MediaSavvy

Martin Geddes says that network providers should be regulated as common carriers. He’s right, of course. There really is no other solution.

Common carriers can’t discriminate against either users or applications. This idea is older than telecom, going back to the regulation of railroads. In return for this loss of control, the carriers give up liability for how the network is used.

We’ve moved away from this idea because the telcos have always wanted to “add value” to their networks and they’ve managed to “persuade” the regulators that this will increase competition. Furthermore, Big Brother would like nothing better than for the networks to be its partners in controlling how we communicate. After all, the networks are private companies and are not bound by the first or fourth amendments.

What surprises me is that Martin says no one else is saying this. He may be right. I’ve only hesitated to say it before because I don’t understand the subtleties of common carrier status. But it seems like the only reasonable solution to me. Why aren’t more people talking about this?

The economy is less ragged, there’s more confidence in IT, Internet advertising is booming, the media are talking about a new Internet bubble, and webloggers are creating an atmosphere of innovation in Internet publishing. Here’s a quick braindump of what I think will happen next year.

Demand from high-volume bloggers will lead to the development of simpler, standards-based open-source content management software. This will increase pressure on existing CMS vendors and integrator to justify their cost and complexity. Most will not survive this challenge.

More and more CIO’s will report to CFO’s. IT will look more like a cost center and not a strategic resource. ROI and hard cost/benefit analysis will be necessary to justify any IT spending.

The IT recovery will be unevenly distributed. Large vendors will reap the benefits, but there will be pressure on their margins as their solutions are commodified. Small vendors will scurry for defensible niches or merger partners.

Internet advertising will be white-hot, but most of the revenues will go to a handful of sites. This will give Time Warner the opportunity to spin off AOL. They should seize it.

Computer companies will fail in the consumer electronics market, because they don’t have any understanding of what consumers want, have been turned into followers by Wintel market dynamics , and don’t have the right distribution channels. Apple is the only company that could do it, but loss of focus, low margins and short product lifecycles may make it unattractive even to them.

RSS will be used to syndicate new kinds of information and RSS readers will begin to appear in mobile devices.

This will be the year of digital rights management. A lot more hardware, software, and media will be introduced with DRM, but unattractive terms and compatibility issues will lead to stagnation in networked media.

Client-side and server-side spam filters will be ubiquitous and really good. Collateral damage will include most legitimate email marketing programs.

Most commercial wifi hotspots will go away (except in hotels and airports), but merchants will begin to provide free hotspots as a customer service.

More online content will go behind subscription barriers. However, this will be the beginning of a death spiral for those sites. Eventually (after their current management is fired), they will be reborn as stripped-down, highly-automated free sites.

Broadband access providers will begin to exercise their muscle by metering bandwidth and by imposing more limits on what protocols their customers can use, what information they have access to, and what information they can publish on the net.

It has been a long time since I was involved in creating a site from scratch, and only then as part of a large team.

I’m in the process of building a site for a community that I’m interested in and it has been an education. Most of the lessons have been positive. You’re going to be hearing a lot more about this on MediaSavvy. Especially once I’m ready to go public with my project.

Generally, the quality of the tools that are available to site builders is extraordinarily high. And a lot of great ones are free and open-source. And a lot of the others are cheap. Not to mention the fact that even the more-expensive tools take advantage of open-source platforms: Linux, Apache, mysql, and PHP.

You don’t have to be an ubergeek to put it all together, either. Everything is polished and has a enough customization options that you can avoid coding if you want. And boy, do I!

I also learned that I can do nearly everything I want with CSS, but that I still need tables if I want to be confident that the site will display as intended in the average user’s browser. A tip of the hat to Microsoft for keeping Netscape’s annoying table tags in circulation.

The big challenges right now have nothing to do with code. I need policies for posting, editing, advertising, as well as some idea of what my workflow will be.

What’s amazing to me is that although I knew deep down that open-source software was revolutionizing the publishing business, I had no idea how fundamentally disruptive this is becoming. And it goes beyond production. This software makes it possible to destroy the tacit understandings (and explicit labor contracts) that underpin publishing as we know it.

In the near future, you’d better have a damn good reason for printing something on paper, and you should forget about letting your print product drive your online strategy.

It’s amazing how much energy is left in the idea of digital editions of print publications. I’m not talking about shovelware Web sites, but about digital replicas of the print product, distributed electronically and read on the subscriber’s computer. The basic formula for these products is PDF+DRM.

This idea has been around forever. Longer, I think, than the consumer Web. It gets a lot of its energy from the perception among publishers that because it duplicates their print product with some digital advantages (e.g. searching) that it can be sold. Yet, aside from licensing fees, the incremental cost is about the same as a Web site — zero. Of course, there are real disadvantages as well. Magazines and, especially, newspapers are not formatted for reading on a computer.

The latest avatars of digital editions, Zinio and Newsstand, are generating a lot of interest.

PBS’s Newshour ran a story on digital editions of newspapers [Real Audio], with some remarkable statistics: about 160 US newspapers, and 225 newspapers worldwide are now offered in electronic editions, and the Washington Post’s digital edition has 800 subscribers. However, the number of actual editions being delivered today may be an order of magnitude smaller than this.

The Newshour described the audience as expatriates and others who couldn’t get home delivery. In other words: the Web audience.

But if it’s true, as Zinio claims, that 83 percent of digital magazine readers click on links in editorial content and 60 percent on links in ads — why not just give away the magazine and make money on the ads, just like you’re doing on the Web?

This maybe already happening. I know of at least one person who is getting a Zinio edition of a normally paid computer magazine for free.

I’ve been giving a lot of thought to bundling lately.

Generally, I think bundling is a pretty stupid idea. Bundles don’t exist to solve problems for consumers. They exist to solve problems for producers, either subsidizing products that can’t be sold unbundled (cable packages), to maintain manufacturing volume (magazine subscriptions), disguise the real cost of a product (Tivo, cell phones), lock out competitors (Internet Explorer), or to create the illusion of value where none exists (local telephone services beyond dialtone and call waiting).

Because bundles seldom solve problems for customers, they generally fail. Even when they continue to survive in the market, it’s not clear that if the components were sold individually, the net present value to the producer would not have been greater.

I can only think of a few situations where bundles make economic sense. One is where individual components of the bundle could not be sold economically, but that there is enough value in the bundle to satisfy customers. Norton Utilities is an example of this kind of bundling. So is Microsoft Office. Back in the seventies, this could be said of cable programming, but now cable programming could be unbundled if cable companies weren’t monopolies.

A second example is volume sales. Magazine subscriptions are a good example. Publishers cut out distribution middlemen and increase readership. Readers are given an almost impossible-to-resist bargain as a result.

A third is where you need to create a bundle to solve a chicken & egg problem or, in rare cases, to create a whole that is more than the sum of its parts. Apple Computer is a good example where the combination of hardware and software is genuinely synergistic. The early cell phone industry might be another example where bundling hardware and services might have made sense, but technology has passed this model a long time ago.

The fourth economically successful kind of bundling is the forced buy. Generally, you have to be a monopolist to force customers to buy a product that they don’t want to get something that they do, or give away a product to force a paid competitor out of business. “B” movies and a lot of pre-antitrust IBM software were subsidized in this fashion. Microsoft used this technique (as well as an excellent product) to make Internet Explorer the standard Web browser. Generally, these bullying tactics can be successful, but are bad for end users and markets, and are often illegal.

Outside of monopoly markets, I don’t believe it’s possible to create a successful bundle that doesn’t create real value for the end user by either reducing price or creating something genuinely new.

If you can’t do that, you should be asking what your real motivation for bundling is.