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Lodsys didn’t invent in-app purchases but wants money for every one

Lodsys, a company that produces no products, has been sending out letters to Apple App Store developers demanding license payments over their patent on in-app purchases.  While Apple itself is mixed up in more than a dozen patent lawsuits, it is becoming growingly apparent that there is no area safe from a patent lawsuit.  Lodsys, who seems to be offended at the idea that people call their company a patent troll, is only looking for 0.575 percent of in-app purchases.  Now Lodsys didn’t invent this patent. They purchased it from Intellectual Ventures.  And the patent itself is pretty obvious.  Applications and websites have long had purchases to be made after opening their program (or site).  This just applies to the mobile version of doing that same thing.

How is innovation served by paying Lodsys?  How does paying Lodsys promote the progress?

For developers, you can get some advice here on what to do if you get one of these letters.

Wrong conclusions: Study does not show music piracy is disappearing

Several media outlets are reporting on a new study from Envisional claiming that it shows music piracy is subsiding. But no, music piracy is not dying. If one reads past the first few pages of Envisional’s study, they’ll see music piracy is just as rampant – and even see real ways to deal with it.

The graph everyone is latching onto is below, showing that music only accounts for 2.9% of the top 10,000 torrents on PublicBT’s tracker.  Let’s ignore for the moment that PublicBT is a small sample of the many torrent trackers out there; this still is likely somewhat representative.  But how are these 10,000 torrents ranked? By leechers. Leechers are people who are still downloading the torrent file.  Seeders have completed the file. When a leecher completes the file, they become a seeder.

Music torrents are often only several megabytes. The complete Beatles catalogue can be found for under 2GB, a bit larger than a movie file. TorrentFreak found that the average video torrent is 1.73GB while the average music torrent is only 214MB.  A single album can be downloaded within minutes meaning there will usually be very few leechers on the average music torrent.  Just reading on a single page, for total number of downloaders, music jumps ahead of PC games and software by more than 100,000 downloaders (pg 14).

48336443-Envisional-Internet-Usage-Jan2011.pdf - Adobe Reader

Let’s also consider that BitTorrent is not the sole file-sharing tool.  Cyberlockers like Rapidshare and Megaupload, music accounted for 10.1% of links found, slightly ahead of software and games, behind TV shows, films, and pornography, same as BitTorrent. So again, we see music is not disappearing.

But how can we track interest of file-sharers.  Thankfully, on page 25 of this same study, Envisional charts search queries on the Gnutella network.  Music accounted for almost 55% of all search queries.

Maybe, based on these numbers, other media have just gotten more popular on piracy networks.  As bandwidth increases and more learn about piracy, thanks to generous campaigns from the media industry telling every about it, larger files can be shared more easily.  So larger video files are growing as all file-sharing grows.

BPI (England’s version of the RIAA) claimed 1.2 billion songs were downloaded in 2010 in the UK alone.  So the music industry still sees music piracy as pretty significant.

So iTunes, streaming sites, and other legal music options still aren’t quelling music piracy as much as music execs would like to think.  Maybe embracing BitTorrent, like so many music artists have, they can increase the value of scarce goods and make more money. The selling of songs and plastic discs just isn’t a significant market anymore.

The Rise and Fall of Hulu

Hulu should have been Netflix. The major networks and movie studios had ownership of the upstart video platform and provided the site with excellent content in a pleasing interface – exactly what the market seemed to be demanding. Sure it took them almost a decade to get to this first step, but it exceeded expectations with its content, technology, and success.

But as to be expected with legacy businesses, they are more interesting in protecting their legacy revenue then investing in future returns.

For the past year, Hulu has been devoting time and resources to blocking media centers, phones, and specialized web browsers, all at the behest of their media company owners. Certainly Hulu has a right to do this, but how does it make business sense to actively block people from using your product?

Now Hulu, with impressive revenue, traffic, and highly effective ads (estimated at being twice as effective as TV ads), the media company overlords don’t see Hulu as a success, but as a threat to their still highly lucrative advertising deals and licensing payments from cable companies.  Rumor has it that media companies now want to turn Hulu into more of a cable-like platform for live content and get larger upfront payments from Netflix and other streaming sites (so they can bleed Netflix dry, but that’s another blog post).

What’s really unfortunate is how blind the media companies are in regards to the potential benefits of letting Hulu drive innovation forward.  Hulu CEO Jason Kilar wrote an excellent blog post on the future of Hulu and television which really challenges the status quo. Anonymous media executives responded in the Financial Times (paid registration required) saying:

“If I were given billions of dollars worth of programming, I too could probably build a business,” the person said. “But I know that in order to build a long-term, viable business I would have to do so in a way that works for everybody.”


“These are clearly the musings of an elitist who is obviously disconnected from how the majority of America watches television.”

Except in both cases, these execs missed the point of Kilar’s article and his goal.  The first quote, believing that if you just offer the content, you can build a business, ignores that Hulu still has a tiny amount of content compared to any piracy site on the web – and there are many. Hulu and Netflix have been successful by offering an excellent user experience, making it easier and more convenient to watch content than trolling BitTorrent sites.

The second quote might even be true, that Kilar doesn’t understand the TV viewing audience, but he understands what the next generation of potential TV watchers want, and sitting through long commercial breaks is a pretty obvious trend.  It’s rather TV executives who are dreaming of the old days when viewers were beholden to set schedules. From DVR to iPads, TV viewers are demanding more control over their TV viewing habits. And if these media companies don’t catch up to the future, then someone else will leap frog them and reap all the benefits for themselves.

The Daily: Lessons on how to build a business

The hype around Rupert Murdoch’s newest pet project, The Daily, is a big strength. Few general interest publications could gain mass media attention.  But any dot com survivor can tell you, hype alone does not build a business.

Murdoch and his News Corp. empire do not lack for funds, but the $30 million outlay for the iPad only newspaper is a shocking number. Not to mention the estimated weekly $500,000 operating budget, The Daily is no boot-strapping start up.  And this is the first flaw.

The dream of Murdoch and other publishers is The Daily will somehow return users to paying for news content.  So Murdoch is spending the amount he would spend on a paid publication.  And this is the flaw in his economics.

It’s not simply will people pay for news, but how much is that worth?  For math fun, several have tried to estimate how many readers The Daily needs to make money, saying, oh, they only need X many or they only need X% of iPad users.  Hoping a certain number of people give you money is incredible limiting and not how you build a growth business.

Yes The Daily gets hype from being iPad only, but what is the gain? What can you do on an iPad but not on the web (even if the website is paid for) unless someone shares it, and even then its missing the multimedia?  You can’t even get The Daily on the iPhone or iPod Touch. How is this maximizing your earning potential?

Hype is The Daily’s only unique element. None of the content is revolutionary thus far – and for all the money spent, they still include AP articles, just like every other free news website.

When I and others claim news and content want to be free, it isn’t because we’re cheap (most of us did shell out a lot of money for iPads and smartphones).  Rather, we see the economics at work. There is more competition. Competition pushes prices down.

This also means costs must come down. No printing or delivery trucks cut huge costs, but many ambitious start-ups run on a few million over their first few years. This allows you to be nimble and respond with dollars and time in accordance to the marketplace. By investing so much money upfront, The Daily is already locked into technology and likely methodology that if ineffective, will be expensive to replace. That and it requires a lot more readers at the start rather than letting growth happen naturally. Just another example of the legacy publishing mentality rather than finding more efficient ways to deliver news.

But people pay for the Wall Street Journal and Financial Times, you say.  Well both of those are not general internet, but specialized business papers that cater to a need-to-know first crowd. Plus, both have decades of history and credibility built up to prove their value.  How does The Daily plan to convince people to read it instead of the New York Times or CNN or the USA Today? Hype is not enough of a reason.

Of course, if you really want to read The Daily for free, there’s http://thedailyindexed.tumblr.com/. Sorry Murdoch, you can’t uninvent the internet.

Android fragmentation: Benefits of experimentation

The battle of mobile OSs often revolves around open and closed systems and open source and proprietary.  For many, like myself, the more open approach of Android has been a selling point, but the same openness has led to a fragmented market where hundreds of android products all handle the operating system differently.  Every iPhone (disclaimer, I have a Motorola Droid phone and an iPod Touch) however, pretty much is the same.  Fragmentation for Android has been seen as a negative for the platform, limiting app developers who can’t predict the system used by the users.  But fragmentation has other more significant benefits.

Fragmentation also means experimentation.

There are Android phones with and without keyboards, large and small screens, lots or limited on board memory, slow and faster processors, high and low priced, etc.  This is all about testing and innovating the marketplace and finding out what consumers really want.  Remember Android is just over two years old (released September 2008).  It sees rapid software upgrades and even faster hardware releases, each time out innovating the previous generation.

Right now this is a slightly controlled chaos.  Many parallels can be seen between the early Mac OS and Windows battle for desktop supremacy where Apple again chose to offer limited options for its OS while Microsoft let anyone able to pay its license.  Google does not even charge to use Android. This pretty much means anyone can choose to put Android in their hardware (even a set of headphones have their own operating system).

For now Android looks like somewhat controlled chaos.  While Apple’s iPhone comparably looks sleek and simple, it is one-size fits all.  To its benefit it is a very nice size and thus has widespread appeal, but in the long-term, this is just as limiting as it was for the Mac OS.  Already patterns are emerging in leading Android hardware developers, focusing on faster processors and larger screens which only a year ago started catching up to the iPhone’s processing power but are now boasting higher specs.  This is innovation benefited by competition.  Android handset makers must compete and outpace each other while and Apple.  It’s in all of these handset makers to make Android as appealing as possible. Only Apple cares about making iOS and the iPhone better.

For now this means Apple, with its head start and compelling product, is a formidable opponent.  But this is marathon, not a sprint, as Google seems perfectly aware. Constant small upgrades and enhancements over the long term can add up to something pretty amazing.

New Year, New Prodigeek coming soon

Well the New Year has passed and Prodigeek has not been well tended.  I’m still finishing up some big freelance projects that have sadly dominated my time (plus I started playing World of Warcraft over the holiday and that was a huge mistake). I will be revisiting Prodigeek with some big changes as my freelance work winds down and I stop saying yes to everyone with a bank account.  Look forward to Prodigeek 3.0 around March/April.  I will try to do some posting between now and the big relaunch.

Prodigeek hiatus

So I’ve got a new job and a shockingly expanding freelance business, so I will be pausing from blogging for a while.  I still have lots to say and will be reimagining Prodigeek and all its glory in the coming months.  I thank everyone for reading and hope you will come back when I start writing again.

Startup visa bill aims to create jobs

For years, the U.S. has turned away smart, in-demand immigrants because of the limited number of H-1B visas it grants. Most regrettable is these highly trained and highly paid workers are also high in demand and often create more jobs than they fill. Instead, these workers attended U.S. universities only to return to their home countries to build companies, technology, and jobs.

Last year, Brad Feld started a movement to add a startup or founder’s visa to any immigrant who starts a company in the U.S. The Senate is now considering just such a bill called the Startup Visa Act (full text PDF here) that will encourage immigrants to stay and build companies here in the U.S. creating new jobs and new opportunities.

Certainly not every startup will succeed (no guarantees for U.S. citizen startups either), but as any venture capitalist knows, you only need one or two to take off to shake up an entire industry: see Google or Apple, Microsoft, and IBM of yesteryear. Our goal should be to make sure the next generation of Googles and Apples are founded in the U.S. as that ensures more jobs and more prosperity for the next generation.

Prodigeek was recently hacked

I believe I caught this issue early. All the pages on Prodigeek were forwarding to different sales sites. It does not seem like malicious code was downloaded to anyone’s computer, but of course, any bad code is not good. I’m bumping up some more security plug-ins so hopefully this will not happen again.

Holiday and working blogging blues

Yup, I’ve been slacking on my blogging over these past few weeks. Between holiday traveling and some tough weeks at work (even the auction business gets into the holiday spirit), I’ve been finding it tough to keep to a schedule. I’m still working on a big release for my employer, Leslie Hindman Auctioneers (no relation at all to Prodigeek), as their IT and Social Media Manager, so things might be erratic for the next few weeks.  Hopefully, I’ll be able to find a new rhythm soon. Thanks as always for reading and have a happy holiday.