Archive
The Business of Facebook
Facebook is undeniably a phenomenal success given it’s ever expanding membership and mindshare of all the social networks, but even that has not provided it with the same money making prowess as Internet rivals like Google. So how and when can Facebook hope to start making some real money, or has that boat sailed already?
This and other similar hot topics were discussed by the panel at a Digital Breakfast NYC event which I attended off the back of my participation at the recent Copyright and Technology 2010 conference in New York (more on that here). The highlight of this event for me was the presence, on the panel, of David Kirkpatrick, Author of “The Facebook Effect”, a book which provides a fascinating insight into just how Mark Zuckerberg and co. formed Facebook, and the subsequent rapid journey it underwent to become the behemoth of social networks. The ensuing discussions between audience, panel, and chair touched on the many challenges confronting Facebook in its quest to become a ubiquitous platform. It also explored sore topics like privacy (“which means different things to different people and different generations”, according to panelist, Elend ), as well as Facebook’s difficulty getting into China and its huge user base of potential Facebookers.
My Verdict: Excellent event, great panel, stimulating conversation and a pleasant location (at the Madison Avenue office of the event host and sponsor), plus breakfast and an autographed copy of the book! Now that’s what I call an excellent start to the day.
Copyright and Technology 2010 Conference
Last week’s event on copyright and technology has led me to the conclusion that a long-overdue dialogue is slowly taking place between two vital groups in the digital content economy, i.e. the legal and technology stakeholders. However, it also raised some questions about likely winners and losers in the evolution of a digital content ecosystem.
This inaugural conference took place in in New York City, and I was lucky enough to be invited to moderate a panel session on the role and future of DRM, and other content protection technologies, that inhabit the interface between copyright and technology. Below are some key messages from this event:
- DRM is not quite dead. If anything it is alive and well, outside of “permanent Internet music downloads”, according to event chairman Bill Rosenblatt in his opening address, which was also a master class on the trajectory of challenges and developments in the battle between copyright and digital technology.
- “Sopranos level” commercial piracy, as operated by sophisticated / profit-oriented criminal organizations, (i.e. not your ordinary file-sharing individual) have become the key focus of attention and anti-piracy efforts by major content owners. According to Viacom’s Stanley Pierre-Louis, organizations like Viacom are making every effort to find the “right balance to take advantage of new platforms whilst protecting IP”.
- Innovative approaches are critical for video content monetization – For example, Ads are video too, and Google’s Shalini Govil-Pai described how more brands are now using YouTube to ‘prove’ their ads before putting them out via more expensive broadcast TV channels
- Interoperability is vital. And initiatives like the Digital Entertainment Content Ecosystem (DECE) will help “provide users with a choice of platforms”, according to Mitch Singer (CTO for Sony Pictures Entertainment). However, one notable absentee from this 50+ strong consortium is Apple which operates its own closed content ecosystem.
- “You can’t monetize what you can’t identify”, therefore correct content identification is a critical element in any monetization effort. Technologies like Fingerprinting and Watermarking both play a large part in making this happen, but there’s still more work to be done, and implementation can be tough.
- Progressive Response (aka 3 Strikes) and ISP level monitoring may be flawed – A telling question from speaker Gary Greenstein, (IP lawyer from Wilson Sonsini Goodrich & Rosati) was: “What if you connect to your own music collection over an ISP, would that not be a false positive for copyright infringement”?
- Rights Management is still a major headache – An observation from my panel session was that although DRM still has a role and future (even if by another name) in digital content monetization, by far the bigger issue for content owners remains the challenge of inadequate rights management for content. This is an area that is actively being addressed by companies like Teradata, SAP and Capgemini which together can deliver even more innovative solutions for IP rights management
However, there is still a lot of work to be done before copyright and technology can claim to work well together (see my session intro slides). One attendee’s poignant observation highlighted the relatively limited availability of legal content (perhaps as a result of cumbersome content rights models, infrastructure issues or outdated release window models), versus widely available but illegal / pirate copies that can be found online, sometimes even before commercial release of the product!
In conclusion, this was a very useful and timely conference given the high level of engagement and interaction (including the customaryTwitter commentary) between audience and speakers, right from the start. However it could have done with mixing up the legal / technology streams a bit more, but the overall feedback was positive, and I suspect many attendees, and the entire content industry, would benefit from more of this type of event and dialogue in the future. Hopefully the next one might even be held right here in London – aka the birthplace of modern copyright!
Copyright and Technology
These two mostly work hand in hand especially as a change in one typically brings about a change in the other, think P2P file sharing and DMCA or Digital Economy Act. So why is this the case, and will it ever change?
It is hard to think of a scenario where copyright is not tightly related to technology, for the simple reason that even the act of copying (at least to any economically significant scale) is highly dependent on having access to an appropriate copy technology. Interestingly, the UK’s Statute of Anne, which is widely regarded as the first fully fledged copyright law, came into being after the introduction of print duplication technology, aka the printing press. Given where we are today, with ubiquitous and massively available digital duplication and dissemination technologies, copyright has become even more intertwined with everyday technology; from early music players to broadcast receivers and shiny new mobile / media / communication devices. As a result, it has become even more urgent to find ways in which to make copyright and technology work better together.
These and other pressing topics will be up for debate at the inaugural / eponymous Copyright and Technology 2010 conference which will be taking place this Thursday in New York City, and yours truly will be there to participate and hopefully get some indication of where things are heading in the near-mid term. The two tracks of this conference are divided equally between technology and legal aspects of copyright, which should make for some interesting cross-fertilisation of ideas and potential insight to the future of copyright. Watch this space.
What is the cost of disruptive innovation?
Lately it seems I’ve become immersed in all things start-up, and can even spout buzzwords like funding rounds, exit strategies and venture capitalisation, at the least provocation. However, I’m puzzled as to why most early stage start-ups, and their investors, appear rather too obsessed with money (i.e. raising / spending / making it) instead of focusing on creating and establishing a great service or product first.
In these extraordinary times, an online product or service must be clearly innovative (and preferably disruptive) at some level, before it can be considered great; which brings me back to the key question above: what does it really cost to innovate and disrupt? At the risk of sounding simplistic, I seriously think that it should cost no more than time multiplied by the cost of connectivity. The reasoning behind this is as follows:
- Innovation is mostly incremental and evolutionary, and only rarely radical and revolutionary, (even though the impact may be both radical and revolutionary -e.g. Apple’s iSuite-of-products). This means that the key ingredients for many innovative and disruptive offerings are usually already available, (and sometimes freely so), thus the innovator is mainly tasked with combining them into a compelling new product or service (occasionally with some inventive glue to hold it all together). In the online world this would be something like a “mash-up” of pre-existing services.
- In an evolutionary system, there are usually many imitators for each successful individual, product or service. Some of these imitators might even employ various differentiating strategies in order to conquer a niche, or perhaps overthrow the incumbent where possible, but the fact remains that they are building on the success of others. Therefore the efforts (and cost) should be less than that incurred by the originators. Re-inventing the wheel is expensive, but this is exactly what I’ve seen many start-ups attempting to do today!
- Finally, flexibility and sustainability are key success factors, in my opinion, because you’ll need to adapt rapidly to the relentless change of an ever-shifting online environment (and what better way than by not having to write custom code each time). Also, if you haven’t failed fast enough to become self sustaining in a relatively short space of time, then there is something seriously wrong with your business model which your investors’ money cannot easily fix. Two examples that embody these qualities respectively are: SliceThePie (a fan-funded music service that has evolved into a music industry “Swiss Army Knife” of flexibility and value); and Betfair (a major industry -disrupting online betting exchange and service provider which just turned 10 years old today!)
In conclusion, if a start-up is not innovative enough to effectively build on the success of others, (and in so doing, reduce its cost significantly), then it has a serious problem which might indicate an inability (i.e. it is not flexible or sustainable enough) to survive and succeed in the current and emerging economic landscape.
(Disclaimer: The above post represents this author’s personal opinion, and does not constitute professional assessment or investment advise in any way, shape or form; also it is not an endorsement of any of the companies or services mentioned above as examples, which are solely based on publicly available information)
Jude Umeh is a senior consultant and enterprise architect, and you can follow him on Twitter or LinkedIn
The Privacy Dinosaur
This seems to have become a key talking point of late, and many people are taking a fairly vocal stance about real or perceived invasion of their privacy rights, (as it were some sort of property). However, it appears the time has come to consider the dreaded question of whether privacy will likely become extinct in the next generation or two?
Ok, so it all started with the ever so clumsy handling of Facebook’s now habitual privacy changes, which led to expected uproar over their motives, and the hassle of changing individual settings yet again. This was swiftly followed by the mea culpa and promises to take user concerns into consideration in future. So far, so typical, but what stands out for me is that such repeated cycles of mistake and contrition will slowly erode user sensitivity to privacy over time, not only on Facebook, but also on other social network platforms where it has become the trend setter and de facto leader anyway. Interestingly, newer social networks like Twitter and the infamous Chatroulette do not seem to have quite so many problems over privacy, particularly the latter video based network which if anything appears to be all about sheer, perverse exhibitionism.
In addition, thanks to the brand new Digital Economy Act, it looks like new anti-piracy policies will mandate ISPs to log details of copyright infringers, so that repeat offenders may be sued by rights holders as and when they please. In order to do this, I suspect consumers’ browsing habits and behaviours will need to be analysed (sniffed) and recorded into said log. So I ask again, is there really such a thing as privacy in our brave new online world?
——-
Note: This post was previously published on my BCS DRM Blog, where you can find the original post, and reader comments, in the archives.
Judeumeh's Blog 