mLife
What is it? According to the web site, we’ll find out February 3. Personally, I like Randy B.‘s entry for what mLife might be:
I think mLife is a new sports drink that will help you lose weight, get rich and make beautiful bikini models fall in love with you just for drinking it
Randy B. TX
Rest in Peace, MDP ::: An article by New York State Bar Association president (and Proskauer Rose partner) Steven Krane explores the lessons that the legal profession can learn from the Enron debacle.
Krane’s logic goes this way: Enron had Andersen as an auditor, and Enron had Andersen as a consultant. Andersen’s consulting business necessarily influenced its audit business, to the ultimate detriment of the accounting profession, the client, and the business community at large. Surely the same slippery slope will exist for law firms if non-lawyers will have any influence over decisions made by lawyers?
Here’s the issue: today, American Bar Association ethics rules prohibit law firms from having non-lawyers as partners. Those ethics rules are grounded on the premise that non-lawyers “(those not inculcated in the culture and morals of the legal profession) will have the power to dictate the way in which law is practiced and legal clients are served” (Krane’s words).
I’m not sure I buy this. I’m a lawyer (the non-practicing kind; I work for a software company not as a lawyer but as an executive), but I see this logic as a not-so-subtle insult to non-lawyers. I’ve long felt that non-lawyers could be just as effective at looking out for the clients’ best interest… professionals of all stripes (consultants, bankers, etc.) do this every day in other markets.
Furthermore, the lack of equity interest among non-lawyers in the firm has a destructive effect on the caliber of people the firm can attract. When your IT, marketing, and staff don’t have a financial interest in the firm’s long-term success, they’re less likely to stick around. (Staff turn-over at law firms is ridiculously high. While equity ownership isn’t the only reason, it’s certainly a contributing factor.) By restricting “ownership” to only those with law degrees, firms reserve the key stakeholder roles to lawyers – who are then also expected to be technology and marketing experts in addition to billing 2000+ hours a year.
This doesn’t make sense, does it? Krane’s arguing from the client’s perspective – that their interests could ultimately be subverted by a profit-hungry non-lawyer not bound by the same ethical obligations as the lawyers. That’s no doubt a concern, but there’s a flip side to that concern: the failure of many law firms to structure themselves as a business – which limits their ability to truly align their services with the needs of their clients.
What do you think? If you’re a non-lawyer, do you want to buy legal services from a consulting company? Would you be concerned that the non-lawyer consultants would exploit your situation in pursuit of the almighty dollar?
Web services end users in short supply ::: Here I am at this conference, sitting at a computer with a direct Internet connection. In the past ten minutes, I’ve checked e-mail (home e-mail through Hotmail, work e-mail through Outlook Web Access), read the news, I’m posting an update to my web site (through blogger.com), and I’ve checked our CRM system for any activities going on at customers I need to worry about. The web has achieved ubiquity… but many are asking “what’s next?”
A recent conference hosted by InfoWorld focused on Web Services. Microsoft made a splash with their .Net announcement last year, but they’re hardly the only ones. Sun, IBM, and Oracle are talking about developing a more modular, component-style interface to their back-end apps. The goal – to allow multiple components to “talk” to each other instead of using stand-alone apps. The trends contributing to this – ever-cheapening bandwidth, increasingly powerful desktops and nearly-free storage – all point in that direction. The standards arising – XML, SOAP, and others – indicate that we may be approaching a technical landscape in which different apps can actually talk to each other! So where are they?
Microsoft Passport is a service. Instant messenger apps (AOL Instant Messenger, Yahoo! Messenger, MSN Messenger, etc.) are web services. Blogger.com is a web service, just like Userland’s Radio 8 and Movable Type are web services. The conference (link is at the beginning of this post) held earlier this month suggests that a number of vendors are on the bandwagon – but also demonstrates that end users aren’t yet arriving en masse.
The question this raises: how does a services metaphor for computing change how companies acquire technology? What do they pay for? Will the services model be any more successful than the ASP fad of a couple years ago? (Perhaps the true value of a services model is that it allows firms to selectively decide which parts of their infrastructure they can outsource, without having to go all-or-nothing.)
Checking in from the Marketing Partner Forum ::: I’m in Naples again (one of life’s cruel ironies – it’s at the same not-ready-for-prime -time Ritz Carlton Golf Resort I was at two weeks ago), this time for the Marketing Partner Forum. Keynote speaker is David Maister – who was hawking his new book (First Among Equals) and talking about the key characteristics needed of managing partners in professional services firms.
Not entirely surprising, but no less revealing, statistics revealed during polling of the audience (in no particular order):
More later…
AOL in Negotiations to Acquire Red Hat ( washingtonpost.com) ::: This story ran over the weekend, and I’m still not sure I have figured out what the advantage is to AOL (or Red Hat, for that matter). 
One quote in the story is almost laughable: “But the AOL software could be configured to override Windows and launch a version of Red Hat’s Linux operating system, sources said.” Come again? Not only are the technical difficulties of configuring a dual-boot machine very real, but the prospects of consumers maintaining competing OS’s on their machine solely for the purpose of checking e-mail seem awfully small. AOL is the predominant content provider today – people pay them $20+ per month for access to reliable content. But AOL is not an OS, nor are they expected to be. AOL is an icon on a desktop – a desktop provided by Microsoft. To fight this war will be to subject AOL/Time Warner stock to a punishing battle it simply cannot win. Do you think the Time Warner folks are scratching their heads over this one? The battle for the desktop OS is over, and in fact will migrate to the web over the next 36 months. The battle for the “web desktop” is far from over – so why isn’t AOL focused on that?
AOL has been an unparalelled success when it comes to delivering a consumer experience online. But its handling of past tech acquisitions is hardly impressive. Early online denizens should remember GNN (O’Reilly’s Global Network Navigator). Acquired back in 1993, it was dead a year later. Then there’s Netscape, acquired in 1999. Today, all of Netscape’s tech talent is gone, and Netscape’s value to AOL is as a home page with eyeballs. Compuserve was acquired, only to morph from a pioneering online service to an AOL clone. In each case, it’s hard to make an argument that consumers benefitted from the acquisitions. It’s further difficult to argue that AOL benefitted materially from them either.
So what will a Red Hat acquisition mean for consumers? For Red Hat? AOL? Send me your thoughts…
A few law firms on the verge of global domination ::: In this month’s American Lawyer, Peter Zeughauser writes about what it’ll take for a handful of firms to emerge from the pack and be true global powerhouses. Zeughauser (who is the founder and prinicipal at The Zeughauser Group) predicts that to be truly global, firms will need:
Can’t resist including his final point:
One has to wonder when the inexorable march of technology will affect expansion strategy. One would think that it will, and that someday soon, geography will matter less than technological brains and brawn.Read the article. There’s a lot more in there that’s worth reading – good observations about firm size, governance, and financial issues affecting a firm’s ability to prosper.
Gates memo: “We can and must do better” ::: The first major strategy shift for Microsoft since Gates’ .Net letter from two years ago. Many Microsoft execs are doing their version of a mea culpa – for example, Microsoft’s Group V.P. for Operating Systems Jim Allchin was quoted as saying “enough is enough” in today’s New York Times.
And the shift is getting positive comments, even from past critics. Bruce Schneier, author of several books on cryptography and CTO at Counterpane Systems, said “Because of Microsoft’s dominant position in software, they have the ability to singularly affect the security of the Internet. To have Microsoft as a company focusing on security will make the Internet a safer place.’‘ (Full article on security experts’ response is available courtesy of Reuters.)
CPA Firms Adopting the Corporate Approach ::: At the recent Winning is Everything conference, I picked up a copy of Practical Accountant magazine. The cover story is about “Going Corporate” – a trend among growing accounting firms. What accounting firms are realizing, according to those interviewed, is that traditional services-based businesses often have thinner profit margins than other industries. In addition, the larger these firms get, the harder they are to manage by the traditional partnership model (long live committees!).
The article talks about a number of firms who have gone corporate. One thing this move allows? The development of product lines rather than billable-hour services. Margins are higher, cross-selling is easier, and the firms can scale faster.
Perhaps most surprising (at least to anyone who’s spent time working with law firms) was this quote:
“Tom Schulte, managing partner of RBZ in Los Angeles, cites law firms as the inspiration for his firm going the corporate route. “I always wondered how law firms got 80 partners in a room and heard them all,” he says. “The answer is, they don’t.” (emphasis added)True enough Tom. But did it ever occur to you that most firms haven’t moved beyond the problem? Few law firms today are truly corporate in structure, and among those hardly any are developing “ products” to sell their clients.
A corporate model – where there is a professional management team in place that doesn’t bill time to clients – is rare among professional services firms. As this article notes, it can be very threatening to a professional to give away or abandon their book of business. However, some accounting firms seem to have figured out that the alternative – more scalable business models, higher profits, better leverage – is enough to convince a few to try it out.
Handspring warns of Treo holdup – Tech News – CNET.com ::: Turns out that the Treo won’t show up on the web until next month and on retail shelves until March. 
Cancer and DNA (requires Real Audio player) ::: Driving home last night, I caught this report on NPR about a couple of researchers who are trying to identify genetic causes for various forms cancer and other diseases. According to Michael Myerson, the researcher interviewed for the story, “the human gene sequence database contained a lot of things that weren’t gene sequences.” Myerson and the other researchers used the human gene sequence database to help find new microbes that cause diseases. They looked at a total of 7,000 sequences, and found 22 that didn’t match known human gene sequences, then narrowed it to two that matched the human papilloma virus. With that, they were able to identify the microbial causes for cervical cancer. (There’s more lab work to be done to confirm the findings, but you get the idea.) An abstract of the article is available here, the full text of the article is available but requires a paid subscription.)
What intrigues me about this report isn’t the medical breakthrough these researchers have made. Interesting, sure. But it’s a bit beyond the scope of my interests. What is really interesting to me is the notion that the breakthrough was a completely unanticipated result of the collection of information in the human genome database. The purpose of collecting the gene sequences in the database was to map the human genome – and the info that made up the core of this research project was an afterthought of that goal.
This is a great example of the premise that you just don’t know what you’ll want to know down the road. It seems that one of the things any knowledge management initiative must do in order to succeed is to ensure that as much information is captured as possible – because there’s no way you’ll be able to predict which pieces of information will be useful to you a year from now. If that information is collected, then you may be able to use it. If it’s not, you won’t.
John Robb, President and COO of Userland Software, maintains a Yahoo! Group called K-Logs. The idea is that weblogs (like this one) can serve a KM purpose. As weblogs are used throughout an organization, the collection of observations, links, and articles will form a collective body of work that people can use to share knowledge, search knowledge, and learn. (As an aside, I use blogger.com as my tool of choice for updating this web site. Userland just released Radio 8, their new weblogging software package. Blogger.com is geared to periodic writing, Radio 8 seems more cleanly geared to the quick collection and sharing of observations. Also, there’s some technology packaged in the software that ensures that others will be better able to monitor sources of information they’re interested in. The notions of information, editors, and finding what you want are all intriguing… but will be covered later.)
In any event, a number of KM systems have focused on the synthesis of information – the attempt to make machines capable of distilling information and getting it to the right people. Robb’s approach (which he calls k-logging) is to shift the synthesis back to the people, and make the systems simply a mechanism for collection of the information. Can’t say that I disagree with him on that point.
However, in order for an organization to benefit from this setup, they have to have a culture that encourages and rewards learning (this may sound obvious, but how many organizations are truly wired this way?) and a leadership structure that recognizes the advantages to capturing and sharing this information. Without those two, no efforts at capitalizing on a KM strategy will work. I think weblogs provide an attractive mechanism for collecting the information. The next step is to make sure that the organization can do something with it.
As I read the Business 2.0 article on KM that I briefly mentioned last week, I started thinking that the author actually proves my point. (Thanks also to Sean Roche, who e-mailed several thought-provoking points on the subject.) The author points out that both CasePoint at a customer call center and the intranet at PWC were less than successful – and attributes the failure to a lack of interest on the part of individuals in investing time with the computer. “Most people go down the hall,” he reported.
But this doesn’t necessarily indict KM per se – it just indicts those examples. Isn’t it possible that the failure was attributable to the highly structured nature of the systems that were built? If the information were stored, and there was a Google-like interface that allowed you to intelligently sift through the data, wouldn’t that make it far more easier to embrace? (Come to think of it, that’s the connection to yesterday’s post about Google’s ability to render domain names moot…)
No More Popup Ads ::: This is heaven… a clearing house for opting out of those damned pop-up ads showing up on your desktop. Buh-bye, X-10!
Lindows.com – you can trust Microsoft… really! ::: Here’s a snippet of a letter from Lindows.com CEO to Lindows.com “friends”:
[W]e feel obligated to disclose to you that we were compelled to disclose your email address to Microsoft during the discovery process as well as the content of many of your messages sent to us. We were not happy about doing this, but we had little choice. We have received assurances from Microsoft that they will not use or disclose your address for any purpose beyond this case.
For a company trying to compete with Microsoft, this is a startling assurance, don’t you think?
Lindows.com, for those that don’t know, is trying to release a version of Linux that will run Windows apps. Read some of the press about them here, and visit their web site to learn more.
‘Google effect’ reduces need for many domains ::: What’s in a name? Thanks to Google, less than it used to be. By improving the search technology and relying on links to the site to determine relevance and popularity, Google has made it far more likely that you’ll find what you’re looking for. [From the SJ Mercury News Tech Section]
Signs of a Rebound Appear in the High-Tech Heartland ::: According to The New York Times, the signs in the Valley aren’t all that disappointing. Lots of anecdotes, and even a few statistics, that signal that more people are jumping on the bandwagon: the recession may be over.
Business 2.0 – Magazine Article – The Case Against Knowledge Management ::: I haven’t fully digested this article, but it presents a good case against “standard” KM solutions while outlining a possible framework for firms to realize value out of their collective knowledge.
One place where the author is misguided: the focus on Moore’s Law, as if it should have produced a solution for the morass we’re in. It shouldn’t. Reed’s Law, on the other hand, may be a closer answer. (I wrote about this, briefly, a few weeks ago. Guess I should start following up on it.)
Handspring Treo out next week ::: Last summer, Handspring announced the Treo, a communicator that would combine a Palm Pilot, a GSM cell phone, and a wireless Internet device for e-mail and web browsing. I wasn’t really overwhelmed by the idea – I’d seen the Kyocera Smart Phone and found it bulky, had friends who said the battery life was bad, and Handspring’s explanation of the wireless e-mail capabilities sounded a lot like OmniSky’s wireless POP3 e-mail access (where you were lucky to get an hour of battery life).
But RIM still owns the corporate wireless e-mail game, right? Not necessarily. Yesterday, wireless network provider Motient filed for Chapter 11 bankruptcy protection. Motient is one of two major network providers for Blackberry access. Handspring will be releasing their “always on” wireless e-mail option shortly after the Treo ships, and the Treo runs on an OS that is actually intuitive and is supported by thousands of third-party developers. (If you’ve ever used a BlackBerry, you have to admit: other than wireless e-mail, there isn’t much it does well.)
Ramifications of this little gadget coming out on Monday? Motient will take longer to emerge from bankruptcy, RIM’s sales will stall (I had the CIO of a major RIM customer tell me the other day that after seeing the Treo, he’d probably phase out more than 2000 BlackBerry devices in favor of the Treo), and Handspring will emerge from an uncertain economic picture into profitability. Just when it looked like the iPaq had won, the Treo may actually save Palm from itself, providing a shot in the arm to licensing revenues and giving the platform a new lease on life.
Premium services coming for Blogger.com ::: This isn’t necessarily big news for most readers, but as a recent convert to the world of “blogger”, I’m at least happy about this. Some background:
Blogger.com is currently run by one guy – Evan Williams, and it supports more than 300,000 users like me who use the site to post content to their weblogs. Remarkably, the site is free (as is its companion hosting site, Blogspot.com). According to this post, Ev is going to be introducing a “ premium” services suite for blogger.com users. I’ll pay. Why? Servers have been sluggish lately, a security breach on 12/25 left the service down for 24 hours, and new features have been slow in coming. Due to recent troubles with server performance, I’ve been unable to successfully post and publish any content since Wednesday. (And I’m on my sixth attempt at posting this post…)
Gates at CES ::: In contrast to Steve Jobs’ announcement at MacWorld, Bill Gates actually announced something innovative. You’ll get no argument from me that Jobs’ marketing acumen was in full force this week ( getting Time to guarantee a cover story about a new monitor), but what Microsoft talked about at the International Consumer Electronics Show was actually new.
Before anybody jumps down my throat, this stuff is at least 12 months away (which means 18 months). But the iLamp (as some have coined it) isn’t available yet either. And I see something fundamentally different about Microsoft working to change the way we interact with the information and Apple working to change the way the box looks on our desk.
This isn’t limited to their consumer offerings either. Microsoft is positioning .Net and its component services as a corporate solution (with broad applicability in the consumer market through services like Passport), while Apple still doesn’t have a viable corporate option. The major developments over the next five years in computing will be interface driven (see my earlier post about efforts in this area); Microsoft seems to be more aggressive in extending XP than Apple does in extending OS X.
This will continue to limit’s Apple’s success in the home arena, as computing trends follow a trickle-down path: what gets standardized in the office will show up in the home. Who would have thought 10 years ago that multi-function devices ( printers/scanners), networks, or high-speed connectivity were going to be standard in many homes? As Microsoft continues to grow its offerings in the corporate space, it can translate those gains into dominance in the home market. Corporations have more money, so they can afford to pay for the high-priced R&D. Apple has no such engine, and that’s why they will never gain the consumer market share that Steve craves.
I think there’s a corollary to this discussion as well: until Sun & Oracle can find a way to commoditize their offerings and make them applicable in the home market, they’ll never be able to fully recoup the investment they make in the corporate space.
Morrie Shechtman on leadership ::: I’m down in Florida at the Winning Is Everything conference (two days, accountants only. You know you’re jealous!), and the afternoon’s keynote presenter was Morrie Shechtman, author of Working Without a Net. Put simply, if you ever get a chance to sit in a room where he’s presenting, don’t miss it. He’s that good.
(Memo to the folks running the Ritz-Carlton Golf Resort, which opened 3 days ago and is host to the conference: Leaks in your first week? No street signs, street lights, or employees who know how to give directions to the surrounding areas? Is there such a thing as a hotel beta test? Now I won’t go creating any PowerPoint presentations to complain (it’s online here), but you guys cut the ribbon a few weeks too early…)
Jobs: Flat-panel iMacs on the way – Tech News – CNET.com ::: This is what he was talking about last week when he said it would be “bigger than all the rumor sites’ predictions”? I must be missing something. Yes, it’s elegant. And yes, it’s very, very different than what other PC manufacturers are coming out with.
Go on and just buy Palm already, OK Steve? You know you want to…
Recession’s over, according to Tom Siebel ::: Even though my company competes with Siebel on occasion, I have to admit I admire the company and the way Siebel has started and run it. This is a great article in Forbes (you’ll need to register; don’t worry, it’s free) that talks about how Siebel saw the recession coming early (thanks of course to his own software), adjusted accordingly, and now sees the rebound before anyone else does.
I’m all for the good news, but doesn’t this sound a little like Tom’s old boss claiming he saved $1b with his own software? (Nothing wrong with taking a page from the old mentor’s playbook, right?)
Climbing to Greatness with Jim Collins ::: I just started reading Good to Great by Jim Collins last night. If the rest of the book is as good as the article above (from Booz Allen’s strategy+business magazine), or last fall’s article in Fast Company, it’s going to be a very enlightening read.
Collins also points out that technology played a part in the great companies’ performance, but as an accelerant and not as the agent of change itself. This is instructive, because those of us who work on the technology side (see my bio for full disclosure on what I do) are often in a position of suggesting technology that will change the way an organization operates.
In professional services firms (law firms, accounting firms, management consulting firms), the culture is often aligned against sharing information. Technology can lead to efficiency, but if you’re a firm that bills by the hour, efficiency isn’t necessarily your friend.
Sean Roche and I have been corresponding for a few days on this topic. Sean’s been around the block on these issues at least as often as I have, and he believes that firms would best be served by putting a moratorium on any technology purchases for the time being. Invest in training, he says, try and leverage existing technology, and improve the firm organically from the inside.
Putting aside the issue of whether the existing technology is worthy of further investment (a big issue, no doubt), I’ll return to Collins’ suggestion that technology can’t be the agent of change for companies to truly succeed. Without a leader who has set a clear vision for where the organization is headed, how that direction will be measured, and what role the technology has in those goals, the organization will simply not be capable of deriving any substantial benefits from the investment.
What’s been holding these firms back to date? Rule by committee “leadership” where decisions are often debated for months. A business model that results in undercapitalized, highly leveraged businesses that aren’t necessarily able to weather financial cycles. In the absence of a true leader, these organizations plod along. If Collins is right, the technology can only accelerate change that has been directed by the organization’s leader. Which means that investing in existing technology, without any change in strategy at the top, is doomed to fail. (Or, to be slightly less fatalistic: investing in existing technology won’t materially improve things at the firm.)
So… where does that leave us? I don’t think professional services firms have the options of sticking with their current business model. While rumors of the death of the billable hour in the legal profession are overstated, I do think they have a limited shelf life. The efficiencies from various technologies in play are simply too great to ignore. Pressure is coming from all sides (the latest threat to law firms, and to mid-sized accounting firms: multidisciplinary practices (MDPs)). Clients (the business people at the clients, not necessarily the professionals) are under increased pressure to cap costs to service providers, which means that those same service providers will have to get more creative about how to profitably provide valuable services.
The technology that will allow service firms to do this is varied. CRM is certainly a component. (Full disclosure again: I work for Interface Software, a CRM company focused on the professional services market.) By learning more about existing clients, segmenting prospects and adding some quantification to the sales (aka “business development”) efforts, firms can leverage their collective relationships far more than they’re doing today. Other than CRM, there’s also expert systems (Davis Polk and Linklaters are far along on these efforts), portals, and true collaborative systems that tie clients to professionals in a meaningful way.
Bottom line? There are strategic technology investments to be made that can significantly aid firms in growing their business. But technology alone can’t do it – which leads us to a larger issue: the need for more CEO types in professional services firms. That’s fodder for another discussion.
FBI May Use Keystroke-Recording Device Without Wiretap Order ::: Turns out that Pretty Good Privacy ain’t so good if the FBI has you in their sights. Nicodemo Scarfo Jr. is an allged crime boss who was indicted in June, 2000 for loan-sharking and gambling charges.
What makes the case interesting is that the government obtained the information implicating Scarfo by installing a key logging system on his computer to trap his PGP passphrase. Once armed with the passphrase, the FBI was able to decrypt the incriminating documents.
The order that came down from the US District Court on 12/26 (Merry Christmas, Nic!) was that the FBI did not violate the Federal Wiretap Act in capturing this information. The FBI was able to invoke the Classified Information Procedures Act to prevent disclosure of how the key logger system worked. The judge held an in camera (i.e., private) discussion to determine the legitimacy of the FBI’s claim, and then ruled that the CIPA applied. (And why isn’t this a wiretap? The FBI claims that their classified key logger only captures information when the computer isn’t transmitting information over a wire, so that the wiretap act doesn’t apply. Don’t you love the law? Makes that Steve Jackson Games case even more prophetic, doesn’t it?)
Back in ’96 when I was editor in chief of the Richmond Journal of Law & Technology, we published an article by Greg Sergienko about self-incrimination and cryptographic keys. It was a good article, but dealt with what seemed to be the obvious risk at the time: the government forcing the individual to turn over the key. What’s obvious now is that the government has easier ways of getting at the key… rendering the use of encryption just a little less secure.
If you’re interested in the Scarfo case, there’s a good bit of information at EPIC’s site here.
I Can’t Stop Thinking! #5 ::: OK, this should be my last post on micropayments. But this comic strip by Scott McCloud is a great explanation of how micropayments might work, why they’re good for content providers, and how consumers would benefit. (Found a link to this from James Gleick’s home page, who has his own article from 1996 on the subject.)
Next up: a follow-up to last week’s post on strategic technology investments for professional services firms…
Micropayments won’t work ::: Josh Marshall, the man behind Talking Points Memo, responded to my post on micropayments by saying that he doesn’t see them addressing the needs of web content providers. But as we’ll see, it’s exactly those other content providers who need micropayments to work – because the advertising model is not supporting them.
Years ago, when David Chaum was running DigiCash, he and Newsweek journalist Steven Levy used to say that “ micropayments” would allow journalists to get paid more efficiently. They used Newsweek as their example. In today’s model, a reader pays Newsweek, and Newsweek in turn takes care of paying the writers. But what if the readers could pay the journalist directly? The reader would pay only for the content they wanted, while the journalist would benefit from the reach of their publication. The more widely read the publication, the more money they could get. In this model, readers might only pay a nickel to read it, yet the total proceeds to the writer could easily be in the thousands.
What Amazon has done right with the Honor System is to eliminate many of the steps necessary to make a payment (I’ve used it not only to pay for Talking Points Memo, but also for Stephen King’s “The Plant”, which went dark in November of last year; both times, payment took less than a minute). However, it still requires proactive measures on the user’s part – and this is what Jakob Nielsen was talking about in his AlertBox post.
I believe two things need to happen for micropayments to be truly useful: the proactive steps today must go away, much as Nielsen predicts. But there’s another step – one which will eliminate a fear I would have if I were paying a little money for a lot of content – there must be a simple way to archive the content that users have purchased. I don’t regularly save HTML pages, and I don’t want to rely on the site having a useful, searchable archive. Functionality like this is already built into Internet Explorer and Windows Media Player (for purchased digital music files) – and I’m sure it could be extended to written content fairly easily.
Nielsen suggests that this needs to be like electricity – there’s a transaction cost to leaving a few lights on, but I don’t necessarily worry about what my electric bill will be. Similarly, users can migrate to a for-pay content model where they don’t worry about clicking on an article at Talking Points Memo because (a) the cost is too low to be concerned about and (b) they’ll have it archived to refer back to when they need it. The reason this is a necessary discussion is that the ad-based revenue model works for only the top 10 web sites who get more than 75% of all online ad revenue. The sites that aren’t in the top 10 need another way to fund themselves – and the ad-supported model has had a number of casualties, as this article details the massive decline of former Internet success story The Motley Fool.
By the way, the naysayers are starting to show up on PayPal. This article in Business 2.0 throws some cold water on the PayPal IPO idea, saying that their fundamentals aren’t strong (they’ve lost over $250m since their launch in ’98) and they’re facing increasing competition from eBay Billpoint, Citibank’s c2it, Yahoo’s PayDirect service, and others. What the Business 2.0 article fails to consider is PayPal’s competitive advantage over everyone else: their fraud detection.
