Dana Blankenhorn

Porn's Changing Role in Tech

Sad, but true. The first industry to get hold of and make money from most technologies is the porn industry.

When you have high-income buyers ready to pay big for what they want, you have a business model that can't be beat. True for porn, true for gambling. While many "early adopters" are geeks who will embrace a technology for its own sake, porn customers are goal-oriented.

So it was porn that pioneered the business model for videotape, porn that pioneered the 900 number, porn that pioneered the DVD and the paid Web site. Attempts to outlaw porn merely act as taxes on this market, just as in every other area.

Now porn is looking at higher capacity DVDs, where there is an ongoing format war between Sony's Blu-Ray and the HD-DVD standard. Sony says it won't sell to pornographers.  Does this mean HD-DVD will sweep the field?

Why Google Goofed in Buying YouTube

A Brazilian judge has demanded that the nation's phone companies and ISPs cut off access to YouTube, because a clip of a Brazilian model (left) making love on the beach keeps popping up there against his orders. 

The words "finger" and "dike" come to mind obviously, but the report also shows exactly why Google should not have bought YouTube in the first place.

Censors seek leverage. Google offers leverage. The Judge could easily extend his ban from YouTube alone to Google generally. So could any other judge who finds something on YouTube they don't want to stay there there.

A quick note. The woman's name is  Daniela Cicarelli and I'm certain the video looks just like any other 20-something having sex on the beach. This obsession with watching celebrities do it is, to my mind, silly. But so it goes...now back to our story.

What Makes An Interest Special?

Charles Martin wrote today pointing to a News.Com story (and discussion thread) on the RIAA trying to use the current lame duck session of Congress to get even more anti-consumer legislation into law.

The RIAA is a classic "special interest." It's narrow, but more important it has money, presence, and the ability to take revenge on those who disobey.

As the price of doing all this has risen, more general interests have been drowned out.

But in an era of Internet Politics, maybe not so much.

Abundance vs. Scarcity

The economics of this decade can be summed up as a fight between abundance and scarcity. (Pictured is the first oil well, courtesy the Paleontological Research Institute.)

Digital goods are abundant, their economics that of abundance. The time and attention of buyers is limited, the products on offer unlimited. So if you can monetize small slivers of that, as Google, YouTube and MySpace do, through truly deep personalization (it's all about you and what you want to know, see and feel) you're going to make money.

In contrast there is oil economics, which the current Administration has been making paramount. Oil is based on an economics of scarcity. The providers have the whip hand, and by manipulating supply they can maximize their value. OPEC does it, refiners do it, integrated oils do it by owning their own dealers.

The producers of "copyright" goods -- movies, TV, music, books, software, etc. -- all depend on an economics of scarcity. You've got to see that movie now, you've got to turn on the TV to this channel at this time, you've got to get the #1 hit and be the first on your street to read the #1 book. You want to run the new Windows applications, so you need Windows now, and new hardware to run it. This makes the supplier of the good king, able to name their own price by manipulating supply -- just like an oil company. And it's good to be the king.

Media Business Model Dying

Given what I wrote recently about the problems of media, and the differences between H-P and GE, I reckoned it would be prudent to comment on the NBC lay-offs. NBC is owned by GE.

Most comments on this have come from media insiders, who have an auitomatic bias for, and affection for, the operation of the business. They don't see it through the gimlet eye of the accountant. For that reason, ignore what anyone in the media tells you about this. They want NBC to succeed. They want to work there. Real businessmen don't care.

For generations GE has had a rule that guides its actions toward subsidiaries.  You grow earnings by 15% per year, or you're gone. There are two ways to do this. If you grow revenues, and keep operations lean, your earnings will grow. If you can't grow revenues, you better cut expenses.

What GE is saying here is that media revenues can't grow 15% per year, so it's going to cut. The media business model is broken.

Note that I'm not just talking about TV here. NBC Universal is more than TV. I'm talking about all media -- music, movies, the lot.  General Electric has decided these are no longer growth businesses.

What might it do instead? A lot of things. Jack Walsh liked finance. Jeff Immelt calls his strategy "ecomagination," by which he means green energy and energy-saving technologies.  I think the key word here is technology. Technology is still a fast-growing business. Media is not.

This Week's Clue: Out Everybody

Update: When I wrote this, over a week ago, I honestly had no idea there was a closeted gay predator on Capitol Hill. But I can't say I'm surprised.

Following is the lead item in this week's issue of my free weekly e-mail newsletter, A-Clue.Com.

Unlike the items you see here, A-Clue.Com columns are usually written at least a week before they are published. They have to stand the test of a little time.

You can subscribe to A-Clue.Com by following this link. Enjoy.

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Let me start this week by saying I'm straight, married, happy with myself, but that my best friend in college was gay. His coming-out changed me, because I still loved him afterward.
Still do.

History tells us that gays who are honest with themselves, and others, pose little threat to society, no matter how much some hate groups may disagree.

Closeted gays, on the other hand?

Very dangerous. That makes this an issue for straights as well as gays. Finding, naming, shaming, and preventing evil are in everyone's interest. Self-hating, closeted gay people do tremendous damage. Self-hating closeted people no matter what their trips cause tremendous damage.

Back when I was young the best example of this was Roy Cohn (above). Cohn was Joe McCarthy's chief lawyer. He came up at a time when to come out meant to lose everything you had. He was a bully.  While his homosexuality was an open secret, and he even went to gay bars in the 1970s, he never admitted to the AIDS which killed him in 1986. His life was fictionalized in Tony Kushner's Angels in America. 

He was an archetype. He hated himself and so practiced hate on others. Pretty good definition of evil in my book.

 

On Evil

Everyone knows Google's corporate slogan – Don't Be Evil.

Note, it's not don't do evil. It's not an absolute. We often face hard choices as adults and corporations. Absolute good vs. evil choices are rare.

Still, the effort is worthwhile, on the bottom line. Because Google is perceived as being ethical, as doing its best not to “be” evil, a lot of people (me included) cut it a lot of slack. And the more slack you earn as an Internet company, the more credibility you have, the more money you can make.

It should also be noted that evil is a relative variable here. Evil compared to what?

Well, Yahoo for one.

A decade ago, Yahoo made a Clued-in move when it bought Seth Godin's company, Yoyodyne, and made him (briefly) its chief marketing yahoo. But Godin's ethics soon grated on the higher-ups, and Yahoo has been in the ethical gray area ever since.

I would argue that this, along with its decision to become a “media company” or portal, taking its eye off the search ball, enabled Google to come into being in the first place.

But that's how Yahoo defines itself, as a “media company.” It now has a market cap of $35 billion. Are they glad they dissed Godin and do business with slime? Maybe they are. But Google is worth almost $124 billion.

 

Hollywood Remake Time: Meet John Doe

You know how Hollywood loves to remake old movies, because it's cheaper than coming up with new stories?

Well here's one for our time. Meet John Doe.

This was Frank Capra's thinly-veiled attack on fascism, which he cleverly chose to set in the USA. Gary Cooper is John Doe, a man created by newspaperwoman Barbara Stanwyck as a circulation gimmick. Edward Arnold plays D.B. Norton, the newspaper owner, who wants to use Doe to make himself dictator.

How easy to update is that? Just turn the newspaperwoman into an afternoon anchor, set it at Fox News, and you don't even have to change the script.

The game for today is setting the new cast. For that let's play the I want, I'll take, I got game. You know that one. I wanted a big star, I'll take a TV star, I got me a nobody. That way we have some budget options:

The 1966 Game: Who's Jane Fonda Now?

This one is a real poser, because Jane Fonda -- as in f%&@@ Jane Fonda -- did not exist in 1966.

This was the Jane Fonda that existed in 1966.

Fonda was, in 1966, one of the hardest working, hottest, most popular young actresses in Hollywood. She was, after all, Hollywood royalty -- daughter of Henry, sister of Peter. She was coming off one of her biggest box office successes, as Cat Ballou in 1965 (from which this is taken). And the next year she would have another great success with Robert Redford in Barefoot in the Park.

The year 1966 saw the release of three of her films, however, all of them forgettable. (Great roles are rare.) These were The Chase, The Game is Over, and Ash Wednesday.

I'm certain, however, that you were thinking of THAT Jane Fonda, the 1972 Jane Fonda. From 1966 her trajectory was turning ever-more leftward. Her father had been a shining liberal hero, a man whose image was defined by the FDR Political Thesis, and she was headed toward the logical (in retrospect) extreme end of that arc, her own date with extremism. From Barbarella to They Shoot Horses, Don't They to Klute, she was playing increasingly hard-edged roles which represented everything the Nixon Revolution meant to crush.

And, with her 1972 trip to Hanoi, she gave them all the ammunition they would ever need. Even in 2006, an attempt to honor her in her adopted home state of Georgia failed because of Republican opposition to that f%$&@&@ Jane Fonda.

So who's Jane Fonda now?

The Economic Laws of Content

Japanese researchers report that when broadband is fully available, people download only one-third more than they upload. (Picture source.)

This leads us to the assumption that folks are prosumers, producing as much as we consume, and that thus all users really are (and should be) equal.

But what are we really doing with the resource?

There is what I call an economic law covering content. It's a sort of inverse-square law on both the production side and the consumption side of broadband.

1. Almost anyone can write. It's also low bandwidth. So it's very symmetrical. And what someone defines as good (or bad) is so subjective there is an audience for almost everyone. (Even me.) Again, it's symmetrical.
2. Radio takes more people to do right. It's higher in bandwidth. Less symmetrical. And less of it is also "good," so again, less symmetrical.
3. TV takes even more people to do right. It's even higher in bandwidth. Even less symmetrical. And, again, less of it is "good." Also, it wears on its audience quicker.