" /> net.wars: May 2012 Archives

« April 2012 | Main

May 25, 2012

Camera obscura

There was a smoke machine running in the corner when I arrived at today's Digital Shoreditch, an afternoon considering digital identity, part of a much larger, multi-week festival. Briefly, I wondered if the organizers making a point about privacy. Apparently not; they shut it off when the talks started.

The range of speakers served as a useful reminder that the debates we in what I think of as the Computers, Freedom, and Privacy sector are rather narrowly framed around what we can practically build into software and services to protect privacy (and why so few people seem to care). We wrangle over what people post on Facebook (and what they shouldn't), or how much Google (or the NHS) knows about us and shares with other organizations.

But we don't get into matters of what kinds of lies we tell to protect our public image. Lindsey Clay, the managing director of Thinkbox, the marketing body for UK commercial TV, who kicked off an array of people talking about brands and marketing (though some of them in good causes), did a good, if unconscious, job of showing what privacy activists are up against: the entire mainstream of business is going the other way.

Sounding like Dr Gregory House, people lie in focus groups, she explained, showing a slide comparing actual TV viewer data from Sky to what those people said about what they watched. They claim to fast-forward; really, they watch ads and think about them. They claim to time-shift almost everything; really, they watch live. They claim to watch very little TV; really, they need to sign up for the SPOGO program Richard Pearey explained a little while later. (A tsk-tsk to Pearey: Tim Berners-Lee is a fine and eminent scientist, but he did not invent the Internet. He invented the *Web*.) For me, Clay is confusing "identity" with "image". My image claims to read widely instead of watching TV shows; my identity buys DVDs from Amazon..

Of course I find Clay's view of the Net dismaying - "TV provides the content for us to broadcast on our public identity channels," she said. This is very much the view of the world the Open Rights Group campaigns to up-end: consumers are creators, too, and surely we (consumers) have a lot more to talk about than just what was on TV last night.

Tony Fish, author of My Digital Footrprint, following up shortly afterwards, presented a much more cogent view and some sound practical advice. Instead of trying to unravel the enduring conundrum of trust, identity, and privacy - which he claims dates back to before Aristotle - start by working out your own personal attitude to how you'd like your data treated.

I had a plan to talk about something similar, but Fish summed up the problem of digital identity rather nicely. No one model of privacy fits all people or all cases. The models and expectations we have take various forms - which he displayed as a nice set of Venn diagrams. Underlying that is the real model, in which we have no rights. Today, privacy is a setting and trust is the challenger. The gap between our expectations and reality is the creepiness factor.

Combine that with reading a book of William Gibson's non-fiction, and you get the reflection that the future we're living in is not at all like the one we - for some value of "we" that begins with those guys who did the actual building instead of just writing commentary about it - though we might be building 20 years ago. At the time, we imagined that the future of digital identity would look something like mathematics, where the widespread use of crypto meant that authentication would proceed by a series of discrete transactions tailored to each role we wanted to play. A library subscriber would disclose different data from a driver stopped by a policeman, who would show a different set to the border guard checking passports. We - or more precisely, Phil Zimmermann and Carl Ellison - imagined a Web of trust, a peer-to-peer world in which we could all authenticate the people we know to each other.

Instead, partly because all the privacy stuff is so hard to use, even though it didn't have to be, we have a world where at any one time there are a handful of gatekeepers who are fighting for control of consumers and their computers in whatever the current paradigm is. In 1992, it was the desktop: Microsoft, Lotus, and Borland. In 1997, it was portals: AOL, Yahoo!, and Microsoft. In 2002, it was search: Google, Microsoft, and, well, probably still Yahoo!. Today, it's social media and the cloud: Google, Apple, and Facebook. In 2017, it will be - I don't know, something in the mobile world, presumably.

Around the time I began to sound like an anti-Facebook obsessive, an audience questioner made the smartest comment of the day: "In ten years Facebook may not exist." That's true. But most likely someone will have the data, probably the third-party brokers behind the scenes. In the fantasy future of 1992, we were our own brokers. If William Heath succeeds with personal data stores, maybe we still can be.

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.

May 18, 2012

A thousand new millionaires

"But what if the numbers ever start going down?"

The speaker was the managing director of CompuServe UK in approximately 1991. And I had just suggested putting a banner on the CompuServe login page announcing the number of users, at the time growing rapidly. Well, you know the rest.

I'm not alone in comparing Facebook, which went public yesterday, to past online social venues, and I won't review my reasons here. As I wrote in January when Ramnit surfaced, were I an early investor in Facebook I'd be wanting to cash out now.

As I write this, the market hasn't opened yet in the US, so this is just fun-with-numbers. Facebook's 421.2 million shares at $38 raised $16 billion, a nice war chest to go shopping with. The company's new $104 billion market cap, the Wall Street Journal tweeted yesterday, tops Yahoo!, Groupon, LinkedIn, Netflix, IAC/Interactive Corporate, Zynga, and Pandora Media - combined. It's slightly above Amazon, more than double eBay, about half of Microsoft, almost double Cisco or Boeing. More soberly, it's 50 times CompuServe acquirer AOL's market cap today - but less than half of AOL's $222 billion in December 1999.

I'll blame some of the Facebook IPO madness on the 2010 release of The Social Network: a mainstream movie is fabulous publicity for a five-year-old company. Throw in widespread familiarity and the all those stories about the Arab Spring, and you have a company of apparently vast social significance - but not necessarily good business. The size of the hype has lots of financial pundits trying to sober people up. With reason: the buying frenzy suggests that expectations are so high that a disappointment is almost inevitable.

Warren Buffett, and his legendary mentor, Benjamin Graham, espouse(d) two enduring principles: a "moat" protecting a business from copycats and competitors, and a "margin of safety". The latter is simple enough: buy undervalued companies. If the company makes a misstep, you are somewhat protected against losing your investment. So the statistic that gives real pause is this one: if Apple were valued (price to sales) the way Facebook is at $38 a share, Apple's market cap would be six times what it is now: $3 trillion.

A quick round-up of other issues, beginning with the huge size of the float coupled with a lower - and slower - growth rate than Apple, Google, or LinkedIn. Seeking Alpha directly compares Facebook and Google at IPO time; The Motley Fool compares Facebook to giant Internet IPOs of the past; its graphs show just how hard it will be for Facebook to live up to the track records of Google, Amazon, and Apple. Minyanville has ten more negative perspectives, even including the guy who can't get his teenaged daughter to stop spending all her time on the system. The New York Times's Dealbook has plenty more. Disappointed investors can, however, lie back and think of California, which desperately needs the tax money from those thousand new millionaires.

With respect to Facebook's ongoing business - because guessing at the company's future earnings is really what this is all about - others have cast doubt on its mobile prospects, its advertising model, especially in the light of GM's very public withdrawal, its prospects for diversifying its revenue streams, its trust issues, and Mark Zuckerberg's stated claim that the company's goal is not really to make money. With respect to the latter, the argument goes that either he means it and may shaft his shareholders from time to time in service of his vision, or he will be gradually weaned away from it under the pressure of running a public company. And Zuckerberg, more than most, has retained single-handed control over what the company does. Arguing about the hoodie is just silly; it's branding; get over it.

That's the valuation, but what about that moat? The number of users and market dominance was a very big asset for eBay because it's clear that the bigger the pool of buyers to whom you can offer "long tail" goods for sale the more likely you are to find a match. In hindsight, for eBay and Amazon, first-mover advantage really was key. But whereas people go to Google to fulfill the essential need of finding things online, Facebook usage is discretionary. People don't join Facebook for itself; the real appeal is the presence of their friends, even if once there they get obsessed with Farmville. And Facebook will never be the only way - or even the most fun way - to hang out with your friends.

In 2000, when the dot-com bust hit, the one thing almost everyone knew was that in five years the Internet would be much, much bigger than it was then. Many had bet too much, too soon on the wrong companies, but the premise was right. That's less clear now: Facebook's 900 million (or whatever) is a staggering number, but the company's growth has been driven by increasing user numbers. How long can it keep on doing that? Its biggest challenge will be keeping those users interested enough to stay on the site.

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.

May 11, 2012


When I first saw that Google had obtained a license for its self-driving car in the state of Nevada I assumed that the license it had been issued was a driver's license. It's disappointing to find out that what they meant was that the car had been issued with license plates so it can operate on public roads. Bah: all operational cars have license plates, but none have driver's licenses. Yet.

The Guardian has been running a poll, asking readers if they'd ride in the car or not. So far, 84 percent say yes. I would, too, I think. With a manual override and a human prepared to step in for oh, the first ten years or so.

I'm sure that Google, being a large company in a highly litigious society, has put the self-driving car through far more rigorous tests than any a human learner undergoes. Nonetheless, I think it ought to be required to get a driver's license, not just license plates. It should have to pass the driving test like everyone else. And then buy insurance, which is where we'll find out what the experts think. Will the rates for a self-driving car be more or less than for a newly licensed male aged 18 to 25?

To be fair, I've actually been to Nevada, and I know how empty most of those roads are. Even without that, I'd certainly rather ride in Google's car than on a roller coaster. I'd rather share the road with Google's car than with a drunk driver. I'd rather ride in Google's car than trust the next Presidential election to electronic voting machines.

That last may seem illogical. After all, riding in a poorly driven car can kill you. A gamed electronic voting machine can only steal your votes. The same problems with debugging software and checking its integrity apply to both. Yet many of us have taken quite long flights on fly-by-wire planes and ridden on driverless trains without giving it much thought.

But a car is *personal*. So much so that we tolerate 1.2 million deaths annually worldwide from road traffic; in 2011 alone, more than ten times as many people died on American roads as were killed in the 9/11 World Trade Center attack. Yet everyone thinks they're an above-average driver and feels safest when they're controlling their own car. Will a self-driving car be that delusional?

The timing was interesting because this week I have also been reading a 2009 book I missed, The Case for Working With Your Hands or Why Office Work is Bad for Us and Fixing Things Feels Good . The author, Michael Crawford, argues that manual labour, which so many middle class people have been brought up to despise, is more satisfying - and has better protection against outsourcing - than anything today's white collar workers learn in college. I've been saying for years that if I had teenagers I'd be telling them to learn a trade like automechanics, plumbing, electrical work, nursing, or even playing live music - anything requiring skill and knowledge and that can't easily be outsourced to another country in the global economy. I'd say teaching, but see last week's.

Dumb down plumbing all you want with screw-together PVC pipes and joints, but someone still has to come to your house to work on it. Even today's modern cars, with their sealed subsystems and electronic read-outs, need hands-on care once in a while. I suppose Google's car arrives back at home base and sends in a list of fix-me demands for its human minders to take care of.

When Crawford talks about the satisfaction of achieving something in the physical world, he's right, up to a point. In an interview for the Guardian in 1995 (TXT), John Perry Barlow commented to me that, "The more time I spend in cyberspace, the more I love the physical world, and any kind of direct, hard-linked interaction with it. I never appreciated the physical world anything like this much before." Now, Barlow, more than most people, knows a lot of about fixing things: he spent 17 years running a debt-laden Wyoming ranch and, as he says in that piece, he spent most of it fixing things that couldn't be fixed. But I'm going to argue that it's the contrast and the choice that makes physical work seem so attractive.

Yes, it feels enormously different to know that I have personally driven across the US many times, the most notable of which was a three-and-a-half-day sprint from Connecticut to Los Angeles in the fall of 1981 (pre-GPS, I might add, without needing to look at a map). I imagine being driven across would be more like taking the train even though you can stop anywhere you like: you see the same scenery, more or less, but the feeling of personal connection would be lost. Very much like the difference between knowing the map and using GPS. Nonetheless, how do I travel across the US these days? Air. How does Barlow make his living? Being a "cognitive dissident". And Crawford writes books. At some point, we all seem to want to expand our reach beyond the purely local, physical world. Finding that balance - and employment for 9 billion people - will be one of this century's challenges.

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.

May 4, 2012

A matter of degree

What matters about a university degree? Is it the credential, the interaction with peers and professors, the chance to play a little while longer before turning adult, or the stuff you actually learn? Given how much a degree costs, these are pressing questions for the college-bound and their parents.

This is particularly true in the US, where today's tuition fees at Cornell University's College of Arts and Sciences, are 14 times what they were when I started there as a freshman in 1971. This week, CNBC highlighted the costs of liberal arts colleges such as Colorado's Pepperdine, where tuition, housing, and meals add up to $54,000 a year. Hah, said friends: it's $56,000 at Haverford, where their son is a sophomore.

These are crazy numbers even if you pursue a "sensible" degree, like engineering, mathematics, or a science. In fact, it's beginning to approach the level after which a top-class private university degree no longer makes the barest economic sense. A Reuters study announced this week found that the difference between a two-year "associate" degree and a four-year BA or BSc over the course of a 30-year career is $500,000 to $600,000 (enough to pay for your child's college degree, maybe). Over a career a college degree adds about $1 million over a high school diploma, depending on the major you pick and the field you go into. An accountant could argue that there's still some room for additional tuition increases - but then, even if that accountant has teenaged kids his earnings are likely well above average.

Anthony Carnevale, the director of the center that conducted this research, tells Reuters this is a commercialization of education. Yes, of course - but if college costs as much per child as the family home inevitably commercial considerations will apply even if you don't accept Paypal founder Peter Thiel's argument about a higher education bubble.

All this provides context for this week's announcement that Harvard and MIT are funding a $60 million initiative, EDx, to provide online courses for all and sundry. Given that Britain's relatively venerable Open University was set up in 1969 to bring university-level education to a wide range of non-traditional students, remote learning is nothing new. Still, EDx is one of a number of new online education initiatives.

Experimentation with using the Internet as a delivery medium for higher education began in the mid 1990s (TXT). The Open University augmented the ability for students to interact with each other by adding online conferencing to its media mix, and many other institutions began offering online degrees. Almost the only dissenting voice at the time was that of David F. Noble, a professor at Canada's York University. In a series of essays written from 1997 to 2001, Digital Diploma Mills he criticized the commercialization of higher education and the move toward online instruction. Coursework that formerly belonged to professors and teachers, he argued, would now become a product sold by the university itself; copyright ownership would be crucial. By 2001, he was writing about the failure of many of the online ventures to return the additional revenues their institutions had hoped for.

When I wrote about these various concerns in 1999 for Scientific American (TXT) reader email accused me of being an entitled elitist and gleefully threatened me with a wave of highly motivated, previously locked-out students who would sweep the world. The main thing I hoped I highlighted, however, was the comparatively high drop-out rate of online students. This is a pattern that has continued through to mid-2000s today with little change. This seems to me a significant problem for the industry - but explains why MIT and Harvard, like some other recent newcomers, are talking about charging for exams or completion certificates rather than the courses themselves. Education on the shareware model: certainly fairer for students hoping for career advancement and great for people who just want to learn from the best brands. (Not, thankfully, the future envisaged by one of the interviewees in those articles, who feared online education would be dominated by Microsoft and Disney).

In an economic context, the US's endemic credentialism means it's the certificate that has economic value, not necessarily the learning itself. But across the wider world, it's easy to imagine local authorities taking advantage of the courses that are available and setting their own exams and certification systems. For Harvard and MIT, the courses may also provide a way of spotting far-flung talent to scoop up and educate more traditionally.

Of course, economics are not the only reason to go to college: it may make other kinds of sense. Today's college-educated parents often want their kids to go to college for more complex reasons to do with quality of life, adaptability to a changing future, and the kind of person they would like their kids to be. In my own case, the education I had gave me choices and the confidence that I could learn anything if I needed to. That sort of motivation, sadly, is being priced out of the middle class. Soon it will be open only to the very talented and poor who qualify for scholarships, and the very wealthy who can afford the luxury. No wonder the market sees an opportunity.

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.