SOPA and The New Gatekeepers

I’ll admit that on a scale of 1-10, my following of the SOPA/PIPA escapades is only about a 6. This may seem low for someone who runs a platform that hosts 50 million unique visitors a month; all of whom are able to post user-generated content which potentially violates SOPA/PIPA principles.

Having been acquired by msnbc.com, a company 50% owned by Microsoft (who opposes SOPA as drafted) and 50% owned by NBC (who is one of the most visible proponents of the bill) our little organization is powerless to do much about the situation and frankly to even express much of an opinion about it. Note: I have not been told to shut up about anything. I just feel like there are enough smart people working this out right now that the world doesn’t really need my opinion on it.

What I do want to talk about, however, is a truth about the new world of legislation that this SOPA/PIPA fracas has made extraordinarily clear:

If you want to pass any sort of bill that affects the internet, you better vet it with the people who control the internet.

By “control the internet”, I of course don’t mean the people manning the tubes. I mean the people who run the most important destinations on the internet and the people who back those people. This includes the heads of for-profit destinations like Twitter and Facebook, the caretakers of non-profit destinations like Wikipedia, the investors who back all of the great online companies of tomorrow, and the government officials who are sympathetic to their cause.

From this anything-but-exhaustive list, we have Dick Costolo, Mark Zuckerberg, Jimmy Wales, Paul Graham (and cohorts), and none other than Barry O. himself. None of these people support SOPA as it has been drafted. Not only do they oppose it, but many have gone out of their way to publicly denounce it. Jimmy Wales has gone so far as to shut down the world’s most important collection of knowledge for a day to demonstrate what shutdowns actually look like.

It seems incredible to me that these gatekeepers of the modern internet were seemingly not even polled as to what they thought of this bill before it was floated. It would be like the EPA trying to sneak through a law that automobiles get 100mpg by year’s end without even talking to the car companies first. In some ways it’s even worse than that.

The truth is that the most powerful and influential people today look very different from the most powerful and influential people of the last century. The 20th century was all about industrialization. The game was to take a natural resource (like oil or cotton) process it until something useful (like gasoline or clothing) and then sell it for as much of a profit as you could. Since many congressmen came from industrial professions before they took office, or at the very least could easily wrap their heads around fairly straightforward concepts like oil drilling or cotton ginning, they had little difficulty a) maintaining relationships with important people in industrial fields, and b) drafting laws which made sense for consumers and producers at the time.

This new world, however, in which probably less than 10% of our elected officials can even tell us what a DNS server is, is a disconnected one. How are congressmen supposed to write bills that are palatable to the public if they don’t understand the ramifications of how the bills are to be technologically enforced? If you listen to the various SOPA debates like this one on PBS with Ben Huh and Rick Cotton, you don’t hear the anti-SOPA people disagreeing with the spirit of the bill. You hear them disagreeing with the letter of it; and to Rick Cotton’s credit, he even asks Ben if Ben would support the bill if it were written differently.

The people at media companies who helped write this bill are lawyers. It is usually a lawyer’s job to write up documents that are most favorable to their client. It is then, however, the other side’s job to modify that language into something equitable. “The other side” in this case is our elected representatives. What seems to have failed in this case was not that the initial draft was written as it was written, but that Congress did a terrible job of analyzing it, shopping it to important technologists, and then presenting something that actually made sense. As a result, this bill will fail, and that’s about the worst outcome private sector SOPA supporters could ever imagine. So in a sense, Congress failed both SOPA supporters and SOPA opponents. Amazing but true.

We either need a world where our elected officials know more about how technology works or a world where they at least consult a more heterogenous group of gatekeepers before proposing laws that affect technology, IP, and free speech.

It seems like it will be at least another generation until we get the former, so it is imperative that we immediately get the latter.

Note: I am speaking on behalf of myself here and not on behalf of any of the organizations who employ me (who I love equally :) ).

You Aren’t Who You Hang Out With

Every new app you try these days wants to know who your friends are. It’s easy to understand why. On the marketing side, it’s to encourage users to evangelize the app amongst their friends. On the user experience side, however, it’s to help users consume more relevant content.

Here’s are a few examples:

• Upon signing up for Rdio and connecting your Facebook account, you are shown music your friends are listening to.
• Upon installing Oink and connecting your Twitter account, you are shown food and other items your friends have sampled.
• Upon checking your Facebook news feed, you are shown status updates from friends reacting to movies they’ve just seen.

While this sort of content tailoring provides value, I often find myself uninterested in it. The reason is that although in many cases my friends are similar to me, my taste in things like music, movies, and food do not map to my friends’. The taste correlation between friends may be greater than between two random strangers, but it’s still not very high in most cases.

There’s a better way to expose people to new experiences and I think we’ll start to see more of it in the future. It may already have a name, but I’ll call it “phantom friending”.

To illustrate phantom friending, imagine you want to watch a movie tonight and you need a recommendation. Now imagine you have these two options:

1. Calling your best friend, asking them what good movies they’ve seen recently, and picking one of them.
2. Consulting a list of preferred, recent movies put together by someone across the country who you don’t know but who has in the past indicated that they hate a lot of the same movies you hate and love a lot of the same movies you love.

I hold that in almost every case, the second option will provide a better result. Even if you were able to poll 5, 10, or 20 friends, a well-picked phantom friend would produce a better result. That is because the phantom friend doesn’t represent someone you like to socialize with — as your real friends do — but rather someone who watches movies the same way you do. They have your same tolerance for violence, same appreciation for special effects, and same patience for heavy dialogue. In other words, they may be unlike you in every other way, but their brain consumes movies the same way yours does.

The phantom friend concept works better for some subjects than others. It would seem to work well for movies, food, and music. It may work less well for TV shows, because a big part of TV shows is discussing them week after week with our friends. The same goes for clothing. We often wear similar clothing as our friends in order to fit in better.

For the many situations where phantom friends are better influencers on us, I’d love to see more apps and services geared towards this type of discovery. One example I’ve always wanted is a “Movie Critic Dating Game”. I rarely read movie reviews because I haven’t identified a movie critic who is a lot like me. Here’s how it would work:

1. I am presented with a list of 20 movies.
2. I rate each movie with a thumbs up, thumbs sideways, or thumbs down.
3. The app finds me the national movie critic who has rated the 20 films most similarly to how I have rated them.
4. I then begin reading the critic’s reviews each week and choose new movies to watch accordingly.

Interestingly, the above scenario works almost as well if the system can find someone with the exact opposite tastes as me. If I can find the person who I disagree with the most, I can just always do the opposite of what they suggest (the “Costanza strategy”). Furthermore, even if you extended the questionnaire to 200 movies, there is someone in the world (although perhaps not a professional movie critic) who answered all 200 the same way you did.

Undoubtedly I am not the first to think of this concept, but given that it doesn’t seem computationally ferocious to do, I’m surprised we haven’t seen more of it. Hunch seemed like it was after a similar result, but it always seemed too impersonal to me. I don’t want a computer telling me what people similar to me like. I want a computer matching me up with someone and then letting me know what else they like. There is a difference there.

I can imagine a world in which I have a movie sensei, a restaurant sensei, a music sensei, and a bunch of other senseis. I may eventually know them by name or I may not, but it would be a fun set of relationships to have.

A good problem to have

Through much of the late 90s and early 00s, I remember having the same conversation over and over again about Apple and Microsoft. I had it with my friends, I had it with my colleagues, and I had it with anyone else who was interested in computers. It went something like this:

Other person: “When are you going to give up already and start using a PC? The war is over. Apple lost.”

Me: “They still make the best stuff and I want to support the company that makes the best stuff; not a company that uses their monopoly to sell products.”

Other person: “Don’t you think Apple would do the same thing if they were in charge?”

Me: “Yes. They’d probably be even more ruthless, but at least they’d make great products.”

From there, the conversation would tail off in another direction but I always remember thinking wishfully to myself that if Apple ever did rule the world again, what a fantastic problem it would be. Instead of having our future dictated to us by a company who didn’t even care enough to fix a broken web browser for over five years, we’d have our future dictated to us by a company who produced the most wonderful products in the world. The dream seemed so far-fetched, however, that it was easy to miss the potential for nightmare in it.

Trading places

Apple will probably finish this year a larger company than Microsoft, from a market capitalization perspective. That would mean the world values the sum of future cashflows into Apple more than any company in the United States besides Exxon-Mobil. God forbid the terrible BP oil disaster gets worse and has cascading effects on other oil companies, we could see Apple at #1.

So in a sense, we’ve now admitted — as investors at least — that Apple owns our wallets, many years into the future. This actually feels good right now, though, in a way. Not only am I using a great operating system, but lots of other people are too. Not only do I have a phone that keeps me connected, but I really enjoy using it too. Not only can I craft richly designed web experiences for geeks with good browsers but a good majority of people can finally view them too.

Most things are great so far. The reward we’ve reaped as a society for shoving greenbacks into Apple’s bank account for the last decade is that we have much better stuff now. It’s the exact opposite effect we got from making Microsoft big.

Those who are following the situation, however, have noticed a few things change recently, the most obvious being a move towards an incredibly closed operating system in iPhones and iPads. Many believe it’s only a matter of time before most of Apple’s products run on a similar OS. There are many definitions of “closed” vs. “open” but here is mine:

A closed system is one where a single organization has absolute control of everything that goes into it and everything that comes out of it.

Adobe ignores fire, gets burned

Steve Jobs wrote in his mostly reasonable letter condemning Flash that it was Adobe whose stuff was closed and Apple was the one using open technologies, but Adobe’s CEO — despite saying very little of substance — was right about one thing: this is a smokescreen. In order to use the Flash format, all I need to do is either buy a single copy of it (if the IDE is useful to me), or use any number of other, free compilers out there. In other words, Adobe never even needs to know about me and never needs to approve what I’m doing or selling.

In order to get my stuff onto an iPad or iPhone, however, I must receive explicit approval by a human being working for Apple after this human being has manually reviewed my work, derived my intentions for the product, and made a value judgement on what my creation brings to the device. As long as that process exists, there shall be no arguments that the iPhone or iPad are more open than just about anything we’ve ever seen before… including Flash. To claim that because Apple is pushing open standards like HTML5 (really for their own benefit) means they are somehow more open than Adobe is folly.

Adobe’s problem in this mess is that they’ve painted themselves into a corner with the public. They used to be loved by everyone who used their products. Ask a designer ten years ago whether they’d rather switch away from Apple or switch away from Adobe and I’m sure most would have stuck with Adobe. Today, not only has the situation reversed itself, but I find myself actively trying to move away from Adobe on my own. They’ve shipped nothing but bloatware for the past five years, each version of CS being slower and buggier than the previous and offering very little important utility in return. $700-$1000 for Photoshop CS5 and it still can’t even print a tiled document. Adobe Creative Suite, in many ways, has become the Microsoft Office for the creative design and development industry. Somehow I bet that was a company goal in a presentation at some point. Mission accomplished. So when Apple stiffarms Adobe by changing section 3.3.1 of their iPhone OS developer agreement, it’s no wonder people aren’t exactly rushing to Adobe’s defense.

Flash has taken a slightly different path towards public distaste and I actually don’t blame Adobe for most of it. When Flash first came out, only the most talented design visionaries used it. When a new Flash site came out in 1999, each one was like a new DaVinci… beautiful works of art that moved the web from a tame, ugly typographically poor medium to a center stage for creativity.

Then the advertisers got ahold of it.

When most people speak ill of Flash, they are actually speaking ill of ads. Watching Flash video on YouTube doesn’t crash your browser; visiting a news site with five annoying Flash ads all trying to synchronize with each other does.

What most of these people don’t realize, though, is that it’s other “open” technologies that play a part in making this happen and will continue to, long after Flash is history. The OBJECT tag which spawns Flash movies is an open standard. The javascript that popped open that window with the screaming Flash ad is an open standard. And the HTML/CSS that slowly sashayed that 300×250 div right the fuck over that paragraph you were trying to read is an open standard too.

When Flash is gone, this overly aggressive marketing will simply be foisted upon you using more “open” technologies like HTML5. And guess what? It’ll be harder to block because it looks more like content than Flash does.

Here is when I digress just a little bit…

It also amuses me when people talk about two things in particular with regard to the iPhone and iPad. First, how much better some companies’ iPhone apps are than their web sites, as if the company is somehow so much more gifted at creating iPhone apps than web pages. It feels better because it’s designed for you to do things quickly. Most web sites are actually not designed for speed of task completion at all. They are designed to maximize page views or at the very least, time on site (and hence, maximize revenue). ESPN.com doesn’t want you reading one story about the Mayweather/Mosley fight and then moving on with your day. They want you to read ten more stories after that, check your fantasy teams, and buy a Seahawks jersey. Mobile.espn.com, on the other hand, is more concerned with getting you in and out quickly because they know you have less tolerance for distraction and extraneous clicks when you’re on your phone. The second thing is when people talk about how great content looks in some of these iPad apps. Again, this is a reaction to the lack of distraction, not the tablet form factor.

Content that is free of distractions and potential crashes looks and feels better. Period. It’s not the hardware; it’s the environment.

… and then try boldly to pull it back in

… which brings us back to Apple and their role in the way we experience information moving forward.

With the iPhone and the iPad, Apple has either smartly or stupidly drawn a line in the sand and declared themselves no longer just the arbiters of hardware and system UI but arbiters of content and commerce as well. If you want to develop or produce content for Apple’s ecosystem, you will do exactly as Apple tells you to do. If you want to enjoy Apple’s products as a consumer, you’ll enjoy every freedom Apple provides and live with every limitation they impose. It’s like a country club. Apple isn’t saying you can’t play golf with your pit-stained t-shirt and denim cutoffs. They’re just saying you can’t do it at their club. Apple wants to run the most profitable country club in the world, with millions of members, but they don’t want everybody; and therein lies the difference between how their resurgence is playing out and how Microsoft’s dominance ultimately played out.

Microsoft wanted 100% share in every market they entered. The thought was that once you dominate a market, you can impose your will on it via pricing, distribution, bundling, and all sorts of other methods designed to maximize profit. To Microsoft in the 1980s, a monopoly was a great problem to aspire to have, and since antitrust laws weren’t routinely applied to software companies, the threat seemed immaterial. The problem with this thinking, however, was that the law eventually caught up to them and crippled their ability to continue operating as a monopoly.

Apple, on the other hand — while in danger of eventually suffering the same fate — seems determined to avoid it. What’s the best way to avoid becoming a monopoly? Make sure you never get close to 100% market share. What’s the best way to temper your market share? Keep prices a bit higher than you could. Keep supply a bit lower than you could. Keep investing in high margin differentiation and not low margin ubiquity. Remember how Microsoft invested $150 million in Apple in 1997 in order to keep them around as a plausible “OS alternative” in hopes of avoiding the antitrust knife? Well Apple already has that in Android, in Blackberry, in Windows Mobile, in Palm, and in Nokia. They are fighting hard right now to make sure they are one of the two or three that will continue to be relevant in 5-10 years, but their goal is clearly not to be at 100% or even 90%. That level of success would get the company trustbusted.

It is this prescient and necessarily restrained motivation that reveals the true reason why Apple has closed up tighter over the last few years: it’s not to take control of the world. It’s specifically to separate themselves from a pack of companies they need as their competitors but want relegated to the lower margin areas of the market. Apple will stay closed as long as being closed is a net positive to their business. Until people either start abandoning their products because of this or the do the opposite and adopt their products at a rate which creates a monopoly, they will continue operating at their current clip: high innovation, high profits, and high control.

It’s scary to people because they remember the harm other companies have done when they reached monopoly status, but with Google, Microsoft, Nokia, RIMM, and now HP all keeping the market healthy with different alternatives, there is no excuse for not voting with your feet if you’re unhappy. Apple’s not going to take over the world because — if for no other reason — the laws of the United States won’t let them. If you don’t want to contribute to their success because their behavior is distasteful to you, then don’t; but don’t forget how fortunate we are to have such a ruthlessly innovative company at the helm of the ship at this point in time. Either get on it or just pick another boat and draft in its wake. When the biggest problem in personal technology is that the leading company is getting a little too exceptional, it’s a good problem to have.

It’s Only a Matter of When

I’ve been trying to square my lack of enthusiasm about the iPad with the seemingly very positive analyses from those smarter than me.

After a few days, I think I finally reconciled it with a simple realization: the only reason I’m not enthusiastic about the iPad as a consumer is that it simply falls below my value curve at this point in time. Consider the graph below:

When the iPhone came out, I would have paid $1000 for it. I still would, to be honest. I wouldn’t exactly be happy about it, but I’d do it. It provides so much utility to me, it’s become such an indispensable part of my life, and it has no perfect substitutes, so its price elasticity to me is extremely low. Apple can charge pretty much whatever it wants and I will buy exactly one iPhone.

When the iPad was announced, however, the value curve was very different for me. It is currently a device I’d pay about $199 for. Not $499-$829. That is not to denigrate it at all. It just means its current value to me is below its current price. I don’t read eBooks, I have a laptop for my mobile computing needs, and I don’t have a place in my workflow for this device at this point in time.

The key is what happens over time, however.

The first effect is a pricing effect. As the price of both devices inevitably decreases, the value equation begins to change. A $10,000 iPad sells maybe 1000 units. A $1000 iPad sells maybe a million units. A $100 iPad sells 50 million units. And a $10 iPad sells about 500 million units.

So then, “liking” the iPad is really just a question of “what price would you pay for it?” For me, it’s about $199 right now. Electronic toy price, in other words. For others it may be a lot higher, and still others, lower.

The second effect is a utility effect. The utility of an iPhone is very high right now. It already plugs into existing cellular and wifi networks, it fits in your pocket, it replaces multiple devices, and it has few competitors. What happens when it’s not the only horse in the race though? We’re already starting to see stiff competition from Google with the Nexus One and Nokia undoubtedly wants to play this game too. It’s unclear whether any competitors will succeed making a better smartphone than Apple, but they will certainly create viable substitutes, thus reducing the unique utility of the device.

Look at what happens (possibly) with the iPad though. You can just sense by looking at it that it’s a bit “early”. There isn’t enough to do with it yet. The New York Times app looks nice and all, but it’s a far cry from a world of widely available, richly laid out e-publications (I personally question, however, if we even need this sort of world). You also can’t use the iPad for home automation stuff yet (although my buddy Danny will be working on it). You can’t beam Hulu from it to your TV. You can’t video conference with it. You can’t control it with voice commands. You can’t run it for a week on a single charge. These are all things I think we’ll see in the next several years, and thus it may become a more valuable device as time goes on.

When either the price is lowered to my value threshold, or my value threshold rises due to increased utility, that is when a purchase will be made. Perhaps even multiple purchases.

There is little doubt in my mind — upon finally thinking this through from a dispassionately microeconomic standpoint — that at least one of these two things will happen; and that is why Apple wins in the end, despite our best attempts to be curmudgeonly about it.