Perceptric Forum

Peter Drucker - Management and Marxism

Chris Gilbey — Tue, 09 Feb 2010 17:54:23 +1100

I have been doing some research.

It started with me wanting to find out a bit about what Peter Drucker, the world famous management guru, had been doing in Frankfurt before he left Germany. This was as a result of an idea I had for a story built around an anedcote about Peter Drucker that I have blogged about before, which I rather liked...

Its amazing how you both find that you are led on an intriguing voyage of discovery and how sometimes information that is extraordinarily germane comes at you out of left field. So it was with this project.

The information that I started with was really helpful - about the economy in Germany prior to WWII, and how the reparations negotiated at the Treaty of Versailles were intended to ensure that there would never be another war because Germany would be crippled with payments to the allies in that war. The irony of this of course is that when Wall Street collapsed, even then there was a global economy, and Germany was extremely reliant on the US as a trading partner. When the US market tumbled, Germany crashed. The economic conditions, ironically led to the rise of National Socialism and Adolf Hitler... All of this is quite commonly known... and must have had a substantial impact on the young Drucker going to university and studying international law in Frankfurt.

But this is where fate played a hand in my research... I was listening to a podcast from the BBC with a discussion about the Enlightenment and the philosophers behind it. Toward the end of the podcast there was some discussion about the concept that the Enlightenment as it is currently conceived was largely an invention by the allies after WWII to counter some of the concepts of Nazism. I found that interesting enough... But there was also some mention of the part that the "Franfurt School" may have played before and after the war... That took me on a new voyage of discovery.

I was intrigued to find out that the Frankfurt School was developed informally in the 1920's and was the first place in Germany where the economic theories of Karl Marx were seriously considered....

So... My thoughts were suddenly kicked into a new gear. It would have been impossible for Drucker to have been to Frankfurt University and to have not been aware of this debate. How much did it influence his thinking and the ideas that he introduced and were incorporated into the companies and countries that became the world beaters over the period from 1950 on?

I was intrigued also to discover that the first serious study that he did (for General Motors) was so controversial that managers were advised to not read it! Why?

Drucker interviewed executives and workers, visited plants, and attended board meetings. While the book focused on General Motors, Drucker went on to discuss the industrial corporation as a social institution and economic policy in the postwar era. He introduced previously unknown concepts such as cooperation between labor and management, decentralization of management, and viewing workers as resources rather than costs.

Drucker claimed that an industrial society allows people to achieve their dreams of personal achievement and equality of opportunity. He referred to decentralization as "a system of local self government," in which central management tells division managers what to do, but not how to do it. The young executives are given the freedom to made decisions - and mistakes - and learn from the experience.

Would these be the kinds of ideas that Drucker synthesised from being exposed to Marxism?

Wouldn't it be ironic if the entire capitalist system of corporate growth and remuneration of employees through stock options and collaborative bargaining and distributed responsibility for achieving targets - all these things that we associate with good (capitalistic) management practices came from someone whose underlying rationale for management was based on a healthy appreciation of Karl Marx...

Optus Broadband Satellite -

Chris Gilbey — Mon, 08 Feb 2010 15:00:05 +1100

I received a letter today from Optus with my comments in parentheses and italics.

Here is what it said:

Dear Valued Customer (What is the problem here? Optus can address the envelope to me personally, but can't invest in a data base that personalizes the letter itself? What sort of technology company is this?)

Firstly we would like to take the opportunity to thank you for your business and trust that you are happy with your service with Optus. (OK. I got that. And you are welcome. I'm not, but the alternatives are unfortunately worse.)

We hope you are enjoying your Optus Satellite Broadband Service. (Enjoy? What is there to enjoy here? It costs twice as much as ADSL. It runs at half the speed of ADSL. It is only "broadband" in that it is always on. It is not high speed. It doesn't support VOIP because of the latency, but I can deal with that. It takes forever to download anything that has any multimedia in it such as flash. And the only reason that I have the service is because there isn't enough copper in the ground in my street to enable me to get ADSL. Telstra's 3G service by the way is comparable, but I would rather support Optus than Telstra, but that is just me).

We would ask if you are satisfied with your broadband that you could help us in spreading the word! (What? Now you want me to do your marketing for you too, and endorse a mediocre and expensive service using my personal brand reputation! Not only are you nuts, but cheap too?) We have enclosed 8 brochures advising of our latest sales and plans. (Well they are going to hit the recycling bin real fast, so I'm afraid that is more carbon footprint and more wasted trees that you guys are responsible for). Do you have any family of friends who are in a similar situation to yourself where broadband only existed via satellite? (Fortunately for my family and friends the answer to this is, "No"). These brochures may assist them in the right path when making a decision in choosing a reliable satellite provider. (Tell me this: why the hell should I do your job for you and market to my friends when you don't even offer a kick back to me to do the work by offering me a discount on my monthly rate for two successful introductions for instance? If you want to be a marketer, start acting like one, or is it that you have all been given ridiculous sales targets and are trying to figure out how to reach them? Why don't you watch a couple of episodes of Mad Men and get some ideas about how marketing works!).

We thank you in advance.

Kind Regards,

Kate McDonald
Aventra Pty Ltd
Optus in Business Partner.

Kate, I hope that you are monitoring blogs and that you are monitoring Face Book, because this blog has quite a good readership one way or another. And this posting will be circulated among the 450+ friends that I have on Face Book too.

The moral of the story is simple. Before you ask someone to do word of mouth marketing for you, make sure that what you are providing is worthy of being talked about positively...

By the way every time that I have been prompted to blog about a company because of either poor customer service or poor communications I have found that the company suddenly gets in touch (barring one company, the ANZ Bank, that is) and starts improving in their service. It will be interesting to see if this happens with you, Optus.

The Doppelganger Meme and Copyright

Chris Gilbey — Mon, 08 Feb 2010 10:14:38 +1100

If you use Facebook you would know that there is a meme that is traveling around it to swap your photo for a photo of a "doppelganger" - someone famous that you look like.

It's pretty cool. Suddenly you see pictures of movie stars next to your friend's name and you realize how much they do or don't look like Marilyn or George or....

One of my FB friends made an interesting comment about this over the weekend. This practice voids the Terms Of Use that each member of FB agrees to when joining the service. (Everyone has to confirm that he or she has the right to upload and use any photo that they choose to display).

Because of the recent cases that have just had judgments handed down (EMI Music/"Downunder" vs Larrikin Music/"Kookaburra Sits In The Old Gum Tree on the one hand and iiNet vs Village Roadshow, AFACTS et al on the other) there is a growing focus on copyright law in the media and in the public.

Generally the public has no idea of copyright law, nor of how it works. Hence the great outpouring of emotional support for Men At Work currently, even though the band has only incidental relevance with the Downunder case as they were the artist performing the song, and not the writers of the song.

So here we have the possible misplaced support for one iconic song and its writers over another, primarily because there isn't a strong "sing along" resemblance between the songs (since it was an instrumental riff that was determined by the court to be the infringing material).

In the case of the iiNet case, the movie industry tried, unsuccessfully, to prove that an ISP in Australia was actively promoting the theft of copyrighted material in the form of movies.

Now this case actually has relevance for the ordinary man in the street (the men at work, if you will), because it is presumably the man in the street who is sharing or downloading the massive quantity of movies that are shared online every day, through bit torrent networks, through html traffic and through encrypted internet traffic too.

The failure of the movie companies to get their case up means that for the man in the street that is illegally sharing movies, there is now very little likelihood of their ISP actively intervening in this practice, even though the ISP would have a reasonable suspicion, one would figure, that if someone is consuming gigabytes of bandwidth each week/month it is unlikely that the user is just a prolific email user.

The use of the doppelganger photos by FB users is something that is a humorous activity that is unlikely to create a law suit for FaceBook in terms of the breach of copyright. It would be hard to imagine any star being able to assert that there was brand damage done by the association of his or her photo with Joe Bloggs for instance.

What we have here though that is actually quite interesting is that there is an awakening feeling in the community that copyright law is wrong. When enough people break a law it becomes more and more difficult to assert that the law is of value to the community. And when that happens it becomes difficult to argue why the law should still be on the statute books.

So this seems to me to mean that there needs to be a re-evaluation of the concept of "fair use" in a digital society.

According to Wikipedia:

"Fair use is a doctrine in United States copyright law that allows limited use of copyrighted material without requiring permission from the rights holders, such as for commentary, criticism, news reporting, research, teaching or scholarship. It provides for the legal, non-licensed citation or incorporation of copyrighted material in another author's work under a four-factor balancing test."

Clearly copyright as a concept has been fought for long and hard over many years and it should not be dispensed with because of a populist movement to breach many aspects of the law.

The way to fix the problem, and it is a major problem, is as follows:

1. The copyright industry should lobby for "fair use" to be incorporated into the Act and that should provide that all content that is shared online does not constitute a breach of copyright if there is no profit motive for the transfer of the material.
2. A bandwidth copyright fee should be introduced that is paid for the transfer of copyrighted material. This should be a very small fee, that is collected from the ISP.
3. A tariff on memory should be introduced that essentially taxes blank memory and is paid to a society that accounts to rights holders.

This may take time, but is absolutely necessary in order to stop what are essentially non-productive law suits that ultimately criminalize the working man in order to see a growth in copyright industries with an increase in productivity and profitability.

Some Thoughts About The "Downunder" and "Kookaburra" case

Chris Gilbey — Sun, 07 Feb 2010 09:50:42 +1100

I have been amazed at the outpouring of emotion about the decision by the court last week in favour of Larrikin Music in its plagiarism suit against EMI Music.

This is in relation to whether "Downunder", the iconic Aussie song from Men At Work, infringed "Kookaburra Sits In The Old Gum Tree", the iconic song written for a Girl Guide's Jamboree by Marion Sinclair in 1932. (Note for the publisher: the use of the song at this link does not show a (c) copyright line denoting ownership!)

The court found that the flute riff in the Men At Work recording was derived from the Marion Sinclair work...

Ok - so that should reasonably be it. The two sides went to the umpire for a ruling. The two arguments were made. The referee issues his determination. Now the two sides retire to the dressing room waiting for the costs and damages ruling... And that is essentially what they did.

But because the two songs are both quite iconic Australian songs, there was quite a bit of a media frenzy. And the public has become quite interested and emotional about the whole thing.

What is surprising to me is the level of support for the Men At Work side of the story - certainly on Face Book - where there are two groups that have been formed. One is "You Can't Sue Men At Work For That Much!". Another is "The court decision against Men At Work is RIDICULOUS"(sic).

This case and the ensuing furore is actually a pretty good example of the ignorance of the public, and in many respects of the musicians and songwriters who form a good part of at least one of these groups.

The fact is that it is not Men At Work that is being sued in any event. They are the "Artist" that recorded the offending song. The record company were initially joined in the legal action, as the owner of the copyright in the recording, but they settled relatively early and out of court.

The court stoush was actually between the respective publishers representing the rights that they hold that were assigned to them by the songwriters.

A lot of the heat in the postings in FaceBook from supporters of the latter group is about how it is morally wrong to sue Men At Work because they did so much for the economy of Australia, how "Kookaburra" is part of our culture and shouldn't be able to sue anyone for using it and how the boys from Men At Work shouldn't have to pay for doing something that was not reprehensible etc...

The rational facts of the situation, that I believe are totally misunderstood by these people are as follows:

1. In reference to the first group mentioned, there is no ruling yet from the judge as to damages, so to worry about the quantum of damages before it has been announced seems a bit premature to me.

2. As far as the realistic payment of damages, we can assume that the law suit itself probably cost each side somewhere between $750,000 and $1.5M conservatively. This would have been funded in each instance by the publishing companies that own the rights to the songs: Larrikin Music in the case of "Kookaburra" and EMI in the case of "Downunder".

3. In most modern publishing assignment agreements from writers to publishers there is an indemnity clause that provides that the writer warrants that the work he or she is assigning is original. In the case of a work that is found to have infringed, clearly that is not the case and as a result one would expect for the publisher to invoke the indemnity clause and, as a consequence, to be able to recover its costs from the writers. The costs would include the natural damages, and punitive damages that may be awarded, and the costs of running the case.

4. Let's assume for arguments sake that the court determines that 25% of the royalties associated with Downunder are to be awarded to Larrikin henceforward, and that there is a nominal damages amount of $100,000 awarded. (I am not suggesting for one minute that this will be the court's decision; it is just there to create a construct). And let's say that both sides are told that they have to cover their own costs.

The impact on the songwriters would largely be the fact that EMI would want to recover its legal costs...

Because the rest of the story is this: The song has already seen the best of its selling period, during the heyday of Men At Work, more than 20 years ago. The songwriters would have been paid their royalties, paid their taxes and then spent the money on wine, women, and song, and the odd investment in real estate, stocks and bonds and whatever rock'n'roll stars do with their ill gotten gains. They are not going to forfeit very much at all... So virtually no loss for them. Their publisher, EMI, has a pretty solid balance sheet, so the money is going to be a drop in the bucket to them in any event, and, over time, they will get to recoup it a dollar at a time from the ongoing performance and mechanical revenues generated by the song over the period of copyright - the next 70+ years!

Meanwhile the impact on Larrikin is pretty extraordinary. As is the impact on the value of "Kookaburra". This song, regarded by many as being a traditional public domain song is now known throughout the world of music copyright as being a title that is still in copyright with a publisher that is prepared to vehemently and doggedly protect its rights. The benefits to the estate (since the writer is dead) will be significant, though not necessarily immediate (unless the judge is very generous in setting damages).

The impact on songwriters is also interesting.

Some people have said to me that this will make it difficult for writers to write because they will be concerned as to whether they have accidentally taken material from a song that is in copyright. I think that is highly unlikely. The fact will remain that indemnity clauses feature in songwriter assignments. They may get rewritten in the light of this judgment.

What I think is more likely is that songwriters who believe their work has been infringed, may take a more "active" stance in looking to their publishers to pursue their rights. Because of the consolidation of ownership of rights among a relatively small group of major publishing companies this may produce some interesting situations over the next few years, as publishing companies are forced to consider suing their own affiliate companies (which of course is unlikely to happen) but will produce other solutions; as publishing companies are outed by songwriters who feel that their publishers are not sufficiently responsive to the writers' needs; as writers who have not assigned their works to publishers and own their own copyrights start to understand that owning the rights to your song and fighting for those rights are two different things and that there are benefits to not being your own publisher when it comes to the affordability of legal representation...

To be continued...

Ho-hum, iiNet Wins Court Case against Industry Heavyweights.

Tom Koltai — Thu, 04 Feb 2010 14:08:26 +1100

stats2010-h.doc

Late last year I was speaking to industry representatives about the outcome for the iiNet court case. They all believed that it was a lay down misère, (in favour of themselves).

After all, there was little old iiNet, a small (by world standards) ISP and there were thirty-four financially well heeled complainants. (Just on the basis of odds, it would have appeared that fortune would favour the litigants.)

Well apparently not so.

This morning in court, reading out his summary of the almost 200 page judgment, Justice Cowdroy summarized that the evidence established that iiNet had done no more than to provide an internet service to its users which was a legitimate communication medium that was neither intended nor designed to infringe copyright.

And further, he said that “while iiNet had knowledge of infringements occurring and did not act to stop them, such findings did not necessitate a finding of authorization”. (In other words, iiNet didn’t create an environment that publicly proclaimed “Join iiNet and get your movies for free,” and thereby ostensibly “authorize” it’s users to download content illegally.)

This is the second time in in the last decade that the content companies have gone after small Australian ISP’s. The last time in 1999 it was APRA for music on hold.

The content industry cherry pick their litigation victims based on a formula:

Reliance on jurispridence in this instance would appear to have failed, so it's back to the drawing board for the content companies.

Or maybe not, after all, ACTA is still hanging it’s head over the entire free world, our politicians having been obviously influenced to an extent by the large political donations recieved over the last few years.

Whichever way the content companies jump, one fact remains foremost in every film directors minds.

"If everyone downloads the content for free, then where will the funding for next years blockbuster movies come from?"

There is however another story at play.

That is the story about how for decades, money has won the majority of legislative decisions, because after all, that is the nature of the corporate beast (and it is the corporate beast that donates the most money for political hopefuls to become Miisters of Parliament).

The mantra of the Corporation is survive at all costs, repel all boarders, prosecute all wrong doers (doing wrong against the company).

Anyone that is, or has been a CEO knows that being the boss means that you have a fiduciary interest to the company and its shareholders to win at all (legally permissable) cost.

Or, failing winning, the CEO still have to answer to the toughest boss of all, the shareholders; and shareholders can be a merciless audience at annual general meetings.

Shareholders don’t care why you failed, they just know that their investment is worth less this year than last and as you’re running the show it must be YOUR fault.

The content industry has had some major upsets at the helm of several of their member companies. But what is also happening is that their shareholders are realizing that strongarm tactics are not working.

Sometimes it takes a long time for an idea or meme to become an accepted fact.

In Australia, the “Belt-up” seat-belt road safety campaign ran for ten years before Australians accepted that putting on the seat belt was an automatic function of traveling in a motor vehicle.

Possibly, the content industry shareholders now realise that :

A) File sharing is here to stay.

B) ISP’s are unable to prevent it from occurring.

C) The Justice system is unwilling to enforce fascist type lawmaking precedence.

D) Other options need to be examined.

Now, if we could just convince our legislators of the same (in relation to ACTA and restrictive and privacy infringing aspects of other Free Trade legislation,) then we might just have a world where we all get on a lot better and happier.

Wikipedia states that the definition of happiness is a state of mind or feeling characterized by contentment, love, satisfaction, pleasure, or joy.

Happiness economics suggests that measures of public happiness should be used to supplement more traditional economic measures when evaluating the success of public policy.

Source: http://en.wikipedia.org/wiki/Smiley

I’m pretty sure that right now, Michael Malone (CEO of iiNet) looks like the little guy above.

Curiously, I believe that today’s decision means that the shareholders of content companies can actually now also be happy and instruct their representatives, the content company CEO’s to start the process of meaningful dialogue to profit from P2P, rather than lose from it.

P.S: And Australia really does have a balanced and fair court system. Which is rather nice to know.

References:

Judgment - Roadshow Films Pty Ltd v iiNet Limited (No. 3) [2010] FCA 24

http://www.austlii.edu.au/au/cases/cth/FCA/2010/24.html

Happiness

http://en.wikipedia.org/wiki/Happiness

SMS Power beats Hollywood, Radio, Videogames & the Music Industry.

Tom Koltai — Thu, 04 Feb 2010 01:29:57 +1100

stats2010-h.doc

Or – The Havenots become the Haves.

Preamble

It’s a well known fact that when placed under restricting circumstances, all animals will look for an escape or release from the restriction.

"The Internet treats censorship as a malfunction and routes around it." - John Perry Barlow.

--------------------------------------------------------------------------------------------------------------------------------

The Article

IRC stands for Internet Relay Chat. It’s been around since I was a little boy. OK – It’s been around since 1988.

For those that are not familiar with IRC, it’s the same (in principle) as MSN chat, Yahoo chat, Skype chat – in fact all of those programs allow you to type messages to each other – via the internet – FOR FREE.

In fact in the early nineties, I, with a number of BBS sysops in Australia set-up a chat link called Ozlink and we connected our BBS’es to other BBS’es all over Australia.

I was connected to the Internet so we found like minded Sysops in other countries like like Florida Frankfurt and Colorado to which we connected the Australian Ozlink chat.

It was fun, chatting to people on the other side of the country or world. (This was BEFORE MSN/YAHOO etc.)

I fell in love with the technology because I saw it as a way for people to communicate with lots of other people, cheaply and as an economist, I just knew that had to be good for the economy.

Fast forward to 1996 and Telstra attempting to defend their voice traffic by attempting to implement a ”B” party charging regime for incoming VOIP calls via the internet.

Well we stopped that one with concerted activism which I believe for the first time in Australia had thousands of consumers sending faxes to their MP’s. (The power of the Net…)

Telecommunications companies in the early days of the Internet were moaning and groaning about losing revenue. Every one of those groaning, complaining Telco’s, are still with us today, stronger and more profitable than before the internet.

They observed, they learnt, they entered the ring and started boxing… and it rather looks like they have won the game. In most countries, it is the large Telco’s that control access to most of the internet infrastructure.

That accounts for approximately one fifth of the worlds population, mainly what we like to call the industrialized world.

The other 4.8 billion (the emerging economies) are still hunting with bows and arrows.

Or so I thought until I received an email from Tomi Ahonen today. It contained the summary of his 2010 Mobile Phone Almanac.

We started talking about messaging programs on the Internet.

Here are some bullet points from Tomi’s Almanac Cheat Sheet.

The mobile telecoms industry grew subscribers, services and revenues even in economic downturn
The 'mobile internet' browser service use (including WAP) now has more users than legacy PC based internet
The mobile phone is the only device that 30% of the world's population carries
Digital content revenues on mobile are four times as large as those on the legacy PC based internet
Mobile is considered the 'first media' in the emerging world, only medium able to reach half of the population
Mobile messaging revenues $153B are bigger than radio, Hollywood, videogaming & music industries combined

Sorry folks, I just have to say it again. WOW.

The phone companies – in a recession, increased their revenues to 153 Billion which combined is larger than all the revenues form Hollywood, Videogaming, the Music business and Radio combined.

And here is the interesting bit...

They didn’t need to sue their customers for using MSN/Yahoo or IRC.

They didn’t need to turn our courts into their personal employees.

They didn’t need to lobby our politicians for unworkable legislation.

The Telephone companies achieved their 12% revenue increase in the middle of a recession, the old fashion way.

By providing a service and billing for it.

Let me spell that out in large letters for the folk that don’t quite understand how this works.

If you are a mobile phone consumer and wish to send a message – first you have to be located within a service area, and you need a mobile phone.

If there is no Cellphone tower within range, the Telephone Company don’t get your business.

So of course, Telephone companies build infrastructure to make sure that there's a cellphone tower close by, in case you want to send an SMS.

If you cant afford to buy an expensive handset, they offer you whichever handset you want on a pay by the month plan; just to ensure that they have your business.

SMS messaging in Australia started in 1995. Billing for the messages commenced in 1996 at $0.25 per message.

Now the cost of SMS varies between three cents and eight cents (at the wholesale level) and twelve cents to twenty cents at the retail level.

According to Tomi’s data, 3.6 billion people used messaging services of whom 2 billion were from emerging nations. )(OK so bows and arrows and cellphones….)

So now persons in emerging nations are able to afford to send a message to others for a few pennies/cents.

Obviously low cost messaging with availability of service equals windfall revenues for the carriers.

Can those emerging nations afford to buy a Blu-Ray copy of this years movie? – Nope.

Can they buy it from Amazon if they don’t live in the USA? – Nope.

Is there any legal affordable manner for them to obtain the content legally ? – Nope.

What choice do they have?

They can download it from the Net or not watch it.

That’s not a choice, it’s a Technical Meme waiting for some software to make it happen.

Oh the software for mobile phone P2P downloads already exists?

Sure has done since 2004.

But only for people from the industrial countries surely.

Nope, its available to anyone with a data connection.

And as can be seen from Tomi’s connectivity data, the communication crossover between industrialized and emerging has occurred.

stats2010-h.doc

DIGITAL DIVIDE per capita	Industrialized World		Emerging World		Total
Banking account unique holders	950,000,000	(79%)	1,250,000,000	(22%)	2.2 B
Internet users incl PC, shared & mobile	775,000,000	(63%)	925,000,000	(17%)	1.7 B
Mobile phone subscriptions	1,600,000,000		3,000,000,000		4.6 B

There are now more people connected from the emerging nations than the industrialized nations.

The moral of the story is that the industry that provides the ability for it's customers to :

a) Acquire the content (get connected)

b) Use the content (send/receive a billable message)

c) Economically (cheaply)

Appears to be leaping ahead of the industry that makes the content

a) hard to get - if you happen to live in the wrong country.

b) too expensive

c) encrypted and too hard to use

d) self destroying DRM rental overnight digital copies

e) sues their customers

f) wastes money lobbying Government to enact prehistoric legislation.

g) When it does make the content available - it is usually not in a timely manner.

In other words what would happen if when you wanted to send an SMS, the Telephone company operator came on the line and said - I'm sorry

sir, but SMS service to your destination party will be delayed for three to six months from the time you send the message.

When you ask why.....

The operatior replies....

Well our boss is on the board of Warner Bros Studios and it's a new thing they're trialling. Three month Delayed SMS. Do you think it will catch on?

The Telcos with their agressive and suportive marketing plans have made a success of harvesting increasing revenues from countries who it seems only last decade were on our foreign aid recipient list.

We wonder if the content industry can learn to do the same.

After all, look at the money they made out of a lousy billion people. How much could they make our of selling that catalogue to five billion more?

Hint - A Bluray video that sells for $25.00 on Amazon is not going to sell too well in Burundi where the average income is $120.00 per annum.

(Of course I'm assuming that unlike Australians, Burundians will be able to purchase Video content from Amazon and not be told - I'm sorry the country of your IP address is not yet authorized to purchase that content.....) AAaaaaargh!

Disclosure:

I have purchased Tomi Ahonens 2009 Almanac. I have no other connection with Tomi or his products. I do however happen to like the way he presents his data and findings.

References:

TomiAhonen Cheat Sheet: "Mobile Industry Numbers 2010"

[Tomi Ahonen presentation and slides on The Next 4 Billion]

http://fora.tv/2009/09/24/Mobile_Phones_The_Next_4_Billion_with_Tomi_Ahonen

The Calculation of the Currency of Hedonism.

Tom Koltai — Wed, 03 Feb 2010 12:16:23 +1100

This is the third article in this series entitled: The Economics of Video Entertainment

Part 1 Here

Part 2 Here

For the last couple of days I’ve been leading up to talking about the individual value proposition as to why people purchase, watch, read or listen to certain types of content.

Hedonic pricing components of entertainment are based on the public’s willingness to pay for perceived differences in entertainment offerings.

Chris and I have been batting the ball backwards and forwards over the variables that cause the purse or wallet to be opened and the transaction to take place.

We have concluded that the age old sin of pride in the context of gossip and water cooler conversations is the major culprit.

Being able to tell your friends that you attended a viewing of Avatar at the IMAX at Darling Harbour - and that the experience, as one Avatar attendee relayed to me: “Blew me away with the surround sound, the completely immersive nature of the film, I felt as if I was there, a part of the whole adventure. It was great!” (We’ll call this Experience 1 – “E1”) – is a cool thing to do. Especially so, if you were one of the first that recognised the “greatness” of the entertainment offering.

Experience 2 (“E2”) - Conversely : “I have been to some bad cinemas showing brilliant films, yet the lumpy and ungiving seating has not only ruined my enjoyment of the cinema experience, it has soured it for me so that I no longer attend the smaller theatres that show the limited release films.”

Here we have the two extremes of the Cinema experience.

E1 enjoyed the environment so much that he was gushing to tell me how great it was.

E2 put me off permanently from ever wanting to visit a certain Cinema chain.

Let’s break down the components:

Peer Review Outbound – he enjoyed telling me about his experience

Peer Review Inbound - I was so impressed with his enthusiasm, that I immediately went to Rotten Tomatoes to read the Critics reviews where 82.4% said it was great.

The E1 experience also dealt with

Visual Quality

Audio Quality

Rotten tomatoes brought to my attention the Director of the movie so let’s add:

Direction, Plot and Editing to our list.

Obviously the quality of the stars would be important so lets add:

Actors.

Now what would happen if we added one further ingredient?

Possibly the most important one.

What’s happening to Avatar on the P2P Networks?

At the Pirate Bay, some kind anonymous person is providing the current Top 100 of all downloads (which used in the right manner, allows anyone that can mine data to become a Nielsen’s wannabe.)

RANK	NAME	DATA	Seeders	Leechers
10	Avatar (2009) PROPER TS XviD-MAX	Uploaded 12-20 2009, Size 1.36 GiB,	15882	5695
27	Avatar (2009) Spanish TS HQ	Uploaded 12-21 2009, Size 1.64 GiB,	4109	6127
37	Avatar TS XviD-IMAGiNE(No Rars)	Uploaded 12-19 2009, Size 1.53 GiB,	6342	2320
43	Avatar.2009.iTALIAN.MD.INTERNAL.DVDscr.XViD-THEMA[S.o.M.]	Uploaded 01-16 20:17, Size 1.29 GiB	3763	4468

TOTALS			30096	18610

Which actually put it ahead of the most popular TV shows, however with P2P interest waning (decreasing Leecher numbers).

1	Heroes S04E18 HDTV XviD-LOL [eztv]		Uploaded Today 04:42, Size 349.94 MiB	28148	31306
2	House S06E12 Moving the Chains HDTV XviD-FQM [eztv]		Uploaded, Today 03:27Size 350.04 MiB	24325	22834

Data is as at 23:30 hours, Feb2, 2010 EST AU.

Therefore TODAY – Avatar, the movie (albeit in three different languages) is the number one downloaded file in the world.

If we gave all of these items based on personal Hedonic preferences and here is the difficult part. What appeals to “moi” may not necessarily appeal to you and vice versa…. So obviously we have to nominate the following list as:

	Arbitrary Hedonic Values
1	Currency of Content	<1 Mnth =+35%
1	Familiarity of Content	+3 for current affairs memes, themes and Temes.
1	Value of Content	+1 for each minute of content
5	Action	+5 for each explosion/car chase/
2	Music	+2 for appropriate music scoring per scene.
5	P2P Downloads	+5 for each download
#	Actors	+10 for each famous actor
8	Director	+8 for "Like the Directors Films"
5	Patriotism	+2 for program reflects my patriotic values
5	Oscar Awards etc	+5 for program has been nominated for an award (x # of awards)
1	Critiques	+1 for every Critic posting Positive or Negative.
5	Technology	+25 for every unique Technology aspect. (3D/Imax).
3	Social Networking	+3 for every mention on Facebook
1	TV Advertising	+1 for every time I noticed a TV advertisement
3	Newspaper Advertising	+3 for every time I noticed a Newspaper Advert
5	Scenery	+5 for artistic content - e.g.: Beautiful Scenery
5	Plot	+5 for Great plot
5	Editing	+5 for excellent editing.
5	Peer Review Inbound	+5 for every person that has told me about it.
5	Peer Review Outbound	+7 for every person I talked to about the film.
5	Venue Quality	+5 for Great seats and comfortable ambience
1	Visual Quality	+10 for IMAX, +8 for Cinema 2K +5 for HD +1 for 720 x 480
#	Audio Quality	+10 for Dolby surround sound

So now I have my very own personal Hedonic scoring method value for each piece of content viewed or under consideration for viewing.

The discerning consumer might then look-up his entertainment budget to ascertain whether a $27.00 ticket price is affordable, however, if we add “Peer Pressure” to the above mix, then we have obviously reached “Engagement Point” and the contents of the wallet/purse are then utilized.

The days when consumers are driven exclusively by free to air and print-press advertising are long past.

Word of Mouth has expanded to Peer to Peer networks including the social networks. A thumbs up on Facebook or the Torrent/ED2K Networks is an apparent guarantee of success at the Box Office.

The desire for non-cashed up young people to be able to be in the first group of viewers that have seen a film is high. Peer pressure demands conformance.

Short of building thousands of IMAX theatres throughout the world, I don’t know how Hollywood can satisfy the growing demand for the real experience of these modern technologically advanced films.

Australians that download Avatar from the P2P networks pay approximately $3.00 in bandwidth charges for the privilege of being under-awed by the experience.

Down-loaders soon learn that the experiences of E1 are far superior to their own….

“Well I saw it for free”.

Free low-res computer-fare might have been cool in 2004, but now, it’s just so, ho-hum.

Free doesn’t have fresh popcorn smells.

Free doesnt include 3D

Free doesnt include a hugest screen.

(We blogged about the ersatz “taste” here.)

Value of the P2P download as recommending tool = High

Value of the P2P download to the downloader is questionable.

If Hollywood continues this innovative approach to movie making, I dare say their coffers will keep filling.

3D heads up display glasses anyone?

Just maybe, instead of ignoring these new technologies, Hollywood should bring them out first.

I see in the not too distant future, content companies with technology R&D departments.

Sort of like…. Sony and of course with the reverse process, Apple..

Old Hungarian saying – if you can’t beat ‘em, join ‘em.

Tomorrow we are going to discuss the Value per minute.

Stay tuned.

References:

Transformers 2: The IMAX Experience

http://screenrant.com/transformers-2-imax-experience-kofi-14656/

A Quote From Joseph Stiglitz, noted economist

Chris Gilbey — Tue, 02 Feb 2010 17:13:02 +1100

Tom and I were talking today about the Hedonic Value Index that he is working on. I wondered aloud to him whether happiness and hedonism are actually alike.

One of the great societal problems that we currently face, and is, I believe, a symptom of the GFC, is this confusion between consumption of things as a motivator of happiness and spiritual happiness.

I came across this quote from the noted economist, Joseph Stiglitz, earlier today which pretty much sums it up for me!

We have created a society in which materialism overwhelms moral commitment, in which the rapid growth that we have achieved is not sustainable environmentally or socially, in which we do not act together to address our common needs. Market fundamentalism has eroded any sense of community and has led to rampant exploitation of unwary and unprotected individuals. There has been an erosion of trust-and not just in our financial institutions. It is not too late to close these fissures.

Apocalypse Book

Chris Gilbey — Tue, 02 Feb 2010 16:40:55 +1100

I was doing some research today on a short story that I am writing about the period leading up to World War 2. Like most research it led to some extraordinary twists and turns and lateral connections with seemingly unrelated topics.

Fortunately, living in the age of Google, it is easy to find information that makes you feel at least a little bit intelligent and informed about the times that you write about...

But then I decided that one of my characters would invoke Mary Shelley and the protagonist in her book, Frankenstein....

That led me to do some quick research on Mary Shelley in Wikipedia...

I was quite surprised to find that Mary Shelley's favourite work from the author's perspective was a book that was roundly panned by the critics at the time. It was a science fiction book, called, "The Last Man" and tells the apocalyptic story of a global plague that befalls the people of the earth at the end of the 21st Century. It was written as a thinly veiled analog of her peers during her lifetime, but seems like it could be an interesting read...

Fortunately it is out of copyright and available as a download as a pdf file.

That will be the next book to read!

The ED2K Networks disagree with Nielsens or "Koltai’s method of TV ratings"

Tom Koltai — Tue, 02 Feb 2010 10:37:14 +1100

This is Part II in a series of articles entitled: The Economics of Video Entertainment

In yesterdays article, I commented that :

At Perceptric, we have commenced an attempt at applying our P2P Value method against the relatively new science of hedonic valuation.

Early results have enabled us to see patterns that are contra-indicative to standard online Nielsen type ratings.

Programs that would appear to be decreasing in popularity on TV would appear to be increasing in popularity on the P2P networks.

e.g.: Flash-forward.

Flash Forward? Every statistic appears to publicly call me a liar.

Source: http://www.tvu.org.ru/index.php?show=episodes&sid=27955

Yep it looks like it’s dying. But hang on a minute, lets see the clicks per day.

A Histogram of the data shows us a very different picture.

It shows solid growth with the exceptions of the 7^th and 10^th episodes.

What do I base this on?

Hits per day.

Episode	HPD
E1	44.46723
E2	46.09355
E3	48.05903
E4	50.77546
E5	53.82808
E6	52.8084
E7	49.19266
E8	59.12285
E9	64.89869
E10	48.37375

Therefore regardless of what Nielsens or anyone else are saying, Flashforward has an audience that is growing at 0.0284x per day.

Not enough you say?

Okay lets compare it to the most downloaded TV series of 2009 which was House.

Hits per day.

Episode	HPD
E1+2	60.91882
E3	60.48799
E4	62.06326
E5	62.28052
E6	70.56682
E7	80.82763
E8	80.84548
E9	88.08141
E10	97.45169

Or, growth is at the rate of 0.0677x per episode.

So was House always a hit?

Not on the ED2K networks.

Here’s the results for the first ten episodes of house from series 1 (2004).

In other words losing user attention at the rate of -0.0283x per episode.

But Koltai, House started in 2004.

We didn’t have any near as many people connected via high speed DSL in 2004.

Ahh yes well, now we get back to what I was talking about yesterday.

Hedonic Value.

The last twelve months have been filled with discussion and concern about the “end days” of the world with doomsayers telling us that December 21^st 2012 is it.

There is little discussion about the Dec 21^st being the traditional first day of Winter and the natural end of the annual Spring, Summer Autumn growing calendar.

Educated people are aware of these facts and typically ignore the doomsayers. However there are billions that believe everything that comes out of the little box that we call TV.

“End of the world is coming Mother, it said so on the TV.”

“Well I better go and make the beds and sweep the porch then……”

Flashforward has involved itself in the doomsday conspiracy meme and mentioned the Haldron Collider (As has another popular show, “The Big Bang Theory”).

Ears perk up. Haldron Collider – End of the World!!!!! (Burn the Witches, where is my necklace of Garlic.)

The most prized hedonic possession is a combination of life, liberty and health.

Of course if you live in Australia or one of the lucky countries in the world, these are taken for granted and not considered individually valuable.

Possibly one has to be a survivor of the Gulag populated salt mines to understand the definition of freedom.

Subconsciously however, humans are aware that life and living has a priority attached.

On the basis that Hedonic enjoyment can only be experienced by a live human, therefore let us give being alive on 22 December 2012 a Hedonic value of 100.

With everything else allocated a value less than 100.

Therefore programs about the highest (human) valued topics are likely, regardless of their acting, special effects or plot, likely to do quite well.

e.g.: the BBC are having some success with their Horizon series:

BBC Horizon - 2009-11-03 Who's Afraid Of A Big Black Hole.avi 746 MB

and

BBC Horizon - Lost Horizons - The Big Bang.avi 746 MB

(Which is actually receiving more hits than Flashforward.

Stay tuned, Hedonic Valuation of viewing choices is just starting to get interesting.

Qualification of Data.

TVU is only one from amongst approximately 87 ED2K indexes

References:

Flashforward Partial Plot Outline....

http://bunchofnerds.com/2009/10/physics/large-haldron-collider-sabotaged-by-its-own-future-cern-physicist-arrested-charged-w-working-w-al-qaida/