Philosophical Musings

May 30, 2010

Peter Drucker on Intellectual Property, 1993

Filed under: business,Copyrights — Elad Kehat @ 11:49 am

Found in the Wired archive:

We have to rethink the whole concept of intellectual property, which was focused on the printed word. Perhaps within a few decades, the distinction between electronic transmissions and the printed word will have disappeared. The only solution may be a universal licensing system. Where you basically become a subscriber, and where it is taken for granted that everything that is published is reproduced. In other words, if you don’t want everybody to know, don’t talk about it. I think we are getting there very fast.

I have worked with musician Peter Gabriel on several projects. At a workshop we were holding for AT&T he was asked, “How do you deal with piracy of your albums?” Gabriel said, “Oh, I treat it as free advertising. I follow it with a rock concert. When they steal my albums in Indonesia, I go there and I perform.”

How come it took the music business about 15 years to sort-of figure out what Drucker (and apparently Peter Gabriel) got in 1993?

Which just goes to prove what Drucker says earlier in the same interview:

Thirty-odd years ago I began to counsel that you should build organized abandonment into your system. It follows the old line that it makes more sense for you to make obsolete your own products than to wait for the competitor to do it. But this is very hard for organizations to do. The internal resistance is great. They have to be forced.


July 5, 2009

Where Cory Doctorow is Wrong – You won’t Make Money Selling Books in the Future

Filed under: business,Copyrights,Digital Culture,ebooks — Elad Kehat @ 9:57 pm

I was delighted to find an interview with Cory Doctorow in the July-August 2009 issue of Harvard Business Review (available here, but behind a paywall). I’m a huge fan of Cory, and while there was nothing new in that interview, it was still fun to read.
The point of this post however is spread the word about the interview (for that there’s twitter…), but rather to take the opportunity to say that I think Cory’s got his views on the future of books wrong, and to bring my own experience as a counter example.

The case in point is his claim (oft-repeated elsewhere) that an electronic book isn’t a substitute for a printed book, and thus authors can expect to keep making money by selling printed books in the future, while giving away e-books for free to gain publicity.
Of special interest are the following question-and-answer:

HBR: What about the Kindle? Doesn’t it throw your model into question?
CD: I don’t think so. First of all, anyone who’s willing to spend $350 on a Kindle is not someone who’s going to cheap out about spending 10 bucks on a book. The Kindle may come way down in price, but I think it’s going to do that by adding a bunch of features that increase appeal and the volume produced. Once you load the Kindle up with features, you have the same problem you have with a computer – it becomes too distracting. So I’m not all that bothered. Now, maybe I’m wrong about this, and if I am, then I’ll have to figure out another way to make money on my books. Of course, spending 10 years at the coal face of electronic publishing will give me the tools to find that new income model.

Like I said, I’m a huge fan. I read many of Cory’s books. However, I never paid for them. I read them all in e-book format on my Sony Reader (a competitor to the Kindle). I spent far more than $350 on Sony Readers (I bought 3 of them to date – for my wife and my father as well as for myself), but that doesn’t make me not “cheap-out” on spending $10 on a book. Even though I admire the author, if he gives the e-book away for free, I see no problem in not paying for it. Moreover, future features notwithstanding, my Reader is, and has been since I bought my first one 2.5 years ago, my preferable way to read books. Whenever faced with a choice between a printed book and an e-book, I choose the latter. In fact I go out of my way to acquire an e-book version of a book that I want to read even when I have the printed version available at hand.

Obviously, this single counter-example – myself – does not mean that the majority of the market will behave the same as I do. Cory himself seems to acknowledge the exceptions to his expectation by saying that “It’s a rare person who treats an electronic book as a substitute for a printed book” – that could leave me as one of those rare cases.
Nevertheless, I don’t think that he supplies any strong arguments to support his expectation that my case is going to be the rare exception. His main argument is the problem with reading off the computer screen is its myriad distractions. I disagree. My reason for preferring to do my long-form reading on my Sony Reader rather than my computer screen(s), is that it’s much more comfortable for curling up with in bed, on the sofa, or reading on the table during breakfast. Laptops, even NetBooks, are too big and uncomfortable for that, and Smart-Phones are too small. The average paperback has the near-perfect form factor for book reading, and the Kindle / Sony Reader manage to improve on that!

Finally, we’re discussing here an author who gives his e-books away for free. As most books become available in digital editions, and digital readers proliferate, the publishing industry is going to experience the same fate the music industry did. No DRM scheme would save them (as Cory had claimed himself in the past).
In conclusion, I think that Cory had better put that coal face to good use. If anyone can find a new income model for authors, it’s him.

February 27, 2009

Popping Polls

Filed under: business — Elad Kehat @ 3:17 pm

It’s not news that the news print business is in deep s*!t. Readers gone, newspapers shutting down and I guess the mood must be pretty lousy too. Not to worry says The Rosen Group, a PR shop specializing in print media according to this MedisPost article:

…the vast majority of U.S. consumers still deem print editions of newspapers and magazines to be “indispensable” sources of news and entertainment.

83% consider daily newspapers to still be relevant.

These facts are based on the findings of a national poll. No word on how many of these consumers actually spend money on such relevant and indispensable items. They did note that:

When asked if newspapers and magazines will exist in 10 years, nearly half of those surveyed (45%) said yes…

Looks like they tried to give this a positive spin – nearly half think that print will exist in 10 year! Wow! Let’s focus on the flip side though – over half of respondents think that print will be gone within the next decade.

Now, if you ever look for an example of someone burying their head in the sand, there you have it. Money talks, as they say, and if consumers really thought that print is indispensable, then Denver’s 150-year-old Rocky Mountain News wouldn’t have folded today, as that article reports, and the NY Times wouldn’t be teetering on the verge of bankruptcy.

Looks like the ailing industry is popping polls now, as a way to feel a little better. Kind of like taking aspirin for cancer.

November 13, 2007

Content is King… Louis XVI

Filed under: business,Digital Culture,entrepreneurship,movies — Elad Kehat @ 9:47 pm

Marc Andreessen has a thesis that Holywood (where big studios rule) might become something more like Silicon Valley (where entrepreneurs usually remain stock holders in their creation). He describes it as:

“a shift of power from studios and conglomerates towards creators and talent”

And the very next day I found two interesting items that corroborate his thesis:

First, check out Killer Bean Forever – a full feature animation film apparently created single-handedly. Here’s how Jeff Lew, it’s creator describes his work:

“For the past 4 years, I’ve been working at my computer 14 hours a day, 7 days a week. I’ve spent my entire life savings and maxed out credit cards. After all this time and effort, my movie is almost done. I present to you a preview of my feature film directorial debut… Killer Bean Forever.”

Sounds just like a technology entrepreneur describing his startup.

Second, here’s yet another example for how marketing doesn’t need big budget – “Producer Thanks Pirates for Stealing His Film.”:

“Our independent movie had next to no advertising budget and very little going for it until somebody ripped one of the DVD screeners and put the movie online for all to download. Most of the feedback from everyone who has downloaded “The Man From Earth” has been overwhelmingly positive. People like our movie and are talking about it, all thanks to piracy on the net!”

Obviously, that wouldn’t work if the film sucks – then you’ll need a serious marketing budget to push it.

In any case, I’m banking on this trend to deliver some good movies instead of the crap that’s produced by Holywood studios today. I just watched Ocean’s 13 (yet another crappy sequel) on DVD, and one of the previews was for No Reservations – which seems like a crappy rip-off of a very good German film I watched a while back – Bella Martha. If content is king in Holywood then right now it’s King Louis XVI.

MLM 2.0

Filed under: business,Digital Culture — Elad Kehat @ 3:15 pm

“Consumers trust their friends and acquaintances far more than any other source.”

So says a Forrester “strategist”. Makes sense. But the corollary is wrong:

“Facebook, which brings a unique solution evolves advertisements to endorsements and encourages members to subscribe to a brand in what we are calling “Fan-Sumers” (an evolution of the consumer). As consumers share their affinities, brands can advertise using trusted social relationships.”

Apparently, in order to be a strategist at Forrester you need to be good at coining new terms (fan-sumers), that are rip-offs from your betters (Toffler’s prosumers – Update: Jeremiah says it wasn’t a rip-off, and I apologize. Nevertheless, Toffler is basic reading if you’re any kind of strategist). However, Mr. Strategist doesn’t have to ask “why?” – why do consumers trust their friends and acquaintances more than other source?

Here’s why I sometimes trust a friend’s opinion more than an expert, and always more than an ad – because it’s honest. It’s because I believe that my friends have my own interests in mind when they recommend a product, and not any commercial interest. More than that – if a friend was ever to try to promote some product to me in order to receive a benefit from a third party without disclosing that, I’d never trust their opinion again, and would seriously question whether they’re actually my friend.

Facebook’s “amazing” strategy that Forrester is touting seems more like MLM 2.0. Make money working from home, touting products to your social network friends, only you don’t even make money…

Fortunately some clear thinkers realize that. Nick Carr’s “The medium is the message from our sponsor” had me rolling on the floor…

(Real) Competition-Blindness

Filed under: business,Copyrights — Elad Kehat @ 2:46 pm

So a major TV network (NBC) has finally launched a service that lets you download shows to your PC. Not surprisingly, they still don’t get it right:

“First off, it’s Internet Explorer only, then once you download the player, if you don’t have the latest .NET framework, you’ll be downloading that also. Next: Windows Media needed a security update on top of it all. On a Mac? Sorry, can’t help. Outside of the US? You’re out of luck too.

Don’t they realize that they have to be better than competition?  They probably do. It’s just that they choose to ignore the real competition. Let’s parse those (non)issues:

1. It’s internet explorer only. Mininova etc. work on firefox as well.

2. You need to download the latest .NET framework. I guess I could live with that one 🙂

3. Windows media needs a security update. Screw you.  Playing DivX torrents doesn’t require any “security” updates that securely send information about me somewhere else.

4. On a Mac? No problem. Lots of bittorrent clients work on the Mac.

5. Outside of the US? Even better, in most countries MPAA hasn’t got lawmakers in their pocket (yet).

August 23, 2007

Some More Shoddy Statistics

Filed under: business,investing,statistics — Elad Kehat @ 10:47 am

Founders know best, says USA Today: “Firms tend to prosper with founders at the helm“.
As a startup founder myself, I was naturally intrigued – what data supports this conclusion?

“Going back 15 years, stocks in founder/CEO companies have surged an average 970%, vs. a 222% gain for the S&P 500, according to data from S&P’s Capital IQ.”

Oh. See the problem? If not, read on…
The article goes on to try and explain (unsurprisingly, with no further hard data) why it is that founders are so successful at managing their own companies. No further consideration is given to the idea that this may just be a false correlation.
So here’s the problem: Del Jones and Matt Krantz, the USA Today reporters, compare the 15 year performance of companies with founder at the helm vs. companies in general.
What about an alternative explanation: public companies that have the same CEO at the helm for 15 years must have a damn good CEO. Otherwise they wouldn’t be successful and the board would find someone else for the job.
It’s nice that they use a system called “Capital IQ”, but a little more of it (or a passing understanding of statistics, or a minimum level of critical thought) would have prompted them to dig further and compare those founder/CEO companies to other companies that had the same CEO for the past 15 year. Would that study yield the same result? Or would that just lead to no article and an angry editor?

Or maybe it isn’t reporters fault:
“Ohio State University finance professor Rudi Fahlenbrach”. This is from a top-60 university?

And the “experts” seem to fall for it with no trouble at all:
“I should’ve attached more attention to it over the years,” says Rob Sellar, a money manager of Aberdeen Asset Management.
Really, Mr. Sellar? How about “attaching” more attention to what’s missing from the data? After all, there no telling in this “research” whether all companies headed by their founders succeed, just that public companies that had a leader successful enough to stay at the helm for the past 15 years are successful…

August 10, 2007

Strike Back for Freedom

Filed under: business,capitalism,Copyrights,Democracy,Freedom — Elad Kehat @ 2:01 pm

Finally, someone is trying to use the media industry’s own weapons against them.

TechCrunch reports that Veoh, an online video website, is suing Universal Music, after being continually threatened by them.  While their chances in court are probably not very high, its heartening to see that some entrepreneurs aren’t easily intimidated.

Incidentally, I ran into this quote of a judge today:

“There has grown up in the minds of certain groups in this country the notion that because a man or corporation has made a profit out of the public for a number of years, the government and the courts are charged with the duty of guaranteeing such profit in the future, even in the face of changing circumstances and contrary public interest. This strange doctrine is not supported by statute nor common law. Neither individuals nor corporations have any right to come into court and ask that the clock of history be stopped, or turned back, for their private benefit.”

Unfortunately, the speaker isn’t a real judge, he’s a fictional one, in Robert Heinlein’s classic short story Life-line, written in 1939! (I’ve been reading some classic scifi lately). Too bad that this paragraph, written 68 years ago by a true libertarian to criticize corrupt business, is still relevant today. Even worse, no real life court today would say the same.

May 24, 2007

Growing Revenues in the Music Industry

Filed under: business,Copyrights,music — Elad Kehat @ 6:17 am

This article from eMarketer shows that artists’ revenues from recording performance rights (i.e. payments by radio and TV stations) as well as synchronization licensing (i.e. the licensing of music for commercials, television shows, films and videogames) are growing fast. Together they totaled nearly $4 billion in 2006.

So while the recording industry, i.e. the people who sell CDs, is in trouble, the people who actually create music have many potential sources of revenue even if the end user isn’t paying for CDs.

April 16, 2007

Major Lables are not to blame for Music Business Demise

Filed under: business,Copyrights,economy,music — Elad Kehat @ 7:26 pm

A NY Times article by Tony Sachs and Sal Nunziato tells the story of the independent CD shop that they owned in Manhattan for 12 years, until it closed in 2005.
They are full of criticism for the major record labels, whom they blame for making all the wrong moves in the face of the file sharing revolution, mistakes that they claim have led to their shop going out of business.
It is an important read, that helps you realize how the revolution does not hurt just big faceless corporations or multimillionaire-but-still-gready musicians. It also affects small business owners, who lose the business that they had spent 12 years nurturing.
But as much as I share their loathing for the big record labels, Mssrs Sachs and Nunziato are plain wrong. The labels are not responsible for the demise of their shop, and rather than make mistakes, I believe that they soon enough realized where all this is going, and began fighting for their lives with all the tools at their discretion (basicly money, which is used to influence lawmakers and public opinion).
Sachs and Nunziato’s shop had closed because its many of its customers no longer had a need for it. It’s great that their staff, unlike Best Buy’s actually “knew who Van Morrison was”, but people now go to the internet for music advice. It’s fun to claim that Tower Records had “the entire history of recorded music under one roof”, but that claim is plain wrong, and in any case, we can turn to file sharing to really find any piece of music ever recorded, and searching for it is easier too.
They continue by claiming that “the customers who had grudgingly come to trust our opinions made the move to online shopping or lost interest in buying music altogether. Some of the most loyal fans had been soured into denying themselves the music they loved.” Come on guys, people don’t deny themselves of the music they love. Instead they have a much better source now, and they still spend endless hours browsing and building themselves a great collection, but it doesn’t cost them money.
They end by saying that “the occupation we planned on spending our working lives at is rapidly becoming obsolete. And that loss hits us hard — not just as music retailers, but as music fans.” Again, while it’s heart wrenching that someone’s life creation is becoming obsolete, you can’t stop technology. Too bad that you share your lot with the buggy drivers, but that’s life. You can’t blame the major record labels for this. Change is an inevitable part of our world, better learn how to handle it. Finally, we should also keep in mind that recorded music, the basis for the CD shop business (the entire music business actually), was enabled by a technological advance. Some times these advances are good for you, some times they’re not.
Finally, as self-described “music fans”, these guys should be happy with the change. What it really means is more music in the hands of more people. Business has nothing to do with it.

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