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[This piece was written for (in Raleigh, North Carolina ) and published twenty-five years ago, on February 10, 1986. Since it might be worth re-visiting some of the points I made, as well as the event itself, I decided to dust off the piece and put up here. Except for a few spelling corrections and added links, it’s unchanged. — Doc]

I can remember, when I first saw the movie , how unbelievable it seemed that and could fly their spacecrafts so easily. They’d flick switches and glance knowingly at cryptic lights and gauges, and zoom their ways through hostile traffic at speeds that would surely kill them if they ran into anything; and they’d do all this with a near-absolute disregard for the hazards involved.

That same night, after I left the movie theatre, I experienced one of the most revealing moments of my life. I got into my beat-up , flicked some switches, glanced knowingly at some lights and gauges, and began to zoom my way through hostile traffic at speeds that would surely kill me if I ran into anything; and I did all this with a near-absolute disregard for the hazards involved. Suddenly, I felt like Han Solo at the helm of the . And in my exhilaration, I realized how ordinary it was to travel in a manner and style beyond the dreams of all but humanity’s most recent generations. I didn’t regret the likelihood that I would never fly in space like Han and Luke; rather I felt profoundly grateful that I was privileged to enjoy, as a routine, experiences for which many of my ancestors would gladly have paid limbs, or even lives.

Since then I have always been astonished at how quickly and completely we come to take our miraculous inventions for granted, and also at how easily we use those inventions to enlarge ourselves, our capabilities, and our experience in the world. “I just flew in from the Coast,” we say, as if we were all born with wings.

I think this “enlarging” capacity, even more than our brains and our powers of speech, is what makes us so special as creatures. As individuals, and as an entire species, we add constantly to our repertoire of capabilities. As the educator said, our capacity to learn is amplified by our ability to develop skills. Those skills give us the power to make things, and then to operate those things as if they were parts of ourselves. Through our inventions and skills, we acquire superhuman powers that transcend the weaknesses of our naked, fleshy selves.

One might say that everything we do is an enlargement on our naked beginnings. That’s why we are the only animals that not only wear clothes, but who also care about how they look. After all, if we were interested only in warmth, comfort and protection, we wouldn’t have invented push-up bras and neckties. Or other non-essentials, like jewelry and cosmetics. It seems we wear those things to express something that extends beyond the limits of our bodies: the notions of our minds, about who we are and what we do.

But clothes are just the beginning, the first and most visible layer in a series that grows to encompass all our tools and machines. When we ride a bicycle, for example, the bike becomes part of us. When we use a hammer to drive a nail, we ply that tool as if it were an extra length of arm. Joined by our skills to tools and machines, our combined powers all but shame the naked bodies that employ them.

I remember another movie: a short animated feature in which metallic creatures from Mars, looking through telescopes, observed that the Earth was populated by a race of automobiles. Martian scientists described how cars were hatched in factories, fed at filling stations, and entertained at drive-in movies.

And maybe they were right. Because, in a way, we become the automobiles we drive. Who can deny how differently we behave as cars than as people? It’s a black that cuts us off at the light, not Mary Smith, the real estate agent. In traffic, we give vent to hostilities and aggressions we wouldn’t dare to release in face-to-face encounters.

Of course, we have now metamorphosed into entities far more advanced than automobiles. As pilots we have become airplanes. As passengers we have become creatures that fly great distances in flocks.

If those Martian scientists were to keep an eye on our planet, they would note that we have now begun to evolve beyond airplanes, into spaceships. In their terms we might note the Tragedy as the metallic equivalent of a single failure in the amphibians’ first assault on land. Evolution, after all, is a matter of trial and error.

But as we contemplate the price of our assault on the shores of space, we need to ask ourselves some hard questions. For example: is the Challenger tragedy just a regrettable accident in the natural course of human progress, or evidence of boundaries we are only beginning to sense?

On January 28th, Challenger addressed that question to our whole species. We all felt the same throb of pain when we learned how, in one orange moment, seven of our noble fellows were blown to mist at the edge of the heavens they were launched to explore.

Most of us made it our business that day to visit the TV, to watch the Challenger bloom into fire, and to share the same helpless feeling as we saw the smoking fragments of countless dreams rained down in white tendrils, like the devil’s own confetti, to the ancestral sea below. The final image — a monstrous white Y in the sky — is permanently embossed in the memories of all who witnessed the event.

It was so unexpected because the shuttle had become exactly what NASA had planned: an ordinary form of transportation, a service elevator between Earth and Space. NASA’s plan to routinize space travel succeeded so convincingly that major networks weren’t even there to cover the Challenger liftoff. Instead they “pooled” for rights to images supplied by Ted Turner‘s Cable News Network. Chuck Yeager, the highest priest in the Brotherhood of The Right Stuff, voiced the unofficial NASA line on the matter. “I see no difference between this accident and any accident involving a commercial or military aircraft,” he said.

Would that it were so.

“Fallen heroes” is not a term applied to plane crash victims. In fact, the technologies of space travel are still extremely young, and the risks involved are a lot higher than we like to think. “Since NASA made it look so easy, people thought it would never happen. Those of us close to the program thought it could happen a whole lot sooner. We’re glad it was postponed this long,” said , a former astronaut and pilot of the .

The fact that the shuttle program was so vulnerable, and we failed to recognize the fact, says unwelcome things about our faith in technology, and now is when we should listen to them. Because the time when flying through space becomes as easy as flying down the road, or even through the air, is still a long way off. In the meantime, it might be best to leave the exploring to guys like Lousma, who are blessed with the stuff it takes to push the risks out of the way for the rest of us.

And we’re talking about the kind of risks that were built into the shuttle from its start.

Consider for a moment that the shuttle program is, after all, the bastard offspring of a dozen competing designs, and constrained throughout its history by a budgetary process that subordinates human and scientific aspirations to a variety of military and commercial interests. And consider how, as with most publicly-funded technologies, most of the Shuttle’s components were all produced by the lowest bidder. And consider the fact that many of the Shuttle’s technologies are, even by NASA’s admission, obsolete. If we had to start at Square One today, we’d probably design a very different program.

A new program, for example, would probably take better account of the Perrow Law of Unavoidable Accidents. A corrolary of Murphy’s Law — “Anything that can go wrong, will go wrong” — the Perrow Law is modestly named after himself by , Professor of Sociology and Organizational Analysis at Yale University. According to Perrow, the shuttle program has succeeded mostly in spite of itself. Its whole design is so detailed, so complex, so riddled with interdependent opportunities for failure, that we’re lucky one of the things didn’t blow up sooner, or worse, suffer a more agonizing death in space.

“The number of interconnections in these systems is so enormous,” he says, “that no designer can think of everything ahead of time. It may be that this was one major valve failing on one of the tanks, but I rather suspect that that’s not the case. NASA tests and is very concerned about those valves. They have back-ups for every major system. The problem is more likely to have been a number of small things that came together in a mysterious way — a way that we may never learn about.”

He continues, “The chances for an accident will be only marginally reduced if we find the cause of this, and harden something or increase the welds, and eliminate this one thing as a source of an accident. But right next to it will be a dozen other unique sources of accidents that we haven’t touched. But by touching the components next to it, we may increase the possibility of other accidents.”

, who wrote , and invented the term, suggests that NASA may have snowed itself into believing that space travel is past the pioneering stage, and that, as a concept, the shuttle’s “coach & freight service — a people’s zero-G express” was premature. Of the martyred teacher, , he says “Her flight was to be the crossover, at last, from a quarter of a century in which space had been a frontier open only to pioneers who lived and were willing to die by the code of ‘the right stuff’ — the Alan Shepards, s and Neil Armstrongs — to an era when space would belong to the entire citizenry, to Everyman. The last role in the world NASA had in mind for Crista McAuliffe and the rest of the Challenger crew was that of pioneer or hero.”

This was because NASA had labored long and hard to break the political grip of what Wolfe calls “Astropower,” the “original breed of fighter-pilot and test-pilot astronaut — the breed who had been willing, over and over again, to sit on top of enormous tubular bombs, some 36 stories high, gorged with several of the most explosive materials this side of nuclear fission, and let some NASA GS-18 engineer light the fuse.”

The fact was, Wolfe suggests, that McAuliffe and her companions “hurtled for 73 seconds out on the edge of a still-raw technology” before they perished. Which is why he asks “If space flight still involves odds unacceptable to Everyman, then should it be put back in the hands of those whose profession consists of hanging their hides, quite willingly, out over the yawning red maw?”

If the answer is yes, then what will need to happen before Everyman is really ready to fly the zero-G express?

In a word, simplification. Right now there is no way for a single pilot’s senses to stretch over the entire shuttle system, and operate it skillfully. A couple of years ago, the Director of Flight Operations for NASA said “this magnificent architecture makes it that much harder to learn to use the system.” According to Professor Perrow, “because the Shuttle system was designed in so many parts by a phalanx of designers, when it’s all put together to run, there is nobody, no one, who can know all about that system.”

Perrow says “It requires simplification for a single person, a pilot, to know everything that’s happening in such a hostile environment as space.” One of the great simplifications in aviation history was the substitution of the jet engine for the piston engine. That’s what we need to make space travel agreeably safe.”

It is ironic that on the day the Challenger blew up, , a space industry consultant and a former NASA administrator, was about to mail the first draft of a commission report to the president on the future of the U.S. space effort. That report advanced two recommendations: 1) a unmanned cargo-launching program to deliver cargo to space at a fraction of current shuttle costs; and 2) an improved shuttle or a new-generation system like the “hypersonic transportation vehicle” the Air Force has wanted ever since NASA beat the rocket airplane into space. The hypersonic transport would simply be an airplane that can fly in space. By contrast, the shuttle is a spacecraft that can glide to earth. Already, hypersonic transport technology has been around for years. Reports say the first “space plane” could be ready to fly in the 1990s. The thing would cruise along at anywhere from Mach 5 to Mach 25, which would mean, theoretically, that no two points on the earth would be more than three hours apart.

But it will have to fight the inertia behind the shuttle program, which is substantial, and slowed only momentarily by the Challenger explosion.

I fear we can only pray that future missions will continue to dodge Murphy’s law.

Over time, however, our sciences will need to face Perrow’s Corollary more soberly. We need to recognize that there are limits to the complexities we can build into our technologies before accidents are likely to occur. Thanks to Fail Safe, Doctor Strangelove , and other dramatic treatments of the issue, we are already familiar with (and regretably taking for granted) the risks of nuclear catastrophe to which we are exposed by our terribly complicated “defensive shields.”

And this hasn’t stopped us from committing to even more dangerous and complicated “defensive” projects, the most frightening of which is the euphemistically titled , better known by its nickname: Star Wars. Professor Perrow says “Star Wars is the most frightening system I can think of.” In fact, Star Wars is by far the most complex technology ever contemplated by man. And possibly the most expensive.

There are cost projections for Star Wars that make NASA’s whole budget look like pocket change. Portentiously, the first shuttle experiment with Star Wars technology failed when shuttle scientists pointed a little mirror the wrong way. We can only hope that the little mirrors on Soviet Warheads are aligned more cooperatively.

Complexity is more than a passing issue. It is science’s most powerful and debilitating intoxicant. We teach it in our schools, confuse it with sophistication and sanction it with faith. In this High Tech Age, we have predictably become drunk on the stuff. And, as with alcohol and cocaine, we’ll probably discover its hazards through a series of painful accidents.

Meanwhile, there is another concern that ironically might have been illuminated by a teacher, or better yet a journalist, in space. Its advocates include a recently-created organization of space veterans whose non-political goal is to share their singular view of our planet. That view sees a fragile ball of blue, green and brown, undivided by the lines that mark the maps and disputes on the surface below. It is an objective view, and we need it badly.

The implications of that view are made more sober by recent discoveries suggesting limits to the viability of human life in the environments of space. Outside the protective shield of our atmosphere, travelers are bombarded constantly by cosmic radiation that produces cancer and other ailments.

Weightlessness also has its long-term costs. While there may be ways to reduce or eliminate the risks involved with space travel, we are still, at best, in the zygote stage of our development as space creatures. It might be millennia before we are finally ready to leave Earth’s womb and dodge asteroids in the manner of Han Solo.

Until then, it would be nice if we didn’t have to discover our limits the hard way.

In a more perfect world, where my many passions and obligations would be jobbed out to team of scattered clones, one of me would be in Santa Barbara, at the Super Santa Barbara exhibition on Net Neutrality at 653 Paseo Nuevo where a reception will take place 6:30pm-9pm on Thursday (that’s today) January 6th.

In my stead will be friends, most notably Joe Andrieu — who will give a talk on Net Neutrality with a Q&A — and Warren Schultheis of City2.0, who organized the event and the exhibition, which will run Jan 7th – Jan 23rd. Tues-Sun 12pm -5pm.

In their page on Net Neutrality, there’s a link to this piece I wrote for Linux Journal in 2006. It holds up pretty well, actually.

Again, wish I could be there. But if you are, please come by. There are many arguments to be had on the topic — art to appreciate as well (such as the Julia Ford item above). But the fact that matters most for Santa Barbara is that the city is still under-served by its sources of Internet connectivity. That alone should give everybody plenty to talk about.

Bonus link.

This morning, while freezing my way down 8th Avenue to Piccolo on 40th to pick up a couple of cappuccinos, I paused outside the to admire its stark modern lobby as delivered the latest storm news from Los Angeles through my phone’s earbuds. In the midst of reports of fallen rocks, traffic accidents and fears of mudslides, KNX said an actor had been seriously injured during last night’s latest preview performance of Spider-Man, on Broadway, three short blocks from my very ass.

This wasn’t the show’s first injury. In fact, the show had already earned “Troubled” as its adjectival first name.

So, after I got back to our hotel room, we brought up the Times’ website on our iPad (the paper’s own application crashes) and read Actor Injured in Fall During ‘Spider-Man’ Performance, by reporters Dave Itzkoff and Hamilton Boardman. Also contributing to the story were —

  • actress Natalie Mendoza, “who plays the spider-goddess Arachne” and “wrote on her Twitter feed: ‘Please pray with me for my friend Chris, my superhero who quietly inspires me everyday with his spirit. A light in my heart went dim tonight.'” The story adds, “She appeared to be referring to her fellow cast member Christopher Tierney, who is an aerialist and ensemble member in the musical. Bellevue Hospital Center confirmed that on Monday night it had received a patient by that name.”
  • Steven Tartick, an audience member. “‘You heard screams,’ Mr. Tartick said. ‘You heard a woman screaming and sobbing.’
  • An unnamed “New York Times reader” who shot a video of the accident, which ran along with the story. (That’s my own screenshot on the right.)
  • Audience members Scott Smith and Matthew Smith
  • Brian Lynch, an audience member who “described the scene at the Foxwoods Theater on his Twitter feed, writing: ‘Stopped short near end. Someone took nasty fall. Screaming. 911 called. No idea what happened, kicked audience out.’ He added: ‘No joke. No explanation. MJ and Spidey took what seemed to be a planned fall into the stage pit. Then we heard MJ screaming.'”
  • Eyewitness Christine Bord, who “described events outside the theater in a blog post on her Web site, onlocationvacations.com, and “In a telephone interview,” said “two ambulances and a fire truck were already waiting outside the theater when most audience members exited. The actor was quickly brought out on a stretcher, wrapped in protective gear and wearing a neck brace. He acknowledged the crowd which clapped for him before an ambulance took him away.”
  • A New York Times reader who supplied a photo “showing a ‘Spider-Man’ actor being transported to an ambulance outside the Foxwoods Theater.”

The story concludes,

The “Spider-Man” musical has faced several setbacks during its preview period, with one of its actresses suffering a concussion and two actors who were injured by a sling-shot technique meant to propel them across the stage. On Friday it was announced that “Spider-Man” was delaying its official opening by four weeks to Feb. 7 so that creative changes could be made to the show.

A press representative for “Spider-Man” said in an email message: “An actor sustained an injury at tonight’s performance of ‘Spider-Man: Turn Off the Dark.’ He fell several feet from a platform approximately seven minutes before the end of the performance, and the show was stopped. All signs were good as he was taken to the hospital for observation. We will have more news shortly.”

The comments are a snarky icing on the story’s cake, some calling to mind the late and very great Mystery Science Theory 3000:

“Will a vending machine be selling insurance if the audience cares to purchase any?””There is a reason why this stuff is done with CGI.”

“Didn’t I just read this story?”

“Not so amazing now, are you, Spidey?”

“Dude, this show is getting better all the time! I gotta get me a ticket before it gets shut down.”

“Whoever gave the video to the Times should be commended. That is one brutal fall. If the actor’s neck isn’t broken he’s lucky. We all understand that in today’s world the investments of a group of millionaires in a Broadway show are more important than actors lives but it’s time for the grownups to step in and shut this nonsense down. Look, of course it is sad when someone is injured, but this is the price you have to pay if you want to create great theater. Everyone knows that great theater is about launching people across stages using slingshots. It is what Ibsen did, it is what Shakespeare did, it is what made Sondheim famous. To all the haters posting here, how do you expect to be enlightened at the theater if you can’t see shows that launch actors into the air using slingshots? Mark my words, in one hundred years High School’s will require their students to read Hamlet and to construct slingshots with which to launch each other. That obviously justifies these injuries.”

We live in liminal times, on the blurred boundary between What Was and What Will Be. The formalities of Reporting as Usual, which the Times has epitomized for more than a century, are What Was. What Will Be is Version 2.o of The Press, which will mash up stories (among other news provisioning units) from many sources, which will be credited, linked, and kept current in as close to Real Time as humanly and technically possible.

On Rebooting the News yesterday, @Jay Rosen revisited his excellent distinction between The Press and The Media. Here’s my compression of it: The Press is where we get capital-J Journalism at its best—that is, through goods that truly inform us. The Media is an advertising business.

Nice to see the former keeping up with the Times. And vice versa.

And I do hope that Chris Tierney and the show both recover.

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Balk Friday

Yesterday’s paper came late. Guess it was too heavy. The thing weighed about four pounds, most of which was advertising for sales today, Black Friday, the first day of the Christmas Shopping season. Buy Now and Save! Celebrate the birth of the Savior by spending big, in herds.

We were at a house with TV for Thanksgiving yesterday. There on the flat screen I saw news coverage of people huddled on sidewalks, awaiting rain overnight and store openings in the morning. I guess those people are grazing on savings in those very stores right now.

One sane alternative is to join in celebration of Buy Nothing Day. It’s today in the U.S. and tomorrow elsewhere. BND is part of AdbustersCarnivalesque Rebellion, the idea behind which is to “shut down consumer capitalism for a week”. Today is the culmination of that.

About Adbusters: “We are a global network of culture jammers and creatives working to change the way information flows, the way corporations wield power, and the way meaning is produced in our society.” My work kinda fits that description, but my means toward the same ends are different. Adbusters is at war with captialism, and I’m not. I just think that the demand side of the market has never been properly equipped — and that once it is, we won’t need the war, because the system will reform itself. We’ll discover that it’s possible to prosper and improve our lives and the world by actually relating, rather than by controlling from one side or rebelling from the other.

But, each to their own. I’m glad Adbusters is out there and has a sense of humor about what they’re doing. And hey, think about how much you’re actually saving by spending nothing today.

I lost my Sprint data thing and my smartphone is getting dumber by the second. (In fact, I’m on my way to trade it in.) So the only way I can get online from the road right now is by stopping at a Panera Bread, which has slow but free wi-fi. The kid is with me and just bought a roll for us to share while I let ya’ll know that I’ll be on Tummelvision live at 8pm tonight Eastern, 5pm Pacific, 0100 Greenwich.

If you’re not hip to Tummeling, find out more here. Tummelvision is the brainthing of Heather Gold, Deb Schultz and Kevin Marks, three excellent folks I’ve known for years. In the last few of those, Kevin and Deb have both been involved with ProjectVRM and its immodest ambitions as well.

Should be a fun conversation. Hear you there.

Live blogging Barbara van Schewick’s talk at Maxwell Dworkin here at Harvard. (That’s the building from which Mark Zuckerberg’s movie character stumbles through the snow in his jammies. Filmed elsewhere, by the way.)

All the text is what Barbara says, or as close as I can make it. My remarks are in parentheses. The talk should show up at the MediaBerkman site soon. When it does, go there for the verbatim version.

(In the early commercial Net, circa 1995 forward), the innovator doesn’t need to ask permission from the network provider to innovate on the network. Many different people can innovate. Individuals at the network’s ends are free to choose and to use. Obligation to produce a profit in the future isn’t required to cover development costs, because those costs are often cheap.

Innovators decide, users decide, low costs of innovation let a large and diverse group can participate.

The network is application-blind. That’s a virtue of end-to-end. (Sources Reed, Saltzer and End-to-End Arguments in System Design.)

Today the network operators are in a position to control execution of programs. “Imagine you have this great idea for a video application… that means you never have to go back to cable again. You know you have a fair chance at the marketplace…” In the old system. Not the current one. Now the network provider can stand in the way. They say they need to manage bandwidth, or whatever. Investors don’t invest in apps or innovators that threaten the carriers directly.

Let’s say Google ran the network when YouTube came along. Would YouTube win this time, like it did the first time? (Disregard the fact that Google bought YouTube. What matters is that YouTube was free to compete then in ways it probably would not now—so she suggests.)

In the early Net (1995+), many innovators decided, and users decided. There was little uncertainty about the supportive nature of the Internet.

User uncertainty or user heterogeneity? More and better innovation that better meets user needs. More ideas realized. (That’s her slide.)

With fewer or less diverse innovators, fewer ideas are realized.

Her book concentrates on innovators with little or no outside funding. (Like, ProjectVRM? It qualifies.)

One might ask, do we need low cost innovators now that there are so many billionaires and giants like Google and Yahoo? Yes. The potential of the early Web was realized by Netscape, not Microsoft. By Amazon, not by Barnes & Noble.

Established companies have different concerns and motivations than new innovators. Do we prefer innovation from large self-protecting paranoid companies or small aggressive upstarts?

Users decide vs. Network providers decide. That’s the choice. (The latter like to choose for us. They did it with telephony and they did it with cable TV.) In Europe some network providers prohibit Skype because it competes with their own services. Do we want them to pick winners and losers? (That’s what they want to do. Mostly they don’t want to be losers.)

Users’s interests: Innovators decide. Users decide Network can’t control Low costs of innovation, very large and diverse group of innovators. (Her slides are speaker’s notes, really.)

Network providers’ interests: They are not interested in customer or user innovation. In fact they oppose it. They change infrastructure to protect their interests. There is a gap between their private and public interests: what economists call a Market failure.

Do we need to regulate network providers? That’s what Network neutrality is about. But the high cost of regulation is a difficult question. Not saying we need to preserve the Net’s original architecture. We do need to protect the Net’s ability to support innovation.

Let’s pull apart network neutrality and quality of service (which the carriers say they care most about).

Best effort is part of the original design. Didn’t treat packets differently. Doing that is what we call Quality of Service (QoS).

Question: How to define discrimination? We need to ask questions. Such as, do we need a rule against blocking? Such as against Skype. One defining factor in all NN proposals is opposition to blocking. If Comcast slows down YouTube or something else from Google to favor it’s own video services (e.g. Xfinity), that’s discrimination.

Option 1: allow all discrimination…. or no rule against discrimination. That’s what the carriers want. Think of all the good things you could get in the future that you can’t now if we allow discrimination, they say. (Their promise is a smooth move of cable TV  to the Net, basically.)

Option 2: ban all discrimination … or treat every packet the same. This is what Susan Crawford and others argue for. Many engineers say “just increase capacity,'” in suipport of that. But that’s not the best solution either. It’s not the job of regulators to make technical decisions about the future.

All or nothing doesn’t work. Nether allow all discrimination nor Ban all discrimination.

Application blindness is the answer.

Ban discrimination based on applicaitons. Ban discrimination based on applications or classes of aplicaitons.

Fancast vs. Hulu. YouTube vs. Hulu. Allow discrimination based on class of aplication… or like treatment. Treat internet telephony vs. email differently. But don’t favor Skype over Vonage. (This is hard to describe here. Forgive.)

Problem 1. Distorting competion. Capturing some value from gaming, for example, by favoring it as a class. Give it no-delay service while not doing that for VoIP. But both are affected by delays. In the Canadian network management proceding, we found that P2P is slowed down either all the time or during congestion time. That allows real-time to work well. But then real-time video came along. What class do they say that belongs to? We don’t really know what the Canadian carriers did, but we do visit the question of what they should do if they discriminate by class. Thus…

Probem 2. High cost of regulation. (Self-explanatory, so it saves me the effort to transcribe.)

Problem 3. User choice. Support from the network. The moment you require support from the network (as a user or app provider), you throttle innovation.

Constraints on Network Evolution allows quality of service: 1) Dfferent classes of service offered on a non-discriminatory basis; 2) Users able to choose wheter and when to use which class of service; 3) Net provider only allowed to charge its own Internet service sustomers for use of different classes of service*. So network providers don’t destroy competition any more. Users get to choose which quality of service to use. And the network provider doesn’t need to provide QoS except in a general way. They’re out of the market equation.

(Bob Frankston is across the aisle from me, and I can see the word balloon over his head: “Why constrain thinking with ‘services’ at all? Why not just start with connectivity? Services keeps us in the telecom bottle.”)

Constraints on network evolution. Cost of regulation.

MY SOLUTION: (not on screen long enough.. there was more on the slide)

Preserve factors that have fostered application innovation ≠ Preserve original archictecture of the internet.

Final question to talk about. Why care about application innovation?

Have you ever tried to explain to your partner’s grandmother why she should use the Internet? You don’t argue about sending packets back and forth. You talk about grandchildren pictures, and being able to talk for free. That comes from innovation at the ends, not the carriers.

We need to protect the sources of innovation.

Yochai: What do you do with Apple iPhone? Tremendous user adoption being driven precisely by a platform that reverses many of your assumptions smack in the middle othe most controversial boundary, regarding wireless. (Not verbatim, but as close as I could get.)

Barbara: People say, “Look, I’ve got a closed device supporting lots of innovation.” No, you need to think about this differently. Apple created a device with open interfaces that supported lots of innovation. So it moved us from a world where few could innovate and it was costly, to a world where many could and it was cheap. Proves my point. Now we have an experiment with iPhone vs. Android. Apple controls, Google doesn’t. Now we get to see how this plays out. We’re starting to see where lots of innovators are moving to Android as well. More are starting with the Android, experimenting and then moving to the iPhone. The cost of starting on the Android is less. So we have two shifts. I think we will se the platform with no control being more successful.

Every network neutrality proposal has a network management exception. Mine doesn’t.

Q from the audience; Some apps still need a lot of money, whether or not the network is neutral. Building a big data warehouse isn’t cheap. And why is innovation all that matters? What happens when it is actually hurtful to rich incumbents such as news channels?

Barbara: I agree. If you’re a rich company, your costs of entry are lower. Kids with rich parents have advantages too. To me the network itself is special because it is the fundamental point of entry into the marketplace. We want the impediments to be as low as possible. The cost of starting Facebook for Mark Zuckerberg was actually rather low. He scaled after getting VC money, but he got a significant number of users first, without a lot of costs. I do think this is very important. Innovation is often disruptive, sure. But that’s not a reason for messing with this fundamental infrastructure. If newspapers have a problem with the Net, fix the papers. Separate that problem from the infrastructure itself. As a general matter, one of the good things about the Net’s infrastructure is that it allows disruption.

Q: What about companies as users? (Can’t summarize the answer.)

Bob Frankston: If your grandmother is on a phone… (couldn’t get what Bob said or make sense of Barbara’s response… sorry).

Q: (What about subsidies? I think.) The theory of two-sided markets. With papers, subscibers and advertisers. With the Net, users and app providers. If you’re attached to one platform, the providers are likely to attach to one side. (I think that’s what she’s saying.) This gives the provider a way to monopolize. In Europe, where there is more competition, there are more trade-offs. I think what would happen if we forced the net to be neutral, would we solve the problem by charging a different way. Subsidies, tax breaks. Perhaps a solvable problem. Let’s say we allow the carriers to charge extra (for premium use?). We break the system at its core. It doesn’t make sense to give up the value of the Internet to solve a problem that can be solved a different way.

Q: A question about managed vs. unmanaged isochronous delivery. We should be thinking about what happens when the carriers start charging for better service. (But they already do, with service tiers, and business-grade service (with assigned IP addresses, unblocked ports, etc.). The Europeans give the regulators the ability to monitor quality and impose minimum standards. This has a whole bunch of problems What really are acceptable levels? for example. The Europeans think this is sufficient to discipline providers. Well, in the end there might be some apps that require strict guarantees.

Okay, it’s later now. Looking back over this, I have to say I’m not sure it was a great idea to live-blog it. There are others who are better at it. Within the Berkman fold, David Weinberger is one, and Ethan Zuckerman is another. Neither were in the room, so I thought I’d give it a try. Again, visit MediaBerkman for the actual talk. Or just go get her book, Internet Architecture and Innovation. I got one, and will start reading it shortly.

The picture above, by the way, is one of a set I shot at the talk.

In The Data Bubble, I told readers to mark the day: 31 July 2010. That’s when The Wall Street Journal published The Web’s Gold Mine: Your Secrets, subtitled A Journal investigation finds that one of the fastest-growing businesses on the Internet is the business of spying on consumers. First in a series. That same series is now nine stories long, not counting the introduction and a long list of related pieces. Here’s the current list:

  1. The Web’s Gold Mine: What They Know About You
  2. Microsoft Quashed Bid to Boost Web Privacy
  3. On the Web’s Cutting Edge: Anonymity in Name Only
  4. Stalking by Cell Phone
  5. Google Agonizes Over Privacy
  6. Kids Face Intensive Tracking on Web
  7. ‘Scrapers’ Dig Deep for Data on the Web
  8. Facebook in Privacy Breach
  9. A Web Pioneer Profiles Users By Name

Related pieces—

Two things I especially like about all this. First, Julia Angwin and her team are doing a terrific job of old-fashioned investigative journalism here. Kudos for that. Second, the whole series stands on the side of readers. The second person voice (you, your) is directed to individual persons—the same persons who do not sit at the tables of decision-makers in this crazy new hyper-personalized advertising business.

To measure the delta of change in that business, start with John Battelle‘s Conversational Marketing series (post 1, post 2, post 3) from early 2007, and then his post Identity and the Independent Web, from last week. In the former he writes about how the need for companies to converse directly with customers and prospects is both inevitable and transformative. He even kindly links to The Cluetrain Manifesto (behind the phrase “brands are conversations”).

In his latest he observes some changes in the Web itself:

Here’s one major architectural pattern I’ve noticed: the emergence of two distinct territories across the web landscape. One I’ll call the “Dependent Web,” the other is its converse: The “Independent Web.”

The Dependent Web is dominated by companies that deliver services, content and advertising based on who that service believes you to be: What you see on these sites “depends” on their proprietary model of your identity, including what you’ve done in the past, what you’re doing right now, what “cohorts” you might fall into based on third- or first-party data and algorithms, and any number of other robust signals.

The Independent Web, for the most part, does not shift its content or services based on who you are. However, in the past few years, a large group of these sites have begun to use Dependent Web algorithms and services to deliver advertising based on who you are.

A Shift In How The Web Works?

And therein lies the itch I’m looking to scratch: With Facebook’s push to export its version of the social graph across the Independent Web; Google’s efforts to personalize display via AdSense and Doubleclick; AOL, Yahoo and Demand building search-driven content farms, and the rise of data-driven ad exchanges and “Demand Side Platforms” to manage revenue for it all, it’s clear that we’re in the early phases of a major shift in the texture and experience of the web.

He goes on to talk about how “these services match their model of your identity to an extraordinary machinery of marketing dollars“, and how

When we’re “on” Facebook, Google, or Twitter, we’re plugged into an infrastructure (in the case of the latter two, it may be a distributed infrastructure) that locks onto us, serving us content and commerce in an automated but increasingly sophisticated fashion. Sure, we navigate around, in control of our experience, but the fact is, the choices provided to us as we navigate are increasingly driven by algorithms modeled on the service’s understanding of our identity.

And here is where we get to the deepest, most critical problem: Their understanding of our identity is not the same as our understanding of our identity. What they have are a bunch of derived assumptions that may or may not be correct; and even if they are, they are not ours. This is a difference in kind, not degree. It doesn’t matter how personalized anybody makes advertising targeted at us. Who we are is something we possess and control—or would at least like to think we do—no matter how well some of us (such as advertisers) rationalize the “socially derived” natures of our identities in the world.

It is standard for people in the ad business to equate assent with approval, and John’s take on this is a good example of that. Sez he,

We know this, and we’re cool with the deal.

In fact we don’t know, we’re not cool with it, and it isn’t a deal.

If we knew, the Wall Street Journal wouldn’t have a reason to clue us in at such length.

We’re cool with it only to the degree that we are uncomplaining about it—so far.

And it isn’t a “deal” because nothing was ever negotiated.

On that last point, our “deals” with vendors on the Web are agreements in name only. Specifically, they are a breed of assent called contracts of adhesion. Also called standard form or boilerplate contracts, they are what you get when a dominant party sets all the terms, there is no room for negotiation, and the submissive party has a choice only to accept the terms or walk away. The term “adhesion” refers to the nailed-down nature of the submissive party’s position, while the dominant party is free to change the terms any time it wishes. Next time you “agree” to terms you haven’t read, go read them and see where it says the other party reserves the right to change the terms.

There is a good reason why we have had these kinds of agreements since the dawn of e-commerce. It’s because that’s the way the Web was built. Only one party—the one with the servers and the services—was in a position to say what was what. It’s still that way. The best slide I’ve seen in the last several years is one of Phil Windley‘s. It says,

HISTORY OF E-COMMERCE

1995: Invention of the Cookie.

The End.

About all we’ve done since 1995 on the sell side is improve the cookie-based system of “relating” to users. This is a one-way take-it-or-leave-it system that has become lame and pernicious in the extreme. We can and should do better than that.

Phil’s own company, Kynetx, has come up with a whole new schema. Besides clients and servers (which don’t go away), you’ve got end points, events, rules and rules engines to execute the rules. David Siegel’s excellent book, The Power of Pull, describes how the Semantic Web also offers a rich and far more flexible and useful alternative to the Web’s old skool model. His post yesterday is a perfect example of liberated thinking and planning that transcends the old cookie-limited world. The man is on fire. Dig his first paragraph:

Monday I talked about the social networking bubble. Marketers are getting sucked into the social-networking vortex and can’t find their way out. The problem is that most companies are trying small tactical improvements, hoping to improve sales a bit and trying tactical savings programs, hoping to improve margins a bit. Yet there’s a whole new curve of efficiency waiting in the world of pull. It’s time to start talking about savingtrillions, not millions. Companies should think in terms of big, strategic, double-digit improvements, new markets, and new ways to cooperate. Here is a road map

Read on. (I love that he calls social networking a “bubble”. I’m with that.)

This week at IIW in Mountain View, we’re going to be talking about, and working on, improving markets from the buyers’ side. (Through VRM and other means.) On the table will be whole new ways of relating, starting with systems by which users and customers can offer their own terms of engagement, their own policies, their own preferences (even their own prices and payment options)—and by which sellers and site operators can signal their openness to those terms (even if they’re not yet ready to accept them). The idea here is to get buyers out of their shells and sellers out of their silos, so they can meet and deal for real in a truly open marketplace. (This doesn’t have to be complicated. A lot of it can be automated. And, if we do it right, we can skip a lot of the pointless one-sided agreement-clicking friction we now take for granted.)

Right now it’s hard to argue against all the money being spent (and therefore made) in the personalized advertising business—just like it was hard to argue against the bubble in tech stock prices in 1999 and in home prices in 2004. But we need to come to our senses here, and develop new and better systems by which demand and supply can meet and deal with each other as equally powerful parties in the open marketplace. Some of the tech we need for that is coming into being right now. That’s what we should be following. Not just whether Google, Facebook or Twitter will do the best job of putting crosshairs on our backs.

John’s right that the split is between dependence and independence. But the split that matters most is between yesterday’s dependence and tomorrow’s independence—for ourselves. If we want a truly conversational economy, we’re going to need individuals who are independent and self-empowered. Once we have that, the level of economic activity that follows will be a lot higher, and a lot more productive, than we’re getting now just by improving the world’s biggest guesswork business.

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Happy 42 Day

It’s 101010 today. In binary, that’s 42. It’s also the Answer to the Ultimate Question of Life, the Universe and Everything.

And, as it happens, our son’s 14th birthday. You can imagine how very cool that is.

Ten years ago this month, I gave the opening keynote for the International Retail Conference of the Gottlieb Duttweiler Instutut, in Lucerne, Switzerland. The venue was the amazing Culture and Congress Centre, which had opened just two years earlier. Designed by the architect Jean Nouvel and esteemed for its acoustics, it was the most flattering jewell box into which the stone of my rough self has ever been placed as a speaker. My warm up act was a symphony orchestra. While they played I whispered to my wife, “Not one of those musicians has played a wrong note in years. How many seconds will pass before I flub a line?”

Less than ten, it turned out. But somehow that relaxed me, and the rest of the talk went without a hitch, even though many in the audience were wearing headphones, so they could hear me translated to another language, and their reactions (some nodding, some laughing, some shaking their heads) came several seconds after I said whatever it was they were reacting to. It was weird.

I had mostly forgotten the talk, and wasn’t even sure I had put it up online anywhere. But in fact I had, right here.  Since that’s inside a site that’s not indexed by search engines (my choice, so far back that I’ve only recently re-discovered that fact, explaining why nothing there ever shows up), and I don’t plan on fixing it soon (I’ve got other stuff there I really would rather not get indexed), I’ve decided to post the whole thing here in the blog. As one might expect, it was right about some things, wrong about others, set in a context that has long since changed, addressed to an audience that has mostly moved on, and with arcana that may in some cases no longer make sense. Yet I think it still says some worthwhile things that invite probing and discussion. So here goes:

Why Markets Will Once Again Consist of People
(and why this is good news for Retailing)

This speech was given on the Gala Evening/50th Anniversary Celebration of the Gottlieb Dutteiler Institute, in the Kultur- und Kongresszentrum Luzern – Konzertsaal, Lucerne, Switzerland.

The subheads were put there mostly to make it easy for me to keep my extemporizing close to the text, and to make live translation a little bit easier.

25 September, 2000

By Doc Searls


Opening

People ask me why The Cluetrain Manifesto has 95 Theses. The reason is that Martin Luther did our market testing for us. It seemed to work for him, so we figured it would work for us.

But lately I’ve been wondering why he chose 95. I think the answer is that he was really a retailer at heart.

I figure he had 100 theses, but then decided more people would buy it if he knocked off 5 theses and offered 95 as a discount. It was kind of a sale price. Worked pretty well.

The priest

Speaking of priests, I have a friend, an Irish priest who for many years did missionary work in East Africa. After he read The Cluetrain Manifesto, he called me up and said “I love your book. Especially that first thesis: markets are conversations. It’s brilliant.”

I was the original author of that thesis, so this was fun to hear. But the brilliance he praised was his, not mine.

Village market story

This became clear when he told me the story of a visiting friend he once took to a traditional African village market. His friend wanted to buy a rug displayed in one of the merchant’s stalls. With the priest serving as an interpreter, the customer asked for the price. When merchant responded, the customer said, “That’s too much,” and began to walk away.

The priest then explained to his friend that he had insulted the merchant. So they turned around and went back. The customer then indicated that he wanted to go ahead and buy the rug for the stated price. Now the merchant became upset.

The priest now told to his friend that he had insulted the merchant twice – first by refusing to discuss the value of the rug, and second by offering to pay full price. The customer was completely confused. Clearly he didn’t know how to buy a rug in this town.

Then the priest said to his friend, “What do you think the rug is worth?” The friend responded with a number, and a conversation between the three parties followed.

After a while the customer arrived at both an education about the rug and a price everybody agreed was fair.

The point: markets really are conversations

Now this, the priest told me, is an example of how markets really are conversations. In traditional markets like this one, the only way for a seller and a buyer to discover the true value of the seller’s goods is together – by talking about them and coming to an agreement.

In other words, all value is discovered inside a conversation.

This is why the idea of a fixed price set by a merchant is as silly as talking to oneself. It makes no sense. In traditional markets like this one, conversation starts with the merchant’s asking price. It doesn’t end there.

Tech exec conversation

A few days later I shared this story with a group of government technology executives. After my talk, one guy came up to me and offered another insight. He said that here in the industrial world we do negotiate prices, but only for the most expensive goods and services, such as automobiles, houses and large service contracts.

Then he added another observation. We can only negotiate when there’s a balance of power between supply and demand – when neither side has enough advantage to name the price and end the conversation.

We don’t have that situation in mass markets, including the retail world that is familiar to all of us. In that environment, the supply side has been in control for a very long time.

Learning more about prices

So I began to wonder: when did the idea of fixed prices, set by the supply side, take root and became standard?

Sure enough, in another conversation, I learned that the price tag was invented in the late 1800s in Philadelphia. The inventor was John Wanamaker, the man who opened the first department store in the U.S.

History of retailing

This increased my interest in the history of retailing. Since then I have learned that department stores were pioneers in the use of all kinds of technologies, including –

  • telegraph
  • electric lights
  • telephones
  • radio

Retailing was also the first industry to provide employee benefits, such as health care and paid vacation time.

It was also the first industry to take orders by telephone and to offer customer refunds.

In fact, the whole concept of “customer service” comes from the retailing industry.

Adding value to the conversation idea

You see, what’s happening here – for me, and for all these people I talked to – is that we all added meaning to this one idea – that markets are conversations.

What is it about this idea that attracts so much interest? Why does it make people think about the deeper ways that markets really work?

Finding the answers is a discovery process – something that we do together, as I’ve just shown.

I want to continue that process here, tonight.

The four clues

To start, I will share four insights – let’s call them clues – that have come out of conversations we’ve had since The Cluetrain Manifesto came out in January. I choose these because I think each is especially relevant to retailing.

The first clue is that metaphors matter. If conversation is the best metaphor for markets, what’s wrong with the other ones, and why?

The second clue is that the companies we least expected to get our clues are the ones that seem to be doing the most with them. This is a very relevant surprise.

The third clue is that the Internet, like a real market, is a place, not just a medium.

The fourth clue is that there really is not a new economy. Instead there is a new dynamic in the investment economy, where a river of money flowing from venture capitalists into new companies. This is extremely distracting, and I’ll tell you why.

Finally I will talk about how all four of these clues bring us to the subject of this speech: that markets consist of people – and why this is good news for retailing.

Language warning

A brief warning. I am going to be talking about language here. Unfortunately, I am fluent only in English.

  • Ich habe drei Jahren auf Deutch im Shule lehrt, aber… I took two of them twice – and I gave them all back when I was done.
  • I have worked in France, but not long enough to learn any more French than it takes to apologize for mangling that beautiful language. Pardon moi pour vous derenger. Je nes comprend pas le Francais.
  • I also know a tiny bit of Spanish – though far less than my own three-year-old son.

So forgive my lack of multilingual skills.

I trust that what I tell you will still be relevant, not because technology is forcing far too much English into better languages, but because all expression arises from unconscious sources. And those sources are what I’m here to talk about.

Clue #1

My first clue is that metaphors matter.

In English we have an expression: “in terms of.” In fact, we are always speaking in terms of one metaphor or another. Metaphors supply the words we use when we talk about a subject. When we speak in terms of a metaphor, we bring in a box of words from that metaphor, and speak in terms we find in that box.

To demonstrate what I mean, I’ll start by asking a question about life. When we talk about life, what metaphor do we talk in terms of? In other words, what box of words do we use when we talk about life? Again, the answer is not obvious, because it’s almost totally unconscious.

In a word, the answer is travel. When we think and speak about life, we are inside a big box of travel words.

Birth is arrival. Death is departure. Choices are crossroads. Goals are horizons. Careers are paths. Ambitious people move ahead, or move into the fast lane. Lazy people fall behind. Confused people get lost in the woods. Drunkards fall off the wagon. Saintly people follow the straight and narrow path. Sinners stray.

The travel metaphor – this concept that life is a journey –is so deep, so common, so unconscious and so powerful that we almost never think about it. Yet it is nearly impossible to speak about life without using our handy box of travel words.

One more example. Let’s look at the main metaphor for time, which is money. We budget, spend, waste, lose, gain and invest time. We literally think of time in terms of money.

Metaphors for business

Now: let’s look at business. What’s our favorite metaphor for business? What do we think about business in terms of?

There’s war, of course. And sports. We speak of other companies in our business as competitors. We battle them for territory that we try to penetrate, defend, capture, dominate or control. But war and sports are obvious metaphors – we are conscious of them. What’s the biggest unconscious metaphor for business?

In a word, shipping. We often think and speak about business in shipping terms. We call our goods content that we package and move through a distribution system that we also call a channel.

We often talk about delivering products and services that we address to consumers or end users. Both those consumers and end users are positioned at the far ends of the shipping system we call business.

Marketing also uses shipping language when it talks about addressing, sending and delivering messages through media which are also conceived and described in transport terms.

How long have we been talking about business in shipping terms?

The age of industry

The answer is about 200 years – ever since Industry won the Industrial Revolution.

Starting about two hundred years ago, when we began to build the great textile, mining, manufacturing and transportation industries, we also built an enormous distance between production on one hand and consumption on the other.

We spanned this distance with “value chains,” most of which fanned out from a small number of producers to a large number of consumers. And we began to use that label – consumers – for the first time.

Every business had a place somewhere along one of these chains, where it would “add value” to goods the way parts are added to a car on an assembly line.

This distance between production and consumption – and the power enjoyed by producers over consumers – made it easy to think of markets not as places full of real human beings, but as distant abstractions.

Abstractions for markets

Today, two hundred years after the Industrial Revolution, we use the term “market” to mean five completely different kinds of things, none of which derive from what markets were in the first place. Lets go over the list –

1) Markets are product categories. We speak of automobiles, cosmetics and home electronics as “markets.”

2) Markets are geographical areas such as Stuttgart, Philadelphia and China. It’s amazing to me that in the U.S. we can talk about “penetrating” the Chinese “market.” As if we were throwing spears at a map, rather than selling goods to a quarter of the world’s population.

3) Markets are demographic populations. Men, 25-44. Middle-class women. Volvo drivers. Wine conoisseurs. We call each of these “markets” too.

4) Market is a synonym for demand. This is what we mean when we say there is a “market” for Italian wines, parabolic skis, or impolite books like The Cluetrain Manifesto.

5) Market is also a verb we use to label the pushing of goods from supply to demand. This verb “market” is the root word for the noun marketing. Not surprisingly, marketing is concerned almost entirely with the first four abstractions I just talked about

Ancient markets

Now let’s go back and look at the original meaning of markets.

The first markets were places in the middle of town. People gathered in the marketplace to make culture and do business. These places were the hearts of their cultures. Civilization began in the marketplace. Philosophy, mathematics and democracy are all Greek words born in the agora – the Greek marketplace.

In markets like the agora, all the economic relationships we know so well – supply and demand, production and consumption, vendor and customer – were a handshake apart. In these market places, people who sold goods usually also made them.

Names

In fact, people were often named after what they made, or sold. Many of our surnames are fossil remnants of the roles our ancestors played in their marketplaces. Names like Smith, Hunter, Shoemaker, Farmer, Weaver, Tanner, Butcher…. Lehrer, Jäger, Weber, Schuhmacher, Drucker, Händler… Fermier, Marchand.

The noun “market” – which differs little in German, French, Italian and Spanish – derives from the Latin word mercere, which means to buy. In the Roman marketplace, there were no “consumers,” only customers, who came there to shop. Even today in America we call malls “shopping centers.” Not “selling centers.”

Restoring the handshake

In The Cluetrain Manifesto we said the Industrial Age was a long interruption in our understanding of markets as places where people gather to sell their goods, to shop, to talk, and to enjoy public culture.

The Internet ends that interruption by putting everybody within one handshake of everybody else. First sources and final customers are now one mouse click apart.

The Internet restores an even balance of power between supply and demand.

Consumers are customers again. They are people with names, faces, tastes and rich personal histories.

Retailers have known this since Day One, but many companies farther back in the old value chains are beginning to witness this for the first time.

Smart markets

What they witness is markets – conversations – that are becoming smarter and more powerful by informing themselves. And those markets consist of everybody who wants to contribute to the conversation..

Clue #2

This brings me to our second clue. What kinds of companies want to talk about the issues Cluetrain brought up?

Would it be the dot-com start-ups, which were supposed to be changing the world, and putting these big old industrial companies out of business?

No, it was the big old industrial companies. Those were the ones looking hardest for clues. Companies with names like Procter & Gamble, Coca-Cola, Omnicom, Johnson & Johnson, Citicorp, Conoco, Rohm & Haas, Prudential, IBM and Migros.

The Coke example

Recently I’ve been talking with an executive with Coca-Cola who has the unlikely title of Chief Innovation Officer. In fact, the two of us were recently scheduled to serve on a panel where he would explain how Cluetrain is transforming his company.

Before this event was scheduled, I didn’t know Coca-Cola was subject to any kind of outside influence. They seemed to be more a force of nature than a company in the usual sense. The formula for Coke seemed to be on the periodic table of elements.

Why could the #1 brand in the entire world find guidance in a book that attacks the whole concept of branding?

I found that the answer is simple: Coca-Cola knows it can’t tell customers what they want any more.

However, Coca-Cola also knows it has a long-standing relationship with its customers – because it has led the conversation about soft drinks for more than one hundred years. That’s an advantage.

Procter & Gamble

Not long after the Cluetrain book came out, one of my co-authors, David Weinberger, got a call from Procter & Gamble. They wanted him to talk about Cluetrain with them at their headquarters in Cincinnati.

We were amazed. Procter & Gamble was the company that invented branding – a concept it borrowed from the cattle industry more than seventy years ago.

It quickly became clear that P&G was at least starting to get the clues. They knew branding wasn’t what it used to be. They knew this was no longer a world where one company could put one kind of soap in seven different boxes and sing about the difference.

Today, just four months later, P&G has a new CEO and – at least in some cases – an approach to rolling out new products that starts with the Internet.

We see this with a new hair styling product called Physique. In the past, Procter & Gamble might have spent 90% of its new product promotion budget on television advertising. For Physique they’re spending 30% on TV and the rest on the Web. The Web site says “Welcome to the Physique Stylezone: select your country. Underneath that it says, in French, choisessez votre pays. It’s an international campaign.

In the United States alone, more than half a million people (nearly all women) have signed up – on the Web – for free samples and membership in the Physique Club.

The campaign was developed by Saatchi & Saatchi, a global advertising agency headed by Kevin Roberts – a gentleman from New Zealand. Recently Mr. Roberts bragged about Physique’s results. He said, “The average time people spend on the Web site is 11 minutes… We’ve got the consumers. We’re talking to them, they’re talking to us.”

The retailing advantage

So here we have two of the top marketing companies in the world – Coke and Procter & Gamble – that are not only discovering that markets how conversations, but putting that idea to use, perhaps for the first time.

This is easier said than done. Jack Welch, the legendary CEO of General Electric, has a Net-based internal campaign called “destroy your business.” It isn’t much of an exaggeration. These are fundamental changes.

But some businesses will have less to destroy than others, because they already know what it means to be in conversation with their customers.

This is why I believe that the industry with the biggest conversational advantage is retailing. For retailers, customers are real. There is a limit to how much a retailer can treat a customer as an abstraction. For a retailer, a customer is more than a consumer, a seat, an eyeball, or an end user. Customers are real people.

As retailers, we know customers by name. They shop in our stores, eat in our restaurants, trust us with their credit cards and return to shop again because they know who we are too. In fact, they probably know us better than we know them.

This is no small matter. This is a huge advantage. But what is the relevance of the Internet to that advantage.

This brings me to my third clue

Clue #3

The Internet, like a market, is a place, not just a medium. We go to it, not just through it.

When the Internet came along, it was easy to see it as yet another mass medium – as a vehicle (there’s another shipping term) for delivering messages to consumers.

Mulitple metaphpors

Like a newspaper, the Web has pages that we write or author or publish.

Like telephone directories, which are also publications, it gives us ways to look up stores, services, and each other.

Like radio and television we can “deliver content” in the form of audio and video files and streams.

Sometimes we also use theatrical metaphors at the same time. That’s what Web page designers do when they talk about delivering an experience to an audience.

Places

Now let’s look at this the other way around. To us – to people sitting at their computers – the Internet is more like the telephone than any other medium.

Like the telephone, the Internet is profoundly personal. When we are on the phone, we are in a personal, private space, which is why telephones are a lousy medium for commercial messages.

The messages we want on the Net aren’t the ones that “deliver an experience.” They are the ones that come by email, from people we know.

In other words, what matters most is what we hear from each other. What matters most is conversation.

Even our Web pages have a private, personal quality about them. That’s why we call our main pages “home.”

Home is a place.

By that same metaphor, we also speak about that place as a site that we put up on the Net and call a location. We also call that location an address.

The virtues

Now: who built this place? It’s interesting that the Net was not built by or for business. It was built by computer programmers, who did it not just for themselves, but for all of us. A perfect example is the World Wide Web, which was invented here in Switzerland by Tim Berners-Lee: an Englishman who had little interest in business at all.

What was it that made this place so appealing? What were the core virtues that these programmers built into the Net when they created it. There were three:

  1. Nobody owns it
  2. Everybody can use it
  3. Anybody can improve it

You won’t hear those virtues advertised by any of the big technology suppliers. If it were up to them, the Net would never have happened. All of them would have wanted to own it, to restrict access to it, and to improve it only by themselves.

But it didn’t happen that way. Because nobody owns it, everybody can use it, and anybody can improve it, the Net is much like a commons, a plaza, a town square, for the whole world.

This is our world. We have help from the technology suppliers, but they cannot command the way we build it out.

Back in 1955, Gottlieb Duttweiler said “What is happening is the higher valuation of the man in the street as a power in business life, and more, important, as a human being.

By more than forty years, he anticipated a remarkable development:

The most important market place in the history of civilization is designed to value the man on the street. The individual human being.

The new world

One of the greatest thinkers on the subject of the Internet is my friend Craig Burton, who was responsible for much of the success enjoyed by a networking company called Novell, in the 80s. Craig Burton’s thinking has always been many years ahead of his time.

Recently he described the Internet as a sphere, like a bubble, that constantly expands as more people are added to it.

In fact, he suggests we think of the Net as a bubble comprised entirely of people, all looking inward and all visible to each other across the empty space in the middle.

At the speed of light, the distance between any two points – any two people – is zero. And it’s true: in practical terms, it takes me no longer to send an email to Prague than to a co-worker in the next room. A Web page in Milan usually comes up just as fast in my browser as one from Miami, Singapore, or an office down the street.

Craig Burton says the Internet is the first world we have created entirely on our own, as a species. In fact, he believes that the Net is the biggest social, cultural and scientific transformation since the Renaissance, and that it is just beginning.

In this new world, our most fundamental resource is each other – and the conversations by which together we know more than we can know alone.

Clue #4

The fourth clue is that there is no “new” economy. There is only a well-funded distraction from the real economy, which is the economy of conversation we call the marketplace – an economy that has been with us for thousands of years.

To illustrate the problem, let me tell you one final story.

Not long ago I was at a party in San Francisco. There I talked with a young man who was already a veteran of several start-ups. When I asked him what his new company did, he said “we’re an arms merchant to the portals industry.” I had no idea what he meant.

But he answered every one of my questions with more buzzwords. They were “networking eyeball paradigms,” “portalizing B2B solutions,” “scaling strategic synergies” and so on. Finally I asked a rude question: how are sales?

He said, “They’re great. We just closed our second round of financing.”

Two kinds of markets

Suddenly it became clear to me that every company has two kinds of markets: one for its goods and services and one for itself. In other words, it is in two conversations: one with its community of customers, and the other with its community of investors.

In Silicon Valley, we have confused the second one with the first. We have made a “new” economy out of selling huge promises to investors, rather than goods and services to customers.

The best wisdom on this subject comes from Stewart Brand, who says form follows funding.

One reason nobody owns the Net is that it was originally funded by governments and universities. But this is not a well-funded story.

The best-funded story is the one being told by every company whose category begins with an E or whose name ends in a.com or .co.

Nearly every one of those companies was funded by venture capital.

Now, venture capital is not a bad thing. In fact, it is a very good thing. But it is also a very influential and distracting thing, which is why I want to talk about it.

Looking at size

Let’s look at the size of this distraction.

Last year venture capitalists invested around fourteen billion dollars in Silicon Valley alone. This year they are headed toward investing twice that much. The amount of money we’re talking about here is staggering. I have been told that more than half the countries in the world have a smaller gross domestic product.

This money continues to flow like a river. Even when demand for dot-com stocks began to falter early this year, this money river continued to flow through new dot-com start-ups – not only in Silicon Valley, but around the world. Last week Bertelsmann set up a billion-dollar venture capital fund.

Burning money

Where is this money going?

Much of it goes into building staffs, offices and developing technology. But a huge percentage of it goes into marketing, mostly through advertising in every media you can name.

This both attracts and funds enormous amounts of media attention. Magazine displays in the U.S. are being crushed under the weight of fat new business publications. Their very existence testifies to a “new” economy at work. It’s a lot of smoke, suggesting a very big fire.

But what’s burning is money. We don’t have a new economy here. We have a flood of combustible money – a kind of petrol – that is made to be burned.

Dot-com start-ups are very different kinds of businesses from the ones we’ve been building for thousands of years. They don’t have “overhead” or “expenses” in the usual sense. They have “burn rates.” And burn is exactly the term that they use. In this economy – if you can call it that – spending is a good thing. Burning is a good thing.

Perspective

But again, it’s a distracting thing, because most of the time it talks about itself. For a long time, it also disparaged traditional businesses.

So: how can we keep from being distracted by these huge fires and all their smoke?

With some perspective.

The new conversation – about burning money and huge payoffs when these companies go public – is only a few years old.

The old conversation – about vendors and customers selling and buying goods and services – is as old as civilization itself.

In fact, it is civilization.

And we are not in civilization just for the money.

This is what we are learning from companies like Procter & Gamble, Johnson & Johnson, Nortel Networks and. The surprise – and it shouldn’t be one – is that people don’t work at these companies just for the money.

I am amazed at how many people I meet at these companies are not interested in getting rich at dot-com start-ups. Instead they are looking deeply at why they want to work where they do.

I believe we are finding that these companies have souls. They have human purposes that transcend mere economics. These purposes have little to do with short-term opportunities, and nothing to do with cashing out or starting another business.

I believe retailing has more soul than of any other industry. I say this because retailing is deeply involved in culture itself: the culture of the marketplace. Retailing was here for thousands of years before the industrial age. And it will be here for thousands of years afterwards.

Retailers are not just here to sell. They are here to serve.

Gottlieb Duttweiler said, “The constant will to serve has something irresistible about it – conveying mysterious powers over one’s fellow human beings and making interrelationships visible which would otherwise remain hidden.”

He would have loved the Internet.

Conclusion

Clearly, he loved people. Because he also said, “Whoever forgets that people are the dominating factor in business and politics and thinks only in old-style dollars and francs has got his calculation wrong.”

Herr Duttweiler had it right. Retailing is about people. Markets are about people. The Internet is about people.

For Herr Duttweiler, it took extraordinary insight and courage to state this principle so simply when there was no Internet, deep in that long interruption we call the Industrial Age.

What he said was no less true then than it is today. But today a new age has begun: one that belongs to Herr Duttweiler’s dominating factor: people. Now customers and retailers together can finally agree that this is our world, these are our markets, and we are going to make them together – for ourselves, and for each other.

What can we do to improve this new world that nobody owns, everybody can use, and anybody can improve?’

I look forward to hearing the answer – from you.

Thank you very much.

It’s been a week since VRM+CRM 2010, and there have been many conversations on private channels (emails, face-to-face, phone-to-phone, face-to-faces), all “processing,” as they say. Meanwhile we also have some very interesting postings to chew on. (Note: This is cross-posted here.)

First, Bill Wendell‘s RealEstateCafe wiki has a nice outline of sessions at the workshop. Better than our own, so far, I might add. Great notes behind his many links, and an excellent resource.

Next, there is Katherine Warman Kerns’s Making Sense of Things (which follows her HuffPo piece, Will VRMCRM2010 disrupt ambiguity?). Here Katherine puts on some hats we both shared as veterans of the advertising and media businesses, and does some great thinking out loud about better ways for marketing energy to be spent than CRM, online advertising and FSIs (I believe these are Free Standing Inserts). An excerpt:

What if that 3% in CRM, the 1% in FSI’s, and the less than 1% online are the same heavy TV watchers with nothing better to do?You’d think there would be a lot of investment in innovation to develop “something better”, but innovators are getting mixed signals from advertisers.  Most businesses still advertise  in order to convince retailers and/or Wall Street that they are supporting the brand.

Few outsiders understand that advertising has become a business to business marketing tactic more than a business to “consumer” tactic. Instead of paying attention to advertising spending trends –  dropping from 40.6 % of the total media/marketing industry in 1975 to 17.2% in 2009 . . . . . .  the Venture world pays attention to the proportional amount spent on different tactics: “what this chart (provided by GOOGLE’s Hal Varian) says is that over that past decade Internet has gone from nothing to 5% of all the ad spend in the US”.  As I point out in my comment on this post, “At 5% of 17.2% that puts internet advertising at less than 1% of total media/marketing revenues. “

Ignoring this fundamental change in the market, an amazing amount of money is wasted on investing in incremental change.  For example, the race is on (reportedly, over $40 Billion a year) to upgrade CRM technology to improve predictive accuracy so that 3% will go up.

I’m all for continuous improvement process . . .  but, when the starting point is single digit success and that success may not even be among the desirable demographic who leaves the house, doesn’t it make sense to spend some of that money developing Plan B?

Hey if everyone on the team is aiming for the same corner of the goal with a single digit success rate, doesn’t it make sense to develop the skill to go after the remaining 90%+ of the goal?Until something better comes along, a market leader, P&G is quietly investing in the “new media” segment, “custom digital publishing”, to reach their target with less waste and to identify “thought leaders” to engage in their leading edge open innovation process.  Two examples are beinggirl.com and the partnership with NBCU to produce lifegoesstrong.com.

A new technology movement is creating a possibility to offer something even better: making it possible to shift the paradigm from improving Business to Customer communications to improving Customer to Business communicationInstead of wasting money on better ways to interrupt customers with messages, the customers are enabled to tell business when and what they want information. Project Vendor Relationship Management is the thought leadership evangelizing this premise and encouraging technology development.  On August 26-27, a workshop calledVRMCRM2010 introduced many of these technologies to VRM fans and receptive CRM professionals.

Media has an opportunity to use this technology to give all participants “The Freedom to be Ourselves”.   Instead of self-censuring because of uncertainty over what, with whom, or when their participation will be available for exploitation in “cyberspace”, participants may manage the release of identity, content, and information “in context”.   AND this control can be mutual – for  the “formerly known as audience”, the “formerly known as creative content producers”**, and the “formerly known as advertisers”.

Mutual benefit has the potential to breakdown the siloes which are barriers to collaborate on innovation.  Indeed, VRMCRM- like technologies offer a blank canvas of possibilities for media and marketing innovation to  disrupt ambiguity.

Next, Dan Miller’s In Spite of Investment in “Social CRM”, Enterprises are Still not Paying Attention. Dan, who led the CRM panel at the workshop, sees CRM and social CRM as a train wreck in progress:

…current solutions that are based in CRM and social CRM capture and conduct analysis on a broad set of customer generated data and metadata. Companies think they are doing a better job of paying attention but, whether they admit it to themselves or not, they continue to use their resources to analyze activity, target messages and promotions and influence future activity. That’s not listening or engaging in a meaningful conversation.

VRM involves a totally different engagement model. “Users” (be they shoppers, searchers, mobile subscribers or “other”) initiate conversations with their selected vendors through a trusted resource or advocate. They can compare notes with other shoppers/customers and, while they may be loyal to a brand, they are more loyal to themselves and their peers. In the ideal, the power shifts to the shopper in ways that will disintermediate traditional channels (like the contact center) and influencers (meaning commercials and advertisements).

The train wreck is not the result of there being too many names for the social CRM phenomenon, it is that CRM and VRM are on a collision course whereby one side seeks to grant more power to buyers while the other seeks to retain nearly all the power by pretending to do a better job of listening.

On the other hand, Denis Pombriant sees social CRM as having some promise for VRM, and writes about that in VRM’s Missing Ingredient, also posted as VRM and CRM Meet. An excerpt:

The great thing about social CRM is that it lets the genie out of the bottle.  It introduces randomness and uncertainty to the puzzle and that’s largely a good thing.  You can’t program a customer relationship, there are too many permutations and customers do things you just can’t always predict.

My big takeaway from the conference is the wisdom of crowds, the idea that since you can’t predict, take a deep breath and stop trying.  Instead, just ask the customer and, if you do it right, you’ll get amazing insights.  It struck me that the wisdom of crowds is, perhaps, one thing that VRM could incorporate with great success.

Mitch Lieberman (@mjayliebs) put up a nice summary of #vrmcrm2010 tweets through September 1. Here’s the current Twitter search for the tag.

Even though the workshop was well-attended by CRM folks (and some of their customers), I was struck by how widely varied that business actually is. The distinction between CRM and sCRM is but one of very many.

In fact I had already been schooled on this by my old friend Larry Augustin, whom I got to know well back when he was a major force in the Linux community, and now runs SugarCRM. You can’t have a $15 billion (give or take… I still haven’t seen any numbers since 2008) business without a great deal of variation in what is sold to whom, and how it is used.

And, of course, relating to customers is not the sole province of CRM itself. I would bet that most customer-supporting corporate Twitter entities (e.g. @BigCoCares) began as individual efforts within their companies, completely outside those companies’ CRM systems, including call centers. These as a class now qualify as sCRM, I suppose. But in any case, it’s complicated.

So is VRM, of course. It starts from the individual, but can go in many directions after that. Here are a few of my own take-aways, all arguable, of course:

  1. You can’t get to VRM from CRM, or even sCRM, any more than you can get to personal from social. But VRM needs to engage both. And both need to engage VRM.
  2. You can’t get to VRM from advertising, either. Trying to make VRM from advertising is like trying to make green from red. The closest you’ll get is brown.
  3. We have code, and were able to show some off (or at least talk about it), and that was great. Adam Marcus’ talk on r-buttons, while delayed by equipment failings (not his — the classroom’s built-in projection system on Day One was flaky), showed how users and site owners could signal their intentions toward each other with symbols that actually worked. Renee Lloyd unpacked the (very friendly) legal side of that too. Iain Henderson gave a nice forecast of the Personal Data Store (PDS) trials that MyDex will be running in the UK shortly. Phil Windley vetted the work Kynetx is doing with the Kynetx Rules Language (KRL). It also amazed me that, even when the workshop was over, many people stayed late, on a Friday, to see Craig Burton give a quick demonstration of KRL at work. (See the photo series that starts here.) Joe Andrieu didn’t show his code at work, but gave a great talk on how search is more than queries. I could go on, but to sum up: this was a watershed moment for the VRM community.
  4. It’s still early. Maybe very early. At the end of the workshop I was asked the What’s Next question. My reply was that it’s great to see a fleet of planes airborne after watching them head down the runway for three years — and that they’re all heading in different directions. Also, they’re not the only planes. Beyond that the future is what we make it, and we’ve still got a lot of making to do.
  5. VRM+CRM is a live topic. There was much talk afterward of next steps with workshops, conferences and other kinds of gatherings, in addition to a list for people wanting to follow up with focused conversation. Stay tuned for more on all that.
  6. VRM is not just the counterpart of CRM. There are VRM efforts, such as The Mine! Project, that address one-to-one relating outside the scope both of identity systems (from which some VRM efforts originated) and of CRM. These also matter a great deal, and are very close to the heart of VRM’s mission.
  7. GRM has mojo going. Two years ago, Britt Blaser was the only GRM guy at that VRM workshop, and had trouble drawing a crowd. This time he brought his own crowd, and drew a bigger one. Very encouraging.
  8. I’m still not entirely sure what ProjectVRM should become as it spins out of the Berkman Center. I want it to be lightweight and useful. I’ll be involved, obviously; and we’ll always have a kinship connection with Berkman. Specifics beyond that are forthcoming, probably in the next three weeks.

I’ll think of others, but I’m out of time right now. Please add your own. And thanks again to everybody who participated. It was a great workshop.

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