by Dana Blankenhorn
Volume V, No. XLVI
For the Week of November 19, 2001

This Week's Clue: Moses' Lessons for the Net

This Week's Clue: Moses' Lessons for the Net 

SSP (Shameless Self Promotion)

SP (Shameless Promotion)

Comdex R.I.P.

Let's Make a Record Deal

Black and White, or Shades of Gray 

Clued-in, Clueless

ICANN is technically a non-profit corporation that contracts with other companies to run the Domain Name System. It is a self-perpetuating group created by the U.S. government which, while exercising governance on a worldwide basis, disclaims any effort to define it as a world government.

Increasingly it reminds me of the old Triborough Bridge Authority (TBA) , now part of New York's Metropolitan Transit Authority (MTA)

While the MTA is now run by a board that is mainly appointed by the Governor and approved by the New York State Senate (like a U.S. regulatory agency) the TBA was originally created by and for one man , Robert Moses

Moses used toll fees to transform New York from the Greater New York City of 1898 to the New York Metropolitan Area of today, a network of roads and bridges spanning three states , the heart of what we now call "Megalopolis." For ICANN, the money comes from domain name registrations, specifically hiring registrars. 

As Robert Caro's monumental biography makes clear, Moses began as an urban reformer who, despite his incorruptibility, wound up destroying the city he hoped to save. The keys to his power were cash flow and his insulation from democratic process. 

These are the ingredients ICANN is now playing with. The group's decision, under former Swedish Prime Minister Carl Bildt, to turn its back on democracy was joined by some vicious rhetoric from former ICANN president Mike Roberts on the need to protect the security of the DNS first, last and always

As with Moses their motives are pure. The hurly-burly of democracy must be short-circuited for the greater good. I won't argue with them. Instead I'd rather take you back to the life of Robert Moses to see how his story ended, and the lessons it may hold for Bildt, Roberts & Co. 

Moses' hold on power cracked in the battle over the "Lower Manhattan Expressway," which would have connected the East River Bridges to the Holland Tunnel and West Side Highway and was finally stopped by the New York Board of Estimate, which had to approve the plans. One result, ironically, was that a rival agency, the Port Authority of New York , had a clear field to build a centerpiece for urban development, the late World Trade Center . So we have the first lesson: governments of men (as opposed to laws) always fall of their own weight. 

The second, more important lesson is that Moses' work destroyed the center he sought to protect. The network of freeways prevented the development of a downtown Brooklyn, or Queens, and made Manhattan itself relatively less important. The same things happened when Moses' scheme went nationwide -- we call the result sprawl. 

Today it is the United States of America that is the center of the Internet. But that won't be the case for much longer. By failing to build strong, democratic institutions now, because our leaders are good men and women with high motives, ICANN does not guarantee that absolute online power won't someday be given to men (or women) whose motives are less pure, and who will use that power against the majority of users. When that happens, there may be no legal power to control them, no popular levers (like New York's Board of Estimate) to pull on. 

Laws that control all men and women, even the good ones, are our best defense against tyranny and the desire for violence. We will win the War on Terrorism because our institutions are strong. That's the lesson ICANN is ignoring, and that's why its critics must press on. 

SSP (Shameless Self-Promotion)

The October update of my book, "Living on the Internet," is now available, free, to all members of this list. If you can help me get the actual book onto a shelf that sells PDF or LIT files (or even paper ones) I'll be eternally grateful.

Also, if you haven't gotten a-clue.com in your e-mail box lately, it could be that your e-mail server "bounced" it. We're pretty aggressive on pruning the list, and drop all addresses that bounce six times. So if you're seeing this online and miss it in your e-mail box, just hit the "subscribe" button on the home page.

You can join the A-Clue.Com discussion at I-Strategy , our shared e-mail digest produced with Adventive.Com. You can also read me at ClickZ , B2B, and Boardwatch. I'm also on the mast-head at Bottom Line Personal , a great print newsletter. Remember that it's journalism that keeps the Clues coming...

Shameless Promotion

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You can take the first step toward making your little list truly valuable with help from my friends at Whitehat Interactive - click here to begin that journey.

Takes on the News

Comdex R.I.P.

The failure of Comdex  is a reflection, not of September 11, but the changing nature of the technology industry.

Comdex stood for Computer Dealers Expo. Its mission was to move products through "the channel." Today that channel consists mainly of consumer electronic stores and a collection of big companies and resellers who can all go direct. The largest player in the retail market, in fact, is Dell, which doesn't use the channel at all.

Along the way whole industries sloughed off the Comdex train, like the Internet. What was left was a total dependence on one company, Microsoft. But despite the appearances and headlines Microsoft's power is waning.

In retrospect Windows XP will be seen as a failure - it doesn't provide new functionality to justify its expense (including the new gigahertz-speed hardware needed to run it). Even if the company's handhelds kill Palm that won't be a big hit to earnings. On every front, moreover, Microsoft is going it alone, dealing with customers directly through its Internet services and corporate sales staffs.

The new emerging markets don't have need for Comdex either. Servers go to NetWorld, the embedded market will go to the hardware stores, and new channels (home automation, home networking) will emerge that don't need and can't afford the expense of a week in Las Vegas.

What replaces Comdex? The medium you're using now.

Let's Make a Record Deal

While the headlines are all about "copy-proof" CDs (which will cause many unhappy returns for record stores and, perhaps, kill them off) the real headlines are being made elsewhere.

Most important is the fact that musicians and publishers have signed a deal on sharing of digital rights , one that will allow some musicians to experiment with new distribution media and give all sites that want to sell music more assurance of the cost basis they're looking at.

What's needed is a system of metering that will allow users to download copy-able digital music that is subject to fair use, that can be transferred to MP3 players and other devices, music that moves from producers to consumers in arms-length transactions. Until the new channel is established and accepted, the music industry slump will continue, with musicians and retailers both victimized.

Black and White, or Shades of Gray

Shades of gray have left the pallet since September 11.

Anyone who doesn't follow the political party line is now accused of "left-wing bias" or worse. (I nearly lost a gig on that kind of McCarthyism recently.) The new anti-terror act makes no distinction between dissent and support for terror - we're supposed to trust the government to know. (That will work until the government runs out of easy enemies to investigate, as we know from the history of the Cold War.)

There's us and "the other" - the "evil-doers" as the President calls them. But this isn't just happening in our politics. It's also happening in business as well.

The middle ground has disappeared from discussions about Microsoft, and so has the subtlety. The "browser lockout" was truly shameless, but what may have been just as shameful was the reaction to it. The browser itself was actually opened, so anyone (even competitors) could abuse it . It wasn't a "hole to be closed," it was a feature to be exploited.

Control of the customer is always an issue in business. Once you get permission to sell one item, you seek permission across your product line, then you seek other, compatible products. Preferably you make it impossible for the customer to leave you, by steadily increasing the "switching costs" of your product line. (That's Microsoft's protection in the current market.)

There are many people working against this effort to "control the customer." Competitors are just the first line of defense. Government can also protect competition - first through executive action, then through the judiciary, then through the legislature, and finally through public opinion, which can be the most powerful force of all .

One of the monopolists' arguments against the competition of anti-trust (which comes from the people) is that it creates inefficiency. Yes, it does. A second charge is that it creates bureaucracy. It does that, too. (But every big business has its own bureaucracy.) All this is usually wrapped up in the flag - anti-trust is anti-business.

Anti-trust is also part of the market, not just in the U.S. but elsewhere as well. That's why Microsoft's successful effort to intimidate U.S. trustbusters rang so false among Europeans, and why some even sought to require Microsoft alternatives in government procurement.

The Internet creates another potential pressure point - private action. As with economics and politics, this too is a continuum. It ranges from personal decisions to only use Linux (or Apples) to hacking-together programs that break Microsoft copy protection.

At some point economic, political and private action cross a bright line between right and wrong. Those on either side of these disputes will argue about where that line is. Powerful companies (and countries) like Microsoft (and the U.S.) define it in one place. Weaker companies and countries define it somewhere else.

Where do we go from here? We go back to shades of gray, which always exist in times of market uncertainty. Uncertainty is great for small, specialized, educated merchants of all types. Learn how to solve problems and you'll prosper in 2002.

Clued-in, Clueless

Clued-in is Amazon's virtual credit card . One of the most important things any large merchant can do is gain more control of customers' money, and a branded credit card does that.

Clueless is the World Terrorism Report which frames links off its site with its own wrapper. Sites that force the wrapper off (like the Washington Times) wind up mouse-trapping users, putting in an empty screen that frustrates the "back" button. This is just like 1996s' TotalNews case, only with a European site.

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