on impact of opensource

I’ve spent some time reading a recent study titled Economic Impact of Open Source Software on Innovation and the Competitiveness of the Information and Communications Technologies (ICT) Sector in the EU. Don’t worry, you won’t think the title is too long when you see the document, all 287 pages of it. And no, I haven’t finished reading it yet. I’ve given it a quick skim, am now on pass 2, which is where I take notes and doodle; it looks like I will stay on pass 2 for a week or more.

doubling every
18-24 monthsIn the meantime, any of you who’s vaguely interested in the impact of opensource should take a look at it. I know it’s big and cumbersome, but you don’t have to print it. I know it’s detailed and tedious, but life is not always about soundbites. I know it’s full of figures and charts, some of them dating back to 2002, but a lot of it is largely new and interesting.

You can find the study via this link, which also takes you to the press release announcing the publication of the study earlier this week.

By the way, Rishab Aiyer Ghosh is one of the authors. I first came across Rishab when I started reading First Monday, and he quickly became a must-read for me. One of the books he edited, called CODE, or the Collaborative Ownership and the Digital Economy, is for sure one of my top ten business books of the decade. I think everyone who has even a modicum of interest in the DRM and IPR discussions should read the book, even before they read Lessig or Fisher.

Here’s a sample of the things I learnt in the skim

  • There appears to be a Moore’s Law of sorts operating upon the FLOSS codebase, with a doubling every 18-24 months
  • The FLOSS codebase today represents over 130,000 person-years of effort
  • FLOSS-related services will represent 32% of all IT services within the next 3 years

Also, you may find these three diagrams of interest, showing the FLOSS committer population in the context of overall population, connected people and the rich. I’ve never seen this sort of information, so I think we owe the authors something.

200701181326200701181325200701181326-1

One of the more intriguing observations in the study, which comes across in the summary as well as in the body of the document, is the following:

  • That the current battles about DRM and IPR are having an undesired effect, and that is to deflect creatives resources towards “defensive” innovation.
  • That FLOSS activities give us an opportunity to correct this blemish

Read it for yourself. Let me know what you think.