SitePoint: Rather Than Freaking Out Over Piracy, We Decided To Adapt

from the good-for-them dept

AnonJr alerts us to the news that publisher/media firm SitePoint, has decided to do away with the passwords on the PDF versions of its books, noting that it seemed to only serve to piss off customers:

In the 18 months I have worked at SitePoint, barely a week has gone by where I have not received at least a couple of emails from customers questioning the logic behind our password protection policy. My response, based on the SitePoint philosophy, was always that we were taking an ethical (if largely symbolic) stance on the piracy issue. But how long could we maintain that line while simultaneously placing primacy on the customer experience, as all the while more and more requests to remove password protection poured in.

As a web development resource and learning centre, we know that we must embrace the state of flux -- not as a lofty ideal, but as a normative imperative. You can't claim to be all about the cutting edge when you're stubbornly clinging to old, outmoded processes -- especially when your own beloved customers are urging you to move on. And if we're not keeping pace with the constantly evolving face of web design and development, then we're neither a resource nor a learning centre -- we're a museum.

Kudos to another company recognizing that pissing off your best customers is hardly a way to run a business.

Filed Under: adapting, customers, ebooks, markets, passwords, pdf
Companies: sitepoint

James Boyle On: Strategies For The Digital Age: Beyond Mocking the Clueless

from the fun-though-it-is dept

With our CwF + RtB experiment in full swing, we've asked some of the participants involved to provide some guest posts. The post here is from James Boyle, whose book, The Public Domain is a part of our Techdirt Book Club (signed by Boyle). If you order both the Techdirt Book Club and the Techdirt Music Club before midnight PT, August 3rd, we'll throw in a free Techdirt hoodie, or a free lunch with Mike. We asked Boyle to give his thoughts on new media business models from his perspective, and he came back with this incredibly thought-provoking post that ought to create quite a bit of conversation:

The Associated Press recently released the details of their plan to develop a new metadata/Digital Rights Management format for news stories. (It wasn't described as DRM, but I agree with Techdirt that it certainly sounds that way.) Particularly ominous was this phrase "The system will register key identifying information about each piece of content that AP distributes as well as the terms of use of that content, and employ a built-in beacon to notify AP about how the content is used." (My italics) Even those without a strong dose of civil libertarian paranoia might bridle at the thought of having their practices of reading and sharing newspaper articles tracked by a central repository (other than Google, that is.) "He sure is reading a lot of articles about gay rights!" Pamela Samuelson calls DRM'd articles "texts that rat on you." Somehow it doesn't sound like a good slogan for a sales campaign. (AP says it has no interest in tracking on the individual user level.)

The response of the tech-savvy was, predictably, pretty savage. Techdirt ("it's difficult to think of anything quite this useless") at least offered some principles on which sustainable web businesses might be built. Others were not as kind. Someone even created an extremely profane and sometimes juvenile, but nevertheless quite funny anonymous graphical translation of the AP's diagram to explain the new plan. The criticisms of the plan (clueless graphics aside) centered around two tenets that are familiar to Techdirt readers.

1. an argument that DRM is a.) doomed to fail technologically and b.) has in fact already failed in social and economic practice. The general line here is that the arc of history bends towards technologies that are copy-friendly and anything that tries to turn that feature into a bug will soon fail if it hasn't already.
2. an assertion that "old media" (other names include "the clueless" "dinosaurs" "non digital natives" "the walking dead" etc.) are demonstrably incapable of understanding the potential upside of the sharing economy, or copy-friendly technologies, still less the business models that can be built on top of them. This tenet is so sweeping that it would be much harder to defend if history didn't give us such fabulous anecdata to back it up. My own favourite quote was about the technology that lowered the cost of copying in a prior technological era, "The VCR is to the movie industry what the Boston strangler is to the woman alone." That was Jack Valenti, the late head of the MPAA. Actually, unless the answer to that puzzle is "What is a savior?" Mr. Valenti would turn out to be wrong. Movie rentals to fill the -- cheap -- VCR's that the movie industry had failed to criminalize, tax or enjoin soon provided more that 50% of the industry's revenue.

Personally, I am at best agnostic about tenet #1. I am not a technological determinist. I think that DRM has failed spectacularly in some areas (root kits on CD's), provoked mild irritation and a pressure towards more open alternatives in others (the move towards selling open MP3's rather than protected streams or DRM'd iTunes tracks) and become standard (even if not loved) in others. Most of you are still being forced to watch the FBI warnings on your DVD's and fuss with region control. Sure you could get around it. But how many people bother to? Life is too short. I do think news is a particularly bad candidate for DRM or even "beacons," but that is a specific judgement not a general one.

On tenet #2, I think we are thinking too narrowly. Behavioral economists have identified specific deviations from economic rationality in human psychology-- we tend to value potential losses asymmetrically from potential gains, to use simple heuristics even when they are shown to be false and so on. In my new book, The Public Domain (freely available online, of course) I argue that we have a measurable cognitive bias against "openness" -- I call it cultural agoraphobia, and I argue that it impedes us in understanding the creative potential, productive processes and forms of social organization that the web makes possible. The source of that bias (by which I mean a demonstrated tendency to ignore certain kinds of possibilities in a way that the data does not support) probably lies in the fact that most of our experiences with property come from physical goods -- sandwiches that 1000 people cannot share, absent divine intervention, fields that might be overgrazed or underused if not subject to single entity control. Even digital natives still spend most of the hours of their day in a world in which goods are both "rival" and "excludable." Reflexes picked up in that world tend to lead us astray when we are dealing with the kind of property that lives on networks. "Like astronauts brought up in gravity, our reflexes are poorly suited for free fall." I would even argue that this cognitive bias, even more than industry capture of regulators, is one reason why our current intellectual property policy is so profoundly and utterly misguided. But its implications are wider still.

So far, this sounds similar to the standard technophilic critique of existing institutions -- albeit with a behavioral psychology chaser. But it isn't. Just because it's a bias doesn't mean it's always wrong. It may be that, even once one discards the bias, there may be no immediately obvious way of carrying important social functions into the world of the Net. I don't care where on the techno-optimist spectrum you are (It ranges from "get their eyeballs and their wallets will surely follow" to "the only alternative you seem to be proposing is Google ads, cover charges and lots of T-shirts.") Unless you believe that markets spontaneously self-correct for everything (hint, check your IRA balance before you answer this question) you have to acknowledge that the problem that the AP is responding to may be our problem (how to pay for the kind of expensive investigative journalism that is a real boon to democracy and liberty) as well as their problem (how not to die in the immediate future.)

Don't get me wrong. The world of the future will clearly have media that in some respects are far better than what we have today, even when measured against the most rigorous standards. I am pretty sure, in the world of 2020, pollution levels in Silicon Valley and school performance in Palo Alto will be covered with a wealth of data, expert systems, and interactive mapping in a way that would have seemed a dream in 1990. That will be true for most areas that have wealth, a wealth of data, and a highly educated citizenry with lots of personal liberty and strong personal and ethical reasons to be focused on a particular subject. It will be much less true for areas where those conditions do not hold true, particularly if you have a powerful in-group with strong reasons to want to keep the eyes of the world away. Twitter and the camera phone can do a lot. But they can provide neither the culture of professional journalism, nor the sustained effort and resources to develop a story over years. And there is an oft unnoticed corollary to the claim that the dinosaurs are clueless. It means they are unlikely to solve the problems themselves. Unless you think that markets and technologies spontaneously self-correct for everything, that leaves the rest of us.

In Robert Putnam's fascinating book Bowling Alone he describes the way in which the threads of civil society and of trust frayed during the 20th century -- and offered a convincing social science case that the implications were profoundly negative for our culture. But the book was not a depressive one. Putnam pointed back to the turn of the 20th century. Then, as now, people noticed their society changing around them -- industrialization, the acceleration of migration to cities, urban isolation. But Putnam points out that this prompted an extraordinary entrepreneurialism in civil society. Groups were founded that today seem quaint to us -- the Kiwanis. the Rotarians and so on -- all aimed specifically and solving this failure of civil society. The message was not, in other words, that these problems would self correct through markets and technology. It was that we would need an entrepreneurialism outside the market -- one that experimented with institutions and communities to solve the problems of the day. For me, a glance at AP's DRM business plan prompts the same thought. Some of the functions that newspapers now perform are going to be located elsewhere in society -- in universities, in foundations, in government, in blogs. Some of that will happen spontaneously -- but a lot of it will not unless we innovate in social organization the same way the citizens of the early 20th century did to meet the problems of urbanization.

I was lucky enough to be involved with Creative Commons from its inception and to help found Science Commons and ccLearn. Those organizations were designed to solve a particular problem for which there was a market and legal gap -- the problem of failed sharing. Jesse Dylan's brilliant video on the subject explains it better than I could. Are there equivalent institutional innovations that could help in the area of news gathering? I don't know. Journalism isn't my field. But without the kind of institutional innovation and experimentation in civil society that Creative Commons (or the Kiwani's) represented, I think that we are unlikely to solve its problems. Web 2.0 business methods alone, even with a Techdirt crystal ball, will not be enough. If I am right, mocking the clueless will be a poor consolation.

James Boyle is William Neal Reynolds Professor of Law at Duke and the author of The Public Domain: Enclosing the Commons of the Mind. He writes a regular column for the Financial Times and tweets sporadically as thepublicdomain.

Filed Under: business models, innovation, journalism, markets, media
Companies: associated press

Indie Record Shops Learning To Adapt

from the it's-a-different-world dept

Over the past few years, we've talked about ways that musicians and record labels can (and have) adapted to the changing music marketplace, but the case of brick-and-mortar music retailers is an one. The big players: Tower, Wherehouse and Virgin Music have mostly all disappeared. Music sales in big box retailers (Wal-Mart, Best Buy, etc.) remain narrowly focused on top hits and don't get much shelf-space (Best Buy recently announced plans to cut music inventory by half). However, smaller, indie record shops have been learning to adapt. More than five years ago, we wrote about some indie shops recognizing that they needed to become more of a destination, rather than a "record store." And over the years, we've seen more and more and more stories of smaller record stores learning to adapt.

The latest, sent in by Dave W looks at a bunch of shops in the UK that appear to have realized that they need to completely change -- including one that's really focused on being a destination for people to hang out and buy coffee... while hearing music (often live music) and then selling only special physical goods: limited edition box sets and vinyl. And, apparently for some of these shops, business is better than before. Despite the disappearance of regular CD sales, they've more than made it up selling other music-related goods. It's about recognizing that people still do want physical goods, but they view it as a souvenir, to show support for the musicians, rather than buying "the music" itself. The music, to them, is free. But that doesn't mean they won't pay for goods of value. And retailers can absolutely support that new market as well.

Filed Under: adapting, markets, music industry, record stores

The Problems Of A Legacy Business: Verizon's Union Freaks Out That Verizon Wants To Look Forward

from the what-a-shame dept

It's really sad to see some of the struggles that legacy businesses go through in trying to adapt to a more modern world, but not all of it is the fault of those businesses themselves. Look, for example, at what's happening with Verizon. Subsidiary Verizon Wireless -- which is 55% owned by Verizon -- began a marketing campaign pushing people to ditch their landline phone and go completely wireless. That's not a bad marketing campaign (and, in fact, might be a very good marketing campaign these days). So what happens? The union that represents Verizon's landline telco workers flips out and accuses the company of trying to undermine the union by helping Verizon get out of the landline business, so it can get rid of those workers. Seriously. First of all, there's little evidence to suggest that's true. Like most traditional telcos, Verizon still sees its basic landline business as a useful cash cow that I'm sure it intends to milk for as long as possible. Chances are, since VZW is a separate company, the marketing plan had nothing to do with the parent's marketing efforts. But, either way, at some point the company should be pushing customers to ditch landlines and other older technologies and embrace better solutions. Not because it puts old union guys out of work, but because it's where the market is headed.

Filed Under: landlines, markets, mobile, progress, technology, unions
Companies: verizon, verizon wireless

Kodak Kills Off Kodachrome; Entertainment Industry Take Note

from the changing-with-the-times dept

Back in 1997, while I was in business school, I was working with a professor who was doing some consulting work for Kodak, and I ended up writing up an analysis and a report about what Kodak needed to do, facing the obvious coming onslaught of digital when its business had been based on analog photography for ages. We basically made the case for how Kodak could shift its focus to digital, and that it needed to get started right away. We actually got significant pushback on the analysis (not surprisingly), and it took a few years before Kodak woke up. But, around 2003, the company really started to bet everything on digital, and recognize that, as much of a cash cow as analog film represented, everything about the future was digital. So it's quite a milestone to hear that the company is finally killing off Kodachrome, the company's iconic color stock film.

The reports about it note how Kodak's business is now 70% digital and the company has very much embraced the digital age. It certainly hasn't been all smooth sailing, and some still question whether or not Kodak can really survive in this new world. Yet, the company has made the switch much more effectively than many imagined was possible, and folks there seem to live and breathe digital these days (though, there was heavy turnover associated with that change).

Still, as one reader sent in, it's rather interesting to compare the experience of Kodak with, say, the recording industry, which is still fighting the move to "digital" to some extent. The big record labels fought every new efficiency at every turn, while Kodak quickly learned to embrace digital efficiencies and look to see where its own core skills could be applied to make them better. The record labels? Not so much. After fighting the entire concept for ages, they just handed the business over to Steve Jobs and still have done very little to see what they can do to make the digital experience better, based on their own skills and knowledge. Just as the Kodak transition hasn't been perfect, if the labels had embraced digital and things like file sharing early on, they wouldn't have been perfect or easy either. But the labels would be in a lot better position than they are today.

Filed Under: analog, busienss models, digital, kodachrome, markets

Video Game Companies Still Bitching About Used Game Sales

from the give-it-up dept

This has been discussed before, but apparently one of the big topics at E3 last week was video game publishers again being upset about the fact that they don't get a cut of used game sales. What they never seem to mention, however, is that there's simply no reason for them to get a cut of those sales. When you sell your house, do you get a cut of every sale after that? When you sell a book do you get a cut of every sale after that? Of course not. And for a very good reason. Studies have shown that an active used goods market increases the value of a product. This makes sense. If I know I can resell this widget for $10, I'm more willing to pay $20 for it in the first place. But rather than focus on ways to make it worthwhile for people to buy new video games, the execs want to sit around, complain and scheme for ways to wipe out the used video game market... or at least get a cut of any sale. Once again, we're seeing companies with a sense of entitlement to something they have no rights over.

Filed Under: markets, sales, used games, video games

Finally, A MLB Team Gets A Deal For In-Market Online Streaming

from the water-stone-etc. dept

Major League Baseball has long contended that fans should watch games in the manner in which it chooses, rather than how the fans themselves want to. This is the thinking behind its local blackout policies, first intended to "protect" ticket sales by not allowing the TV broadcast of games that weren't sold out, and lately, intended to "protect" local TV broadcasts by making it impossible for fans to watch their local team online. It takes the blackouts so seriously that it's even patented a way to black out local users from online streams, an absurd show of pride in something that basically just frustrates fans and customers. But there may be some cracks appearing in the local online blackouts, as the New York Yankees, Cablevision and MLB have reached a deal for in-market streaming of games. At first glance, the negotiations sound pretty convoluted, especially considering the Yankees own a stake in YES, the local TV rightsholder. But not surprisingly, the result -- that people in the Yankees' local market can only buy the online subscription if they're Cablevision subscribers that get the YES network in their cable package -- seems like it's par for the course for MLB, which has a penchant for trying to lock down everything baseball-related online.

The amount of baseball that's broadcast on TV has boomed over the past couple of decades, having escaped the thinking that making the game harder for fans to follow on TV was somehow actually good for it. Now, the same thing is playing out online, where MLB seems hellbent on frustrating fans who want to see all of their teams' games online. What makes online different than TV, in that putting up these walls in front of the game's most dedicated fans is somehow a good thing?

Filed Under: baseball, markets, streaming
Companies: cablevision, mlb.com, yankees

What If You Could Invest Directly In Shares Of Intellectual Property?

from the bad-bad-incentives dept

We're always interested in alternative proposals to the current mess with intellectual property, and Dr. James Lyons-Weiler, Director of the Bioinformatics Analysis Core at the University of Pittsburgh, recently asked for our thoughts on his proposal (for which he forgot to send us the link!) about creating an IP share market. The basic idea is that rather than just letting people invest in companies that own certain IP, you would create shares in the IP itself -- so you could buy a piece of a patent, and potentially receive dividends if the patent were licensed. The benefits that he notes are that companies would receive immediate revenue for certain patents, while also getting a clear sense of which patents the market thinks are most valuable. In fact, he notes that this could help organizations invest more wisely in R&D, getting a better sense of which concepts are most likely to be monetizable.

Lyons-Weiler has certainly put a lot of thought into this, and is clearly open to understanding what the downsides of such a proposal might be, so I'm hoping he doesn't mind my criticism of the idea. While the "pros" he list sound reasonably accurate, I would think that the cons greatly outweigh the pros. Most specifically, they focus the investment on the patent (i.e., the invention) rather than the actual innovation that is necessary to make it work in the market place. That's the distortionary effect of patents (putting too much emphasis on the invention over the innovation), and such a market would likely increase that. It overvalues the idea and undervalues the execution. On top of that it would damage one of the areas where many patent system supporters insist patents are most necessary: long-term investing in inventions. Such a market would undoubtedly favor ideas closer to monetization, but supposedly the reason for granting such long patent terms is to give inventors a longer time horizon in which to monetize. So, while it's nice to see new ideas suggested, I don't find this one particularly compelling.

Filed Under: intellectual property, markets

Just Because A Market Benefits From A Gov't Handout Doesn't Mean It's Good Overall

from the looking-at-the-bigger-picture dept

Arnold Kling rips apart a particularly silly New Yorker article by James Surowiecki which attempts (and fails) to show that libertarian economists are hypocrites. The basic reasoning from Surowiecki is that libertarian economists believe strongly in market forces -- but, at the same time, the stock market has reacted positively to news of a potential economic stimulus package. Thus, he concludes, libertarians should support the stimulus package (the market says so!) even if the concept of an economic stimulus package goes against libertarian ideals.

This is silly and wrong for a number of reasons, but it brings up a mistake that I've been seeing made around here all too frequently: the idea that if one market benefits from a certain government handout, then clearly "the market" has benefited overall. So, of course the stock market is looking forward to a government handout -- because those involved in the stock market will benefit from such a handout. However, that does not mean that it's really the best thing for the wider economy. Surowiecki's mistake is thinking that the stock market is a proxy for the overall economy. That's the sort of mistake made by someone totally unfamiliar with the stock market -- so it's a bit surprising to see Surowiecki make it.

As for the similar arguments I've been seeing around here, some of our more vociferous patent system defenders have been posting links to studies that have showed that certain industries have benefited from patent protection. Well, duh. But, of course, those industries don't represent the larger market. So, for example, there is some evidence out there that pharmaceutical companies have benefited from patent protection, but there's also even more evidence that doing so has come at a huge cost to actual healthcare, which has a huge multiplier effect on the economy (in a bad way). The fact that one single segment of an industry benefits from government handouts -- whether in the form of a stimulus package or a gov't granted monopoly -- is hardly proof that the wider market is aided by it. In fact, historical evidence suggests just the opposite. Investment is put towards these more inefficient (on purpose!) markets, rather than what would best serve the wider market.

Filed Under: economics, free market, gov't handouts, james surowiecki, libertarians, markets

Time For Journalists To Take A Lesson From (Smart) Musicians

from the the-model-has-changed... dept

These days there are a few types of stories we see and write about consistently: (1) the legacy recording industry's troubles in adapting to a changing market, (2) the ability of a bunch of motivated, smart musicians, bucking the old way of doing things and finding tremendous success and (3) the legacy newspaper industry's troubles in adapting to a changing market. Given (1) and (2), you would think that (3) might lead to the obvious (4) of a bunch of motivated, smart journalists, bucking the old way of doing things and finding tremendous success. And, in fact, that is happening, particularly with upstart blogs, but it's not getting as much attention. Romenesko points us to what should be a must-read essay over at the Columbia Journalism Review, highlighting the fact that worried journalists should be studying up on the success stories of musicians who are succeeding even as the legacy recording industry struggles.

It makes a few key points (which I'm summarizing and paraphrasing in this list) that apply to both, but which don't always get as much attention in the journalism field:

• Give away as much content as possible to build a following
• Share, don't hoard
• Really engage and connect with your audience
• Be authentic
• Build your personal brand

Some journalists (and musicians!) will likely push back on some of these, but it seems pretty clear that the market is rewarding people who follow these steps, and punishing those who don't.

Filed Under: journalists, markets, musicians, strategies