Comcast announced 250 gigabyte caps per month on all its customers.  While the cap is much higher than Time Warner’s 5 gig cap and more than 99 percent of its subscribers use, the precedent is scary for all interest users.

Much of internet innovation has unlimited usage to thank.  Web video, VOIP, online video games, and more have enjoyed years of breathing room to enter people’s homes.  With bandwidth caps, however high, every YouTube video comes with a price tag.

Comcast technically has a right to limit its network. The problem is a lack real competition.  I could only get Comcast in my last apartment. In my new apartment, I can choose between content filtering and slower AT&T DSL or Comcast. No other company is allowed in my building. So Comcast gets away with bandwidth caps. Time Warner gets away with it.  And the tiny few remaining cable providers get away with it too.  It’s a competition to taking away value from customers, not adding value.

Further, should Comcast and Time Warner want customers using more bandwidth? That would make us more reliant on their services. Already I’d pay a premium for speed (if I could find a place that offered FIOS) and as more people find use in online video and services, more people will want faster speeds with more bandwidth. Instead, Comcast wants to offer you less, charge you the same, and ignore the future. Never a good business strategy, unless you have no competition.

I’m starting graduate school and the horror of textbook prices are draining valuable video game money (and playtime). Several stories have commented on the digital future of textbooks which looks bleak.  Publishers have a loyal clientele in students who must buy overpriced books to keep up in class. Universities and professors are complacent, keeping this archaic system going instead of looking for alternatives.

Wired Campus writes about surveyed students demands for digital textbooks, from costing less than the printed versions and allowing them to be printed.  Many digital textbooks cost the same as their print versions, but limit what you can print and expire after 180 days (with no resale value like the book).

The problem is textbook publishers have little incentive to innovate.  Students spend the money, but only universities and professors can sway what books get assigned (and thus sold).  As long as universities keep assigning expensive textbooks, publishers will continue to gouge students without consequence.

Piracy is starting to nip at the textbook market, but students, like me, who like printed versions find piracy a last resort. Pirate Bay and Textbook Torrents offer surprisingly large supplies of required texts that have only recently caught the eye of publishers.  Instead of recognizing an opportunity, textbook publishers are pushing digital supplements to their textbooks, requiring expensive subscriptions to supplement “losses” to piracy.

Textbooks could thrive in the digital space. Some writers and professors are experimenting with free, open-source e-textbooks to letting students write their own textbook on Wikibooks.  To encourage publishers to conduct their own experiments, professors and universities must unite to represent their students. Students can’t do anything (except file-share) as long as professors assign expensive textbooks.  Schools should screen books for pricing and reward publishers that sell books at fair prices.

Just as I praise 3rd-party innovation on other mobile systems, Apple shows itself less willing to host an open environment.  A developer released a $999.99 iPhone application called “I Am Rich” that did nothing but show a red screen. Some bloggers called for Apple to takedown the program for no reason other than it was significantly over-priced.

Why remove the app? Yes it’s stupid and the eight people who bought it are weird to say the least, but if people want to spend $1,000 on a red screen, who is Apple to say they can’t? MG Siegler of Venture Beat says since the App Store isn’t completely open, Apple shouldn’t have approved it in the first place.  But why? “I Am Rich” doesn’t violate any of the rules Apple laid out: no pornography, bandwidth abuse, or threat to privacy.  The program specifically states there are no hidden features. Anyone who buys the program knows exactly what they’re getting.

By de-listing the program, Apple is expanding its control over what is allowed on the iPhone, proving if it doesn’t like your program, it can and will remove it. Apple also removed BoxOffice, a movie showtime search engine, without notice or justification. Without standard rules on what is allowed on the iPhone, developers may be scared away from getting on Apple’s bad side. Further, it scares away innovation that expands usage and value for the iPhone - no one wants to risk time and money to get banned.

Apple keeps fighting open standards for the iPhone which works now amid the hype. But competition from open systems like Google Android (if it’s ever released) and Symbian will challenge Apple’s concept of top-down control.  The reason Windows Mobile has full flash support in the Skyfire browser is thanks to 3rd-party developers given free-reign to do as they wish on a platform.  If Apple wants the iPhone to really change the mobile space, it needs to let developers do what they do best - develop.

After Google Video and Microsoft’s PlayForSure showed what not to do, Yahoo Music decided it wanted to be an example for what not to do in digital media.  Yahoo announced it will discontinue support for its DRM at the end of September, locking DRMed tracks to a single computer.

Microsoft tried to discontinue its PlayForSure DRM a few months ago, but has agreed to leave it up for a few more years.  Google Video discontinued its DRM, offering refunds for all purchases.  Only after some outcry did Yahoo agree to refund customers or provide DRM-free tracks.

All this ends up being expensive for everyone involved, whether its maintaining servers or refunding every customer you’ve ever had. Soon consumers will realize DRM deprives them of value they expect, like owning the music tracks they paid for.  Of course, consumers can always go to file-sharing networks which are free and DRM-free. That’s the competition, remember.

Shameless plug: I’ll be at the Flow Conference Oct. 9th in Austin, Tex. speaking on a roundtable about music and DRM in case anyone’s in the area.

Republican presidential candidate John McCain has been open about his lack of computer knowledge, saying “I am an illiterate that has to rely on my wife for all of the assistance that I can get.” He adds he’s “learning to get online” and “will have that down fairly soon.” He doesn’t read email and won’t blog. McCain’s aide Mark Soohoo added “you don’t have to use a computer to understand how it shapes the country.”

Is that true? With so many technology issues going unaddressed or made worse with bad legislation, can we support a politician who isn’t fully informed.

Politicians, especially presidential candidates, should have a familiarity with the major technology trends, issues, and debates much like they would any other field from energy to foreign policy. I don’t expect candidates to design their own web pages or develop PHP applications, but using email and and search engines should be second nature.

The United States has no broadband policy, an out-of-date legal system unable to cope with online issues, and a steam of misinformation about security and privacy risks all likely do to a legislative body uneducated on the driving force of the world economy.  Politicians should know more than the average person because they have to make decisions that affect everyone else. Advisors are there to help filter the information, but some knowledge needs to come from the politicians, otherwise how can we trust they’ll make good decisions.

And admitting you don’t know something 73 percent of Americans use regular isn’t a good decision.

7. Vespa

These cute motored scooters seem innocent, but an imaginative geek can turn the modest exterior into an exciting ride of their life.  We might not all pull a Jason Bourne, but it’s worth a try.

6. Segway

The anti-climatic revoutionizer of personal transportation might not have changed the world, but it’s still damn fun to ride.

Continue reading…

The judge presiding over the Viacom vs. YouTube case has ruled Google must hand over IP addresses and user names of its users and a list of the videos they watched, whether on YouTube or embedded on other sites (an estimated 12 terabytes).  Viacom is asking for this information to prove YouTube deals the majority in infringing material.

The result of this ruling is a privacy nightmare.  The Electronic Frontier Foundation has argued the judge’s ruing violates, ironically, the Videotape Privacy Protection Act that says the government can’t snoop your rental history (library books are fair game).  Google, however, has argued before that IP addresses aren’t personal data because they aren’t attached to a single person, says Google “in most cases, an IP address without additional information cannot [identify a user].”

Unfortunately, the IP address can get you pretty close.  It identifies the computer and location, including households and laptops.  The result isn’t just embarrassing users who watched far too much Dog on Skateboard videos.  It’s what does Viacom, the RIAA, and MPAA do with this list once its public.  Most of their effort in suing customers was finding the IP addresses.  Now Google’s handing them over on a silver hard drive.

Viacom obviously wants to analyze Google’s data itself, ignoring a study by Vidmeter.com that found copyrighted materials accounting for a fraction of YouTube viewership.  Based on their sample of more than 1.5 billion views of 6,725 videos, 9.23 percent were taken down.  Those remove videos accounted for only 5.93 percent of views.  You can read the full study here.  Viacom itself accounted for 2.37 percent of of views, the highest of for all content owners.  How they monetize that to $1 billion would be magic.

[Via Mathew Ingram}

Media and software companies release reports that piracy costs them billions of dollars, destroying their business, funding terrorism, or hurting poor farmers. These companies lobby governments to pass laws, sue fans in court, or ask people to spy on others in order to prop up business models that are becoming obsolete. Companies should stop fighting piracy and treat it like any competitor - by competing and out innovating file-sharing services to provide a better value allowing everyone to make more money.

Matt Mason promotes this in his book, The Pirate’s Dilemma, calling piracy a sign of innovation as pirates experiment to make processes more efficient.

Some of America’s greatest innovators were thought of as pirates. When Thomas Edison invented the phonographic record player, musicians branded him a pirate out to steal their work and destroy the live music business, until a system was established so everyone could be paid royalties. Edison, in turn, went on to invent filmmaking, and demanded a licensing fee from those making movies with his technology. This caused a band of filmmaking pirates, including a man named William, to flee New York for the then still wild West, where they thrived, unlicensed, until Edison’s patents expired. These pirates continue to operate there, albeit legally now, in the town they founded: Hollywood. William’s last name? Fox.

New technology has repeatedly challenged media companies, from Edison’s phonograph to television to cassette tapes. After lawsuits attempted to quash the innovation, media companies embraced the new technology and found new revenue streams, making more money as a result. The home video market Hollywood so desperately defends now would never have existed had Universal and Disney’s lawsuit against Betamax succeeded. Instead of suing file-sharing networks, media companies need to embrace the new technology as a new way to make money.

The current state of media and software is quite good. Media companies are making more money every year. Even the music industry is making more music while more people are listening to music. The recording industry is plummeting at a rate so fast piracy cannot be the sole factor, as studies have shown.

But piracy has become an obsession for media and software companies, hurting themselves and their paying customers with DRM and restrictive policies that limit the value of their products. Microsoft, Google, and Major League Baseball have all discontinued DRM serviced, meaning people who legally paid for goods no longer get to use them while pirates continue to download DRM-free goods for nothing.

Piracy offers a compelling alternative. Piracy offers unlimited free downloads of an almost complete collection of every movie, song, TV show, book, or game ever made using a variety of easy to use programs. Pirated content has no DRM, meaning you can put your music and movies on every computer and portable device you own. On the down side, pirated content is has unreliable quality and inconsistent download speeds, but since its free, these are minor negatives.

Why should someone pay for a service with less services?

Media and software companies need to recognize piracy is not going away - it’s a competitor. No matter how many lawsuits the RIAA, MPAA, and BSA file, piracy grows. These lawsuits increase publicity for many sites and services, working against the lawsuit’s purpose - Pirate Bay, the leading BitTorrent tracker, is now one of the 100 most trafficked websites thanks to publicity from these lawsuits. And for every file-sharing service closed down, dozens more pop up. File-sharing is too useful and thus valuable.

To compete, media and software companies will need radical changes to their business models. Techdirt’s Mike Masnick constantly refers to leveraging infinite goods to sell scarce goods.

In a competitive market, the price of a good is always going to get pushed towards its marginal cost. That actually makes a lot of sense. As competition continues, it puts pressure on profits, but producers aren’t willing (or can’t for very long) keep selling goods at a direct loss. Sunk (or fixed) costs don’t matter, because they’ve already been paid — so everything gets pushed to marginal cost.

Movies, music, and software have high upfront costs but negligible reproduction costs - it’s as simple as copy and pasting a file.

This means leveraging infinite goods to sell scarce goods, like concert tickets, collectable merchandise, or advertising (people’s time and attention is very limited). $20 for DVDs and CDs worked under the old, obsolete business model. The new media economy requires new business models that offer more value to consumers. Plastic discs don’t offer $20 of value anymore, meaning new price models and revenue expectations need to be developed. Just because the recording industry used to be making $10 billion a year doesn’t mean is deserves to always $10 billion. As Masnick points out, should the automobile industry be blamed for putting horse-drawn carriages out of business? The industry has to innovate and adapt to market forces to continue making that money. That’s how capitalism works.

Several progressive artists and developers are experimenting with new business models. Radiohead’s pay-your-own price for their new album was a good start. Trent Reznor of Nine Inch Nails earned $1.6 million in one week selling special editions of his new CD, a CD that you could also download for free. Indie record label Fueled by Ramen used viral marketing to build valuable brands around its bands rather than relying on disc sales. The potential for rewarding business models exists, but will require risk and experimentation and an understanding of the evolving marketplace. Media and software companies need to recognize what their customers want and give it to them. Suing isn’t the answer. Embracing is. And that’s how both piracy and business can win.

Forbes provided some hyped linkbaiting today with an article on why Apple’s iPhone could kill, not compete with, but kill the Nintendo DS. I’m taking the bait to quash Apple’s gaming might once and for now.

Tech pundits love finding that new “killer” app to quash the incumbent which, in recent memory, always seems to be something Apple related: iPod “killer”, iPhone “killer”, and even Apple TV “killer” (do you need to kill something that isn’t even selling?).

Nintendo’s DS is the powerhouse of handheld gaming, the benefit of almost 20 years and more than half-a-dozen hardware generations. Sony launched its first handheld competitor, the PSP, barely clutching to 30 percent of the market, a credit to the system’s power and Sony’s well-established Playstation brand. Apple comes to the gaming world with no experience (except the tragic Pippin), no game studio, no retail presence or expandable memory, and most importantly, no interest in killing Nintendo.

Forbes writes its article ahead of Apple’s release of 3rd-party software include, presumably, an assortment of games. When Apple announced its developer’s kit for 3rd-parties, major game publishers Sega and EA were there to show off the first games for the platform. These high-profile releases led blogs to speculate on the iPhone’s potential as an actual handheld gaming platform.

This assumes Apple wants to be a handheld platform. The recently announced $25 for games sales Apple has other priorities. Gaming platforms have relied on low priced hardware subsidized by royalties from game sales. Sony’s PSP struggled initially at its $200 price point - how can Apple’s $400 iPhone think to fare better.

The other point against Apple’s gaming interests are its lack of actual gaming. EA’s cute flOw clone, if holding to Apple’s aforementioned price, costs $8 on the PS3. A rare $20 game on the PSP, Patapon, featured dozens of hours of gameplay. The DS offers assorted casual games like those likely to dominate on the iPhone, but also offers a varied library of epic stories and varied genres. Casual gaming is big business, yes, but hard core gaming is still bigger. The Wii sells amazingly, but software beyond Nintendo (first-party) fails to sell like games on the Xbox 360 and PS3.

Games will never sell the iPhone. The iPhone sells itself because of its variety of features and solid casual gaming will appeal to that user base in ways even the Nintendo DS can’t. The result will be different markets, not competitors.

Microsoft ruled desktop computers but now can barely get people to visit its website without paying them. Tim O’Reilly effectively sums up Microsoft’s problem:

Microsoft was once motivated by its own Big Hairy Audacious Goal: “a computer on every desk and in every home.” They achieved that goal, and ever since, they’ve drifted. Now their only goal seems to be to stay on top of the heap. They need to stop focusing on eating other people’s lunch and start thinking deeply about what kind of goals might stretch the company once again.

This past month has show Microsoft’s tunnel vision when it comes to the web. The company failed to acquire Yahoo (which was probably a good thing for both companies). Then, Microsoft offered cash back to users of its product search, feebly thinking this would steal customers away from Google. Microsoft ignored the fact that its product search is inferior to Google and didn’t offer enough money to make the step down worth it.

More subtly, Microsoft announced it was ending its book scanning project, leaving the endeavor to Google. Alex Chitu explains:

In other words, the book search engine didn’t make enough money and Microsoft decided it’s better to focus on areas that are more profitable. Instead of improving their search engine with valuable content from books and offering better search results, Microsoft chose to make decisions based on the short-term profits.

But that’s not all. Microsoft also decided to remove several games from its Xbox Live store because people couldn’t find the games they wanted. Apparently, Microsoft’s never been to Amazon.com or it would realize the benefits of the Long Tail and maybe fixed its user interface instead of depriving itself of additional revenue.

This is a lot of mistakes for one company to make. None of these seem like poor ideas over the short term, but they show Microsoft can’t look past its next earning’s report. Google, in comparison, lets its ad service support a research factory of innovation where products are unleashed with the idea for monetizing a distant thought for the future. Google News, Docs, Apps, Notepad, and Reader all have no advertising.

O’Reilly suggests Microsoft needs to define its long term goal, something that doesn’t put it in direct competition with Google, even outsourcing search. I don’t agree Microsoft should give up on search, mostly because I don’t want Google to have a monopoly on search (competition good, remember). But it’s true Google’s already doing well with the “Organize all the world’s information” goal.

Microsoft needs something new, that doesn’t rely on the walled gardens that made it the powerhouse it is. The next stage in computing won’t allow Microsoft to live off overpriced software like Windows and Office; not when free, open-source and online alternatives offer compelling alternatives. Buying Yahoo or Facebook isn’t a strategy unto itself, but needs to be part of a long term goal that recognizes both short term and long term benefits. Microsoft itself needs to change, and that change will happen over the long term.