Month: September 2011

Lawsuits as a business model

In The Economics of (Killing) Mass-BitTorrent Lawsuits at TorrentFreak, Alan Gregory examines the likely effects of recent rulings in the Northern District of California and elsewhere, all of which discourage the filing of copyright infringement lawsuits against whole swarms of BitTorrent users.

While not exactly a VRM topic, I’m posting pointage to it because Alan was an intern for ProjectVRM at the Berkman Center in the summer of 2009, when he was still in law school at the University of Florida. Work he did for us then still applies today, and we’re pleased to see him prospering as an attorney practicing in Florida, and staying on the copyright case, which does affect you, me and the new markets that VRM will make.

Some bonus links:

Enough with browsers. We need cars now.

What we need, and don’t yet have:

For independence on the Net and the Web, we need cars, pickup trucks, bikes and motorcycles. Not just shopping carts — which are what browsers have become.

Personal vehicles give us independence. They let us drive and shop all over the place, coming and going as we please. In different stores we use the shopping carts provided for us; but we haul home what we buy in our own vehicles. We also meet sellers in stores at a human level, person-to-person. We can talk.

Even if we don’t own the vehicle we drive, we experience independence. Whether we drive a Ford, a Volkswagen or a Toyota, that car or pickup is ours. It is an extension of ourselves. We know in our bones, as drivers, that this is my engine, my doors, my tires. No company is saying “my” for you.

Cars, trucks, bikes and motorcycles are all substitutable goods. That’s why, if we’re competent drivers or riders, we can switch between them. It’s why we can bring what’s ours (our wallets and other personal things) with us in any variety of vehicles, without worrying about whether those personal things are compatible with a maker’s proprietary driving system.

And, because we are independent as drivers and riders, we are better able to relate to everybody and everything our vehicles enable us to reach and engage. Vehicles are, literally, tools of independence and engagement.

Nobody has invented a car for the Net or the Web yet. Browsers could have been cars, but .  That’s not the Net’s model, or the Web’s, either. It’s just what we’ve used for so long that we can hardly imagine anything else.

Think about how you feel on your bike, or in your car or truck. That’s what we want online. We don’t have it yet, so let’s invent it.

Some background

The was designed originally as a way to link documents by hypertext. Like the it still runs on, it was end-to-end. At the ends were documents and (presumably) readers.

The commercial Web of today is something else: a collection of sites. All are real estate: domains, literally. Each site doing business (and there are now a billion or more of those) has its own terms of engagement. Visitors can take or leave them. Either way, visitors’ freedom within each domain is entirely submissive in respect to the site owner.

This is an architectural fact of life on the commercial Web. It’s also why, should we wish to do business with the site owner, we meet an agreement that looks like this…

You agree that we aren’t liable for annoying interruptions caused by you; or a third party, buildings, hills, network congestion, rye whiskey falling sickness or unexpected acts of God or man, or of Elvis leaving the building. Unattended overseas submissions in saved mail hazard functions will be subject to bad weather or sneeze funneling through contractor reform blister pack truncation, or for the duration of the remaining unintended contractual subsequent lost or expired obligations, except in the state of Nevada at night. We also save harmless ourselves and close relatives from all we don’t control; including clear weather and acts of random gods. You also agree that we are not liable for missed garments, body parts, or voice mails, even if you have saved them. Nothing we say or mumble here is trustworthy or true, or meant for any purpose other than to feed the fears of our legal department, which has no other reason to live. Whether for reasons of drugs, hormones, gas or mood, we may change terminate this agreement with cheerful impunity, and notify you by means that neither of us will respect or remember.

☐   Accept.

… and click on the box.

“Agreements” like this are known in the legal trade as . According to  West’s Encyclopedia of American Law, this form “offers goods or services to consumers on essentially a ‘take it or leave it’ basis without giving consumers realistic opportunities to negotiate terms that would benefit their interests. When this occurs, the consumer cannot obtain the desired product or service unless he or she acquiesces to the form contract.” In other words, we acquiesce to these:

These contracts are called “adhesive” because they lock the submissive party to an agreement which the dominant party can change whenever it wants. In “Contracts of Adhesion—Some Thoughts about Freedom of Contract” (Columbia Law Review, July 1943), Friedrich Kessler explains how these contracts came to be:

 The development of large scale enterprise with its mass production and mass distribution made a new tvpe of contract inevitable—the standardized mass contract. A standardized contract, once its contents have been formulated by a business firm, is used in every bargain dealing with the same product or service. The individuality of the parties which so frequently gave color to the old type contract has disappeared. The stereotyped contract of today reflects the impersonality of the market. It has reached its greatest perfection in the different types of contracts used on the various exchanges. Once the usefulness of these contracts was discovered and perfected in the transportation, insurance, and banking business, their use spread into all other fields of large scale enterprise, into international as well as national trade, and into labor relations.

Half a century later, that same perfection has spread across the commercial Web as well. For example, take Google’s Terms of Service. Here’s an excerpt:

2. Accepting the Terms

2.1 In order to use the Services, you must first agree to the Terms. You may not use the Services if you do not accept the Terms.

2.2 You can accept the Terms by:

(A) clicking to accept or agree to the Terms, where this option is made available to you by Google in the user interface for any Service; or

(B) by actually using the Services. In this case, you understand and agree that Google will treat your use of the Services as acceptance of the Terms from that point onwards.

The parts I’ve italicized translate to use = agreement.

There is also this:

19. Changes to the Terms

19.1 Google may make changes to the Universal Terms or Additional Terms from time to time. When these changes are made, Google will make a new copy of the Universal Terms available at and any new Additional Terms will be made available to you from within, or through, the affected Services.

Every site and service has the same  kind of jive. :

Modification of Terms of Use.
foursquare reserves the right, at its sole discretion, to modify or replace any of these Terms of Use, or change, suspend, or discontinue the Service (including without limitation, the availability of any feature, database, or content) at any time by posting a notice on the Site or by sending you notice through the Service or via email. foursquare may also impose limits on certain features and services or restrict your access to parts or all of the Service without notice or liability. It is your responsibility to check these Terms of Use periodically for changes.

These are what I call the “Vogon clauses.” Readers of Douglas Adamswill recall that Earth was destroyed without warning by (the galaxy’s bureaucrats) to make way for a hyperspace express route. Plans for the route, Vogons explained, had been available at the local planning department near  for fifty years before the wrecking ships came through.

Ah, but that’s not all. Terms of Service are usually accompanied by Privacy Policies. foursquare’s, again, is typical:

Sharing with Partners, in connection with business transfers, and for the protection of foursquare and others:

  • Our Partners: In addition to the data sharing described above, we enter into relationships with a variety of businesses and work closely with them. In certain situations, these businesses sell items or provide promotions to you through foursquare’s Service. In other situations, foursquare provides services, or sells products jointly with these businesses. You can easily recognize when one of these businesses is associated with your transaction, and we will share your Personal Information that is related to such transactions with that business, unless you have elected not to be solicited by marketing partners during the registration process or through the account settings page.
  • Business Transfers: If foursquare or substantially all of its assets are acquired, or in the unlikely event that foursquare goes out of business or enters bankruptcy, user information would be one of the assets that is transferred or acquired by a third party.
  • Protection of foursquare and Others: We may release Personal Information when we believe in good faith that release is necessary to comply with the law, including laws outside your country of residence; enforce or apply our conditions of use and other agreements; or protect the rights, property, or safety of foursquare, our employees, our users, or others. This includes exchanging information with other companies and organizations (including outside of your country of residence) for fraud protection and credit risk reduction.

The italicized passage is the loophole through which every bit of information about you, your checkins, your friends, your tips, your mayoralty of the crosstown bus and the corner dry cleaner — all of it — can fly off to or some other acquisitor, which will be free of foursquare’s burden of good intentions toward your privacy.

We have acquiesced for so long to these insults and abuses that we have a mass case of  — the paradoxical tendency of long-held captives to sympathize with their captors. Corporate legal departments have become our Vogons, and the commercial Web has become our Stockholm.
Contracts of Adhesion became normative when Industry won the , and have long been pro forma for companies wishing to have mass markets for their goods and services, and to otherwise enjoy the benefits of what tech giants and their wannabes call “scale.” In fact, the Internet has actually made things worse, thanks to client-server,
The client–server model of computing is a distributed application structure that partitions tasks or workloads between the providers of a resource or service, called , and service requesters, called .

They illustrate that with this generic drawing:

Client-server graphic

Thus, while the Net itself has a design in which all the ends are essentially peers, the Web (technically an application on the Net) has a submissive-dominant design in which clients submit to servers in the manner of calves to cows:

As calves, we get the milk made from html, javascript, XML and other document-authoring standards; plus, in most cases,  as well.

The original idea behind cookies was helping a site remember where you both were the last time the last time your browser suckled on the site’s teat. That’s how you can get straight to your shopping cart, your account data and other graces of modern consumer husbandry. It’s one way your browser turns into one big personalized single-store superset of a shopping cart in each commercial site you visit. It’s also how you get “personalized” advertising, plus all the other good and bad stuff that visits in .

We also aren’t going to get rid of the calf-cow system, and we can’t improve it any more than we can improve slavery. There is no hack on submissive-dominant that can make it peer-to-peer.

If we wish to leverage the original peer-to-peer nature of the Net and the Web, we will need new instruments of independence and autonomy, that also allow us to engage as equals, and to form relationships that are worthy of the noun. What would those be?

When the first browsers came along from Netscape (and then Microsoft), my wife asked a question that challenged a premise of browsers, and of Web-server-based commerce. “Why can’t I take my shopping cart from one site to another?”

The reason was, and still is, that each site has its own shopping cart, and comprehends you as their customer alone. (I’ve italicized the first person possessive pronoun there.) Even if the commercial site is or , you can’t take your preferences, your settings or anything else from one of those to another. You are trapped on each one’s ranch.

Offline in the brick-and-mortar world, retailers have copied this system through loyalty programs and other instruments of customer entrapment.  But at least in the brick-and-mortar world we still have our own vehicles, including our feet.We are independent by nature.

But we are not yet independent on the commercial Web. Sellers have hijacked the browser and made it theirs, not ours.

So, then

Taking browsers back isn’t the challenge.* The best we can do is improve what will never be good enough. What we need instead are vehicles that give us both independence and means for engagement.

Work in this direction has been going on in the from the start, and a big thanks goes to the for giving us the runway we needed to get that community off the ground. A lot of the necessary tools we’ll need are already there (or in the free and open source code toolbox), or on their way.

But we still don’t have the equivalent of a bike, a car, a motorcycle, a truck, or our own two feet. We just have clients of servers.

Thus, in the absence of our own means of ambulation and locomotion, we continue to talk about how we make slavery easier while improving the ranching system. That’s good and essential work, but it’s not enough. We need to get creative for ourselves now. Not just for the Big Ranchers of today and tomorrow.

* [Later…] I’ve gotten some good push-back on this from members of the VRM community that have more hope for browsers than I do. They also point out that browsers have 100% market penetration, and lots of enlightened developers on the case. We should engage them and not dis them. I agree.

A visit to the advertising echo chamber

Two days ago, eMarketer Digital Intelligence ran a post titled Age, Gender Affect Whether Consumers Will ‘Like’ an Ad. Here are the first few paragraphs:

Older consumers are more likely to click on a Facebook ad, while younger consumers, who are more comfortable with interacting with brands on Facebook, are more likely to click “like.” This information can help marketers target specific audiences with their Facebook ads, a tactic that can be leveraged by using Facebook’s self-serve ad platform.

Over the 10 months leading up to August 2011, Facebook agencySocialCode analyzed Facebook ads for 50 clients and focused on those that included an image, text and a “like” button. The study analyzed how many consumers clicked on the ads, and from there, how many went on to “like” the company’s page.

Women are more likely to click on an ad on Facebook, though both men and women are about equally likely to then click “like” once they’ve done so, the study found. The average clickthrough rate for women of all ages was 0.029%, compared to 0.026% for men of all ages. The “like” rate among those who clicked an ad was 39% for women and 38% for men.

Clickthrough and "Like" Rate* of Facebook Display Ads Among US Internet Users, by Age and Gender, 2011

Older consumers are more likely to click on a Facebook ad, as clickthrough rates increased from 0.026% for the 18-to-29 age range, up to 0.033% for the over-50 group.

However, consumers under the age of 50 were more likely to then “like” a brand, with 18- to 29-year-olds and 40- to 49-year-olds doing so 40% of the time. Those ages 30 to 39 had a 38% “like” rate, while only 36% of those over 50 hit the “like” button.

Clickthrough and "Like" Rate of Facebook Display Ads Among US Internet Users, by Age, 2011

This data supports the fact that younger consumers, having been on Facebook longer, are more familiar with showing support for a brand through a “like” and do so more often. Meanwhile, older consumers click through on an ad to learn more and investigate a brand.

Note the use of “more likely,” several times in those paragraphs. The difference is between fine degrees of “very, very, very, very few.” That’s because highest click-through rate for any demographic is about one third of one percent. Most click-through rates are about one quarter of one percent. That up to 40% of those clicking will also click “like” is interesting only to marketers who ignore the 99.76% to 99.66% who don’t click through at all, and who might regard the ads as noise or worse. Since Facebook allows users to express only one sentiment, it’s impossible to tell what other feelings an ad elicits, if any at all.

Here’s what I tweeted about the piece yesterday…

Doc Searls dsearls Which matters more in this data: — that only 0.025% click on an ad, or that X% of clickers “like” the ad? #VRM 11 hours ago

… and here’s Bitly’s list of all tweets with links to the piece, which they call —


RTs are not conversations. They are echos.

Here are more, from “Related Articles” that a service called Zemanta shows me, in one of my WordPress panels:

Some of these are “promoted.” Note that Zemanta assumes that everything related will be in the same echo chamber.

Here is my favorite view of that echo chamber, as it now stands:

It’s from , by , CEO of the investment bank . He has many other similar (and equally fascinating) graphics at Slideshare.

The least colorful part of the graphic is the word AUDIENCE, over on the right. That’s you, me, and the other 99.xx% out there who don’t click on an ad, as well as the 00.xx% who do.

What we see here is how supply tries to drive demand — and fails most of the time.

The much bigger market opportunity is in demand driving supply. That’s what we’ve been working on with , at Harvard’s , for (as of this month) the last five years.

In that time the list of VRM development projects has grown from none to dozens. They are in Santiago, Johannesburg, Vienna, New York, London, Boston, D.C., Dubuque, Santa Barbara, Salt Lake City, Montreal, San Francisco and elsewhere. In their own ways they all help Demand signal Supply, rather than the reverse. They serve the actual intentions of individual buyers, rather than the machinations of advertisers and their legion of assistants, all scheming to grab the attention of an “audience” — a delusional term that suggests a patient group, all facing a stage, ready to applaud a performance.

It’s early in the new game here. That game is Customer Intentions vs. Advertiser Guesswork. As I said in The Data Bubble, back when The Wall Street Journal launched their terrific What They Know series (about tracking users without consent),

Here’s what’s delusional about all this: There is no demand for tracking by individual customers. All the demand comes from advertisers — or from companies selling to advertisers. For now.

Here is the difference between an advertiser and an ordinary company just trying to sell stuff to customers: nothing. If a better way to sell stuff comes along — especially if customers like it better than this crap the Journal is reporting on — advertising is in trouble.

Here is the difference between an active customer who wants to buy stuff and a consumer targeted by secretive tracking bullshit: everything.

Two things are going to happen here. One is that we’ll stop putting up with it. The other is that we’ll find better ways for demand and supply to meet — ways that don’t involve tracking or the guesswork called advertising.

Improving a pain in the ass doesn’t make it a kiss. The frontier here is on the demand side, not the supply side.

Advertising may pay for lots of great stuff (such as search) that we take for granted, but advertising even at its best is guesswork. It flourishes in the absence of more efficient and direct demand-supply interactions.

The idea of making advertising perfectly personal has been a holy grail of the business since Day Alpha. Now that Day Omega is approaching, thanks to creepy shit like this, the advertsing business is going to crash up against a harsh fact: “consumers” are real people, and most real people are creeped out by this stuff.

Rough impersonal guesswork is tolerable. Totally personalized guesswork is not.

While the advertising mills keep talking to themselves, VRM development continues. As it starts to go mainstream, we’ll need a new organization, primarily for customers, rather than just for developers. We’re working on that, and expect to have it going in the next six months. So stay tuned. Meanwhile, join me in thanking the Berkman Center for giving us the runway we needed to get VRM development off the ground.

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