Business Geek

A key factor that will be returned to a lot in the next few posts will be the effect of specialisation in the markets businesses interact with. As a general rule specialising is more efficient than trying to address multiple markets or tasks. While this is by no means a universally applicable rule, it is a key factor that has driven our advancement societally and personally.

Essentially if we in a western culture needed to produce all of the things we posses and what we consume there is really no chance that we could manage. In fact if we needed to produce, hunt and gather all of what we possessed and consumed we would struggle to reach even a 2nd world standard of living. Some reality TV programs show this to great effect.

Human advancement has been driven by specialisation and community. Look at food as a basic example. A person that is just farming produces much more than one that hunts and farms. A plot of land devoted to one type of crop, or a few complementary crops produces more for the effort than a mixed crop. The downside of this is that there is less variety in what is produced which would not make for a healthy diet. If one person farms and one hunts though, they can share the produce between them so both get more in total and still have variety. A village of specialists can produce a lot with a greatly varied diet.

Our modern capital market is an extension of this basic community food sharing economy. Each of us works in a specific area to produce something in the chain of goods to people. By being highly specific we are able to be highly efficient which enables a higher level of consumption. This also allows us to actually have free time in which to fit entertainment and relaxation, enabling these markets to even exist.

Specialisation has a limit to the benefit it can deliver. In terms of how people work getting too specific can remove some of the interest in the work, which has a negative effect on productivity. Being too highly specialised also hinders a person or companies ability to shift to suit changing markets and situations. There aren't that many positions still available for telegraph operators.

This perspective is key to the thesis I am developing here and is how the four markets get tied together. The environment is important by simply being there as apart from energy everything we possess and consume must come from the environment. As a species we crave companionship and family, we are safer and happier when we have other people we can relate to and depend on which creates a community. The efficiency of specialisation creates the opportunity for a labour market within a community. A capital market is one way, and the best way we have found to date, to track and reward participation in the labour market. Over time this has grown to become a market in its own right with specialist labour that devotes itself solely to the movement of capital.

Over the next posts I will expand on the previous paragraph giving some more detail on the four markets.

Business Geek is changing focus slightly. Over the last couple of years some ideas have been coalescing in my head which are now formed enough to start journalling them in a way that can be shared with others. This blog will be that vehicle. As I explore the paths that my theories and ideas take me I will be posting them here. I will also intermix this with commentary on specific news items or topics that extend or demonstrate those ideas.

These ideas have already driven much of the analysis and commentary that I have been making here and on GNC, which is why this will only be a focus shift rather than a radical change. Previously the news drove the ideas; now the ideas will drive the news. My experience is in IT and this will continue to be the greatest source of stories that I cover or comment on. Focusing on the theory though will also mean topics covering economics, business and politics as well.

The idea that companies should be run exclusively for the benefit of the shareholders is misguided. While we intuitively know that a company (or government for that matter) cannot thrive if every decision it makes considers immediate shareholder return exclusively, our legal system impels organisations to make this their prime objective. This method of corporate governance did work satifactorily for a long time though, and many companies still continue to operate well and ethically so what has changed? I believe the answer comes down to focus and the many ways that drive company executives to objectives outside of long term stability.

My career revolves around solving problems and experience has shown me that problems occur when things move. From a technical perspective its the moving parts that fail first, they slowly shift from the path they should take until they lose track of what they should be doing. From a business and communication perspective problems occur when goals, strategy or environments change and/or when different people have different understandings of what the process and outcomes are. These problems are solved by getting everything back to a stable base, making sure we all understand what we should be doing, confirming that what we will do helps us towards our goals and then get back to work. This demonstrates the root of what I believe is off track with our capatalist society.

We have lost track, both as individuals and as a society, of why company structures exist and what we hope to gain from them. As a result it is difficult for us to evaluate company performance in an objective way. As a result we sometimes use measures that should be proxies for other factors as absolute performance measures. This is to our collective detriment.

The most misused proxy method is money, which is often used as the ultimate arbiter of corporate success and becomes more problematic the shorter the time period that change in money occurs. While we explicitely operate within a capital market, companies actually operate in 4 different marketplaces. Capital is one, and the others are labour, society and environment each of which is greatly important to company success. While all can, and are, related back to capital measures to varied success it is important to realise that they are not completely translatable, hence why using capital as a total substitute can cause problems.

The labour market is not just the economics of hiring, firing and contracting. Companies are also a market for individuals to make best use of their skills and efforts, trading them for the goods they need to survive and enjoy themselves. Companies that assist their employees to find and enhance their talents will do better than those that don't.

The community should be the prime focus of any corporation. I will discuss this in great depth in future posts, the core reason for collaborative effort is to allow the community to advance. If we still had to produce, hunt or gather everything we consumed ourselves we could never sustain anything like our current standard of living. The community of concern for a company is whatever community they engage with as customers, suppliers and staff.

Environment is justifiably getting a lot more focus in corporations, press and government. Thinking in short terms will use up resources that cannot be replaced. Balancing the effect of our manufacturing process so that the inputs and outputs balance in environmental terms.

This describes to raw basics of the thesis which I will develop. I do not believe that the problems with our systems are profound or based on evil intent and an re-examination of what we as individuals and as a community we can improve our position. Upcoming posts will expand in detail as well as make commentary on specific examples and document any research I do on specific ideas or companies.

I finally started to play around with Twitter in recent weeks and am.no more convinced there is a viable business model there than before I signed up. Three simple reasons for this, the infrastructure required to provide the service costs more than the value it provides; advertising based revenue models are inherently difficult to sustain and; there are two many competing methods for users to get the same value.

Sending a tweet out to each follower when you send out an alert in a rapid time scale is no simple thing. There is a lot of database activity required and the requests from the twitter web pages and from the 3rd party twitter applications. For all this activity the overwhelming majority of these twitter posts though they will never be read by a large proportion of the people that receive them. Even the ones that are read are usually of limited value. There are a number of high profile people that can increase their connection to their audience which are the minority. Consider for yourself how much you would be willing to pay for any of the twitter messages you receive. If Twitter were to go to a paid service I would predict that there would be very few people that would be willing to pay.

I have made no secret that I am not a fan of sdvertising based revenue models. The theory that the value of a company can be calculated by the number of users, and therefore the potential advertising exposure, is fataly flawed. There is a large gap between the number of users and getting advertising revenue. Firstly the company needs to have a method to get advertising to the users in a method that will get seen. The company then needs to convince advertisers that they offer value. After all this, advertising on the service must not compromise the service it offers or alienate the users.

For information based services, which Twitter essentially is, then advertising becomes a more unlikely proposition. For people to actually use an information source they must trust it. In this environment advertising must be very carefully implemented, fully disclosed and never confused with actual content. As soon as the line between content and information becomes blurred trust is lost and the service loses users. Loss of users is particularly dangerous for Twitter given its social connection status. Having to be careful with ads not only makes the process difficult but also limits the number of advertisers that Twitter could attract. Some advertisers would only be interested in the medium if it was possible to blur the line between information and ads. A smaller pool of buyers will directly result in lower price and therefore revenue.

And with the service that Twitter offers there are many other ways that the same ends could be acheived. Most of the other social networks offer this type of functionality and to completely compete with Twitter would only need to add a "light" client that would allow announcements only subscribers to a feed. More of a threat however is the instant messaging services. Twitter is really very similar to these services but in a broadcast rather than directed mode. I would expect to see the IM cliects start to add this type of functionality at some point. These services can offer greater value as they also connect to email services as well. Using MS messenger as an example, it already has grouping functionality which would allow users to set up specific groups for notifications rather than regular IM. Adding a broadcast function would allow Twitter like posts to be sent to those broadcast groups. There is a lot more power and functionality with this model, and the service has already proven it can support advertising.

While I can see what some people like about the service I cannot say that I see a bright future for the product as it stands. I believe it will be very hard for them to turn this into a revenue generator. The most likely scenario is that one of the IM vendors will buy them so they can roll the user base over time into their IM community where they can actually derive some value from them.

It's very easy these days to lose your life to work. With the demands that most companies place on their workers these days more and more people are finding themselves travelling more and spending more time at the office. While this is occasionally inevitable, it is important to keep work in balance with your personal life. Its a trap that many young people fall into, and I fell into myself, the misperception that the greater the volume of work you produce and the more people you try and please the faster your rise in the company will be. While it may sometimes appear that this is the case, learning how and when to say no can actually be a more powerful tool in building a career than saying yes all the time.

The problem with "yes" is that it has diminishing returns, the more you use it the less valuable it becomes. If you get known as someone that always says yes there are four things that will follow.
1 - It's human nature to take the simple option so your level of work will increase as people will ask more things of you.
2 - The quality of your work will decrease as you become overloaded, in particular follow up actions and deadlines will start to be missed, which will not be good for your reputation. This will lead to the importance of the tasks trusted to you will decrease.
3 - When you are seen as an 'easy touch' and the person to load any unpleasant task on, people respect for you will drop. While they will still like you and probably even give you good feedback or ratings, they will not see you as someone to move up the ladder.
4 - Your quality of life and your personal relationships will suffer.

A powerful skill to learn is how and when to say no to tasks. Absolutely key to this is you need to be working hard and well to even contemplate turning down a task and have a reputation for doing so. This is not something to try your first month on the job, you need to have a base level of respect before you can start knocking back extra work.

When. There are no absolutes but there are some general guidelines. You should allready have a fairly full plate, this is not a guide to avoid work, just to keep in under control. If the task is not directly part of your role it is easier to turn down; if the task is scheduled for an after hours time that conflicts with other plans you have; if the task has other ways it could be done that have less impact on your workload; if the person giving you the task is trying to foist onto you work they should be doing. All of these are examples of when would be a good time to push back.

How. It is not wise to give a direct no as this does not always go down well. The technique is to agree with the person that it needs to be done, explain why you can't help them at this time, let them know that you are willing to help them meet the objective. For example if someone asks you to stay late after work to put together a report for a meeting they have the next day when your daughter has a recital that night. Tempting as it may be, the wrong thing to say is "Do your own drudge work you stinking weasel!". Try someting like "I'd love to help, unfortunately I have commitments tonight that I cannot cancel, is there another way we can get the information ready for you?" It's polite and not a direct refusal, you have offered to still help but opened a negotiation on terms. This is not guaranteed to get you the result you are after but pushes back in a respecful way that leaves an opening for negotiation if you have misjudged the situation. Its also left room for the other person to back down without losing face. It is also ok to agree after the person has negotiated for a while, even though you have neded up doing the task the other person ahs had ot work for it and consider your needs in the process.

The idea is not to push back on everything, but to protect your personal time and the quality of your work. You will find that saying no occasionally will generally increase your level of respect in the office. It is a skill that is valuable but also one that can take a bit to get the hang of so use it sparingly until you get the hang of it. There are a few occasions where it is rarely wise to push back:
- When the task is being given to you by your bosses boss or higher. If you are being given a request from this level it will generally be more than just a task, it will also be an opportunity to prove yourself in some way.
- Use it sparingly on your own boss.
- If everyone else in your team is going to be involved in the same task, especially if it is after hours, consider what jokes might be made while you are not there.
- If there is an actual crisis.
- If there is a real potential you could be blamed for any negative fallout from the task not getting done.
- If the task is to fix up a problem you created.

The old saying is that there are 3 types of lies; Lies, damn lies and statistics. The problem with statistics is not that they are necessarily untrue, but that they can be so easily manipulated to misrepresent what they actually represent. The ways that statistics can be misrepresented are legion, from the methodology with which the stats are collected to overreaching with the conclusions of the data. In the first of an irregular series on the misuses of statistics we will look at one example, treating popular opinion as statistically valid.

The causal links between video games and violent behavior have been championed by the media, typically by linking violent acts to a video game player. Some of the opinion pieces that get published seem to presume that the link is simply a matter of fact. Statistical representations like this
Source destructoid.com.
purport to show that a large proportion of violent game playing children are more prone to get into fights by representing the data in a graphic that has their bar as the largest. This is an accurate representation of the data, but not of the conclusion that can be drawn. While the number of fighting children that play video games is the largest segment of this sample, the video gaming group as a whole is much larger than the low violent game play group. Not representing this data proportionally suggests a false conclusion.

What that particular data shows is that 87% of low violent game play students get involved in fights while only 62% of violent game playing students do. It can also show that 90% of non violent kids play violent games but only 69% of violent children do. Both of these interpretations show that children that play violent video games are less violent in real life.

I found this graph on Digg the other day which was quite interesting. While it also uses a statistical representation trick to make the slope appear bigger (manipulation of the y-axis) it shows a trend in violent crime over the period that violent video games have been popular. While the downward trend is exagerated, there is no question that the data is real and it can be viewed at the Bureau of Justice source.

So here are my first tips on spotting dodgy statistics
- Beware of "conventional wisdom" expressed in statistical terms
- Look at the fairness of the comparison, somethings should be numerically compared, some should be proportionally
- Beware of the exaggerating effects that playing with scale can have.

A slightly more business than geek topic, but I believe a timely one given the current economic conditions. Again we encounter the recurring theme of short term versus long term thinking and how what looks like it will give immediate benefit is to our own longer term detriment. Part of our nature is also that we act like things are going to stay the same even when we know they aren't. We also are more likely to trust what we have seen then what we can reason.

This mix of observation, belief and self interest drive more of our investment decisions than they should and form a part of why we have booms that outlive their rationality. Remember in the dot-com days when people started to invent rationalisations as to why the boom would continue "It's a new economy that justifies 50+ P/E ratios". We see this exceptionally clearly in housing booms. As house prices go up people that are looking for houses get stressed as they are priced out of areas they were looking in and have to re-assess. Couple that with some easy access to credit and some people start to get silly and pay more than they should to secure the house. Typically you then hear the justification that its ok because the value of the property will rise.

No sane person should be taking on some of the 2/28 loans that were on offer, and it is pure madness to be financing 100% of a home. But for some reason otherwise perfectly rational people will make these types of decisions. We all make these type of decisions sometimes (although not always of this magnitude) and it is typically when we cannot separate our emotional attachment to a thing from our buying decision. It is not necessarily a bad thing, it just is but we need to make sure it doesn't send us into bankruptcy or cost a relationship. I keep hearing about and meeting people that earn high salaries but are barely paying the bills I am not a financial adviser, but I wanted to share with you some financial wisdom that has helped me.

An anecdote to start. I started my first full time job in 1989 on an unimpressive 18K a year salary. Making ends meet on this was pretty hard but doable in 1989. 3 years later I had landed myself a job in IT, shown an aptitude for it and was earning 30K. I found I then had enough money to meet all the bills and have a lot of fun, going out more often and being able to buy the occasional luxury without having to worry. A few years further on and I had a new promotion with a new 50K salary and was very impressed with myself. I moved to a new place, bought a new car and some new goodies for the house. After a couple of months though I found that the bills were starting to get ahead of me and one day found myself at the supermarket register with my groceries for the week, no cash and a rejected credit card which was one of the more embarrassing things that has happened to me.

So why could I live like a king at 30K and struggle at 50K. When I was on 30K I was living a lifestyle set up for an 18K salary. When I was at 50K I 'increased' my lifestyle, and ended up going too far. The salary was greater but so was the cost of my lifestyle. As stressful as it was at the time it was also a great life lesson. The core of my financial philosophy now is to live below my means, and to work out what is really important to me. While I have not made a fortune from this philosophy I have never again worried about where the money was coming from to pay a bill.

- Know what is important to you. If you have a plan of what you want you can more easily make the small decisions that you come across.

- Only borrow as much as you can easily payback in 10 years. If that means you can't afford that house let it go.

- Have a budget. Track your spending over a couple of months, or even a year so you know where your money is going.

- Have 3-6 months salary in the bank or in a safe, easy to sell investment fund. If you lose your job this gives you a good buffer so you don't need to stress in getting another one. It also is a reserve for emergencies, but top it back up if you use it.

- Cars are the worst waste of money out there, it is incredible how much money they can burn for no return, find a reasonably priced one. This is one of the hardest for me to follow as I am a car nut and would love a shiny new fast car, but I calculated once how much money I had spent on cars in the past and almost choked.

- Store credit and delayed payment schemes are for suckers. If you can't afford it now save for it and buy it when you can. Prioritise what you want.

- Always pay off your credit cards in the interest free period.

- Talk to a financial planner. They do this for a living and know more than you do, try and find one you like, and is preferably at least semi independent.

Above all trust your head and your common sense. If a market, whether that be housing or stock, seems to be higher than it should be then it probably is. As we have seen time and time again booms can have a life of their own where even the most sensible pundits and the media start to wonder whether this time it might be different from every other. It won't be. Houses cannot keep growing faster than peoples ability to afford them, stocks cannot maintain hypergrowth indefinitely, and a countries currency cannot remain strong despite a huge debt load.

I don't offer you advise only anecdote, but I have shared what has worked for me and I hope they get a few people to think about how they use their money.

I like this post on Gizmodo for a number of reasons. I have a piece on GNC talking about one, but here I am interested in what this shows about the inner workings of a company in trouble. Motorola has been around for a long time and has managed to reinvent itself a number of times to follow changes in society over time, and has managed to lead some of those changes. It was an early pioneer in the mobile phone space and helped to create the market. It fell behind as the market shifted to a more aesthetic rather than technical one but came back with the RAZR phone.

Motorola is now a company in trouble. It has split into two divisions spinning off the troubled mobile phone division. This type of move is often a precursor to a sale of at least part of the company. I am betting that there are not many buyers for the mobile phone part at the moment. From the reports in the media and the managers letter in Gizmodo it looks very much like this is another case of executive moral hazard.

The previous CEO, Ed Zander, took the company into an ill fated partnership with Apple that gave Motorola an unpopular phone and Apple the experience in the mobile market to produce the iPhone. He also drove a re-direction of the company towards M&A and stock buybacks, all of these moves which drive up stock price. Generally a thing that executives get rewarded on. If this was the actions of a well managed company simply returning surplus money to shareholders there would be no problem with this. It appears though that the funds for these activities came at the expense of the R&D into their cash-cow market of the time, mobile phones.

As is clear to most people, the mobile phone market thrives on innovation, and there are very good profits for the company that can make the "it" mobile phone. This requires R&D funds and a team that either knows what they are doing or gets extremely lucky. From the history of the mobile team at Motorola it appears like they knew what they were doing, from the tone of the email it looks like they didn't get the management support they needed.

"You need to task the company's designers with the same mantra that created the RAZR -- make me a phone that looks, feels, and works like a symbol of wealth and privilege. Recognize the superiority of American software, and bring back those jobs so irresponsibly outsourced to China and Russia. Fully embrace embedded Linux and Google's Android initiative, and take the phone operating system out of the stone age. Recognize that, while rich people don't really know what they want, the lower end of the market does -- and fund the development of an online "crowdsourced" device design platform to take advantage of this fact. Get rid of all of your silly, useless marketing, including those overpriced and completely ineffective celebrity endorsements, and do one solidified global campaign with Daft Punk (the only group whose global appeal extends from American hip hoppers to trendy Shanghai club kids to middle-aged Londoners). Understand that the next big feature in handsets isn't a camera or a music player -- it is social connectedness; build expertise in this area, and sell it down the entire value chain."

It is scarily easy for the executive of a company to destroy value, which is why authoritarian leaders put themselves in a dangerous position. The occasional person has the right mix of smarts and luck to make it work, however all executives need to have good people around them who are not scared to speak up if they think something is not right. Those executives also need to listen to those people.

The moral hazard comes in because there is very little down side to an executive making the wrong moves in the long term. They can easily make value destroying moves that drive up the stock price and get rewarded for it. If everything goes pear shaped they will usually get a golden parachute to ease them out. On top of this a company is such a complicated thing it is easy for them to come up with seemingly valid reasons for failure so a firing will rarely hurt their ability to get another job. With little downside, and likely reward from putting short term stock price over long term viability, it is no wonder that some executives act in their interest rather than the companies.

Blu-Ray seems to have seen off its immediate rival with Toshiba quitting the field, but it would be premature for Sony to declare victory. Technology wise there was really not much to split the two formats on a meaningful trechnical basis and in the end the fight came down to which movie studios each could get online. The conjecture that the win went to the player with the biggest pockets is probably correct but ultimately immaterial. Sony still needs to worry because the fight has not yet hit the field that matters.

That field is the PC. While there has been a small uptake of next gen DVD players for the high end video crowd, the players are nowhere near mainstream yet. Even then the market for playing movies is small compared to the market for PC data discs. And it is once the next gen formats start hitting the PC that the battle will really begin. This part is not likely to happen this year, the price of the units will need to come down significantly before the PC makers start offering next gen players in their systems, and until that happens software makers won't take the effort to release their software in that format.

The other factor that will determine uptake is having recordable versions of the discs. A lot of the use of the media will be in the ability to use it as a backup and data transfer method. This is where the Blu Ray story can fall down (and HD-DVD would have as well). At the moment breaking the encoding on these discs is possible but not easy, the encryption methods will not be as easy to keep under wraps though once recordable versions of these mediums become common in PC's. The security that is in the format also reduces the usefulness as a data storage medium.

The other problem is that Blu-Ray is bigger than DVD, but not that big. The average hard disk size has grown much faster than the optical medium. With 500GB and 1TB drives common now, will Blu-Ray offer a compelling backup story to drive adoption, particularly with potential technical challenges, like the potential of a new media disk intentionally bricking your drive rendering your backups useless.

With the PC market on the horizon there are a couple of competing technologies waiting in the wings that could come to the fore. The Chinese have been content to play in China only with the CH-DVD, but this situation could change once the PC market comes in play (Lenovo anyone?). There is another technology called TerraDisk which is betaware at the moment but if it works will provide 1TB of data on a CD/DVD sized disc.

I agree with the recent Gizmodo story, think carefully about what you need it for before you decide a winner has been determined and go out and buy that Blu-Ray player.

Is it just me or are others being bombarded with gratuitous notifications in their Facebook account? The immediate benefit to me of Facebook has always been the ability to keep abreast of what the people in my wider social group are up to. For my close friends and family, even though I have links to them, I am generally up to date on what is happening in their lives. Its those people that I have some level of friendship with, but that I may not talk to regularly that Facebook helps me keep in touch with.

Recently the amount of "useless" information has started to overwhelm the meaningful. My front page is full of 'invites' to become a werewolf, or to answer a quiz, or to find out my IQ. I accept that the price of using the site is exposure to the advertising, but the open slather that is occurring with applications on Facebook is creating so much noise in the feed that I am going there less and less. Following some of these links to see what was going on I realised what the problem is. A lot of these applications allow you use them without any commitment apart from installing the app to your page which can be easily reversed. After you have completed the personality test, or answered the quiz you are then presented with a request to send a notification of the app to a number of your friends before you can see the results.

This poses an interesting conundrum to the user. After having spent a segment of their time interacting with the app they are then prevented at the end from enjoying the results of that effort. That is unless they agree to spam their friends. Sending a single notification to a few people does not seem like such a bad trade off in return for getting the results of the application you have just spent time on. This is a prisoners dilemma in large scale. All of us would be better off in the long run if no-one was sending these useless notifications. In the short run though each individual faces a situation where they would be marginally better off if they send 'just one' set of spam notifications in return for an immediate return on effort.

As this is actually a repeated game prisoners dilemma, in which case the possibility of others taking retributive action in future games (sending spam back to us) should keep us from taking short term self serving actions. This is a fancy economist's way of saying that social conventions keep us in line. In this sort of precarious situation though, it is easy for this system to break down. There is always a segment of a population that either doesn't recognise the situation or doesn't care. Things then have a tendency to snowball, the more useless notifications we receive, the lower the social stigma is of sending our own notifications out.

My facebook page would suggest that we are getting to this stage now, where for at least a subset of users there is no stigma to sending out multiple application notifications to all their friends. It is by no means all of my friends that engage in this, but the set that do flood my inbox. I tend not to look at any of the notifications from those friends.

For the application developers, forcing people to send invites to their friends to use their product probably seemed like a good idea to get their application spread across the Facebook user base. In reality they end up missing the mark. The community splits themselves in two. The people that don't like to spam their friends choose not to get the applications payoff and delete the app. The developer has then lost a promotional chance and a user. The other user readily spams their friends but are likely to be the type of person that has most of their notifications ignored. I find it hard to take any pity on them.

If the informal social convention to stop this is truly breaking down, Facebook should consider formalising it. This should not have to come to a rule, but a statement of what is considered good behavior can inform people that might not quite get it. It can also send a message to developers about what is expected of them. This type of message also carries an implicit threat that continued flouting of convention could bring more extreme measures.

For now I'll stick with my reduced use of Facebook and trust that this is potentially just a transitory situation. If things continue to slide though I may need to readjust my position. Are you seeing the same thing?

There is a fundamental disconnect between the humans that use the Internet and the computers that enable it. The problem is that we don't speak the same language. While computers are very structured and specific, human communication is chaotic and nuanced. This goes beyond the limitations electronic communications imposes on us by denying us most of the non-informational components of communication, like tone of voice or facial expression. Even with these limits humans have the ability to comprehend multiple levels of relevance beyond the 'raw data' (the specific words) in a statement.

This is not a huge problem when you are communicating directly with someone, convention and substitutes allow us to overcome some of the electronic limits and communicate some of the subtlety. As the communication is targeted, it is also reasonable to assume that the person we are communicating with will receive and read the information (the key word being person). Our culture has developed online to include electronically specific conventions to show when we are being sarcastic if we are SHOUTING, or if we are amused LOL. We even add levels of nuance; ROFL does not mean I am literally rolling on the floor, but I am slightly more amused than if I am only LOL. If I am amused enough to actually chuckle I might ROFLMAO.

The inspecific nature of language becomes more of a problem when we are searching for information from an electronic source. While it is possible for information we store to include te level of specificity required for simple search, the extra effort this would require would be extreme. There is also the problem that the data we want may have been stored informally, the writer not expecting that it would have relevance. The market then appears for search engines and tools. These tools can collate large amounts of information to enable us to sort through it with the aid of a short search phrase to find only those bits that are relevant to us. Sometimes this works well while other times this may be an exercise in frustration. The problem is that the search engines are looking for specifics while we are looking for a context.

As an example below is an excerpt from the Wikipedia entry on Ray Charles

"When he was six, Charles began to go blind, becoming totally blind by the age of seven. Charles never knew exactly why he lost his sight, though there are sources which suggest Ray's blindness was due to glaucoma. He attended school at the St. Augustine School for the Deaf and the Blind in St. Augustine, Florida. He also learned how to write music and play various musical instruments. While he was there, his mother died. His father died two years later."

While it includes the words "Ray" once and "Charles" twice it never directly combines the two. While Ray is directly referred two 7 more times in the sentence, it is in the form of a pronoun (he or his). A search ranking on base word count will rank this higher as an entry on St. Augustine or blind/ness due to the greater prevelance of these words. To a human this paragraph is obviously completely about Ray Charle's youth but a computer struggles to see this without extra information.

The goal of the semantic web is to have information posted to the web available in a form that is understandable by both humans and machines. In order for the machines to understand it though, there needs to be a structure it can use for that understanding. Essentially this means embedding that structure into the document/posting that enables this. While languages like XML provide structures to enable this, it still depends on the old GIGO axiom. Garbage in, garbage out, if the information is not populated or incorrect than the context is not communicated or worse, a wrong context is given. For this to work the adding of this structure needs to be trivial or automated.

The automation of contextualisation is a huge focus for a number of companies. CRM (customer relationship management) and KM (knowledge Management) software/service vendors are particularly interested in this area and base an element of their value proposition on how well their products cope with context. Recently though Reuters has announced the release of their semantic engine to the world. In providing a semantic engine that is available for developers to include in their products and services they have achieved two noble things. It will increase the speed of development of new methods and algorithms. It will also increase the range of products and services that will include semantics.

Tim Berners-Lee believes that the semantic web will be the next generation of the Internet. What I am waiting to see is some implementations. The proof will not be in whether it is possible. Instead the success of this new information categorisation engine will be in how easy it is to fool. It would be a definite benefit to have information correctly categorised and searchable by the true context of the information, if it is gameable there are people that will set tags or labels that falsely direct you to their dodgy sites just like they do with adwords and search engine games today. Even in this situation semantics engines will still be extremely useful for internal business tools.

A writer for Times Online found himself in a predicament trying to keep his personal and professional lives seperate when he created a Facebook account. In having both work and friends on his social networking page he found his work colleagues were getting too much of a look at his personal life. The realisation he came to was that some of the more circumstantial aspects of himself that he might reveal, like his favorite movies, lowered the esteem people at work had of him. In the end he found himself deleting off all the personal information, and even detagging himself from pictures he thought were not showing him in a good business light.

I had a similar problem myself when some work friends and even some customers found out I was on Secondlife. I had to question whether my avatar's black trenchcoat and huge anime style warhammer show me in a less proffesional manner than I projected at work or on site. Also without context some of the people I had as friends may look a little strange. If you have been in Secondlife you know how varied the avatars can be. In the end I made a second avatar which I used on the one or two occasions that a work related person wanted to have an SL meetup.

There is an old adage that you should never let anyone from work see you less than completely dressed. The issue is not one of propriety it is one of boundaries and vulnerability. All people stereotype others, it is a necessary survival skill for dealing with the volume of information we need to process. We only have the time to completely contextualise the entirity of the people that are closest and most important to us. For everyone else we have a high tendency to make snap judgements on peoples personality and abilities on a limited set of information, and these are often not correct. As we know this happens, we chose to show only those bits of our personalities that we believe are relevant to the group we are in. We behave differently at work then at home or if we are out with our friends. This is why it is often uncomfortable if our work and personal worlds collide, these two worlds often see us quite differently and having those views cross over is uncomfortable.

Online I have my work and non-work contacts seperated as much as possible. There are a few people that cross over, but they are in the minority. In my case I use Facebook for my personal and online friends and linkedin for my work contacts. That was the idea at least. I have ended up with a few work people on Facebook as they have found me there and sent me invites. And rejecting an invite from a work person could be worse than having them see whats on your profile.

In the end I am in the same position as the Times Online writer, where I restrict what I put on my facebook account in case it doesn't portray the right image out of context. I end up not using facebook as much as I might, or for the things I could as I am restricted by the openess of the information crossing too many of the groups in my life. I wonder how many other people are in the same situation where the openess of the platform restrict the information they put there, and therefore the value they get from the platform. Given the permanance of information on the net, I also wonder about kids and teens that put information up without considering the potential impact. Will they later regret some of the information they have placed?

This is a direct reposting of an article I published on GNC. I believe that this could be one of the most important moves made in the entertainment industry, or maybe its worst missed opportunity. I want to make sure those of you that don't read me on GNC see this as well.

Update - I may have given the RI too much credit (i.e. any credit at all) for showing some intelligence. The music industry is backing away from the service and the whole thing might die before it starts. Lets hope sense prevails. Thanks to Mario for the techdirt find
TechDirt
Financial Times
MTV

If this article from The Times is completely accurate a new service backed by EMI, Universal and Warner called QTrax will launch in the next 24 hrs that may show that the music industry have been taking at least some of the criticism leveled at them seriously.

While the website is already active the service relies on a custom application that is not yet available for download.  This application seems to be a customised version of the Mozilla browser that will allow users to connect to the QTrax website and download and play from a catalog of 25 million songs.  The tracks are protected by DRM but are in an MP3 format.  There is no details yet on exactly what the MP3 player compatibility and availability is, but presumably the DRM will make this limited.  The service will also be supported by ad revenue.  The distribution of files is via P2P although the exact form this takes is unclear.

There are a number of reasons why this is a potentially brilliant move.

• This is finally recognition that music is art.  As such its value is not diminished by its consumption unless it is bad.  The consumption of good art actually increases its value and should therefore be encouraged.


• The inclusion of rare, live and unreleased tracks in the service allows fans to engage more with their favorite bands.  It allows them to find and sample material they were not previously aware of and they consequently become more attached to the band.


• P2P technology means that the record companies don’t have to pay the bandwidth bill for free listening and imposes at least a minimal cost to the consumer.  It also makes it a more social environment, you can only get your music for free if you help other people do the same thing.


• Unbelievably this is a use of DRM I can support.  The point of DRM in this instance is to link you to the player which allows the music industry to receive the advertising revenue, collect good stats, and limit our use of the music.  This is absolutely justifiable when there is no charge.  It has never been my contention that music should be free, just that there should be a method to interact with it freely.  If you want to listen to anything for free use the service and pay with ad revenue and stats.  If you want to do anything extra, like put it on an MP3 player, burn it to a CD or listen to it in better quality, buy it.


• It removes any justification for any person that can use this service to use any other method to get unauthorised copies of music.  If there is a method that you can listen to the song free of charge any other use must be paid for.  Removing the justifications people use in their own minds when they pirate will reduce this activity.  The availability of this service will also mend a large proportion of the ill-will a lot of the music consuming public has to the commercial side of the music industry as well.


• It exposes the consumers to the back catalog which is the most underutilised resource in the whole music world.  While the top 100 makes the most visible money to the RIAA members, the older releases could be a much greater source of revenue for them.

I am looking forward to seeing, and reporting on what the reality of this service is, but on paper it is very impressive.  QTrax has the potential to significantly increase the sales of music.  It is an absolute fact that the more music a person listens to, the more they buy.  By allowing people to listen to huge amounts of music they will increase sales.

Since they jumped to over $200 recently, Apple stocks have been sliding back down to be around $140. A stark contrast to what the overly exuberant analysts were predicting at the time of a mid to high 200's target price. Reading some of the news reports it is interesting ot see those same analysts scramble to explain why their predictions did not come about. These excuses seem to revolve around the fickleness of the holders of the stock rather than admitting that they were making highly speculative statements.

As I stated in my earlier piece on Apple's stock price, the fundamentals were just not there to justify the size of their share price. With a P/E ratio that stretched, the whole scenario was holding on very delicately. In these situations it only requires the smallest amount of uncertainty to break. In this case it was probably a combination of the lower than predicted sales of iPods and the potential of a consumer slowdown. The share price did not crash, it just came back to a more believable level.

This is a valuable lesson for those of you that work in a business environment, ignore the fluff and focus on the fundamentals. It is easy for people, especially sales reps, to build a convincing argument for an exuberant position. If you focus on the fundamentals it is possible to put these things in context though. In the case of stocks, the fundamental is what the company needs to do to earn its market value. If they are a growth stock there needs to be definitive and believable growth projection that justifies the multiple they trade at.

If you are putting in an IT system, you need to focus on what is the real cost savings or productivity improvements this system will provide. If they are not less than the cost of the system, then what is the point of buying the system. I also often see projects running over time or budget because the IT or business team keep adding optional bits and custom tuning to applications to get what they believe will be marginal improvements. Focus on the core reason and make sure that is working as you need and get it implemented. Once people are using it you can then judge what adjustments may be beneficial and whether they are worth the cost.

The LG suit against Quanta for patent infringement was originally turned down by a lower court, then overturned (in LG's favour) on appeal, but the supreme court in the US has agreed to hear the case. The heart of the case is whether Quanta are liable to pay for LG intelectual property that is included in the Intel chipsets that Quanta use. If you want to know more detail you can find it in some of the links. Its a

The first big deal of this case is that it potentially opens up yet another way for patent trolls to profit from other peoples hard work. The patents in question are not developed by LG (although LG has a history of producing some very good research of its own) but were originally developed by the long defunct Wang and acquired by LG at some stage. They have a license agreement with Intel to use that technology when they build their chipsets which has a set of conditions attached. When Intel sell these chipsets as individual components then that is not technically covered under the license so the liability must pass onto Intel's customer.

There is a lot of semantics involved in this as the end system board works in exactly the same way it would if Intel put it together, however providing the chips individually allow Quanta to custom design board layouts to fit the profiles their customers want. Essentially if LG prevails in this case it will flag as legal putting conditions of sale on a patent license. That would allow a patent holder huge power they do not currently have in setting conditions on their licencees. By allowing the patent holder to retain control of use after it leaves the first purchasers hands then any further link in the chain would need to negotiate conditions with the patent holder.

To give an example, LG could dictate to Intel which geographic regions they could sell in or which companies they could sell to. Given that LG are a computer manufacturer themselves they could influence the competitive market. If a small local computer manufacturer wanted to make their own customer computers, or custom boards for systems control, they would have to negotiate with all the holders of the patents Intel holds. Realistically all these factors would be negotiated away, but the increase in power means the patent holder is able to negotiate a higher amount of return, which eventually means higher costs for everyone else down the chain.

The second big deal about this is that Quanta is the target. There are many other computer vendors and contract manufacturers they could have gone after. Even though Quanta is very large, its main speciality is notebooks. A large proportion of the notebooks you have used in your life would have been manufactured by Quanta under contract from companies like Dell, HP, Apple, Toshiba, Gateway, Sony, etc. LG also have a PC division that includes a notebook range that is not currently sold in the US. They do a lot of OEM work to the same vendors Quanta does, mostly in the removable drive (e.g. DVD) and monitor space. Given the scale of Quanta it would be very hard for them to compete for the notebook ODM business though. If they can manage to increase Quanta's costs they may just be able to open the market up enough for them to become a second player.

Having a second major laptop ODM could be good for us, but to get it in this way would open yet another avenue for patent trolls (and major companies that occasionally act like them) to increase costs for consumers to no good end.

When I discussed Universal ditching DRM (but not on iTunes yet) I stated that I was ready to buy the entire Cure back catalog as soon as it was available online. I thought that I was ready to go with this when I found that everything Cure was now available on the Amazon store. Unfortunately when I tried to purchase I discovered that the downloads are only available if you have a US credit card. Living in Australia I obviously don't have one of these so my quest to give Universal money was thwarted.

The Internet is the medium that allows distribution without barriers. For a product like music every extra sale is added profit. While the music companies are finally starting to listen to some of the people that actually know what they are talking about, but they still insist on trying to control the market. If there is one thing most likely to drive people to alternative markets then artificial restrictions to the legitimate ones. Thousands of years of smuggling operations have proven this.

Maybe the advances in sanity that the music industry has started to show, there may be hope that they will actually start delivering their product in a method that suit their customers. Then we only need them to find their way back to good music.