net.wars

Most net.wars are not new. Today's debates about free speech and censorship, copyright and control, nationality and disappearing borders were all presaged by the same discussions in the 1980s even as the Internet protocols were being invented. The rare exception: online gambling. Certainly, there were debates about whether states should regulate gambling, but a quick Usenet search does not seem to throw up any discussions about the impact the Internet was going to have on this particular pastime. Just sex, drugs, and rock 'n' roll.

The story started in March, when the French Tennis Federation (FFT - Fédération Française de Tennis) filed suit in Belgium against Betfair, Bwin, and Ladbrokes to prevent them from accepting bets on matches played at the upcoming French Open tennis championships, which start on May 25. The FFT's arguments are rather peculiar: that online betting stains the French Open's reputation; that only the FFT has the right to exploit the French Open; that the online betting companies are parasites using the French Open to make money; and that online betting corrupts the sport. Bwin countersued for slander.

On Tuesday of this week, the Liège court ruled comprehensively against the FFT and awarded the betting companies costs.

The FFT will still, of course, control the things it can: fans will be banned from using laptops and mobile phones in the stands. The convergence of wireless telephony, smart phones, and online sites means that in the second or two between the end of a point and the electronic scoreboard updating, there's a tiny window in which people could bet on a sure thing. Why this slightly improbable scenario concerns the FFT isn't clear; that's a problem for the betting companies. What should concern the FFT is ensuring a lack of corruption within the sport. That means the players and their entourages.

The latter issue has been a touchy subject in the tennis world ever since last August, when Russian player Nikolay Davydenko, currently fourth in the world rankings, retired in the third and final set of a match in Poland against 87th ranked Marin Vassallo Arguello, citing a foot injury. Davydenko was accused of match-fixing; the investigation still drags on. In the resulting publicity, several other players admitted being approached to fix matches. As part of subsequent rule-tightening by the Association of Tennis Professionals, the governing body of men's professional tennis, three Italian players were suspended briefly late last year for betting on other players' matches.

Probably the most surprising thing is that tennis, along with soccer and horse racing, is actually among the most popular sports for betting. A minority sport like tennis? Yet according to USA Today, the 2007 Paris Masters event saw $750 million to $1.5 billion in bets. I can only assume that the inverted pyramid of matches every week involving individual players fits well with what bettors like to do.

Fixing matches seems even more unlikely. The best payouts come from correctly picking upsets, the bigger the better. But top players are highly unlikely to throw matches to order. Most of them play a relatively modest number of events (Davydenko is admittedly the exception) and need all the match wins and points from those events to sustain their rankings. Plus, they're just too damn rich.

In 2007, Roger Federer, the ultra-dominant number one player since the end of 2003, earned upwards of $10 million in prize money alone; Davydenko picked up over $2 million (and has already won another $1 million in 2008). All of the top 12 earned over $1 million. Add in endorsements, and even after you subtract agents' fees, tax, and travel costs for self and entourage, you're still looking at wealthy guys. They might tank matches at events where they're being paid appearance fees (which are legal on the men's tour at all but the top 14 events, but proving they've done so is exceptionally difficult. Fixing matches, which could cost them in lost endorsements on top of the tour's own sanctions, surely can't be worth it.

There are several ironies about the FFT's action. First of all (something most of the journalists covering this story don't mention, probably because they don't spend a lot of time watching tennis on TV), Bwin has been an important advertiser sponsoring tennis on Eurosport. It's absolutely typical of the counter-productive and intricately incestuous politics that characterize the tennis world that one part of the sport would sue someone who pays money into another part of the sport.

Second of all, as Betfair and Bwin pointed out, all three of these companies are highly regulated European licensed operations. Ruling them out of action would mean shift online betting to less well regulated offshore companies. They also pointed out the absurdity of the parasites claim: how could they accept bets on an event without using its name? Betfair in particular documented its careful agreements with tennis's many governing bodies.

Third of all, the only reason match-fixing is an issue in the tennis world right now is that Betfair spotted some unusual betting patterns during that Polish Davydenko match, cancelled all the bets, and went public with the news. Without that, Davydenko would have avoided the fight over his family's phone records. Come to think of it, making the issue public probably explains the FFT's behavior: it's revenge.

Wendy M. Grossman's Web site has an extensive archive of her books, articles, and music, and an archive of all the earlier columns in this series. Readers are welcome to post here, at net.wars home, at her personal blog, or by email to netwars@skeptic.demon.co.uk (but please turn off HTML).

Posted by at 12:10 PM | Permalink | Comments (0) | TrackBacks (0)

In the last ten days or so a stormlet has broken out about the announcement that BT, Carphone Warehouse, and TalkTalk, who jointly cover about 70 percent of British Internet subscribers, have signed up for a new advertising service. The supplier, Phorm (previously, 121Media), has developed Open Internet Exchange (OIX), a platform to serve up "relevant" ads to ISPs' customers. Ad agencies and Web sites also sign up to the service which, according to Phorm's FAQ, can serve up ads to any Web site "in the regular places the website shows ads". Partners include most British national newspapers, iVillage, and MGM OMD.

A brief chat with BT revealed that the service, known to consumers as Webwise, will apply only to BT's retail customers, not its wholesale division. Consumers will be able to opt out, and BT is planning an educational exercise to explain the service.

Obviously all concerned hope Webwise will be acceptable to consumers, but to make it a little more palatable, not signing out of it gets you warnings if you land on suspected phishing sites. I don't think improved security should, ethically, be tied to a person's ad-friendliness, but this is the world we live in.

"We've done extensive research with our customer base," says BT's spokesman, "and it's very clear that when customers know what is happening they're overwhelmingly in favor of it, particularly in terms of added security."

But the Net folk are suspicious folk, and words like "spyware" and "adware" are circling, partly because Phorm's precursor, 121Media, was blocked by Symantec and F-Secure as spyware. Plus, The Register discovered that BT had been sharing data with Phorm as long ag as last summer, and, apparently, lying about it.

Phorm's PR did not reply to a request for an interview, but a spokeswoman contacted briefly last week defended the company. "We are absolutely not and in no way an adware product at all."

The overlooked aspect: Phorm called in Privacy International's new commercial arm, 80/20, to examine its system.

PI's executive director, Simon Davies, one of the examiners, says, "Phorm has done its very best to eliminate and minimise the use of personal information and build privacy into the core of the technology. In that sense, it's a privacy-friendly technology, but that does not get us away from the intrusion aspect." In general, the principle is that ads shouldn't be served on an opt-out basis; users should have to opt in to receive them.

Tailoring advertising to the clickstream of user interests is of course endemic online now; it's how Google does AdSense, and it's why that company bought DoubleClick, which more or less invented the business of building up user profiles to create personalized ads. Phorm's service, however, does not build user profiles.

A cookie with a unique ID is stored on the user's system - but does not associate that ID with an individual or the computer it's stored on. Say you're browsing car sites like Ford and Nissan. The ISP does not give Phorm personally identifiable information like IP addresses, but does share the information that the computer this cookie is on is looking at car sites right now. OIX serves up car ads. The service ignores niche sites, secure sites (HTTPS), and low-traffic sites. Firewalling between Phorm and the ISP means that the ISP doesn't know and can't deduce the information that the OIX platform knows about what ads are being served. Nothing is stored to create a profile. Phorm instead offers advertisers instead is the knowledge that they are serving ads that reflect users' interests in real time.

The difference to Davies is that Google, which came last in Privacy International's privacy rankings, stores search histories and browsing data and ties them to personal identifiers, primarily login IDs and IP addresses. (Next month, the Article 29 Group will report its opinion as to whether IP addresses are personal information, so we will know better then which way the cookie crumbles.)

"The potential to develop a profile covertly is extremely limited, if not eliminated," says Davies.

Phorm itself says, "We really think what our stuff does dispells the myth that in order to provide relevance you have to store data."

I hate advertising as much as the next six people. But most ISPs are operating on razor-thin margins if they make money at all, and they're looking at continuously increasing demand for bandwidth. That demand can only get worse as consumers flock to the iPlayer and other sources of streaming video. The pressure on pricing is steadily downward with people like TalkTalk and O2 offering free or extremely cheap broadband as an add-on to mobile phone accounts. Meanwhile, the advertising revenues go to everyone but them. Is it surprising that they'd leap at this? Analysts estimate that BT will pick up £85 million in the first year. Nice if you can get it.

We all want low-cost broadband and free content. None of us wants ads. How exactly do we propose all this free stuff is going to be paid for?

As for Phorm, it's going to take a lot to make some users trust them. I'd say, though, that the jury is still out. Sometimes people do learn from past mistakes.

Wendy M. Grossman's Web site has an extensive archive of her books, articles, and music, and an archive of all the earlier columns in this series. Readers are welcome to post here, at net.wars home, at her personal blog, or by email to netwars@skeptic.demon.co.uk (but please turn off HTML).

Posted by at 11:59 AM | Permalink | Comments (5) | TrackBacks (1)

If you log onto ebay.com (not .co.uk or eBay's other international sites) next week you may find gaping holes: a number of sellers have pledged to boycott from February 18 to 25 to protest changes eBay is making in listing fees, commissions, some payment requirements, and, probably most contentious, the feedback system. The short version: sellers will no longer be able to leave feedback for buyers, and eBay will require sellers who are new or have low feedback ratings to use Paypal as a payment option and also give their listings less exposure in searches. There will also be penalties for overcharging for postage and handling (a sneaky way of making up for low prices).

Whether these changes are good changes or bad, eBay's feedback system has been broken for a long time, as Jim Griffith comments. The essence of a reputation-based system is holding buyers and sellers accountable for bad behavior. But no one dares leave negative feedback any more for fear of retaliation.

Sellers have reacted angrily to the announced change and some are threatening a strike in which they pull all their items from sale from February 18 to 25. Logically, however, what good do buyer ratings do? The system is inherently unbalanced: buyers choose their sellers but sellers can't discriminate among buyers.

Sellers can't, for example, use the buyer ratings to ring-fence sales. If a buyer fails to pay or rips off a seller by instigating a chargeback after the item has been delivered, the seller's only recourse is through eBay's trust and fraud department. eBay's argument that the change should result in a more accurate reputation system is probably justified.

If it doesn't feel fairly balanced, that's emotion, not logic, based on nostalgia for the early days, when eBay was a democratic site where all users were amateurs who both bought and sold. eBay now is full of businesses and professional sellers, and what the feedback changes make explicit is that over time eBay has become a class system.

Professional sellers (everyone from substantial businesses who also run their own ecommerce sites and probably list on Amazon Marketplace and Google Checkout as well) are in a different league from the casual seller who maybe wants to get rid of that old DVD player and doesn't see why it shouldn't be for a bit of cash. If online discussion forums are 90 percent lurkers and 10 percent posters, it wouldn't be surprising if eBay's user community was 90 percent buyers and 10 percent sellers. I'm a good example: I've sold two items on eBay, but bought dozens, some of them repeat business with the same crafts people and some one-off purchases. For casual sellers, I do look at sellers' feedback - largely to eliminate obvious frauds. (I had to stop buying DVDs on eBay at all - the site is overrun with Asian counterfeits). For the professional sellers, however, the more important reputation information lies in recommendations outside of eBay from people interested in the same sorts of things I am.

There are people the changes will hurt, but the big sellers probably won't be among them.; do enough volume successfully and a few negative reviews won't hurt you that much. Individuals won't be able to benefit from an established reputation as a reliable buyer when they sell items. Small sellers will have no way of defending themselves publicly if an unreasonable buyer chooses to trash them. (If the buyer doesn't pay at all, of course, sellers can still work to get the user barred from the service.)

Do eBay sellers have, as some are insisting, a real choice? Some, yes, even though the received wisdom for a long time has been in online auctions size of the user base is everything. Some craftspeople have been migrating to Etsy, which is becoming an interesting place to browse. The big sellers generally already sell through multiple channels. People selling off used DVDs, books, and other media would probably do better listing on Amazon Marketplace, where their items will show up, presumably favorably priced, in the same listing with new copies. It's the flea market crowd - the people selling off old tires, strange collectibles, and odd bits of clothing - for whom the size of eBay's audience is indispensable. That is very much eBay's roots, but who wants to move back in with their parents?

Online communities - including commercial ones, like eBay - all tend to exhibit the same social characteristics. One such is the rule that users hate change. Especially, they hate specific changes that threaten to remove one or more freedoms they're used to. eBay's new CEO is right to say it would be more surprising if people didn't protest, given the community's passionate nature. But plenty of online communities have had userbases just as passionate - and did not survive their own arrogance once technology changes created other options. In this battle, eBay's true opponent is Google.

It is Google, now, whose product search puts eBay listings alongside many others, and where people are increasingly likely to start looking for unfamiliar items. And it will be Google that wins if sellers leave eBay en masse, because that's how we will find them in their new homes.

Wendy M. Grossman's Web site has an extensive archive of her books, articles, and music, and an archive of all the earlier columns in this series. Readers are welcome to post here, at net.wars home, at her personal blog, or by email to netwars@skeptic.demon.co.uk (but please turn off HTML).

Posted by at 3:46 PM | Permalink | Comments (0) | TrackBacks (0)

Large numbers are always fun, and $44.6 billion is a particularly large number. That's how much Microsoft has offered to pay, half cash, half stock, for Yahoo!

Before we get too impressed, we should remember two things: first, half of it is stock, which isn't an immediate drain on Microsoft's resources. Second, of course, is that money doesn't mean the same thing to Microsoft as it does to everyone else. As of last night, Microsoft had $19.09 billion in a nice cash heap, with more coming in all the time. (We digress to fantasise that somewhere inside Microsoft there's a heavily guarded room where the cash is kept, and where Microsoft employees who've done something particularly clever are allowed to roll naked as a reward.)

Even so, the bid is, shall we say, generous. As of last night, Yahoo!'s market cap was $25.63 billion. Yahoo!'s stock has dropped more than 32 percent in the last year, way outpacing the drop of the broader market. When issued, Microsoft's bid of $31 a share represented a 62 percent premium. That generosity tells us two things. First, since the bid was, in the polite market term, "unsolicited", that Microsoft thought it needed to pay that much to get Yahoo!'s board and biggest shareholders to agree. Second, that Microsoft is serious: it really wants Yahoo! and it doesn't want to have to fight off other contenders.

In some cases – most notably Google's acquisition of YouTube – you get the sense that the acquisition is as much about keeping the acquired company out of the hands of competitors as it is about actually wanting to own that company. If Google wanted a slice of whatever advertising market eventually develops around online video clips, it had to have YouTube. Google Video was too little, too late, and if anyone else had bought YouTube Google would never have been able to catch up.

There's an element of that here, in that MSN seems to have no immediate prospect of catching up with Google in the online advertising market. Last May, when a Microsoft-Yahoo! merger was first mooted, CNN noted that even combined MSN and Yahoo! would trail Google in the search market by a noticeable margin. Google has more than 55 percent of the search market; Yahoo! trails distantly with 17 percent and MSN is even further behind with 13 percent. Better, you can hear Microsoft thinking, to trail with 30 percent of the market than 13 percent; unlike most proposals to merge the numbers two and three players in a market, this merger would create a real competitor to the number one player.

In addition, despite the fact that Yahoo!'s profits dropped by 4.6 percent in the last quarter (year on year), its revenues grew in the same period by 11.8 percent. If Microsoft thought about it like a retail investor (or Warren Buffett), it would note two things: the drop in Yahoo!'s share prices make it a much more attractive buy than it was last May; and Yahoo!'s steady stream of revenues makes a nice return on Microsoft's investment all by itself. One analyst on CNBC estimated that return at 5 percent annually – not bad given today's interest rates.

Back in 2000, at the height of the bubble, when AOL merged with Time-Warner (a marriage both have lived to regret), I did a bit of fantasy matchmaking that regrettably has vanished off the Telegraph's site, pairing dot-coms and old-world companies for mergers. In that round, Amazon.com got Wal-Mart (or, more realistically, K-Mart), E*Trade passed up Dow-Jones, publisher of the Wall Street Journal (and may I just say how preferable that would have been to Rupert Murdoch's having bought it) in favor of greater irony with the lottery operator G-Tech, Microsoft got Disney (to split up the ducks), and Yahoo! was sent off to buy Rupert Murdoch's News International.

Google wasn't in the list; at the time, it was still a privately held geeks' favorite, out of the mainstream. (And, of course, some companies that were in the list – notably eToys and QXL – don't exist any more.) The piece shows off rather clearly, however, the idea of the time, which was that online companies could use their ridiculously inflated stock valuations to score themselves real businesses and real revenues. That was before Google showed the way to crack online advertising and turn visitor numbers into revenues.

It's often said that the hardest thing for a new technology company is to develop a second product. Microsoft is one of the few who succeeded in that. But the history of personal computing is still extremely short, and history may come to look at DOS, Windows, and Office as all one product: commercial software. Microsoft has seen off its commercial competitors, but open-source is a genuine threat to drive the price of commodity software to zero, much like the revenues from long distance telephone calls. Looked at that way, there is no doubt that Microsoft's long-term survival as a major player depends on finding a new approach. It has kept pitching for the right online approach: information service, portal, player/DRM, now search/advertising. And now we get to find out whether Google, like very few companies before it, really can compete with Microsoft. Game on.

Wendy M. Grossman’s Web site has an extensive archive of her books, articles, and music, and an archive of all the earlier columns in this series. Readers are welcome to post here, at net.wars home, at her personal blog, or by email to netwars@skeptic.demon.co.uk (but please turn off HTML).

Posted by at 4:38 PM | Permalink | Comments (0) | TrackBacks (0)

On the Net, John Perry Barlow observed long ago, everything is local and everything is global, but nothing is national. It's one of those pat summations that sometimes is actually right. The EU, in the interests of competing successfully with the very large market that is the US, wants to harmonize the national laws that apply to content online.

They have a point. Today's market practices were created while the intangible products of human ingenuity still had to be fixed in a physical medium. It was logical for the publishers and distributors of said media to carve up the world into national territories. But today anyone trying to, say, put a song in an online store, or create a legal TV download service has to deal with a thicket of national collection societies and licensing authorities.

Where there's a problem there's a consultation document, and so there is in this case: the EU is giving us until February 29 (leap year!) to tell them what we think (PDF).

The biggest flaw in the consultation document is that the authors (who needed a good copy editor) seem to have bought wholesale the 2005 thinking of rightsholders (whom they call "right holders"). Fully a third of the consultation is on digital rights management: should it be interoperable, should there be a dispute resolution process, should SMEs have non-discriminatory access to these systems, should EULAs be easier to read?

Well, sure. But the consultation seems to assume that DRM is a) desirable and b) an endemic practice. We have long argued that it's not desirable; DRM is profoundly anti-consumer. Meanwhile, the industry is clearly fulfilling Naxos founder Klaus Heymann's April 2007 prophecy that DRM would be gone from online music within two years. DRM is far less of an issue now than it was in 2006, when the original consultation was launched. In fact, though, these questions seem to have been written less to aid consumers than to limit the monopoly power of iTunes.

That said, DRM will continue to be embedded in some hardware devices, most especially in the form of HDCP, a form of copy protection being built, invisibly to consumers until it gets in their way, into TV sets and other home video equipment. Unfortunately, because the consultation is focused on "Creative Content Online", such broader uses of DRM aren't included.

However, because of this and because some live streaming services similarly use DRM to prevent consumers from keeping copies of their broadcasts (and probably more will in future as Internet broadcasting becomes more widespread), public interest limitations on how DRM can be used seem like a wise idea. The problem with both DRM and EULAs is that the user has no ability to negotiate terms. The consultation leaves out an important consumer consideration: what should happen to content a consumer pays for and downloads that's protected with DRM if the service that sold it closes down? So far, subscribers lose it all; this is clea

The questions regarding multi-territory licensing are far more complicated, and I suspect answers to those depend largely on whether you're someone trying to clear rights for reuse, someone trying to protect your control over your latest blockbuster's markets, or someone trying to make a living as a creative person. The first of those clearly wants to buy one license rather than dozens. The second wants to sell dozens of licenses rather than one (unless it's for a really BIG sum of money). The third, who is probably part of the "Long Tail" mentioned in the question, may be very suspicious of any regime that turns everything he created before 2005 into "back catalogue works" that are subject to a single multi-territory license. Science fiction authors, for example, have long made significant parts of their income by selling their out-of-print back titles for reprint. An old shot in a photographer's long tail may be of no value for 30 years – until suddenly the subject emerges as a Presidential candidate. Any regime that is adopted must be flexible enough to recognize that copyrighted works have values that fluctuate unpredictably over time.

The final set of question has to do with the law and piracy. Should we all follow France's lead and require ISPs to throw users offline if they're caught file-sharing more than three times? We have said all along that the best antidote to unauthorized copying is to make it easy for people to engage in authorized copying. If you knew, for example, that you could reliably watch the latest episode of The Big Bang Theory (if there ever is one) 24 hours after the US broadcast, would you bother chasing around torrent sites looking for a download that might or might not be complete? Technically, it's nonsense to think that ISPs can reliably distinguish an unauthorized download of copyrighted material from an authorized one; filtering cannot be the answer, no matter how much AT&T wants to kill itself trying. We would also remind the EU of the famed comment of another Old Netizen, John Gilmore: "The Internet perceives censorship as damage, and routes around it."

But of course no consultation can address the real problem, which isn't how to protect copyright online: it's how to encourage creators.

Wendy M. Grossman’s Web site has an extensive archive of her books, articles, and music, and an archive of all the earlier columns in this series. Readers are welcome to post here, at net.wars home, at her personal blog, or by email to netwars@skeptic.demon.co.uk (but please turn off HTML).

Posted by at 3:58 PM | Permalink | Comments (0) | TrackBacks (0)

One of the fun things about making predictions is that, as every year-end psychic knows, you can generally count on people to remember only the successful ones. For them to remember the unsuccessful ones the prediction has to be really outrageous. And even then it may not matter – people do remember Ed Yardeni's prediction that the Year 2000 would bring global doom and chaos, but he is, astonishingly, still working.

Most predictions don't involve putting your money where your mouth is. But buying companies does. This week, eBay announced it was taking a $1.43 billion one-off charge on Skype, which it acquired just a little over two years ago for $2.6 billion, half cash and half stock. I think it's pretty meaningless to talk about how much a deal is worth when it's a staight stock swap: stock costs the acquiring company comparatively little, for one thing, and for another, stock deals are always inflated to ensure that the company being bought up doesn't get shafted if the stock goes down. You can buy a lot more stuff in boom times – say, 1999 – than after sane valuations return. Just ask Time-Warner.

In this case, though, eBay paid half cash (and of course its stock has gone up a good bit since then) and the writedown it took this week is known as a goodwill impairment charge. Goodwill is the set of intangible assets – branding, intellectual property, good customer and employee relations – that a company brings with it when it's acquired. It's hard to value directly; in practice it's the difference between the acquired company's tangible assets (physical plant, inventory, receivables) and the price the buyer paid. The inflated valuations of the dot-com boom have left behind an SEC requirement that goodwill must be assessed annually and charged off if its fair value differs too much from the value the company is carrying for it. eBay's charge, therefore, is an admission that the company overpaid for Skype.

The charge turns eBay's profitable quarter into an overall loss. Bear in mind that of all the Internet businesses eBay is the only one I'm aware of that has been profitable throughout: as a weird, new business in 1995, as an established Internet name taking off during the boom, and as a mainstream phenomenon ever since. It's not like Amazon.com, which lost money for years before finally turning black, or AOL, which was always going to struggle once the conditions that sent it skywards changed, or Yahoo!, whose volatility reflects that of advertising spend. eBay has always had a solid business model, for a simple reason: the more you buy on eBay the more you buy on eBay.

In an economic downturn, people turn to eBay to get stuff cheaper or turn the unwanted items in their attics into money. In an upturn, people turn to eBay to flesh out their collections of antique Tasmanian Zorks. Of course, over time the stock has gone down as well as up, but the business has remained solid. As it does, even now. So does Skype's: according to eBay's SEC filing, Skype has continued to grow in all geographical areas, and its net revenues nearly doubled in the past year on an increase in accounts of 81 percent.

Two years after the acquisition, Skype's usefulness to eBay is less clear. Of course, there's the diversification argument: I am frequently told that the hardest thing for a technology company is coming up with its second product. Google, for all the embellishments it's added to its search engine, basically has one core product that produces revenues: text-based, contextual advertising. But if diversification is why eBay bought Skype, it might as well have bought the perfectly profitable kind of thing Warren Buffett is famous for buying: brick, carpeting, and paint. ("Try to contain your excitement," he wrote dryly to his shareholders in 2001.)

At the time, I thought owning Skype would enable eBay to increase the interconnectedness of its user community. This was much what the companies themselves said : eBay would be able to offer, essentially, premium call services, and Skype would help buyers and sellers communicate.

In fact, that hasn't happened: people do not have Skype options to enable on their eBay accounts that would allow other users to make direct contact with questions, and you do not see Skype buttons, whether talk or chat, under buyers' or sellers' names, next to "email the seller". The number one way that buyers and sellers communicate is email, both inside eBay's secured Web platform and outside it once communication has been established. And this despite the fact that systems allowing live telephone callbacks from or real-time chats with a live customer service representative have been well established for a long time, and are built into many of the bigger ecommerce sites. PayPal, which eBay acquired in 2002 for $1.5 billion, has been much more successfully integrated into eBay's core business.

The good news in all this is that financial analysts covering the Internet seem to have matured. No one is writing that eBay is doomed, or that VoIP is all hype, though some are arguing that Skype may still become roadkill. It seems unlikely: Skype's revenues are robustly increasing and after all, it does have pretty smart owners.

Wendy M. Grossman’s Web site has an extensive archive of her books, articles, and music, and an archive of all the earlier columns in this series. Readers are welcome to post here, at net.wars home, at her personal blog, or by email to netwars@skeptic.demon.co.uk (but please turn off HTML).

Posted by at 2:39 PM | Permalink | Comments (0) | TrackBacks (0)

It's a passing fad. It's all hype. They've got good PR. Only sad, pathetic people with no real lives would be interested.
All things that were said about the Internet 12 years ago. All things being said now about Second Life today. Wrong about the Internet. Wrong, too, about Second Life.

Hanging around a virtual world dressed as a cartoon character isn't normally my idea of a good time, but last weekend Wired News asked me to attend the virtual technology exposition going on inworld, and so I finally fired up Gwyndred Wuyts, who I'd created some weeks back.

Second Life is of course a logical continuation of the virtual worlds that went before it. The vending machines, avatars, attachments (props such as fancy items of clothing, laptops, or, I am given to understand, quite detailed, anatomically correct genitals), and money all have direct ancestors in previous virtual worlds such as Worlds Away (Fujitsu), The Palace, and Habitat (Lucasfilm). In fact, though, the prior art Second Life echoed most at first was CompuServe, which in 1990 had no graphics except ASCII art and little sense of humor – but was home to technology companies of all sizes, who spoke glowingly of the wonders of having direct contact with their customers. In 1990 every techie had a CompuServe ID.

Along came the Web, and those same companies gratefully retreated to the Web, where they could publish their view of the world and their support documents and edit out the abuse and backtalk. Now, in Second Life, the pendulum is swinging back it's flattened hierarchies all over again.

"You have to treat everyone equally because you can't tell who anyone is. They could be the CEO of a big company," Odin Liam Wright (SL: Liam Kanno) told me this week. " In SL, he says, what you see is "more the psyche than the economic class or vocation or stature."

Having to take people as they present themselves without the advantage of familiar cues and networked references was a theme frequently exploited by Agatha Christie. Britain was then newly mobile, and someone moving to a village no longer came endorsed by letters from mutual friends. People could be anybody, her characters frequently complain.

Americans are raised to love this kind of social mobility. But its downside was on display yesterday in a panel on professionalism at the Information Security conference, where several speakers complained that the informal networks they used to use to check out their prospective security hires no longer exist. International mobility has made it worse: how do you assess a CV when both the credentials and the organizations issuing them are unknown to you?

Well, great: if the information security professionals don't know whom to trust, what hope is there for the rest of us?

Nonetheless, the speaker was wrong. The informal networks exist, just not where he's looking for them. When informal networks get overrun by the mainstream, they move elsewhere. In the late 1980s, Usenet was such a haven; by 1994, when September stopped ending and AOL moved in, everyone had retreated to gated communities (private forums, mailing lists, and so on). Right now, some of those informal networks are on Second Life, and the window is closing as the mainstream becomes more aware of the potential of the virtual world as a platform.

Previous world were popular and still died. But Second Life is different, first and foremost because of timing. People have broadband. They have computers powerful enough to handle the graphics and multiple applications. Their movement around the virtual world is limited only by their manual dexterity and the capacity of the servers to handle so many interacting simulations at once.

Second: experimentation. At this week's show, I picked up a (beta) headset that plugs Skype into Second Life (Second Talk). People (Cattle Puppy Productions) are providing inworld TV displays (and extracted video clips for the rest of us). Reallusion, one of the show's main sponsors, does facial animation it hopes will transform Second Life from a world of text-typing avatars into one of talking characters. You can pick up a portable office including virtual laptop, unpack it in a park, and write and post real blog entries. Why would you do this when you already have blogging software on your desktop? Because Second Life has the potential to roll everything – all the different forms of communication open on your desktop today – into a single platform. And if you grew up with computer games, it's a more familiar platform than the desktop metaphor generations of office workers required.

Third: advertising. The virtual show looked empty compared to a real-world show; it had 6,000-plus visitors over three days. The emptiness was by design to allow more visitors while minimizing lag. Nonetheless, Dell was there with a virtual configurator on which you could specify your new laptop. Elsewhere inworld, you can drive your new Toyota or Pontiac and read your Reuters news. Moving into Second Life is a way for old, apparently stuffy companies to reinvent their image for the notoriously hard-to-reach younger crowd who are media-savvy and ad-cynical. There is real gold in them thar virtual hills.

Finally, a real reason to upgrade my desktop.

Wendy M. Grossman’s Web site has an extensive archive of her books, articles, and music, and an archive of all the earlier columns in this series. Readers are welcome to post here, at net.wars home, at her personal blog, or by email to netwars@skeptic.demon.co.uk (but please turn off HTML).

Posted by at 1:33 PM | Permalink | Comments (0) | TrackBacks (0)

OK, this is weird. I'm sitting at my desk in London watching a match from the U.S, Open (a modestly sized tennis tournament finishing up this week in New York City. I'm watching it on the laptop. Not so strange; lots of people watch TV on their computers these days. Only in this case I'm watching the match as broadcast on USA Network, a satellite channel people get by cable. In the US.

Some months back in the online tennis forum I hang out in, you started seeing mention of "streams" of live tennis, all coming from Asia somewhere, somehow And damn if it wasn't true. Forget all those P2P networks that make you wait a day or two while someone seeds their digital copy of last night's broadcast – if anyone else is even interested enough in that quarter-final Jankovic-Dementieva match to upload it. Pick a player, and although the picture is small, you can have it live. Complete with commercials. At last I can see the ads repeating 12 times an hour that everyone else is complaining about. Whee!

It's weird the frisson of excitement with which you can welcome ads when they're part of something exotic and slightly forbidden. Believe me, if I were sitting in my friends' living room in Pennsylvania – I'd be complaining away with the best of them about *how many times* do we have to see that Sharapova-as-Leona Helmsley commercial (what's she supposed to be selling, anyway? Noblesse oblige?). But viewed this way it's suddenly so cool, like huddling around the short wave radio and tuning in South Africa.

The closer analogy is the early days of satellite television, when satellite nuts (this was before we learned the politically correct phrase "early adopters") had big dishes in their backyards, and found all sorts of interesting things in the sky, like free HBO (in those days, still known as Home Box Office). When dish owners numbered 1.7 million, the pay-TV services got bothered began encrypting their services to force dish owners to pay cable rates. The upshot: one of the great moments of satellite television; href="http://www.findarticles.com/p/articles/mi_m1511/is_v7/ai_4293600">"Captain Midnight" hijacked HBO's output for four and a half minutesin protest. Captain Midnight was later identified as John MacDougall, a satellite TV salesman, and he was eventually fined $5,000.

Things are likely to be less kindly in the Internet era. For one thing, the companies that own the biggest broadcast networks are bigger, meaner, and have more laws. The first Internet TV casualty was probably the Canadian-targeted iCraveTv, which for a few months in 2000 had 17 American and Canadian channels online,. The service got squashed like a bug, despite offering to pay broadcasters. Bear in mind that the first cable companies operated much the way iCraveTV did: they put up a repeating and ran a bunch of wires.

Well, we know how the Internet works. Take out one guy and in return you get a lot more guys that are harder to deal with. I've lost count now of the players and sites: TVUPlayer, TVAnts, PPLive, Sopcast. All are Asian, all stream live TV, and all use peer-to-peer networking technologies to spread the load. Which means, in turn, that the single biggest expense in streaming – bandwidth – is shared among the users. Most of whom, as far as I can tell, are sports nuts, which is only logical. The picture you get from these players is, while good enough to watch, still relatively small and low-resolution. For scripted television, you can get a better experience by waiting the day and downloading a torrent or a legal copy from the pay services that are beginning to open up.

But the whole experience of sports is the fact that it is live, and no one really knows how it's going to come out. Within some limits, a bad, live picture is often preferable to a perfect, delayed one. Even if you can't really see what Federer is doing when he hits the ball, you want the emotional rush of being there with him. You can always watch the full-size version later for artistic appreciation.

Theoretically, the fact that the pictures are small ought to give broadcasters the same kind of confidence that publishers have when it comes to file-sharing. People will pay for big-screen viewing just as they'll pay for books. Nonetheless, we're standing on the brink of the WIPO broadcast treaty that net.wars wrote about in February, 2005.

James Love has a lengthy critique of the current proposals (PDF). But one thing he leaves out is that as far as I can make out, today's streaming players "rebroadcast" their signals by pointing at an IP address where the broadcaster itself is streaming its own output. Are we talking about making it illegal to access or publish IP addresses based on the content that's available at them? TEOTIAWKI. (The End of the Internet as we know it.)

I can't believe these streams are really legal, despite this argument regarding law enforcement actions in Italy. Even if they include ads, someone in London is not in the target demographic for the USTA. Presumably, eventually everybody will encrypt their streams and we'll all have to have protected players and subscriptions in order to view them. In the meantime, enjoy your giant satellite dish.

Wendy M. Grossman’s Web site has an extensive archive of her books, articles, and music, and an archive of all the earlier columns in this series. Readers are welcome to post here, at net.wars home, at her personal blog, or by email to netwars@skeptic.demon.co.uk (but please turn off HTML).

Posted by at 1:50 PM | Permalink | Comments (0) | TrackBacks (0)

There are three reasons to visit a physical-world store over an online one: convenience; a chance to sample in person a wide range of goods; good customer service. All right, there's a fourth: it's fun. At least, number four on that list is the reasoning behind such phenomena as Niketown or those airport hangar-sized Levi's stores that try to look like night clubs (at least, I guess that's what they're trying for).

Dixons, which this week threw in the towel as a British High Street retailer in favor of turning itself into an Internet-only retailer, has been scoring pretty low on all of those for some time now. Convenient locations – if you work in town – it had. However, notorious for being staffed by young, ill-trained (particularly with respect to computer equipment) kids detailed to sell extended warranties, it was never going to win awards for customer service. The stores were too small to carry a really wide range of merchandise. They couldn't compete on price with the big, out-of-town stores (including the chain's own PC World or its electrical retailer, Currys, which is to be renamed the so-1999 "currys.digital"). And visiting one of those stores was certainly never fun. I can't think of a direct US equivalent, in part because it's so long since most parts of the US have had comparable city centers. In Britain, where public transportation has kept city centers (mostly) alive by keeping foot traffic going past stores the "High Street" – the generic (and often specific) term for the main shopping drag in any given city, like Main Street in the US – has continued in its traditional role. Britain has some out-of-town malls and category killer stores, and it has many, many chains, but you can still find a local butcher or hardware store.

Pretty much all the headlines blamed the growth of ecommerce. Yet Dixons is being squeezed by all the factors above, not just the Web. And in fact, if they attempt to compete on the Web with their current high prices, it's hard to believe that its own brand name is going to be sufficient to make it a long-term success online. The same increasing competition that's squeezing the bricks-and-plastic Dixons – supermarkets like Tesco, which has expanded into electrical goods – are already firmly entrenched online. Sure, you can buy an MP3 player from Dixons. But without the real-world stores to advertise its existence like a painted van touring the streets, Dixons as an online brand name can't compete with Amazon, eBay, or Google's or Yahoo!'s shopping engines. And those are its main competition. Despite its ecommerce operation having grown by 50 percent year-on-year since 2002, does Dixons itself command the kind of loyalty that will get its less Net-savvy shoppers to follow it online? It seems hard to believe.

Among the non-Neterate of my acquaintance, I note that when they want to buy something confusing, like a computer, they do want to buy from a company they've heard of – but they typically want that company to be in the physical world, where they can go see what they're buying. The Web's habit of reducing such purchases to a list of features and specifications works well only if you are experienced and knowledgeable. Of course, we know there's nothing to see when you look at a computer that tells you anything valuable other than whether you like the keyboard, but the presence of a human to explain things and promise to fix them if anything goes wrong is infinitely reassuring. Even if that human is completely ignorant, barely out of school, and gives the wrong advice. I may react in horror when one of these folks goes to PC World instead of the much nearer and more helpful local computer shop, but they do it because they've heard of it and they think that fact offers some security in unfamiliar blocked drains.

It's mildly amusing to look back about eight years and remember that at the time everyone was predicting that the big offline retailers would come online and stomp all over the cyberupstarts. And then again to about five years ago, when everyone was saying that "clicks and mortar" was the way to success. Instead, what seems to be happening is that retail, like so many other things in life and business, is becoming increasingly polarized between the huge names and the niche players. You're the local café or you're Starbucks. You're Cybercandy or you're Tesco. Increasingly, the middle is squeezed out.

Meanwhile, branding is supposed to be the answer for everything. Sometimes – for example, Interfauna – it is the shop's brand that matters. But more often these days, especially in consumer electrical goods, it's the brand of the goods you are buying. No one buys anything from Wal-Mart because the name "Wal-Mart" conveys quality; the one quality that name conveys is "cheap". You choose Wal-Mart as the retailer because of the price, and you choose the brand of the merchandise for its design, functionality, quality, style, or perceived value. Retailer branding is comparatively fragile, even something as apparently unassailable as Amazon.com.

The most likely is that Dixons is a dying brand, and its Web operation will eventually be folded into a single operation that ecompasses currys.digital and PC World. And then Tesco or Wal-Mart will buy it.

Wendy M. Grossman’s Web site has an extensive archive of her books, articles, and music, and an archive of all the earlier columns in this series. She has an intermittent blog. Readers are welcome to post there, at the official net.wars blogor to send email, but please turn off HTML.

Posted by at 1:09 PM | Permalink | Comments (0) | TrackBacks (0)