A few notes, motivated mostly by concern about the extraordinary
popular delusions concerning Internet stocks, and some URL's.
You may have noticed that I'm a judge for the Electronic Frontier
Foundation's Pioneer Awards this year. Everyone is welcome to
nominate people and organizations for the award, and the deadline
is March 10th. Although we've gotten some first-rate nominations,
I'm concerned that very few of these nominations have been for
non-Americans or for academics. So please please, take a moment
and think unconventional thoughts on the following topic: Who is
the relatively unsung hero who really ought to be recognized for,
in EFF's words, "a substantial contribution to the health, growth,
accessibility, or freedom of computer-based communications"?
The full details can be found at .
Nominations, which should include a brief explanation of your
reasons and ideally the contact information of whoever you're
nominating, can be sent to pioneer@eff.org .
I wasn't thinking very clearly when I sent out the URL for Golfe FM
, the cool bitcasting radio station in
Benin. Once my message went out, the Golfe FM site was immediately
overwhelmed, which meant that I could no longer get a continuous
signal from it. I felt bad about these people in Benin whose Web
server suddenly choked for no obvious reason. This Internet thing
still needs a little work.
The 2/18/99 LA Times carried a photo of a group of black-shirted
conservatives burning some of OJ Simpson's personal belongings, which
they had bought at an auction. The article describes the blackshirts
as followers of a Denver radio host named Bob Enyart, who is quoted
as calling for "abolishing the jury system and replacing 'reasonable
doubt' with a reasonable evidence standard". Some of the blackshirts
thoughtfully wore their group's URL, www.shadowgov.com. I encourage
you to check this site out. You might particularly check out the
first two chapters of a fictional book in which they explain what,
according to them, a Christian government would be like. It starts
out with a coup whose anonymous leaders announce that homosexuality
and advocating abortion have become capital crimes. Chapter two
narrates a trial in which
-- and I swear that I am not making this up -- a pro-choice leader
is flogged for insisting on her right to an attorney. Jesus wept.
In response to my last set of notes, some of RRE's learned readers
have stepped forward to defend Amazon.com and cast doubt on eBay.
Let us consider the arguments. One argument in Amazon.com's favor
is that (I am told, and haven't checked the number) it has $2 billion
in cash, so that it can survive something like 15 years of losses at
its current rate. That assumes, of course, that what remains stable
is Amazon's losses rather than the rate of growth of their losses.
More importantly, it assumes that Amazon.com is overvalued by less
than $2 billion. In fact, Amazon.com in 1999 reminds me of Netscape
in 1996. Both companies raised large amounts of cash in overhyped
IPO's even though they had no rational prospect of profits in their
core businesses, whereupon they ran up against larger firms who could
cut prices by shifting revenues from other, less competitive parts of
their business.
Another, more common argument in Amazon's favor is that they are
using "content", such as book reviews and customer purchase histories,
to build up customer loyalty. But look. The Internet brings price
competition. Factors analogous to those that enabled Amazon to kill
the Printer's Ink bookstore in Palo Alto may enable Barnes and Noble
-- or, heck, Buybooks.com -- to kill Amazon. People browsed at
Printer's Ink and then ordered their books from Amazon. Now they'll
browse at Amazon and order their books from Buybooks. Amazon's price
for the privacy book that I edited with Marc Rotenberg is $12.00.
Buybooks' price is $10.50. Take-home: sell any company whose main
barrier to entry is customer loyalty.
The major argument against eBay is more interesting, namely that
eBay's real competitors are not the other general-purpose auction
sites (which have indeed been routed) but rather special-purpose sites
aimed at particular market niches, any of which can easily add auction
functionality. Note that eBay's network effects, while strong, are
segmented: the people who use eBay to buy and sell stuffed animals
don't necessarily use eBay to buy and sell postage stamps, and neither
group necessarily uses eBay to buy and sell used books. Having
collected postage stamps as a kid, I spent some time browsing the
philately section of eBay. It was fun to look at the pictures of the
stamps, but the whole thing was primitive compared to what's possible.
Start with an online stamp catalog, so that all of the auctions can
be hyperlinked to the catalog entries for all of the stamps, and
then vice versa. Then add all of the other stuff you find in Linn's
Stamp News, like announcements of philately conferences and new stamp
issues, and build a stamp auction interface that is much better suited
to the particulars of buying and selling stamps. Now you have a
competitor to eBay that can start attracting the major dealers, some
of whom are already online with their complete list of sales. One
factor is standardization of the software used by the major stamp
auction houses, and the degree to which a specialized stamp auction
site such as Stampauctions.com can integrate with those standards.
Until this happens, eBay has some room to maneuver, and if it wants
to stay in the stamp business it should use that room to negotiate
alliances with major associations, publications, and/or market-makers
within the existing offline institutions of that world -- and likewise
for all of the other worlds that eBay is crashing its way into. None
of this, it should be said, refutes my overall point about the market
in marketplaces: it's still structured by network effects, among other
things.
Microsoft has shown that its legal work is as good as its software,
and yet people keep telling me why the it isn't really a monopoly.
Their arguments reinforce the complaints of so many business people
about the dearth of economic knowledge in society. Perhaps the
most common argument is that Microsoft is always open to competition
from people writing code in their basements, garages, or other parts
of their houses. The point, so far as I can comprehend it, is that
entrepreneurs can provide their own venture capital by sacrificing
the income that they might otherwise have made while writing the code
for their product. This argument suffers from at least four major
fallacies:
(1) The nature of the venture capital that's used to start a business
is of tertiary importance economically. Economics has great faith in
capital markets, and accordingly predicts that any promising business
plan will attract the capital it needs. The argument thus boils down
to the assertion that Microsoft reigns solely through the inefficiency
of capital markets. That's far-fetched.
(2) Any prospective competitor to Microsoft would need an awful large
basement to assemble the necessary programming team. Even the Silicon
Valley business magazine Red Herring, which tracks the high-tech
start-up scene, has declared that "the garage is closed". That's just
not where successful new firms are coming from these days.
(3) Another fallacy, usually lurking beneath the other two, is that
Microsoft's monopoly is held to fail whenever anyone except Microsoft
succeeds in any business related to software. That's the point of the
great swirl of articles we're seeing in the business press -- by pure
coincidence on the eve of decision in the company's antitrust trial --
to the effect that Microsoft's day has gone. It was common to speak
of Microsoft as having destroyed or defeated IBM, and yet IBM remains
a large company. Likewise, Microsoft's monopoly in several markets
is not going away, and will continue to supply the cash they need to
subsidize their entry into other markets.
(4) Perhaps the most important fallacy is the assumption that
Microsoft's barriers to entry consist mostly in the cost of writing
the software. Even free software, such as Linux, however, must face
the barriers to entry caused by network effects -- the benefit that
people get from using the standard, even when the standard is bad --
and by switching costs.
This last point, however, does to the one real danger zone that I can
imagine for Microsoft: the possibility that they will fail in their
declared intention to switch their whole installed base of Windows
over to NT. NT is inferior to Linux in a more fundamental way
than Windows was to the MacOS, and some of the new Linux supporters
aremore competently run and better capitalized Apple. So there's
a glimmer. But Linux is not yet a complete product, and the vast
coalition that will be required to make it into such a product has
no successful precedent. We'll have to see. And in any case, this
speculative scenario for the future has no bearing on the legal
questions of whether Microsoft is a monopoly now and whether it has
engaged in anticompetitive practices.
What most strikes me about the Microsoft trial is that Microsoft's
managers, despite their famous ability to learn from their mistakes,
have internalized the billg cult of personality so thoroughly that
they are unable to stop defying the court, to the point of telling
large numbers of obvious and easily refuted lies. At the rate they're
going, they'll be reduced to referring to Windows as "a legal product".
Recommended: Jean Comaroff and John Comaroff, Of Revelation and
Revolution: Christianity, Colonialism, and Consciousness in South
Africa, volume 1, Chicago: University of Chicago Press, 1991. It
annoys me how the latest crop of think-tank anti-intellectuals have
convinced everyone that postmodernists run the universities, but most
of the postmodernists annoy me too. So let me recommend a model of
social scientific research that addresses all of the phenomena that
motivate the postmodernists (imagination, identity, the ambiguity of
language, etc) without falling into the postmodernists' lazy habits.
This is volume 1 of a projected three-volume work on the interactions
in the 19th century between English Nonconformist missionaries and the
Tswana of modern-day northern South Africa. These interactions were
tremendously complicated, and they changed the people on both sides.
Many things are appealing about the Comaroffs' approach to social
theory. They attend to everyday life and ordinary people, not just
rituals and kings. Rather than forcing a single factor to explain
everything, they analyze the phenomena on several levels. And, in a
principled way, they avoid simplistic dichotomies and generalizations.
They do analyze the dichotomies and generalizations that did structure
the people's thoughts and actions, but they demonstrate how these
categories were themselves social phenomena that arose historically
and then passed away. Their writing is lucid, even if some people
dislike their somewhat flashy style, and instead of piling on the
jargon they let their historical narrative do most of the talking.
Some URL's.
The Nuremberg Files
http://www.xs4all.nl/~kspaink/nuremberg/aborts.html
interview with David Noble
http://node.on.ca/networking/february1999/feature1.html
fall of the day traders
http://www.salonmagazine.com/21st/feature/1999/02/18feature.html
Political Spam Archive
http://www.galenaweb.com/pinkpols/
Resources on Augmented Reality and Computer Augmented Environments
http://www.csl.sony.co.jp/project/ar/ref.html
Internet: An Overview of Six Key Policy Issues Affecting Its Use and Growth
http://www.senate.gov/~dpc/crs/reports/ascii/98-67
mailing lists organized by the Consumer Project on Technologies
http://www.cptech.org/lists.html
Paul Weyrich's letter on the failure of the culture war
http://www.freecongress.org/Libaward/minority.htm
The Right Wing Web
http://www.newsweek.com/nw-srv/printed/us/na/na0308_1.htm
nettime discussion list
http://www.desk.nl/~nettime
http://www.factory.org/nettime
GPS privacy article
http://www.zdnet.com/zdnn/stories/news/0,4586,2203365,00.html
"This American Life" RealAudio archives
http://www.thislife.org/
Rhizome: New Media Art Resource
http://www.rhizome.org/
Cyber sleuths have more than your number
http://www.accessatlanta.com/ajc/bigstory/022199/privacy.html
end