Wednesday, December 06, 2006

With recent coup in Fiji, the troubles in the Solomon Islands and riots in Tonga, you have to wonder what is happening. Over the last few years, the south pacific island nations have seemingly lurched from one crisis to another and there does not seem to be an end in sight. The question is, how is this going to be solved?

The answer, I think, is a Pacific Island commonwealth that includes Australia and New Zealand.

Thursday, November 16, 2006

Put it in RSS

Something that has been annoying me for a while is the lack of companies and industry bodies that don't put their news and press releases in an RSS feed. Or if they do require you to register. This post goes out to them.

I will say this slowly. Put. Your. Press Releases. Into. A. Feed. And make it public available. The purpose (and please correct me if I am wrong) of a press release is to make an announcement that reaches as many people as possible. The very fact you do not put your press releases in a feed restricts the number of people who can see.

Nor do I wont to register and receive emails. I just want an RSS feed with your press releases. There is absolutely no benefit for me to register for your press releases. Registering is only useful when the user gets a service out of it. Press releases are not a service.

It is even more nonsensical for industry bodies not to put press releases in a RSS feed. The whole point on an industry body is to act as advocate and communicate with society. Making it difficult for me to get hold of press releases is not the way to do it. I do not want to have to visit your site to check. I do not want to have to work at it. Nor do I want to register to get an email. I get enough already.

I'll say it again. Put your press releases in a RSS feed.

Tags: RSS, Marketing, PR

Tuesday, October 31, 2006

Paying people for UGC

In a recent post Umair wrote a reply to a question that had come up in a recent Beers & Innovations night. Summary is when will people be paid for "user generated content." I made a point in the comments about how different people get value from services in different ways i.e. monetary payment is not the only form of received value. This is all well and good but many people will still want to be paid.

The biggest hurdle is that transferring small sums of money is prohibitively expensive for the size of the funds transferred. Widespread payment for UGC will not occur until someone cracks problem of providing transfer of funds between parties with a cost approaching zero.

There are several possible methods for doing it. The first would be for a company such as Google to create a financial transfer company and absorb transfer fees the banks impose as a cost of doing business. This is a big and costly option that runs up against (massive) regulatory problems.

The second would be to create a frequent flyer style points system that people can accumulate and then use to for discounts at stores or to purchase gift certificates. This option is probably one that would work well. The "frequent generator" (FG) points would be tied to an identity. For example, I could state (just as Amex holds my "loyalty points") that all my FG points would be held by Google whom attaches my FG points to my Google identity. I can then go to various stores and reclaim the points for discounts, gift certificates etc.

The third option is to essentially create an "internal market" where parties with an identity can transfer, at zero cost, funds. For this to work a provider, lets say Google, would create relationships with the various users of UGC. These users would deposit an opening balance to Google (Google holds this in escrow). When a user uploads some UGC to the site, which then makes some money, the service "transfers" money to the user by saying to Google "user x receives y amount". Google records against the users identity that they have received x without directly transferring the money. The costs are only paid if the user moves money to their real world bank account. Paypal on steroids if you like.

My guess is that a frequent-flyer like system is probably the best option. There is less regulatory overhead, capital and technical requirements. The other major attraction of FG points is that everyone understands frequent flyer systems and the redemption of points. GAYME companies are the obvious candidates to create these systems (they have identities and relations with the users and UGC companies) and I can see this being the next battleground for the hearts and minds of internet users.

Tags: UGC, Web Services

Thursday, October 05, 2006

UK Age Discrimation Laws - The death knell of target job boards?

As of 1 Oct 2006 the UK's age discrimination law (Employment Equality (Age) Regulations 2006) came into effect. I am now reading through a "guide" on these laws and, I am, to say the least astounded. The UK government has taken a massive sledge hammer to crack a small nut and then missed.

What strikes me as most interesting is the possibility that target job boards could possible be ruled illegal under the new laws. From the guide is the following quote:

"If you limit your recruitment to university ‘milk rounds’ only, you may
find that this is indirect age discrimination as this practice would
severely restrict the chances of someone over say, 25 applying for
your vacancies."


"Example: An advertisement placed only in a magazine aimed at
young people may indirectly discriminate against older people
because they are less likely to subscribe to the magazine and
therefore less likely to find out about the vacancy and apply."

Now the obvious first shot will be on services such as Milkround. However, I can see the same logic being extended to any target job board. For example the TechCrunch, Joel on Software and 37Signals job boards are seen by an audience that is by and large of a particular age group. This could be be seen as indirect discrimination.

Perhaps the biggest question is the liability of non-UK companies for job advertisements placed on the Internet? The obvious answer is don't be silly, but if a non-UK advertises a job that can be done by telecommuting, lawyers could argue that the advertisements do fall under the UK laws.

The law of unintended consequences raises its head again.

Also puts a damper on the outcome of News International's purchase of Milkround.

Tags: Web Services

Wednesday, October 04, 2006

A brilliant but simple idea - SlideShare

The best ideas always are aren't they?

Today, Uzanto launched a second service called SlideShare. Essentially, it allows the user to take a already generated powerpoint or openoffice slide pack (doesn't seem to support Keynote yet although a help note says to export to PPT). The user can then share these slide packs with other users and embed them on other sites.

The embed is a flash movie making usable on a majority of social networking sites and viewable in most if not all browsers. The service seems to use Amazon's S3 service.

Just as YouTube has many similar competitors, I expect other presentation services to popup with a similar system. It will be interesting to see who wins. I expect SlideShare has a good start with a working service that is easily used that is compatible with a social networks and a majority of the web.

Tags: SlideShare, Web Services, Social Networks

Sunday, October 01, 2006

Defence in Depth in the world of Single Sign-on

Recent expansion of our network has led me to revist the concept of Defence in Depth and its relation to security. I am a big beliver in Defence in Depth. To the point all the computers at work run with software firewalls in addition to the hardware firewall. But that is not what the point of this post.

Rather, it is the concept of Defence in Depth in web services. The question arises of how many web service companies use Defence in Depth. Given the recent security failures my guess is not many at all. Cruel experience will change that I am sure. But this does lead to the problem of the social engineering attack.

I am wary of single sign-on as it seeminly destroys the usefulness of Defence in Depth. One sign-on and the cracker will then have access to all of a targets services. As web services usually have weaker protection from attacks that come from inside the service it opens up a whole world of hurt. I wonder if Defence in Depth is considered by Identity 2.0 crowd.

An interesting problem.

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Monday, September 25, 2006

Social Networks and Attention

I was at dinner with Howard Rheingold organised at the very last moment by Ian Forrester. It was a very good evening thoroughly enjoyed. But this post isn't about the actual dinner but a comment made by one of the attendees.

Discussion had turned to "The Daily Show" and "Colbert Report." Then the comment was made "I watch 'The Daily Show' but not the 'Colbert Report' as I am sure with my social network that if there is something really funny on the 'Colbert Report', I will find out about it" or words to that effect.

The comment shows an interesting trend in managing attention. People are using their social networks to expand the amount of attention they have. By relying on different parts of your social network to pay attention for interesting items effectively expands the amount of attention a user has.

What is the impact of this? I'm not sure as I haven't had the chance to fully think the implications through. Top of the head is that it will complicate the monetisation of attention. It also indicates that making very general social networks profitable will not be easy. The better route is adding social networking features around a series of more focused websites. Shades of the old Geocites and AngelFire?

The other side of the coin is that this is an interesting adaptation by an individual to managing information overload.

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Thursday, September 21, 2006

Where have I been?

It has been a long time since I last posted. Several months in fact. Where have I been? Working. Of course this begs the question of what I have I been working that has stopped me blogging.

StrategyWire is what has stopped me blogging. I have been working hard getting the system up to scratch for the initial release, which has now come and gone. We (MarketClusters) are lucky to be in a position that we had paying clients with the initial release. Of course this creates the (good) problem of having to push further and faster with our development of the platform.

What is StrategyWire? Good question. StrategyWire is an online intelligence platform that organised news, blog posts, statistics etc. using a graphical map to allow users to easily understand their market. In many ways this will be the most interesting period because we will be building on a strong foundation adding in the whizz bang features. Of course we are looking to hire more developers (and analysts).

StrategyWire is part of the growing number of Enterprise 2.0 applications that are starting to appear.


Sunday, April 23, 2006

Australian Last Mile Broadband as a Utility

Debate has been raging (as much as debates rage in Australia) about who is going to pay for the next generation of broadband network and how they are going to pay for it.  Telstra (the incumbent) has given the ultimatum that it will not build out a FTTN network without regulatory relief (translated: we want to charge monopolistic prices to competitors to access the network).  Their reasoning is the requirement to achieving a realistic return on investment.

Last week Telstra's main competitors tossed a curve ball by offering to jointly fund the build out of a FTTN network for Australia in exchange for access.  Which of course nails Telstra's ROI argument.

What I find most interesting in this debate (many do expect that the offer as proposed will get off the ground) is the airing of different methods to developing out next generation broadband networks.  The common element is the recognition that the base network is a utility.  The proposal for joint funding recognises this.

While it is debateable that joint funding will work (it may) it opens up the debate to other methods of funding.   One that needs consideration is the to place the last mile network (exchange to doorstep) into a tradeable asset trust.  The trust would own the network and service providers would purchase access from the trust.  The advantage of the trust is that it separates network provision from the service provision (a utility) and provides a level playing field for service providers.  The network asset trust would also provide a long term investment vehicle for pension and super funds.

Last mile access is a utility and the joint funding proposal is a clear indication of this fact.  Last mile access as a utility casts the net neutrality debate a completely different light and negates many of the arguments put forward by the US bells.      

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Microsoft's Choice

Google and Apple have shifted the competitive landscape leaving Microsoft fighting a defensive battle on a battlefield not of its choosing.  Microsoft faces the dilemena of continuing to compete on their competitors terms or disrupt the competitive landscape.

The first choice will lead to the slow but inexorable decline in revenue and profitability of Microsoft.  The second choice is very risky because the outcome is unknown and will involve the internal disruption of Microsoft.   Two stark choices but only one can halt the decline of Microsoft.

So what can Microsoft do if it chooses to go with the second option?  Microsoft needs to swap the Win32 kernal for the Linux or BSD and focus on the UI and productivity aspects of the OS.  Similar to Apple's strategy with OS X.

By using a Linux or BSD kernal Microsoft benefits in several ways.  Fundamental architectural decisions made a  long time ago are placing constraints on how secure the WinOS can be made.   Security is becoming increasingly important and is now effecting choices on OS.  A Linux/BSD kernal provides the fundamental security necessary to build a safe OS.  Using a Linux/BSD kernal will allow Microsoft to concentrate on the UI and productivity aspects of the OS which fits very neatly into the creation of a seamless computing experience that Microsoft is pursuing.  It reduces OS maintence and development costs.  Microsoft essentially outsources the bug fixing and OS maintence to the Linux or BSD community.   Microsoft would still need to participate but would not need to devote so much resources on housekeeping but can focus on innovation.

Using a Linux or BSD kernal will allow Microsoft to increase margin on the OS product while reducing the cost to the consumer.  A benefit that Microsoft's hardware partners will appreciate.

Those are the direct internal effects of this move.  But there will also be disruptive market effects of a kernal switch, which can be argued to be far more important to Microsoft.

  • The sea anchor of being an OS company that is stopping Microsoft competing effectively in the new market. 
  • It will in on fell swoop take the wind out of most of the anti-trust suits that Microsoft currently faces.
  • The OS versus OS argument looses bight as it becomes an argument about Unix flavours.
  • Security and productivity reasons for swapping OSes (ie from Win to OSX or Linux) will be mutted if not completely sunk.
But most importantly, the strategy of switching kernal will allow Microsoft to blur the boundaries between the centre and edge of the network.  Which directly effects the competiviness and value of competitors like Apple and Google.

The question remains of what kernal would Microsoft use.  Technically there isn't much difference between Linux or BSD kernals.  I expect that Microsoft will go with the Linux kernal for the following reasons:
  1. Linux already has a greater amount of public mindshare and it would allow Microsoft to reclaim those organisations that have already move to Linux Desktops,
  2. Linux developer community is larger (and more vocal) than the BSD community, and
  3. Steve Jobs choose BSD.
Microsoft using the Linux kernal has significant benefits for the company ranging from costs to more focused development.  Perhaps more importantly it will represent a major disruption of the status quo.  Innovative disruption not only comes from new technology but also from adopting new strategies.

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Monday, March 27, 2006

The Undiscovered Pearl of the Blacksea

I need a break and as I like visiting new places I decided to go to Odessa in Ukraine. I am glad I did. This post is to give you the reader the merest taste of Odessa. Odessa is not a particularly stunning city in the way that Paris or Sydney are. But Odessa has its own charm. As a friend put it: "Odessa is just a large village." Some of the buildings are crumbling others are new. The buildings in the centre of the city are a wonderful meadly of everything great in Italian architecture. Another way to think of it is that the buildings are Italian Architect's ideal of Italian architecture.


Another distinct feature of the city is the huge number of sculptures and statues dotted around the city. Many are beautiful and well worth a look.


While I was there during the winter, it struck me wandering around Odessa that it would be a lovely city to visit during the summer. Particularly with the beaches a 5 minutes walk from the centre of the city (where the decent hotels are :) ). A traveller can spend the day lazing around on the beaches and then hit the many good pubs or clubs at night. After dinner at one of the resturants that serve great food. Of course there are a number of museums to satisfy intellectual guilt before heading back to the beach and niteclubs.

But and there is always a but, travel to Odessa is not for the package holiday maker. Odessa (at tis time) lacks the developed tourism infrastructure that Malaga or Ibiza have. Odessa is really for the independent traveller at this time or those looking for a holiday that is slightly different but still has niteclubs and beaches.

If you do make it to Odessa, drop in to Mick O'Neils Irish Pub. A good pub, a great atmosphere, good food and drink. O'Neils also doubles as the local for the expatriate community of Odessa (all six of them :). Speaking of which I would like to thank Steven, Debbie, Mark and Alan for their selfless inclusion of a traveller into their circle if only for a short period. Special thanks to Mark for taking the time to show me some of Odessa.

I enjoyed my trip to Odessa. I hope I can find the time to return in summer. I do recommend a visit with the proviso that is still rough and not for your average package tourist. But if you want a holiday that is different, not overly touristic then a trip to Odessa could be what you are looking for.

Doing a Hugh in Italian

A recent The Economist (Feb 25 - Mar 3) had an article in it about the challenges facing the Italian textile and footware industry. The Economist offers up the standed freee market cures such as consolidation and investment in capital equipment. One solution that The Economist does not mention is the creation of a global microbrand or to put it another way: the Italian textile and footware industry needs to do a Hugh (you could say doing an English Cut but doing a Hugh sounds better.)

The Italian textile and footware industry simply can't compete in mass market production. If it is not China it will be Vietnam or Burma or Cambodia or Africa. There will always be someone with cheaper labour. Trying to compete directly with the cheap labour is not going to work. Instead the Italian textile industry needs to build on their unique characteristics. The Italian textile and footware industry has a history and a reputation that the cheap labour countries cannot replicate. Taking advantage of their history and reputation is how the Italian companies are going to be able to compete.

Italian textile and footware companies need to create global microbrands that use the reputation and history as a foundation. The global microbrands are important as they create the demand for the time of the craftsman. Time is the only scarcity. But scarcity has no intrinsict value. Value only comes from the interaction of demand and scarcity. Here lies the success of English Cut (doing a Hugh). Through creating a global microbrand English Cut created demand for the time of the craftsman.

There is no reason why Italian textile and footware companies cannot create their own global microbrands to sell the time of italian mastercraftsman. They need to do a Hugh.

Hugh Macleod's The Hughtrain Manifesto

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Sunday, February 19, 2006

Discovery of A-List Posts: Or Why A-lister vs Z-lister debate is a red herring

The conversation that started about gatekeepers has moved on to about A-listers vs Z-listers. Or how Z-listers can become A-listers. You can see the part of the conversation here on tech.memeorandum.

If you are trying to be an A-lister you aren't. Now matter how hard you try it just ain't going to work.

Besides the point isn't to be an A-lister but to write A-list posts. To do this you need an interesting topic, something worth saying (I agree posts get tired very, very quickly) and a readable style of writing. Note carefully that last point. Readable style of writing. I have lost count of the number of times I stopped reading a post after the first paragraph because of really bad writing (I'm looking at you Umair Haque of Bubblegeneration). I enjoy reading Gapingvoid because of Hugh MacLeod's writing style (not to mention the cartoons). It is really simple concept. I With the amount I read every day I don't have time to waste deciphering incomprehensible writing.

Back to the A-lister vs Z-lister debate. The real issue is allowing A-list blog posts rise to the surface from whatever blog they are posted on. Robert Scoble and Om Malik don't write A-list posts all the time. The blogsphere will improve if we make the shift away from thinking in terms of blogs to thinking in terms of posts.

More is needed to help good posts to rise to the surface. Technorati has just implemented their "Authority" slider. However, this still looks at the whole blog and not the individual posts. This is a step in the right direction but the slider could do with refinement to look at per post authority. The other major problem with Technorati's "Authority" measure is that it counts links. This fails to account for the "virtual bloggers" who simply read the post and may leave a comment but do not have their own blog.

There is never going to be a magic bullet for finding good posts. What is needed is a series of measures to rate and compare posts. Some of these measures will be social/community based. Others will be algorithmic like Google News. The more methods for quantifying quality the greater the likelihood of a good post finding its way to the surface where ever its location.

To kick start the debate I propose that two widgets be included in blogs. These widgets would allow readers to rate a particular post. One widget would allow the reader to rate the quality of writing and the other widget would let the reader rate the content i.e. is it interesting, funny, flamebait etc. Think of it as the Slashdot moderation system write large across the blogsphere. The same system can be used for comments as well.

The rating widgets fall into the community/social category of rating measures. What is now needed is a algorithmic measures. Bayesian filters fit nicely. Bayesian filters can be used to find good posts across the blogsphere in much the same manner as they detect and junk spam. The filter would compare each individual post against what it has learned are good posts. The filter can be continuously trained by simple yes/no button for readers and by tying the rating widgets.

Over time further measures can be added including rating the readability of the English and creating topic specific Bayesian filters (what is considered a good post of skateboarding may be quite different from what is considered a good post on 19th century Russian Literature).

No system will ever be perfect and the system will need to be continuously refined. A combination of social and algorithmic methods will be needed to discovery good posts. Neither social or algorithmic alone can do it. And if you are a Z-lister wanting to be an A-lister, writing consistently good posts is the fastest way to becoming an A-lister. Whinging about being a Z-lister is not.

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Saturday, February 11, 2006

Rocketboom and Attention

This week news broke of Rocketboom auctioning ad space. Jeff Jarvis has a post quoting Henry Copeland's view of the Rocketboom auction. It is easy to exaggerate the importance of this auction but I see this as being an interesting harbinger of things to come. It also speaks to a weakness of Google.

What is developing is a transparent market for the sale and purchase of attention; an Attention Market. Just like Fred Wilson wanted. The market poses a serious issue for Google maintaining the growth in revenue. It dent's Google's strategy of becoming an attention arbitrator. Google's current strategy seems to broaden the size of their attention pool through foray's into main stream media. I see this providing a short term to medium growth in revenue but this will rapidly become difficult to maintain as the Attention Market's momentum grows.

Google is not the only company threatened by the Attention Market. All of the Internet Ad Networks and traditional advertising arbitrators will be challenged and changed by the Attention Market. While the Attention Market threatens the established order it brings new opportunities for investment and companies.

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Monday, February 06, 2006

Disrupting the VC Industry Redux: Disrupting Equity Financing

In the ensuring discussion fuelled by Rick Segal's original post on disrupting the VC industry many important points where raised by both sides. In particular Jeff Nolan of Venture Chronicles gives cogent arguments about the value of VCs in building and developing companies. Not the least of which is overcoming the traditional web services "hole" during scaling. Something I have commented on before.

The simple fact is that VCs are not going away. No matter how hard some people might wish. VCs bring value to the table. However, the value that VCs bring does not fit every situation. VCs are currently used as a one-size-fits-all solution to problems. This is where the VC or, more accurately, the equity financing industry will be disrupted. Disruption will come from solutions that address particular problems or situations within the equity financing industry.

In my previous post on this subject I proposed a VC marketplace as one solution. I foresee this market covering the early stages of new company/idea development. From conception to a product with a few customers and some revenue. Put in web service terms, this would be from conception to the beta with a few customers and some revenue coming in. It is from this point that VCs add value. The marketplace, while it could still be used, is not necessarily the best solution for further equity financing. VCs can help smooth the ride as the company goes through major growth spurt. The aim of VCs should be to help the companies leap the "hole".

The VC markeplace doesn't replace VCs. The VC marketplace compliments VCs. The marketplace provides equity financing to companies to get them to the point of being ready for VC funding if they so desire.

Does the investment company proposed by Dave Winer and seconded by Doc Searls have a place. Many bloggers don't think so. They point to the previous failure of publicly traded VC funds. As proposed, I agree. It really isn't a particularly good idea nor is it disruptive (no matter how you cut it) as stated. For its proposed vision it However, the company does have a place within the equity financing industry. Just not the one dreamt of by Dave et al.

The fund could be useful for providing cash injections into companies that either don't want to undertake a round of VC funding (remembering Guy Kawasaki's refrain "To much money is just as bad as to little") or don't wont to involve VCs in the company for some reason (they see the VCs as the devil in disguise). The fund is another way of raising equity financing when VCs or the marketplace aren't a suitable solution.

The fund would only address companyies with cashflow that have an equity requirement that is too small to be worthwhile for VC funding (which seems to be as high as US$10m at the moment and likely to go higher). The fund would focus on purchsing preferred stock as opposed to common stock. Which translates (very roughly) as purchasing a slice of future profits as opposed to a slice of the company

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Sunday, January 29, 2006

Disrupting the VC Industry: a VC investment Market

The discussion about disrupting the VC business hit the blogsphere late last week. Primarily driven the posts by Rick Segal and Doc Searls. A pause of a few days and Dave Winer has proposed User Internet Capital Corp to disrupt the VC business. Doc Searls has thrown support behind the idea as well. When the conversation was first begun, I thought about how the industry could be distrupted. I must admit that I am disappointed by what has been proposed. In a sense the User Internet Capital Corp is simply a VC fund open to all and sundry.

A more disruptive idea is to create a VC market. A market where people (users included) can invest in high risk/high growth businesses from an early stage. A market for Venture Capital would be far more disruptive than simply creating another form of the VC.

So how would the market work? A company would register with the market. The registration process would include the necessary due dilligence process that provides the basis for trust within the market. The company would then place a certain number of shares up for auction.

The auction process would work like this. Bidders bid not only a price but also an amount of shares they wish to buy at that price. At the close of the auction, the highest bidder pays the amount they bid and receives the corresponding number of shares that they bid for. If the highest bidder did not buy all the shares then the remain shares are offered at the final bid price to the other bidders.

An option is available where the total amount of a final bid (bid price for shares x the number of shares wanted) of losing bidders will be divided by wining bid price and they receive that number of shares. The shares that people purchase can then be traded within the market. The last traded price for a company's shares becomes the starting price if a company decides to do another round of funding.

Anyone can register to bid. The registration process for bidders is again a due dillegence process that provides the bid side trust for the market. There is no minium amount or number of shares that a registered bidder can bid for. If all they want is one share , then that is all the need to bid for.

A VC investment market opens up investment in high risk/high growth to anyone (Doc Searls and Dave Winer's users) businesses. A far greater number of businesses will be able to seek and receive VC funding than through the current method. The risk of any individual investor can be spread even further. It also brings competitive bidding to the process which will bring their own improvements to VC investment. Finally, it opens VC investment to the wisdom of the crowds which brings with it the possibility of better selection of great ideas.

I really think that a VC market will produce far greater disruption of the VC investment industry than the creation of a publicly traded VC fund as Dave Winer has proposed.

Links to Conversation:
Michael Parekh
, Paul Kedrosky, Mathew Ingram, Michael Arrington, Mark Evans, Robert Scoble

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Healthcare and Education Spending

[Ed note: I wrote the post a while ago
but I never got round to posting it. After reading two articles
in the Economist, I was motivated to post it. Although it is
about Australian education and healthcare it is applicable to other

Spending on healthcare and education is tied in
with poverty traps, reforming the tax system and welfare.
Currently, Australia has a complicated system that creates poverty
traps as benefits are means tested, disrupts the effective delivery
of services and complicates the tax system even further.

Reforming the way education and healthcare are paid for will
make significant in-roads to improving these community services.
This isn't about who should paid which has largely been settled in
favour a joint payment by both the individual and the state.
Rather it is about how the state money is provided to fund the

Education and healthcare are currently funded in a
top down approach. The money slowly trickles down until
eventually some very small amount reaches the front-line where the
service is actually delivered. The money gets eaten up by
salary increases, administration expenses and pet projects.
This all leads to waste and increased costs in delivering the

The funding needs to injected into the bottom, at the
point of service delivery. The funding is then delivered to
where it is needed by those who need the service. It also
brings in the possibility of competition as service providers now
half to provide a service that the consumer wants to use.

best way to inject the funding at the point of delivery is to create
non-means tested education and health accounts. The federal
government recurring spending would go into each person's education
and health accounts to be spent as the individual determines.

accounts would come with a left and right of arc. An education
account can only be spent on providing education and health accounts
only on health. The health accounts would have further
restrictions on the type of health services it can be spent on i.e.
most cosmetic surgery would be out. If you want that save up
and pay for it yourself. If the individual chooses services
that cost more than what is placed into the accounts yearly then the
individual has to pay the difference. For example, you send
your child to the most expensive private school then you will need to
pay the difference between what the account provides and what the
school charges.

The accounts would replace most if not all the
federal funding of health and education. The introduction of
the accounts would see any restrictions on price and price caps
removed. This will introduce price signals into the delivery of
the services and increasing the scope of competition in the delivery
of services. In this time of population movement, travelling
and globalisation the money in the accounts can be spend with
overseas providers of healthcare and education.

ensure the functioning of the accounts a minimum capitalisation of
the accounts will be mandatory. Just as financial institutions
are required to do. Continuing the theme of choice, the
individual will have the choice of who manages the accounts: their
bank or building society, insurance organisation or the RBA for the

The health and education accounts strike a balance
between effective delivery and competition in service delivery while
ensuring a fair level of access to these services for all
Australians. The accounts also empowers Australians to take
responsibility and control of their lives. These accounts take
what is best of the Canadian, UK public funded systems with the best
of the US funding at point of delivery.

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Saturday, January 21, 2006

Digital Media Marketplaces

A marketplace for digital media has intrigue me for a while. A place where digital media price is set by the value placed on the media by the market. Google Video Store with its variable pricing is a pale immitation of the a marketplace and will remain that way until the price of the digtial media is set by the marketplace and not by the seller. Variable pricing a market does not make. It is however, a step in the right direction.

One question that has bugged me is how would a marketplace determine the value of digital media. The pricing mechanism lies at the heart of any marketplace. For the marketplace to function properly the market needs to method to effectively set the value (and consequently price) of digital media. If the pricing mechanism is faulty then the market wont operate smoothly.

Stockmarkets prices are set by the interaction of the amount of a company's shares available for sale and the demand for the shares. The price is primarily determined by the scarcity of supply. Digital media doesn't have a finite supply. It has an inifinite supply of perfect copies. Scarcity of supply is not going to work in a digital media market as a pricing mechanism.

The Logistics Equation could be used to provide "pricing" variability that is determined by the market. Not really a very good system. Artifical constraints are placed on the market and prices only go up and never down. Not really a dynamic market with variable pricing.

A better pricing mechanism is to use demand per unit time. The price is then determined by the scarcity of demand. As the demand per unit time goes up the price rises, as the demand per unit time goes down the price falls. The beauty of this system is that the price is set by the operation of the market. It also produces a dynamic market with variable pricing with little or not artifical constraints.

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Tuesday, January 17, 2006

Net Neutrality and IPTV

In much of the discussion (Michael Parekh, Om Malik, Jeff Pulver and Lawerence Lessig to name but a few) about net neutrality few seemed to have spotted the primary underlying reason for the determination of the US telcos/cable companies to implement tired Internet access. Besides greed that is.

As I see the primary driving force between the Telcos/Cable Companies (shall they become the new Evil Empire?) is to make their wonderful, investor friendly IPTV plans economical. As I have discussed in a previous post IPTV has significant disadvantages to Broadband TV to the point of IPTV being uneconomical when competing against Broadband TV. Unless the Evil Empire (aka telco/cable companies) can implement two tiered Internet.

The telcos/cable companies are frantically seeking to raise revenue and ARPU (the CEO's bonuses depend on it remember?) in the face of the on-slaught of the IP world. They see IPTV as their salvation and are consequently desperate to make their IPTV plans work. Unfortunetly, Broadband TV makes destroys the economics of their plans. The only way to make IPTV economical is to make it impossible for Broadband TV to be delivered at reasonable resolution and speed (downgrading Broadband TV packets or tiered Internet) without paying. The price the Broadband TV provider has to pay would at the very least make the IPTV competitive but more likely be set to price Broadband TV out of the market (wouldn't want to compete, now would we?)

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Sunday, January 15, 2006

Strategy of Microsft and Apple

Both Steve Jobs' and Bill Gates' keynote addresses showed that both companies are pursuing a stategy of empowering the edge of the network. A strategy that places users front and centre of the companies' focus.

How they pursuing this empowerment differs. Microsoft's strategy is to create seemless connectivity between all the devices at the edge of the network in order for users to be more productive. While Microsoft sees a growing importance for other devices, they still see the PC remaining an important part of the edge of the network. Why centeralise the PC's functions when you are trying to push power to the edge? No thin clients for them.

Apple's strategy differs as they are pursuing a strategy of seemless creation, publishing and distribution of content at the edge of the network. Their focus is less on productivity and more on creativity. Again the idea is to push as much power and functionality to the edge of the network, not to centeralise it.

Both Apple and Microsoft see the edge of the network as becoming the dominate paradigm for the future. Centeralise services and products will still exist but only as the support or compliment edge services and products. A good example is Steve Jobs' demonstration of Photocasting. All the creativity was done on the iMac and distribution was accomplished by a RSS feed mediated across .Mac. The centeralised service, .Mac, support the creativity by providing the user the means to distribute their creativity. Expect to see the same for music and video through iTunes and .Mac in the future.

Noteworthy, is that both strategies of the companies are not mutually exculsive. Both strategies while competing are still complementary. How Microsoft and Apple manage the competitive/coperative relationship between the two companies will be interesting.

THe keynote addresses signaled a shift to the edge of the network. They also signalled that both the telco industry and content industries are now facing two companies that thrive on rapid innovation. Few companies in these industries are up to the pace of change. Perhaps even more worringly for the telcos and content companies is the shift in power balance to Microsoft and Apple.

Links: Steve Jobs' Keynote Address
Bill Gates' Keynote Address

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Saturday, January 07, 2006

Variable Pricing on iTMS

The Labels are demanding that Apple loosen the reins and allow variable music pricing. And there are sound economic reasons for this to happen. Others in the blogsphere have explained the reasoning behind variable pricing in more detailed than I will go here. The labels though, want variable pricing which would put new releases at a price well above what is currently charged.

I personally find this hard to justify. To me it smacks of monopolistic pricing brought on by a lack of competition and waste in the labels operations. But back to the case of variable pricing.

EMI's boss has publicly stated that he expects Apple to institute variable pricing. Many bloggers expect Apple will expect implement variable pricing. Elliot Spitzer's investigation of the US music industry could easily force greater price competition.

So will Apple implement variable pricing? Quite likely. It was bound to happen and Apple will need to maintain "freshness" in the service or risk losing large numbers of users to other download stores. Already this is happening.

But Apple isn't likely to give the Label's exactly what they want. They will implement variable pricing but the upper price is going to be 99 cents. That will be the maximum price and prices for songs will descend from there.

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Thursday, January 05, 2006

Paying for Fibre Networks

Capital. The requirement for any major infrastructure project and one of the hardest things to get. Capital remains the major stumbling block to the roll out of fibre optic to provide the last mile. Verizon is reported to be winding back the company's rollout of FTTP. Telstra, Australia's incumbent telcommuincations company, has stated that it will not rollout FTTN without regulatory gurantee to be able to lock out competitors. Clearly fibre last mile systems are expensive, particularly for companies whom stock prices are going down and not up.

Governments can fund the roll out of fibre last mile systems. This is what Amsterdam City council has decide to do. But government funding is not the only means for funding fibre last mile network rollout outside of a large telecommunications company paying for fibre rollout.

The fibre last mile network is an asset with a relatively predicatable income stream. Funding a rollout can be done by creating an income or royalty trust that will own the last mile network. Investors would buy units in the trust and this money would be used to fund the rollout of the fibre. The trust would not lay the fibre themselves but pay a third party company (or companies) to do the construction work. Once the network is rolled out then the trust simply charges telecommunications providers for access to their last mile connection. All telecommunications operators then have equal opportunity for network access.

Using Income/Royalty Trusts to fund fibre rollout has several advantages. Governments don't need to get involved in funding the rollout nor providing regulation to provide equal access to an incumbents network (always a messy business). A single company is not burdened with a very large capital expenditure over a long period of time. The trusts would soak up a lot of the cash that is sloshing endless around the planet causing various problems. The trusts would also create a "steady" income stream for long term investment. I expect that the trusts would sit between bonds and equity in the risk/reward metric. This would provide the pension/super funds with third security for parking cash.

But the main advantage is that the trusts would see last mile fibre networks rolled out now rather than possibly maybe sometime in the future.

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Sunday, January 01, 2006

Predictions for 2006

As the new year starts, I thought I would jump on the bandwagon of "Predictions for 2006". In no particular order:

Wireless Internet will move mainstream. The Wild Wild Web will move onto the screens of mobile phones as it has already done with PCs. As the Wild Web takes over the screens of the mobile users the precious walled gardens of operators will die. The manicured lawns and delicate pansies of the flower beds succumb to the voracious growth of the Wild Web. This will open up hundreds of new opportunities and services to mobile users. It will further erode the boundaries between wired and wireless spheres.

The Attention Wars will begin in earnest. All though the first shots where fired in 2005, full scale battles will begin in 2006.

Web service operations will suffer. Web Service companies will face outages and problematic quality of service through out 2006 as these companies learn the hard way about operations. While individual companies will improve overall there isn't going to be drastic improvement in the quality of service of web services. It is likely that web service operations will see a increase in the use of Big Iron to do the heavy lifting and mission critical tasks leaving the server farms to serve pages.

Usability will become a competitive differentiator for services and applications. Apple has demonstrated (again) the power of usability. Other companies are going to seek to harness that power in differentiating their service or application in the crowded marketplace of the Internet. Getting the mix between features and usability right is going to give a company a strong competitive advantage. An obvious example is the metaphoric revolution that Office 12 is going to usher in.

Digital home entertainment will enter new phase. The roll out of Media Centres will pit companies molded and shaped by relentless competition against oligarchs shaped by monopoly agreements and captive audiences. Competition for the attention of audiences will become far more intense as Internet video moves from being an indirect threat to a direct threat to broadcasters.

Identity 2.0 will become the catch cry of 2006. The possibilities opened by what has been termed Identity 2.0 from attributing comments and posts across the blogsphere to banking to fighting fraud and e-crime will bring this squarely into the centre of attention of the Wild Web. But like its counterpart in the offline world, identity 2.0 is only going to be as strong as its weakest link. Which is usually the process and documentation for obtaining an id card. This is the problem of a "real id" obtained using fraudulent means. For example using someone else's birth certificate to get a driving license. This will need to be addressed as Identity 2.0 is rolled out across the web.

Broadband TV will continue to gain momentum at the expense of the telco's TV offerings. Broadband TV will continue to grow as experimental broadcasters, non-traditional broadcasters and content owners push more and more video to the consumer through the Internet. The lower cost broadband TV solutions will erode the economic viability of the telco's TV offerings. Something that many telcos seem aware of given their recent rantings on two tier Internet. Two tier Internet will have a much greater effect on Broadband TV than VoIP or Web Services.

Uplink speeds will become a competitive point as ISPs struggle for differentiation in the Speed Wars. As the download speeds escalate rapidly it will become harder and harder for ISPs to differentiate themselves on speed and for the smaller ISPs to remain in the game. At the same time the speed claims will face greater scrutinity from consumers and regulators. This will force ISPs to find alternative ways to differentiate themselves which they will do with uplink speeds. We won't see a sales pitch based on synchronous speeds but something like a 8-12 Mbps downlink with a 1-4 Mbps uplink.

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