Disruptive Tendencies

Should Atlas Shrug?

Yesterday, I started reading Susan Jacoby's new book, "The Age of American Unreason". Many of the statistics she cites have been cited elsewhere, but it was her aggregation of these, and the discussion of the implications, that I have found sobering. This has led me to ponder whether America has any chance of remaining the greatest country in the world, or whether any forward motion is strictly a function of momentum from previous generations' effort, or perhaps through the sheer strength of a very small subset of society. I would wager that to these "Atlases", the US is getting very heavy indeed.

The examples Jacoby uses provide quantitative measures that reinforce what I (we?) see manifested on a daily basis but all too often choose to ignore:

"Nearly two-thirds of Americans want creationism...to be taught alongside evolution in public schools. Fewer than half of Americans-48 percent, accept any form of evolution, even guided by God, and just 26 percent accept Darwin's theory of evolution by means of natural selection. Fully 42 percent say that all living beings, including humans, have existed in their present form since the beginning of time." (1)

In another section, she points out that, in a 1998 survey by researchers from the University of Texas, "one out of four public school biology teachers believes that humans and dinosaurs inhabited the earth simultaneously." (2)

This can't be a shock to anyone who watched the early Republican debates, where fully 7 out of 11 candidates came out as Christian fundamentalists, falling over each other in their attempts to prove their religiosity exceeded that of their opponents. Not intelligence, not competence or experience, but how strongly they believed that the Bible was the inerrant word of god was their primary qualification for running for President of the United States.

How have we allowed this to happen? How have we become so intellectually neutered so as to allow "political correctness" to supersede intellectual debate and discourse?

In his song, "None of Us Are Free", Solomon Burke sings "If you don't say it's wrong, then that says it's right". The intellectuals of this country have been the silent minority, and as a result, are equally complicit in the sorry state of US society today.

In Atlas Shrugged, the intellectuals of the world went on strike, removing themselves, their capital and their productive capabilities from society and physically relocating to a world of their own. Today, it is not just the exodus of intellectual horsepower, but capital flows and competitive advantage as well that threaten this country. In an information/knowledge based world, how is it possible for the US to be competitive with such a pervasive, systemic abdication of reason? And perhaps more importantly, what are the prospects to pull out of this dive?

As in Atlas Shrugged, the US is being held aloft by a disproportionate few - intellectuals, engineers, entrepreneurs. In a flat world, where ideas, capital and people can move with relatively little friction, it will not be surprising if these few "shrug". Wouldn't you?

That's my .02!

Martin Suter 
(martin.suter@iplicensing.net)

(1) "Public Divided on Origins of Life, August 30, 2005, Pew Forum on Religion and Public Life

(2) George E. Webb, The Evolution Controversy in America (Lexington, KT, 1994), p.254

 

In Memory of Anne Lummis (1936-2008)

In Ulysses, Tennyson wrote, "I am a part of all that I've met". As I drove back today from Anne Lummis' funeral, I began to fully understand what a profound statement this truly is.

I didn't know Anne, having only met her briefly at a few social occasions with her husband, Gordon. But I had the privilege today of seeing how many friends came out to pay their respects, and to hear the tributes to her during the eulogies by her husband, and their three children.

One of the descriptions of Anne's life that stuck with me today was that "She wrote her own book." This is something that we all get to do, and how it reads is entirely up to each of us.

Those who know me, would attest that I am proud of my accomplishments. But when all is said and done, those closest to us - our family, friends, colleagues will gather in a room to remember us. No one in that room will care that "He was a great business development guy...He exceeded quota...He signed big deals", etc. It's not what we've done, but who we are and how we've lived our life that matters to those closest to us at the end of the day.

We make choices in our actions and interactions every single day, consciously or subconsciously. We choose to act rationally or irrationally, with integrity or not, with compassion or not. When we become that "part" of those that we meet along the way, what "part" of them will we become? If we strive to leave the best parts of ourselves when we cross paths with people, the world will be a better place for our having passed through it.

By all accounts, Anne Lummis left only the good parts with all whom she met, and, as a result, the world is, indeed, a better place.

We could all aspire to as much in our own lives.

 

A Nine Inch Nail in the Recording Industry ’ s Coffin

I find it fascinating that many market disruptions are not technological, but rather business models enabled by technology. What happens when there are no barriers to entry? What happens in a world with no friction? What happens when customers can interact directly with sellers?

Dell shook up the PC industry by first selling direct to end-users. Google has gone from a Search engine to the dominant force in advertising, and along the way has figured out how to do "free" very well. eBay brought the garage sale to the world. And finally, recording artists are realising that there's money to be made selling direct to your fan base, without compromising your artistic integrity.

Nine Inch Nails just released a collection of 36 songs, called "Ghosts I-IV". MSNBC.com suggests that "2008 may go down in history as the beginning of the end for the recording industry." I beg to differ. It's been like watching death by 1000 cuts in slow motion. 2008 is hopefully the year where the final nail is hammered into the coffin, a nine inch nail.

Where did it all go wrong for the music industry?

Record companies are licensing companies. What is a "record deal", if not a license granting rights to an artist's intellectual property to a record company along with the rights to make or have made physical product, the rights to distribute and sell this IP in return for a royalty rate paid to the creator of the IP. For decades, they held the keys to the kingdom. Barriers to entry were high...Studio time, production and mixing equipment, analog master tapes were expensive, manufacturing, promotion to radio stations, and distribution channels...The studios had a wonderfully integrated system, but it was a closed system. The only way that an artist could get a record on somebody's turntable was to play within the system, by their rules.

Video may have killed the radio star, but digital is what killed record companies.

The shift from analog/vinyl to digital was the first nail in their coffin. Cheap, ubiquitous broadband was another nail. Napster got people used to downloading content and not having a physical instantiation of the music (i.e. a CD) and was another nail. MySpace and other social networking sites facilitated the viral promotion of artists; another nail. YouTube further helped them distribute music videos and concert footage; another nail (This one in MTV). Apple bundled GarageBand with the MAC, enabling anyone to produce decent quality music quickly and cheaply; yet another nail. iTunes and the iPod gave us a means of storing and cataloguing our music, eliminating the need for a home stereo system or physical form factors; another nail. iTunes gave us a means of purchasing music that no longer required a trip to the mall; the eighth nail in the coffin.

And in the past year, major artists like Radiohead and now Nine Inch Nails selling direct to their fans. Hopefully, the ninth and final nail.

In his book, The Long Tail, Chris Anderson articulates how in a world without friction (i.e. the Internet), even those with the most arcane tastes, can find something they want, growing the overall size of the market. He posits that there is more money to be made across the entire breadth of the market, as opposed to a narrow, deep market as the music industry used to be.

The music industry isn't dead, record companies and MTV are.

But have we, as consumers, ended up winning or losing in this deal? I would suggest that we've won big-time.

Trent Reznor, from NIN comments on Ghosts I-IV: "The end result is a wildly varied body of music that we're able to present to the world in ways the confines of a major record label would never have allowed..."

The probability of my selecting a Nine Inch Nails CD and paying $15.95 to see whether I liked it or not would have been pretty small. Or Radiohead for that matter.

But give me a chance to experience and experiment with new tastes in a low-risk way, and I'm all over it. Does it get any better?

That's my .02!

Martin Suter

martin.suter (at) iplicensing.net

 

 

Cheering for Microsoft: Wink, wink, nudge, nudge

About four weeks ago, I blogged about Microsoft's bid for Yahoo (849: Is that miles or light years?). One of the key points that I tried to make was that the anti-Microsoft culture in the Valley is so deeply ingrained that it borders on the religious. There was a great article in today's Times (Hostility Has Its Rewards) that also touches on this same point, by an unnamed VC, no less:

"Yahoo is “under attack from Darth Vader” one venture capitalist told me."

The Dark Side. The Borg. Microsoft.

The Valley, and by extension Yahoo, will resist assimilation. It's in their water supply. It's in their DNA.

The article quotes Larry Ellison extensively and credits him with legitimizing and validating the hostile approach to takeovers. It goes on to suggest that he's even cheering for Microsoft to prevail. Of course he is!

Your biggest competitor is spending $44 billion and untold senior management cycles moving into a completely different sandbox than you're playing in. With Microsoft's time, attention and money diverted from the enterprise and business applications markets, Oracle laughs all the way to the bank.

"You go, Steve!" Wink, wink, nudge, nudge...

That's my .02!

Martin Suter

(martin.suter (at) iplicensing.net