April 2012

Facebook is scared of the internet

[Commentary] It is no wonder that Mark Zuckerberg got so defensive this week. As he was paying $1 billion to eliminate the threat to Facebook from Instagram, an 18-month old photo sharing site, the web’s former giants were being humbled.

Yahoo, which unveiled another reorganization under its fifth chief executive in five years, and AOL, which sold a portfolio of 800 patents to Microsoft for $1.1 billion, are under attack from hedge funds. Both are worth a fraction of their value during the 1990s internet bubble.

Silicon Valley was always competitive but barriers to entry in the late stages of the social network boom are so low, and capital so plentiful, that creative destruction is on fast-forward. If Facebook, which is about to launch its initial public offering, will pay $1 billion to neutralize Instagram, how much are Path, Pinterest and others yet to be invented worth? Warren Buffett is famously averse to technology investments because of their unpredictability, and the consumer internet has the shallowest moat of all. Facebook’s bulwark is the network effect of having millions of users but Instagram’s rise and the fall of Bebo, MySpace and others shows how fragile it is. Zuckerberg has so far avoided the pitfalls by handling the rise of Facebook cleverly, and reversing his mistakes rapidly enough not to alienate users. But as its growth has slowed in the US, he has clearly got worried at the growing competitive threats to its dominance. Instagram was one but there are others, some of which would be even more expensive. The internet has a nasty habit of consuming its mature companies – Yahoo took 18 years from being founded in 1994 to get into its current state. Facebook will be lucky to last that long.

FCC wants to bring web developers and agencies together

On April 16, the Federal Communications Commission will host a ".Gov Developer Meet-Up" that organizers hope will encourage web developers and agencies needing web apps to interact.

The amount of raw data produced by government agencies and made available to the public has increased markedly since the Obama administration Office of management and Budget's promulgation of the Open Government Directive. While "data" once meant spreadsheets and documents, it now includes large sets of raw numbers and information that can be organized, reorganized, displayed, mixed and mashed up in custom applications. Federal agencies increasingly make data available through application programming interfaces (APIs) and web services, the former numbering more than 25. But there is still no comprehensive forum for potential developers to see the full scope of available resources. The ".Gov Developer Meet-Ups" aim to fill that void.

Federal Communications Commission
April 16, 2012
11:00 AM - 3:00 PM EDT
http://www.fcc.gov/events/gov-developer-meet

Problem:

The Administrations Open Government Directive has ushered a significant increase in data publication from .Gov’s. What was once just data download, has given way to direct access to many federal agencies data coffers. Federal agency’s are increasingly making data available through application programming interfaces (APIs) and web services. There are more than 25 agencies with developer resources on their sites (aka /developer pages). However, there is no comprehensive forum for the developer community to collectively see the breath of these resources. In order to really see the benefits of open government, APIs need to be consumed by the developer community.

Solution: .gov developer meet-up

The FCC will host a .gov developer meet-up on April 16, 2012 from 11:00 AM EST- 3:00PM in the Commission meeting room. This event is designed to expose the developer community to most of the .gov /developer resources currently in production, and this event will give .gov producers the opportunity to expose their resources to the open developer community.

Each of the federal agency’s with /developer pages will be given less than 10 minutes to present their API resources and assets as ignite type sessions. Developers are invited to be in the audience, ask questions interact with the core producers and see the whole .gov/developer community. This meet-up will conclude with general session where developers can interact with the principles for each of these agencies, write code against these APIs, or present their use cases so government can understand how their assets are being consumed from the outside.

If you would like to attend or participate in this great event promoting open government please RSVP by emailing developer@fcc.gov by April 12, 2012. This event will also be livestreamed: http://www.fcc.gov/live . We look forward to seeing you and sharing our latest innovations in technology!



AT&T's Text Messaging Plans Are a Regressive Tax

The most active senders and receivers of texts are nonwhite, earn incomes below $30,000, and do not have a high school education, says a 2011 study conducted by the Pew Research Center’s Internet & American Life Project. AT&T, to use but one example, charged $1,310 per megabyte to send text messages in 2008. In 2011, the company effectively doubled that amount. And that's assuming you're even on a monthly plan. Most low-income users are almost certainly on prepaid devices, where fees for text messages are even higher. Yet it costs the carrier virtually nothing to handle text messages. This raises an obvious question. Are text messages a regressive tax on the poor that helps subsidize cell service for the rest of us?

Cut in E-Book Pricing by Amazon Is Set to Shake Rivals

The government’s decision to pursue major publishers on antitrust charges has put the Internet retailer Amazon in a powerful position: the nation’s largest bookseller may now get to decide how much an e-book will cost, and the book world is quaking over the potential consequences.

As soon as the Department of Justice announced Wednesday that it was suing five major publishers and Apple on price-fixing charges, and simultaneously settling with three of them, Amazon announced plans to push down prices on e-books. The price of some major titles could fall to $9.99 or less from $14.99, saving voracious readers a bundle. But publishers and booksellers argue that any victory for consumers will be short-lived, and that the ultimate effect of the antitrust suit will be to exchange a perceived monopoly for a real one. Amazon, already the dominant force in the industry, will hold all the cards.

E-Book Borrowing, Preceded by E-Book Waiting

As a technical matter, it’s remarkably easy to borrow an e-book from your local library. But not if you want to take out the best-selling biography of Steven P. Jobs, the hero of the Internet age who helped lure tens of millions of people to personal computers, tablets and other digital devices. The publisher of the Jobs biography, Simon & Schuster, does not sell digital books to libraries. Five of the six major publishers of trade books either refuse to make new e-books available to libraries or have pulled back significantly over the last year on how easily or how often those books can be circulated. And complaints are rampant about lengthy waiting lists for best sellers and other popular e-books from the publishers that are willing to sell to libraries.

Want to borrow “The Help,” the novel by Kathryn Stockett? On New Jersey’s state e-book consortium, 375 people were waiting for a copy recently.

“We hear a lot of frustration,” said Christopher Platt, the director of collections and circulation operations at the New York Public Library. “It’s rational. We don’t expect our readers to understand the complexities of the publishing industry.”

These complexities may only increase with the announcement that the Justice Department had filed a civil antitrust action against major book publishers and Apple, accusing the companies of colluding in 2010 to raise the prices of e-books. In the meantime, though, if you can find the e-book you want in the library, it’s easy to check it out. You can browse a library’s digital holdings from the comfort of your living room at any time. You don’t have to go to the library to borrow a book, and even better, you don’t have to go there to return it. Books vanish from your device when they are due. And you can get access to a library’s e-books from myriad devices, including e-readers, tablets and smartphones.

Publishers: E-books were 'disrupting the industry'

Amazon's Kindle e-readers and its bargain pricing of e-books apparently posed an existential threat for publishers.

Publishers believed the low prices for these newly released and best-selling e-books were "disrupting the industry," according to the Justice Department's lawsuit. Publishers worried that if $9.99 solidified as the de facto standard that consumers expected on retail prices for e-books, Amazon and other retailers would demand that they lower their wholesale prices, further squeezing publisher profit margins, according to the lawsuit. Those publishers feared that this $9.99 price point could become so popular that digital publishers could challenge "incumbent publishers' basic business model," according to the lawsuit.

CEA Slams DOJ, Obama Administration Over E-Book Lawsuit Against Apple

The Consumer Electronics Association slammed the Justice Department and Obama Administration for the lawsuit filed against Apple and publishers over e-book pricing.

"The decision by the U.S. government to sue Apple and book publishers for alleged antitrust violations over the price of electronic books marks another sad milestone in our government's war on American companies," said CEA President Gary Shapiro. "Apple is an American crown jewel that other nations covet, yet our own government leads an attack on its entry into electronic books." Shapiro paired that lawsuit with the government's denial of the AT&T/T-Mobile deal and the $4 billion breakup fee that cost AT&T to argue that current political leadership is essentially inviting -- he likened the actions to "catnip" -- the European Union and other governments to extract money from "successful American companies." Shapiro switched metaphors and suggested the Obama administration was a reckless driver bent on destruction. "Our nation is heading toward an economic cliff, and the administration is not only putting its full weight on the accelerator, it is removing the airbags of innovation and growth, which are our best chance at safely avoiding economic catastrophe."

CFA's Cooper: Trial of Apple/Publishers Might Be Beneficial

The Consumer Federation of America said it almost hoped Apple and the two publishers that did not settle with the Department of Justice over allegations of e-book price fixing.

The complaint and lawsuit filed today by the Department of Justice confirms our worst fears," said CFA director of research Mark Cooper. He said the reasons the spotlight of a trial might be useful were that Justice would almost certainly win, that it would help demonstrate why digital disintermediation is pro-consumer, an argument that CFA has made for remaking video delivery models online, and because it will illustrate the importance of antitrust laws in insuring competition in the new digital economy.

Winners and losers from DOJ suit against Apple, publishers

Who are winners and who are the losers in the Justice Department’s lawsuit against Apple and five top publishers?

  • Apple: Loser. But not as big as you might have expected. Despite being painted in the DOJ filing as a huge part of a major conspiracy to fix prices on e-books, but e-books aren’t a large part of Apple’s business. Investors aren’t that interested in this particular suit.
  • Amazon: Winner. Even the company has said so.
  • Publishers: Losers. The agency model that Apple proposed — where publishers set the prices and retailers got a cut — was a godsend for the companies that were chafing under Amazon’s way of doing business. But their decision to act together and move to completely change from letting retailers set prices to taking that power for themselves ended up backfiring on them in a big way.
  • Barnes and Noble: Snatched defeat from the jaws of victory. The Justice complaint mentions the mega-retailer frequently as a victim of the pricing agreement, and it would seem that any agreement that keeps publishers from setting prices would be a win for retailers. But Barnes and Noble stock was down — almost 6 percent at one point — since the loss of the agency model opens the door for Amazon to sell books cheaply to gain market share.
  • Consumers: Unclear. On one hand, the price of e-books is likely to go down if Justice is successful. That’s good for consumers, who — for obvious reasons — like lower prices. On the other hand, if Amazon rises to be the dominant force in the e-book market, that will certainly mean that there are fewer competitors. That can be bad for the industry as a whole.