Part of the key selling point of the whole concept of Android-based smartphones was that they were open to tinkering. Apparently, Motorola thinks somewhat differently about that. paperbag was the first of a whole bunch of you to point to variations on the story that Motorola has put a thing called "eFuse" on the Droid X which will effectively brick your phone if you try to mess with the software.
If you look around, a lot of people who said they would originally buy a Droid X are saying they won't do it now, just on principle. Bricking a phone that someone bought, just because they want to change the software themselves is pretty abhorrent. Motorola's response to the concerns isn't winning over many people either. They flat-out say that if you don't like it, you should buy another phone:
We understand there is a community of developers interested in going beyond Android application development and experimenting with Android system development and re-flashing phones. For these developers, we highly recommend obtaining either a Google ADP1 developer phone or a Nexus One, both of which are intended for these purposes. At this time, Motorola Android-based handsets are intended for use by consumers and Android application developers, and we have currently chosen not to go into the business of providing fully unlocked developer phones.
The use of open source software, such as the Linux kernel or the Android platform, in a consumer device does not require the handset running such software to be open for re-flashing. We comply with the licenses, including GPLv2, for each of the open source packages in our handsets. We post appropriate notices as part of the legal information on the handset and post source code, where required, at http://opensource.motorola.com. Securing the software on our handsets, thereby preventing a non-Motorola ROM image from being loaded, has been our common practice for many years. This practice is driven by a number of different business factors. When we do deviate from our normal practice, such as we did with the DROID, there is a specific business reason for doing so. We understand this can result in some confusion, and apologize for any frustration.
I think they're missing the point. The fact is most consumers won't tinker with the underlying software of their phone, but if they do want to, they should be allowed to do so without having Motorola destroy the device.
Stephan Kinsella sends over a fascinating talk by Dr. Terence Kealey, a UK biochemist and professor, discussing why -- contrary to what most people think, "science" is not a public good, and that government-funded science actually tends to do more damage than good for global economies:
Many of the points raised actually apply to issues related to patents as well. For example, he starts out by quoting Francis Bacon, who defended the idea of governments funding science by claiming (as we often hear about patents), that if an individual invests in research, it will cost a great deal to do so, but any competitor can then copy the results for free. And thus, Bacon concluded, science was a form of a public good which the government should fund. Sound familiar?
The problem, it turns out, is that as with patents there is no actual data to back this up. Kealey points out that there is no historical or econometric data anywhere that supports this claim. For example, he points to the OECD's sources of economic growth report (pdf), where it found very high correlation between economic growth and countries that had high levels of private R&D. When it came to publicly supported R&D, the report found no impact on economic growth... but, more worrying, it found evidence that public funding of science tended to crowd out private funding of R&D, which (again) correlated highly with economic growth. Now, of course, correlation is not causation, and there may be many other factors at play here. However, it is interesting that there doesn't appear to be any direct evidence that public expenditure in science leads to economic growth.
Dr. Kealey points out that many people believe in the importance of public funding of science based on the same thinking as Bacon above: the idea that science is a public good. That is, that once it's out there, anyone can use it -- and thus, it either needs to be enclosed and limited in some manner, or funded by the government. In the last couple decades, however, more and more economists have begun to realize that this thinking on public goods is not only overly simplified, but it's often wrong. It appears to be the case here again. Kealey points out that science is not, in fact, a public good.
Why? Because of a combination of social mores and the need to do your own research to understand what others are doing:
The standard story... was that science was a public good, in the sense that anybody can go to the journals -- or the internet today -- and pick up the Journal of Molecular Biology and read the papers for free... We can get it for nothing. Or we can go to the Patent Office, which very kindly publishes all this stuff... and read all the patents... and get ideas, blah blah blah.... We all know that "science is publicly available," and therefore is easy to copy and all the rest of that.
But hold on a second.
How many people in this room can read the Journal of Molecular Biology. How many people in this room can read contemporary journals in physics? Or math? Physiology? Very, very few. Now the interesting thing -- and we can show this very clearly -- is that the only people who can read the papers, the only people who can talk to the scientists who generate the data, are fellow specialists in the same field. And what are they doing? They are publishing their own papers.
And if they try not to publish their own papers... If they say, 'we're not going to get engaged in the exchange of information; we're going to keep out of it and just try to read other people's papers, but not do any research of our own, not make any advances of our own, not have any conversations with anyone,' within two or three years they are obsolescent and redundant, and they can no longer read the papers, because they're not doing the science themselves, which gives them the tacit knowledge -- all the subtle stuff that's never actually published -- that enables them actually to access the information of their competitors.
This is a huge point that fits with similar points that we've made in the past when it comes to intellectual property and the idea that others can just come along and "copy" the idea. So many people believe it's easy for anyone to just copy, but it's that tacit knowledge that is so hard to get. It's why so many attempts at just copying what other successful operations do turn into cargo cult copies, where you may get the outward aspects copied, but you miss all that important implicit and tacit information if you're not out there in the market yourself.
He then goes on to discuss the Royal Society of London, which encouraged scientists to publish their own research, and points out that while initially, people might think that it was better to not be a member, not publish your information and just scoop up what others had done, in practice that wasn't the case. Why? Because the members of the society beyond publishing themselves, also had much greater access to all the other members as well, allowing them to continually further their own knowledge. In other words, the argument that researchers or competitors will prefer to keep their inventions secret via trade secrets goes out the window when companies realize that by sharing more freely their own inventions, they also get greater access to the inventions of others.
What's interesting here is that this story of the Royal Society and the benefits of membership actually fit -- almost exactly -- the research on why Silicon Valley became such a huge success when compared to other, similar arenas. What that research showed was that due to a lack of noncompete agreements in Silicon Valley (where they are outlawed), the rate of job shifting was much higher. And, partly because of that, information flowed much more quickly between competitors. While one might normally think this is a bad thing, what actually happened was it allowed all the companies in that space to grow much faster, because the knowledge sharing led to faster and faster advancements for all. Rather than being limited to just what one group could figure out, they could all effectively build on each other's knowledge as well -- and the end result was much greater growth for all.
But, still, as with the situation that Dr. Kealey describes, there had to be a level of expertise from everyone involved. It wasn't as if some other party, with no knowledge of the space at all could just copy it. So too, it appears to be, with scientists:
You can't access the science of others unless you're part of the game. It is only the molecular biologist who is publishing his own papers, getting invited to the conferences, having the discrete conversations with other fellow molecular biologists, who can capture the work of others. And so you don't get the information for free. You pay a very high price to access the information of your fellows. Science is not a public good.... It costs as much to access information as it does to make it. It's just that the cost of accessing is the subtle parallel cost of the work you have to do before you're ready to read it. And, as a part of that, you're contributing to the common pool of knowledge.
From there, he discusses the famous story of how the Wright Brothers and their patents effectively killed the aviation industry in the US until the government stepped in to force them to open up. And from there, he makes the point that I was discussing above about the research on Silicon Valley:
What is really interesting about the exchange of knowledge, is the work of von Hippel and others at MIT Sloan Management School: industrial scientists collude -- or I don't know what word you want to use -- exchange information all of the time. Even competitors. It's a straight quid pro quo. Just like academic scientists. von Hippel showed, for example, the 12 leading steel makers in America... 11 of them routinely met discretely, and exchanged information as quid pro quos. It's a very nice model, economically. There is actually shared knowledge amongst scientists. One of the leading economists of science -- I'm not going to name all the names because it's boring -- but he's showed that there are no industrial secrets in America or in Britain or in the West. Scientists at the level of research, in companies, exchange so much information, that no secrets exist more than about a year, a year and a half....
...
Scientists discovered a very long time ago that their own self-interest is assured if they share knowledge with competitors. Because the ones that don't share knowledge, whether they're academic scientists looking for their Nobels or business scientists looking for money, that if they don't share, they will absolutely get left behind.
It's great to see that there's even more research on this particular subject than I had been aware of before, but which confirms many of the points that I've been making for years.
It's no secret that MPEG-LA, the private company that handles patent pools for a variety of digital video standards, including the widely used H.264 -- and recently began dabbling in patent trolling, has suggested that there can be no digital video without licensing patents from its patent pools. And, of course, there were just rumors (kicked off by a Steve Jobs email), that MPEG-LA was gearing up to sue any "open" video standard out of existence. Well, that whole story got a bit more complex this week when Google announced its plans to open up its VP8 video codec, and make it royalty free, under the WebM name.
Of course, you didn't think that MPEG-LA would take that calmly, did you? MPEG-LA's boss claims he's working to create a patent pool around VP8... meaning that what Google insists is now royalty free, might not end up being royalty free if MPEG-LA has its way. Of course, the good news here is that you now have Google's cash around to back up any potential patent fight, but it may take years (and years and years) before any resolution comes of it. And, in the end, for MPEG-LA, that might be the real goal. If it can just create enough uncertainty around VP8 through patent threats and lawsuits (even if it loses), it might hope that it can retain its hold on the market with H.264.
The White House tasked the Office of Management and Budget (OMB) with spreading "open government" efforts throughout the US government -- but a recent analysis of what agencies in the government are most open shows that OMB is near the back of the pack. The rankings put the different agencies into three categories: exceeding openness standards, in line with openness standards and... weak on openness. OMB fell into that last group along with the Treasury Department, the Justice Department, the Defense Department and the Energy Department (are any of those really a surprise?).
The study also criticized OMB for talking a lot more about openness than doing anything about openness:
"OMB's plans to improve these issue areas remain overly vague, with almost no listed milestones or schedule for specific actions," the study found. "OMB's plan also does fails to include any information about how the plan was developed, what outreach was done to gather input and ideas, and how it will inform the public about its progress."
This reminds me, actually, that just last week, there was a one-day session on open government policies by the White House... and some found it rather ironic that part of the session was off-the-record. Hint to the US gov't: this openness thing? You're doing it wrong.
Dave Weinberger has a thought-provoking post where he discusses why an "open" internet is so important, and suggests that we may be thinking about things incorrectly due to the term "open."
The Net as a medium is not for anything in particular -- not for making calls, sending videos, etc. It also works at every scale, from one to one to many to many. This makes it highly unusual as a medium. In fact, we generally don't treat it as a medium but as a world, rich with connections, persistent, and social. Because everything we encounter in this world is something that we as humans made (albeit sometimes indirectly), it feels like it's ours. Obviously it's not ours in the property sense. Rather, it's ours in the way that our government is ours and our culture is ours. There aren't too many other things that are ours in that way.
If we allow others to make decisions about what the Net is for -- preferring some content and services to others -- the Net won't feel like it's ours, and we'll lose some of the enthusiasm (= love) that drives our participation, innovation, and collaborative efforts.
So, if we're going to talk about the value of the open Internet, we have to ask what the opposite of "open" is. No one is proposing a closed Internet. When it comes to the Internet, the opposite of "open" is "theirs."
I'd certainly never thought about it that way, but it does make a point. I do think that many more people feel "at home" on the internet in a way that they never could or would in other platforms or media. And part of the fear that people have about losing an "open" internet is that it will decrease any incentive for participation. There is definitely a sense that part of the reason why some folks would like to pull back on openness is to turn the internet from a platform for users towards a more controlled broadcast sort of platform. That is, it won't be about communication, but about content delivery -- and when you do that, it loses a significant portion of its value. And I think that's where the shift from "ours" to "theirs" comes from. Not everyone can put a show on TV, but anyone can put a video on YouTube or just create a website. The internet is about communication, and when you start mitigating who can communicate and how, you lose the value of community.
There are plenty of stories today about the not-so-secret "Google Phone" known as the Nexus One (assuming no silly legal issues get in the way) was finally "officially" announced. There wasn't much surprise at the announcement, other than the fact that Verizon Wireless is expected to get the phone in the spring as well, meaning that there's a CDMA version out there somewhere. Nearly every story about the phone has played the paint-by-numbers game of asking "is this an iPhone killer." To be sure, the Nexus One (which I have had a chance to play with) is extremely iPhone-like. But pitting it head-to-head against the iPhone may be the wrong way of thinking about it.
As he often does, Bill Gurley cuts through the clutter to make a really strong point. The iPhone and its closed system were designed for the top of the market only. Google isn't necessarily looking to compete with the iPhone or take users away from the iPhone -- it's looking to attract the market of "everyone else," for whom the Nexus One (or other Android Phones) represents a huge upgrade over what they have:
The iPhone does exist, and it is wildly popular. There are an estimated 55 million iPhones in use around the world. Despite this remarkable success, history will also show that Apple intentionally chose a business model with plenty of room for disruption underneath its pricing structure. It also chose a single carrier as a partner, which resultantly threatened others. Then Google built a product and a strategy that allayed the carrier's relative fears. Google gave them what they wanted, and then even gave them money. It could afford to do this because Google aims solely to protect the great business they already have in advertising, not to make money directly from the product (HW or SW in this case). Microsoft Windows, Internet Explorer, and Mozilla's Firefox represent choke points on the personal computer whereby Google could lose search share, or at least be forced to pay a toll. In mobile, they see a chance to potentially eliminate the toll-takers.
With a business model that allows for much broader distribution and price points that are well beneath the iPhone, Google's Android won't compete directly with the iPhone. For the iPhone loyalist, like Stewart Alsop who railed against Android, Android is simply not an option. This price insensitive user demands the very best experience they can possibly have and this is still the iPhone. Users won't switch in mass from the iPhone to the Android. It's the other 3.95 billion cell phone users that are highly likely to consider Android a step up from their current feature phone. The Android strategy results in phones at much lower prices with much more diversity which will hit a broader set of demographics. Apple can and will quintuple its current market share and still have a small portion of the overall cell phone market.
This is why the two products do not compete head to head. With its super aggressive model, Android will be the choice of the masses, and with its sleek design and non-compromising price point, Apple will rule the high end.
While I think Gurley overplays the claim that the Android strategy results in "phones at much lower price points," since that hasn't happened yet, there are a number of good points raised in this article. In many ways it goes back to the discussion we had a year and a half ago about the differences between open and proprietary strategies. The closed, proprietary, "walled garden," strategies have advantages in brand new markets -- no doubt. They are less chaotic, more user friendly and simply easier to grasp for many. But, in the long run, the open solutions almost always win out. The solutions that allow others to jump in and add stuff, change stuff or make stuff better. It may take some time, and the lead time for the proprietary solution may seem insurmountable, but overtime, the more open solution almost always wins out. Remember when AOL and its walled gardens were going to dominate the "open" internet? It seems likely that the same thing may play out in the mobile space.
The second point that I think is key is the recognition that Google has the opportunity to play a bit of business model jujitsu against competitors with Android, noted in this sentence: "It could afford to do this because Google aims solely to protect the great business they already have in advertising, not to make money directly from the product (HW or SW in this case)." This is a point that we discuss in a variety of different business markets. It's why we think that those who understand how to embrace the difference between scarce and infinite goods have a huge advantage. If you can make money by giving away a product for free that some legacy business relies on charging for -- and then making your money up in an ancillary market (made bigger by giving your product away for free), then you have a massive advantage to disrupt the market.
The problem, however, with Gurley's post is that it isn't clear that Google is actually doing any of this. As noted, the pricing on the Nexus One is hardly revolutionary, and seems quite standard. Gurley is right that Google with Android has an opportunity to do something disruptive, but it's not clear it's there yet.
Update: SoundExchange got in touch to respond to some of these points, please read the updates in the post and at the end.
SoundExchange, the collections group in charge of collecting and distributing money to musicians from a variety of different services (radio, satellite, webcasting, etc.), is technically a "spinoff" of the RIAA, but as many people who have dealt with SoundExchange will tell you, it's still tied at the hip with the RIAA. In fact, I was recently talking with someone who told the story of "negotiating" with SoundExchange, and was surprised to discover at the meeting that there was an RIAA representative who did all the talking. The SoundExchange guy stayed quiet.
Why the government has granted exclusive rights to this industry group to collect and distribute money to musicians is troubling enough. But it's made worse by the fact that if SoundExchange "can't find" musicians to give the money to, it gets to keep the money. Thus, for years there's been a struggle over the fact that SoundExchange seems to have incredible trouble finding musicians -- including some huge rock stars, and that means that SoundExchange, officially a non-profit, is holding on to a ton of cash (currently somewhere around $200 million). There are also questions about how SoundExchange has violated the law that created it, in order to lobby for even more rights to collect money from radio stations.
Based on all this, we've always had trouble taking SoundExchange seriously, so consider us skeptical now that the organization claims that it's going to be much more open and communicative and has launched a new website to help be more open. Only problem? The big list of artists that SoundExchange can't find has gone missingUpdate: Apparently this was a mistake by the lawyer criticizing SoundExchange who was unable to find the list, though it is still there. In the link above to P2Pnet, entertainment lawyer Fred Wilhelms goes through a variety of questions that SoundExchange hasn't answered, and he asks what happened to that list (while also noting how the list almost never seemed to change) Update: Again this appears to be an error on the part of Wilhelms, as the list is on the website:
The new website is a lot cleaner and easier to use, but there's one thing the old site had that the new site doesn't; the unregistered artist list.
As of now, there's no way for anyone outside the organization to assist in the effort to locate artists that SoundExchange has been unable to register since 2006. Despite your glowing reports on how many artists SoundExchange has been finding, you and I both know that, before the list disappeared, no names had been removed from the published list in over seven months, and only a couple dozen in the last 18 months. I'll take your subsequent assertion that the full and updated list will appear on the website at face value. Is there any schedule for that? Please don't tell me "soon." That's a devalued coin in the SoundExchange treasury.
Wilhelms also notes that for all of SoundExchange's claims to be "open" it's also conveniently not explaining how it determines who gets paid:
There's another thing that is missing from the new website which was repeatedly promised to me by John Simson and Neeta Ragoowansi; an explanation of how SoundExchange uses samples to determine which artists get what share of the royalty revenue when complete census data is not available. I was told two years ago that this information would be provided on the website, but I find that, not only is sampling not mentioned, SoundExchange continues to say things like "Get Paid When You Get Played." That's the header on the Featured Registered Artist page.
I have clients who have gotten a lot of play, but haven't gotten paid, and they've been told it was because their plays were not in the sample playlists provided by the webcasters who play them. Perhaps you can explain why SoundExchange has decided not to mention sampling on the website. I come back to related problems later on in this letter, but I would like to know if SoundExchange is ever going to explain how it samples, or even that it relies on sampling at all.
This is a big issue. As we've seen over and over again, many of these collections societies use sampling and counting methods that greatly overvalue big stars (who need the money less) at the expense of up-and-coming artists. It's like the poor get to pay the rich.
From there, Wilhelm's letter goes on in great detail responding to claims from SoundExchange and debunking them one by one. SoundExchange claims that they're now going to be much more open and respond to these types of questions. We'll be interested to see what they have to say.
Update: SoundExchange disputes many of the assertions in the post and in the letter from Wilhelm. I've corrected the one factually incorrect issue that we made -- the list was still there (though some in our comments argue it's now much more difficult to use). I'm not going to edit Wilhelm's letter, because that is his work, but SoundExchange disputes his claim that "sampling is not mentioned" by pointing to an FAQ response, and also disputes the issue of the list not updating by stating "We do not update the list on the website as it was a one-time release of artists who stood to lose money in a 2006 pool release (which was later cancelled in favor of ongoing efforts to find artists). This is clearly stated on the list. Names come off the unpaid list all the time, but the website list was a static, one-time release." Even though this is stated on the list, it seems like it would only make sense to keep the list current.
The other issues that SoundExchange has with the post are points of disagreement, but are not factually incorrect. It notes that while it can keep the money, it has not done so (though, leaves out the fact that this was due to publicity over the fact it was going to do so). SoundExchange also disputes the claim that it has "trouble finding artists," saying that the real problem is the rightsholders themselves, who fail to register. If that's the case, then it would certainly be useful to provide details on how many artists that SoundExchange holds money for that SoundExchange has contacted and then still failed to register. SoundExchange also insists that it has every right to lobby, but I'll link to the original article explaining why it seems likely that SoundExchange is in violation here. Finally, SoundExchange doesn't like being lumped in with other performance rights groups who use sampling methods which tend to favor large artists over smaller ones, saying it supports "census" data that would accurately account for all plays. Duly noted.
Well, this is just lovely. I added it as an update to the original post about Biden's highly questionable, one-sided "piracy summit," but it's an issue that deserves an additional post. Reporter Ryan Reilly was attending the summit, and was Twittering what was going on, so we got to hear Biden say that piracy is "flat unadulterated theft" (apparently the Vice President of the US is unfamiliar with US law and the difference between infringement and theft, which is... um... scary). Then we heard that Attorney General Eric Holder was reinvigorating the Justice Department's "task force" on copyright. Why? There's still no indication of any actual harm (both the movie and music industries are growing). Then, Commerce Secretary Locke noted that anti-camcording efforts are an important part of the anti-piracy effort. Funny timing, given the recent fiasco over a young woman arrested for incidental capturing of snippets of New Moon.
So it started out just great. And then? Well, then the press got kicked out. Seriously. Isn't this the Obama administration that's supposed to be all about openness and transparency and not giving in to industry lobbyists? So it gathers up a bunch of the highest ranking government officials, (and doesn't invite any consumer advocates or tech industry representatives) puts those politicians in a room with industry bosses and lobbyists, claims that "all stakeholders" are present (seriously, that's what Biden's press release said), has those government officials make a few blatantly false or misleading claims, and then kicks out the press. Yikes. Update: Reilly has now published his article on the event, which includes a list of attendees.
As a bunch of countries and lobbyists continue to debate ACTA in secret, it's interesting to compare that to an ongoing effort by Christian Engstrom, one of two Pirate Party representatives in the European Parliament, to create an Internet Bill of Rights by asking people what they want. Which one sounds more like government for the people, by the people?
It really was just a couple months ago that the Royal Mail in the UK was using a copyright claim to stop websites from offering public postal code data. It made no sense that such data should be proprietary, and it appears that, finally, UK officials are realizing this. Starting next year, the UK will free up postal code data so that anyone can use it. There are still some questions as to how this will be done, but it's a huge step forward from shutting sites down to actually freeing up the data.
