by Dana Blankenhorn
Volume V, No. III
For the Week of January 22, 2001

This Week's Clue: A Recession Survival Guide

This Week's Clue: A Recession Survival Guide

SSP (Shameless Self Promotion)

Fiddling While Rome Burns

Digital Property Rights Go Both Ways

Year of the Client

Clued-in, Clueless

You don't see the future by sifting through the past like the burnt embers of a fire and extrapolating from what hasn't burned through. You see the future by learning from history and applying its lessons to the mistakes of today.

Against inflation the Fed itself contends in vain. Since 1973 all U.S. recessions have been the product of inflation, specifically increases in the price of oil. Despite this fact our dependence on imported oil has increased since 1973. Energy policy has become the true "third rail" of American politics, and any attempt to craft a long-term solution (through short-term investment) has been a non-starter. Recessions are the penalty of this failure. They're the quick fix because they reduce demand.

Oil makes us dependent on a stable Middle East. When that area catches cold our economies catch pneumonia. The Arab Oil Shock of 1973, the Iranian revolution of 1979, and the Gulf War of 1990-91 all caused oil price inflation and recession. It is happening again and the results are predictable

Don't expect to "take advantage" of a recession. The prize here is survival. What are the correct survival strategies?

Internet companies should not only survive but they should thrive in this new environment. That doesn't mean their valuations are going to grow. But they should be able to earn solid profits, and that's what the market needs now. Dollars must be invested efficiently, too, you know, and until the recovery is obviously ahead fear, not greed, will continue to drive markets. 

SSP (Shameless Self-Promotion)

We're going to Hawaii! I've committed to speaking at the E-Commerce 2001 Conference and Exposition  on the Big Island of Hawaii, March 8-10. There's still time for you to register via e-mail to this big event . I hope to see you there.

You can join the A-Clue.Com discussion by joining I-Strategy , the shared e-mail digest that replaced our discussion board late last year. I-Strategy covers your future and that of the Internet. It will be lively, take just a few minutes to go through, and provide a host of voices other than my own. Please subscribe to it .

I'm still 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. You can send me e-mail any time.

My Clues come from daily writing for ClickZ. I write monthly for Crain's B2B, and Boardwatch. I write weekly for WorkZ and Internet Content . My monthly column has launched in Publish Magazine . I have written for Advertising Age and others as well. Yes, I'm very busy, but you can still buy my book. (Yes, I am working on a new one.)

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

Takes on the News

Fiddling While Rome Burns

One of the most amusing aspects of my journalism job is watching how stupid large organizations are on the way down, not just the way up.

Take the folks at Fox. The boss lays off hundreds from the news Web sites, he's skeptical about the Web generally, but the folks at FoxKids.Com are still (thoughtlessly) FedEx-ing irrelevant press releases to me. When they call on a follow-up I mention the news, and I'm told "Oh, that doesn't involve us!"

Or look at the lovely folks who run The Industry Standard. They're laying off a ton of people, but the top writers and editors are still going off to Nevada for a "retreat" (read vacation) and passing around memos about all the fun they're about to have. (The Standard, understand, is a unit of giant International Data Group.)

One more example should suffice about large corporate stupidity. Less than two years ago Federated Department Stores did something clever, acquiring Fingerhut for its dot-com fulfillment expertise. Hundreds of lay-offs later Fingerhut's one remaining dot-com success, Andys Garage Sale, is being closed. Andy's started by selling Fingerhut's remainders and evolved into something similar to Doonesbury's famed myvulture.com. Well, never more.

No matter how dumb you may feel, your small company is a team, and no one there is as stupid as the big boys are. That's because everyone in your company thinks about your company's fate as their own.

Digital Property Rights Go Both Ways

We experience copyright material in many ways. If we go to the movies or a concert we pay to experience it once and hold no possession of it. When we buy a DVD or CD we consider ourselves owners of the content. It's my CD collection.

Copyright holders have never recognized this reality, although it has been common practice for a century. Copyright owners feel they've licensed you a copy of the CD, but that they still control how it will be used. In some ways we've accepted this reality. A DJ will get a license to make money from his CD collection at parties. But even when we make a profit from our "ownership" of a CD we don't always recognize this. Attempts to halt the spread of second-hand CD stores have proven fruitless.

So the question of ownership and licensing is being fought again, with the rise of the Internet. Copyright holders are trying to assert license and control over what you do with the copy of something you bought. To do this they're seeking to force technology on users that re-asserts control of CDs after they've been purchased . Unless everyone is treated as a potential criminal, the claim is that copyrights will become worthless.

The effort is being led by the software industry, for its own reasons. Microsoft's move to require registration and limit use of its software to one machine might work, if the price of the software were cut by a factor of 10, but that's not going to happen . What's going to happen is that Windows upgrades will slow, "hackers" will create workarounds, and Microsoft will find itself fighting the same losing battle as music companies are fighting (and losing). The alternative to Microsoft's losing is that only the technically proficient will have what they consider to be their property rights.

So let me make this clear to the software companies, to the music companies, and to the movie companies. If I bought it, I own it, and I'll do what I want with it. As long as I'm not taking money from re-selling it I'm no pirate. If you don't like that tough - arguing with the market is always a losing proposition.

Year of the Client

I saw 2001 in the dying embers of 2000, without realizing it.

I was in San Antonio before the Alamo Bowl, sitting in a hotel bar with some younger Northwestern University alumni. One of their number fell asleep across the room, so the man next to me picked up his digital camera and lined up a close-up of his friend's sleeping face, while a third man laughed next to him.

Digital cameras were among the most popular gifts of the last Christmas season, along with other client devices for creating digital movies and music. It will take time for people to learn how to use these devices, and their next response will probably be to upgrade their PCs, starting later this year. This means the present slump in PC sales will end, as will the slump in software sales.

It will take more time, however, before facility with new PC client applications turns into a desire for sharing these files widely. When it does the broadband revolution will truly be here. But it does take time to learn new skills, and now will be the time for many.

Clued-in, Clueless

Clued-in is Thom Reece , and not just for inviting me to Hawaii. He realized early that the disciplines of business work both online and off-line, years before most were willing to acknowledge the fact.

Clueless is iBlast, the latest attempt to turn the two-way Internet into a one-way medium. It has just begun its beta test and deserves to be strangled in its crib.

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