by Dana Blankenhorn
  Volume VI, No. XXXIV

This Week's Clue: The Silk Road

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This Week's Clue: The Silk Road
SSP (Shameless Self Promotion)
SP (Shameless Promotion)
A Universe Changed by the Web
The Luddites Are Back
Moore's Law Opener
Clued-in, Clueless
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For the Week of August 26, 2002

Silk is an amazing substance. It's very soft, even sensual, but also stunningly strong. It's also perfectly natural, the creation of a moth seeking to cocoon itself while it transforms into a final form that will flit about long enough to reproduce, then die.

To gain the benefits of silk (and other treasures) Muslim traders during what Europe would call the Middle Ages plied the "silk road" across Asia. It was a lawless, unregulated path, something like the modern Internet. (It also held great wonders like the stone Buddhas blown-up a few years ago by the Taliban.) After Marco Polo discovered the road, the race was on to get around it and seize the riches of the Orient for the "great nations of Europe." in the 16th Century.

The Silk Road, and its fate, are an example of the Golden Rule - he who has the gold makes the rules. This is what happens in the absence of strong democratic institutions. It's how most of the world works most of the time.

It is true that democracies can be corrupted, and even elections can be stolen. These are the price of cynicism. When people believe "they're all crooks" they become easy to fool. (You can fool all the people all the time if you just convince all the people they're Clueless.) That's how we got such things as the DMCA, the Bono Act, and the 2000 election. But democracy has its own stabilizer. Once people believe that honesty is possible, and reform necessary, they will prevail in a democratic system. Reformers may, indeed be "only morning glories," as George Washington Plunkitt said in the classic "Plunkitt of Tammany Hall." (Essential reading for anyone interested in political science.) But when democracy is fully roused you get a LaGuardia or a Roosevelt.

Two news stories launched this lecture. The first was a legal effort by the RIAA to block U.S. backbones from serving a Chinese Web site called Listen4ever.com. As I understand it (I never was able to access it) Listen4ever was a warez site for music. They didn't use special "enabling" software - they just put the mp3s up and let people grab 'em.

My guess is China shut it down as soon as the right bureaucrat heard about it, but the RIAA wanted more. It wanted a U.S. legal precedent, denying backbone service (and thus site access) to any location on its say-so. The precedent could then be used against any Internet address used by a peer-to-peer network member. China is happy to oblige this because it wants backbone blocks on Taiwan, Falun Gong, democracy, open thought - any Clue you can name.

There's an important Clue right there. Dictators don't like anything that threatens their dictatorship. This is just as true for commercial dictators (like the RIAA, or the BSA for that matter) as for governments. And what dictators want more than anything is a controlling authority they can rely on (just as crooks want one that can be reliably bought).

That's where the second story comes in. It's why the struggle over ICANN matters. ICANN has decided that democracy's too messy. It prefers to be a dictator. And anyone who prefers dictatorship (including the foreign policy "realists" who backed Iraq and Al-Queda for short-term gain) is on their side.

Dictators can get things done. They make the trains run on time, they stop crime. They get results more quickly, and more reliably, than the messy paths of courts and parliaments might allow. History tells us the price - war, genocide, starvation, despair. But many are happy to pay in their short-term interests. Personal safety is, on the whole, more precious to more people, more of the time, than personal liberty.

In the end liberty, democracy, and even regulated capitalism are long-term values. They call us based on respect, on ethics, on the better angels of our nature. That's why it matters whether ICANN (or its successor) acts democratically, or dictatorially. It's not that democracy will mean better results. It's that democracy at least holds out the promise of reform, and creates a system within which reform can occur.

The point is that right now, the Internet is running along the Silk Road, not the democratic path. Democracy is messy, it requires the creation and use of a complex system which itself might become corrupted if its citizens give in to cynicism. It is absolutely the worst way to run anything. Except, as Winston Churchill said, for "all the others that have been tried."

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SSP (Shameless Self-Promotion)

I've been named to the ValueTree "Transparency Roll of Honour"for the work done here in urging honesty and ethics on the part of business leaders. I'm honored.

I have opened two new markets. GlobalPOVhas taken a piece I wrote on identity cards and why Americans won't take 'em. Marketingprofs has taken an occasional column similar to work formerly done at ClickZ. I'm presently negotiating with Corante to do a blog based on my upcoming book "Moore's Law for the Above Average." But I'd love more work, and I'm waiting for your e-mail.

To join the review team of the "Moore's Law" book just ask . If you'd like to help market the book as an agent or publisher, the address is the same. My current books include "Boom, Bust & Beyond: The Best of Dana Blankenhorn," , "The Time Mirror," and "Living on the Internet".

I still write for Boardwatch, Boardroom and BtoB. I still produce I-Strategy for Adventive

I'd like more readers, so tell your friends, clients, partners, and Congressperson about a-clue.com. You have my permission to forward this newsletter widely. And if you have trouble subscribing let me know .

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

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Shameless Promotion

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Takes on the News

A Universe Changed by the Web

With all the boo-hoo-hoo continuing over Web commerce it's useful to look at one niche that has changed - totally and irrevocably - thanks to the online world.

That niche is travel. Human travel agents are disappearing, and so are airline commissions, as reservations move completely online. Orbitz, a reservation site backed by the major airlines, hasn't destroyed its competitors. Instead sites like lastminutetravel, cheaptickets and Lowestfare are still in the game against Expedia and Travelocity. All this despite repeated attempts by the airlines to cut them off, extending the elimination of commissions to online brokers, forcing them to add their own up-charges.

Web sites are now the tail that wags the industry dog. Discounters like Southwest and JetBlue now depend heavily on their Web sites to make their numbers, and focus closely on the Web's performance in making sales. Their success has spurred competition from the majors but those efforts have been diffused, in part by Ortibz, in part by their own bureaucracies and in part by their route structures.

It's now undeniable what consumers want. We want a cheap, direct bus ride from here to there. We no longer tolerate the pretense that air travel is anything more. All costs - including selling costs - must be driven out. The discounters are the future, hub-and-spoke is the past, and the issue has been forced, I'd submit, by the rapid move of sales to the World Wide Web.

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The Luddites Are Back

Competition makes progress inevitable. Progress is a necessary good, despite its side-effects.

In the 19th century the word "Luddite" entered the vocabularyas apparel trades tried vainly to save themselves against the rush of machines. But Luddism wasn't the only political by-product of labor automation. Marx and Engels based communism on the "fact" that mechanization turned workers into "units of production," and these people would have to take control of society to bring some humanity to it.

Communism and Luddism both ignored the march of progress. One man does the work of 100 in comfort, and the other 99 (or their children) can be educated for a better life. Competition for labor and markets forces companies to see workers as their markets, and to honor their power.

But Luddism is making a comeback, mainly due to the fact that progress today takes place at a molecular and even atomic level. This is a key to advancing Moore's Law, and pushing it in new directions. But that doesn't slow the neo-Luddites, most of whom today are accused of wealth and guilty of education.

Care must be taken. Courts, regulatory agencies and professional societies all have roles to play. But competition doesn't just exist between companies. It exists between countries. China is becoming a major factor in chip-making, and it is actively researching the same nano-tech fields that have been pioneered here. We don't need less work in these areas, we need more. Otherwise we'll be buried. If we let any prejudice rule science we'll lose the future, but let's be clear. Someone else will pick up the baton.

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Moore's Law Opener

Twenty years ago I bought my first computer. It was a 26-pound, Z-80 based Kaypro, running at 2.5 MHz with 64 Kbytes of memory. It had two double-sided double-density floppy drives that held 360 Kilobytes of data each. I could write up to 180 pages of copy on it, then latch the keyboard to the case (making it portable) and haul it home. Which I did. Along with a printer and modem, it cost $2,700.

Today my son has a 733 MHz machine, with 32 megabytes of memory, and a multi-gigabyte hard drive which cost me $700. He thinks nothing of using my 1.5 Mbps Internet connection to play games, and the home network runs his schoolwork to my ink-jet printer.

We take these kinds of improvements for granted. They are, in fact, the tip of the iceberg. Tasks that took supercomputers are now done routinely using regular PCs, thanks to peer-to-peer networking. The improvements aren't incremental, either. They're logarithmic. You don't get a 3% gain, you get a 100% or 1,000% gain in performance, all at once.

This is the world of Moore's Law, and this is my beat. I would like to do more than follow here, I'd like to lead toward a new understanding of where these trends are taking our lives and our industries.

Because we've let ourselves be blindsided needlessly.

Take the "telecomm crash." While outfits like Global Crossing and Qwest were pouring billions of dollars into fiber cable, the coming glut was visible to anyone with a Web browser. While fiber networks were laying and overlaying cables like there was no tomorrow, Bell Labs was demonstrating 1 terabit data transmission on a single fiber, for a distance of 400 miles. They were doing this by refracting light into 1,000 different wavelengths (like a rainbow) and detecting each wavelength's on-and-off pulses separately.

Stuff like this happens all the time, but most of us tend to ignore it. We don't make the connection between the lab and the real world of business. My task is to make some of those connections, so you won't get blindsided.

Let's start with something "ripped from today's headlines". IBM and an outfit called Nion Corp. have a new electron microscope that can "see" images smaller than a single hydrogen atom. The microscope uses a desktop PC (admittedly, a new one) and an array of magnetic lenses. The microscope will let engineers create pictures of silicon structures as small as 50 atoms in length.

What this means is that Intel's latest announcement of faster chips will, in time, be followed by others. And note the "back-story" - chip-makers are accelerating development of faster chips as the recession in their industry continues.

In other words, you ain't seen nothing yet. Here we'll watch the future as it unfolds, and give you a chance to get out a little ahead of it. It's going to be a wonderful, wonderful ride.

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Clued-in, Clueless

Clued-in is Earthlink's new access software, which will include a pop-up killer and follows that function's inclusion in a standard firewall, ZoneAlarm Pro. There's also an important lesson here - ISP competition is becoming a matter of software.

Clueless is Qwest's $7 billion sale of its directory business. That's $1 billion less than originally advertised, and justifying the sale will require some very nasty business, like harvesting the database for sale to marketers. The buyers may well find they've bought nothing but trouble.

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