Dana Blankenhorn

Bad News is Good News

A few weeks ago, I noted how the “bad news” at Snap, Twitter and other social media companies can easily be interpreted as good news.. If people are no longer interested in rage tweeting, they could be becoming more thoughtful. They could be reserving judgment. They could have found real lives.

The same is true, doubly so, with the recent “problems” at chip stocks like Nvidia, Micron and Qualcomm. Prices for commodity chips are falling. The “chip shortage” is easing. In the near term it means lower profits for big chip companies. Sell, sell, sell.

But it also means falling prices and more supply for companies that use chips. It means car prices could start declining. It means the Machine Internet can get a fresh start.

The Streaming Crash

A small fall in subscriber numbers sent Netflix stock down 25% overnight in what stock market observers are calling the “streaming crash.”

All the companies involved in streaming crashed in sympathy. Paramount was down 11%. Warner Discovery dropped 5%. Disney was down 4% and even Amazon lost 2%.

As usual I was early to this. I wrote about the streaming crash in 2019.  “The limits to the streaming market are time and, to a lesser extent, money,” I wrote. If you were reading closely, you’d know the most important limit is time.

The Metaverse Problem

Back in 2009, I covered Taiwan’s CompuText show, alongside my son, then 18.

We spent four days wandering the halls, on the hunt for “desktop Linux.” We eventually found Linux Foundation head Jim Zemlin addressing a small group in a corner of Taiwan 101, the city’s tallest building, miles from the show’s main hall. It’s become something of a joke between us since then.

The point is there was no desktop Linux. You can argue that Google Android is Linux, or that the Mac OS is based on a Linux, but these aren’t truly open systems. Linux is, and was, primarily a server technology.

This is important to note when thinking about Web 3.0, or the Metaverse, as the buzzword advocates call it. They say it’s the biggest thing since the Web was spun, nearly 3 decades ago. It’s certainly the biggest thing since the Cloud, which Amazon began selling 15 years ago.

Unbundling Cable

Over the weekend, Google briefly carried through on its threat to remove 15 Disney channels from its YouTube TV cable replacement and cut the price by $15/month.

Coverage focused on the brevity of the cut-off. In the process they missed the story.

This is the first time anyone has successfully unbundled cable TV. Previous threats by programmers to cut off cable operators succeeded because customers complained. The operators never cut their prices in response, as Google did in this case, and as it threatened to do earlier with Comcast.

Disney’s bluff included the line that disaffected viewers could \buy the “Disney Bundle,” combining its ESPN+, Hulu+, and Disney+ streams, for less than the YouTube price cut. What Google wanted was for Disney to charge it no more than it would cable operations of similar size. They likely got that.

Controlling Data for Good

When we talk about control over data, we start with metadata. These are vast stores of data on what people are searching for online, data about data.

Google and Meta Platforms (Facebook) use metadata to control advertising. Metadata lets advertisers reach specific consumers for the same price as the general network. The aggregation and organization of markets, once done through journalism, no longer pays.

The same techniques, applied to content, led us to Trump. Victims stay within a walled garden of propaganda. Facts can never get in. People don’t just vote based on this. They refuse vaccines, buy guns, and die. He who controls the data makes the rules.

The Iron Triangle

For 200 years, since the Monroe Doctrine, Latin America has been ruled by an Iron Triangle of economic oligarchs, religious extremists, and militarists, backed by the veto of the U.S. government.

Democracy and liberty never stood a chance. Even when “leftists” took power, as in Cuba, Nicaragua, or Venezuela, they simply adapted the system. The party became the religion, and the party leaders the oligarchs. The military rules. Power flows from the barrel of a gun.

We teach our kids that America never adopted that system, but we did. In the American South, from 1876 until roughly the mid-1950s. The KKK was the military, the Southern Baptists were the religious, and local landowners were the oligarchs. Textile manufacturers moved south and adapted to it. It was the refusal of northern businesses to go along after World War II that led to its breakup.

Cloudflare and the Cloudless Cloud

The Cloud Czars gained dominance by putting cash flow into cloud infrastructure.

Apple, Microsoft, Amazon, Google, and Facebook now spend billions of dollars each quarter on data centers. They upgrade the ones they have, and they build new ones. This is the cloud world we know.

Cloudflare wants to change that. The company is selling a concept called “Web3,” in which every server can be a node on the cloud network.

The offering is based on distributed technology already used for cryptocurrency like Bitcoin and Ethereum. Cloudflare supports these efforts with gateways. The idea is that distributed software can now support cloud storage for less than what Amazon (for instance) charges to move data out of its S3 repository. It’s in moving data out that Amazon Web Services sees its biggest profits. Cloudflare says it can disrupt that. Amazon calls its storage offering S3. Cloudflare calls its new one R2.

Great theory. Harnessing the edge to take on the center makes sense. Letting anyone with unused space play in cloud markets sounds great. Exporting data with S3 is expensive.

Why Tech Should Buy More Media

Ever since Microsoft tried, and failed, in cable news with MSNBC, tech has been leery of investing in media.

There have been exceptions. Jeff Bezos bought The Washington Post. Marc Benioff bought Time. But these were personal investments, not corporate. They were made for political reasons, not business ones.

The result is that the media remains run by conservatives, by junk men, and by useful idiots. Fox News has been joined by OAN and Newsmax. Local papers are being destroyed by hedge funds like Alden, who are more interested in the tax breaks than the product. CNN, MSNBC, and The New York Times  remain committed to “both siderism,” which allows the right to drive the agenda.

This is threatening the country, the economy and (most important) tech. Billionaires like the Smith family, which owns Sinclair, come from the resource industries. They see labor as fungible. They see the world in black-and-white. They don’t see change and they don’t want change.

Change is what tech thrives on. It’s what tech produces. Brains are the gating factor to technology growth and it’s clear that today’s conservatives hate brains. Otherwise, they would have endorsed the vaccine and wouldn’t have pushed Trump.

A half-century ago the right saw this kind of threat and acted. The myth of the “liberal media" is based on the idea that reporters were professionals, but it didn’t understand how Vietnam was a Cold War activity. It didn’t see the coming resource wars. Only the resource industries, the oil guys and lumber guys and real estate guys, saw that.

Pay for the Clouds

Right now, the roughly $150 billion/year going into cloud infrastructure is paid for with cash flow. Most of that cash flow comes from free services.

It’s ad-supported services that are holding up the free Internet. It’s these ad-supported services that the clouds were first built to support.

The antitrust bills now zipping along in Congress try to end all the perceived “sins” of the Cloud Czars – Apple, Microsoft, Amazon, Google and Facebook. But they don’t answer the big question, which is where new cloud investment will come from if the Czars are broken up.

Amazon can do fine on its own. There is plenty of cash flow coming into Amazon Web Services to support its capital spending. Most of Amazon’s investment these days, in fact, is going into warehouses and transport fleets, which aren’t as profitable. Splitting AWS from Amazon, along with its digital services like Amazon Prime video, the Kindle eBooks, and Alexa cloud-based speaker, would be a stupendous opportunity for investors. It would let AWS grab share from Google and Microsoft because their clouds are tied to software that competes with their customers.

Netiquette: The Issue for 2020

I covered the biggest issue of 2020 back in 1988.

I covered it in two ways.

On the one hand I covered the Electronic Networking Association for Newsbytes.

The ENA featured such cutting-edge minds as Mike Godwin and Joichi Ito. They met online, using software called PARTIcipate. They were communicating across nations and time zones. It was exciting.

They didn’t want to spoil it. They developed rules known as Netiquette to define proper behavior.

Netiquette can be summarized thusly: be nice. Assume goodwill. Be polite. Accept disagreement as legitimate. Don’t lie to make a point. Remain inquisitive and friendly. Understand that the person reading what you “say” can’t read your body language. Account for that.