Monthly Archives: February 2007

Not exactly news

Funny article about how users are creating shadow IT departments using gadgets and downloadable software to create productivity boosters deemed non-kosher by IT, who fears these invasions of their turf.

This has been a problem and a source of innovation forever – Digital Computer used to sell their computers as "engineering equipment back in the early 80s so that invidividual departments could get around corporate computing centre standards. Absolutely nothing new here.

Though, of course, with Google tools, downloadable software and cheap computers, you could actually end up having more processing power and LOCs than central IT, if you worked on it. Sobering thoughts for many CIOs, I bet….

(Via Slashdot.) 

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Guilt and slavery

Slave ship deckIt is approaching 200 years since the slave trade was abolished in Britain (and thereby, effectively, in the world). The Economist has an excellent analysis of the slave trade and what brought it down, comparing it to the Holocaust in the ability of the "normal" society to disregard what was going on. The campaign against slavery was remarkably successful, but depended on many factors, not least the gradual understanding that slave rebellions eventually would bring down the practice, at least in the West Indies. Once England abolished slavery, it became the chief enforcer against it.

I remember, from a business history class, another analogy to the Holocaust – the fact that most free people in the United States did not understand the suffering of the slaves because their picture of it was skewed. In terms of numbers, most of the slaves were at large farms where they were driven like cattle by forement with whips. But to most of the free population, the slaves they met were more likely house slaves – tenants and workers of small farms. These were treated better – and so the perspective of slavery was even more polarized between the slaves and the free than the judicial distinction would imply. Just like the Holocaust, the worst parts of the system were hidden from most people, who instead saw the less unacceptable side of separatism and (at least on the surface) only slightly worse conditions.

The article is interesting because it cool-headedly analyzes the slave trade and its abolishion as phenomena, and does not shrink pointing at some unwelcome facts, such as the involvement of African chiefs, or from drawing connections to the present times. Recommended.

Economics of abundance

Great article by Mike (whoever that might be) at Techdirt: If you can’t compete with free, you can’t compete, period. His argument is that there really is no difference selling digital and physical goods as long as scarcity is removed – price will over time move to marginal cost, and whether that cost is 0 or something higher doesn’t matter:

Say I own a factory that cost me $100 million to build (fixed cost) and it produces cars that each cost $20,000 to build (marginal cost). If the market is perfectly competitive, then eventually I’m going to be forced to sell those cars at $20,000 — leaving no profit. Now, let’s look at a different situation. Let’s say that I want to make a movie. It costs me $100 million to make the movie (fixed cost) and copies of that movie each cost me $0 (marginal cost — assuming digital distribution and that bandwidth and computing power are also fixed costs). Now, again, if the market is competitive and I’m forced to price at marginal cost, then the scenario is identical to the automobile factory. My net outlay is $100 million. My profit is zero. Every new item I make brings back in cash exactly what it costs to make the copy — so the net result is the same. It’s no different that the good is priced at $0 or $20,000 — so long as the market is competitive.

On the surface, this has validity from the producers’ point of view, but how about the demand side? If I have to shell out $20,000 for a new car, that is money I could spend om something else, no matter the profit. If I can get all the movies I want for free, I can consume as many of them as I have time for, at zero short-term cost to myself. The relationship between price and demand is not linear, at least not on an individual basis. And here comes the psychology part: If I decide to shell out 20K for a car, I will make a careful decision, compare features, and try to get as much as possible for my money. If the price of a movie is 0, I will just download a lot of movies and keep them around. The only investment will be in actually watching them, meaning that somehow the company selling them has to get value out of my watching the movie rather than purchasing it.

In-line advertising, it seems, coupled with a way to track actual viewings rather than purchases. Google Adsense in movies, click-on-the-hero’s-coat-and-buy-it, instant delivery and on-demand video services delivered over the web, taking responsibility for the whole viewing experience.

Now, if only my broadband service were up to snuff….

Mothership Internet

Jon Udell has an interesting discussion of social network software: That it will be subsumed into the general Internet over time. LinkedIN, for one thing, is now a fairly well closed off professional network, useful if you want to get in touch with someone at a particular company, and free of spammers, unless you count the headhunters with 5000+ connections. Incidentally, just like the early academic networks, back in the 80s.

The trouble with networks is keeping them at the right size and with the right nodes. When it grows to large, smaller groups will secede and form subnets, often with dimensions added to the connections between them. That’s the way it is with LinkedIN as well: It started off with very strict limitations on what you could do. Then, if you pay for the premium account, you can send emails that shortcircuits the chain of connections and ask questions that pop up on people’s home screens.

I have 287 connections on LinkedIN, and have been pretty stringent about keeping them to people I have actually interacted with, enough so that I would remember them. The network is useful, but the growing size of the overall network means that some sort of differentiated contact settings are needed. Eventually, LinkedIN will be too large to manage, the ratio of useful information to crap will fall, and people will ignore it, except for certain subnets, tightly interlinked and with many mutual recommendations. Just like the blogosphere three years ago, the Well in early days, and the various nets back in the 80s.

Hang on to you own website, I say. Manage it well. As long as the network management tools keep getting overwhelmed, make sure you node is polished, well lit, and carefully selective where its links goes.

Phisheries report

Wired has an interesting 25-page article on how FBI did a sting operation involving a "flipped" card scam bulleting board operator. Reminiscent of Markoff’s books about the various hunts for Kevin Mitnick and other mistfits.

I can’t help but notice what sad sacks these "hackers" and "cyber criminals" turn out to be. Not much of Al Capone over them, just overweight and pale board jockeys sitting up all night hammering out badly spelled instant messages.