Archive for June, 2010

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Fashion: A Remix Economy

Listening to Russ Roberts of EconTalk discuss his wardrobe and his relative cluelessness with regard to fashion, my thoughts turned to software engineers. I wondered if both economists and software engineers believe that there’s some kind of optimization algorithm for selecting clothing.

In an episode of EconTalk, Johanna Blakely talks with Roberts about how the lack of copyright protection in the fashion industry turns it into an economy of continuous innovation. There are some interesting lessons here regarding the relationship between originals and copies, remixing and the circulation of design motifs.

Download EconTalk: Johanna Blakely on Fashion and IP

Somehow it seems unlikely that the technology/media business will look to fashion as an inspiration for viable business models. But it’s clear they could learn a thing or two. As you look across the landscape of technology companies, only Apple (despite the fact that Jony Ive never changes his T-shirt), has managed to create a release cycle that in many ways mirrors the major fashion houses. They release new designs annually and then watch the knock-off shops go to work trying to replicate their products. And like the top fashion houses, Apple is driven to be creative, to set the next trend that puts them one step ahead.

The fashion world still honors and rewards the creators of fresh and original looks. Since there’s no regulatory friction hindering fast followers with good-enough copies, the market is filled with cheap knock-offs. Both seem to survive in the ecosystem. One reason for this is that the copies are not digital— they aren’t exact atom-for-atom copies of the originals. Generally, to lower the price of the knock-off, the materials have to be cheaper. In the world of bits, exact replication is just a matter of a few key strokes. There’s no such thing as cheaper or more expensive bits. One of the more interesting trends in fashion is the designer who copies herself. Rather than cede the low-end knock-off market, the designer executes low-end copies of her signature styles for mass distribution through the fast-fashion retailers.

You can learn a lot about the economics of the technology business by simply viewing each of the major vendors as a fashion house.

The Stuff Dreams Are Made On…

We’re inaugurating a new tradition around the homestead, Shakespeare Saturdays. This Saturday we’ll be screening Shakespeare’s last play, The Tempest. In the story, the magician Prospero, and his daughter Miranda, have been stranded on an island for 12 years. Prospero raises a tempest on the sea to cause a passing ship to run aground. Among the passengers are Prospero’s rivals from the time before the island, Antonio and Alonso, King of Naples. It’s in the midst of this wild storm the story begins…

Written in 1610, the play continues to be regularly performed and adapted. The Tempest has also been the inspiration for whole range of work from operas and symphonies to poetry and post-colonial literary analysis. Quotes from the play turn up in the most unexpected places.

Samuel Beckett’s Endgame has the character Hamm speaking a line from one of Prospero’s most memorable speeches: “Our revels now are ended.”

“Our revels now are ended. These our actors,
As I foretold you, were all spirits and
Are melted into air, into thin air;
And—like the baseless fabric of this vision —
The cloud-capped towers, the gorgeous palaces,
The solemn temples, the great globe itself,
Yea, all which it inherit, shall dissolve,
And like this insubstantial pageant faded,
Leave not a rack behind. We are such stuff
As dreams are made on, and our little life
Is rounded with a sleep. …”

Prospero
The Tempest by William Shakespeare

John Gielgud called Prospero his favorite role. He played it many times in the theater, but he was never able to mount a film version of the project. The closest he came was in Peter Greenaway’s adaptation Prospero’s Books.

Caliban is another fascinating character— a beast, a brute, the son of Sycorax, a witch who was also banished to the island, but has died several years before the action of the play begins. Caliban provides the counterpoint to Prospero, where Prospero sees that he must wake from the dream he’s created; Caliban suffers so thoroughly in his daily existence that he cries out to dream again.

Be not afeard; the isle is full of noises,
Sounds, and sweet airs, that give delight and hurt not.
Sometimes a thousand twangling instruments
Will hum about mine ears; and sometime voices
That, if I then had waked after long sleep,
Will make me sleep again; and then in dreaming,
The clouds methought would open, and show riches
Ready to drop upon me, that when I waked
I cried to dream again.

Caliban
The Tempest by William Shakespeare

There are 38 of Shakespeare’s plays and collaborations in existence and there are film versions of most of them. Not every Saturday will be Shakespeare Saturday, but I’m looking forward to immersing myself in a very foreign world that is not so unlike our own.

Real-Time Networks, Man-In-The-Middle, And The Misappropriation Of ‘Hot News’

Google and Twitter have filed a amicus brief with the appeals court on TheFlyOnTheWall.com case. Briefly, at issue is FlyOnTheWall’s near real-time redistribution of investment bank research ratings. Investment bank research departments spend time, money and resources creating stock ratings and price targets. The purpose of this effort is to create an information asymmetry in the market to the advantage of the i-bank’s clients. FlyOnTheWall does not employ analysts and has no research capability, it discovers stock ratings, aggregates and redistributes them in near real time. Since their cost of production only includes real-time redistribution infrastructure, and therefore they can offer their high-value information feeds at a lower cost than investment banks. Subscribers to FlyOnTheWall pay for these aggregated news feeds, they aren’t free. In their testimony, FlyOnTheWall claimed they only gathered information from publicly available sources and only published tweet-sized snippets summarizing the reports.

Google and Twitter make the following argument in their brief:

News reporting always has been a complex ecosystem, where what is ‘news’ is often driven by certain influential news organizations, with others republishing or broadcasting those facts — all to the benefit of the public,

and further

How, for example, would a court pick a time period during which facts about the recent Times Square bombing attempt would be non-reportable by others?”

At issue is the re-emergence of the hot news doctrine, which was originally put in place in 1918 to stop William Randolf Hearst’s International News Service from taking Associated Press wire news stories and redistributing them as their own. The court set forth five criteria to determine whether ‘hot news’ has been misappropriated:

(i) a plaintiff generates or gathers information at a cost;

(ii) the information is time-sensitive;

(iii) a defendant’s use of the information constitutes free riding on the plaintiff’s efforts;

(iv) the defendant is in direct competition with a product or service offered by the plaintiffs;

(v) the ability of other parties to free-ride on the efforts of the plaintiff or others would so reduce the incentive to produce the product or service that its existence or quality would be substantially threatened.

In the case of TheFlyOnTheWall.com the court ruled for the plaintiffs, Barclays, Merrill Lynch and Morgan Stanley, and decided that a 2 hour embargo was a reasonable amount of latency to build into the Network. In the fast-paced world of equity trading, two hours is an eternity. These days trades are often executed in a matter of milliseconds. The enforcement of this kind of rule, however, is problematic. In the brave new world of social media, both individuals and news organizations have interconnected real-time distribution networks. Once bits of information touch this public social network they can spread with breathtaking speed. Twitter, Google and Facebook are currently the media through which this information is dispersed. And each of them can be said to profit by the circulation of high-value information through their networks.

Over the last few days we’ve seen the drama of General Stanley A. McChrystal play out. The events were put into play by a story written by Michael Hastings, a freelancer for Rolling Stone Magazine. The story about McChrystal’s comments began leaking out Monday night. Both Politico and Time magazine posted a PDF of the Rolling Stone article to their web sites before Rolling Stone. Rolling Stone asked the sites to remove the PDF. The New York Times reports:

Will Dana, the magazine’s managing editor, said that the magazine did not always post articles online because it could make more money at the newsstand and that when it did, the articles were typically not posted until Wednesday. But other news organizations made that decision for him.

The McChrystal story is an interesting example of the ‘hot news’ doctrine. Rolling Stone magazine puts out 26 issues of its print magazine per year. Even before the issue hit the newsstands, it dominated cable news, has been fully reported in the New York Times and resulted in McChrystal’s resignation and replacement by General David Petraeus. One could argue that Rolling Stone should have a business model that allows them to benefit from these kind of real-time events. And it’s quite possible that the broad dissemination of this story will lead to a significant increase in newsstand sales and web site traffic.

In this case the ‘hot news’ was so hot that the story itself became a story. Major government policies regarding the conduct of the war in Afghanistan had to be decided in real time. There was no hesitation, no waiting for Rolling Stone’s newsstand business model to play out. By the time we finally see the printed magazine it will have become an artifact of history. With the advantage of hindsight, we may even wonder why the headline writer put McChrystal’s story third after Lady Gaga’s tell all and the final days of Dennis Hopper.

The question about the ‘hot news’ doctrine isn’t going away; and the decision of the appeals court will be closely watched. In the meanwhile, the marketplace is searching for a solution to the fact of real-time aggregation and relay of digitally-copied work product. The return of the pay wall is an attempt by producers of stories about the news to create a firewall around their work product. Most corporations employ a firewall to keep their valuable internal discussion from reaching the public networks. Limiting access of your product to paying customers isn’t a new idea. However, when your work product is a story about news events or ideas encoded in digital media, creating reliable access controls is problematic. Where in the early days of the Network the focus was on direct access and disintermediation of the middle man; now the economics favor the man-in-the-middle. Meta-data can be sold at a fraction of the price of the data to which it points. The complex ecosystem of ‘the news’ is looking for a new equilibrium in which both data and meta-data can flourish.

Vanilla Flavored: The Corporate Web Presence

The corporate web site used to have a brilliant excuse for its plain and simple execution. It needed the broadest possible distribution across browsers and operating systems. All customers, regardless of the technical specs of their rig, needed to be served. Some basic HTML, a few images, a conservative dollop of CSS and javascript. Transactions and data are all handled on the back end with a round trip to the server for each and every update of the display. And the display? Order up a screen resolution that serves 90%+ of the installed base as reported by server logs. Make that 800 x 600, just to be sure. This down level, conservative approach has been baked into enterprise content management systems and a boundary has been drawn around what’s possible with a corporate web presence. Mobile web was even simpler, a down level version of a down level experience. Rich internet applications (RIAs) were put into the same category as custom desktop apps, generally not worth the effort.

Back in 1998, Jakob Nielsen reported on the general conservatism of web users:

The usability tests we have conducted during the last year have shown an increasing reluctance among users to accept innovations in Web design. The prevailing attitude is to request designs that are similar to everything else people see on the Web.

When we tested advanced home page concepts we got our fingers slapped hard by the users: I don’t have time to learn special conventions for your site as one user said. Other users said, Just give it to us plain and simple, using interaction techniques we already know from other sites.

The Web is establishing expectations for narrative flow and user options and users want pages to fit within these expectations. A major reason for this evolving genre is that users frequently move back and forth between pages on different sites and that the entire corpus of the Web constitutes a single interwoven user experience rather than a set of separate publications that are accessed one at a time the way traditional books and newspapers are. The Web as a whole is the foundation of the user interface and any individual site is nothing but a speck in the Web universe.

Adoption of modern browsers was thought to be a very slow process. In 1999, Jakob Nielsen insists that we would be stuck with old browsers for a minimum of three years. Here was another reason to keep things plain and simple.

The slow uptake speeds and the bugs and inconsistencies in advanced browser features constitute a cloud with a distinct silver lining: Recognizing that we are stuck with old technology for some time frees sites from being consumed by technology considerations and focuses them on content, customer service, and usability. Back to basics indeed: that’s what sells since that’s what users want.

Over time, a couple things changed. The web standards movement gained traction with the people who build web sites. That meant figuring out what CSS could really do and working through the transition from table-based layouts to div-based layouts. Libraries like Jquery erased the differences between browser implementations of javascript. XMLhttpRequest, originally created for the web version of Microsoft’s Outlook, emerged as AJAX and turned into a defacto browser standard. The page reload could be eliminated as a requirement for a data refresh. The Webkit HTML engine was open sourced by Apple, and Google, along with a number of other mobile device makers, began to release Webkit-based browsers. With Apple, Google, Microsoft and Mozilla all jumping on the HTML5 band wagon, there’s a real motivation to move users off of pre-standards era browsers. Even Microsoft has joined the Kill IE6 movement.

The computing power of the cloud combined with the transition from a web of documents to a web of applications has changed the equation. Throw in the rise of real-time and the emergence of social media: and you’ve got an entirely different ballgame. With the massive user embrace of the iPhone, and an iPad being sold every three seconds, we might want to re-ask the question: what do users want?

Jakob Nielsen, jumps back to 1993 in an effort to preserve his business model of plain and simple:

The first crop of iPad apps revived memories of Web designs from 1993, when Mosaic first introduced the image map that made it possible for any part of any picture to become a UI element. As a result, graphic designers went wild: anything they could draw could be a UI, whether it made sense or not.

It’s the same with iPad apps: anything you can show and touch can be a UI on this device. There are no standards and no expectations.

Worse, there are often no perceived affordances for how various screen elements respond when touched. The prevailing aesthetic is very much that of flat images that fill the screen as if they were etched. There’s no lighting model or pseudo-dimensionality to indicate raised or lowered visual elements that call out to be activated.

Don Norman throws cold water on gestures and natural user interfaces by saying they aren’t new and they aren’t natural:

More important, gestures lack critical clues deemed essential for successful human-computer interaction. Because gestures are ephemeral, they do not leave behind any record of their path, which means that if one makes a gesture and either gets no response or the wrong response, there is little information available to help understand why. The requisite feedback is lacking. Moreover, a pure gestural system makes it difficult to discover the set of possibilities and the precise dynamics of execution. These problems can be overcome, of course, but only by adding conventional interface elements, such as menus, help systems, traces, tutorials, undo operations, and other forms of feedback and guides.

Touch-based interfaces built around natural interaction metaphors have only made a life for themselves outside of the research laboratory for a few years now. However I tend to think that if these interfaces were as baffling for users as Norman and Nielsen make them out to be the iPhone and iPad would have crashed and burned. Instead they can barely make them fast enough to keep up with the orders.

The classic vanilla flavored corporate web site assumes that users have old browsers and don’t want anything that doesn’t look like everything else. All new flavors are inconceivable without years and years of work by standards bodies, research labs, and the odd de facto behavior blessed by extensive usability testing. There’s a big transition ahead for the corporate web presence. Users are way ahead and already enjoying all kinds of exotic flavors.

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