RatcliffeBlog - Mitch Thinking Out Loud

2002 over, 2003 below!

2002 over, 2003 below!

Tokyo closed 2002 at a 20-year low. The Dow finished 2002 with its worst loss in 25 years. The NASDAQ did even worse, dropping 31.2 percent. The S&P was down 23.3 percent on the year.

Stock pickers and analysts--hell, everybody--want to believe 2003 will be better. Because the Dow has still not corrected to the same degree as the other indices, and with consumer spending more tentative than at any time in the last decade, the heaviest blow may come in the spring and summer of 2003. I hope I am wrong, but I'm afraid I am not.

That old fashioned Digital ID

That old fashioned Digital ID

Doc relates Andre Durand's idea that "When T1 identites have real customer relationships with T2 partners, T3 goes away. We will have the final defeat of Marketing as Usual."

I agree. Doc's definition of a T2 relationship is an "OurIdentity" that is based on mutual agreement. He goes on to say: "Each embodies a relationship that is open to change, and to other relationships that may suit both parties. As for the ownership issue, it's a bit of a red herring. Look at it this way: who 'owns' a contract?"

This is my point exactly, that the contract does nothing to transfer the user's rights in their identity to a company permanently. When a contract is broken, it dissolves any rights a company would have to an individual's identity (this would usually be found in a contract between two companies in the term and termination, limitations and, perhaps, indemnification sections). The company must forfeit all future use of information about the individual and, as Bryan points out (in an email thread quoted by Eric) "the tables are turned" if individuals have the ability to dictate the rules and technologies of engagement. Which is also what Doc says.

This thread is getting way too confusing.

So, what's the design principle? Design tools for the owners of the most basic form of identity (the now-fabled T1 idenity) and leave the rest alone. Give the individual the tools to manage their identity and the OurIdentity issues will be self-organizing. The rules most individuals would be inclined to select ("don't collect information about me unless I give explicit permission" -- an opt-in system) prevent the T3 identity (marketers making guesses about us) from accumulating through our daily brushes with markets. Companies would be forced into a new, more equitable relationship with their customers.

Oil in perspective

Oil in perspective

Let's just imagine there is a war in Iraq next month. Here is the 10-month average production in barrels-per-day of the global oil supply:

United States: 9,051

Persian Gulf: 18,837

Organization of Arab Petroleum Exporting Countries: 19,501

OPEC: 28,009

Total Worldwide: 75,545

That means 24.9 percent of the daily oil production in the world will be directly in the line of fire. This is another reason to worry about the cost of doing business in 2003.

The art of stealing

The art of stealing

Max Carey, Hall of Famer baseball player during the 1910-20s, reduces the whole problem of doing business down to an eye for details: "Stealing bases is the art of picking up little things--things like a spitball pitcher who never threw to first if he was going to throw a spitter to the plate."

A lot of what I write about here are those little things. A media giant missing the sign to shift into a new technology. The cost of preserving a few dollars in revenue at the expense of developing a new generation of content creators.

Half-step forward, two steps back?

Half-step forward, two steps back?

AOL is tying its Instant Messenger to the Short Messaging Service (SMS) used in mobile phones. This is a good move. Problem is, it is incredibly hard to use and doesn't allow the mobile to respond to messages (curtailing any actual thumbtribe-building through AIM).

What AOL needs is a totally integrated IM that serves as a virtual space for groups based on digital identity, using an intelligent client to render messages on any device (two-way SMS messaging being a given) and puts it all in context for review and use later -- then it is a business tool as well as a cool consumer feature. They need what Marc talks about.

Consumer confidence sinks, again

Consumer confidence sinks, again

The Conference Board's Consumer Confidence Index fell to an eight-year low in December. This spells more trouble in 2003.

“Latest signals from consumers are in keeping with a continuing mixed bag of economic news,” says Lynn Franco, Director of The Conference Board’s Consumer Research Center. “But the major factor dampening consumers’ spirits has been the rising unemployment rate and the discouraging job outlook. Weak retail sales over the holidays clearly reflect the current mood of consumers. Until there is an improvement in labor market conditions, there is not likely to be a significant upturn in consumer confidence.”

Fair use is necessary

Fair use is necessary

A group of colleges have petitioned the U.S. Copyright Office for an exception to the Digital Millennium Copyright Act to allow them to excerpt electronic information for scholarly and critical purposes. This is absolutely necessary if we are going to develop this medium as a business and an art form. Two reasons:

1.) If scholars cannot excerpt a scene from a digital film for use in a classroom, how will students become engaged with the techniques of production or the aesthetics of digital storytelling? We need to teach and debate this digital form.

2.) If it is illegal for a critic to excerpt a film or media file for academic or commercial purposes, how will potential audiences learn about new titles and feel empowered to make intelligent choices amongst titles?

DVD cracker may be sued...

DVD cracker may be sued in Hollywood

The Supreme Court granted a stay of a California Supreme Court ruling that would have prevented Hollywood from suing a coder who posted the code for secure DVD technology on the Web in 1999. As I predicted, Elcomsoft was a prelude to another suit, this time aimed at person within the U.S. who can be associated with the distribution of DRM-cracking code that is being actively circulated. Elcomsoft had stopped distributing its product when warned off by Adobe. Matthew Pavlovich, the defendant in the pending lawsuit, fits the profile, having posted the code for the Content Scrambling System used in most DVDs.

The case had been relegated to either a Texas or Indiana court by the California ruling. If Hollywood wins, the lawsuit might be heard by a jury of movie-making peers.

In this case, the code is not copyrighted, so the Digital Millennium Copyright Act does not apply, and the punishment Hollywood is seeking will be inflicted through civil penalties for violating trade secrets owned by the DVD Copy Control Association.

Top Trends

Top Trends

The Washington Post says we bought too much "newfangled stuff" in the 1990s. Dadnabbit, they may be wrong. We bought a lot of stuff that early adopters used to be the only ones lining up to buy, and we're paying for it still in burnt fingers and bad user experiences. It wasn't just the newness, it was the beta-quality of so much stuff that was a problem.

The lede of the story is what bugged me enough to post one of these year-end look-ahead pieces that can be filed weeks before they are actually published. The predictions are obvious and uninspired.

Here are my predictions for the year, in no particular order:

802.11 b/a access point installed base grows 230 percent.

Broadband access in the U.S. reaches 34 percent of households and small businesses.

DSL subscribership gains on cable modem subscribership, ending the year with approximately 40 percent of the U.S. broadband home/SOHO market.

Streaming media usage increases, driving associated ad/sponsorship revenues up by 70 percent or more.

Time-shifting of programming becomes a major consumer value proposition, both in video and audio. People begin to break free of the idea of a programming schedule controlled by a broadcaster.

The NASDAQ gains 3.8 percent on the year, largely because so many companies are delisted. The Dow is down thirty percent at least twice during the year and ends down six percent to 10 percent.

It will be a record year for small business bankruptcies, creating even greater problems in consumer demand.

The pace of network infrastructure acquisitions will pick up. WorldCom will be sold in roughly one big chunk. The buyer? BellSouth, SBC or British Telecom (Bush throws Blair a bone on the issue of foreign ownership for all he's done in the war on terror and everyone else)

AOL will pass the 39 million user mark globally. MSN will pick up an additional 2.5 million ISP customers but will focus on delivering the broadband skin version of its software in head-to-head competition with AOL's broadband efforts.

Wireless handset unit sales will be up, revenues down. The typical cost of 1,000 minutes of anytime air time will be $55 by November. Wireless carriers will continue to use data services, even "3G" high-speed data, as a loss leader, driving intense demand for application services and content partnerships by carriers.

Housing prices ease, but don't collapse, as interest rates remain at historically low levels all year.

Consumer credit debt is reduced as households put more into paying off debt than buying more newfangled stuff.

The Web is a key...

The Web is a key source of household information

The Pew Internet and American Life Project found that 40 percent of households have now been online more than three years, with the Web playing an increasing role in their daily lives and decision-making.

Here is how Americans line up when probed about specific topics and whether they think the Internet will satisfy their information needs:

For information or services from a government agency, 65% of all Americans expect the Web to have that information; 82% of Internet users say this and 39% of non-users say this.

In the realm of electronic commerce, 63% of all Americans expect that a business will have a Web site that gives them information about a product they are considering buying. Four out of five (79%) of Internet users say this and 38% of non-users say this.

For news, 69% of Americans expect to be able to find reliable, up-to-date news online; 85% of Internet users say this, compared with 43% of non-Internet users.

For health care information, 67% of Americans expect that they can find reliable information about health or medical conditions online; 81% of Internet users say this versus 45% of non-Internet users.

Overall, 84% of all Americans have an expectation of finding information online in at least one of these four topical areas. That translates into nearly all Internet users (97%) and most non-Internet users (64%).

When it comes to personal information, the story is different. Only 31% of Americans expect to be able to find reliable information about someone online; 35% of Internet users say this and 25% of non-users say this. However, 58% of Internet users say they expect to be able to reach someone via email.

Coaches with thin skins

Coaches with thin skins

High school sports teams are the subject of intense blogging criticism, and some coaches are complaining about it to the New York Times. This is the price of giving the edge of the network a voice, represents a huge opportunity for a large media player (are you listening AOL and Yahoo?) to provide moderated high school sports forums. From the story:

"You can see people — whoever they are — attacking the school down the street on these vent sites, writing how bad the coaches are," said Phillips, now the assistant executive director of the Georgia High School Association, which oversees competitive sports. "I think, unfortunately, some school officials go in and read those things.

"It's bad enough for a player to sit at the dinner table every night and listen to their parents' opinions, but then the kids go in their room and surf the Net. Some of the kids might say, `Hey, they're right; the coach isn't any good.' Kids are impressionable."

Enough about the sturm und drang of adolescence, which the story focuses on. We all know any group of teens needs some supervision, even if by one of their own.

A few years back, I served as interim CEO of a company that policed video chats. In video, the policing goes way beyond filtering "bad words," because people drop their pants and do a lot of things that takes a human interlocutor to deal with. Our "cops" became active participants in the communities they monitored (including open chats, adult chats, gay chats, and several children's site). It showed me that real hands-on participation in communities can be profitable.

One of our cops could patrol five or six chats simultaneously (it would be even easier with text blogs), using gentle pressure to correct bad behavior rather than just cutting people off. At $25 an hour per monitored chat, paid by the host of the chat for the service, that one employee could drive $125 to $150 an hour in revenue.

A high school moderator service could be organized using people working out of their homes in their communities. They could act as editors and cheerleaders, moderators and organizers of events around town. Local advertising or national laid in, along with enhanced services, such as providing comprehensive statistics (both locally and to college scouts) or doing fulfillment for logo'd clothing makers, or providing market research services and consumer panels of high schoolers, could drive a lot more revenue than the $30K to $40K it might cost to hire that local moderator to cover all the high schools in a city.

Some of these efforts are self-organizing (check out this story about News By Teens International), but a set of tools and supporting people would be a welcome service for most folks on the Web.

The calendar business: All niche...

The calendar business: All niche all the time

Calendars are a half-billion dollar industry and is incredibly niche-oriented with more than 3,000 titles competing for buyers. One company has more than 240 dog calendars. And we think it's hard to survive on the Web.

Top 2003 calendars


Top-selling 2003 calendars through Dec. 25:

1. George W. Bush, daily boxed

2. Sports Illustrated swimsuit, wall

3. German shorthaired pointers, wall

4. "Harry Potter" movie, wall

5. "The Far Side," wall

6. 365 cats, daily boxed

7. Thomas Kinkade — Painter of Light, wall

8. "Lord of The Rings — The Two Towers," wall

9. Dilbert, daily boxed

10. FDNY firefighters, wall

Source: Calendars.com

Vivendi closes publishing connection

Vivendi closes publishing connection

Another nail in Vivendi's cross-media dreams of empire was hammered home today when the French company sold Houghton Mifflin for $1.6 billion ($1.28 billion in cash and $380 million in assumed debt). Vivendi had paid $2.2 billion.

Now, think about this for a moment. Two of the biggest movies in history, the Harry Potter series and the The Lord of the Rings trilogy, are basically massive publishing tie-in marketing machines.

Based on my dealings with various U.S. holdings, it is clear to me that they thought just buying operating units was enough -- there was never any cross-media title development, nor even ways to think about selling music more efficiently. More's the pity, since, at one point, they had all the pieces to build something quite new and profitable, if only they'd followed through. Instead, Vivendi acted like a bank, a lazy bank at that, building assets without actively managing them.

How the past appears

How the past appears

I sent out an email tonight to friends in my address book asking them to pass along a pointer to my blog to their colleagues. Of course, I looked over the bounces to see who had moved on from their current jobs, when I noticed this bounce message:

The recipient name is not recognized

The MTS-ID of the original message is: c=us;a= ;p=cantor fitzgeral;l=CFNYEXCH010212310734ZF6C15FH

MSEXCH:IMS:Cantor Fitzgerald:US-Exchange:CFNYEXCH01 0 (000C05A6) Unknown Recipient

Cantor Fitzgerald, of course, was in the World Trade Center. My friend there is gone. Here's hoping that none of us have to see email bounces like this for similar reasons in or after 2003.

Reputation and identity: Two different...

Reputation and identity: Two different things

Britt Blaser writes about my comment that "people must own every aspect of their identity" that:

.... individuals never own every aspect of their own ID, because it's our collective sense of a person that matters, not theirs. Let's expand upon our conception of modeling an ideal marketplace:

When Big Bob, the prosperous, straight-talking village blacksmith, strolls into the agora, shoppers and merchants who have grown up with Bob project upon him their collective respect and comfort. When Bob's brother, the unfortunate town drunk, lurches into the square, another collective persona is painted on ol' Fred. No one in the village would let Fred sleep outside on a harsh night, but they don't get out their best wares for him.

This is human nature at work—we make each other into what we have concluded about each other.

Britt's example deals with reputation, not with identity. They are deeply intertwined, but they are different. Identity is a description of who we are, involves our consent to refer to us in a particular way, and the right to use our identity in reference to the conduct of business.

Talking about people, such as ascribing upstandingness or drunkeness to someone, deals with reputation and is governed in the plain old world in a very different way than identity. If I claim to be Big Bob but am not, I am guilty of lying (if I don't use his identity to conduct business) or fraud (if I do conduct business using Bob's identity). On the other hand, if I say Bob is a drunk because his brother is a drunk, then I am slandering him. If I write that Bob is a drunk, I am libeling him.

Britt suggests that we will have to leave it to human nature. We should, and human nature has distinguished between identity and reputation for millennia. Taking his example of Xpertweb, it relies on mechanisms that are the product of human nature: we enter into agreements, sell stuff, buy things and so forth based on negotiated terms. If I offer to sell you something but refuse to let you rate me on Xpertweb by remaining anonymous, you won't likely buy if you're concerned about accountability, will you? That's because I've withheld my identity so that you cannot affect my reputation. Two different things.

We make our judgements about others, but we do not make others into what we judge them to be. Each of us decides how we will allow ourselves--our identities--to be used. That would include earning a reputation for being unwilling to allow our identities to be used, which could be perceived as untrustworthy.

My position is that casual interactions do not constitute a grant of access to identity. Access to identity and, conversely, maintenance of anonymity, is something to be negotiated in every case in the increasingly connected networked economy. Technology facilitates the increased number of interactions and can be used to govern the exchange of information during those interactions. I'd qualify as an absolutist about the rights of the individual, being a small "l" civil libertarian.

The policies that govern these interactions need to be debated in terms of rights, not simply technology, because the technology will shape the final form of the digitally-enabled society.

More digging that ID

More digging that ID

Eric Norlin continues on the notion of T2 vs. T3 identity:

I think there's a misunderstanding around a T2 identity here. A T2 identity is (for instance) the title that you have a job. So let's say you're:

Doc Searls
Senior Editor, Linux Journal

and along with that title (and the accompanying benefits of it), you were issued a corporate credit card. These identities were issued to you and are temporary and conditional -- ie, if you get fired, you no longer have those identities.

Compare that with a T1 -- that's your own individual identity....and therein I think Mitch is absolutely right -- we own it. period.

Here’s where Eric and I differ fundamentally: I think the job title borrows from you, rather than you from the job title. Individual rights always outweigh corporate rights, despite the fact that companies are fictional people for legal purposes.

If I take a job (which I am never inclined to do), I’m loaning my reputation to the company, not borrowing value from the company. Sure, it may be that it is a situation where it is my first job, so I’d not be giving the company much rep, but I’m not getting much of a title, either.

Also, the mechanism of identity Eric refers to, like a corporate credit card, is not a form of identity at all, it is a transactional mechanism. Identity is separate from the mechanisms of commerce. It precedes that commercial role Eric chooses to focus on.

Likewise, if I fly an airline and they have offered me a spiff in the form of miles, they are mine and I may use or dispose of them as I choose without incurring any debt to the company in the form of their use of my identity as a “happy customer,” unless I give explicit consent to be counted as such (and that can be governed by a simple set of principles that can be modified over time using a representative democratic system to decide about policies, so that day-to-day management of my identity is unnecessary).

Also, for Eric's (albeit Digital ID-centric) view of what will happen in 2003, check out his column in Digital ID World.

Throwing money into the WildBlue...

Throwing money into the WildBlue yonder

Kevin Werbach comments on the $156 million investment by Kleiner Perkins and others in WildBlue, a two-way broadband satellite company:

With DirecTV and many others abandoning grand plans for satllite broadband, one must be skepical about yet another effort. By 2004, terrestrial broadband should be widespread enough to leave only a limited market for satellite. But Kleiner Perkins and the other investors who put money into WildBlue must think they know something.

I'm equally skeptical of any investment in a market that has proved impossible to profit in at the scale a DirecTV operates. Kleiner must think there is a consolidation play here, perhaps with satellite radio operators like XM and Sirius.

Tha Big E-Bizzle, you know...

Tha Big E-Bizzle, you know what I am sayin'?

I ran my previous posting, about Digital ID through Snoop Dogg's Shizzolator. Here's the last few paragraphs shizzolated. Some a you muthas needs to get da humor n' shit:

I think we has da right 'n da responsibility as consumers be afiable revoke da use of izzle identity, know what I'm sayin'? One function of identity in da future will be like da Tha Big E-Bizzle ranking system (see Ross Mayfield's comment on my posting 'bout Tha Big E-Bizzle), which appears denote reputation by simple quantity of muthas who has done or do business wit someone n' shit. We should be afiable revoke a company or organization's ability be like we are a customer or a member, should we not? So, T2 identities are conditional wit regard izzle grant of da use of izzle identity, not da other way around (in which da commercial relationship is appended , rather than izzle identity being appended a corporation's, as Eric 'n Andre argue that shiznit is in da case of a United Mileage Plus membership)."

Where Eric believes that shiznit is impractical imagine izzall identity under one roof, I think that shiznit is perfectly manageable compared da complexity of a completely distributed system." Having spent a lot of time working wit da ideas of a chaordic organization, Eric rightly points out that PingID or da Identity Commons are restricted by they organizational charters (being corporations), but that is simply because we has not addressed da need fo' new kinds of corporate structures 'n tax regimes deal wit da ideas that wuz pioneered by VISA n' shit. Whereas a completely distributed identity regime has not been achieved, a choardic organization like VISA has, 'n is now da largest financial entity on da planet."

Believe me, that shiznit is hard design da documents that govern a chaordic company." I'm in da midst of drawing up contracts that will put a chaordic audio/video production 'n network development company in place, know what I'm sayin'? My goal is make that shiznit work within da current tax 'n business structure (which will cripple da company's ability grow a degree) in order demand changes in da corporate governance 'n tax structures after making that shiznit work fo' a few years."

Eric chimes in, Andre too...

Eric chimes in, Andre too (indirectly) on Digital ID

Eric Norlin posts thoughtfully, but mistakenly I think, on the whole Digital ID debate. Citing an article by PingID's Andre Durand, he suggests that people do not "own" this dimension of their identities:

Tier 2: Corporate Identity - A T2 identity is both conditional & temporary in its issuance to you. We typically denote these identities as being assigned or issued to us, and they typically refer to us in the context of a business relationship. For example, nearly every 'identity' we have with a business is a T2 identity, our job title is a T2, our cell phone is a T2, our United Mileage Plus is a T2, our social security is a T2. T2's comprise the bulk of our digital identities today.

I think we have the right and the responsibility as consumers to be able to revoke the use of our identity. One function of identity in the future will be like the eBay ranking system (see Ross Mayfield's comment on my posting about eBay), which appears to denote reputation by simple quantity of people who have done or do business with someone. We should be able to revoke a company or organization's ability to say we are a customer or a member, should we not? So, T2 identities are conditional with regard to our grant of the use of our identity, not the other way around (in which the commercial relationship is appended to, rather than our identity being appended to a corporation's, as Eric and Andre argue it is in the case of a United Mileage Plus membership).

Where Eric believes it is impractical to imagine all identity under one roof, I think it is perfectly manageable compared to the complexity of a completely distributed system. Having spent a lot of time working with the ideas of a chaordic organization, Eric rightly points out that PingID or the Identity Commons are restricted by their organizational charters (being corporations), but that is simply because we have not addressed the need for new kinds of corporate structures and tax regimes to deal with the ideas that were pioneered by VISA. Whereas a completely distributed identity regime has not been achieved, a choardic organization like VISA has, and is now the largest financial entity on the planet.

Believe me, it is hard to design the documents that govern a chaordic company. I'm in the midst of drawing up contracts that will put a chaordic audio/video production and network development company in place. My goal is to make it work within the current tax and business structure (which will cripple the company's ability to grow to a degree) in order to demand changes in the corporate governance and tax structures after making it work for a few years.

Few new drug applications in...

Few new drug applications in 2003: BioPharma downturn to continue

The Financial Times reports that fewer new drug applications (and many of those applications actually for orphaned drugs--deemed too small a market for the original developer) were submitted to the European Medicines Evaluation Agency in 2002 and that the same is expected for 2003.

The drought of new drugs looks set to continue after Europe's medicines regulator revealed that applications for approval had nearly halved.

 

The European Medicines Evaluation Agency said it had received only 31 applications in 2002, down from 58 the year before and 54 in 2000.

The industry has already suffered a miserable year with only 16 new drugs winning approval from the US Food and Drug Administration, against 24 last year - which was already considered low - and 1996's record 53.

Rural healthcare will be strained...

Rural healthcare will be strained by Homeland Security

In the unexpected consequences category, my brother, who works at Healtheon, points to this Wall Street Journal story. His note: "Don't know if you saw this one, it represents a very basic and pragmatic way that the change in immigration law will impact large sections of the country."

The nation's heightened focus on homeland security has reached to far corners of the country in an unexpected way: It is complicating immigration programs that encourage foreign doctors to serve in communities that have a hard time recruiting medical professionals.

Concerns that followed the Sept. 11, 2001, attacks have caused the cancellation of one immigration program designed to lure foreign doctors to underserved rural areas. Security worries also have stalled an effort in Congress to loosen restrictions that have crimped a second program that draws doctors into both rural and urban areas needing medical help.

Taken together, the steps have raised worries, particularly in rural America, that an important avenue of health care is being choked off. In Congress, in the courts and inside the federal bureaucracy, some are beginning to push back.

Recovery slow and uncertain

Recovery slow and uncertain

Wireless chipset sales kept the semiconductor recovery going at a slow pace in November, according to the Semiconductor Industry Association. Overall, sales were up 1.3 percent in the month compared to October. Year over year, sales were up 19 percent.

I do think the reviving handset market and Wi-Fi access will keep this sector of the semiconductor market afloat in the coming year. It remains to be seen whether PC sales will recover in any meaningful ways. I understand via the grapevine that Apple will make it very attractive to buy a Mac or a PowerBook come January.

Critical Path just one of...

Critical Path just one of many companies that could be delisted

The NASDAQ has told Critical Path it will be delisted because it doesn't meet the $1-bid price requirement. What the NASDAQ has to acknowledge is that it is a penny stock market after the bubble burst and, because investors deserve to be able to trade shares that the NASDAQ encouraged to come to market, the $1-bid price and the minimum capital requirements for many NASDAQ-listed companies need to be removed to sustain a market in these stocks.

ECB Chief: Iraq war will...

ECB Chief: Iraq war will damage global economy

Wim Duisenberg, Europe's Alan Greenspan, told press on Sunday that the European Central Bank is preparing to respond to global economic damage caused by a war with Iraq.

Duisenberg said US Federal Reserve Chairman Alan Greenspan -- with whom he speaks once a month -- agreed that the threats of war were bad for the economy.

In a separate interview with Germany’s Bild am Sonntag weekly, released Sunday, Duisenberg said the central bank remained open to further easing in interest rates, after the ECB’s December 5 decision to lower them by a half-percentage point.

The ECB has been less aggressive than the Fed with its rate cuts, leaving it a bit more room to maneuver as oil prices and other prices rise in the face of the impending war.

New business model, new funding

New business model, new funding

Qpass Inc., a provider of "activity management business system software for wireless carriers and other network operators," that used to provide a kind of micropayment system, today announced the first closing of its Series B financing, securing $10.7 million.

   From the press release: RRE Ventures led the round with participation from new investor Westbury Partners, along with existing investors Hook Partners, Oak Investment Partners, Seapoint Ventures, and Venrock Associates. The company's management also participated in the round. In conjunction with the financing, Qpass announced that Joseph G. Fogg, III, chairman of Westbury Partners and former head of worldwide investment banking at Morgan Stanley & Co., has joined the company's board of directors.
    This funding marks the third and final step in the transition from the company's original business plan to one that is solely focused on providing business systems to network operators. "Over the last eighteen months we have restructured and narrowed the focus of the company, rebuilt our software platform from the ground up, and have now completed our recapitalization, emerging with a fully-funded business plan in hand," said Chase Franklin, Qpass CEO. "We're proud to have completed this process while continuing to support our leading wireless carrier customers, adding support for new services like Wi-Fi access and Java downloads along the way."

So, the idea is that having failed to be the enabler of paying for stuff, Qpass will now be the enabler of paying for access and stuff. The focus on wireless is the right one, but if the payment system doesn't become a single wallet for the end-user, it becomes just another billing item on the credit card each month, adding to the complexity of paying for access and stuff rather than removing any steps.

Digging ID

Digging ID

Doc and David respond to my recent screed that they agree that people should own their identities. I still have to insist that thinking about how a top-down organization will facilitate individual ownership and control of the files that represent our online identities is the keystone of successfully deploying all the nifty technologies that already exist.

The understanding that we own our identities is implicit, perhaps for us, but not for everyone. So, we must make it an explicit element in the debate.

David acknowledges this when he writes:

My concern has been more with: (1) The imposition of ID schemes top-down rather than continuing to grow bottom-up solutions to actual problems, and (2) What we would gain and lose with a strong digID system in place. The first concern sounds like it maps to Mitch's imperative ("Thou Shalt Own Thy Identity") but need not: it's conceptually possible to impose a top-down identity scheme that enables us to own our identities. It's just politically less likely since the people doing the imposing have an interest in taking custody of our IDs for us. How thoughtful of them.

It is this lack of thinking about the human dimension of the problem (with all due respect to the people who have to work on the technical dimensions of the problem of Digital ID, like Bryan) that is preventing everyone from moving forward. AKMA puts it best:

The cardinal reason for people acclimating themselves to DigID will involve the impulse to deal with people (or something like people) whom we can know through their observable behavior. We will want agents to be accountable for what they do, and we will want the friends and strangers with whom we converse online to offer some earnest stake in candor and trust. So the version of DigID that will succeed won’t succeed because it has the coolest interface, the highest security, the greatest degree of user-manipulation (most users don’t want any more settings on their technology than the bare minimum). The successful version of DigID will offer users primarily a way to know one another, to feel as though the “Snowbunny” with whom one had an, err, intimate discussion yesterday will be recognizable in some way when one encounters her or him today.

Online sales up, but ended...

Online sales up, but ended early

According to ComScore, the last week of online Christmas shopping was up 19 percent annually, but slowed compared to previous weeks' year-over-year growth. This can be attributed to the concern, expressed repeatedly to me, that shipping companies wouldn't deliver on time for late orders. Ironically, it's the physical layer of the online marketplace that people worry about and not the security of the purchase itself.

Strong dollar fading

Strong dollar fading

The Bush Administration recently stated it will support a strong dollar, but continuing worries about North Korea, Iraq and generally about the economy have taken the dollar to new six-week lows compared to the bedraggled Japanese Yen.

Fortunately for the Bushies, the Japanese want to weaken the Yen to keep exports strong. But with so little room for the Fed to move now (with rates at 1.5 percent now) and a pending disaster in the consumer economy, the strong dollar policy will be sorely tested in 2003.

What's wrong with this picture?

What's wrong with this picture?

According to Google News, these are today's interpretations of the latest Japanese book-to-bill ratios in the semiconductor industry:

Chip orders rise in Japan. Boston Globe - Orders for Japan-made chip-making equipment more than doubled in November compared with last year, signaling earnings at Tokyo Electron Ltd. and rival manufacturers may rise, an industry group said.
Japan's fab-tool book-to-bill remains flat Semiconductor Business News
Japan Nov chip equipment orders off 20 pct mth/mth Forbes

Each of the reports focuses on a different aspect of the story, but the crux of the matter is clearly stated in the second graph of the Forbes piece:

The November orders figure, while up 127.5 percent from a year ago, was also the lowest since February, the Semiconductor Equipment Association of Japan said.

Okay, so not to belabor the semiconductor industry is still in the doldrums in Japan, but this shows why editorial input is important and why total automation of news delivery could give one a very skewed view of reality.

Online sales tax: Bad choice...

Online sales tax: Bad choice for states' fiscal recovery

Saying that they "can no longer ignore an entire segment of the retail marketplace," states are lining up to try to tax online sales. I wrote this years ago on ZD Net and I'll say it again: The states are not missing anything. If they have any type of tax on company revenues, they are capturing sales made online within their region. If they hope to capture sales taxes on purchases made over the Internet by citizens of their locality, the cost and complexity of doing so makes the idea a money-loser with a huge upfront investment.

The states are in a pickle due to larger economic problems than the failure to capture local sales taxes on the Net; by the time any solution to this minor failure to tax is in place, the economy will have probably entered a new up cycle.

No bonuses, no desire to...

No bonuses, no desire to change jobs

The Washington Post reports that 80 percent of workers polled by TrueCareers Inc. (a subsidiary of Sallie Mae, the student loan organization) say they expect to see an impact on bonuses because of the poor economic climate. Forty-seven percent don't expect to see any bonus at all as a result. Sixty-four percent won't go looking for a new job if the economy seems to be improving -- basically, for the ordinary folks out there, it is time to hunker down. Storm weather ahead.

Me, too

Me, too

According to a survey by BIGresearch, almost 50 percent of us surf the Web while watching TV. I certainly do, but what's interesting is that people seem to be viewing the experiences as related, complementing one another.

Dual Media Consumption in U.S. (% of respondents) “regularly or occasionally consume two media at same time.” First, then..

	Men	Women
Go online and watch TV	59.8%	67.2%
Watch TV and go online	69.3	76.0
Read newspaper and watch TV	53.4	58.7
Watch TV and read newspaper	66.7	74.3
Listen to radio and read magazines	50.7	52.0
Read magazines and watch TV	50.4	60.0

Source: Retail Adv. and Mktg. Assoc/BIGresearch, Oct 2002

The study also determines that the prime time for watching TV and going online, or the converse, is between 7:00 P.M. and 11 P.M. in the US. Specifically, the study found that during that time period:

69.4% watch TV

43.3% go online

22.3% read magazines.

US Internet Users Online and Watching TV Simultaneously (% users with PC and TV in same room)

Frequently 47%

Occasionally 29%

Rarely 18%

Never 5%
Source: ComScore Media Metrix

Top semiconductor stories of 2002

Top semiconductor stories of 2002

According to Semiconductor Business News, these are the top ten stories of the past year. Take a look. There are a couple of tech breakthrough stories, but it's mostly bad news.

Bryan is misunderstood, not unclued

Bryan is misunderstood, not unclued

Bryan Field-Elliot of PingID replied to my comments on the Digital ID debate. He says I tore him a new one, but really, I think I'm reacting to the lack of focus on the individual's ownership of their identity by the Cluetrain boys, Doc and David. Based on his comments, I think folks have been focusing on a tangential technical issue he raised, about the implicit cryptographic qualities of Digital ID to the detriment of his larger argument, which is that people should own their identities.

You do have to have a technology to engage in a policy debate. However, the policy debate must also shape the technology. A user-centric ID system is critical, and it needs a constitution and a representative system to provide guidance for the policies that govern the use of the IDs generally – we cannot expect everyone to effectively govern the minutiae of their privacy day-in-day-out, so a general set of guidelines and an ongoing discussion is crucial to an evolving Digital ID policy.

Sickly sweet Silicon Valley

Sickly sweet Silicon Valley

The New York Times reports on investigations into insider trading and fraud by Silicon Valley companies, after the Department of Justice called for a few sacrifices among the digerati for the sake of its "Clean-up Corruption" campaign. The natives are sure that no one in the valley could possibly do anything wrong--after all, isn't technology ethically neutral? I love this from my friend Stewart Alsop:

"The carpetbaggers showed up, and the day-trippers and tourists came along, and with that you got some crooks," Mr. Alsop said. "There is a pretty gray line between incompetence and fraud."

Well, then, there are a lot of incompetents in Silicon Valley. In reality, there are certainly some crooks, but the real crime is that investors paid for a lot of people to get the experience of launching an IPO. People who were not ready to run their companies for the profit of the investor and not just themselves.

DigID debate continues

DigID debate continues

The debate over the meaning/implementation of digital identity has continued in email between Doc, David, Bryan, Eric and AKMA. With all due respect, gentlemen, you are missing the point of how identity migrates to electronic environments almost entirely. It is not about technology and implementation, but about ownership of identity information. (AKMA comes close when he endorses the "dark net vs. protected net" idea, but this is still largely a matter of implementation only).

Bryan got the issue of "policy" backwards and essentially unclued, because his thinking compounds and is compounded by the basic problem with your debate in that it assumes the policy will be arrived at by companies bargaining with one another and, finally, once the dance of the giants is finished, offered to customers as a fait accompli.

Key points and a few comments:

Doc writes: This is something we never experienced in the supply-controlled markets — actually distribution systems — of the Industrial Age. VISA has its way of dealing with customers. United Airlines has its way. Hertz has its way. Starbucks has its way. All fine in their own ways, but disconnected. They meet at the customer, but only exclusively, and on each supplier's terms. And because the suppliers all compete for the "consumer" (a simple device about which only transactions and a few bits of persistent data are valuable), there is little inter-vendor cooperation. For vendors selling the same stuff, competition (in the absence of customer demand for cooperation between suppliers) demands exclusive relationships, to the degree that term applies (usually not much farther than required for transactions and minimal customer record-keeping).

What we need is something simple, distributed, and resident on the customer's side, where demand is expressed and best controlled (by the customer). From what I can tell, this is what Liberty, PingID and SourceID are all up to.

Doc and all generally agree that this is the end goal, but they miss a very key point that needs to be reiterated again and again: People own their identities and should continue to own them as they migrate into electronic environments (not just markets). But where the ID resides, whether on the user's computer or a server somewhere, is irrelevant; how we share that information and whether we have the freedom to remain anonymous is the issue. This requires that individuals own their identity. OWN, with full rights to revoke access to their identity.

Dee Hock, the founder of VISA, has told me that the one thing he really regrets and would substantially change if he had it to do over again, is that VISA customers have no voice in the governance of the VISA system. He'd have the people who sign up for cards get a voice in policy about privacy and even a share of the economic value created by the pooling of the information that describes them to member banks.

Invariably, every plan discussed by this debating crew involves a company that "owns" the identities of people using their technology -- they build an asset in the critical mass of customers using their technology. Take PingID, a "member-owned, technology-neutral network that is facilitating the business framework necessary for the accelerated deployment of federated identity services." It focuses on companies as members. Companies own the IDs they enter into the network, whether employees or customers. Liberty Alliance is more technology-centric, but, again, emphasizes membership of organizations. SourceID is decidedly organization-based, even though it is an open system, as its definition of "End-user self-provisioning" is: "Whether the identities represent employees, business partners, or customers, an "outward-facing" web interface will allow people to self-provision their own identities (subject to the security restrictions and workflow directives defined elsewhere)." That just means we do the work of maintaining our identities by typing them into commerce interfaces.

Organizations are not people, which begs the question: who owns the information that represents me and when is it exposed? In every example the DigID debaters are talking about, an organization, not an individual, owns the individual's identity. I'd expect that to disturb these decidedly clued people more than the prospect of a DRM being associated with the identity tools.

All the discussion about DRM and other crypto-based functionality that Eric raises as features and that scare Doc are simply the "user interface" of what digital identity is: a series of ones and zeros that is unique to the individual with which an ID is associated. A problem with the dialog is that Eric is arguing from a primarily technical perspective, while Doc, David and the others are talking primarily about business rules.

Any skilled cryptographer could build a DRM using any Digital ID. In fact, that convenience of an open digital ID system is that it becomes a malleable, functionally speaking, as a PC. It is a platform for secure communication, commerce, connectivity and so forth. There is nothing scary about that.

If you have to accept a DRM to get a Digital ID, then it is awful, because it imposes a coerced form of authentication on the user; they are right about this problem, but missing the larger issue of the fact that an organization is always involved.

David writes: I thought we were talking about "empowering customers." And, just as I wouldn't stand for being strip-searched when I leave a store in order to drive down "shrinkage" costs, I don't want to trade the freedom of anonymity for a nickel-off coupon. No, that'll cost you a dollar off.

An open user-owned identity system would empower customers and resolve the problems Doc refers to, that of comparing prices, but it would raise the bar substantially in terms of the value of the identity. We can trade on the exposure of our identity or lack thereof, getting discounts for sharing more information, just as David says. That bargaining will never stop, because companies always want more information about us. None of the systems vying for market acceptance acknowledges the sovereignty of the individual identified, placing the ultimate decision about what to do with user information in the hands of people who view that information as an asset. As we already know from the fluid "privacy policies" of Web sites, which can be transformed overnight by management fiat or a merger that replaces the old policies with new ones, no organization, except one owned by the identity owners--individuals--is safe from that threat.

Bryan writes: The Protocol problem will be solved; the new problem may become one of Policy.

The last point I wanted to make, is that I believe that the software protocols for "Sovereign Identity" will be built, and that they will be deployed on the commercial side of things (by retailers for example, who want access to identity information, and by identity providers, who will compete for your business to host your identity information). This is, for example, what the Liberty Alliance is all about, without whose momentum, I could never see service providers performing the software changes needed to do identity interchange.

The next phase after that will be for folks (such as at SourceID) to implement these identity interchange protocols into rich clients, rather than at hosted identity providers, so that you can "run your DigID" on your own trusted machine, outsourcing to no one.

Suddenly then, there becomes a wholly new barrier to adoption. It's no longer a question of Protocol, but now, a question of Policy. How to get companies to trust (or, in market terms, negotiate with) a DigID which is coming from a personal machine's IP address, rather than a trusted identity hosting provider such as a major bank?

Bryan gets this backward. An identity need not reside on an individual machine to be in one's control (a Digital ID could be associated with any number of IP addresses -- it certainly will be). There is no issue of trusting one PC on a single IP address if individuals pull together to create an identity regime. An individual-owned identity system on the model of the Identity Commons solves these problems, because it creates a sufficiently large group of people that can negotiate to bring organizations and companies into the system based on adoption of principles. The process of Digital ID acceptance is essentially a political one. It will be imposed to one degree or another in every case, except one based on individual ownership of their identity. So, the process needs to begin with the debate about policy and not what you can do with a Digital ID. People must own every aspect of their identity, guys. Design from that principle outward--the company or non-profit that does this will eventually win.

This is where I live....

This is where I live....

People think it rains all the time in the Northwest. I love it here, even when it is raining, which is less often than you think. It is the place that makes me whole.

Bob's Java Jive

The port of Tacoma

A big reason 2003 will...

A big reason 2003 will be worse than 2002

The states are going bankrupt, laying off hundreds of thousands of people, cutting services (which cuts spending of the recipients of those services) and generally decimating the future of American education. The New York Times Bob Herbert sums it up succinctly.

Here is Washington state, we're borrowing $4.7 billion to try to keep higher education alive.

You reputation is worth...

You reputation is worth...

7.6 percent if you have an established identity on eBay. According to a study by researchers at several universities, sellers with a lot of positive ratings from other eBayers (for example, I have 148 ratings from other people on the service), even if they'd been dinged a few times, got higher prices than those with no established track record. Thanks for the link to Howard Rheingold.

Add up your customer experiences

Add up your customer experiences

According to a survey by Boston Consulting and Shop.org, when you add up a catalog, retail store presence and online shopping, you get a whole greater than the sum of its parts.

Shoppers Spend More Through Multiple Channels DoubleClick finds:

Shoppers using one channel spent $591

Shoppers using two channels spent $894

Shoppers using three channels spent $995
Holiday Shopping Study, DoubleClick, January 2002

And Penny customers show:

Internet only shoppers $121/yr.

Catalog only shoppers $242/yr.

Retail only shoppers $194/yr.

Tri-channel shoppers $1,000+/yr.
JC Penny Study

Clonaid?

Clonaid?

The reports that a religious sect, the Raelians, have produced a human clone, for which they've offered no proof, no pictures, no nothing, strikes me as an excellent recruitment device for the group, which believes it is receiving instructions from space aliens. Apparently tired of producing humans themselves, aliens abandoned the planet Earth and waited for humans to start taking their calls, through the founder of the Raelians, in order to reintroduce cloning.

All PR, no substance, I'd bet, based on their reported implantation success rates, 50%, which is far ahead of normal in vitro fertilization procedures. But watch the idiots flock to the Raelian site -- the only good thing about this is that Scientology will take a recruitment hit as the fools go for the cloning story.