Yahoo circa 1998 as Ponzi scheme

Paul Graham, as part of an article on Yahoo!’s problems:

By 1998, Yahoo was the beneficiary of a de facto Ponzi scheme. Investors were excited about the Internet. One reason they were excited was Yahoo’s revenue growth. So they invested in new Internet startups. The startups then used the money to buy ads on Yahoo to get traffic. Which caused yet more revenue growth for Yahoo, and further convinced investors the Internet was worth investing in.

Strategy Taxes

From Robert Scoble on why Google can’t build something like todays-darling-of-the-echo-chamber Instagram:

6. Google’s engineers can’t use any Facebook integration or dependencies like Instagram does. That makes it harder to onboard new customers. I’ve downloaded a few iPhone apps this week and signed into them, and added my friends, just by clicking once on my Facebook account. My friends are on Facebook, I don’t have a social graph even close to as good on Google. Instagram gets to use every system it wants. Google has to pay “strategy taxes.” (That’s what we called them at Microsoft).

So it isn’t just legacy that bogs down companies as they get bigger.

Oh, how much is that second-hand app on the home screen?

Frédéric Filloux in his Monday Note column describes a rights-based (as opposed to files-based) future for managing digital content (whether magazines or books):

A first phase is likely to consist of an extension of what we have today, i.e. a transaction system based of book files: text-based books or richer media products. The main players will remain Amazon, or the Apple iBooks store. But, in five to ten years, this way of dealing with intellectual content  will be seen as primitive.

The true revolution will be a shift from a files transaction system to a rights transaction system. This transformation involves radical changes in the way we think of digital content, books, videos or even games.

Today, Joe can’t share a book that he bought (rented?) from an e-book-store, can’t give it back, can’t pass it on, can’t re-sell it – nothing. He can either keep it or delete it. – what a waste! The publisher and technology industries, for all their talent, have created a form that, in important ways, is less convenient than even the original physical book form that it is based on .[1]

They will be forced to fix this state of affairs as more people read their books, magazines and more online, and competitors with saner policies enter the market.

But even in a digital rights-based world, what about a second-hand market for digital books – and apps? If Joe purchased an email program for his Nokia smartphone, and a year later bought an iPhone, he could

1. return his app (the rights to the app) to the store he bought it from. In this case, does Joe get a full or partial refund? Unlike a physical good, there has been no wear. And it’s fair to say he’d be refunded whatever the current price is (or maybe the price he bought it for, whichever is less). But this is flawed – since the number of rights are infinite, they are worth nothing themselves. The store gains nothing by refunding Joe his money, so there’s no incentive in a return-refund.

2. transfer his app (the rights) to Jane’s Nokia. Unless Joe’s gifting the app away, a transfer means Jane will need to pay Joe for those rights. How much are those rights worth to Joe?

This is the second-hand market for digital goods.

An eBay for digital goods sounds about right, and about time [2].

[1] And when we attempt to set the digital book/magazine free, the limited corral of policies we build around it is maddening in its clumsiness: you-can-only-share-with-so-many-people, you-can-only-share-so-many-times, you-can-only-share-with-an-identical-device, you-have-to-pay-extra-to-share. This is when you know that from among the inventors, engineers, marketers, lawyers and accountants, the first two have left the room.

[2] This market will need support from app stores and developers, of course. There’s no way – over-the-counter or otherwise – for Joe to transfer his app to Jane (or any other bidder). This is regardless of whether it’s bought from an app store (Apple/Android/RIM/(ugh)Nokia) or from the app developer itself.

About downtime and disconnecting

Two articles read within 24 hours:

One: ‘Whatever happened to downtime?’

“Why do we give up our sacred space so easily? Because space is scary. During these temporary voids of distraction, our minds return to the uncertainty and fears that plague all of us… It is now possible to always feel loved and cared for, thanks to the efficiency of our “comment walls” on Facebook and seamless connection with everyone we’ve ever know”

Two: ‘My Own Private (Rental) Island, in the Bahamas’

“These are the things I carried: an iPad jammed with various kinds of media, enough batteries to stock a Wal-Mart, a BlackBerry, a bunch of DVDs, 7,000 songs on my iPod, and a bottle of extra virgin olive oil.

These are the things I needed: My wife.

Had I been on Little Deadman’s Cay by myself, I would have gone mad fairly quickly and begun speaking to coconuts or at least banging them together to hear some noise beyond my own breathing. On this trip, Jill was the necessary luxury.”

A significant number among us now feel more comfortable speaking – behind a screen -with our larger circle of acquaintances than with our inner circle of friends. This is changing that thin slice of society we’re part of, changing in real, observable ways. How much we won’t know, except in hindsight.