Posts from March 2006

I’ve been thinking a lot lately about getting "ahead of the curve".

I am not sure what curve this cliche refers to, but for me its the market adoption curve of any technology or business model.

It’s hard to make money in the venture business if you wait until the adoption curve starts to slope upwards to make your investment(s).  I believe that you must always try to look ahead to get a sense of what’s next and make your bets before they are obvious.

Not everyone takes this approach. Certainly there is a momentum investor style in the venture capital business, but that is not our style.

If you get too far ahead of the curve, you can find yourself on the bleeding edge and that is no good either, so its a careful line you have to walk and nobody does it perfectly, not even the best venture firms.

But I am convinced that if you spend a significant amount of your time looking ahead, trying to get ahead of the curve, you’ll have a better performing fund than if you simply invest in whatever is the hot trend of the day.

Brad has a great post up on the Union Square Ventures weblog about how electrons have gone from an eyesore in the front hall to basically invisible and he sees that bits are making that same move.  It’s a great read.

My Nuggets pick of several weeks ago was Dan Baird’s Love Songs For The Hearing Impaired.  It was an unusual pick because I had never heard the record when I picked it as a Nugget.  I had heard it recommended in several places and could not find it in any of my usual music stores; Amazon and emusic.  The record seems to be out of print and cannot be purchased through conventional channels.

Well I got it last week and have listened several times.  It is indeed a wonderful record, with Keith Richards style guitar licks and a high energy southern vocals telling classic hardluck stories like my personal favorite “Knocked Up”.  But this is not another post on Dan Baird, although he may deserve another one.

This post is about how I got the record and my thoughts about the resale market for bits.  Chris Fralic commented that I could probably find the record on half.com/ebay and sure enough a used copy of the now out of print CD was selling on eBay.  It was an auction and the opening bid was $1.99.  I put in my bid and forgot about it.  A week later I got an email from the seller via eBay alerting me to the fact that I was the winner.  He tacked on a small shipping charge and I asked him to pay via PayPal which cost me another $0.50 which was fine with me.  All in, I paid $4.28 or something like that.

I would have happily paid a lot more than that to the record label and/or Amazon, eMusic, or some other music vendor but nobody wanted to take my money.  So instead I gave it to some guy down south who didn’t have a need for the record anymore.  I am not suggesting he had already ripped the mp3s and had no need for plastic, but he surely could have done that before reselling the CD to me. Regardless of whether the guy who sold me the Dan Baird CD did this, I am sure that many people do it.

The reality is that bits don’t degrade and can be resold in perpetuity.  I could easily rip the mp3s from the Dan Baird CD and sell it again on eBay, and possibly get back all but the shipping and PayPal costs (ie the transaction costs).  I don’t plan on doing that, but frankly I think it’s a service that someone should provide for all of out of print records that the labels won’t put up for online distribution.  There is a market out there for out of print music and someone is going to fill it if the labels don’t.

A savvy serial entrepreneur named Bill Nguyen, who was involved in one of my portfolio companies, Freeloader, in the mid 90s, has started a web service called lala.com which has launched in closed beta.  I haven’t been invited (although I’d love an invite) but I’ve heard a bit about Bill’s plans and they involve facilitating this reselling of music with 20% of the proceeds going to the artists whose bits are being resold.  Lala.com is backed by Ignition and Bain Ventures with some big money so I am sure there is more to it than simply reselling CDs.  I suspect there’s a whole community and music discovery angle to it as well.  And there are a whole slew of “barter services” on the web like BarterBee, Peerflix, and a host of others who are attempting to create marketplaces of various flavors to facilitate the reselling/trading of bits.

Of course, this is not limited to music by any means.  It works just as well for tv shows, fill length movies, video games, and anything else that is sold in bits. And frankly it’s a very efficient way to distribute content, passed along from person to person.  We’ve been talking about a superdistribtion model for digital content for a long time and this is the physical container version of that.

But this reselling of bits is probably not kosher and the content owners aren’t going to like it very much. There may be lawsuits just like the ones against Napster and Grokster.  Lala has an interesting model with giving a 20% cut to the artists.  But unless I am missing something, and I may well be, they don’t seem to do anything for the label which actually owns the content.  So I am not sure what they deal is there.

We are in flux until we get to an all digital distribution world, and that is not happening any time soon, particularly with DRM wreaking havoc over the online model.  Unless I can get the mp3 free of DRM, I prefer to listen via a streaming service until I can get the CD shipped to me at which point I rip the music into mp3s.  That’s a complicated way to acquire and consume bits, but I believe more and more consumers are going to realize that they are locked into proprietary devices and marketplaces with DRM and there will be consumer backlash that will stunt the growth of the commercial online distribution channel until we rid the market of DRM.

Illegal file sharing networks and reselling bits fill this void during this state of flux and I think there is going to be a lot more of that going forward.  And I think its possible that a legitimate online model may emerge out of these grey/black market systems over time.  So they are worth watching.

Reselling and trading bits is a logical activity online.  I think we’ll see more of it over time, not less.  And I hope a model emerges which compensates the creator and owner of the content when the bits get resold.

I have posted in the past that convenience trumps quality and of that I am sure.

But a confluence of moments today on my way to sun valley for a week of skiing make me wonder if authenticity also trumps quality.

It started when my friend andy forwarded his post on a rolling stones dvd from a show they did on the 1975 tour – the first with ron wood. That dvd is andy’s favorite live stones show even though his wife pointed out to him that the video quality stinks and the sound quality is equally bad.

Andy goes on to wonder if the advent of hd audio and video, home theaters, surround sound, etc will lead to a world where we cannot simply appreciate the raw power of a great artist(s) at work if it lacks the quality of a modern production.

I think not andy.

On the plane to salt lake I listened to my friend jason chervokas’ down in the flood.  I often go back to these amazing podcasts for long flights.  They are a great way to pass time when you have plenty of attention to give.

Most down in the flood podcasts feature recordings going back easily 100 years.  They are scratchy, weak, and lacking anything close to modern production values.

And yet the authenticity of the performances and the raw energy and joy of the music comes through loud and clear.

And then I opened the arts & leisure section of today’s new york times to find judy rosen’s piece on early 20th century pop music.  I am writing this on my sidekick on a short hop from salt lake to sun valley so I can’t go online and listen to the internet stream of Stella Mayhew’s "I’m looking for something to eat" which has been converted from wax cylinder to digital audio by the UC Santa Barabara along with another 6000 cylinders of early 20th century music.

Thank god someone is doing this.  We are talking history here.

Right before I got on the plane, my friend Pat sent me an email talking about a keith richards/chuck berry duo on Little Queenie he heard this morning doing chores around the house.  He was so pumped that he fired off an email to a couple buddies who could appreciate his joy.

I replied ‘ keith’s unique sound is etched on the face of rock and roll’.  This is indeed history we are talking about. 100 years from now they’ll be talking about Keith Richards the way Jody talks about Stella Mayhew in todays’ paper.

So I think authenticity, particularly the authentic works that artists build on, are always going to be valuable.

And I am dying to see Andy’s dvd and I don’t really care what the quality is as long as the performance lives up to his billing.

Sent from my mobile device

My latest obsession is Tapes ‘N Tapes.

These guys are really good, in the mold of Modest Mouse, Pavement, Violent Femmes, Arctic Monkeys, Pixies, etc.  What a great find. You can get the record, called The Loon, at Amp Camp.

I posted a couple tracks in the original post (linked to above).

But here’s another, called Cowbell. You gotta check it out.

Cowbell

As part of the advertising deal with Sonos to sponsor the "In Heavy Rotation" list on the left sidebar of this blog, I asked for a Sonos system to setup, test, and review.  I got the system a couple days ago and spent a couple hours yesterday afternoon setting it up.  Now I am done and happily sitting in my kitchen listening to my favorite radio station, WEHM, over the Sonos system.

The way to think of Sonos is an iPod for your home stereo system.  The handheld wireless controller (shown in the first picture on this post) works a lot like an iPod, it has a scroll wheel, a very nice display that shows album art work, and a bunch of other useful buttons.

The controller allows you to access the digital music files and services that are on a computer in your home and play them through the equivalent of a home stereo.  The Sonos Zone Player (seen in the picture on the left) is the heart of the system.  It connects to your computer (via an ethernet connection) finds the music and the music services and build links to them.

You can connect the Sonos Zone Player to an existing set of speakers or to a multi-room audio system, or you can order speakers directly from Sonos.

If you have more than one place you want to play music in your house and you don’t have a multi-room system, then you can get a second, third, fourth, Zone Player and they all synch with each other. You only have to setup the first one.  The setup Sonos sent me was two zone players, one controller, one controller cradle, and two sets of speakers.  They came in a bunch of boxes.

The setup was pretty straightforward.  I picked a windows machine that has the Rhapsody music service on it, and put the first Zone Player next to it.  It happens to be in a rack I have in my basement near my router and other equipment, but you could put it anywhere in the house. The Zone Players are a little bit bigger than a Mac Mini.

You connect the first Zone Player to your network with ethernet.  They don’t want you to use wifi.  I think there’s a way to work with an all wifi home, but that wasn’t a problem for me.

Then you install the Desktop Controller software on the machine that has your music library and/or your music service on it.  The only music service I know for sure that Sonos works with is Rhapsody.  The installation was about as simple as it could be.  The software finds the first Zone Player and then you tell it where to look for your music library.  My configuration was particularly tricky because my music library is not on my computer, its on a set of audio request music servers.  But I was able to browse easily through my network from within the Desktop Controller software to find the music server and Sonos indexed the files.

If you want Sonos to work with Rhapsody, you need Rhapsody 3.0 which can act as a server and you need to make sure its configured properly.  I had to upgrade from Rhapsody 2.0 to 3.0 and after I did that, it was preconfigured to be a server, but changing the configuration isn’t very hard if you need to do that.  It is a matter of checking a single box.

If you only have one Zone Player, you are done at this point.  if you have a second Zone Player, as I do in my kitchen, then you need to find an out of the way place for it and plug it in.  The second and any additional Zone Players can connect to the first Zone Player via wifi so it matters a lot less where you put them.  They just need power.

Then you connect the cradle to power and put the Wireless Controller in the cradle.  I selected a section of the shelves in our kitchen for the cradle and that worked pretty nicely.  The Wireless Controller is about the size of a 4×6 picture frame.

So that’s all there is to setting it up.  My process went pretty much without a hitch. The one small issue was that I have a personal firewall on the computer I put the Desktop Controller software on.  The controller software identified the potential problem and I called support and they gave me some ports that I needed to open up on my firewall.  Other than that, I’d say it was a pretty simple and painless process.  It took me about an hour to do the software, two Zone Players, and the Wireless Controller.

I don’t really need the main feature of the Sonos which is to give you an easy and convenient way to play your music library on your computer over a home stereo system with a wireless controller.  I have the music servers in my house connected to a crestron system so I have had that ability for a while now.  But the Sonos does basically the same thing for about a third of the price of the servers and you don’t need a crestron system at all.  Had Sonos been around five years ago, I may well have gone with it instead.

The two things I love the Sonos for are the ability to play Rhapsody through a home stereo system and the ability to play Internet radio the same way.  I use Rhapsody all the time on my computer but we have had a hard time finding an easy way to get it onto our multi-room audio system.  Sonos solved that problem for me.  That’s what I was hoping it would do when I asked them to send me one to try out.

The big surprise was Internet radio. I didn’t know Sonos had a good solution for that.  Sonos comes preconfigured with many of the most popular Internet radio stations like KEXP and KCRW.  But you can input any audio stream URL into the controller software and its automatically added to your favorites. I did that this afternoon with WEHM and have been listening every since to my favorite radio station just like I listen to it on Long Island.  Awesome!

Now I know some of you are going to think, "Fred’s shilling for Sonos now". It’s true that Sonos is advertising on this blog, but I am giving the money to charity and I certainly wouldn’t promote a product or service to all of you that really sucks.

There are two things I wish were different about Sonos. The first is that you can’t search for new artists on Rhapsody from the Sonos controller.  You can only play artists, albums, tracks, and playlists that you have saved.  That means you have to use the Rhapsody client to find new artists and save them before you can play them on Sonos. If there were one thing I’d urge Sonos to fix, that would be it.

The other issue is not a problem for me, but is something that could affect many potential Sonos users.  If you have a music library consisting of songs bought from iTunes or another online store that uses DRM (like Microsoft’s Play For Sure), you won’t be able to play them with Sonos.  This is not Sonos’ fault, it’s one of the many reasons DRM sucks.  The bottom line is if you buy songs from iTunes, you are getting locked into iTunes, iPod, and the apple ecosystem.  Not enough people understand this issue and they should.

My biggest concern is the cost.  The system I got, the Introductory Bundle, costs $1200 from Sonos.  You may be able to get it for less somewhere else. And if you need more than two zones, each Zone Player is $500 and each Wireless Controller is $400. So this is a premium product. But it delivered a premium experience for me and if you are looking for a simple, elegant solution for integrating digital music and music services like Rhapsody and Internet radio into your home audio system, you should give Sonos a really good look.

It rocks.

From Matt Blumberg, CEO of Return Path, comes the latest member of this club of shame.

This one’s a cousin of click fraud, called survey fraud.

Moving survey taking online has vastly improved the economics of doing surveys and is also beginning to increase the ability to target the perfect sample groups.

But it’s also led to a lot of fraudulent behavior. Return Path’s survey business, called Authentic Response, is built on some unique technology and recruiting techniques that let them avoid the fraudulent behavior which leads to better results and lower survey costs.

If you are doing a lot of online surveys, you should check out Authentic Response.

I just read Danah Boyd‘s eTech talk and it left me thinking a lot about MySpace and online communities and kids.

There’s been a ton of discussion about MySpace and the "danger" that it creates for kids. I was at a dinner last month with a group of some of the most sophisticated technology people in NYC and a woman pulled me aside and said, "what am I supposed to do about MySpace?".  I said, "what do you mean?".  She said, "it scares me".

MySpace doesn’t scare me.  I use it although I don’t use it often. I only have three friends on MySpace and one is Tom and another is my friend Steve’s new band, the Jonas Brothers.  I am playing their video on my MySpace page so be prepared if you go visit my page. 

I know what my kid’s pages look like although I rarely go visit them.  But my kids know I am on MySpace and I often tell them about a cool video or photo I’ve seen on MySpace and sometimes they’ll actually go check it out. I don’t hover over their MySpace activities, but I also don’t ignore them.

The Gotham Gal wrote a post about this last week. It’s a good post by a mom who cares a lot about her kids but isn’t worried about MySpace.  She said:

I have 2 kids that use My Space.  It is their generations space to
represent themselves.  Did parents freak when Elvis came on the scene?
Did they freak when the Rolling Stones came on the scene?  Did they
freak when they grew their hair long and rebelled?  Answers to all of
the above and more is yes, yes  yes.  Think about what you did growing
up that your parents were scared of.  They were scared because they
didn’t understand the space and weren’t sure how to teach you the tools
to navigate the situation.

What she is saying is we are lucky because MySpace is something we can figure out. Join it yourself.  Make a page.  Check it out.  Figure it out.

Chartreuse also has a great post on MySpace. He compares it to bikes:

Every day millions of kids get on bikes and ride around neighborhoods across the country without much parental supervision.

Now a lot of bad things can happen to a kid on a bike.

She can be hit by a car.

She can be abducted.

She can fall and break her arm.

She can just ride off as far as her feet can take her and decide never to come back home again.

Now because of all the horrible things which can happen to a kid on
a bike a huge industry was created. They sell helmets, kneepads, tracking systems, and the like to make bikes safer or parents feel more secure.

Despite all this stuff most parents still just give their kids some rules and let them ride.

MySpace is just the modern bike.

Lots of horrible things can happen to a kid on the internet. And the
industry will continue to grow based around protecting children from
all that horrible stuff or making parents feel more secure.

But the truth of the matter is that most parents will just give there child some rules and let them ride.

And that’s o.k.

Sounds like Gotham Gal and Chartreuse are on the same page.  And I am with them.

Jessica is starting to use Facebook more than MySpace. That’s a trickier one because parents can’t hang out in Facebook. But I’ve asked her if I can check out the service because I am curious to understand why its different than MySpace. She lets me see her page and that’s a good sign.

Back to Danah’s talk.  She is really all over what makes online communities work.  There’s a great section in her talk where she talks about Craig’s List, Flickr, and MySpace and points out that each service had a person (Craig, Stewart, and Tom) who were/are personally available in the community.  The point is that the best communities are built by people and they take on a culture early on that is representative of the people who build them.

Danah goes on to point out that scaling is a real issue.  How can one person or even a small group of people ride herd on something as huge as MySpace?  Danah says:

The people in charge of Craigslist, Flickr and MySpace breathe their
sites. They don’t go home at night and forget about the site. They are
online at 4AM because something went wrong. They are talking to users
at midnight just because. You cannot force this kind of passion – it’s
not just a job, it’s a belief system.

Unfortunately, it is not clear that even the most passionate people
can keep doing it forever. This type of true embeddedness is utterly
exhausting. It plays a heavy toll on the lives of the designers. Even
in smaller communities, creators grow tired.

And you wonder why MySpace, Flickr, Delicious, etc sell their businesses?

Another really great point Danah makes is about online language.  Check out this part of her talk:

[T]he following sentences [were] pulled from MySpace. Yes, they’re all English.

– "PatTy D aka tHe ScO CitY 415 LiKe wHa!!!"
  – "yung ant wassup wit it jus show’n da page sum luv so do da same a where u get dat background bru"
  – "suP WIt IT pLAY bOI?"

It’s easy to express horror and indignation at this writing style if
you’re not a part of the relevant social group, but that is a
condescending position. What these teens are doing with language is
fascinating and important. They are repurposing written words to
express culture in the same way that people have always repurposed
spoken words for slang. Because teens spend more time online, they are
morphing written words for expressive communication. They are
personalizing words.

Personalizing words and spaces and communities. We are at the dawn of the age of personalized media. The web has given the world a place where the audience is the publisher and what we are witnessing (and hopefully participating in) is the personalization of media. It will manifest itself in many strange and wonderful ways.

And I am embracing it; for me, for my kids, and for the rest of my life.

I have posted extensively on the Internet Axis of Evil and the list is a permanent placement at the bottom of the left sidebar of this blog:

I hate spam in all of its forms and the people who engage in it are criminals in my book are in the same category as murderers and rapists (edits at the suggestion of the commenters who I concur with).

So when I came out strongly against a "paid stamps" model for email in my post on January 30th of this year (possibly the first salvo in a loud and long response to the Goodmail initiative), I had to think hard about this issue.  Is money a good solution to spam?  I don’t think it is.

But I totally agree with Esther Dyson’s closing point in her op-ed column on the same subject in the New York Times this morning.  Esther says:

If people like those little stamps that mark their mail as safe and
wanted or as commercial transactions, then let the customers have them.
And let other companies compete with Goodmail to offer better and less
expensive service.

Goodmail isn’t good because it’s new, but
neither is it bad because it’s new. If it’s a good model, it will
succeed and improve over time. If it’s a bad model, it will fail. Why
not let the customers decide?

My outrage in that initial post was not about Goodmail.  I think Goodmail has every right to promote a paid stamps model.  It was that AOL had decided to go exclusively with Goodmail and was eliminating its "enhanced white list" program and was apparently not open to other white list solutions like Return Path’s Bonded Sender and Habeas.

A lot has changed since that monday morning in late January. First AOL clarified its position and said that it was not going to phase out its enhanced white list. I responded with another post where I said:

If AOL and others want to offer a paid stamps program as a compliment
to these other approaches, that is fine with me.  But mandating paid
stamps as the only solution, which is what was announced last week and
now seems like an miscommunication, is a bad idea.  I am glad everyone
is coming to that conclusion.

And I believe that the other companies in this space, Return Path (where I am an investor and board member) and Habeas, are going to get a place in the white list at the major mail receivers.  So Esther’s call for competition is going to happen and the market will decide as long as the mail recievers maintain an open playing field for all.

But back to the question I asked in the subject of this post.  Is money a good solution to spam?  I don’t think so because spam is not limited to email.  It is the scourge of every open system on the Internet.  You get Google spam, blog spam, comment spam, trackback spam, etc, etc.

Should I charge people to comment on this blog in order to elminate comment spam?

Should I charge people to trackback to this blog to eiminate trackback spam?

Should Google charge web pages to get into its index to eliminate search spam?

I don’t think so. Approaches like those will eliminate all that is good about the Internet.

We have no choice but to work on reputation and trust systems.  These are the long term solutions to spam and the Internet Axis of Evil in all of its forms.

I think we are very close to workable commercial whitelist solutions for email that are entirely reputation based.  And I think these approaches can be adapted to work in other areas, if they aren’t already.

So its fine with me if we have a competition for the best ideas in the marketplace.  But my bets aren’t around paid approaches.  There’s a better way and smart entrepreneurs armed with great technology will show it to us as long as the market remains open to such approaches.