purple motes

The above video documents the production of a ten-second news segment for a U.S. national news network. In this segment, a network correspondent declared that the (then) upcoming Indiana primary is a "must win" for Hillary Clinton.

The production involved a satellite truck, a two-person video crew, and the news correspondent. The production location apparently was chosen so that behind the correspondent would appear the Lincoln Memorial, the Washington Monument, and the U.S. Capitol. Why the segment was shot live to air isn't clear. Being live to air required the crew and the equipment to be in place at the time of the broadcast, waiting for the on-air cue, and required the satellite truck to relay the signal.

The camera crew had years of experience and large equipment. They also had an on-camera, focused microphone that could cut out extraneous background noise like a plane flying overhead. This video crew could make great video.

The correspondent was a 19-year television news industry veteran. Among other reporting positions, he had served as an embedded video reporter in Iraq. He undoubtedly is intelligent and knowledgeable.

Let's hope that changes in the news industry and new video economics result in much better use of such talents, skills, and resources.

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Yahoo! Answers has attracted a large number of active users. As of March, 2008, Yahoo! Answers had perhaps 25 million U.S. users and 135 million users world-wide. The U.S. and world-wide users have created 237 million and 500 million answers, respectively. The number of users is currently growing about 35% per year in the U.S. and 85% per year world-wide.[1]

Yahoo! Answers organizes users' interactions in a "question and answer" (Q&A) format. Q&A is a extremely simple, widely understood communicative form. It's one of the first forms that kids learn (young kids' incessant question-asking is a common source of temporary parental insanity). Communicative forms that require relatively little effort to use are relatively attractive to users.

Q&A supports both information-transfer and sociality in communication. In Yahoo! Answers, some top level categories such as "cars & transportation," "science & mathematics," and "local business" favor information transfer. See, e.g., "What's the best way to make your exhaust pipes on your truck as loud as possible?" Much different from such questions are calls for empathy ("Is looking different ok?"), relationship advice, and other, non-factual discussion requests. Q&A is a communicative form with much more general value than just for seeking high-quality knowledge.

User behavior in Yahoo! Answers suggests the importance of immediate, personal user interests. The shares of users that ask questions, answer questions, and vote on the best answer to questions are 70%, 55%, and 24%, respectively.[2] A user's immediate needs drive a question. Answering a question is a response to an opportunity that arises. Voting on the best answer to a question requires evaluating what others have written about another's question. Decreasing user activity is associated with less immediate, less personal user interest.

Yahoo! Answers is facing increasing competition for users. Google launched Q&A sites in Russia and China in June and August of 2007, and more countries are expected to be added to the service.[3] Microsoft Live Search QnA, launched in Beta in May, 2006, is being steadily improved. WikiAnswers is a Q&A site that has grown rapidly in the past year, attracting a significant share of Q&A activity. The increasing competition for Yahoo! Answers indicates recognition of the value of Q&A for attracting users and generating user activity.

Notes:

[1] Figures from Matt McGee. I have not been able to find the company source for this data. A Yahoo! Answers blog post for Jan. 10, 2008, states, "Since the U.S. launch in December 2005, Yahoo! Answers has become the largest knowledge-sharing community on the Web with more than 20 million users in the U.S. and more than 90 million worldwide." McGee's U.S. data indicate a ratio of answers per user of 7.6 and 9.5 in Aug. 2007 and Mar. 2008, respectively. Data from Gyöngyi et. al. (2008), mainly for early 2006 and English-language, probably U.S. only, has 11.0 answers per user. Data from Adamic et. al. (2008), for one month, apparently in the second half of 2007, given that about 11 million answers were created in the month, English-language, probably U.S. only, has 11.8 answer per user. The number of answers is more obviously defined than the number of users. The McGee user count may include some users who registered but did not engage in any activity.

[2] Gyöngyi et. al. (2008) p. 5, Fig. 4.

[3] Google Answers, which was an attempt to establish a commercial market for information, shut down for lack of success in December, 2006. Q&A as a communicative form was only a small component of that endeavor.

References:

Adamic, Lada A., Jun Zhang, Eytan Bakshy, Mark S. Ackerman, Knowledge Sharing and Yahoo Answers: Everyone Knows Something. WWW 2008 / Refereed Track: Social Networks & Web 2.0 -Analysis of Social Networks & Online Interaction, Beijing, China, 2008.

Gyöngyi, Zoltán, Georgia Koutrika, Jan Pedersen, Hector Garcia-Molina. Questioning Yahoo! Answers. First Workshop on Question Answering on the Web (at the 17th International World Wide Web Conference), Beijing, China, 2008.

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The city of Burlington, Vermont is providing communication services for its residents over a new, advanced municipal fiber optic network. Burlington is a city of about 40,000 persons. The city department that builds the network, operates it, and sells communications services is called Burlington Telecom (BT). BT had been designed and operated to be self-sufficient. BT receives no city budget or special tax revenue.

BT has been much more successful than other new communications services providers. Construction of BT's fiber network began in 2005. BT provides wholesale services on an open access basis to other communications service providers, and it provides telephone, cable television, and broadband Internet services to retail customers. BT signed up its first customer in 2006, went cash-flow positive for operations in 2007, and is projected to cover its debt and be profitable about 2009.[1] The network is intended to offer long-term, advanced communications services to every resident, business, and institution in the city. By the end of 2008, the network will be sufficiently extensive to do that.

One important factor in BT's success has been the expertise and leadership of Tim Nulty. After an impressive career working for the United Auto Workers, the U.S. government, the World Bank, and a private capital fund addressing telecom start-ups in Central and Eastern Europe, Nulty came out of retirement to provide key direction for the Burlington project. Unfortunately there's only one Tim Nulty. But other cities have good leaders, and they can learn from what Nulty has done.

Nulty emphasized a "build the barn you can afford" approach to building BT's network. BT first built a network for Burlington city government organizations, which served as anchor tenants. The network was then extended to selected large businesses. Subsequently it was expanded to serve residential customers.

BT benefited from relatively low cost of capital. Koch Financial Corp., an organization of private investors, provided $20 million dollars for the project at 5.17% interest.[2] The physical network itself, rather than municipal guarantees, provides the backing for the loan. However, as municipal finance, the interest is tax-exempt. Tax-exempt municipal bond financing provides capital much more cheaply than private equity finance.

A factor less widely understood is that providing retail services has been critical to making BT financially sustainable. BT's retail services include differently priced bundles of telephone, Internet, and cable services similar to what commercial service providers offer. Since BT offers wholesale services on an open access basis, commercial services providers could out-compete BT at the retail level and confine it to wholesale service provision. Given that city departments typically do not excel in complex, competitive retail services, that probably would be a desirable long-term outcome.

However, beginning a municipal network with retail services makes good financial sense. Establishing a municipal network necessarily requires mobilizing the population to support it. Commercial service providers, in contrast, need to make huge expenditures on advertising and marketing to gain popular recognition and to attract customers. Moreover, pre-established popular support for a municipal network makes customer uptake relatively predictable and scalable. BT has had a take rate of about 30% of houses passed.[3] At the recent Freedom to Connect conference, Nulty emphasized that not allowing a municipal network to provide retail services is a sure way to kill it.

Update: See also the East Central Vermont Community Fiber Network.

Update 2: Burlington Free Press article on Burlington Telecom. Tim Nulty's response. More on the Vermont E-State and the East Central Vermont Community Fiber Network clash with the Vermont Telecom Authority. Summary: technology is easy compared to the interaction of human egos.

Notes:

[1] From Tim Nulty's presentation at Freedom to Connect, 2008.

[2] This was for Phase 3 and 4 of the project. A $2.6 million loan for the initial phases was at 5.63%. See p. 3. of Christopher Mitchell, Burlington Telecom Case Study.

[3] Ibid.

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Nico Nico Douga is a Japanese video sharing site that has rapidly gained popularity in Japan. Nico Nico Douga was launched in mid-December, 2006. A little more than a year later, in mid-January, 2008, the site had about 5 million users. As of October, 2007, the site's Japanese users amounted to 27% of YouTube's Japanese users, but Nico Nico Douga's users had 43% greater video viewing time and 49% greater number of visits per month than YouTube's Japanese users.[1] Nico Nico Douga has been astonishingly successful in rapidly acquiring a large number of relatively active users.

A signature feature of Nico Nico Douga is that users are able to add text comments within videos. Much research and analysis supports the value of integrating sensory modes of communication (but I'm still waiting for a show-and-tell mobile communicator). Other sites, however, have not been successful with this feature. Mojiti, one of several sites that has provided commenting within videos, disappeared. Hulu, an NBC-News Corp joint venture, is rumored to have purchased Mojiti, but Hulu does not currently offer commenting within videos. Part of the problem may be rights issues. Adding comments within a video might arguably be creating a derivative work, or be a violation of the creator's moral right to the integrity of her or his video work. So perhaps the reason that Nico Nico Douga has successfully implemented in-video comments, and popular U.S. video sites have not, is that the U.S. has many more copyright lawyers than does Japan.

Nico Nico Douga's revenue comes mainly from premium membership fees. The site, which requires users to register to view videos, offers free membership and premium membership. The number of free members granted access to the site is limited during the prime usage hours 7pm to 2am. Premium membership costs 525 yen (about 5 USD) per month. Premium membership gives the user unrestricted access time, more bandwidth, more storage, mobile services, and other additional customization options. Premium members account for only about 3% of total members. But premium membership fees account for about 67% of the site's revenue. The remaining 33% of revenue comes roughly equally from banner ads and an affiliate program.[2] Nico Nico Douga' business model thus contrasts sharply with video sites that emphasize video distribution and advertising.

Many video sites are currently struggling to generate ad revenue. YouTube's U.S. (ad) revenue for 2008 was recently estimated at 90 million USD. Some estimates put total U.S. online video ad revenue for 2008 at 0.5 to 1.4 billion USD. Perhaps 50% of that ad revenue will be from display ads on video play pages, 40% from pre-roll video ads, and only 10% from in-video ads. Online video ads confront some significant challenges. Most fundamentally, unless online video ads work significantly differently from other types of traditional advertising, the size of the total ad market will be limited to perhaps 1.5% of GDP. In that scenario, online ad revenue will come only from winning tough competition for attention with traditional media.

Nico Nico Douga's annualized revenue in January, 2008 amounted to about $25 million USD.[3] That's not bad for a business in operation for a little over a year. Profitability for online video sharing and social networking sites is possible. But betting solely on advertising-supported business models probably isn't a good idea.

Notes:

[1] These data are from Fumi Yamazaki's review of Nico Nico Douga on Joi Ito's Lab Blog. From the linked Nielsen/Netratings source (in Japanese), and other data I've inferred the specifications of the numbers.

[2] These figures are based on figures in Fumi Yamazaki's review. See that review for underlying data and sources. For business model description, see Section IV of Tokyotronic's review.

[3] Calculated by scaling up Y 101 million revenue in Nov. 07 with 86,000 premium members to 174,000 premium members in Jan. '08.

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The rapid growth of novels in the late eighteenth-century was an important communications industry development. A large number of manuscripts of novels were available to printers at low cost. Printing novels was a profit-driven business, as was book-selling and book-lending through commercial circulating libraries. Printers chose novels to print with keen regard for market demand. Hence studying what novels were printed provides insight into what readers sought.

Female authors predominated among the authors of English novels for about thirty-five years after the production of novels rose sharply. The number of new novels printed in Britain and Ireland roughly doubled from the first half of the 1780s to the second half of the 1780s, rising above 50 novels per year and remaining above that level permanently. Across the years from 1785 to 1819, the median ratio of male-authored novels to female-authored novels was 0.69, meaning that male-authored novels numbered about 31% fewer than female-authored novels.[1]

Printers probably favored female authors because they judged female authors to have better prospects of successfully serving readers' demands. Female authors on average probably understood the literary demands of female readers better than male authors did. Hence the sex ratio for authors suggests that, for thirty-five years after novels became a much more popular good, female readers predominated. These were also the years when women workers, including married women, were a large share of the new cotton factory workforce. Thus, even when women were taking jobs outside the home in a new, high-profile segment of the economy, women probably were also spending more time reading fiction than were men.[2]

Given the biological facts of human sexual reproduction and the evolutionary creation of the human animal, one should expect the behavior of males and females to differ significantly. In the contemporary U.S., men are much less likely to read literary works than are women. Taking sex differences seriously is important for thinking about the development and marketing of communication services.

Notes:

[1] The ratio of male-authored to female-authored novels is not the same statistic as the ratio of male authors to female authors of novels, because some authors wrote multiple novels. Raven (2003) p. 150 declares that the latter statistic is "far more significant" than the former, but does not clearly specify why. From 1770 to 1799, the number of male authors of novels was 54% greater than the number of female authors of novels. See Raven (2000) p. 41. Since authorship of novels typically generated little profit in money or social status, the latter statistic indicates that authorship disadvantaged men more than women. Authors, however, were a much smaller share of the population than were readers.

[2] Tepper (2000) analyzes the "gender gap" in fiction reading in the U.S. This work notes that fiction reading is "passive and generally home based" and states that "girls are still socialized into passive, private and non-competitive activities, while boys are channeled into activities which tend to be aggressive, competitive, creative, and leadership-oriented" (p. 272). It cites an authority who declares that "inequalities persist for women in their opportunities for leisure" and concludes that socialization accounts for women reading more fiction than men (id.). Tepper seems not to have considered the possibility that particular patterns of socialization of males and females are part of evolved human development paths and might be extremely difficult to change without tyrannical force. Note that Tepper's concern about women's fiction reading goes against the fundamental theme of the NEA's study, Reading at Risk. Neither Tepper (2000) nor Reading at Risk shows much concern for men.

References:

Raven, James (2000), "Historical Introduction: The Novel Comes of Age," in The English novel, 1770-1829: a bibliographical survey of prose fiction published in the British Isles, gen. eds. Peter Garside, James Raven, and Rainer Schöwerling (Oxford: Oxford University Press), vol. 1, pp. 15-121.

Raven, James (2003), "The Anonymous Novel in Britain and Ireland, 1750-1830," in The faces of anonymity: anonymous and pseudonymous publications from the sixteenth to the nineteenth century, Robert J. Griffin, ed. (New York: Palgrave Macmillan), Ch. 6.

Tepper, Steven J. (2000), "Fiction Reading in America: Explaining the gender gap," Poetics 27, pp. 255-75.

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Searching video is notoriously difficult. That implies a scaling problem for a large video repository like YouTube. Given relatively fixed amounts of video tagging and category information, more videos imply relatively less information for searching among videos and targeting ads to videos.

YouTube's announcement of new APIs for external use of the YouTube video platform points to better information for video search and ad targeting. Videos uploaded and played through a third-party site are segmented by the specific third-party site. Third-party sites also have differentiated text correlated with the content of associated videos. This additional information allows better video search and better video ad targeting compared to what's possible for videos uploaded and viewed on the YouTube site.

Online video services have many different niches. Decentralizing video uploading and playing provides a more scalable business for YouTube.

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The proposed U.S. federal government budget for 2009 cuts funding for the American Time Use Survey. The survey program costs $6 million per year to administer for its full sample design. That seems to me to be a small amount to spend for high-quality, publicly available data very relevant for understanding value generation in the digital economy, long-term changes in media use, and key current issues in the communications industry.

You can sign a letter here to support restoring funding for the American Time Use Survey. Doing so won't take much of your time.

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While making cars is a dying industry in the U.S., collecting car maintenance data seems to be a quite promising business. Jiffy Lube has 2,200 North American service centers servicing about 27.5 million customers per year. Jiffy Lube does "fast lube," i.e. quick oil changes for drive-in customers. But Jiffy Lube is also in the data business:

Jiffy Lube® also uses state-of-the-art computing technology to educate customers about vehicle maintenance services, share customers' maintenance histories across its network, and provide services that satisfy vehicle manufacturers' warranty requirements. This gives drivers the freedom to visit any Jiffy Lube® service center with the peace of mind that their records can travel with them. [from Jiffy Lube's History & Mission]

"Educate customers about vehicle maintenance services" means sell services in addition to oil changes based on collected data about a car's maintenance history. Those service are offered at a time when it's highly convenient for the customer to buy the services. The customer's car is right there at Jiffy Lube, ready to be served. That's a propitious action circumstance for personalized, relevant advertising, much like that of text ads displayed in the context of web search.

The automobile industry could do much more to develop its data businesses. Cars generate a large amount of performance data that could be downloaded at maintenance stops. Establishing open standards for such data and making it easy for car owners to grant anyone access to their car's data could enable considerable value in data services. Car service centers could sell a wider range of more accurately targeted maintenance services. Gas stations might sell personalized mixes of gas optimized for the car's driving pattern along with reports on fuel mileage history. Certification and evaluation services in the used car market would be more valuable with much additional car usage data beyond car mileage. Storing, sharing, and processing data is cheap and continually getting cheaper. Businesses that aren't thinking about how to create data businesses aren't learning from Google.

Note: Trust is important for creating value from data. "Don't be evil" makes particularly good business sense for data businesses.

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"Is a company allowed to do this under the regulations?" "What does that regulation mean?" These may seem like simple questions, but in reality they may have only expensive, uncertain answers.

Regulation is not necessarily like code that anyone with the appropriate capabilities can copy, interpret, and execute. In an case concerning the U.S. Environmental Protection Agency (EPA), a court noted:

The phenomenon we see in this case is familiar. Congress passes a broadly worded statute. The agency follows with regulations containing broad language, open-ended phrases, ambiguous standards and the like. Then as years pass, the agency issues circulars or guidance or memoranda, explaining, interpreting, defining and often expanding the commands in the regulations. One guidance document may yield another and then another and so on. Several words in a regulation may spawn hundreds of pages of text as the agency offers more and more detail regarding what its regulations demand of regulated entities.[1]

One might calls this the modern administrative state, or the ancient patron-client system. This system does not produce a closed set of texts (black letter law) that clearly defines what a subject may do.

This system is most likely to develop under particular circumstances. Where political interests and moral sentiments have force at a relatively abstract level, showing concern by generating details is likely to be more important than the specific details and their actual effects. If only a few companies are of primary concern, and the activities of these companies are well-established, than regulation can feasibly be made highly complex while still supporting claims of relevance. If narrowly specialized lawyers, economists, consultants, regulatory-affairs departments, and regulatory agencies largely shape an area of regulation, they are likely to shape it so as to enhance their claims to expertise. That means fostering regulatory circumstances that require long study and considerable previous experience to understand.

The modern administrative client-patron ancient system is not a historical inevitability. Just as in considering the importance of federalism and subsidiarity, vague invocations of the "scale of modern societies" does not explain the necessity of the "modern administrative state."[2] The scope of interests relevant to a field of regulation can broaden over time and innovation increase. As a large number of persons gain the capability to engage in an activity, they may form new, specific moral sentiments about what they should be able to do in that field of regulation. Broader, more dynamic moral, political, and business interests can be powerful forces for making regulation simpler, clearer, and less expensive to interpret.

Recent developments in copyright regulation indicate regulatory effects of broader, more dynamic moral, political, and business interests. Prior to the rise of the Internet, narrow interests elaborated a rather obscure and unintelligible copyright regime. The Internet has greatly broadened interests in that regime. In practice, many persons copy materials on the Internet in ways that violate copyright or that aren't meaningfully analyzed in terms of copyright. How copyright regulation will evolve is quite uncertain. But certainly it will not evolve primarily through the narrow administrative process of the past.

Note:

[1] Appalachian Power Co. v. EPA, 208 F.3d 1015, 1020 (D.C Cir. 2000).

[2] See, e.g. Colburn, Jamison E., "The Jurisprudence of Notice and Comment" (November 1, 2007). WNEC School of Law Legal Studies Research Paper No. 07-01 Available at SSRN: http://ssrn.com/abstract=1027001, pp 1 (fn. 2), 3, 45.

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An insightful communication scholar wrote:

in all communication, in so far as it is related to actual experience, there must be a movement of love. Those who have loved over many years may reach a point where almost all masks are gone. But never all. The lover's plight is tied to the fact that every one of us puts on a mask to address himself, too. Such masks to relate ourselves to ourselves we also try to put aside and with wisdom and grace we to some extent succeed in casting them off. When the last mask comes off, sainthood is achieved, and the vision of God. But this can only be with death.[1]

Let's get naked?

[1] Walter Ong (1975), "The Writer's Audience is Always a Fiction," in An Ong reader: challenges for further inquiry, ed. by Thomas J. Farrell and Paul A. Soukup (Cresskill, N.J.: Hampton Press, 2002) pp. 425-6.

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