Introduction The Pop Music Industry August 26	eBusiness Planning to Succeed The Always-On Commons How Information Flows Alphabet Soup RFID Tames the Bullwhip
Structure of the Industry August 31	Competitors Suppliers Buyers Substitutes New entrants
The transformation of business processes tearing down the walls September 7 September 14 September 21 September 28	elevator pitches - sept 7 Pressures on the music industry supply chain Economics / Markets Technology / Architecture - presentation sept 14 Politics / Laws / Policies Social culture / Norms
Key policy issues who's in charge? October 5 October 12	Ownership / Control IP: Copyrights and Patents Contracts and Licenses	- mission and vision - goals and keys to success - products and services - competitive advantage
Final presentations October 14	Business / Marketing Plan

Deliverables
August 31 - October 5	in-class presentations of web site(s) - 5 or 6 oral for 1 - 3 minutes to stimulate discussion	see tables below on this syllabus
September 28, October 5	some parts of business plan - 7	roundtables
October 5, 12	other parts of business plan - 4 oral / 1 - 3 minutes - taped	- mission and vision - goals and keys to success - products and services - competitive advantage
October 14	business plan	outline

Liberation Management: Necessary Disorganization for the Nanosecond Nineties
by Tom Peters

Today's organizational images stink. Not just those that derive from the military ('Kick ass and take names') and 'pyramids' (heavy, steep, immobile) but even the new 'network,' 'spiderweb,' 'Calder mobile.' These modern notions are a mighty step forward, but they still miss the core idea of tomorrow's surviving corporation: dynamism. How about company-as-carnival?

Say 'carnival' and you think energy, surprise, buzz, fun. The mark of the carnival -- and what makes it most different from a day in most offices -- is its dynamism. Dynamism is its signature, the reason we go back. To create and maintain a carnival is never to get an inch away from dynamic imagery.

Today's global economic dance is not Strauss waltz. It's break dancing accompanied by street rap. The effective firm is much more like Carnival in Rio than a pyramid along the Nile. The practical point for the firm's leaders: Constantly using dynamic imagery, thinking of yourself as running a carnival and stomping out all forms of static thinking and imagery will help point you toward the right structure and strategy for these woozy times.

These are nutty times. Nutty organizations, nutty people, capable of dealing with the fast, fleeting, fickle, are a requisite for survival. No one can escape the clutches of radically altered technologies, a completely turned-upside-down competitive context. And yet most of our organizations and their leaders are far from zany.

Bold times call for bold leaders. Bold times call for bold experiments. The time for incrementalism has passed. It's true, to be sure, that the march into the future will take place one step at a time. But those steps had better be in pursuit of a zany, bold future. Period.

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Night-by-Night

Personally, I am always ready to learn, although I do not always like being taught.
-- Winston Churchill

Saturday, August 26

The end of the road - where we're headed

Two venues for your MBA 604 marketing presentation: popkomm and SXSW

Note that I have taken the liberty of scheduling you to do a presentation next Thursday, August 31.

Introduction to e-Business

How to Make Money in an Age of Transition

eBusiness | Planning to Succeed | The Always-On Commons
How Information Flows | Alphabet Soup | RFID Tames the Bullwhip

Slogans and Mantras

the network is the computer

hyperlinks subvert hierarchy

The Pop Music Industry

Port 80's Boardwalk
Popular Music

Your business plan does not have to describe operations in the U.S. Perhaps some regulatory arbitrage can help you reduce risk and expenses.

to do

weather report - Saturday, August 26, 2006

How did it go tonight? What was the cloudiest part? The clearest?

Bistro - Introduce yourself

roundtables

The Bullwhip Effect -- due ASAP

explore this course web, especially the Port 80 Boardwalk's pop music industry web, the rest of Ricci Street, and the WWW beyond

Get in the habit of viewing HTML source code.

Every so often, right-click and view the source code of a page and try to relate the code to what's displayed in the browser. After you download Microsoft's Web Accessories, you will be able to highlight parts of a page and view just that part of the source code.

software toolkit 

Download and install the parts that you don't have.

FrontPage settings

The working version of your Plaza web should be on your hard drive in a folder all to itself that FrontPage treats as a "FrontPage web". For the screenshot on the right, my web for Ricci Street is on my desktop, address C:\WINDOWS\Desktop\riccistreet.

The underscored folders _vti_cnf and _vti_pvt hold the glue that Front Page uses for many of its useful functions. You need those folders on your laptop or desktop for FPage to work. You do not need to FTP those folders to the server, though they won't do any harm if you happen to transfer them there.

Research on the Internet - taming the bitstream

What a search engine is, how it works, the difference between search engines and directories, and how to use Boolean keywords.

I recommend Google for all your search engine needs.

If you aren't using a browser like Opera or Firefox that has a Google search built in, try Dave Bau's Quick Search Deskbar.

This tiny textbox is designed for search hounds with weary mouse-fingers. Unlike the Google Toolbar, this little deskbar lets you launch searches without starting a web browser first, directly from your Windows Explorer Taskbar.

Don't forget Google Groups, which lets you search the Internet's newsgroups.

When you get to the end of the search engine's coverage, you have to go to specific sites and search their databases, especially the College library's online resources (student ID required). For this kind of basic business research, you will want to go to industry specific magazines and search their archives.

The research for the music industry comes from a variety of sources, especially Hoovers Online, the U.S. Census Bureau, and other sources. Please make sure you can get into Hoover's Online via the college library's web site. We will search Hoover's as well as several other databases full of business info -- especially the government's E-Stats site -- and others, such as:

The SmartMoney Map of the Market

If I could figure out where to make time for it ...

... we would examine weblogging as a way of "taking notes" while you're quickly surfing the Web doing this kind of business research and we would collaborate using a wiki.

Thursday, August 31 and the first hour of Thursday, September 7

How did the others vote in the poll about the legality and morality of downloading? Discuss it at the Bistro's First Night Poll Results forum.

course readings

Site of the Nite

MakeUpAlley

Makeupalley.com Becomes Independent Site

Since last March 26, 2000, the popular beauty community website, Makeupalley.com, is no longer owned by drugstore.com. Both parties reached an agreement where Makeupalley.com is become an independently owned and operated site by its original founder, Hara Glick.

Glick founded Makeupalley.com in 1999 which was purchased by Beauty.com later that year. Both companies were purchased by drugstore.com in January 2000. Glick held a Vice President position at the Beauty.com New York office, which was recently relocated to Seattle, WA.

Glick can now focus on building the Makeupalley brand and growing the community. Makeupalley.com is popular among consumers and retailers for unbiased beauty information.

No blind alleys: Unbiased beauty advice
by Deanna Larson
Nashvillecitypaper.com, November 30, 2004

The cosmetic-crazed members of this consumer-to-consumer Web site have already bought, used and rated more beauty products than I could ever try in a lifetime, warning me off bad products and steering me toward the ones that deliver as promised.

Women from all professions and walks of life contribute to the site, hoping to save another woman a waste of time or money.

CBS News: Hara Glick, the founder of Makeup Alley, says the Web site has seen more than a quarter million swaps since it started five years ago, and there's never been a health-related complaint.

Trading faces on the Internet
by Cheryl Lu-Lien Tan
LJWolrd.com, August 6, 2001

Makeup swapping Web sites often have message boards where women chat about their favorite products or rant about ones they dislike. Sometimes, their conversations lead to product changes.

Maureen Kelly, president and creator of New York-based Tarte Cosmetics, said she has made several changes to her line of makeup thanks to messages on swapping sites.

A few months ago, after seeing swappers share their frustrations with how quickly they were using up Tarte lip glosses, Kelly changed the product from 1.9 grams to 3.5 grams at the same $19 price. Kelly also made the gloss wands longer and changed the product flavor from vanilla to natural after reading postings on swapping sites.

The Pop Music Industry (con'd)

Will you bring on new employees with over-inflated promises of the future or will you let them know about the true state of your finances and your ability to pay them over the time period they expect to be employed?

Port 80's New Venture Creation - resources for start-ups.

learn more about nuts and bolts: names and intellectual property

Pop Music Links - a loooong page of categorized links to a variety of relevant topics

Demo video archives

In 1991, Stewart Alsop changed the technology conference circuit by instituting a new event with new rules: DEMO would be about the products; would require timed, live demonstrations; and would not allow PowerPoint presentations! These rules still stand.

The Entrepreneurial Team
by Dana Blankenhorn
A-Clue.com, January 30, 2006

While it's true that anyone can launch a business, an entrepreneurial business must be a team from the start.

Sure, you need the entrepreneur, the idea person. You need someone who can find the money, who can sell the scheme, who can adjust to events, who can lead. You need someone of boundless energy, determination, ambition, and (especially) ruthlessness.

If your business is going to be on the Internet, you need a content guy. Having an Internet business without a content guy is like having a restaurant without a chef. ...

Having studied entrepreneurs for 30 years, close-up, I can say that they are really different from most of us. They generally have enormous energy, big egos, something of a messianic complex, along with a willingness to let go, not just of parts of their jobs but of the whole business. The best entrepreneurs are in it for the chase, not the money. They care about the thrill of the building, for the buying and selling, for the hunt rather than the kill.

True entrepreneurs aren't wedded to the business, but the process, the chase, the game.

It takes clear vision, a revenue model, luck, good timing, and an innovative, inventive management team. Money is one way of keeping score and buying time to do your next thing. If money is your goal, I believe that you're much less likely to make lots of it. Concentrate instead on providing people with a product or service that they are willing to pay for.

August 31 - Debate - 6:30 PM

debate Berkman scenarios

The success of a project depends a lot on events in the world outside the control of the company. While many futures can be imagined, only one will happen. So another way of saying it is that most projects fail -- whether a stand-alone start-up or a new product or service for an existing company -- partly because they require a future that doesn't happen. The trick for you, then, is to predict the future accurately. Doing so is good risk management; it will reduce the potential of outside events' causing your failure.

This report from the Berkman Center clusters possible futures into five scenarios and discusses the public policy implications of each. Your project for this course should posit one of or a blend of these scenarios.

Five Scenarios for Digital Media in a Post-Napster World
by the the Digital Media Project
Harvard's Berkman Center, November 2003

Several trajectories could guide the future of music and movies online. These five scenarios are the different models vying to shape the development of digital media.

Each of you will present a short explanation of your scenario -- try to "sell" it. Then as a class, we will discuss and finally vote on which we think will happen. It would make sense for the business model that you come up with to be consistent with the future that you think it will exist in.

pment of digital media.

August 31 - 7:30 - 10 PM Presentations

Based on what you find on the web by and about these companies / organizations, how are they dealing with the driving force of the Internet? By and about means that you should look at the corporate web site (by) as well as what Google News gives you access to (about).

Feel free to negotiate a trade with someone. As long as they all get addressed, I don't care who does which.

Elevator Pitch

On Thursday, September 7, each of you is going to pretend you are alone in an elevator with a venture capitalist. You will have thirty seconds between stops in the elevator to briefly explain your business idea. I'll ask someone to take notes and post them at the Bistro. Comparing the notes to your intention, you'll see how an elevator pitch is likely to be received by someone who will be far less interested than our class note taker was in paying close attention. Let me emphasize again that pitching new ideas can happen inside an organization as well as in a bank's loan office or a venture capitalist's boardroom. You have to make a positive impression in a short time.

This pitch will be videotaped.

scenario

Near the front desk of one of those skyscraping Los Angeles hotels, you saw a guy who everyone was hanging around like he was famous or something. So you asked and some dude said in a hushed whisper, "That's Steve Jurvetson."

"Who?" you asked.

Dude looked at you like you'd done some anatomically impossible act in public. "Steve Jurvetson is a managing director of Draper Fisher Jurvetson. Just about the most important venture capitalists in the whole state. Haven't you submitted your business plan to them? Everyone else has!"

Yeah, right. You should be so lucky. But then late that night, you were alone in the elevator and held it for a guy dashing through the lobby. He jumped in and pressed 46, and then you noticed that it was that Jurvetson guy.

As the elevator doors closed on just you two at the beginning of a long ride alone together, Steve Jurvetson turned toward you. "Thanks! Say, what do you do?"

And so you gave him your best on-the-spot pitch for your brand new business model.

to do

weather report - Thursday, August 31

How did it go tonight? What was the cloudiest part? The clearest?

readings

roundtables

The Bullwhip Effect -- due August 31

Government Stats -- due September 7

Business Models -- due September 7

upcoming: The Future Of Music, Inc. -- all three due September 28

PEST analysis

SWOT analysis

Force-Field analysis

September 7

Sites of the Nite

FON

FON

From Hot Spots to Fon Zones?
by Andy Reinhardt
Business Week, February 7, 2006

The CEO of Spanish startup Fon discusses why its unusual telecom biz model makes sense for consumers -- and big-name investors like Google.

On Feb. 6, a little-known Spanish startup called Fon made worldwide headlines because of an eye-popping equity investment. Internet giants Google and Skype, a unit of eBay, along with the prestigious venture-capital firms Sequoia Capital and Index Ventures, are pumping $21.5 million into the Madrid-based company to help it take off.

Wi-Fi Wonks Fon Home
by Cyrus Farivar
Wired, February 9, 2006

A new service could allow you to share your home internet connection and, in exchange, surf the web for free while on the road.

A Spanish company called Fon (pronounced like "phone") has devised a new way to provide Wi-Fi to local areas. The company announced earlier this week that it was able to obtain nearly $22 million in funding from Silicon Valley juggernauts including Sequoia Capital, Google and Skype.
 

Ultimate iPod accessories
By CNET staff, February 2, 2006

The market for iPod accessories is so huge that our offices can barely handle the periodic influx of new products (which coincide with new iPod announcements) that hope to enhance your iPod experience. Whether you're looking to transform the iPod into a fully functional stereo or just want to wrap it in a cool, scratch-resistant casing, you'll find the answer here.

vehicles

At Demo.com, I was looking at the line-up for next fall's show and saw this entry for Mp3Car.com.

1. Intel co-branded and developed automotive enabler.

2. Fujitsu Automotive docking station with StreetDeck.com software.

3. Single DIN rapid install car computer with StreetDeck.com software.

StreetDeck combines the features of navigation, satellite radio, vehicle diagnostics, Bluetooth phones, cameras, media ripping, audio playback, radio, DVDs, picture viewer and Wi-Fi syncing into an intuitive touch screen interface. StreetDeck builds on standardized hardware and provides a software development kit to allow additions with minimal development time.

Mp3Car.Com

Your source for mobile computing solutions. We provide hardware, software, and technical support to help you integrate your mobile computing needs into your car. Enjoy your stay and if you have any questions, please feel free to contact us.

StreetDeck

Introducing the first all-in-one mobile electronics package. StreetDeck delivers all the extras you want and need in your car, so you can go from zero to loaded with one installation.

Features

* Touch Screen Control
* Navigation & Mapping
* Bluetooth Phone Integration
* Satellite Radio
* Vehicle Diagnostics
* Rear-view Camera Support
* CD player/MP3 Extraction
* MP3 Player
* FM Radio
* DVD/Video Player
* Picture Viewer
* WiFi Sync Support

web design

Now that you are finding a business model, you should start thinking about names, logos, and visual look-and-feel. For inspiration:

Current Style in Web Design

The great sites ... share the following design features:

Simple layout
3D effects, used sparingly
Soft, neutral background colours
Strong colour, used sparingly
Cute icons, used sparingly
Plenty of whitespace
Nice big text

Let's look at these features one by one. ...

Web Creme

CSS Beauty's Gallery

Thursday, September 7 - 6 PM

The Transformation of Business Processes: tearing down the walls

What's getting blown to bits?

What walls? The walls between:

departments in an organization
an organization and other organizations in its supply chain
an organization and its customers

Where do the walls come from? Tradition. The rise of the managerial corporation in the past hundred years. Fear fostered by lawyers and cost accountants and the threat of lawyers and cost accountants.

What do the walls do? Preserve territory. Control information flow. Power can come from my hoarding information, from knowing something you don't and not telling you.

When information was locked up in atoms, it was easier to control. Now that it's loose on a network, it's harder to control. Information wants to be free, as in unfettered.

Friedman's 10 Flatteners

White Collar Work
by Tayfun Demiroz

in 'Leading the Revolution', Gary Hamel argues that strategies of managing the bottom line and cost cutting that have characterised the past decade are now defunct. In effect, 'corporate aneroxia' has set in. Today, there is a need for dramatically different business concepts or dramatically new ways of differentiating existing business concepts. It is through 'business concept innovation' that strategic variety can be introduced into an industry. It is a time of revolution where there are industry 'incumbents' and 'insurgents'. "Dream, create, explore, invent, pioneer, imagine: do all these words describe what you do? If not, you are already irrelevant, and your organisation is probably becoming so." says Hamel.

At this stage, let's look at what the Australian Aborigine thinks of our current economic and social model:

"It seems business has become a hazard to Mutants (white man). Your businesses were started so people could get better items collectively than they could get for themselves and as a method to express individual talent, and become part of your money system. But now the goal of business is to stay in business. It seems so strange to us because we see the product as a real thing, and people as real things, but business isn't real. A business is only an idea, only an agreement, yet the goal of business is to stay in business regardless. Such beliefs are difficult to understand." 'Mutant Message Down Under', p105.

Well, it has taken almost two centuries for Western civilisation to come to the same conclusion.

Dead Man Walking -- the incumbents' problem

Setting the stage -- the incumbents' position

Internet Neutrality

Internet Neutrality

Net Neutrality
Full Committee Hearing
Senate Committee on Commerce, Science, and Transportation
Tuesday, February 7 2006

software for an access-tiered, closed-garden Internet: p-cube start-up bought by Cisco

Consumer generated media

aka participatory media, user generated content

Rip, mix, burn

Blogging, wikis, social networking, tagging

old media

A content publisher gives you something you want in exchange for something you don't want while the publisher has a moment of your attention.

new media

Consumers unshackle content from time, place and manner restrictions.

Center for Digital Democracy's Declaration of Digital Democracy

Choice. Competition. Diversity. Equal Opportunity. Free Expression. Equitable Access. Self-Determination. These are among the basic values that must govern our communications systems in the digital age.

Municipal broadband deployments to double in 2006
by John Tilak
DigitalMediaEurope, January 27, 2006

There are over 400 cities worldwide currently planning to deploy municipal broadband networks, and that number will double in 2006, making community broadband initiatives a very real and significant trend, according to a report from market research firm Visiongain.

Despite legal opposition and intense lobbying from incumbent telcos and cable companies, municipal broadband is well on its way. As of the first quarter of 2006, there are over 100 city and regional wireless broadband networks operational worldwide, more than 40 of which are in the US.

Darknet

definitions

What's the difference between these often confused terms: sharing, piracy, counterfeiting, bootlegging, theft and stealing?

using or enjoying something jointly with others

the unauthorized use or reproduction of copyrighted or patented material

to make a copy of, usually with the intent to defraud; forge

the act of selling illegally or without permission

the act or an instance of stealing; larceny

the act of taking feloniously the personal property of another without his consent and knowledge; theft; larceny

$50 Million C-D Counterfeit Operation Shut Down; Satary Arrested
press release
U.S. Attorney's Office for the Northern District of Georgia, November 13, 2003  

The indictment specifically charges that SATARY, AL-QUDAH, and AKRAM ABDELRAHMAN YACOUB manufactured and distributed counterfeit and pirate CDs, counterfeit audio cassette tapes, counterfeit labels and trademarks in various locations throughout the Atlanta metropolitan area, and in Macon, Georgia, and that DALTON MARK HOWELL, GARLAND WAYNE ETHRIDGE, and CARL WISDOM SMITH manufactured and distributed counterfeit CDs, labels and trademarks in various locations throughout the Atlanta metropolitan area.

The indictment charges from in or before April, 1999, through in or about February, 2003, SATARY and the co-defendants manufactured counterfeit compact discs (CDs) and counterfeit audio cassette tapes through the unauthorized recording of popular music protected by copyright and the unauthorized duplication of artwork, graphics, and photographs which was protected by copyright contained on labels of popular music, often manufacturing "compilation" recordings and individual recordings

RIAA’s Annual Commercial Piracy Report Shows Trafficking In Pirated Music Increasingly Sophisticated, Closer Ties To Criminal Syndicates
press release
RIAA, July 13, 2005

The RIAA reported a 58 percent increase in seizures of counterfeit CDs, the authentic CD look-alikes with high-quality artwork and packaging that make the product appear legitimate. Working together, local law enforcement agencies and RIAA investigators seized 1.2 million counterfeit discs in 2004. This pirate product is increasingly traced back to smaller CD copying plants. The growing number of these smaller-sized facilities over the past few years has created excess production capacity, and some unethical businesses have diverted this excess capacity to the production of high-quality pirate product.

Thursday, September 7 - 8 PM

Economics / Markets

Market imperfections

Context of the music industry

Government Regulation

Disruptive Technologies

Creative Destruction

Economics of Information Goods

Most business (non-start-up) failures are rational. That is, everyone made the correct decision. Therefore, the business failed.

Note | In a sense, all start-ups fail due to under-capitalization. They don't have enough capital to survive to profitability. They don't have enough capital to survive bad management, bad information, inability to find market, etc.

How the music industry uses marketing techniques as a means of control.

legit file sharing: BadBlue

In what ways will the future be different from the past? In what ways will they be similar?

Is the past a good guide to the future? If not, what is a good guide for the future?

Do we have a new economy forming?

Just a new economy, or a whole new economics?

What will it be based on that's so different? Are networked bits so different from atoms?

Two major driving forces. Yes, networked bits are so different from atoms that we need an economics of abundance in addition to the traditional economics of scarcity.

Home Nanofactory

The second is the loosening of capital markets, aka globally mobile capital, and the rise of transnational capitalism.

Public Policy

Yes, your organization's structure and culture can have a lot to do with the organization's ability to survive, adapt, and even thrive.

However, our society's structure and culture has a lot to do with it, too. Increasingly, that society is a global network.

Public policy context

how laws, institutions, customs, and regulations affect incentive, the creation of new knowledge, and the possibility of profiting from it

Economic context: capital formation and investment

the business of America is business, not your business

Rule of (which) law?

Who's in charge?

Of course, you say, national laws should prevail. Let's expand it a little.

We live in a globalized economy where international law should supercede national law (just as national law supercedes state law and state law supercedes local law).

We live in a globalized economy where national law (ex: US's freedom of speech; freedom of press; separation of church and state) should supercede international law or other countries' laws.

Golden Straitjacket

This was the only debate topic where I had to give thought to which side is red and which is blue. Basically, it doesn't matter, as I'll try to explain, so I couldn't use the same loose/tight dichotomy as I did with the others. This becomes the more generalized debate proposition within which the other four find their context.

In The Lexus and the Olive Tree, Thomas Friedman writes (p. 86) that one debate is over, and a winner is clear.

When it comes to the question of which system today is the most effective at generating rising standards of living, the historical debate is over. The answer is free-market capitalism. ... There can be different brands of free-market vanilla and you can adjust your society to it by going faster or slower. But, in the end, if you want higher standards of living in a world without walls, the free market is the only ideological alternative left. ...

When your country recognizes this fact, when it recognizes the rules of the free market in today's global economy and decides to abide by them, it puts on what I call the Golden Straitjacket. The Golden Straitjacket is the defining political-economic garment of this globalization era. ... If your country has not been fitted for one, it will be soon.

Golden Rules

Friedman describes the Golden Straitjacket by the rules it imposes on a country.

make the private sector the primary engine of economic growth
maintain a low rate of inflation and price stability
shrink the size of the state bureaucracy
balance the budget, if not have a surplus
eliminate import tariffs
remove restrictions on foreign investments
get rid of quotas and domestic monopolies
increase exports
privatize state-owned industries
deregulate capital markets
make the currency convertible
open industries and stock and bond markets to direct foreign ownership and investment
deregulate to promote domestic competition
eliminate government corruption, subsidies, and kickbacks
open banking and telecommunications systems to private ownership and competition
allow citizens to choose from an array of competing pension options and foreign-run pension and mutual funds

This op-ed piece in today's Buffalo News won't be available in a week or so, but it explains where Mexico is resisting the Golden Straightjacket and why that fuels the US immigration problem.

Mexican economy still struggling
by Robert Samuelson
Buffalo New, June 28, 2006

It's not that Mexico has made no progress. Its economy was once crisis-prone, inflation-ridden and heavily insulated from foreign trade. Now it has quelled inflation (about 4 percent), controlled government spending and opened up to trade. Before adoption of NAFTA in 1994, tariffs on covered imports averaged 12 percent; by 2001, they were 2 percent. In recent years, its economy has grown almost 4 percent annually.

Exploding the myths of offshoring
by Martin N. Baily and Diana Farrell
The McKinsey Quarterly, July 2004

Far from damaging the economy of the United States, offshoring should enable its companies to direct resources to next-generation technologies and ideas—if public policy doesn't get in the way.

Three Democratizations

Early in his book, Friedman writes about what caused the rise of free-market capitalism: the three democratizations, of technology, of finance, and of information. In short, the Internet let money move freely. The folks who cry "Save America's Jobs" are spitting into the wind, according to Friedman.

The venture capitalists at Parkside Partners are globalists, money movers. However, they live in the real world, where many people are fighting back. In Friedman's terms, those fighting back are more interested in their (local) olive trees than in another (global) Lexus.

Electronic Herd

You and I grew up in a world in which nations ruled and competed. Sure, there was a World Court and a United Nations and many treaties, but the nation-state was supreme. According to Friedman, those days are over. Look at the European Union. The ruler of a country has no more discretion than the governor of any one US state has in the face of the overwhelming superiority of the US Federal government. In this analogy, the Federal Government has been replaced on a global scale by what Friedman calls the Electronic Herd. Gathering in Supermarkets, this Herd has far less accountability than any nation-state ever did. At Parkside Partners, you are part of the Electronic Herd.

The Electronic Herd is made up of all the faceless stock, bond and currency traders sitting behind computer screens all over the globe, moving their money around with the click of a mouse from mutual funds to pension funds to emerging market funds, or trading from their basements on the Internet. And it consists of the big multinational corporations who now spread their factories around the world, constantly shifting them to the most efficient, low-cost producers.

This herd ... is beginning to replace governments as the primary source of capital for both companies and countries to grow. In order to thrive in today's globalization system a county not only has to put on the Golden Straitjacket, it also has to plug into this Electronic Herd.

What does this mean for our public policy debate? Friedman calls it synchronized swimming, which is why I had trouble assigning a red or a blue to these Rule of Law debate positions. According to Friedman, there is no debate.

Unfortunately, this Golden Straitjacket is pretty much "one size fit all". So it pinches certain groups, squeezes others and keeps a society under pressure to constantly streamline its economic institutions and upgrade its performance. it leaves people behind quicker than ever if they chuck it off, and it helps them catch up quicker than ever if they wear it right. It is not always pretty or gentle or comfortable. But it's here and it's the only model on the rack this historical season.

As your country puts on the Golden Straitjacket, two things tend to happen: your economy grows and your politics shrinks. That is, on the economic front the Golden Straitjacket usually fosters more growth and higher average incomes -- through more trade, foreign investment privatization and more efficient use of resources under the pressure of global competition. But on the political front, the Golden Straitjacket narrows the political and economic policy choices of those in power to relatively tight parameters. This is why it is increasingly difficult these days to find any real differences between ruing and opposition parties in those countries that have put on the Golden Straitjacket. Once your country puts on the Golden Straitjacket, its political choices get reduced to Pepsi or Coke -- to slight nuances of taste, slight nuances of policy, slight alterations in design to account for local traditions, some loosening here or there, but never any major deviation from the core golden rules. Governments ... which deviate too far from the core rules will see their investors stampede away, interest rates rise and sock market valuations fall. The only way to get more room to maneuver in the Golden Straitjacket is by growing it, and the only way to grow it is by keeping it on tight.

Thursday, September 7, 8 - 10 PM

Elevator Pitch

You get six minutes to stand up and, without any visual aids, tell us what your company is going to sell, to whom, and for about how much. What problem will it solve for those customers?

to do

weather report - Thursday, September 7

How did it go tonight? What was the cloudiest part? The clearest?

roundtables

The Future Of Music, Inc. -- all three due September 28

PEST analysis

SWOT analysis

Force-Field analysis

Thursday, September 14

In the News - Wireless Philadelphia, wireless Detroit, the death of the CD, what happened to LokiTorrent, and using Lessig's physical layer to control barriers to entry when you can't compete in the marketplace. Also, a review of the new Napster.

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The pervasive PEST analysis: At Wired News, the "subsets" on the left navigation bar are Technology, Culture, Business, and Politics. Substitute Social for Culture and Economics for Business and you have a PEST analysis.

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Note from last spring's class:

I hope you didn't take my shots at Republicans the wrong way last Thursday. When the Democrats were in the White House, I took shots at them for the same reason: to make you think, to make you realize that there are alternatives to the narrow two -- and very conservative -- choices offered at election time in this country. The double-speak of calling John Kerry a liberal is an example of what I mean. It's not the party in power that's the problem; it's government itself. Both parties are there to protect the status quo, the incumbents, the campaign contributors.

Having said that, the government is not monolithic nor are the parts always on the same page. The government that stifles innovation with the DMCA was the same government that funded early Internet research. When they were doing the funding in the 1970's and 1980's, no corporation or legislator saw the future clearly enough to perceive the threat that by 1998 would require passage of the DMCA to protect the incumbents from competition.

As an MBA, you need a worldview from 20,000 feet in the air, not from Buffalo NY wearing the rose-colored glasses of American media and American politics. The Web is not the US Wide Web, it's the World Wide Web. The threat is far larger than anything Congress or the Supreme Court can deal with let alone the two major parties. US businesses that get locked into an US-centric world view will not be able to compete effectively in that new world.

In short, if you want to make money and it's illegal here, try another country. But don't, please don't, let your fear of breaking a law discourage you from thinking and imagining.

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Technological / Architecture

Last week, we didn't have time to look in depth at how the battle between the old and new is being fought in the market place. We talked a little about the long tail and other ways in which digital goods bend the laws of economics. When it comes to the incumbents trying to beat the innovators on the battlefield of place, product, price, and promotion, we can see that the incumbents lose.

The Internet makes place irrelevant.
Digital products have trivial marginal costs, replacing scarcity with abundance.
As for price, how can the incumbents beat free in a world of abundance? Answer: create artificial scarcities, aka DRM, digital rights management
The Internet levels the promotional battlefield. No longer are the deep-pocket incumbents the only ones able to afford the old broadcast media. Every new entrant and substitute can have a professional looking and functioning web site with world-wide reach.

Thus, for all four P's of the marketplace, the advantage goes to the innovators.

This week, we will look at the computer infrastructure threatening the proprietary model and the control mechanisms for fighting back. You have to decide which will work better for your product/service and for the company you're setting up to deliver your product/service.

open - driving forces

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closed - restraining forces

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Passwords revealed by sweet deal
BBC News, April 20, 2004

More than 70% of people would reveal their computer password in exchange for a bar of chocolate, a survey has found.

It also showed that 34% of respondents volunteered their password when asked without even needing to be bribed.

A second survey found that 79% of people unwittingly gave away information that could be used to steal their identity when questioned.

Pizza Palace - superior customer service? or scary times we live in?

Can the boss be fired for blogging?

Spectrum Policy: Property or Commons?

An emerging consensus holds that one of the greatest limits on innovation is the government's method of allocating portions of electromagnetic spectrum. Since its discovery, small chunks of spectrum have been auctioned off to the highest bidder, or given away to commercial interests in exchange for their submission to government regulation. Laws prohibit the resale of spectrum, which means that unused spectrum cannot be transferred to others who want it, and is therefore wasted.

As a result, would-be innovators never know if spectrum will be available for their new inventions. Consequently, they can't factor it into a business plan, or build new wireless applications in their garage knowing that the necessary spectrum will be available to their future customers.

In an effort to encourage innovation, critics of the current model have proposed radical -- and radically different -- reforms. Some say spectrum should be treated like 'property', giving purchasers the same rights afforded any property owner, including the right to exclude others from using it, and the right to transfer ownership. In contrast, proponents of a 'commons' model argue that spectrum is like a stream that belongs to all of us, and that current technological innovations allow sharing of the resource -- a practical, not moral, argument.

Cat and mouse games

Speedbumps and how to fly over them

DRM's Achilles heel: in every technological system for controlling content, at some point consumers must be able to read, hear, or otherwise experience the content. Whenever that happens, the content is necessarily exposed, and it can then be captured and re-distributed without the DRM.

Banned IP Ranges

Tivo To Go

Extract television recordings from your networked Tivo device to your Windows XP PC for personal, noncommercial use. This web page isn't intended as a hardcore geek guide just a place get the average Tivo user pointed in the right direction by exposing some of our options, since our primary web resource is prohibiting these conversations. None of the products or methods listed on this page involve breaking Tivo's encryption nor do they describe the illegal distribution of video. This guide is intended to facilitate the personal, noncommercial viewing and archiving of television files that Tivo has recorded at your request.

Users bypass copy protection on portable Napster (no longer available)
Stuff, February 16, 2005

Users have found a way to skirt copy protection on Napster Inc's portable music subscription service just days after its high-profile launch, potentially letting them make CDs with hundreds of thousands of songs for free.

Such users are already providing instructions to other would-be song burners through technology websites like BoingBoing. ... Thwarting the intellectual property protections of the service is as easy as a free software patch.

Engadget.com said by installing the digital music programme Winamp and then adding a secondary programme to Winamp called Output Stacker, users could convert the digitally protected files from one format to another that can then be burned, unencumbered, onto CDs. ...

A spokeswoman for Napster said that such endeavours were nothing new and the company was not too concerned.

"The DRM (digital rights management) is intact. Basically, people are just recording off a sound card. This is nothing new and people could do this with any legitimate service if they want to use a sound card," she said.

Studios Using Digital Armor to Fight Piracy
by Amy Harmon
New York Times, January 5, 2003

"You're not buying music, you're buying a key," says Larry Kenswil, the president of the eLabs division of the Universal Music Group, the world's largest record company. ... "That's what digital rights management does: it enables business models."

The new Napster To Go has been available for a couple of weeks. It took that long for someone to explain how to beat it:

Burning through Napster's collection, free

Hundreds of music CDs, zero dollars*, obtained legally.
*Not including the cost of blank CDs

Three computers, one fast networked drive, and a few dedicated people: Turning Napster's 14-day free trial into 252 full 80-minute CDs of free music.

to do

weather reports - Thursday, September 14

How did it go tonight? What was the cloudiest part? The clearest?

roundtables

The Future Of Music, Inc. -- all three September 28

PEST analysis

SWOT analysis

Force-Field analysis

Thursday, September 21

In the News

Looking ahead: on October 5, you're going to stand and be taped while you give a 5-minute summary of your mission and vision. We'll do them in the order shown on the reports page, where you will see that there are still a lot of blanks for company names, slogans, NAICS codes, etc.

Blog of the day (with a poor name and slogan): A VC - Musings of a VC in NYC

Business idea of the day: Turn TiVo into the anti-cable

Cool site of the day (with a provocative name and slogan): 10x10 - A hundred words and pictures that define the times.

A Fluid Look at the News
by David Cohn
Wired News, February 22, 2005

Want to stay up on the latest news but think Google News is dry and boring? For something a little more visual, try 10x10. The site lets viewers scour the top headlines using photos, which combine to create a broad snapshot of the world every hour on the hour.

News at a glance has never been so literal, thanks to information architect Jonathan Harris, 25, creator of the site. 10x10 takes the most common words from major news outlets like BBC World Edition and New York Times International and couples them with pictures. The site lets users interactively search for the top stories by scrolling over pictures and the words associated with them.

Political / Laws

Is the Internet the end of the world as we knew it? Perhaps. For sure, according to Doc Searls and David Weinberger, it's The World of Ends:

The Nutshell

1. The Internet isn't complicated
2. The Internet isn't a thing. It's an agreement.
3. The Internet is stupid.
4. Adding value to the Internet lowers its value.
5. All the Internet's value grows on its edges.
6. Money moves to the suburbs.
7. The end of the world? Nah, the world of ends.
8. The Internet’s three virtues:
    a. No one owns it
    b. Everyone can use it
    c. Anyone can improve it
9. If the Internet is so simple, why have so many been so boneheaded about it?
10. Some mistakes we can stop making already.

Porter's barriers to entry

open vs closed, tight vs loose control of rights

privacy, secrecy, and security

Legal punishment is a kind of social policy.

Karl Wagenfuehr, who is not a lawyer, researched the penalties for shoplifting a DVD as compared to the penalties for downloading one.

What does this say about our values? About who has the stronger lobby? If downloading is theft, who is it theft from, the retailer or the label (copyright holder)?

Dumb Laws

Underwater bike ride to launch students' eight-week crime spree
by Gerard Seenan
The Guardian, February 26, 2005

As US coast-to-coast crimewaves go, it is not in the league of Bonnie and Clyde. It lacks both violence and avarice and is further hindered by an overabundance of pre-publicity.

Undeterred, a couple of students from Cornwall are intent on making American criminal history by spending their summer breaking as many US laws as possible. ...

"There are thousands of stupid laws in the United States, but we are limiting ourselves to breaking about 45 of them," said Richard Smith, from Portreath, Cornwall.

The legal chess match

Do you understand the differences between the different kinds of intellectual property: patents, trademarks, copyrights, and trade secrets?

proscribed behavior: counterfeiting, trademark/brand infringement, file copying

What laws and court decisions will help your business succeed?

You should have a corporate position on every relevant law and court case. After you learn more about the industry that you are in, you can rely on the appropriate trade associations and advocacy groups to represent "your" side. But as an entrepreneur, you must be aware of and able to discuss the issues and be especially aware of the implications for your business. In general, this awareness is part of risk assessment or risk management.

the latest:

Writers group sues Google over copyrights
by Globe Wire Services
Boston Globe, September 21, 2005

An organization of more than 8,000 authors accused Google Inc. yesterday of ''massive copyright infringement," saying the powerful Internet search engine cannot put its books in the public domain for commercial use without permission.

Gyuri asks:

Is there any difference between stealing a cd from a store (so taking it without paying fro it) and downloading it from the internet or ripping the music from another cd?

Public Law 108-419
108th Congress, 2004

D) To minimize any disruptive impact on the structure of the industries involved and on generally prevailing industry practices.

Note that for several of these topics, I have extensive links below the schedule. However, please don't look at only the resources I have provided. Go beyond them to look for especially more recent information about these cases and laws.

 

Nintendo DS looks beyond gamers
BBC News, February 16, 2006

Owners of Nintendo's DS game gadget could soon be using it to browse the web or watch TV.

By June, Nintendo will release an add-on card for the handheld that has Opera's web browsing software on it.

Following this, it will release another card with a TV tuner inside that picks up programmes broadcast for portable devices.

Muni Wireless

Municipal Broadband: Corporate or Local Control? (Note the map of states that have already legal barriers to Community Internet and states with pending anti-municipal broadband legislation.)

Faced with the expanding digital divide, many local officials have set out to directly provide high-speed broadband service through municipal networks. Whether building a wireless system, installing fiber directly to homes, or exploring broadband over power lines – or some combination of these options – local communities are finding they can get better service for less money if they do it themselves.

Big telecom and cable companies have responded by furiously working to slam the door on community wireless. The telephone and cable giants are trying to use their lobbying clout in state capitals to pre-empt local control, preserve higher prices and preclude competition.

Why Your Broadband Sucks: Telecom toadies (ahem, state officials) stifle competition to keep prices high.
by Lawrence Lessig
Wired, March 2005

You'll be pleased to know that communism was defeated in Pennsylvania last year. Governor Ed Rendell signed into law a bill prohibiting the Reds in local government from offering free Wi-Fi throughout their municipalities. The action came after Philadelphia, where more than 50 percent of neighborhoods don't ha