Dana Blankenhorn

Word of the Year: Enshitification

Enshitification is what happens when principles go out the window.

Principles like service, like honor, like honesty, like “a little looking for the other fella,” as James Stewart said in Mr. Smith Goes to Washington, are what make civilization possible. When they disappear, as they have over the last several years, it doesn’t matter much what your system is or what your laws say. Those with power will take it, and only the strongest will survive.

This is mostly discussed today in the realm of politics. Words have lost their meaning and are often used to mean their opposite in the name of victory. Facts mean nothing and are simply denied in the name of power.

Sell Nvidia, Buy Amazon

These are heady days for Nvidia, and profitable ones for my retirement account.

I bought 100 shares of Nvidia about 5 years ago, which soon turned into 300. I sold one-third of them to get my money out, but the remaining shares are worth nearly $500 each.

Nvidia is the chief arms merchant to the cloud. Its GPUs are essential to AI applications. More important, so is its software. It’s the Nvidia software stack that keeps chip rivals like AMD and Intel from gaining traction.

I also own stock in Amazon.Com If you’re into AI, Amazon.com is the better opportunity.

While Nvidia is at the front-end of AI, Amazon is at the back end of it. It’s Amazon that will reap AI’s rewards, in its supply chain, in its warehouse operations, and in its media business. Imagine if you could speak to Alexa casually and get real answers.

Amazon’s AWS cloud still has one-third of the market. Its approach in AI is to offer a wide range of tools, rather than insist companies buy any particular one. This makes sense to me.

Twitter to Mastodon

Over the last months I’ve been spending a lot less time on Twitter, now called X, and more time on Mastodon, its open source doppelganger.

The difference between the two can be summed up in two words. No algorithm.

When you use Twitter, or any commercial social media site, an algorithm encourages you to stay online. You like fluffy bunnies? Here are posts on fluffy bunnies. You can quickly fall into a fluffy bunny rabbit hole, where fluffy bunnies are all that matters, and anyone who doesn’t like fluffy bunnies is some sick pervert. This is especially true on TikTok.

At Twitter, this is found under the tab marked “for you.” The tab doesn’t exist in Mastodon. Instead, there are other tabs. “Home” is like Twitter’s “following” tab. Federated shows the most recent posts on any site, no matter where they come from. You can input a hashtag to get news on any topic of interest, like #Ukraine. There’s also a local tab featuring messages placed on Mastodon server you are part of.

This last is important. There is no central control in the “Fediverse,” which includes many other social services, including a Facebook clone and an Instagram clone. Instead, anyone can spin-up a server or “instance” and choose who to connect or “federate” with. In practice, while Meta’s “Threads” is compatible with Mastodon, many Mastodon servers won’t link to it, fearing the force of the algorithm, the coming firehose of content, or just Mark Zuckerberg’s right hook.

The Coming Disney Breakup

Walt Disney Co. is in play. (I remember getting one of these sent to me after the Disney Channel's launch in 1980.)

CEO Bob Iger fired his replacement and can’t find another one. The company is killing its streaming service by reducing content and raising prices. Its deal with Penn Entertainment, directly running a sportsbook, means ESPN is now incompatible with the main company’s business model. The resorts business is tanking, thanks mainly to climate change.

My guess is that the entertainment company will be sold to Apple, probably within a year. ESPN, ABC, and the parks will be spun out as separately traded companies. It might happen all at once.

The only reason to keep the whole thing together was “synergy.” A bad year for one division might be offset by a good year in another. The combination would then be a better investment than the parts.

But that’s not working. The movie business is dying. Disney is doing all it can to hasten that by refusing to bargain with its unions. If management and labor aren’t partners, you can’t do business.

The TV business was dead years ago. This includes cable.

The resorts business is increasingly divorced from the rest of the company.

The Internet is doing to the streaming business what it did to print. Paywalls take away 90% of your audience. Advertising rates keep declining because there’s too much free content. Live sports are viable but the billionaires who control teams and leagues keep pricing fans out of the market. If it’s all just about money, the players will gravitate to whoever offers more of it.

40 Years an Internet Client: A History

I have been using the Internet since moving into our present house 40 years ago.

It doesn’t seem that long. It was a lifetime ago.

To the right is my original set-up. It cost $2,799. The $300 modem ran at 300 baud. That was enough in a text Internet era. I used MCI Mail to file stories with those editors advanced enough to take them that way. (MCI printed them for the rest.) I still remember a 1989 Tokyo trade show where I used my TRS100, which also had a 300 baud modem, to send copy to San Francisco, then London. Good times.

Over time modems got better. My 300 baud became a 1,200 baud when I switched to an IBM PC. Then there was a 9,600 baud unit I got for a PC compatible later in the decade. Eventually I even had one with a claimed speed of 56,000. Its maker tried to support the phone companies’ ISDN efforts and went bankrupt.

Threads and Open Source

The Clouds were built with open source.

What’s now Meta Platforms got its start not with the “social network” of Facebook, but with the Open Compute Project. It’s an open source platform for building hyperscale data centers at minimal cost.

Thanks to Open Compute, Meta owns its own infrastructure. It also has thousands of programmers on staff, whose job it is to bring traffic to that infrastructure. But even with Threads, Meta didn’t forget where it came from.

Threads is being built to support ActivityPub, the open source system behind Mastodon and what’s called the Fediverse.

Each Mastodon server will shortly have a choice, whether to connect to or “federate” with Threads. Some will. Some won’t. If you don’t like the decision of your instance’s admin, you can choose another instance that meets your needs. Or you can set up your own.

In short, you don’t need Threads. Its only advantage is its scale since it will use Meta infrastructure. That’s also its disadvantage. It’s being built to collect data and monetize it. Mastodon isn’t.

The degree to which Cloud Czars like Meta and its four peers – Apple, Microsoft, Google, and Amazon – support the open source ethos they’re built on is always an open question. They will go back-and-forth on it, adding support here, withholding it there, based on their own business requirements.

Another Opening, Another Show

In my 45 year reporting career I have seen perpetual change.

I have also seen enough booms and bubbles to detect their pattern.

I am old enough now to have witnessed the PC boom, the networking boom, the Internet boom, the SaaS boom, and the cloud boom.

We’re now in the early stages of a sixth boom, the AI boom.

Here are some things I have learned from those previous booms, and busts.

First, second-mover advantage. Everyone talks about getting there first. It’s more important to get there right, to understand the value you’re creating and ignore distractions. There were dozens of PC companies in the 1980s, and hundreds of software companies back then that are no more. There were dozens of search engines before Google.

Second, do one thing right. That’s the secret of Apple. It can be hard to figure out what that one thing is. It changes. But once you find it, don’t let anyone distract you. Also, think about what’s under your hood, not just what you’re selling. If you’re wrong, the market will tell you.  

Third, don’t let bureaucratic success lead you to think your shit doesn’t stink. AT&T and IBM built vast internal structures, where individual success lay in believing their own press clippings. They thought they could see the future by looking up their own assholes. Never look in, always look out.

Death of Old Hollywood

Hollywood was born 110 years ago based on the control of distribution channels.

The theaters made the films. The “studio heads” all started as theater owners.

Since then, control over distribution has determined the industry’s direction. When the Supreme Court took away the theaters’ power, it transferred to TV networks. Then it went to cable.

Now it’s in the hands of the Cloud Czars.

I’ve been writing about this since 2019l. Apple, Amazon, Google and (eventually) Meta will control our entertainment options because clouds control distribution. Microsoft may join them, but they were so burned by their efforts at the dawn of the Internet Age that it will take time.

The companies that became heirs to the studios made the previous jumps, to the small screen and then the multi-channel screen. They haven’t made this one. They don’t own clouds. The survivors will be those who can sell out.

Media is Community

The destruction of the media by social networking was self-inflicted.

It was caused by publishers forgetting what their business is about.

They thought it was about advertising.

Here’s what I was taught in 1978, at Northwestern’s Medill School of Journalism. Organize and advocate a place, an industry, or a lifestyle. Sell ads against that audience at a premium price. Demonstrate to businesses how your paper reaches their target. Profit.

It’s this misunderstanding that led journalism astray when the Web was spun, a generation ago. I saw this coming and warned against it as loudly as I could. I argued with my teachers that the Internet would create more jobs for journalists over time.

Save the Kindles

You can be comfortable in a big company. But you can also miss opportunities because they don’t look big enough.

Take Amazon.Com. They’re on track to bring in $500 billion this year. About half will be in merchandise sales. The other half will be in services of various kinds. The stock fell after earnings because the cloud unit projected slower growth, some of it driven by its own effort to help customers lower their cloud costs, some by the cost of adding AI software to AWS. Overall, Amazon stock is a buy.

My problem is Amazon has become such a sprawling business that some divisions are just too small to merit attention.

Take the Kindle book division. This is funny because Amazon started as a bookstore.  

I like the Kindle. An e-book reader is lighter than almost any book. You can use it with the lights off. A Fire Tablet can cost just $40 and serve as a personal TV. You can get refurbished Kindle readers dirt cheap.

E-books make printed books seem an environmental disaster. E-books also save money. Amazon offers a $10/month library service called Kindle Unlimited. I consider it a bargain. It offers lots of e-books at $1 to $3.

But in all the efforts by some states to ban books and close libraries, you haven’t heard a word from Amazon. That’s because the Kindle business is so small, by Amazon standards, that the company would rather keep quiet than pursue an opportunity that might be controversial.