It’s funny how Murdoch’s statement made Cuban think of Twitter while it made me think immediately of the A&P.

The Great Atlantic and Pacific Tea Company, or A&P, was America’s first national chain of food markets. Hell, it was America’s first self-serve market, first to have store brands, first to advertise nationally, first to have a customer loyalty program (in 1912!), first to publish its own magazine (Womens’ Day, which is still around, though no longer owned by the A&P), and for most of my childhood back in Ohio A&P was the big Kahuna of grocery chains. With $5.4 billion in sales in the mid-1960s, A&P was at least 20 percent bigger than any of its competitors.

But after 105 years of setting the pace for the grocery industry, A&P peaked in the mid-1960s and went into a decline that lasted for at least 15 years and, it can be argued, continues even to this day. A&P, which has had German owners (the Tengelman Group) since the 1970s, is more of a super-regional chain today and doesn’t particularly vie for industry leadership on any measure. What happened in the mid-1960s to hurt A&P was it opted out of being indexed by Google News.

Well not literally, but close enough. A&P management, which back in the mid-60’s was still chosen from the founding Hartford family, decided at that time to abandon shopping centers — retail aggregators as Google is a news aggregator. They reasoned that in most shopping centers the anchor store was an A&P. In their view their supermarket was the main draw for a shopping center and didn’t need any of those other shops or stores to provide traffic. The rest of the shopping center was seen by A&P management as being purely parasitic. The company could get cheaper real estate down the road with a standalone store, which is why today most A&Ps aren’t in shopping centers. It’s also why A&P is a shadow of its former self.

You see the Hartford family (and Rupert Murdoch) were wrong. The flawed assumption at A&P was that shopping centers would somehow do without an anchor supermarket, which they didn’t. By withdrawing from the common location A&P was not only walking away from significant customer traffic, it was in each case simply handing that traffic to a Safeway or a Kroger store. It was a supremely stupid move.

Which brings us back to Rupert Murdoch, who is brilliant in his own right but in this case can’t find his own URL with both hands.  If Murdoch abandons Google News, then those hundreds of millions of reader referrals per day will simply go to other publications or maybe even to guys like me.  It’s not like Google can’t fill the space.

Murdoch wants readers to pay for news. I’d like folks to be paying for my words, too. But pulling out of Google News isn’t the way for either of us to accomplish that. And Twitter isn’t a factor with enough of the audience (yet? ever?) to make a difference.

Giving Murdoch the benefit of the doubt, then, I’m guessing he simply doesn’t mean what he said.  Perhaps he just wanted to sow a little confusion, get some publicity and maybe a concession or two from Google.

It won’t work.

Brett Glass (on the left) runs Lariat, a small wired and wireless Internet Service Provider (ISP) on the prairie in Laramie, Wyoming.  Bob Frankston (right) programmed VisiCalc, the first personal computer spreadsheet and for several years worked on home networking issues for Microsoft, somehow without having to move from his beloved Newton, Massachusetts.  Two nerds, a decade apart in age yet both vastly experienced, they have completely different views on Net Neutrality. Bob loves it. Brett hates it. Yet coming to understand each man’s position helps us better understand the whole Net Neutrality issue and what really matters.

Net Neutrality discussions usually come down to pitting home users against Comcast, Verizon, or AT&T.  The ISP is presented as a bogeyman and a multi-billion-dollar bogeyman at that.  It’s easy to oppose big, rich companies that maybe aren’t as attentive to customer service as they ought to be. But what if the ISP is Lariat and the customer service comes straight from the owner? That’s when things start to get interesting.

Brett is trying to get the most bang for his Internet backbone buck, so things like traffic shaping, web proxying, and restricting certain protocols like BitTorrent appeal to Brett because without those policies he’d have higher costs and lousier service for most users.  So would Comcast and Verizon, by the way.  ISPs large and small generally want to limit their users to certain bandwidth and download caps and don’t like enabling software and media piracy.

Bob Frankston, as an outspoken proponent of Net Neutrality, is really more about outright defeating the telephone and cable companies.  He wants to put them out of business.  Or, more properly, he wants to put them out of their present business. Bob thinks ISPs should simply be schleppers of bits, not paying the slightest attention to ports, protocols, or applications.  In Bob’s ideal world we as individuals would control the copper wires and glass fibers that connect us to the Internet, with the ISP simply standing-by at the utility pole or neighborhood gateway to give or take bits that we’ll transmit at a rate of 100 million per second.

Bob’s concept of the Internet is actually fairly common in the darnedest places, like much of Eastern Europe.  In Moscow, readers tell me, there are neighborhoods where you can get a coax connection to the net running at a blazing 100 megabits-per-second.  But at the same time the meter is running and you may be paying individually for every one of those hundred million bits.

And this is where the two concepts — Brett’s and Bob’s – differ enough to matter.  By calling for the very broadest definition of Net Neutrality it seems to Brett that Bob is trying to put him out of business.  Brett identifies with his VoIP telco role.  But what Bob proposes would force a change of business model on Brett and all the other ISPs right up to Comcast and Verizon: no more e-mail, McAffee, Net Nanny stuff — just the bits, please.  Bob wants to take away everything that Brett sees as making his service charming.

The truth lies somewhere in-between.  Business models ARE changing and they always have, though not quickly, in the telecommunications space.  Back in 1983 when it divested its locl operating companies, AT&T (a different AT&T, remember, not the current company by that name) was choosing to deliberately abandon local phone service because long-distance made nearly all the profit.  So AT&T became a long-distance telephone company, squandered lots of money on cable TV and cellphones, then saw itself implode when long distance became a commodity that’s effectively free for most customers.  The AT&T business model changed (from full-service to strictly long-distance) then changed again (from long-distance to bankruptcy).

ISPs big and small are fighting to retain their present business models, which they view as essential to their survival and see threatened by Net Neutrality.  They are making good money with the current model and so are loathe to change it.  That’s it: they are resisting change, seeing it as bad. Until you get down to the level of Brett Glass trying to make some customer’s VoIP phone work well over a wireless link it’s fear of change that we’re seeing and not much else.  Yet change is inevitable as markets grow and mature.

Brett may not be able to survive as a pure schlepper of bits.  He sees his added value as bringing connectivity to places where it didn’t exist before.  Bob respects that but concentrates on a bigger picture where the virtualization of networks is carried all the way to our property lines.

In the long run Bob Frankston is more correct, though in his zeal he seems to need the current class of big ISPs to die and be replaced.  I’m not sure that is really needed, though it might be nice since that would at least end their reactionary lobbying.

Twenty years ago this month the Berlin Wall fell, changing European and Western culture as a result.  Within the next 20 years we’ll see a similar revolution in digital networks as distinctions between wired and wireless, Internet and television, voice and data blur to insignificance.  I just hope there’s still a role in there for Brett Glass, out on the prairie.  I strongly suspect there will be.

This is the first of probably three columns about what will be in coming months the huge story of how the Obama Administration reinvents the Internet.  They are obliged by law to do so and are required, in fact, to submit a grand plan to Congress by February 16, 2010. This National Broadband Plan is intended to accomplish the very same goals as the Clinton-era National Information Infrastructure (remember Al Gore’s “information superhighway?”) only this time it might actually succeed, again thanks mainly to Moore’s Law.

I’ve written before about the last time we went through an exercise like this.  It wasn’t pretty, with the big telephone companies essentially stealing $200+ billion in tax credits in exchange for, well, nothing.  That’s why U.S. broadband, which used to be the best and cheapest in the world is only middle-of-the-pack today.  The National Broadband Plan is supposed to fix that, though at a cost some are predicting (hoping?) will be more than $100 billion.  This time the cable TV companies will be joining the telcos at that trough.

In the broadest of terms what the Obama Administration wants to do is to bring 100 megabit-per-second Internet service to every home and business in America.  They will task ISPs to provide such a service in exchange for being allowed to continue operating as ISPs.  In places where such services can be easily provided at reasonable cost with an acceptable level of profit, which is to say in urban and higher-density suburban areas, this will be no problem.  Ramp-up fiber-to-the-home, fiber-to-the-curb, and DOCSIS 3.0 cable modem services and we’re there.  The simple business expedient of putting local TV stations out of business and grabbing their advertising income will, alone, more than pay for the upgrade costs.

Where there’s a problem is providing this same level of Internet service (100 mbps) in all the more sparsely-populated parts of America.  It is from those areas the telcos and cable companies will come, hat in hand, to ask the government to cover the difference between what they can charge and what it actually costs to provide the service.

Serving these non-urban areas is what I see driving a return to satellite projects like the ill-fated Teledesic.

For those who don’t remember it or have forgotten, Teledesic was one of a number of 1990s plans to use low-earth orbiting satellites to provide wireless Internet service almost everywhere on Earth.  By being closer to the ground than geosynchronous communication satellites, the Teledesic network could support many more low-power users (analogous to having more cell towers) and support low-latency services like Voice over IP (VoIP) which won’t work on a geosynchronous satellite link. The original Teledesic plan called for 840 satellites, later reduced to 288 satellites that would be flying in somewhat higher orbits.  Craig McCaw, Paul Allen, and Bill Gates were all involved in the project, which eventually died when the Internet bubble popped and it couldn’t be financed.

I know I am putting this all too simply, smartypants, but for the purposes of this column that is enough detail.

Teledesic died because it was too ambitious, too costly, and the people behind it made some fundamental mistakes, some involving rockets and the true cost of sending stuff into space, which I know something about.  Remember my Moon shot?  Well it is continuing and I’ve learned quite a bit about space economics along the way.

For Teledesic one key requirement was getting 840 or 288 satellites into orbit for a good price.  Toward that end they standardized on a satellite design that could be launched by any space-faring nation which was supposed to put all those nations in competition, fighting for Teledesic’s business. To set an aggressive baseline price, Bill Gates personally flew to Russia to cut Teledesic’s launch deal himself.

The Russians saw Bill coming.

Gates was negotiating for use of former Soviet SS-18 intercontinental ballistic missiles to launch scads of Teledesic satellites at a time.  Bill’s negotiating position was a tough one (or so he thought) paying no more than $7 million per launch.

Let’s pause for a moment to understand something about those SS-18 missiles.  These were (and still are) the biggest ICBMs around, each capable of lofting 10 independently targetable H-bombs over the pole at the U.S..  SS-18s were launched from underground silos that were designed with a different philosophy than U.S. Minuteman silos: SS-18 silos are hardened to survive a U.S. nuclear attack and then make a second strike.  This second strike capability made the SS-18s the scariest mothers around.  Forget about mutually assured destruction (MAD), the SS-18s made possible mutually assured RE-destruction, killing any survivors of the first wave.  In the eyes of U.S. generals and diplomats, those SS-18s simply had to go.

And they did go, or were at least intended to, as a major condition in the Strategic Arms Reduction Talks (START and START-2).  In exchange for certain favors including chopping the wings off American B-52 bombers, the Russians agreed to destroy 100 SS-18s, taking 1000 warheads out of the game.  There were a number of ways to accomplish this, but the cheapest by far was to launch the SS-18s into space.  It’s easily verifiable, almost impossible to spoof, and might even accomplish some good, like providing the world with 100 mbps Internet service.

Back to that $7 million launch price negotiated by Bill Gates. For the Russians, launching SS-18s came with a negative price, since each launch eliminated the need to disassemble, destroy, and verify the destruction of a missile, the total cost of which could easily reach $1 million.  So launching satellites, while it incurred certain costs for modifying the missiles to replace H-bombs as cargo, began with a price of negative $1 million. The cost of the missile, itself, was zero.  And Bill Gates‘ $7 million would have been nearly all profit for the Russians.

The Russians could have launched the entire Teledesic network for free and still come out financially ahead.

Had Teledesic been able to cut the right deal with the Russians, their satellite constellations would have been launched almost for nothing and we might have satellite Internet service today.

Speaking of today, a decade later, technical and political realities have changed.  Where Teledesic was a $9 billion gamble that didn’t pay off, there is right now $7.2 billion sitting in the FCC’s Universal Service Fund — money the telcos and cable companies are going to try to claim to provide National Broadband service to indian reservations and logging camps.  To serve all of America’s 110 million housing units will cost a lot more than $7.2 billion, which is where those numbers approaching $100 billion came from.  There’s going to be a financial food fight at the FCC to pay for rural broadband service.

But not if a Teledesic-like satellite system were revived.  What would have cost $9 billion in 1996 would cost less today because digital technology always gets cheaper.  Where the 1996 money was coming mainly from private capital markets, $7.2 billion could come from the FCC this afternoon.  By embracing a bold satellite initiative using low-orbiting satellites with low latency the Obama Administration could sidestep dozens of local and regional boondoggles saving tens of billions, providing a solid service that would not only reach every remote part of the U.S., but the rest of the world, too.

Imagine the international political power that would come with having such a global network.  Friendly nations could get cheap Internet, unfriendly nations would find it difficult to keep their citizens off the net.  It could be a bully pulpit in space.

And I know a thing or two about pulpits.

For a stark contrast, compare Windows 7 with OS X 10.6 Snow Leopard, its would-be competitor.  I won’t get into the argument over which OS sees the other as competition, maybe they both do. In the marketplace, however, the upgrade version of Snow Leopard costs $49.95 $29.95 ($99.95 $49.95 for a five-machine family pack) while there are twenty different versions of Windows 7 to choose from with the most popular (Windows 7 Home Premium) priced at $119.95.

Is Windows 7 really worth $70 $90 more than Snow Leopard?

(Obvious pricing brain fart above — Bob)

The better question to ask is why Microsoft decided to set the price point where they did? And the answer to that one is quite simple: Microsoft doesn’t actually want you to upgrade to Windows 7 at all.

Microsoft wants you to buy a new Windows 7 PC instead.

Setting the price at $119.95 is a brilliant move on Microsoft’s part.  The company doesn’t want users to upgrade so by setting the price high Microsoft is essentially imposing a Windows 7 upgrade tax on users.  Buy a new Windows 7 PC from Staples and the software price drops to $49.95, the same as Snow Leopard.

Microsoft likes to make money, hence the Windows 7 tax, but their main reason for setting the price so high is to get us all to buy new computers.  That brings Microsoft less  revenue per unit but more revenue overall as businesses, for example, decide to upgrade a whole office with new PC’s rather than pay $119.95 per desk just for new software. New PCs come with dramatically lower support costs for Microsoft than do retail upgrades. The pricing ploy makes Microsoft very popular, too with its Original Equipment Manufacturers (OEMs) like HP, Dell, and hundreds of others.

Here’s another piece of evidence aiming in the same direction: have you actually done a Windows 7 upgrade?  Mine took seven hours!  It shouldn’t have to take that long unless part of the goal was simply to discourage upgrading.  Snow Leopard took me 20 minutes to upgrade, but then Apple has no OEMs to please (this is key) and makes lots of money on upgrades even at $49.95.

When Windows 95 was introduced (I was there, shooting Triumph of the Nerds), part of the Bill Gates and Jay Leno performance that day was upgrading a 486/66 machine from Windows 3.1 to Win95.  It took about half an hour.  With more modern processors, memory, disk drives, and a new OS touted as being lean and mean, why should Windows 7 take significantly longer than that to upgrade?

It shouldn’t, unless speed-of-upgrading wasn’t on the feature list to begin with.

Why no comment?  I’ve been wondering that aloud for the last day or two, asking my friends and almost anyone I meet why IBM would be so foolish not to at least issue a press release on the arrest?  After all, the company supposedly cooperated with the SEC investigation.  They should have known the arrest was coming.  Why weren’t they ready with at least some statement reaffirming corporate values or possibly distancing themselves from Moffat?

Doesn’t IBM management owe that to its 398,000 employees?

They removed Moffat’s bio from the IBM web site, but that’s all.

Lack of comment suggests Big Blue doesn’t know what to say.  Perhaps the company is paralyzed. Maybe there is disagreement in the executive ranks about how to handle the problem.  Maybe Moffat, himself, was the guy who would have helped craft any response but now he’s unavailable.  Beats me.

But it doesn’t smell good.

My Mom, who is 85 and, like me, doesn’t own any IBM shares, may have put it to me the best.

“My guess is that this isn’t over,” she predicted.  “IBM could declare him innocent until proven guilty or they could write him off, but the fact they have said nothing at all means there are probably more shoes to fall. They could announce an investigation to ferret out others who made the same mistakes, whether those others exist or not.  And that’s what they would have done, had all the remaining guilt lay below Moffat’s level. But it probably doesn’t. I’d look upstream.”

Mom is a clever girl.

What does it say, then, when the architect of LEAN is arrested for alleged insider trading?

The good news, I guess, is that he was caught. The rest of the news is bad.  If Moffat is guilty as charged then it shows serious ethical and moral lapses at the very top of IBM (Moffat has been mentioned as a possible successor to IBM CEO Sam Palmisano). Even if he is proved innocent Moffat is still guilty of poor judgment in his choice of friends and of being a blabbermouth.  Since Moffat is being charged, in part, with insider trading of IBM’s own shares, then LEAN itself should probably come under some scrutiny as a possible tool for generating insider profits.

Worst of all, this might well turn out to be yet another example of parasitic management using the power of the corporation entirely for self-enrichment.  There is no insider tide that raises all boats.  There is no insider trickling down, except perhaps in the manner of honor among thieves.  Moffat and his gardener may have benefitted, the latter by getting to mow twice per week instead of once, but the rest of us — and certainly the 398,000 other people who work at IBM — are no better off for his alleged actions.

So Moffat is guilty or he’s stupid, neither of which says much for IBM.

I think we’re all fairly sure at this point that Apple will shortly release such a device and that it will be nominally based on the iPhone or iPod Touch.  This is key because of the App Store and iPod ecosystems it will leverage.  Anything that runs on an iPod Touch will run on the tablet.

Since the tablet is also an e-reader, it has to have both a larger screen and greater battery life so users have a hope of making it all the way to the train platform scene in Anna Karenina.  Readers are probably correct, then, that the new Apple will have an e-ink display or equivalent. Current players in this very limited space are e-ink, SiPix, and Kent Displays, so Apple is likely to go with one of those.

But an e-ink display and the iPod Touch (or iPhone) app and content libraries are not enough.  Apple has to have unique content for the new device, which is why Cupertino has been talking to traditional publishers and those publishers have been blabbing to each other.

Publishers want to make money.  They want to be paid for their content.  They may also want to show ads.  Most importantly, though, they want a change of platform such that they can reassert control over their intellectual property, which has been for the most part subverted by the Web.  The easiest way to do this is through a new file format combined with a new category of content.  A tablet edition of the New York Times, for example, would ideally not be easily readable on other devices without paying something to the Times.  This is not to say it would be impossible to read the Tablet Times on your Windows PC, but not without first buying the content file.  And while viewing on a Windows PC is probably inevitable, don’t expect to read that same file on a Zune, ever.

One interesting way around this problem of getting paid while still reaching for a true mass audience would be to make certain content features usable only with the e-reader.  So the basic story might be readable on most any notebook or mobile phone, but to see the accompanying video would require the paid version.  This is just a thought, not a prediction.

The best user experience with this new content type would be using the iTablet, which would be supremely portable, silent, power-efficient and easy to read.  Bigger and with longer battery life than an iPhone or an iPod Touch, the tablet would be ideal for reading on a train or plane, in the car, during lunch — anywhere you’d read a magazine or book. Heck, hasn’t that always supposed to have been the idea behind an e-reader?

The content has to be somehow better than what can be read on a Kindle.  That’s made easy almost out-of-the-box given the iPod Touch software base.  Here’s the potential for content that actually does something.  I think that’s key.  For this device to succeed it has to have a large volume of content that simply does more than you’d generally expect on other platforms.  Otherwise why buy the reader?

As I wrote last time I have no inside knowledge of Apple’s plans.  But I know Apple as well as anyone and I do have one bit of insight.  Two years ago, while shooting interviews at e-ink in Cambridge Massachusetts, we saw what was probably the first demonstration of an e-ink display that was in color and supported full motion video.  I am absolutely convinced that display or its equivalent will be at the heart of the new Apple tablet.

Kindle is black and white.  Apple is color.  Kindle is static.  Apple offers animation and video, along with an LED backlight to make colors pop if the lighting is right.  Kindle is filled with books, magazines, and newspapers.  Apple is filled with books, too, but some of them will be like books in Harry Potter, with animation built into the pages.  Apple magazines and newspapers will include animation and video for a new kind of composite publishing format that will be Apple-protected and mainly for sale even if some ads are included. And the Apple device will play music, videos and movies, too.  Why not?

It won’t be cheap, not at first, because it doesn’t have to be.  I’d look for an introductory price in the $499-699 range for the first million or so units after which the price will start to fall.  Content will definitely be available by WiFi, but there’s also the possibility of a Kindle-like cellular connection that could be used by Apple to subvert AT&T’s network exclusivity on the iPhone.  This new device will be, after all, a new device, and not necessarily subject to the AT&T exclusive.  If there are cellular and non-cellular versions, then the iPhone/Touch analogy is complete.

Questions that remain concern how Apple will defend its new franchise and how the company will be paid for content. Many readers have yearned for a micropayment scheme as the cure for the common newspaper. As a guy who lives by writing I yearn for that, too, but I don’t see it coming, at least not in a form dramatically different from what Apple already has working with iTunes.  Sure it is attractive to make (or spend) a penny here and a penny there, but iTunes has already taken most of the friction out of purchasing content, both through one-click buying and (this is vital yet ignored by most pundits) the role of iTunes gift cards to bring online purchasing to tweens.  iTunes is an enormous money machine that will be extended to cover as many new types of content as Apple can think of.

How to protect the franchise is a little more complex.  Apple will look for exclusive deals wherever it can – exclusives with publishers as well as technology suppliers.  The publisher deals are easy since this new content won’t generally play on other mobile devices, though I’m sure you’ll be able to read it all on any iPhone or iPod Touch so Apple can claim an ab initio installed base in the tens of millions of units. I’d expect Apple also to try for a display exclusive of some sort, possibly even acquiring e-ink, which is in the process right now of being acquired by a Taiwanese LCD vendor called PVI.

This e-ink/PVI deal is especially interesting because it was announced back in June as an all-cash deal for $215 million then revised earlier this month throwing-in 120 million preferred PVI shares for the former e-ink investors.  This is a huge about-face that instantly doubles the price of the purchase while also giving the former e-ink owners a share in any upside for the business — an upside they obviously expect to enjoy or they wouldn’t have held out for it.

E-ink had, over the years, raised $150 million, so while the investors were being made whole by the original $215 million sale price, their upside wasn’t much.  But then the electronic ink business, for all its apparent potential, hasn’t really been that good despite e-ink’s use in both the Sony and Amazon Kindle readers. Four months ago the e-ink investors were thrilled to just get their money back.  Then something changed.  They just demanded (and got) twice as much money in the form of preferred shares giving them a significant piece of any upside explosion — an explosion they clearly didn’t expect when the original cash deal was negotiated.

The something that happened I believe was Apple’s entry into this market segment. That alone may have been enough.  I’m guessing Apple, like it did with Samsung and Flash RAM, made a huge commitment for most — maybe all — of e-ink’s color display production for years to come.  Or maybe PVI is simply flipping e-ink to Apple.  Only time will tell, but I know in my bones that there is something going on here.

Chances are that Apple’s tablet won’t revolutionize publishing, but for Cupertino it will accomplish more than enough to be a success if it extends the iPhone and iTunes user bases, crushes the AT&T exclusive, and pushes Amazon and Sony to second and third places in the e-reader category. For Steve Jobs the goal is always to change the world, but if that can’t be done then making money and beating the crap out of competitors is almost as good.

Back in 1994, I proposed to my employer at the time that we start a strictly online publication to cover just Microsoft. We called the proposed e-magazine MicroSquish and took it so far as to make a pilot issue and do some very interesting market research. The World Wide Web was only a couple years old at the time, and I was unconvinced that it presented a suitable delivery platform in an era of dial-up Compuserve accounts and 2400 bps modems. So MicroSquish was conceived as a downloadable publication to be distributed by e-mail in the new PDF format then called Acrobat. It looked just like a print magazine, right down to the 75 percent ad-edit ratio. And just to be cool, we built into the technology the ability to report back data from readers. We could not only track who read each issue, but how many times it was read and which stories or ads. We figured this data of who read what and in what order would be very useful to advertisers and ad agencies. But we were wrong.

Ad agencies 15 years ago didn’t want to know whether or not their ads had actually been read, they told us. This was simply because if an advertiser discovered that few, if any, people were actually reading their ad on page 113, the company might just pull that ad and save their money, taking revenue away from the ad agency in the process. The entire ability to sell an ad-edit ratio of 75 percent (which was needed to qualify for printed distribution by second class mail – yet another buggy whip in a digital era) was based on this deliberate ignorance. Ad agencies and publications alike knew that many — even most — advertising dollars were simply wasted, but it wasn’t in their interest to admit that, so they didn’t.

Contrast this to pay-per-click, which is brutally honest, where every successful ad has efficacy and advertisers have a pretty darned good idea what they are getting for their money. This reality is precisely why ad-supported magazines, newspapers, and television are losing revenue. It is a trend that is likely to continue, and can only result in a degradation of production standards on the print side to match the reduced revenue potential of the online business, where BS gives way to measurable, though impoverished, results.

It is not a pretty picture. More pay-per-click means more online content but ultimately less money for producing that content. Print publications fade from sight or continue primarily as art forms, rather than businesses. None of this is intentional. This isn’t Google or Apple or any other company setting-out to destroy an industry. It is simple Darwinian evolution that will ultimately make many print publications as obsolete as I already am.

Back in 1994 I proposed to set an example with Microsquish but it never saw the electrons of publication.  Computer professionals who were already spending eight hours per day in front computer screens told us in focus groups that they didn’t see themselves reading a publication on those screens. Think about that statement for a moment and you’ll realize how crazy it was. But my bosses were, I think, relieved to hear it, because they weren’t ready to give up print distribution. Then there was the little problem of distributing up to 200,000 one-megabyte files per week, which looked like it might take more than a week back then simply to do. You can’t publish a weekly magazine that takes eight days to deliver.

Well what goes around comes around I guess because the rumor this week is that Apple’s long awaited tablet computer is some form of electronic reader and that Apple intends to get into the distribution of content for this new platform, just as it earlier did for the music, TV and movie businesses with the iPod and iTunes.

I have no inside knowledge about Apple’s plans, but as one of the guys who came up with the whole electronic publication idea, I think I’m in a position to put it in perspective.

Technology is the least of this.  Yes, we need an electronic medium that is price-competitive with what it replaces, but it doesn’t take an Apple per se to do that. The much harder parts are the business model and the mojo.

Mojo?

Mojo!

Let’s assume that Apple or some Apple competitor announces a really good electronic reader, which means one that costs little, is super-easy to use, stores a lot, and has very low power consumption.  That’s just the beginning.  To go with that reader they’ll need sources of content and a way to make money from the new content business.  Just making the reader isn’t enough: if you build it they won’t come. But in order to get the content you have to be able to convince content owners to share and that requires mojo – the perception on the part of the content owners that this thing is going to be a success whether or not they participate.

An important thing to remember here is how Apple evangelized the Macintosh 25+ years ago. For the Lisa, which predated the Mac, Apple didn’t bother to lure developers: Apple just wrote itself the seven core applications it thought would be enough to make the platform a success.  Only that didn’t work.  The Lisa was too expensive and seven apps weren’t enough.  So for the Mac, which was developed for far less money than the Lisa, Apple turned to third-party developers. And here’s the line they used, which I believe was the work of Alain Rossmann: “It’s obvious that graphical computing is the future, whether the Mac is a success or not. This is your chance to learn how to develop for such an environment. Choosing not to develop for the Mac, then, is choosing for your company to eventually die.”

The argument obviously worked, especially when persuasively made by guys like Steve Jobs and his surrogate, Guy Kawasaki.

Apple is doing it again, from what I understand, only this time the evangelizing is being done among print and electronic publishers. And what’s being dangled before this New York and L.A. crowd is the Hope diamond of modern electronic publishing – PAID CONTENT.

Every publisher wants to make money. The six ways to make money in publishing are: 1) selling the product outright, whether it is a book in a bookstore, a magazine on a newsstand, or a pay-per-view TV show; 2) selling subscriptions; 3) selling ads; 4) selling a combination of subscriptions and ads; 5) syndicating content – selling it for use by other publishers, or; 6) giving the thing away for free to support a live tour or event of some sort to which people in many cities and countries will buy expensive tickets.  The Internet era has supposedly taught us that almost nobody is willing to pay for a subscription so that limits publishers to ads, syndication, or touring/events – none of which appear to generate enough revenue to pay for the kind of lunches publishers like to eat, hence the fading print and broadcast industries.

Part of the difficulty here is that while we’ve effectively removed most of the production and distribution expenses from publishing, we’ve added some expensive layers, especially portals like Yahoo.  Also the old-line publishers like Time-Warner that are used to OWNING their content haven’t shown themselves to be as good as Lonelygirl15 at MARKETING it. And unlike Lonelygirl, T-W is saddled with very high overhead if very little teen angst.

Enter Steve Jobs, stage left, proffering an appealing concept (I make lots of money selling content: look at iTunes), embodied in an attractive package (the Apple tablet/reader/thingee), and suggesting an exciting outcome (the salvation of Big Publishing). And his mojo is having some effect. The New York Times, for example, is suddenly talking about paid content, having a couple years ago specifically walked away from that business model on empirical grounds. The Times and most of the other publishers (like Rupert Murdoch) suddenly taking another look at paid content have all been drinking Steve’s Flav-R-Ade.

But that’s not enough.  If Steve is going to change publishing the way he’s already changed music, he’s going to need more than what I’ve described so far.  He’s going to need a new publishing platform, a new kind of product to sell on that platform, and a new business model to pay for it. Anything less will not succeed. I’ll get into those details in my next column.  Until then talk among yourselves.

I don’t take money for reviewing products because I don’t review products.  Never have, never will. So don’t send me any products, okay?

Publishers send me early copies of a few books per year, generally hoping I’ll either provide a quote for the book jacket or write a positive column about it.  I do accept such books but rarely write about them. If I give a quote it is never for money, mainly because I didn’t think anyone would pay. I was probably right about that.

I once sent a book of mine to Joe Bob Briggs only to have him give it away on his web site.  Tacky.

While it is true that I write for money, in the case of this page the only money comes from those ads you haven’t been clicking on.  I have no idea what those ads will be, by the way. They are served automatically by IDG Technet, which sends me each month a check that is pitifully smaller than I was led to believe it would be.

If you want to suggest a topic to me and accompany that suggestion with a gift or a check, it pretty much guarantees I won’t write about what you want me to. This is all part of my reverse psychology plan to get Microsoft to pay me $1 million to never write anything about them again.  So far that strategy is not working.

Bear Stearns (remember them?) once offered me money to participate in a conference call with their customers.  I had done such a call before for free to talk about my Google shipping container data center column but felt too much like a talking dog and didn’t want to do it again.  So they offered money.  I said “no.”  And of course Bear Stearns is now dead.  So be careful what you ask of me.

I write for other publications like the New York Times and they pay me, but so far that pay is not from vendors except in the case of Perforce Software, where I write a column for their company newsletter. But I’ve never written about Perforce here.  Until now that is. Does that mean the FTC will now arrest me specifically because of this disclosure? Sounds like a Star Trek episode.

Most of my income actually comes from giving speeches and participating in events like brainstorming sessions, many of which happen at companies I have written about.  Often I learn things at these events that are worth writing about, though strictly within the bounds of whatever non-disclosure agreement I’ve signed (violate NDA = wife takes kids and leaves).  So in this sense I do take money from companies I might write about.  But the companies never give me money specifically to write (except for Perforce, above) and they often don’t like at all what I end up writing. Screw ‘em.

The FTC rules say nothing about giving speeches or selling one-page screenplays for $2 million.  If they expand the rules in that direction, of course, I may yet be in trouble.

In that case there’s always pizza delivery.

So I polled six old friends who ARE cybersecurity experts and they kinda-sorta agreed with me.  More on this below.

But first I have to marvel that I even know six cybersecurity experts and — even more amazing — I’m pretty sure they don’t know each other. They seem to be like badgers, solitary creatures who only come out to mate.

They are cynics, too.  One questioned the term “cybersecurity” as being inappropriate.

“(It) depends on your definition of expert,” said expert number one, who works deep in the military-industrial complex. “If you mean someone who can spell ‘cyber’ then sure (there are 1,000). If you mean those who know that ‘cyber’ is short for ‘cybernetics’ and has little to do with computers then probably not. I still occasionally use the title ‘Cybernetic Psychophysicist.’”

Sure enough, there’s a very detailed definition of cybernetics here and it doesn’t intrinsically have very much to do with computers or networks, though don’t tell that to the DHS without first taking off your shoes and placing the definition in a one quart plastic bag.

“Duh!” said expert number two who has spent his career at telcos and cable companies. “Of course.  You got it right.  I doubt there are 1000 in the world.  There are a lot of wannabees, or folks who think they are…”

“Define ‘expert,’ said another friend from behind Door Number Three, who comes from the security software business. “(An expert is) a person with a high degree of skill in or knowledge of a certain subject.  Great, but the question is all about scope. I may be an expert cook – but can I run a kitchen? Same thing with security there are tons of experts – in specific areas. I was an expert in AV, IDS, and other areas. But I was not the all knowing security guru. (even though my knowledge base was very broad). This is where we run into unintended actuated consequences. An expert will make a choice and take an action.  The end result may not be what they had anticipated because of other factors beyond the realm of their expertise caused an unanticipated consequence.

“Example: I am forced to use low sulfur gas because the experts say it produces 20 percent less harmful emissions. Too bad they did not notice it has a lower power quotient then a normal gas blend. As a result I use 30 percent more gas that is 30 percent more expensive (and puts four percent more sulfur into the air).

“So I believe there to be less then 30 real experts in security, but there may be well over 500 subject matter experts and perhaps another 1000 sous-security people.”

Now I brought in the big gun — expert number four, an independent security consultant to foreign governments:

“My bet is that they are going to just pull the bodies from the Department of Defense and Department of Energy,” he said.  ”DoD has established a number of credentials required to be classified as a security specialist like CompTIA Security+, CISSP, etc.  None of this stuff has any practical application because it is hardware/software neutral.

“Even if a government agency, (over 550 or them) allows you to sniff their network, are they going to let you evaluate the applications for bugs?  I don’t think so.  Without scrubbing the software with products like Ounce Labs (owned by IBM),  what is the point of evaluating the network?

“Another item of great importance is a security clearance to do the work. This is where you will get only one brand of thinking; DoD or DoE clearance. This will prohibit the security “black hat” types from ever being involved in the project without coming from the DoD or Energy.

“So you will end up with 1,000 Security Managers in the government with Sec+, and CISSP certifications, talking to cisco, Juniper, CheckPoint, Tipping Point, Microsoft, Oracle, Ounce Labs, etc. security professionals at $300 an hour doing the actual work. That’s 1,000 jobs for window dressing, releasing reports that end up on Drudge Report listing the number of breaches in Federal Government Agencies.

“When you look at the private sector protection of data standards for items like credit cards you have real teeth in your regulations.  You don’t have to take credit cards, but if you do then you need to be PCI compliant. Don’t want to be PCI?  No problem we won’t allow you to use our credit cards. Where will that type of enforcement be with the wall of 2,000 eyes protecting the USA?”

No there won’t be (this is Bob again) because governments are required to provide services to their citizens. Even the DHS can’t shut down the government to cure a security breach, though I am beginning to believe they haven’t yet figured that part out.

“I’m not sure there are even a handful (of experts) with any sort of broad experience,” said expert number five, who is usually associated with security hardware. “There probably are pockets of them, with specialized narrow experience, e.g. in banking, virus or DOS attacks, military networks, etc.. And even if there were 1,000, what would they be doing on behalf of Uncle Sam?”

That’s a great question given that we as a nation can’t seem to hire and keep a national cybersecurity czar. So what are we doing hiring 1,000 experts given there is no boss?

While it is great to have a Cybersecurity Awareness Month, whatever that is, and it might be great to add a thousand “experts” to protect our nation, if you look deeper into this story it is for the most part BS or HS and, I fear, CS to boot.

Look, the number of CCIE’s with security as a certification is 2,300 for the entire world. Subtract the 50 percent who work for cisco, then 50 percent again for those not working in the field any longer, and you get 500 cisco CCIE Security Experts worldwide. The only way to get another thousand in three years is by training them. But in the last four months with 800 available seats to sit for the cisco CCIE Security exam only one person has passed!

The DHS is extremely unlikely to be able to find and train 1,000  cybersecurity experts in three years. Maybe they’ll come up with 100 (more likely 5-10), but the DHS environment will make it unlikely — very unlikely — that all of those 100 will stick around.

Secretary Napolitano says she might not need all 1,000, which to me says she is really looking for 3-5 people.  And frankly that ought to be enough if they are truly experts and are both properly led and supported (which they probably won’t be).

So this is the wrong approach entirely. It won’t work, the DHS probably knows it won’t work (if they don’t know that, well God help us all) but they see it as better than nothing. That doesn’t worry me so much, though. What really worries me is the point brought up by cybersecurity expert number six, who himself came in from the cold:

“Sure there are 1,000 (cybersecurity experts),” he said, ” but they are already employed… as hackers.”