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Why You Shouldn’t Buy a Hummer H2

Apparently, sales of the Hummer H2 are falling so fast that GM might even stop making them. Environmentalists will probably cheer this news, but there's another reason I would never buy a Hummer H2 or H3 for that matter. It's complicated, so I've put it into a diagram: Hummer H2 equals Humvee plus Little Tykes plastic parts

Why Google is Worth More than AOL and Verizon

As I write this, Google has a market cap of about $148 billion, compared to Verizon at $124 billion and AOL parent Time Warner at $82 billion. Google might rule the Web search market, but Verizon's $88 billion and Time Warner's $44 billion in revenue last year dwarf Google's $10 billion. Why would a smaller company that makes less money be worth more to investors than larger competitors? Are they just being irrational? Maybe so, but I think there is at least one good reason why Google has been so successful: it has focused on providing services, rather than content or infrastructure. Why is this important? Think about it this way: whenever you do anything on the Internet, chances are you can break it down into three layers: 1) Infrastructure - your connection to the Internet, whether it's Cable, DSL, dial-up, FIOS, etc. 2) Service - the application you use to get what you want done, for example the search engine you use to find things or the mail client you use to read you email. 3) Content - the stuff you read, watch, listen to, or create yourself for others to see. This is of course not a strict hierarchy, but it is a way to look at just about any medium to get some useful insights. Small companies and new startups usually have to compete within one of the layers, just because you can only do so much with limited resources. So a magazine might put up a web site to provide content, and a VOIP company won't build it's own DSL lines, it will just provide VOIP service. Many larger companies eventually find it tempting to cover two of the categories or even all three. This seems like a good idea, and you will hear a lot about "synergies" and things like that. In the best case maybe the company will have some cost savings and be able to provide more value to customers because they no longer have to pay other companies for the other layers. Quite often, though, this can lead to "walled gardens" where companies try to steer users through their systems at each level. AOL, for example, used to keep a lot of premium content off of the Web available to their ISP subscribers. Verizon sells Internet access on it's cell network, but you'd better believe they want you to buy ring tones and MP3s through them rather than some random retailer. In the worst case this leads to illegal monopolistic behavior. Now Look at Google. They seem to have very little interest in providing or controlling the Infrastructure. To Google an Internet connection is an Internet connection. In addition, they have very little interest in being the content provider - Google wants to organize the world's information, leaving the creation of information up to the world. This gets them in trouble with companies that wish to control the content and the service, and use their control of content to force users into their service. Google makes it's play at the service level, with the search engine, Gmail, Google News, etc. YouTube is a good example of how Google can grow and compete in new areas while still keeping within the service layer. Verizon might see YouTube as competition for their IPTV service, but note that YouTube isn't building fiber to every house. Time Warner produces TV shows (content), runs networks (service), and operates the cable running out to your house - meanwhile YouTube lets users produce video themselves. So why is this an advantage for Google? Think about it this way - Google could try to extend their dominance of search into content, but would Google really make better content than everyone else? Google could try to buy up or build out infrastructure, and judging by their data centers they might be able to do a really good job of it. But could they build infrastructure to reach the whole world? Would owning the connection give them an excuse to make the services less flexible, and ultimately less useful? In more general terms, for some services these separations are so obvious that you probably haven't even thought about the alternative. Email is a good example - although in the ancient past the service was tied down to the infrastructure, I would have a hard time imagining a service provider trying to generate the content themselves. Would you use an email service where you couldn't email your mom, your professor, your boss, etc., but could correspond with professional emailers hired by your ISP? In the past ten years, would you have used an ISP that provided email service but blocked access to Hotmail or your college email account? Competition can and should exist at every level. Just like any market there are different approaches - you can try to fit a particular niche, you can try to outperform the competition, you can try to lock users in. Successful practitioners of the latter approach might be tempted to extend into other levels, but in the long run it might not be a good idea. The best case scenario, for both consumers and competitors, is a natural separation with lots of competition within each level. This is more or less the present case with the Internet, despite many attempts at vertical integration and a paucity of competition in the infrastructure level in most areas. Lots of competition means lots of opportunity for capitalism to do it's magic, providing a wide range of options and generating a lot of wealth. Informal, natural separation means everyone has to stay flexible and we get the benefits of specialization. Adam Smith would totally be on board. This best case scenario is also what a lot of people mean when they talk about Net Neutrality. I think that Google understands all of this. Now what about their partnership with Earthlink to offer WiFi? It's possible they are just following the "throw it up and see if it sticks" approach they are known for. My guess is that they see moves to extend lock-in by infrastructure companies into services as a threat and are demonstrating that they can do the opposite if needed. But I bet they would be perfectly happy with a vibrant WiFi market with lots of players providing the infrastructure so they can provide their services.

Sick of PowerPoint Slides? Here’s a Better way to Present Data

If you design web sites, write reports, or do presentations, you should probably take a look at the work of Edward Tufte. One of his best-known essays tells how your typical PowerPoint presentation can obscure information more than it helps illustrate. So what do you do if you have a ton of numerical data and just two and a half minutes to present it? Well, if it's data about the pron industry on the Internet, you could do something like this: (Might be NSFW) [youtube]QOFTQpNhsWE[/youtube] Thanks to TechCrunch for digging up the video. The video might seem like just a punchline, but seriously, this is the perfect way to present this data and I think it could be translated to other subjects as well. Obviously it would take a bit of creativity, I don't mean to say that your quarterly sales data should be sharpied across your significant other's backside. A simple example: if I had data about food, I might capture my audience's attention with pie charts made out of, well, actual pie. Tufte is not really a fan of pie charts, and I admit this example is more about capturing attention than effectively conveying complex data. Can you think of any novel, but amazingly appropriate, ways to present facts and figures? And in case you need the executive summary (read: no data) of the above presentation, here it is: [youtube]QtiGd58J0bY[/youtube]

How to Ruin an Entire Medium: The Attack on Internet Radio

A lot of really crazy ideas were floated as the next big thing during the dot-com bubble. USB-powered olfactory devices, buying 50-pound bags of dogfood online, and even Internet currency backed by Whoopie Goldberg instead of the Fed all got a lot of press and a lot of money before disappearing. You might remember a lot of excitement around the idea of Internet radio back then too. It seemed for a while that everyone and their brother was setting up RealServer on a spare Pentium II or signing up with Live 365 to broadcast the definitive European house techno mixes or every bootleg Phish MP3 they could collect to the masses. Streaming was dodgy, but possible, over dial-up speeds and it worked so well over high-speed lines that universities and offices ended up blocking ports. But Internet radio has largely faded away. Was it a bad idea all along, like the CueCat? Nope. Was it killed by ever-expanding iPod storage? Probably not. Rather, Internet radio's popularity and vitality were drained by a poorly-legislated artificial monopoly and compulsory licenses. This all has to do with how music is licensed. In the wild-west days of the Internet, anyone could broadcast anything and it was up to musicians and copyright holders to go after broadcasters. Since broadcasters included anyone with some spare time and virtually no one was making any money, this resulted in a huge, messy, innovative, fascinating jumble of Internet radio stations, much like the fascinating jumble of Web pages we know and love. Clearly, though, musicians had a valid argument about not getting paid for their work. At first, the RIAA pursued the same tactic used against Napster and other P2P systems - refuse to negotiate at all and sue into oblivion. Lawsuits, or the threat of lawsuits, shuttered services like NetRadio. Finally in 2002 relief came in the form of uniform royalty rates set by the U.S. Copyright Office. Unfortunately the rate, 7/100th of a cent per song per listener, was much too high for all but the largest Internet broadcasters to pay. And the fee was retroactive to 1998, meaning big checks were due when the policy went in place. To put that fee into perspective, let's say you have a station that averages 10 listeners at any time. You play songs that average 3 minutes each, and were broadcasting from 1998 through 2002. That's 700,800 songs, and really 7,008,000 listener-songs, which means suddenly you owed almost $5000. Small change for Yahoo, perhaps, but good luck making $5000 in advertising revenue with an audience of 10 listeners. So by 2002 we've done a great harm to a once promising medium. It isn't dead yet, since some big players can afford the fees or subsidize their broadcasting with other revenue. Not quite dead, but not lively or interesting - let's say five years of a persistent vegetative state. Now The U.S. Copyright Office is pulling the feeding tube. It has granted the RIAA the exclusive right to administer a compulsory license over all music through it's collection agency, SoundExchange. This means two things will change- first, the fees are going to go up, way up. Second, even if you don't play any music owned by RIAA member record companies, you still might have to pay them. This doesn't necessarily benefit the copyright holders. SoundExchange doesn't have to seek out and pay the 13-year-old kid who created some random MP3 on his mom's iMac. Also, forcing broadcasters out of business will result in less fees being payed. Pretty much every blog on the Web thinks this is an ill-conceived plan. Listen, I've watched a fair amount of Star Trek in my day and when Wil Wheaton tells you something won't work, you better listen. In addition to stunting an entire medium, this whole system is obviously unfair. Internet radio will pay much, much more than terrestrial radio. The regular radio stations pay license fees based on a structure that was calculated based on their revenues. Those royalties probably totaled less than $500 million last year, but by the time the online fees hit their cap Internet radio will pay a projected $2.3 billion for fewer listeners. What can you do? Not much, but the founder of Pandora has asked people to sign a petition. The "Internet Radio Equality Act," introduced by Congressmen Jay Inslee (D-Wash.) and Don Manzullo (R-Ill.), would reverse the decision so writing your Congressmen might help a little. But in large part the damage is already done. Imagine if the Web had been subject to similar legislation. Back in the 1990s copyright holders like Disney and Fox were aghast that anyone could put up a site with a GIF of Bart Simpson or Mickey Mouse. Do you think the billions of dollars of value and commerce generated by the Web would have happened if every single jpeg, whether or not it was someone else's IP, required payment of .07 cents per pageload?

Uncle Ben: From Servant to CEO

Uncle Ben is now a CEOFor years, he has been ever with us. A familiar face in the grocery aisle, quick to ease our hunger. But he shall serve you rice no more, for Uncle Ben has been promoted to CEO (or perhaps chairman of the board) of Uncle Ben's Inc. Uncle Ben, instant rice pitchman, has long been seen as a holdover from less polite times. He clearly was not meant to be your actual uncle, or even that guy your dad knew from school that everyone made you call "uncle" as a creepy sign of pseudo-familiarity and respect. Since he was an older black man, dressed as either a manservant or perhaps maitre d’, and "uncle" was a disrespectful way to refer to blacks in the South, it seemed perhaps he was just another racist stereotype. Oh, they told us that he was a farmer known for the best rice in the region, but why the fancy duds? The use of stereotypes to market products has a long and interesting history in the U.S. The movie Ghost World has an interesting, fictionalized take on the matter. Some were obviously meanspirited, but others, like Uncle Ben and Aunt Jemima, have managed to change with the times and get by, partly because the stereotypes were no longer relevant. Kids today don't have a clue what a "mammy" character like Jemima is supposed to be, except for vague images from old Tom and Jerry cartoons, if they still play those. Is a black butler any more offensive than say, a British one? Well now we know for sure that Uncle Ben is not a racist stereotype, at least not anymore. With this promotion from servant to CEO, Mars, Inc. has finally revealed the truth: Ben was just in a very long, very abrupt career track within the company. Perhaps you and I are salivating over the step from associate analyst to analyst, but that is because we don't have the vision and patience of Ben. Sixty-odd years might seem like a long time for just one promotion, but it's not so bad when the promotion is from the lowest rung on the ladder to the highest, busting through any glass ceilings in the way. Ridiculous you say? It's not without precedent. When young Bruce Wayne's parents were murdered in front of him, the leadership of Wayne Enterprises was opened up. Later, because of his duties as Batman, Bruce could never devote the time required to run a large corporation. Much of his CEO responsibilities were in fact delegated to Alfred, his manservant. Of course Alfred was never officially named to the board, but you can see how that sort of thing could happen. Who was the last CEO of Uncle Ben's Inc.? Perhaps we should look into whether or not his parents were murdered in front of him, such that he was raised by Uncle Ben. Just like Batman, but black, and his crime-fighting gadgetry is probably rice-based. In any event, does this mark then end of all racism in the United States, or is it just a way to drum up some press for the same damn rice they've been selling for 60 years? Let me know what you think in the comments.