Startup Toolbox

Jay Parkhill July 23rd, 2007

The FCC is putting up for auction next year a slice of radio spectrum that will go dark when analog TV is shut down net year, and is due to set the rules for the auction in the next few weeks. To the great pleasure of many, Google plans to bid on a portion of that spectrum, with the intent of providing carrier-neutral cellphone service. In other words, consumers with phones that use the spectrum could freely jump around to any carrier. No more 2 year contracts.

Google’s bid depends on the FCC approving this use along with other conditions that go along with it, like (somehow) requiring handset makers to make phones using the new 700mhz spectrum. The network would need to be built out as well, so I guess the handsets go, err, hand in hand with cell site relays that can handle the traffic, etc.

The major carriers were up in arms about Google’s bid at first. They claimed that Google was stifling competition by imposing these conditions and that the spectrum should simply go to the highest bidder- no conditions, just whoever can pony up the most cash. More recently, AT&T had an about-face and endorsed the FCC’s proposed rules, which largely accept Google’s proposal, but also impose a reserve price so that if the bids aren’t low enough the FCC can re-run the auction.

Phew! So the carriers are slamming Google for being anti-competitive, Google says its conditions are necessary in order to allow anyone other than the major carriers to compete in the space, and some third parties are lambasting the FCC’s reserve bid rule as anticompetitive insofar as it prevents startups with shallow pockets, like Cyren Call and Frontier Wireless from making a bid.

Here’s my take. People are wary of Google and more and more seem to take the “don’t be evil” motto with a big grain of salt. On the other hand, consumers hate their wireless carriers about as much as they love the convenience of their mobile phones. So when Google and the carriers start slinging “anticompetitive” mud at each other it’s no big surprise which side wins and which gets told to ease up on the chutzpah.

Personally, I think “wireless network neutrality” will fill a niche in the industry, especially for early adopters (such as iPhone buyers) willing to pay more for handsets. If consumer ability to jump carriers easily pushes carriers a bit then that would be great as well- maybe they will stop charging more to buy a ringtone than it costs to buy the whole song on iTunes. It will be a great experiment, if nothing else.

• Broadband , Google , wireless

Jay Parkhill January 4th, 2007

I have previously posted on Youtube’s pending overseas problems, as well as the problem with notice-and-takedown rules for copyright violations in the user-generated content world. Apparently, the ex-wife of soccer star Ronaldo was filmed having sex, and copies of the video made it onto YouTube. Reuters reports that the plaintiff, Daniela Ciccarelli, demanded that YouTube remove the video and that YouTube did so, but users promptly re-uploaded it.

The court’s most recent ruling was that YouTube must shut down until it is able to comply with the demand to remove all copies of the video, though Reuters dryly notes that enforcement of the order in US courts could be difficult.

I doubt Google has a great deal of concern that YouTube may actually be forced to shut down. At the same time, it is conceivable that YouTube could face sanctions in Brazil for failing to comply with the order. Add in the Japanese issues and a pattern seems to be in the making. At a certain point the collective weight of overseas litigation seems likely to go from headache-inducing to big trouble. It will definitely be interesting to see how matters unfold.

• Copyright , Google , Intellectual Property , Web , YouTube

Jay Parkhill December 21st, 2006

Chris Anderson, Editor of Wired Magazine and author of The Long Tail, gave a talk about a theme in his book called the “Economics of Abundance“. The long tail theory is that in the digital world, distribution costs are lowered so vastly that essentially any content and any product will find its audience, no matter how dispersed the audience members may be. The economy of abundance flows from that, and says that if the audience is out there, fewer reasons exist not to develop the product.

The idea has a lot of merit, but I think it can easily be overstated. It is true that scarcity is much less of an issue with digital products than with physical ones (think Amazon vs. just about any brick-and-mortar bookstore); there is no need to make tough decisions about shelf space when one can make everything available. Server storage, processor and bandwidth costs are low and dropping all the time, which should make it easier and easier to offer a wider variety of products. Shelf space is governed by the “economics of scarcity”, a zero-sum game. The economics of abundance let users/consumers choose, a seeming win-win for producers, sellers, and consumers.

On the flip side, abundance means more choices, which means more decisions about what to focus on. Scarcity is reduced from the producer/distributor/retailer side, but on the consumer end we still only have so many hours in the day to allocate. Abundant choices could even make our time resource more scarce after we spend time weeding through the abundance to find the material that interests us. Businesses run up against the risk of pushing themselves too far out on the long tail. Stop worrying about how your users will perceive the product and you may find that you have only a handful of customers. Stop worrying about how your users will find your product and you may not even have that many.

Google strikes me as a good example of this. There are few better-recognized brands on the Internet, but the company still struggles to make its products known to and understood by potential users. Earlier this year Google announced an effort to scale back its new product rollout and focus on “features, not products”, in Sergey Brin’s words.

Google seemed to have adopted the long tail theory in its engineering departments, implicitly at least, by allowing engineers to spend one day per week on products of their own imagining. The result follows Anderson’s long tail beautifully- Google has a huge number of products, but almost none other than search have significant traction in the market. Hitwise shows that Google is the clear leader in search, but time I checked Gmail had something like 5% of email market share. Google Video’s distant place in the video space led to its decision to acquire YouTube, Blogger watched its competition continually improve their products, yet limped along for two years or so without a significant overhaul until just recently, etc.

When I put all this together, I come to the conclusion that product success may follow its own long tail principle: the products that get the most attention have the greater likelihood of success. Products stuck out on a company’s development tail are more likely to lag.

So it seems as though Google has run on the long tail/abundance principle- throw out lots of stuff and see what sticks- but has found that it doesn’t have the resources or the wherewithal to follow up and make sure all its products get sufficient marketing and technical support in the market. And of course, if Google can’t do it, how much harder is it for “regular” companies trying to get by with “regular” amounts of cash?

• Google , Startups , Web