The NewGround Blog

Site renovations

Please excuse our temporary dishevelment while we are refreshing the site design, which includes working out a few kinks.

Trial Lawyer Bonanza

Looks like this will be Obama’s first play during his opening possession.  Damn this is gonna be a long painful four years, watching OPR (Obama, Pelosi and Reid) wreck our economy for the next 20 – 30 years.  It just sucks.

Science of Evil and the Financial Crisis

The Belmont Club describes how the WSJ  and the Washington Post, while searching for the culprit in the financial crisis, pass one another like ships in the night, yet both arrive at the conclusion that more regulation could have prevented this mess.  The author, Richard Fernandez, then goes on to wonder whether any regulator could have stopped the gravy train that was sloshing so much gravy.  He then posits an alternative suggested by “ponerology”, which defines itself as the science of evil.  A basic tenet of ponerology holds that approximately 5% of the population is psychopathic, and that over time, they accumulate in the upper echelons of organizations (due to their ruthlessness?) and are well positioned to breed corruption within and without their organization and those related to it.  His closing and provocative thought:

It’s amusing until one realizes how often we discover, at intervals of 50 or so years, how a cohort of people more or less simultaneously learn to game a system until it crashes.

Wall Street’s Demise

This Fortune/CNNMoney article sums up concisely how Wall Street arrived at its logical end – it’s what happens when the Masters of the Universe play the “game” with other peoples’ money instead of their own.

Paid Search 101 Rap

This creative gentleman converts the concepts of SEO/SEM (Search Engine Optimization/Search Engine Marketing) into catchy rap lyrics.  I think he should consider entering the employee training or seminar business – it would sure make some of this stuff easier to learn!

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American Music at its BEST! – The Band with the Staple Singers

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This version unfortunately omits Mavis’ comment just after the end of the song -“beautiful!”  That is was and that it remains.

Latin America Wireless

Like most of the Middle East and Africa, Latin America is skipping the 100% wired stage of telecoms. Governments in those countries were too financially unstable &/or corrupt to mandate buildouts beyond the wealthy enclaves and business districts of their major cities. The beauty of wireless is that it is so much less capital intensive. Consequently, wireless telephony penetration in LatAm now approximates 60-70%. Moore’s Law continues to reduce the cost/increase the functionality of handsets (and you can have either, but not both, as a consumer). In LatAm, prepaid service is a much bigger mode of payment for service, as it facilitates budget management. Also, calling party pays, not the one called. Finally, network convergence is driving all the margin out of the historically high margin voice telecom service (in late nineties 45% OPERATING profit was the norm), whether wired or wireless.

The Internet is in the process of aborbing wireless telephony. The constantly improving economics of optical and/or digital networking infrastructure and innovation enabled and fostered by entrepreneurs leveraging of IP (Internet protocol) internetworking technology (browsers, hyperlinked web, free email, graphic design, etc, etc,) has and will continue to drive the merging of all heretofore physically discrete analog networks (each being a separate business unto itself) into a single interconnected set of commonly structured and operated digital networks, all of which transport and connect video, voice and data applications – the “converged network”. Text/sms messaging is but one of thousands of applications that operate on and interconnect through the Internet. It is, in fact, the highest revenue /bit form of communications service for which consumers pay (by a factor of 1000), primarily because of the telecom operators end-to-end control of that network. For details see The Evolution of Price Discrimination in Transportation and its Implications for the Internet (especially Table 1 on second page of this pdf). The author, a mathematics/computing professor at U of Minnesota, is widely regarded for his fact-based approach to the economics of telecommunications networks.

Despite the convergence phenomenon, the US lags Europe and Asia in its usage of mobile telephony and mobile Internet (you can mostly thank the FCC’s bureacracy’s money-grubbing wireless spectrum lotteries for that). Nevertheless, US usage of wireless Internet will pick up dramatically in the next couple of years, as ATT/Cingular, Verizon and Sprint/Nextel have deployed their 3G (they call it broadband, but its really medium band) networks. (Europe/Asia finished theirs 3-5 years ago). Here is a chart showing Internet enabled mobile phone penetration as of a couple of years ago.

Publishing and Advertising 2.0 – Part 2

The Internet will continue to drive major structural change into the advertising and other digitizable media for the next 25-35 years. (The Carlota Perez book previously mentioned explains paradigmatic technology diffusion; Ray Kurzweil, referenced below, builds on the same concept to posit that technology/human change has accelerated since time began and will continue to do so, resulting within 30 years in implanted brain chips that leverage our thinking capabilities the way our foot on the gas petal leverages our muscular capabilities). Anyway, back to the present. Broadband connectivity (medium band, really – until we get more competition in telecoms, the 100MB/sec links available throughout Seoul, Korea and other foreign cities will be a figment of our imagination here) just recently hit critical mass in the US. Broadband mobile phones (again, medium band vs other nations) will reach critical mass in the next three years. That $200/household for Internet ad spend represents only that revenue that has been derived from the move of print ads to the web; audio/video related advertising is at its inception (and is why Google paid $1 billion for the largest market/mind share position in that market. Audio search is well developed and will begin to be monetized via ads soon. Video search has further to go, but I have no doubt that Moore’s Law will bring the processing power required to do it to an economically viable level. The number of doublings in processing power/unit ($) of resources consumed just recently passed thirty. Given the exponential nature of this growth, however, the absolute gain from each doubling has now reached the point of delivering stupendous economic impacts (same applies to storage, where you can now easily buy Terabyte storage servers for less than $1000). For more on the law of accelerating returns associated with technology advances, see Ray Kurzweil.

Some talk about buying/selling advertising in terms of the current industry participants like Fox News. Although Rupert does get it regarding broadband Internet, very few organizations with the size and longevity of any of the existing broadcasting/media companies are ever able to make transformative changes to their business models. See Clayton Christensen, The Innovators Dilemna, for hard proof. The companies that break standard price points will have a different view of the economics/business model, just as Bill Gross (Idealabs) did when he invented the pay-per-click Internet advertising business model that Google has leveraged into a $150 billion market cap. Remember, Google did not even begin to sell search advertising until the 2001-2002 timeframe.

A final point about change in content/advertising markets – the Internet evidences and enables statistical distributions commonly known as the Pareto principle (80/20 rule). Chris Andersen of Wired wrote the signature piece on this phenomenon which he dubbed The Long Tail (link to his website, which links to article, book, Wikipedia, etc.) Andersen’s point is that for digitazable products/services, the changes wrought by the growth in interconnected and ever mor powerful communication/computational processing devices will enable the exploitation of demand that was previously unexploitable due to the lack of sufficient market scope to spread the fixed costs of production and distribution over. The fixed costs are now already incurred, in terms of the infrastructure of the Internet, and the marginal costs of distribution are virtually nonexistent. An Amazon employee described the Long Tail as follows: "We sold more books today that didn’t sell at all yesterday than we sold today of all the books that did sell yesterday."