Keith's shared items in Google Reader

Jon Miller On MySpace's Future And Google Controversy

2009-11-13T20:12:38Z

Yesterday at the Monaco Media Forum I interviewed Jon Miller, the head of News Corp (NYSE: NWS) Digital, on stage. Below is the full video of it. I grilled him on MySpace’s future, the future of Google’s search deal, on Murdoch’s half-incoherent statements about Google (NSDQ: GOOG) (and the resulting media paroxysm about it), the news consortium that the company is putting together and progress of it, Hulu and how it fits in if/when Comcast (NSDQ: CMCSA) buys NBCU, working for a media conglomerate vs a media mogul, and other interesting issues.

Interesting how Miller’s remarks about supposedly blocking off Google is reverberating in other news sources, when he really didn’t say much beyond the fact that they are ready to take some steps in the next few months or quarters. But then, who cares about facts, when the interpretation is much more interesting, right?

(Note: We’re aware of a syncing problem with the audio and video here, and are trying to get it fixed. In the meantime, here’s an mp3)

BSkyB, Virgin Media Agree 'No Need For Project Canvas'

2009-11-13T17:26:52Z

BSkyB (NYSE: BSY) and Virgin Media (NSDQ: VMED) have had their differences in recent years, but they are agreed on one thing: that the Project Canvas open IPTV platform should not be cleared by the BBC Trust because it won’t provide anything the commercial market can’t.

Keen to keep growing their marketing share in the ruthless pay TV market against an open source IPTV standard, both companies could do without a partnership of the BBC, Five, ITV (LSE: ITV) and BT (NYSE: BT) marketing an affordable set-top-box against their premium options.

Griff Parry, director of on demand for Sky, told the C21Media’s FutureMedia conference on Friday: “One of our concerns is that there’s no evidence of market failure here. There are a broad range of players who want to drive internet TV services.” And that includes Sky which is marketing its Sky Player PC VOD player, pushing content out to its iPhone app and gearing up to finally use the ethernet connections in Sky+ HD boxes to give users pull VOD services. Sky opposed Canvas in no uncertain terms in May.

Speaking after BBC Future Media & Technology director Erik Huggers had given a flashy demonstration of what Canvas could look like, Parry said that if Canvas goes through, there’s a risk of “distortion” in the IPTV market, adding: “They say it’s an open partnership when in reality it isn’t.” But Parry didn’t rule out placing Sky’s paid-for content on the Canvas platform—as he told us in March, Canvas carriage remains a possibility for Sky even if it doesn’t join the consortium of partners. But the broadcaster will only sell at the right price and it’s currently fighting off attempts by Ofcom to give rivals cheaper access to its sports and movies channels.

In a separate session, Virgin Media TV’s commercial director David Cuff declared himself in the naysayers’ camp too: he agrees that Canvas is a game-changer, but asks “what game are they changing? I’m worried it’s my game”. He said: “I don’t understand his explanation for why it’s needed. He’s worried for us that we might need to deal with different types of TV (tech standards)... it seems to me the marketplace is already providing this.”

Cuff added that VMED was open-minded about what platforms its content ends up on—as long as it can successfully monetise it. But an open platform IPTV standard is not part of its plan: “Canvas is a bit scary, because if someone’s giving it (the technology) away, then you worry about what happens to your own set-top box.”

Related

BBC Canvas Could Be Controlled By Commercial Players, Costs £115 Million

News Corp Wants To “Lead” The Media Industry To Its Own Demise

2009-11-13T17:17:10Z

Once again, News Corp. is threatening to hide itself from the rest of the Web. Earlier this week, Rupert Murdoch told an Australian interviewer that he might start blocking Google from the WSJ.com and his other news sites, even though Google accounts for about 25 percent of the traffic to the WSJ.com. Now his digital lieutenant Jon Miller is echoing his boss and warning that a move to block Google may come within the next few months. But he qualifies that by saying that News Corp must “lead” other media companies against Google for this to work. In other words, News Corp can’t go it alone.

I’m not sure what other media companies, other than the AP, might be willing to follow. While the WSJ actually does quite a good job getting people to pay subscriptions online, and supplements that with advertising revenue to those paid subscribers, it is not clear how many other media brands can command that kind of loyalty. If Murdoch can get any of his newspaper rivals to once again retreat behind pay walls, it most surely will hurt them more than it will hurt Google.

In fact, Murdoch is such a sly fox, it is hard to say who he is really going after here. By playing on his rival’s fears of Google becoming the new homepage for news, he might convince some of them to deny Google the ability to index their sites. He knows that the WSJ.com at least can survive on its own, and if the ploy doesn’t work out, he can always reverse himself. But you can’t help but suspect that all of this public strategizing is nothing more than a trial balloon to see if any other news companies are willing to come along on a Google boycott.

Any such boycott, which would entail nothing more than requesting that Google stop indexing their news sites and thus become invisible to most people on the Web, will only hasten the demise of most of Murdoch’s rivals. Unless, of course, part of the plan is to turn to Bing instead and sell exclusive indexing rights for gobs of cash. It’s a risky move, however, because the WSJ and Murdoch’s other news sites could get caught in the crossfire as well.

The notion of News Corp leading other media companies in this battle reminds me of the last scene of Gallipoli, the WWI movie set in Australia, when the infantry goes over trench wall, only to get slaughtered by the enemy.

Col. Robinson: Tell Major Barton that the attack must proceed.
Frank Dunne: Sir, I don’t think you’ve got the picture. They are being cut down before they can get five yards.
[hits the phone]
Col. Robinson: Bloody line! Our marker flags were seen in the Turkish trenches. The attack must continue at all costs.
Frank Dunne: But…
Col. Robinson: I repeat, the attack must proceed!

Or perhaps Blackadder is more appropriate here:

Melchett: Field Marshal Haig has formulated a brilliant new tactical plan to ensure final victory in the field.
Blackadder: Ah. Would this brilliant plan involve us climbing out of our trenches and walking very slowly towards the enemy?
Captain Darling: How could you possibly know that, Blackadder? It’s classified information!
Blackadder: It’s the same plan that we used last time and the seventeen times before that.
Melchett: Exactly! And that is what is so brilliant about it! It will catch the watchful Hun totally off guard! Doing precisely what we’ve done eighteen times before is exactly the last thing they’ll expect us to do this time! There is, however, one small problem.
Blackadder: That everyone always gets slaughtered in the first ten seconds.

Charge! Hey, where is everybody?

Crunch Network: CrunchBoard because it’s time for you to find a new Job2.0

Badda Bing! Microsoft woos newspapers by funding their stick to beat Google

2009-11-13T17:35:59Z

As Microsoft shed its beta tag for the launch of the UK version of Bing today, TechCrunch Europe has learnt that it held a secret meeting with a group of big European publishers, mainly newspapers.

The meeting came literally days after Rupoert Murdoch said he was considering withdrawing his vast newspaper empire from Google’s index, despite the possibility of losing a lot of traffic.

What was discussed provides a glimpse of what newspaper publishers may do next, and how Bing will collude in this new war on Google.

We’ve confirmed with our sources that on Tuesday this week, Microsoft’s Peter Bale, Executive Producer of MSN UK, walked into the meeting flanked by two Microsoft lawyers. He made a presentation to representatives of newspaper publishers such as the Financial Times, News International, Associated Newspapers, Germany’s Axel Springer and publishers from Poland and Italy, among others. Bale is possibly the perfect man for the job – a respected, well liked former journalist who headed up the Times Online before jumping to MSN. As such he is Microsoft’s point man when it comes to talking to big publishers.

From what we understand from our sources, the pitch was clear. Microsoft plans to launch an assault on Google’s flank, by cosying up to major content providers, especially newspapers, that feel hard done by Google News. It plans to use Bing as a way to entice them out of the Google eco-system, into one where, increasingly, the content of major newspapers could well be found more often on Bing than on Google.

First off, Bing plans to put its money where it’s mouth is. Our sources say Microsoft has pledged to help fund research and engineering into ACAP to the tune of about will put £100,000. This is the more granular version of the robots.txt protocol which has been proposed by publishers to enable them to have a more sophisticated response to search engine crawlers. However, we understand that Microsoft won’t be involved in developing the protocol, just the financial funding.

For years, Google has characterised the debate about search engines as “you are either in our index or not in it, there is no half-way house.” But the Automated Content Access Protocol (”ACAP”) proposes a far more layered response, allowing full access or just access to some content of a site. Unsurprisingly, it’s been developed by a consortium of the World Association of Newspapers, European Publishers Council and International Publishers Association. Proposed in 2006, it has been criticised as being biased towards publishers rather than search engines, specifically Google, and few non-ACAP members have adopted the protocol. Some call it the “DRM of newspaper web sites”. That said some 1,600 traditional publishers have signed up to using ACAP.

But if Bing starts to play ball with ACAP, this could change the game. Suddenly newspapers will have a stick, and a heavyweight enforcer in the shape of Bing, with which to beat Google. Google would have a choice – either recognise the ACAP protocol in order to get some level of access to newspaper sites, or just ignore it.

Back to that meeting in London, and during the discussion our sources say Bale talked about the possibility of giving big print publishers ‘premium positions’ on the Bing search engine. However, there is little detail on how this would work in practice or what revenue share would apply.

A further point of potential conflict is how Bing dolls out the search sweets to publishers. Our sources tell us that Italian and Polish publishers were hopping mad that the Bing European rollout – which started with the UK this week – will likely concentrate on the big European markets like France and Germany while leaving smaller markets to a much later stage.

In addition, the rise of the ACAP protocol could well signal new battles. The question is, will ACAP – the development of which is so far being controlled by newspapers – be used by Microsoft Bing simply as an indicator of how to treat a publisher’s site? Or would Microsoft help the publishers engineer ACAP into a kind of a rights management engine – with Bing becoming the central clearing house for content from traditional publishers? That’s not the case at the present, of course, as Bing wants to be a trusted partner. But it’s worth asking if it could happen in the future.

And who gets to decide who is a favoured traditional publisher and who isn’t? Bing, or a newspaper-heavy body like the European Publishers Council? By the sounds of how discussions went this week, it’ll probably come down to a simple question: do you have a big printing press, or don’t you?
We contacted Microsoft for comment but a spokesperson said that they had “no comment” to make.

Not on the money

2009-11-13T15:02:42Z

[Dave Birch] I'm always keen to try out innovative new payment products. And I'm an O2 Premium Customer, or whatever it's called. So when I was idling around in London yesterday and happened past an O2 outlet offering the new "O2 Money" prepaid card, I thought I'd pop in a get one. Since it's a prepaid card, I assumed it would be a bit like getting one at the newsagent or supermarket. I wandered in, expecting to hand over £50 and walk out with a card with £50 on it. But it turns out that despite the big advertising poster in the shop window, the doesn't actually sell them. The guy told me I had to go home and apply on the interweb. Oh well. One night I was bored enough at home to try and do this, so I went to the O2 Money web site. I thought I'd get a card for my son to use. The web site asks you to put the mobile number in and sends you a code. I did this, and got the code. I typed it in expecting to see a screen saying "congratulations" but instead I got another form asking me to top up the phone using one of my other cards. Naturally I couldn't be bothered to do this, so I still don't have a card and nor does my son.

Since O2 already know my address, phone number and bank account details, and have a decade-long credit history on me, Wouldn't it have been cheaper and simpler to have a "text 'yes' to XXXXX and we'll post you a card" option? Why no integration?

Irrespective of my whining, I think O2 Money has had a pretty successful launch. There is a big advertising campaign, which appears to be working, and plenty of cards are going out the door. Is the UK about to accelerate its prepaid market to the point where prepaid Visa cards and MasterCards are mass market products? Is the UK about to look more like the US?

In the United States, open loop (bank issued) pre-paid cards have experienced only moderate success.
[From National ACH: Pre-Paid Cards Boom or Bust ?]

Not sure I'd qualify them as a moderate success, since they are a big business, but to get to the point where everyone has one will still take some breakthrough.

Mercator estimates users loaded $187.2 billion onto closed-loop cards last year, up 4.3% from 2007’s estimated load of $179.6 billion. But open-loop or network-branded prepaid cards offered by banks and payment processors are coming on strong. Mercator pegs their 2008 load value at $60.4 billion, up 48.5% from 2007’s estimated $40.7 billion.
[From News]

But perhaps the mobile phone is, once again, the special sauce. The idea of prepaid cards in phones, or prepaid stickers on phones, has plenty of momentum.

mobile payments will gain momentum with prepaid – even without penetration of NFC terminals to support it.
[From Mobile Payments at the Point of Sale [ATM, Debit & Prepaid Forum 2009] — Payments Views from Glenbrook Partners]

See. But there's another point here, though, I think. Our experience, gained from a number of projects that involve both prepaid cards and mobile phone is that the combination of prepaid card and phone (in the O2 sense) is powerful even without technical integration between the two as in NFC. Provided that the cardholder can see the balance of the card on their phone, then they will use the card more. Simply knowing the balance (and the mobile phone is by far the easiest way to achieve this) is enough to boost card use: there's no immediate need for any really fancy functions.

These opinions are my own (I think) and presented solely in my capacity as an interested member of the general public [posted with ecto]

contactless, contactless and nfc, debit cards, mobile, prepaid

Operators should push vendors & silicon companies to support 2.6GHz HSPA+ as an alternative to LTE

2009-11-13T10:07:00Z

Following up on my post from two weeks ago about HSPA / HSPA+ in 2.6GHz, I'm now more sure that this is a becoming a wise option - and operators and device vendors should start pushing their suppliers to support it. I'm becoming increasingly sceptical about the short-term case for LTE, especially for GSM/UMTS operators in developed markets like Western Europe.

The received wisdom suggests that "new spectrum = new technology". I can certainly see the appeal and elegance for radio network engineers to put the newest, shiniest kit into the spanking-new bits of frequency in 2.6GHz and the digital dividend.

But I think that for current HSPA operators, they should think twice. Even the theoretical gains in efficiency for LTE vs. Release 8 or Release 9 HSPA+ are relatively modest. With 64QAM and 2x2 MIMO, I've heard figures of 20-30% *might* be achievable. However, given views of contrarians like Moray Rumney from Agilent, these gains may well not be attainable in the real world - or at least, only for a certain proportion of the time under specific user/cell scenarios. In terms of actual *average* throughput in normal usage, there may well be only a wafer-thin margin between them.

Yes, LTE has better latency (in theory), a flatter and maybe cheaper network, and the ability to use thin slivers of spectrum.

But this needs to be set against the need to run LTE as an overlay on HSPA anyway (3 sets of network opex....), plus the extra cost and complexity in handsets, the huge testing and optimisation costs, the probable flaky hand-offs between LTE and 3G/2G, the ongoing issue of voice support and numerous other unknowns. Add to this the fact that LTE does not appear to offer any obvious new business models compared with HSPA+ (especially if only used in limited "hotspots") and the business case dissipates even further.

That's not to say LTE won't be improved - after all, HSDPA has proven a superb "bug fix" for WCDMA, only 5 years after it was introduced. Prior to that point, 3G was pretty pointless - in hindsight, operators would have been better off leaving the 2.1GHz spectrum unused, or perhaps temporarily putting EDGE in it, although under old regulatory regimes that probably wouldn't have been allowed.

This time, there are more options.

I think that operators should give serious consideration to the scenario of continued upgrades to HSPA, including putting it in new spectrum bands like 2.6GHz. Much of the new radio equipment could be easily upgraded to LTE at a later date - if required. There's possibly an argument to skip current LTE entirely and wait for real 4G - LTE Advanced - as an eventual migration path.

Given that operators are currently starting to put HSPA in refarmed 900MHz (surely also a "new band" effectively?), why not also 2.6GHz?

Either way - I think that operators should start leaning on their suppliers, both infrastructure- and device-side - to support HSPA2600 as an option at least.

Edit: any game-theorists reading this might also want to ponder on the competitive impact of those most benefiting from early scale economies for LTE devices (on any band). In particular, CDMA operators moving to LTE will likely be disproportionately affected if their HSPA peers don't follow suit at about same time. Will LTE enable a marketing win vs. HSPA+? Given that neither is 4G I can't really see why - 3.75G vs. 3.9G isn't really a great headline-maker. In fact, if WiMAX and LTE operators can use 4G as a branding device, I see no reason why HSPA+ operators shouldn't too.

Google's AdMob Deal Analyzed

2009-11-10T17:15:47Z

We’ve spent some of today canvassing opinions from various parts of the mobile marketing business concerning Google’s acquisition of AdMob for $750 million, announced yesterday.
The consensus seems to be that the move is a welcome one, and not just for AdMob. Mick Rigby, Chairman of mobile media and strategy agency Yodel Digital, says he had mixed emotions when he first read about the deal, but concluded that it is a good move.
“AdMob is a great business providing an excellent service and my initial thoughts were that they would completely get swamped by Google and become a faceless monolith,” he says. “In retrospect, however, I think this is both a good move for AdMob and for the mobile business as whole. For AdMob, they will be able to tap into all the global Google relationships and grow rapidly. The mobile advertising business gets a huge shot in the arm of increased credibility. Google has said that in the future it believes it will be making more money from mobile than from the fixed line Internet. In buying AdMob, Google has shown massive commitment to mobile advertising and by the nature of this relationship, it will accelerate the growth of the sector.”
Adhish Kulkarni, Managing Director of B!Digital, says the acquisition is an important step in validating mobile as a sustainable, profitable advertising medium at a time when other mobile advertising brands have exited the market.
“Admob being primarily linked to CPC (cost-per-click) performance marketing still leaves the premium space open - one of the reasons B!Digital recently launched our own mobile advertising marketplace,” says Kulkarni. “Given the rapid expected growth of the medium, we feel there is lots of room for competition to thrive as long as you keep focus. Finally, this move cements Google’s strategic emphasis on mobile, which also means they may be looking to fill other gaps in the mobile advertising marketplace such as SMS marketing, which are today out of scope for Admob.”
Mark Slade, Managing Director of 4th Screen Advertising, also draws a distinction between AdMob’s CPC-based, ad-exchange model, where advertisers can “buy inventory blindly and cheaply on a CPC basis, with the price being dictated by the ad-network provider or buyer” and premium ad networks.
“Using Google’s muscle AdMob will no doubt be able to increase its share of this sector considerably, which means some tough times ahead for many of its direct competitors,” he says. “However, premium mobile ad-networks such as 4th Screen offer advertisers the ability to provide a highly engaging experience that can deliver a precise and targeted campaign at premium inventory, that draws on advanced handset features and an array of mobile marketing techniques.”
Slade concludes that the Google/AdMob deal can only serve to increase the value brands place in mobile advertising per se, and that the industry will experience a benefit at both the CPC and premium ends of the market.
Zohar Levkovitz, Founder and CEO of Amobee, which delivers advertising solutions to mobile operators, says that the move signals to operators developing their own mobile advertising offerings that there is no time for complacency.
“The marriage between Google and Admob is a clear indicator that the mobile advertising industry has a bright future. Industry innovation will also stand to benefit from Google entering the competitive mix,” says Levkovitz. “While operators still own the mobile market in terms of reach, and the subscriber in terms of trust, billing relationships, user demographics and targeting information, it is undeniable that Google’s acquisition is a game changer.
“Nevertheless, there are still challenges to overcome and fragmentation continues to be a stumbling block. In order for mobile advertising to have a strong, viable future, we believe that the solution must be more centralized around the unbeatable assets of the mobile operators. Major brands and media buyers want a one-stop shop solution and access to the operator’s premium inventory. An operator-centric approach will play a key role in making this possible and further accelerate adoption.”
Xen Mendelsohn, Product Marketing Manager at Comverse Mobile Advertising, echoes these views. She says:
“Many of today’s mobile campaigns use mobile display banners offered by mobile ad networks, such as AdMob and others. However, bypassing the operator in the mobile advertising value chain provides advertisers with inferior results.
“Ad networks, like Google Analytics over the web, can provide information about the OS and handset used to display the ad, the amount of time that the ad was displayed, the country, IP address, etc. But they’re unable to provide real information about who the users are and surely no indication of their interests and habits.
“Mobile operators hold key assets of great value that can’t be replicated by any other player, not AdMob or Google or even the two combined. Operators know their users and their interests – information can be tailored accordingly to reduce the risk of spam and irrelevant ads. Operators can also offer incentives such as free or reduced-price mobile services in return for receiving ads on your phone. And operators also have access to more channels than pure mobile internet display ads, from ringback tones, to P2P SMS/MMS, visual voicemail, video etc. The options are almost limitless."
Mendelsohn notes that while many operators have acknowledged the growing activity in the mobile advertising arena and their unique assets, they have been hesitant to jump in with both feet; mostly due to a lack of knowledge of how to turn into a media company that sells ad space.
“The size of the Google AdMob deal shows the advertising web giant sees huge potential in this domain,” she says. “And it will certainly reassure and encourage operators that there is big business for them in the mobile advertising market; especially when the latter are in possession of unique assets that trump the off-deck mobile advertising framework.”
Jo Wall, Mobile Advertising Specialist at Acision, says the purchase of AdMob will strengthen Google’s mobile advertising position, which to date, she feels, has been limited, predominately focusing successfully on mobile search.
“Linking the capabilities of the two companies should produce more innovation within this space, hopefully this will be more than just mobile Internet advertising,” says Wall. “The multi-channel potential from mobile Internet, messaging, on-device, games, applications and more is what makes mobile advertising exciting. However, for mobile advertising to flourish it is critical that privacy, preference and permissions are at the heart of any solution going forward. It will be interesting to see how Google’s Ad Preference Manager will be extended to the AdMob’s Ad Network capabilities to benefit both the advertisers, by providing greater targeting data for more effective campaigns, and the end users by ensuring more relevant ads are received.”
Mark Curtis, CEO of online and mobile dating service Flirtomatic, says the move is very good news for mobile overall.
“I’m not surprised,” says Curtis. “Admob had been very clever at setting up a system that, like Google Adwords, was super easy to use from anywhere in the world to buy placement anywhere in the world. It also marks out how very serious Google is about the mobile space. What I'm hoping for now is innovation in mobile advertising and there is a strong chance Google will drive this.”
And Stephen Upstone, VP Sales Business Development at Velti Plc, says he believes that Google’s investment in AdMob is a strategic play for the Android ecosystem and the ambition to quickly scale Android to become much larger than Apple and, longer term, Nokia’s Symbian.
“The strategic value here is how AdMob will help make revenue flow to application developers and handset manufacturers using the Android Operating System,” says Upstone. “This strategic importance could have had an influence on the valuation in the deal, especially if there was competition from other potential buyers.”
Ben Tatton-Brown, Managing Director of mobile media planning and buying agency RingRing Media, describes the acquisition as “a milestone for our industry, that highlights the potential of the mobile advertising market.”
Tatton-Brown says he believes the valuation is justified regarding the size and the growth of the market.
“I am very confident for the future of mobile advertising,” he says. “Especially since RingRing Media is now spending in excess of $1 million a month buying advertising for our clients and seeing significant month on month growth.”
And Mike Wehrs, CEO and President of the Mobile Marketing Association (MMA), says that if there remained any doubters of the value of mobile marketing, the sale of AdMob to Google at this valuation puts those concerns to rest.
“Mobile marketing and advertising represent unique capabilities for advertisers and marketers and a new level of information access for consumers,” says Wehrs. “These characteristics have shown already the incredible impact on a company's marketing efforts that embracing MMA guidelines and best practices in their Mobile Marketing efforts can have.”
And what do we think? Well for what it’s worth, with no axe to grind and no vested interests, we agree with Mick Rigby that it’s a deal that gives the mobile marketing business increased credibility at a time when there is still much frustration in the air that budgets are still small, brands still ignorant of what mobile can do for them, and the very act of buying mobile media is still far too difficult. As David Fieldhouse, Head of Mobile at media agency Mediacom put it at an event last week:
“When you can spend £1m online in an afternoon and it takes three days to spend £50,000 on mobile, there’s your answer.”

The fact that, despite all this, Google feels that this a market worth being in can only get more brands to take mobile seriously. Perhaps even the mobile operators too. On the subject of which, for those following our attempts to get more information out of O2 about their marketing database of O2 subscribers which they are making available to brands, we followed up our email of last Thursday with another this morning, asking all the same questions. Still no reply, but we’ll share all the details with you as soon as we have them. Perhaps, hopefully, they’re too busy talking to Google.

Footnote:
We’ve received a couple more opinions about Google and AdMob, which we thought were worth sharing.
Sponge CEO Dan Parker says:
“I think this is a game changer. Like many, Google CEO Eric Schmidt has evangelised about mobile for some time, saying he believes it will outgrow internet advertising, which in the UK will over take TV this year.
“To date, the evangelists at media groups, agencies and brands have done little to back their rhetoric. Mobile budgets are modest at best and closer to non-existent at most companies.
Now the smartest and most successful company in new media have backed their rhetoric with action. Google has paid a very big price to get a strong position in mobile. This is not going to go unnoticed by every advertiser, agency and media owner. I believe it will be a landmark event in the growth of our sector.”
And at YOC, Christian Louca, UK Country Manager and Head of Publishers, says Google's acquisition of Admob makes perfect sense.
“The purchase demonstrates the search engine giant's ambitions extend beyond the desktop and into the mobile space,” says Louca. “Adding mobility is a natural extension of what Google does already.
“The news sends a clear message to any people who might have doubted that mobile ad networks are able to create a sustainable and profitable model. Previous attempts by other players in the market may not have been so successful and somewhat premature, (but) the mobile industry is now in a boom state. Companies such as Google understand the market dynamics. They understand that even the most expert mobile specialists cannot fully appreciate the full potential mobile offers as it is simply too massive. Google is in the best position to keep driving the industry forward whilst being able to unlock its true potential by developing personal, creative and innovative user experiences. This is a big wake-up call for the industry.
“I think we will start to see a significant increase in the speed of the development of the entire market and this is certain to open up opportunities for other investors looking to take part in such an exciting and lucrative industry.”

Negative-sum games

2009-11-09T07:01:43Z

As if current economic conditions weren’t dire enough, several forces conspire to push the media sector’s financial performance further downward. These factors are an obsession with market share, price wars, and first movers’ ability to set the tone, often for the worse.

Take the iPhone application market as an example. At first, publishers were elated: at last, a content distribution platform with an embedded transaction system. They saw it as the first step to make customers pay for content. Then, another idea took over: market share. Like “eyeballs”, the old Internet Bubble de rigueur metric, market share is today’s mirage: once you get it, profit is (almost) sure to follow. Never mind there are zillions of companies that have once and for all severed the connection between market share and profit (Apple for computers, BMW in the auto industry, Nucor in steel production, name but a few).

Unfortunately, the first one who shoots for market share sets the standard, sometimes with surprising twists and turns. Take the Wall Street Journal: first-rate web site, highly successful business-wise with one million paid subscriptions (about $100/yr). When it came to the iPhone opportunity, guess what: they went for a free application loaded with pathetic ads — apparently locked on the saturation mode, the same banner kept showing endlessly. Just a few weeks ago, seeing a steep drop in profits, the WSJ.com reversed itself and restricted access to its app.

The same happened in France with Le Monde: the paper launched a free iPhone app even though some parts of its website are paid for. As a result, no one in the French market is considering a paid application. For good measure, we’ll recall Le Monde’s long history of setting costly standards for the industry. Ten years ago, when the socialist government imposed the work time reduction from 39 hrs to 35 hrs per week, Le Monde granted its employees a generous application of the law. The paper was similarly munificent when it negotiated copyrights for internet reuse of editorial production. Both first moves turned out be to costly to all publishers who had no choice but to align themselves to “le journal de référence” (not a reference in terms of business performance with years of continuous losses). As for now, it doesn’t seem Le Monde has a plan to make a richer paid-for version of its iPhone app — even if the quality of the paper and of its web site could easily justify it.

Even if the media industry calls it a “game changer”, it appears the iPhone will be slow to strengthen bottom lines. Look at the chart below produced by the consulting firm Medialets :

As you notice, the news category is the second largest for free apps (73% of the total), the n°1 being the social networks (94% free, understandable considering the younger demographics). As a comparison, only 12% of games are free; two reasons for this : a) you can’t put advertising on a game and b) the gamers are used to pay.

How wrong are online newspapers not to charge for their iPhone App? Quite wrong actually. For several reasons.

First, there is not that much price elasticity in the mobile phone industry. As this graph taken from a study made by Pinch Media shows…

…. a $0.99 app is not downloaded substantially more than a $4.99. Says Pinch Media: “We suspect that the relatively strong performance of $4.99 applications are a reflection of their quality, and a sign that the App Store will support higher prices for an engaging experience”. And we can safely say that watching a major newspapers iPhone’s app is undoubtedly and engaging experience.

Second, and this is also about engagement, still according to the Pinch Media survey (the six slides presentation is here), paid apps tend to be used more than free ones by a significant margin:

There are two underlying messages, here.

1/ News organizations should hang on to their “value proposition”. The free model has its virtues, as we explained in a previous issue (see Inhale, it’s Free), but in the case of a particularly engaging content or service, paid-for can be justified.

2/ Act together. The battle to convert some of the free digital users to paid ones will be won or lost, depending on key players joining forces or not. Weirdly enough, due to their difficult financial situation, the US newspaper industry appears to show a readier disposition to a coordinated move than, say, French papers which are essentially good at collaborating to beg for subsidies.

That leads us to the price wars issue. As a whole, the media industry is prone to such practices, especially in the turbulent digital transition. Take the American book industry: in the United States, the fight between Wal-Mart and Amazon is perfect example of MAD-ness, as in Mutually Assured Destruction. To sum up, Wal-Mart (n°1 in the retail word : $400bn in revenue, 2.1m mostly low-paid employees) wants take the lead in the e-commerce business. To achieve that goal, it needs to take on Amazon, n°1 e-retailer in the US. Hence their choice of weapon: cultural goods associated to the Amazon brand. Currently, the two giants are tied in a damaging price war on books — they flog bestsellers at about 70% discount of the suggested list price price — and DVDs as well. Needless to say, they lose money on each sale. The discount is so huge that the three warring retailers (Target has joined the fray) are rationing books to prevent secondary resales. The American Booksellers Association has asked the Department of Justice to investigate the book war.

How to get out of this vicious spiral? Regulation is but one solution. The book industry’s health and vigor seem quite related to the degree of regulation. In Germany, where discounts are verboten, there are 2.25 times more bookstores and 31% more new titles per 1000 inhabitants than in the US. And, when we compare the revenue generated by each new title in Germany and in the US, the German book market brings slightly more money (+12%) in absolute terms, but four times more when you factor in respective population sizes.

What regulation can’t do must be achieved by collective action. In some countries, the mobile phone industry has been quite clever in “cartelizing” itself in order to avoid a lethal price war. This said, the price fixing often happens at the consumer’s expense: in France, in 2005, the three carriers (Orange, SFR, Bouygues) were fined €534m. (Today, they’re back to the same business tricks, don’t worry.)

The media sector suffers from its fragmentation. Still, many business components could be improved with coordination. Besides sharing logistics and, to some extent, technology (see our story about “coopetition” The End of Walled Gardens), the downward spiral of advertising prices could be checked using concerted strategies, ranging from closing down the disposal of long tail of digital inventories to price dumpers, or simply saying “no” to excessive discounts imposed by media buying agencies. In the context of prices that are about 20% to 30% below last year’s level, thinking in those terms is a matter of survival.

— frederic.filloux@mondaynote.com

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Explaining 4.6 billion mobile phone subscriptions on the planet

2009-11-06T15:29:42Z

The world has a population of 6.8 billion at the end of this year, 2009. We here at the Communities Dominate blog have examined the statistics of the major technology and media industries, with a particular focus on mobile obviously, as we were the first to say in public, that all social networking services will head to mobile, as we said back in 2005 in our book Communities Dominate Brands, when most did not know what social networking was, and when nobody talked about YouTube or Facebook or MySpace and Twitter did not even exist. At the time when we wrote the book the total global blogger environment was under half a million, while today just English-speaking blogs number over 100 million. It has been quite a ride, these past four years or so since our book and we appreciate all the readers at this blog.

But yes, in that time mobile has grown from being just another technology platform, the widest reaching digital platform, widest reaching technology and widest reaching media channel (as we say, mobile is the 7th of the mass media, when put into chronological order of all seven mass media channels starting with print).

NUMBERS IN CONTEXT

And a little while ago, the ITU gave their projection that we will reach 4.6 billion live mobile phone subscriptions for the planet, by the end of the year 2009. Wow, 4/6 billion subscriptions. For comparison, there are 480 million daily newspapers by circulation (or probably less, as newspapers seem to be disappearing left and right in these troubling economic times). There are 900 million cars that are registered for use. There are about 900 million paid cable/satellite TV subscriptions on the planet. There are about 1.1 billion PCs in use of any kind including the new netbooks. There are less than 1.2 billion fixed landline phones - this number is also declining. There are about 1.5 billion TV sets and 1.7 billion total internet users. Note that of the internet users, today more people access web content (browsing) from a mobile phone, than from a personal computer - as we can see, the total world PC population is 1.1 billion, and many of those in poorer parts of the world, like in Africa and Latin America - are not even connected to the internet. Obviously most who access the web on a phone also do so from a PC, and today far more total internet traffic is from PCs than from phones. But as we have reported here before, today more total browsing is from mobile phones than from personal computers. In many developing world countries it ranges from 4:1 more from mobile as in South Africa to 10:1 as in Bangladesh.

But lets continue with the comparative stats. Credit cards? The world has about 1.8 billion unique holders of credit cards and about 2.2 billion unique holders of banking accounts. And then the last truly big technology - FM radios, the world has about 3.9 billion FM radio sets in use, although most of these are the multiple radios we have in the Western World, where a single person may have 4 or 5 radios easily. Also note that all other fave tech stories and gadgets are tiny compared to these, so gaming platforms like Playstations and Wiis or MP3 players like iPods or GPS devices like TomTom do not reach anywhere near a billion users.

MOBILE IS THE GIANT

Against that backdrop, comes mobile. I try to not call it the 'mobile phone' anymore, and certainly not the 'cellphone' as 'mobile' is best descriptive of the device and technology, it is far more than a calling device, or a phone. The word phone is literally the wong term for over 11% of all mobile phone/cellphone users, who never originate any voice calls on their devices - but do send text messages. In India the proportion is already at 30% of all phone users who never originate voice calls - but do send text messages..

So yes, the ITU reports that mobile will hit 4.6 billion subscriptions at the end of this year. That is two thirds of the total population of the planet. Wow. Compared to any other technologies - mobile is 18% bigger than radio, twice the size of unique holders of bank accounts, 2.5x bigger than unique holders of credit cards; over 2.7x bigger than all internet users - which includes mobile phone based internet users. Of PC based internet users, mobile is 4.6x bigger. There are 3 times more mobile phone subscribers than all TV sets on the planet. There are almost 4x more mobile phone subscriptions than fixed landlines globally, and more than 4x more mobile phones than all personal computers in use on the planet. And for those subscriptions - five times more people pay for a mobile subscription than pay for a cable TV or satellite TV subscription; and globally, almost ten times more people pay for a mobile than pay for a daily newspaper. Kind of makes you think, eh?

MULTPLE SUBSCRIPTIONS, DUAL PHONES

But that is not really the full story. We here at Communities Dominate blog have been analyzing more deeply into those mobile phone subscriptions, what is the reality. Once, ten years ago, a mobile phone subscription was the same thing as a unique mobile phone in use; and a mobile phone subscription was equivalent to 'unique mobile phone user' ie 'mobile phone subscriber". Those who saw me speaking ten years ago remember me pointing out that this was starting to be not true. Today all analysts agree, there are more subscriptions than actual phones in use, and there are more subscriptions, than unique 'subscribers.' Why? because many users will get two or more subscriptions, often to save on their costs. The prevalence of 'prepaid' subscriptions helps expand this offering where a subscriber does not need to sign up for a 2 year contract to get another phone number and account, on a rival network.

The phenomenon of the multiple subscription first tended to mean two subscriptions per person was also two phones per person, but that also was not true and we have reported on that split. Some who have two subscriptions are well to do, and have for example an iPhone and a Blackberry - one person, two phones, and two subscriptions. This is the common pattern with employed people in the Developed World. But we have now actually the larger proportion of the second subscriptions, of users with one phone, who use two or even more subscriptions on that one phone, switching the SIM card. So these tend to be almost exclusively GSM phones - and part of the appeal of GSM to the Developing World. People too poor to afford a 50 dollar basic phone, can still get a used GSM phone imported from Europe or the Middle East, to Africa for example, and then to further optimize on their costs, they get a couple of SIM cards and switch between them to get the best rates on a given call or message type, depending on time of day, on what network the other caller is, etc.

I was literally the first person to report on these phenomena, as they were first observed globally, in Finland in the last decade. My consultancy TomiAhonen Consulting has been providing the big picture numbers here via this blog, and in my writing and speaking engagements quite regularly, and as I said at the start of this blog, at the start of this year, January 1, 2009, we had 4.0 billion total subscribers, using 3.4 billion unique phones, which was 3.0 unique mobile phone users (paying subscribers) with the remaining 1 billion mobile subscriptions being second or third subscriptions. And yes, about 1 in 8 mobile phone unique users on the planet last year, used two phones. This is as much as one in two out of Western European phone owners.

SPLITTING THE 4.6 B NUMBER

So my consultancy has been monitoring that number, and we are ready to give the tentative preliminary split for the end of 2009. We find that of the 4.6 Billion total mobile phone subscriptions, that means 3.3 Billion unique subscribers of mobile phones. Thus a staggering 1.3 billion of all mobile phone subscriptions on the planet are now second or multiple subscriptions. So more than a third of the planet - 39% of the unique mobile phone users, who have at least one phone and at least one subscription - now have 2 or more. Wow. But we have been reporting on many countries with 'astronomically' larger mobile phone subscriber counts than total human population (not households, and not adult populations) ie Hong Kong at 140%, Ukraine, Italy and Taiwan at 130%, Russia, UK, Sweden etc at 120%, even many Developing World countries have passed 100% per-capita human count of mobile subscriptions, meaning they have more mobile accounts than people such as Malaysia, South Africa, Chile. Colombia etc.

But yes, I am now reporting that the total unique mobile phone subscriber count grew from 3.0 Billion last year to 3.3 Billion this year, and is just short of 50% of the planet's total population.

What of actual phones in use? Many who have 2 subscriptions have also 2 phones, and for example many who recently got iPhones or Blackberries, tend to have a second phone for other needs or on other networks. And then there are many who carry two phones from the same maker, for convenience reasons, so for example if they want a QWERTY keyboard, they have a Nokia E series, and then to get a great camera, they also have a Nokia N-Series, but then are able to standardize on the chargers, the car kits, etc. But nonetheless, we clearly have far more handsets in use than the 3.3 billion unique mobile phone subscribers, and we sold over 1.1 billion new phones this year 2009. I am ready to report that for the end of the year, we will hit 3.8 Billion actual mobile phones (or strictly speaking, "mobile devices" - as this also now increasingly includes 3G data cards and dongles to allow laptops to connect to 3G networks) in use. Also note, that there were clearly then 100 million new subscibers who shifted from carrying one phone, to carrying two phones.

So mobile phone (end user mobile device) active population on the planet grew from 3.4 billion to 3.8 billion this year. Also that obviously means that out of the 1.1 billion new phones sold this year, 700 million were replacement phones to existing users, upgrading their handsets, and only 400 million were new phones put into use. Still, 3.8 billion actual phones is yes, 3.5 times more phones than personal computers, and over 2 times more phones than TV sets, and almost as many phones in use, as stand-alone FM radios on the planet. Very big numbers indeed.

NEW NUMBERS

But we are also observing two new trends emerging in the world. There are families so poor that they cannot afford to get a phone or even a prepaid SIM card subscription for each family member, but find such utility out of the first phone in the family, that they do get one mobile phone account as a 'family phone' - much like for most of the previous 50 years in the Industrialized World, we had fixed landlines, as a shared family phone, one phone for the whole family. I have seen the phenomena reported in many Developing World countries, in very much a rural-area focus, so it seems that in cities even the poor often get their own SIM cards, but in rural areas, often the first phone for a family becomes a shared instrument. My consultancy has now done its first estimate of this portion of the total mobile phone subscriber base on the planet, and finds that about 150 million mostly poor people, mostly rural, in mostly the Developing World, have a phone that is shared by the family. Out of all unique mobile phone owners on the planet, that is 4.5%. But because the families tend to be large in India and Africa, where we see this phenomenon most pronouncedly, it means that the total 'reach' of unique people who have access to a mobile phone, either their own or a shared phone is now 3.9 Billion. Or 600 million people have access to a 'family phone' as a mobile phone, while not owning that subscription. in total 750 million people use such a shared phone which is 19% of all who can be reached by mobile phone on the planet.

So, 3.9 Billion unique people can be reached by mobile phone, that is 57% of the planet. Out of those 3.9 million people, 3.3 billion or 85% have their 'own' mobile phone, and 15% have a family-shared mobile phone.

And we have another new phenomenon. This too has been expected for this whole decade, but the numbers have been so small that they did not dramatically factor in the overall giant numbers of mobile. I am talking of non-human subscriptions, the various telematics subscriptions on the planet. This includes the electricity or water meters that are read by automated GSM chips, or the remote control chips to remote TVs like they sell in Singapore on the 3G networks, and the remote control modules for your household robots as they sell in South Korea. We are now having industrial massive use of GSM in such industries as forest management or livestock management, and even household pets connected via GSM collars, and we reported on the first household plants that now send in SMS alerts when they need water, as launched in Japan. We are starting to see telematics-connected GSM accounts reported by some of the more advanced indsutrialized country markets, such as Telestyrelsen, the Regulator from Sweden. And based on the early data on telematics, we at TomiAhonen Consulting can report that around the world, 200 million mobile network subscriptions are non-humans, ie telematics subscriptions. That is 4.3% of all subscriptions today and growing.

IN SUM

So to understand the whole 4.6 B mobile subscription number reported by the ITU. yes, there are 4.6 billion mobile subscriptions on the planet at the end of 2009. That means a growth rate of 15% in this time of economic distress. Very impressive growth.

That breaks down to 4.4 billion human subscriptions and 200 million machine/non-human animal subscriptions.

The human 4.4 billion human subscription number represents 3.3 billion unique paying human subscriber. Out of those, 150 million have shared family accounts, so the total mobile phone user base reaches 3.9 billion people.

Out of the 3.3 billion actual mobile phone paying unique human users, one third have two or more subscriptions, so there are 1.1 billion 'second or third' subscriptions actively in use. And of those 3.3 billion unique mobile phone users, 15% have second phones, so the total number of actual mobile phones in use is 3.8 billion mobile phones, and 1 in 8 mobile phones actively used on the planet, is actually a second phone by the same user.

There you go. These are the preliminary numbers for the end-of-year 2009, based on analysis by TomiAhonen Consulting, and this is currently the only place where you can use as a reference for these numbers. But please feel free to report on these if you blog or write or speak on mobile industry numbers. And obviously the current start-of-year 2009 numbers for mobile in great detail are reported in the Tomi Ahonen Almanac 2009, for which you can see many statistics and free sample pages at the Almanac ordering page.

Actually 'nobody' moved Nokia's cheese, it still dominates smartphones, slight shfits only in Q3

2009-11-06T13:52:54Z

Well well, these are intersting times indeed.

I remember the hype was all over the blogosphere when Nokia announced its self-reproted market share im smartphones to be down to 35%, and many pundits were all over the space predicting the end of Nokia. We here at CDB reported the numbers, and wondered, who actually had 'stolen' Nokia's strong market share, in who moved my cheese and its follow up blog, we know half of who moved the cheese.

But it was far too much of a total shift in market shares in one period, to be able to be explained just by Apple and RIM, after the full results of all makers came in like Samsung, SonyEricsson, Motorola, LG, HTC, Fujitsu etc. Now we have the 'final' numbers, the 'official' numbers for Q3, 2009. The two major analyst houses who are regularly referenced as the most credible sources, IDC and Canalys have both reported their final count of the third quarter of 2009 for Smartphones. They find a bit of a difference by one or two percentage points, as might be expected, but have no argument of the order and magnitude of the big four, but if we average the two, we get these market shares for smartphones Q3 in 2009:

Nokia 39%
RIM 20%
Apple 17%
HTC 5%
Fujitsu 3%
Samsung 3%
All others 13%

Most of the story is more-or-less the same as in the "who moved my cheese" blog postings, plus or minus one percentage point, but the Nokia share is dramatically different today. Note this is reality, not the early reporting. The reality is that Nokia still holds 39% market share of all smartphones, is still bigger than the next 2 put together (RIM and Apple) and only lost 2% market share from Q2, and actually grew 1% market share from the same quarter the year before. Most importantly, the way I look at it, the relevant metric - Nokia is doing BETTER in smartphones than their handset market share globally, meaning 'all is well' in terms of their strategy.

Yes, Apple is growing very strongly from the last quarter (although, according to Canalys measurements, this quarter in 2008 vs this quarter in 2009, Apple actually lost market share compared to this time a year ago) and RIM is either holding steady or growing (IDC has them holding, Canalys growing). RIM is always a difficult smartphone brand to factor in, because they report one month later in their quarter, so their 3rd quarter is not like the others from July to September, the RIM quarter runs from August to October, and we get RIM numbers always a month later than the others. So the analysts have to make a guess about RIM.,,.

But yes, we heard a lot of hype about Nokia doing a death-dance in smartphones, like Motorola doing its death dance in mobile phones. Rubbish, Nokia is doing just fine. It did lose 2% of market share, yes, and Apple actually gained more than 2%, so Apple is winning currently and Nokia has lost some market share, but no time to panic. Nokia is still the giant, and most importantly, their smartphone market share is better than their global handset market share, so here is a global handset giant, clearly set on building its future as well in the smartphone space. None of the other big 5 handset makers, Samsung, LG, SonyEricsson or Motorola, have smartphone market shares anywhere near their global handset market shares. If you think smartphones are the future of handsets, then Nokia is executing 'perfectly' in that space. But who of the tech journalists is now going to write this story? The more 'fun' sexy and glamorous story is to write about Android or Apple being the hot smartphone. Incidentially, Android has about 3.5% of all smartphones, split across dozens of models and many makers, so in size, they are about as relevant to smartphones as Fujitsu or Samsung, far smaller than HTC. How often did you think HTC, Fujitsu or Samsung are the leaders in smartphones?

And one comment on RIM. I may still have to come back to this statistic and correct it one more time. RIM hgas said recently in October that they expect their total shipments at 9.9 million smartphones for this quarter. If that is true, and the Canalys and IDC numbers had them in the 8 million plus range, then expect RIM market share reality to be boosted by about 2 percentage points more, so the 'real' RIM market share may be as big as 22%, would be a dramatic growth rate indeed. But we wait until RIM reports officially. Certainly both Canalys and IDC indicated in their smartphone press releases that RIM is growing strongly compared to this time a year ago. The question only remains, exactly how strong had their growth been..

Ok. to the mystery of who moved my cheese, nobody really. That 2% shift in market share from one quarter to the next for Nokia is well within their normal fluctuation. As long as their smartphones outperform the overall company, they are doing just about as well as we could expect. Why the discrepancy by the way? beacuse when Nokia reported their Q3 numbers, thay only had their internal numbers to compare to, and they had over-estimated the total market size, and thought they had lost more than they had. In reality, the global market for smartphones had grown less than Nokia thought, and thus their market share in reality was better than they thought. This can easily happen in these kinds of volatile times, when the global economy experiences big shifts.

Robbie Williams’ new album to debut exclusively on Spotify in the UK

2009-11-03T09:29:22Z

It’s our great pleasure to announce that this Friday, November 6th, we’ll be unveiling Robbie Williams’ comeback album “Reality Killed The Video Star”, exclusively to all of our users in the UK, in advance of the album’s official launch on November 9th.

The album was produced by Trevor Horn and features twelve brand new tracks (plus one reprise), including the singles “Bodies” and “You Know Me”. The album will be made available exclusively to every one of our UK users at the turn of midnight this Friday.

So is “Reality Killed The Video Star” a return to form? Before next Monday’s official launch, there’s only one way to find out.

As part of this exclusive we’ve also had Robbie put together a playlist of some of his favourites tracks over his career and another playlist highlighting tracks from his musical heroes.

Dumb pipes – why Skype fears Open Source

2009-11-02T22:49:39Z

Skype’s Linux version will soon become open source software – and maybe run on every smartphone, TV set-top box or other gadget powered by the free operating system. It could also become part of multi-protocol messengers like Pidgin or eBuddy or Meebo. Or at least that was the hope for some hours today after a French user got the following answer from Skype customer support.

Olivier Faurax had asked for a proper version of Skype for Mandriva Linux and was told:

We understand that many users complain that there is no Mandriva version at present. We are happy to be able to inform you that Skype will from now on be part of the open source community. Therefore Linux developers will be enabled to influence the development of the Skype client for Linux – which will most certainly result in specific versions for the different distributions.

As incredible as this sounded, the wording was unclear so Faurax asked for a release date. He was told that “the Linux Skype version will become open source in the nearest future”. Pretty amazing if it referred to the complete Skype source code. As many devices with an embedded OS run some flavour of Linux, those devices could also be made capable of making and receiving Skype calls.

An example are WiFi routers like the VoIP capable Fritz!Box that millions of German customers got for free with their DSL connection. Not only does the router run Linux but it’s issued with regular firmware updates that add new powerful features by maker AVM. The latest free additions are a print server, answering machine and music streaming functionality. It’s also an analog telephony adapter which means that I can connect a phone to make and receive VoIP calls without the need for a computer.

I use it with ten different VoIP providers and therefore I am reachable under German, British, US and even Peruvian numbers on the same phone. The only thing that’s missing is Skype, that’s why I rarely use it. And it will probably stay that way, judging from the latest Skype blog post. After Olivier’s story got Slash Dotted and everyone went crazy, Skype declared officially:

Yes, there’s an open source version of Linux client being developed. This will be a part of larger offering, but we can’t tell you much more about that right now. Having an open source UI will help us get adopted in the “multicultural” land of Linux distributions, as well as on other platforms and will speed up further development. We will update you once more details are available.

That doesn’t sound so euphoric anymore. The statement only refers to an “open source user interface” not the entire Skype source code that, crucially, includes the needed protocols for voice transmission through firewalls, for example. As I understand it, an “open source user interface” alone won’t be sufficient for developers to utilise Skype as a service inside of other software or devices. That’s probably to avoid becoming “the dumbest pipe of all”, as I once called it in a blog post.

When people can make their Skype calls on other software, normal phones or wherever, they could potentially use Skype for inbound calls and for the free Skype-to-Skype calls only. Paid outbound calls to phone networks would be channeled over Skype’s competitors who offer cheaper prices. Companies like Sipgate or Voipbuster always stress this point in their advertising. In August, I got this email:

As it is now becoming more and more clear that Skype’s services will not be available much longer because their software license will expire, it is now the time to switch to VoipBuster. [...] To make sure everyone can still use Voice Over IP at even cheaper rates than Skype, Voipbuster has lowered loads of destinations.

Sipgate basically said the same in a press release from August. Everyone wants to eat from Skype’s lunch. That’s why they’re treading so carefully with open source.

Could SIP Really Save Skype?

2009-11-01T13:00:04Z

Global Index, a technology owned by Skype co-creators Niklas Zennstrom and Janus Friis via their company JoltID, is the fulcrum of leverage in their ongoing dispute with current Skype owner eBay and its potential purchasers. If you were either the buyer or seller in this labyrinthine transaction, you’d likely be tempted to declare, “Let’s just rip out Global Index and use something different.”

Such a move would undoubtedly take the wind out of JoltID’s sails as Skype tries to find a new home outside of eBay. Indeed, many VoIP pundits insist that Session Initiation Protocol (SIP) could be Skype’s savior. But while it’s true that technologies like SIP and its stepchild XMPP achieve a lot of the same goals as Global Index, such an argument ignores the fact that Skype is as successful as it is because it has exponentially better operating economics than the rest of the VoIP industry –- and Global Index is the singular reason why.

The Promise of SIP
In 2002, as Zennstrom and Friis were facing a bevy of lawsuits of indeterminate scope and the writing was on the wall as to the profitability prospects of a P2P file-sharing network, many in the then-fledgling VoIP industry were busily attempting to re-architect the telephone network in the Internet’s visage. A number of these services, including two from entrepreneur Jeff Pulver — Vonage and Free World Dialup — used SIP at their core. They were consumer-focused services that, in their own way, attempted to mimic the architecture, business structure and design of the public switched telephone network using Internet Protocol technologies.

SIP is now hugely significant in shaping how many telecom networks are architected. But while many of us initially thought that SIP might herald an era of person-to-person multimedia communications free from the control of large companies, it hasn’t exactly worked out that way.

The Drawbacks of SIP
For telecom companies and their vendors, the draw of SIP was that it could be used to transpose the proprietary SS7 signaling network onto the Internet while allowing the calls themselves to transit IP networks –- both at a significant discount to the cost of switched telecom trunking. But even as a client-server phenomenon deployed on the public Internet, SIP is an incomplete solution. On its own it has no way of traversing firewalls or, more importantly, dealing with NAT traversal –- a critical oversight for a protocol created in the late 1990s for the IP address-starved modern Internet.

SIP user agents (such as that software on your computer or that phone on your desk) must also be manually configured to register themselves to a SIP proxy server if users are to be allowed to use them for differing networks. Furthermore, all traffic, addressing and routing decisions in a SIP network are typically handled at the network core or by equipment operated by the service provider. That includes the various workarounds such as STUN that enable folks behind firewalls or using private IP addresses to talk to each other, not to mention derivative (and much cooler) protocols and techniques such as XMPP and Jingle.

If adapting SIP to the vagaries of the modern Internet sounds expensive, it is. By 2006, Vonage had already burned through nearly half a billion dollars. More importantly, SIP architectures are a critically flawed design starting point for a true P2P network. SIP and XMPP networks are really client-server networks masquerading as P2P.

Forgetting about the exponentially more costly business of sending voice or video data across networks, 70 percent of traffic on XMPP instant messaging networks is the result presence updates. Some estimates are that as much as 60 percent of this information is itself redundant. Servicing the traffic on a network such as Skype’s, which consists of some 45 million daily users, would bury most startups in server and bandwidth expenses. Add to that the actual messages themselves, and having to handle the voice channel or video at the core, and it becomes clear that only the big boys get to play in distributed communications services.

Enter the Supernodes
Or do they? As it turns out, features like instant messaging, voice/video chat, and presence management are ideal applications for the technology that Skype’s founders had been playing with for years in the P2P world. The networks using their technology when Skype was founded in September 2002, Kazaa and Morpheus, handled massive volumes of data between peers with no real central core to speak of, but still significant domain control by FastTrack, the company created by Zennstrom and Friis to license technology using the same moniker. The key concept exploited by the services derivative of this technology is the distributed, auto-discovering, self-healing node-supernode model tied together by PKI encryption.

On any of the other VoIP and IM networks such as Gizmo or iChat, each user is a node -– a logical endpoint in a cloud that connects to host computers operated by the service. But with Kazaa, Skype and even Joost, a small percentage of each service’s users unwittingly conspire to provide the network’s backbone in the form of supernodes. Which means that if you have some combination of a permissive firewall, really good port-forwarding on your router and a public IP address on your computer, you, too, can be a Skype supernode. When it comes to traversing firewalls, NAT, and handling distributed authentication and presence management, supernodes do all of the heavy lifting.

That is the reason Skype is able to service 45 million daily users on a fraction of the infrastructure that a SIP-based provider like Vonage needs to deploy. The workload that normally would be handled by equipment owned by the company is distributed among the users themselves.

The Power of Global Index
In order to make this seamless to users, Skype implements a Service Discovery Protocol. Such technologies have always worked well on Local Area Networks (Apple’s implementation is called Bonjour) but often get confused on the public Internet because there is usually no central registry — and because the broadcast packets they use tend to get snubbed by access routers.

When you load it up, it starts with a table of known supernodes and the central Skype server. Skype’s only centralized involvement is in verifying your identity via PKI authentication and providing an update (if necessary) of friendly nearby supernodes. From that point on, your associated supernodes handle every piece of data you share on the network. An added bonus is that supernodes can redesignate the location of the master Skype hosts on your computer whenever necessary.

Since the whole thing is encrypted, and the encryption keys of nodes and supernodes are all validated by Skype’s root key authority, everything on the network is trustworthy and virtually impossible to hack or otherwise corrupt. In other words, the Skype network is fully distributed, self-healing and largely decentralized, but still maintains all of the advantages of command and control desired by a service operator who actually wants to make money from integrating the service.

Thanks to Global Index, Skype operates at cost levels that are believed to be a fraction of those of even the most efficient SIP or XMPP-driven networks. It is this economic advantage that trumps the possibility of forklifting standards-based telephony technologies into the core of Skype’s network. If you truly wanted to replicate Skype’s ingenious — and very practical — design, you’d be better off looking at technologies like Napster, Bittorrent or GNUtella.

Ian Andrew Bell is creator of the team management service rosterbot.com

Yeah, I’d Like Metered Broadband, Too — If It Were Actually Metered

2009-10-30T00:00:15Z

With broadband, as with other utilities such as electricity and water, people should pay for what they use, according to an editorial in The Financial Times today. Demand and use of the Internet has risen faster than capacity can keep up, which means that the all-you-can-eat model of unlimited broadband per month no longer applies, argues Andrew Harries, chief executive of Zeugma, which makes equipment that can be used to provide metered service. However, he neglects to explain that the ISPs’ version of metered broadband isn’t priced like your water or electricity, but is instead priced like a cell phone plan.

According to Harries:

A little history might shed light on this topic. In the early, pre-bubble days of the mid-1990s, broadband technology was still experimental. There were a variety of digital subscriber line (DSL) technologies vying for supremacy and DOCSIS 1.0 was still in development and it was primarily technical limitations that resulted in broadband being marketed as a flat-rate service.

Further, with Napster and streaming of high-definition video not even on the horizon, broadband operators believed that counting bytes was more trouble than it was worth. Hence, broadband was ushered in as a flat-rate service.

Broadband wasn’t marketed as a flat-rate service solely because of technical limitations. It was marketed as such in order to get people to sign up for it. This is how companies, even back in the dial-up days, got people to go online and explore. AOL stopped charging people by the hour back in 1996. When snappier speeds came on, ISPs had to convince people those speeds were worth it, and so they offered flat-rate pricing and talked about faster surfing. And people took them up on it.

Speed is still a huge element of the ISPs’ marketing, even if many folks can’t tell the difference between a web page loading at 5Mbps and 15Mbps. So why push speeds? Because people can tell the difference between tiers for heavy-data services such as video steaming and large downloads. Carriers may complain that we’re using more broadband, but they are actively exploiting that demand in their marketing of faster (and more expensive) service tiers to customers.

But they want to exploit their customers’ wallets as well. And here’s where I have the biggest issue with Harries’ article. He bases his entire argument about metered billing, when in fact he’s talking not about true meters but about a consumption- or usage-based plan analogous to those offered by cell phone companies. This causes him to back off from his most interesting statement (emphasis mine):

To make matters worse, broadband prices have generally declined over the same period – possibly not fast enough to satisfy some. But when coupled with the increase in average speed, the price-per-bit paid by consumers has dropped like a rock.

From where does the capital come that is needed to expand broadband capacity further? Even the academics that populate “public interest” organisations lobbying for greater net regulation recognise, at least abstractly, that broadband operators need to earn a profit if they are to continue to invest in infrastructure.

Given these circumstances, don’t usage-based billing frameworks make sense?

Whoa. In the first part he’s talking about the decline of prices per bit paid by consumers, but he later switches from his use of the phrase “metered broadband” to “usage-based billing frameworks.” There’s a simple reason for this. Metered billing is something I can’t argue against intellectually as long as my ISP charges me based on an actual price per bit. I would be paying for my actual usage, exactly as I pay my water or electric company. But carriers would never want to do this because it would reduce their profits.

Instead, when ISPs talk about meters they’re talking about different service tiers that don’t reflect actual usage, but herd customers into set plans where most will be paying a monthly fee for more than they use. And if they go over their tier, they get walloped with fees. Last month when Verizon CTO Dick Lynch talked about meters, it wasn’t an accident that he compared the future of metered broadband to wireless plans, which are tiered service plans that have proven hugely profitable.

Verizon in its third quarter reported 28.3 percent operating income margin for its wireless service, and for more of a hint, check out its statements last year to investors when it introduced an unlimited $99 plan. Basically it argued that the revenue lost from the few who would benefit from the plan would be more than made up by those joining it out of fear that they may go over their minutes. Of course wireline ISPs want a piece of that.

The Promise and Reality of LTE

2009-10-29T09:39:54Z

Ed. - To warm us up for the forthcoming Telco 2.0 Exec Brainstorms on new business models (next week in London and 9-10 Dec in Orlando, Florida), Telco 2.0 is blogging from eComm this week. This is probably the best event series on strategic technology developments, and we're delighted to partner with it. Below are some highlights so far. NB: Google Wave users can follow the conference backchannel by searching "tag:eComm with:public"; presentations will be posted to the individual session waves in due course.

Spectrum and LTE: promise and reality

Telco 2.0 ally Brough Turner argues that the scarcity of radio spectrum is an illusion brought on by telcos and the limits of current receiver technology. He described experiments in measuring the actual utilisation rate of the US CMRS (Cellular Mobile Radio Systems) bands; the highest utilisation rate they were able to observe was only 13%, during a US political party convention. Surely, then, there's plenty of room at the bottom.The reason why we don't need to regulate the visible spectrum is that the receiver - the eye - is far more sensitive and selective than any radio device we've ever constructed; if we can improve the receivers, software-defined radios could squeeze out much more bandwidth from the existing spectrum allocations, and the mobile operators' monopoly of spectrum would be subverted. On the other hand, there's also plenty of room at the top, in the extremely high frequency bands that are currently largely unused. A major advantage here is that it's much easier to build a MIMO device for gigahertz frequencies; the distance between the multiple antennas has to be half the wavelength. so a MIMO device for the so-called beachfront spectrum at 700MHz can't physically be a mobile device because it's got to be rather longer than a laptop. Beyond MIMO, it's becoming possible to put multiple radios on a chip as well as multiple antennas on a radio; this opens the possibility of using beamforming. However, Moray Ramsey of test-and-measurement specialist Agilent Technologies had a bucket of cold water to go with all that optimism; he argues, based on data from Agilent's work on LTE conformance testing, that the next-generation wireless standard has serious problems. The baseline performance of LTE Release 8 radios is turning out to be a disappointment on the test stand; especially, the OFDMA and MIMO technology is more complicated than originally thought, and rather than doubling the capacity by going from 1 antenna to 2x2 MIMO, the boost is closer to 20%. Worse, the LTE vendors have been using the wrong benchmark for comparison; LTE has been trialled against early HSPA deployments, against which it does indeed show a substantial improvement. But very few things in the industry have advanced as quickly as HSPA once it got going; peak download speeds have increased by a factor of 10 since the end of 2005 and uplink by a factor of 15. The latest wave of HSPA kit, in fact, beats the current LTE generation soundly. As Dean Bubley pointed out in discussions later, the number of solutions to the LTE voice problem is now up to six. And worst of all, one of a list of criteria he cited as necessary to achieve LTE implementation was that IMS would need to be deployed. We've said this before; Long Term Evolution ought to mean just that - evolution, and that means that good HSPA now beats middling LTE tomorrow.

Google Music Onebox: Video Interviews With Just About Everyone Involved

2009-10-29T05:46:37Z

TechCrunch writer Jason Kincaid traveled down to Los Angeles earlier today to cover the launch of Google Music Onebox. In addition to his live notes from the event and the panel, he managed to point his camera at just about everyone involved in the new service: Google Director Product Management Search R.J. Pittman, MySpace Music President Courtney Holt and LaLa founder Bill Nguyen. Jason also recorded his own first demo of the product, which didn’t go so well based on the mouse and browser setup.

Key takeaways – Google will integrate new partners as it makes sense. And while MySpace knew about the negotiations between iLike and Google prior to announcing their acquisition of iLike in August, the deal was far from certain. More on that in a subsequent post.

All are below:

Crunch Network: CrunchBoard because it’s time for you to find a new Job2.0

News Corp. Wants Time Warner Cable To Pay Up For Access To Fox

2009-10-28T11:45:00Z

News Corp. (NWS) wants $1 per cable subscriber per month from Time Warner Cable (TWC) for Fox, the Wall Street Journal reports.

Traditionally, cable companies don't pay much, if at all, for broadcast networks available for free over the air. With advertising in the dumps, News Corp. is looking for another revenue stream. Bernstein Research estimates the Fox network had an operating loss of $120 million.

CBS is already getting paid for its stations, at an estimated average of $0.50 per household.

If News Corp. doesn't reach a workable solution by the end of the year with Time Warner Cable, it could take Fox away from Time Warner Cable, which would screw the 13 million Time Warner Cable subscribers.

Join the conversation about this story »

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Mobile Banking's Next Big Market: The United States?

2009-10-28T15:25:58Z

In my recent trip to Silicon Valley, I had the privilege to meet with Carol Realini, CEO of Obopay, a mobile payment startup that is fueling a social revolution worldwide by enabling scores of unbanked people to avail of financial services for the first time in their life.

Obopay's technology allows consumers and small businesses to buy, pay, and transfer money through any mobile phone via a simple text message (or by using the Mobile web browser or Obopay's downloadable mobile app). People who send money via Obopay can fund their account either with cash or by linking it to their credit card or current account. Receivers can get the money either through an Obopay account or have it transferred directly to their bank account.

Mobile banking services like Obopay are a hot new phenomenon in developing countries in the Indian subcontinent and Africa where hundreds of millions of people face financial exclusion. For instance, India is home to 600 million unbanked citizens. If these millions of Africans and Indians can't go to the bank, then the bank must reach out to them. That's what Obopay is attempting to do with its clever micropayment service model.

Carol explained that her inspiration for Obopay came during her visit to Africa (where only 25% of the population is banked) where she witnessed something amazing: in the remotest rural areas, people were carrying a mobile handset even though they didn't have a wallet. By combining the two, Carol (a serial entrepreneur with three decades of experience in the tech sector) realized she could financially empower millions worldwide. Upon her return to the US, Carol launched Obopay to make financial services affordable for the masses.

Obopay today operates in both the US and India. Why pick these two countries? As Carol puts it, "because the US is the world's #1 money sending market, while India is the world's #1 money receiving market" — thanks to the billions of dollars remitted to India by its huge expatriate community. India's other attraction is the fact it is adding 10 million new cell phone subscribers each month, making it a fertile growth market for mobile payment services for years to come.

I asked Carol why telecom carriers and big banks are struggling to scale up the micropayment initiatives they have piloted in many developing nations. She replied that in order to be optimal a mobile payment system must boast two qualities: affordability and openness. To make small transactions like micro deposits affordable, the system must be anchored by a very low cost business model. And to allow ubiquitous access, the system must be built around an open network that supports all mobile carriers and interconnects with all banks, thus generating positive network effects. Unfortunately, most carriers ignore this reality and are trying to create mobile payment offerings that run only on their proprietary network, while traditional banks struggle to offer affordable services because their costs are just too high.

Yet Carol does recognize the importance of carriers, handset makers, and banks in the mobile payment ecosystem. That's why Obopay has systematically partnered with US and Indian carriers like AT&T, Verizon, and Essar (which has also invested in Obopay). Obopay has also struck deals with banks like Citi and YES Bank since 50% of mobile payments are money transfers that involve a bank on either end. Carol believes that Obopay's open, ubiquitous, and interoperable model is the optimal way to deliver more value to more users at lesser cost.

Interestingly, Obopay has also received investment capital from Nokia, which Carol describes as the "only mobile company in the world with the greatest reach and a big vision for extending banking services to the next billion people." That doesn't surprise me, given that Nokia boasts an installed base of 1.1 billion users worldwide and sells 14 cellphones per second — the bulk of which in developing nations like India and Africa. Recognizing that there are more than 4 billion mobile phone users worldwide and only 1.6 billion bank accounts, Nokia has just launched Nokia Money, an affordable mobile financial service built on top of Obopay technology to help democratize banking access for the masses.

As I wrapped up my discussion with Carol, I asked her what lessons and best practices Obopay has managed to transfer from India to the US. To my surprise, Carol told me that the US has 106 million underbanked citizens — all of whom could benefit from the many innovative, low-cost financial inclusion schemes that Obopay has successfully deployed in India.

Obopay's low-cost business model is built around an open, scalable technology platform and a rich and diverse partner ecosystem. They encourage a more frugal mindset among consumers, who embrace their "pay before" spending paradigm (via prepaid mobile accounts) as opposed to the ruinous "pay after" model (with credit cards) which fueled the financial bubble that led to the current recession. And, by brokering socially-relevant innovations across the US and India, Carol's firm is making basic banking services affordable not only for low-income Indians but also to Americans who live paycheck to paycheck and are overcharged and underserved by the traditional banking system.

Five Mind-Blowing Web Stats You Should Know

2009-10-28T15:32:22Z

Fifteen years have passed since I was first introduced to the web by Marc Andreessen and Jim Clark's launch of Netscape in 1994. The following year I started a company, ZEFER, while at the management consulting firm McKinsey & Company. ZEFER was one of the earliest Internet services and development firms and we were both thrilled and lucky to be participants in the first days of Internet commercialization. In 1994, we estimated that there were probably 5000 websites; the Internet research organization Netcraft, based in England, started tracking the number of websites in 1995, then pegging it at 18,000. It's easy to forget how relatively early on in the innovation cycle of the web we find ourselves. Whether we are in Web 2.0 or moving to a 3.0 era, the on-going growth and striking dynamism continues to inspire me. Of course, we've had the dot-com boom and subsequent nuclear winter, but innovation requires the forest to be burnt down from time to time to allow new shoots to sprout.

As I reflected on some of the most recent Internet trends, hot companies, and what might lie ahead, I found these five mind-blowing web stats that should excite all of us to stay tuned and hold on fast. Here they are — five pretty incredible web stats to drop at your next meeting, dinner conversation, or airplane ride.

Mind-Blowing Web Stat #1: 40,000-fold increase in the number of websites in 15 short years. If the number of approximately 5000 websites in 1994 is correct and that we are now part of some 200 million plus websites today, then we've experienced a stunning 40,000-fold increase in number of websites. How's that for a growth rate? It also helps explain why Kevin Ham, a Canadian Internet entrepreneur, is minting money from the domain names he owns. Mr. Ham owns some 100,000 domain names worth hundreds of millions and that generate estimated ad revenue of $70 million annually. Great foresight, on Ham's part, to see that good domain names are like scarce waterfront property. This is the chart copied from Netcraft:

Total Sites Across All Domains August 1995 — October 2009

Mind-Blowing Web Stat #2: It feels like it was only yesterday that Evan Williams coined the term, "blogger" as founder of Blogger.com before taking the head post at Twitter. Today, the blogosphere is doubling between once and twice a year and there are over one million blog posts daily.

Mind-Blowing Web Stat #3: Speaking of Evan and Twitter, there have now been more than five billion tweets. I admit it: I was a pretty big Twitter skeptic, but now I'm a pretty big Twitter fan. My guess is that Mr. Ham and others are trying to find ways to squat on as many Twitter handles as possible as it will become increasingly difficult to get the twitter alias you want. I stumbled across this "gigatweet" counter on the web. I don't know the accuracy of the source but this is a pretty cool real-time counter of the numbers of tweets — it is worth clicking through.

Mind-Blowing Web Stat #4: Not to leave out some of the other obvious big web names of our day, here are two stunning stats on Google and Facebook. Google still owns the search market. Sources estimate that the search goliath receives about two billion queries per day. That said, I think I'm more impressed by InsideFacebook.com's estimates that the social network is adding 700,000 new users per day.

Mind-Blowing Web Stat # 5: Okay, this is as much of a predictive statement as a stat. For some time, I have periodically checked which sites are in the top ten, as task made much easier now with the likes of Alexa. What is amazing is that whether you look at the global top ten or US top ten websites, about half of the sites are five- to six-year-old companies (e.g. YouTube, Blogger, and Facebook). The implication is that we'll continue to see a pretty high-rate of churn amongst the top ten. What other industry do you know where so many in the top ten market share positions are companies that are younger than a first grader? Big names that may be top of the world today are being bombarded by the threat of new Internet start-ups every day. Twitter was born in 2006 and has already hit #13 on Alexa's top global list and #12 on its U.S. list. How long will it take to break into the top ten? The answer: not long at all. And this is what continues to make life interesting in the world wide web of disruptive change and unpredictable innovation.

Musing about downloads in the UK

2009-10-28T23:22:02Z

Some of you may have noticed that I like my cricket. And one of the things I like about cricket is the cricket story; the history of cricket is festooned with anecdotes and tales and apocrypha, filling a very large number of books. As with most other stories, over time, these stories gain a life of their own, with a series of embellishments and accoutrements; this is particularly noticeable when the story is about larger-than-life characters, something that cricket’s cup runneth over with.

One such story involves one of the largest of the larger-than-life characters: Freddie Trueman.

The story goes like this:

Trueman bowls. Batsman is trapped plumb LBW. Trueman appeals. Not out.

Next ball. Trueman ever-so-slightly irritated. Trueman bowls. Audible snick, ball deflects and sails upward, caught behind. Trueman appeals. Not out.

Third ball. Trueman a little more irritated now. Trueman bowls. Through the gate, stumps spreadeagled, middle stump uprooted and cartwheeling. Trueman turns to the umpire and says with a wry smile “We nearly had him that time, didn’t we?”

We nearly had him that time, didn’t we?

Actually that’s the way I feel about recent discussions to do with downloads and filesharing in the UK.

First we had the Digital Britain Report. Lots of hard work, lots of interviews, lots of people given a chance to express their views and opinions.

The report had an entire chapter on Creative Industries in the Digital World. The chapter headings were Towards a New Framework for Content; Protecting and Rewarding Creativity; The Legislative Proposals; Legislation to Reduce Unlawful Peer-to-Peer Filesharing; Other Rights Issues: Fair Use; Modernising Licensing; Intellectual Property Office’s Copyright Strategy; Orphan Works; Matched Penalties for Physical and Online Copyright Infringement; A Role for Rights-Based Funding Mechanisms; Interactive Content: Converting Creativity into Value; Digital Test Beds to Trial New Products and Business Models; Extending Existing Interventions to Interactive Content; Virtual Worlds; Digital Britain: Film, Cinema and Literature; Literature; Case Study: Retirees.

From that line-up, you would think that serious consideration had been given to most aspects of what is essentially a complex subject. The fact that we’re entering a new world, with new products, services and business models. The case for change. The legislative implications of that change, needing to reward creators while protecting the principle of fair use. And so on and so forth.

When it comes to legislation to reduce unlawful peer-to-peer filesharing, the report had this to say:

The key elements of what we are proposing to do are:

Ofcom will be placed under a duty to take steps aimed at reducing online copyright infringement. Specifically they will be required to place obligations on ISPs to require them:

to notify alleged infringers of rights (subject to reasonable levels of proof from rights-holders) that their conduct is unlawful; and

to collect anonymised information on serious repeat infringers (derived from their notification activities), to be made available to rights-holders together with personal details on receipt of a court order.

Ofcom will also be given the power to specify, by Statutory Instrument, other conditions to be imposed on ISPs aimed at preventing, deterring or reducing online copyright infringement, such as:

Blocking (Site, IP, URL);

Protocol blocking;

Port blocking;

Bandwidth capping (capping the speed of a subscriber’s Internet connection and/or capping the volume of data traffic which a subscriber can access);

Bandwidth shaping (limiting the speed of a subscriber’s access to selected protocols/services and/or capping the volume of data to selected protocols/services); and

Content identification and filtering.

This power would be triggered if the notification process has not been successful after a year in reducing infringement by 70% of the number of people notified.

Remember, this was the outcome of a long period of formal consultation with people from all parts of the industries involved. Seemed a decent piece of work. And then what happened?

Then, the Secretary of State for Business, Inn0vation and Skills, announced plans to discard the proposals in the Report, and rather than go through a year-long trial period with non-technical measures, accelerate the move towards technical measures. Measures that ISPs have been united in opposing, for a plethora of reasons: rationale, lack of fairness, affordability and effectiveness being the main ones.

I thought to myself, when I read the Digital Britain Report, the hawks were plumb leg-before-wicket. They were out.

But no, the Secretary of State decided “Not Out”.

A little while later, I read another official document. This time it was the All-Party Parliamentary Communications Group, reporting on an Inquiry called “Can we keep our hands off the Net?”

This was another duly appointed committee going through its orderly business, seeking to answer five questions:

#1 Can we distinguish circumstances when ISPs should be forced to act to deal with some type of bad traffic? When should we insist that ISPs should not be forced into dealing with a problem, and that the solution must be found elsewhere?

#2 Should the Government be intervening over behavioural advertising services, either to encourage or discourage their deployment; or is this entirely a matter for individual users, ISPs and websites?

#3 Is there a need for new initiatives to deal with online privacy, and if so, what should be done?

#4 Is the current global approach to dealing with child sexual abuse images working effectively? If not, then how should it be improved?

#5 Who should be paying for the transmission of Internet traffic? Would it be appropriate to enshrine any of the various notions of Network Neutrality in statute?

There were ten conclusions regarding Question 1. Conclusions of an All-Party Committee duly set up to look at this issue. And what did they say? Here are some extracts:

We believe that voluntary arrangements would be the best way of tackling this issue and
note with approval the initiative which is already under way in Australia. Accordingly,
we recommend that UK ISPs, through Ofcom, ISPA or another appropriate
organisation, immediately start the process of agreeing a voluntary code for
detection of, and effective dealing with, malware infected machines in the UK.

2. If this voluntary approach fails to yield results in a timely manner, then we further
recommend that Ofcom unilaterally create such a code, and impose it upon the UK
ISP industry on a statutory basis.

We conclude that much of the problem with illegal sharing of copyrighted material
has been caused by the rightsholders, and the music industry in particular, being
far too slow in getting their act together and making popular legal alternatives
available.

We do not believe that disconnecting end users is in the slightest bit consistent with
policies that attempt to promote eGovernment, and we recommend that this
approach to dealing with illegal file-sharing should not be further considered.

We think that it is inappropriate to make policy choices in the UK when policy
options are still to be agreed by the EU Commission and EU Parliament in their
negotiations over the “Telecoms Package”. We recommend that the Government
terminate their current policy-making process, and restart it with a new
consultation once the EU has made its decisions.

Let me repeat one of those conclusions. ” We conclude that much of the problem with illegal sharing of copyrighted material has been caused by the rightsholders, and the music industry in particular, being far too slow in getting their act together and making popular legal alternatives available.

So this time I thought to myself, definitely caught behind. But the Secretary of State for Business, Innovation and Skills had other ideas.

He’s announced that formal three-strikes legislation will be in place for April 2010.

Not out.

But it isn’t time for us to give up hope as yet, despite the presidentially non-consultative hide-head-in-sand approaches in evidence. Very recently, I saw the possibility of help from a most unlikely quarter: Disney.

Here’s a quote from the CEO of Disney:

The business model that underpins the movie business is changing,” Bob Iger told the Financial Times in an interview published on Monday. “If we don’t adapt to the change there won’t be a business — that’s my exhortation to my team.”

The newspaper said Iger advocated a fundamental rethink of the costs associated with movie production and marketing.

And I thought to myself. What a shame. Britain could have led, should have led, the world in a complete rethink of the principles, practices and legislation required for a thriving digital world. Instead, we’re about to take ten steps back while Disney, of all people, move forward.

Good for Bob Iger. Good for Disney. Someone has to change.

And, as I saw the wicket spreadeagling, I turned to the Secretary of State and said, wryly, “Nearly had him that time”.

Credits: Trueman photo hanoiswans; leg-before-wicket photo Wikimedia Commons; caught behind photo cricketweb.net; wicket spreadeagled story tribuneindia.com.