Wednesday, May 30, 2007

The Long Tail Review

This review originally appeared in my column in the Brandon Sun, March 15, 2007, with the title: All Those Little Things Can Really Add Up These Days - To Cash.


Two recent books provide fascinating reading of how the Internet is changing our world. These are The Long Tail and Wikinomics.

The author of The Long Tail: Why the Future of Business is Selling Less of More is Chris Anderson, the editor in chief of Wired magazine.

The “long tail” describes the shape that appears when numbers, such as the quantity of items sold, are plotted on a graph. It swoops down dramatically from left to right. The graph illustrates that a few mainstream products dominate a market. Numerous less popular products sell much less frequently.

Think of a video store. A small number of popular new releases makes up the bulk of the sales. These few films are the short “head” of the graph. Now think of all the rest of the store. This multitude of movies is the “long tail.”

As an example in The Long Tail, Anderson describes the music industry. Wal-Mart is by far the largest music retailer in the United States. A typical Wal-Mart carries 4,500 unique CD titles. Although that might sound like quite a lot, there are actually many more possibilities. Furthermore, 30,000 new albums are released every year.

Now say hello to the Internet and the availability of virtually unlimited variety. As Anderson notes, Amazon carries 800,000 different CDs. Online music retailer Rhapsody has over 1.5 million different tracks.

There is money to be made selling just a few of each of the many, many items along the long tail. On the Internet there is no constraint of limited shelf space. This new reality is shaking up the retail industry, creating whole new businesses, and impacting our culture.

Compared to the choices on the Internet, even the most gigantic big box store is actually quite empty. “Walk into a Wal-Mart and you’re overwhelmed by the abundance and choice,” says Anderson. “Yet look closer and the utter thinness of this cornucopia is revealed.” After all, he points out, “more than 99% of music albums on the market today are not available in Wal-Mart.”

The recording industry has become painfully aware of the force of the Internet. Whole new businesses, however, are blossoming and becoming sustainable in this new “paradise of choice.” Among the winners are web-based music stores such as Apple’s iTunes, as well as, of course, Internet staples like Google, Amazon, and eBay.

Will we welcome or be overwhelmed by this new marketplace? “Online retailers offer variety on a scale unimaginable even a decade ago – millions of products in every possible variant and combination,” notes Anderson.

“But does anyone need this much choice?” he asks. “Can we handle it?”

Anderson refers to a research study that set up outside a food store. Consumers were offered a taste test of either six or 24 types of jams. They were also offered coupons to buy jam at the store. Interestingly, more people tasted with the larger selection, but fewer went on to buy.

Apparently, too much choice actually can discourage buying. To resolve this conundrum, Anderson predicts that we increasingly will seek help in making our selections.

In our daily lives, we will employ more advisers, counsellors, planners, and coaches.

On the Internet, we will use more “filters” such as search engines and online reviews to help us sort out what we want.

Whatever the future picture, however, we’d better get used to it. For example, Amazon and its online retail partners already offer us a choice of more than 1,200 varieties of jam!

Not only commerce, but also culture, is being transformed. Perhaps there will always be a “mainstream,” but in some ways every one of us is a bit of an “oddball.” As examples, cites Anderson, “We may collect strange memorabilia or read esoteric books, hold unusual religious beliefs or wear odd-sized shoes, suffer rare diseases or enjoy obscure movies.”
On the Internet, everyone can find - and find support for - any inclination. “The resulting rise of niche culture will reshape the social landscape,” says Anderson. “People are re-forming into thousands of cultural tribes of interest.”

The Long Tail predicts a more informed, questioning citizenry. “This is the end of spoon-fed orthodoxy and infallible institutions,” says Anderson. We are experiencing “the end of the couch potato era.”

Wikinomics: How Mass Collaboration Changes Everything delves even further into how the Internet is changing business and society. In a future column, I’ll review Wikinomics.


(Read an updated version of original Long Tail magazine article.)

To go to chapters.ca: The Long Tail.

Thursday, May 24, 2007

AGLOCO: Scam or Smart Move?

“Own the Internet” is the intriguing slogan of AGLOCO, which also describes itself as ”the Internet’s first member-owned economic community.” Is it a scam or a smart move?

AGLOCO is just a few months old, and is, in fact, just in the pre-launch phase. What is AGLOCO? And, is it viable?

AGLOCO is an acronym for A GLObal COmmunity. The slogan “Own the Internet” is a bit presumptuous, but it does suggest the objective of giving ordinary Internet users the chance to own at least a piece of the riches of the Internet. AGLOCO also uses the more accurate: “Get your share of the Internet.”

AGLOCO was started by a group that includes some of those who were involved in the ill-fated AllAdvantage company in 1999 – 2001. AllAdvantage gained a reputation for its early efforts in “viral marketing,” desktop user tracking, ad targeting, and for pioneering the installation of a Privacy Officer.

In its heyday, AllAdvantage was one of the most visited websites on the Internet, had 10 million members, and paid out over $120 million to its members. Then it crashed.

AGLOCO looks like it is on a much sounder footing than AllAdvantage ever was. Surfing tracking technologies, affiliate programs, and Internet advertising revenues are much more developed than in 2001. Although AGLOCO promises cash payment to its members, the program should be sustainable, as any payments will wait until the money is actually earned.

How will the money be earned? AGLOCO promises its members a share of the billions of dollars currently sloshing through the Internet: for doing searches, clicking on ads, referring others, and buying products.

Members will download a “Viewbar” (currently in development), and install it on the bottom or top of their computer screens. Ads will appear on the Viewbar targeted to the websites the member is visiting. Members will also be able to search and buy through the bar. Members will be rewarded for using the Viewbar, up to a maximum of five hours per month.

Members, however, will not need to change any of their surfing or buying habits. At least initially, individual members will not be paid for their own product buying. Instead, members will be paid a share of the overall AGLOCO revenues.

The company will be structured so that all of the company’s shares are owned by the members. (The management team will be paid 10% of the revenues as its compensation.) The ownership scheme is quite ambitious, as the company is open to people from all over the world. The company currently is “exploring public offerings of the stock on various major global stock exchanges as a means to facilitate the issuance of shares to members.” How these shares will be valued, and traded across many different countries, are among the many details yet to be worked out.

AGLOCO’s structure reminds me of the co-operatives and credit unions that are popular where I live in Western Canada. These co-ops are owned by the members and sell groceries, gasoline, and other products. (Credit unions are similar and provide banking services.) Members join by paying a nominal membership fee, such as $5 or $10 (Canadian).

Although anyone can shop at these co-op stores, each individual members’ purchases are tracked through the year. At the end of the year, members are refunded a portion of their spending, based on the success of the co-op’s overall performance.

Typically, part of the refund is made in cash to the members, and part is allocated to the member’s “share equity.” This latter amount is like a reserve and usually only paid out, for example, when the member moves from the area or reaches the age of 65.

These co-operatives are owned by all the members. The co-op is governed by a Board of Directors, who are elected by the members at the Annual General Meeting (AGM). One member gets one vote. The Board hires and pays managers and other staff to run the operation.

In a similar way, AGLOCO members will own the company and will receive a distribution of it’s profits: partly in cash, and partly in shares. As mentioned earlier, however, the distribution largely would not be based on the individual member’s purchasing or viewing (other than using the Viewbar). Payments would be based on the success of the company as a whole. (The company also later plans to add some payments based on each member’s individual purchases.)

There are no details yet on the AGLOCO website about the company’s governance, such as the selection of its Board of Directors. Being Internet based, however, there is potential to involve members in selecting and interacting with the Board of Directors much more than in conventional institutions.

An important point of difference with many traditional organizations: membership in AGLOCO is free of charge.

AGLOCO also offers a referral feature, where members can benefit from signing up new members. This aspect builds on the social networking and affiliate marketing characteristics of the Internet. The AGLOCO program will reward members for their referrals, and for their referral’s referrals, up to four levels of extended referrals.

The information on the AGLOCO website may get some members dreaming of overly optimistic revenues for signing up additional members. In the “Member Calculator” section, members are invited to enter a hypothetical scenario. I entered a modest three direct referrals, with each of them getting three referrals, and everyone surfing the Internet for five hours per month. The monthly calculation? 458.75!

But that number is “Hours accumulated towards earnings.” And there is this disclaimer: “For illustrative purposes only. Your actual earnings could vary from this example.” By clicking on the “Global Earnings Table,” one is supposed to “see the current listing for hourly rates, hours and minimum payout limits.” The actual information, however, is basically non-existent.

I think that this part of the AGLOCO website should be suspended until there is more specific information about the payout procedures. The monthly hours / earnings confusion and the disclaimer itself do not fit with the tone of the rest of the website. I think that this part of the website supports those who accuse AGLOCO of being a “scam.”

Some more realistic estimates seem to be in the Simmons research report, linked to AGLOCO’s company blog. The Simmons report figures that an average user - even with no referrals - could expect to receive $150 worth of company shares, plus $5 to $15 cash monthly. Each referral generated would be worth an additional $30 in shares, plus some additional cash distribution, according to Simmons.

The basis of the program seems sound. AllAdvantage paid out for each new member until it went broke. In contrast, AGLOCO’s clout in the Internet marketplace actually increases with each additional new member.

As AGLOCO points out, many activities on the Internet are already based on referral and affiliate payments. “Just about every time you view an ad, click an ad, search, buy something, download something, join a community, or post a story, picture, or video, some person or some company is making a fee, commission, and / or sale from your activity.”

Many successful websites – like YouTube or MySpace – were built by the input of the ordinary community members. As AGLOCO asks, “The users created the community, where’s their share of the profit?” AGLOCO invites everyone to help build a new Internet community, and share in the proceeds.

Two of the criticisms of AGLOCO centre around privacy and sustainability issues. Privacy seems to be dealt with by the company’s commitment, but there is a certain amount of trust needed anywhere. Building on the pioneering work of AllAdvantage, AGLOCO promises to respect the privacy of its members.

Members, as the owners, can also help to make sure that their company keeps its pledge: “Privacy is paramount. No spam, no pop-ups, no selling information, no emails from people you don't know, no emails to people you don't know, and no tricks. Period.”

Is the referral system itself just another scam: another form of pyramid or Ponzi scheme which depends on more and more people buying into it, with only the first members actually getting paid? This argument is refuted by the fact that the process is reversed: the members are the ones being paid. Since membership is free, members really have nothing to lose, and only something to gain.

I like the overall feel of much of the AGLOCO website. I like the co-operative aspect, with members owning the company. I like the fact that membership really is free and there is no “upselling,” hidden fees, or costly “premium membership” that you discover later.

I like the idea of the vision that is as lofty as the name itself: a global community. “The Internet unites the world across cultures, borders and languages,” says the website. “AGLOCO wants to bridge the divide in global understanding and promote itself as a cross cultural, socially aware and responsible community.”

The “mass collaboration” potential of all those members is a feature that could be further developed. Members could be engaged in creating the community, not only economically but also culturally. Hopefully, this broader vision can be fleshed out as the company grows.

There will also be a provision to donate one’s shares and cash earnings to the charity of one’s choice. As well, an AGLOCO Foundation has been set up “to promote free access to information across the world.”

The major disappointment has been the delay in releasing the AGLOCO Viewbar, leading some to wonder if it is just a “scam.” However, if the Viewbar is released soon, there could then be a flurry of interest. Those who got in early and started signing up others would look like they made a “smart move.”

Suggestion to AGLOCO: change the wording on the website about the Viewbar release. It has stated the Viewbar “will be available to download in several weeks” for months now! AGLOCO could be better at making itself look more like a “smart move” rather than a “scam.”

I myself joined AGLOCO in December of 2006. I haven’t seen anything yet, but it hasn’t cost me anything, either. And, there is all that potential. If you would like to learn more about joining, click on my referral link here.

See you in the global community?

Monday, May 21, 2007

Thoughts on Auto Theft

The Manitoba provincial election is tomorrow, and I’m reflecting on two previous columns I wrote about auto theft in our province. Manitoba has the highest rate of auto theft in Canada, even in North America.

Many cars are stolen by youngsters under the age of 18. In a recent column, I noted that, according to news reports, many of these child car thieves, suffer from intellectual disabilities or Fetal Alcohol Spectrum Disorder - FASD.

During the election campaign, both the NDP and the PC want more police, which is fine. The NDP, during the campaign, has advocated tougher sentencing laws from the federal government. But the NDP hasn’t really addressed the main issue: the federal laws are the same across Canada - why is Manitoba’s auto theft rate so much higher than elsewhere?

Nice to see, however, that the PC platform includes about $5 million in funding for FASD prevention and treatment. That approach would seem to address more of the root causes, rather than simply calling for “tougher” laws.

In a column I wrote a couple of years ago, I looked at the Grand Theft Auto games. I might have thought, as many still do, that these games actually encourage real behaviour like auto theft. And, in fact, the Manitoba government has moved to restrict the sale of these games to kids. I was quite struck, however, by the arguments made by Steven Johnson in his book: Everything Bad is Good for You: How Today’s Popular Culture Is Actually Making Us Smarter.

In the United States, Johnson points out, auto theft is down substantially since the first Grand Theft Auto game was released in 1997. Violent crime has dropped dramatically in the last ten years, coinciding with the release of more violent video games. Could it be, asks Johnson, that would-be auto thieves and other criminals are now “getting their thrills on the screen instead of the street?”

Johnson also cites several large-scale studies which have been tracking American kids since the 1970s. They find that today’s youth are not only less violent, but also do better academically.

I think we should take another look at our kids here in Manitoba, the ones affected by FASD, the ones stealing cars. As I said in my column, if it takes a village to raise a child, then something is rotten in the state of our provincial village.

Although suffering from intellectual disabilities, many of these youngsters are quite technically adept. At least at stealing cars, these kids exhibit technical competence that is well beyond that of the average person. Perhaps they should be playing more video games. Perhaps their technical skills could be harnessed for their, and society’s, good.

Such thoughts probably can’t be considered during the heat of an election campaign. But maybe they could be considered in the light of day afterwards.

Friday, May 18, 2007

Remember Diana Rattlesnake

Brandon, Manitoba - a city of 40,000 people - has a well-deserved reputation for being a safe, friendly, place. We can go one, two, or even more, years without a single homicide.

However, there were several homicides in Brandon a couple of years ago, and two of the cases made national headlines. One was the Erin Chorney murder. The body of Chorney was found in early 2004; the teen had been first reported missing two years earlier. Her ex-boyfriend, Michael Bridges, was convicted of murdering her after an elaborate police sting operation. (Winnipeg Free Press crime reporter, Mike McIntyre, has written a best-selling book about it: To the Grave: Inside a Spectacular RCMP Sting.)

Another case was the Joubert murders. Respected elderly retired physicians, Noel and Doreen Joubert, were murdered by their son, Paul, in September, 2004. He was arrested after a cross-country chase, and later committed suicide awaiting a court-ordered mental health assessment, before he could be brought to trial.

There was yet another homicide around the same time; one that sometimes doesn’t even make the local news. Diana Rattlesnake was killed in October, 2004. At the time of her death, she was an employee at the recycling facility where I was the General Manager. Her killer has still not been found. The conventional media have an obligation to report accurately about her death, especially since reporting on the event actually could help bring her killer to justice. (And here is where the Internet can help to keep alive the stories that otherwise might fade away. Or not be generally available, for example, the Brandon Sun makes its content available only to its paid subscribers.)

The following is a “Letter to the Editor” from me that was published in the Brandon Sun on February 10, 2007:

Remember Rattlesnake

There was someone missing from the front page story about Brandon’s latest homicide in the February 6 Brandon Sun. “Yesterday’s death marks the first homicide investigation in Brandon in more than two years,” the article noted. Then there was a recap of the Joubert and Chorney murders.

But there was another homicide in Brandon during the same period — one that is still not solved.

Diana Rattlesnake was killed on October 28, 2004. An aboriginal woman, she lived and died in modest circumstances. Her death did not bring to Brandon the national publicity of the other cases mentioned. Perhaps such reasons make it possible to overlook her death.

Diana Rattlesnake lived, worked, and died as a member of our community. She should be remembered by the media. She should be remembered by the public as well. Someone might remember something that could bring justice to this case. Furthermore, remembering those who have been killed might help to prevent other homicides in the future.

As someone who knew her, I ask the media and the community to please remember Diana Rattlesnake.

Thursday, May 17, 2007

Welcome

Welcome to my blog, “The Good, The Bad, and The Unsustainable.”

I would like to start off with a bit about myself, and a bit about my plans for this blog.

I grew up in Winnipeg, Manitoba. Since 1979, I have lived with my family in Brandon, Manitoba. My wife Meg and I have been married for 35 years; our three children are now grown up. Much of my work has been with non-profit organizations - in the areas of community education, volunteerism, and environmental action. For 15 years, until that program ended in 2006, I was employed as the General Manager of the non-profit Westman Recycling Council.

I am currently a writer and consultant. A column I write for the Brandon Sun is now called "Citizen Active," but was formerly called “The Good, The Bad, and The Unsustainable.” I like the old name (even though it was deemed too long for the newspaper), and thought it would be a good one for this blog.

For my blog, I plan to post some of my previously published columns, as well as some new thoughts and comments about life, community, and the world.

Thanks for joining me. I am looking forward to this blog journey, and hope you enjoy it, too!