by Dana Blankenhorn
Volume IV, No. XXXII
For the Week of August 7, 2000

This Week's Clue: Trying to Kill the Web

This Week's Clue: Trying to Kill the Web

SSP (Shameless Self Promotion)

The Real Privacy Battle

What Can Be Done Away With

How the Government can Save the Music Industry

Clued-in, Clueless

There's a reason why the Internet and Web succeeded while schemes like X.400 and EDI failed. The Internet's design requires that networks exchange "precious bodily fluids" (Jack Rickard's term), while the Web is based on unlimited linking (and sharing), again without economic motive.

Networks that cut-off access to other networks no longer offer Internet service to customers - they're private networks. Content owners can protect their data with firewalls and cash registers, but content that can't be freely linked-to is no longer on the Internet, either.

The chief corruption of our age is the purchasing of government by private gatekeepers, who use it to protect old monopolies and deny market access to the producers of goods and services. The Internet has undermined this. In the process it has made producers, consumers and (even) big business richer than ever before. 

That is not enough for the Clueless. The Clueless want guarantees - guarantees of control and payment on their terms rather than the more uncertain terms of the market. As the political season enters the home stretch, it's time to look at these efforts to kill (or ruthlessly control) the Net.

The best publicized such attempt is that of record producers. The interests of artists and record companies are not congruent - the former ripped off the latter for generations. (They still do.) But like battered women fighting the cops for their men, some artists are now defending their masters' greed and attacking attempts to create different and more direct economic links between listeners and musicians. 

Producers say they create tastes and create acts, thus they create value. They create some value, but they're paid nearly all the value the industry creates. Like Stephen King , some musicians  are now looking for ways to turn demos, community, online concerts and merchandise into an even-better revenue stream than what a record deal offers. 

Meanwhile by spreading fear, uncertainty, doubt, lobbyists and lawyers, record companies have fooled many into thinking they're defending artists rather than themselves, attacking piracy rather than the new market. One such is Geraldo Rivera (who doesn't even own his own name - check it out ) who concluded a discussion on Napster by defending the industry and saying, "artists should be paid." That's not the question, Geraldo. It's whether artists will have choices and control over those payments, or whether their slavemasters in the music industry will. 

Other industries are taking music's lead, using lawyers and lobbyists to regain control technology has taken away from them. On the Internet backbone banks are leading a charge to gear-up against major providers' refusal to give smaller backbone companies the equal access the Internet mandates . UUNet has been abusing its power in this marketplace for years - fortunately there are big victims here who can defend themselves. In the process these victims defend you. 

The rules of equal access aren't "fair" to those who benefited from old arrangements. They can buy arguments, they can buy lawyers, and they can even buy courts. Read the nonsense Richard A. Epstein of the University of Chicago wrote recently on behalf of Realtors (among others) who lost their monopoly on content to the Net. Epstein's work is part of the eBay-Bidder's Edge case , in which database links were enjoined by a Clueless judge. 

Epstein wants courts to go further. He wants public sites defined as property their owners can control through trespass statutes. This view would require licensing for every link on the Net, transforming the Net from a public space (with private spaces walled-off behind firewalls) into a private one ruled by lawyers - where those with the gold make the rules. It's legal sophistry at its worst, and you can bet he's being paid well for engaging in it. 

The danger, of course, is that judges buy this nonsense and put the law completely against the Net. Today, that is a real possibility. The political system is bought-and-paid-for, and the legal system is bought-and-paid-for, by defenders of the status quo. Technology and the market stand against them. 

But I believe technology and the market will eventually win out. As monopolists continue to win legal and political victories, my faith lies in the righteous anger of the market and the refusal of technologists to knuckle-under. 

Those who stand on the side of technology and market change will win this struggle. Attempts to move the site of the struggle will not succeed. 

SSP (Shameless Self-Promotion)

I'm still making myself available for consulting to a limited number of clients, with an eye toward assuring their long-term success. If you're interested give me a shout at 404-373-7634.

Also, please pass this along to friends and urge them to join our list. And don't forget our new e-mail address .

I write daily for ClickZ, and weekly at Andover.News. I write monthly for  NetMarketing, Boardwatch, and  Intellectual Capital. I've been in Advertising Age and the Chicago Tribune . Once every other month I'm in CLEC Magazine. Twice each month I'm at OneChannel.Net  and I've recently joined the staff at ISPWorld. You can always buy my book . Subscription instructions are at the bottom of each issue.

Remember that it's journalism that keeps the Clues coming...

Takes on the News

The Real Privacy Battle

Major media are under the Clueless impression that the battle over privacy is between the industry and the government . They couldn't be more wrong.

No, the real battle is with customers, the marketplace, with consumers who instinctively understand the information transaction they seek to engage in but fear both big business and big government. A recent Cyber Dialogue study, while it concerns the health care industry, reveals this basic truth clearly .

We all know that the only way a Web site can serve us quickly and well is to know something about us. The more the site understands about us, the more likely it is to find content, products and services that appeal to us. The problem is what happens when that data is leaked, either to government, potential employers, or others who might use the details against us.

The data we give must be kept in the control of a neutral third party that has some protection against the depredations of government. The reason Dubya is leading for the White House is because of the assumption that he distrusts big government as much as you do. (It's a false assumption, but whether an assumption is valid is unimportant in electoral politics.)

Whoever gets your data, in other words, has to be ready for the government's onslaught. The understandings behind that data are all that's important to the businesses receiving it - most don't have a Clue as to how to use their own data warehouses. As Cathy says, "Everyone wants to be understood. No one wants to be known."

What Can Be Done Away With

Any spending that doesn't lead to results is wasted money. This is most true in the e-tailing and dot-com technology worlds. Yet every city is building first class office space for dot-com companies.

This is wasted money. Dot-coms don't need first class space. They don't even need as much space as they have, since most of the work can be farmed-out to virtual teams.

While the headlines are about landlords shunning technology tenants the real story is that most potential tenants lack a Clue. When you support home offices with free broadband, furniture, and construction loans for key people you save money and maintain loyalty at the same time. Servers need connections, redundancy, and back-up power, but they don't have to be in your central office. That office should be heavy on shared spaces like conference rooms (equipped with videoconferencing systems), light on private offices.

This means dot-coms need smaller, cheaper offices, and that the Internet will lead to a residential re-modeling boom.

How the Government can Save the Music Industry

The great Napster hooha obscures the serious efforts by artists to forge new relationships with listeners.

It's obvious that big-name artists can reinvent these relationships, if they get control of their current catalogs and remove the blinders tying them to their record company "masters." While record companies still have a role in molding popular tastes and plugging artists into them, their percentage of the gross must decline - although those that get this right will still find their grosses increasing. The key to the battle is whether small artists resist the "heroin" of a little fame-and-money offered by the record companies in exchange for one-sided contracts.

And here's where lawyers should come into the picture. How about re-examining some of those contracts between artists and record companies? "No one held a gun to their head" is a common refrain, but when record companies are the sole market gatekeepers that's not really the case. Which lawyers can do the most good? These lawyers can do the most good . Even an investigation of the "big five" (or is it four?) on antitrust charges would open the market by giving private lawyers a potential cause of action. Their pressure could release the big artists, allow creation of new economic models, and provide a guide other artists could then follow.

The market, not the law, should settle this war in the best interests of all. In time, it will.

Clued-in, Clueless

Clued-in is Earthlink investing $2.5 million to give its DSL customers firewall security . In a price-sensitive market that kind of caring counts for a lot.

Clueless is Real Networks, which wound up with yet another scandal because it went back to its old ways of doing business when it thought the coast was clear.

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