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Interesting take on the online reputation scrubbing services…Check it out here.

Also available on RWW…

Since we are talking about open source, a definition of the subject from Wikipedia is in order:

“Open source is a set of principles and practices that promote access to the production and design process for various goods, products, resources and technical conclusions or advice. The term is most commonly applied to the source code of software that is made available to the general public with relaxed or non-existent intellectual property restrictions. This allows users to create user-generated software content through incremental individual effort or through collaboration.”

In the area of computers and Internet, open source movement is almost as old as computers themselves. In the beginning there was Multics, Unix, BSD, Minix etc. Than came Richard Stallman’s GPL, GNU and FSF. That was followed by Linux, Apache and many more projects. Over time open source movement has begun extending to things beyond software and technology to include media (video, pics and blogs etc.), creative content (creative commons) and communities.

Since open source movement affects our lives in more and more ways, let’s take a look at how the open source model is interacting with our market driven economic system.

Open Source Business Models

The heightened level of interest in open source model has lead companies to start looking for ways to add value to the process of open source development and distribution in order to make money from it. Some of the models/approaches that have emerged are:

• Develop the product and open it up to the community: The main goals for the businesses here are two fold:
  • Generate marketing buzz
  • Leverage the skills/people in the community to enhance the product.

Businesses make money by selling add on software modules or services to customers using the open source technology. Some of the examples of this model are Eclipse (IBM), Netscape, Linux, and recently Solaris (Sun) etc. While this model sounds attractive as a way to reduce development costs, there are plenty of other expenses for the businesses. Businesses need to create and participate in boards (Sometime controlled by the business, sometimes not) to chart a sensible product direction, to manage licensing issues and to put together a well tested base distribution bundle. Working on a board staffed with community members and sometimes even competitors can be an expensive and time consuming process.

• Take an Open Source product and provide support and services to enterprises: There are a number of companies like MySQL, Zmanda, RedHat etc. that provide such services. The business model is all about building up the volume and driving up the percentage of paying customers (typically less than 2% of the customers pay) for customer support or other services.

• Provide open source platforms: There are a number of sites/projects like sourceforge.net, google code and even YouTube or FaceBook that provide platforms for open source like collaboration. The business model typically is to provide the basic services for free and make money via ads by driving the page views.

The value of the open source is pretty clear to customers as they get the product and services they want without having to pay for the underlying product…But who else is extracting the rents in open source related economic activity? Let’s look at the value accruing to three important stakeholders – Businesses, Customers and Contributors.

Value to open source businesses

Some have argued that businesses are capturing the lion share of the value of open source at the expense of contributors and customers. This point of view is expressed by Dirk Riehle (leads the open source research group at SAP Research) in his recent paper on the topic. Dirk argues that businesses derive the maximum benefit because:

• Customers want a deployed solution, so service companies (like IBM) that use the open source software, just make up for the free open source software by increasing the price of the service. This increase directly goes to their bottom line.
• Businesses benefit as employers, because larger talent pool due to non-proprietary nature of open source, enables businesses to have a stronger negotiating position compared to the individual developers.

Besides the obvious conflict on interests (Dirk works for SAP which isn’t big on open source and competes with IBM which is), Dirk makes the first point without pointing to any data. I find it hard to believe that customers don’t see a lowered bill when open source software is used compared to proprietary software.

For his point #2, Dirk again, provides no facts but makes a general assertion. I believe that the people who contribute to open source are self motivated people who enjoy programming and as such get a higher salary compared to people who do not participate in open source.

Also from the open source businesses point of view, if we consider the costs associated with managing, engaging and participating with the community, I am not sure the open source businesses will come out with lower costs, compared to non-open source businesses.

Overall it seems to me that open source businesses have significant costs and barriers to profitability and are certainly not capturing the majority of value in open source transactions.

Value to Customers

Customers using open source benefit a great deal.

• Free software makes it easy to get started.
• Using open source enables customers to avoid the dreaded vendor lock-in. So if customers are using open source they are able to change providers if they are not particularly happy with the service provided by the vendor. Open source provides them with huge leverage with service providers.
• The customers benefit as they have a larger talent pool to hire from and they don’t have to pay proprietary vendors for all sorts of “certifications” etc.

Overall the customers come out well ahead by using open source technology. In fact, were it not for the LAMP (Linux, Apache, MySQL and Php, Python, Perl etc.) stack, startups costs would have been a lot higher then they are today and we would not be seeing the amount of innovation we are seeing in the field of Internet and Technology.

Value to Contributors

Contributors to open source also benefit from participating:

• It used to be the case that contributors did not get paid for their contributions and had to work on their own time, but things are changing. With the popularity of the open source projects, more companies are paying contributors to support the community or are even contributing proprietary modules to the community. This provides direct incentives to contributors to work with the community.
• Open source participation is a great way to establish creadibility of you are a programmer…Have you seen ads like these?“With your resume, please include some php and javascript code snippets or refer us to an open source project you’ve worked on.”
• Most good open source developers have an opportunity to become public voice of the project. This extended role for engineers not only means an ego boost but also translates to higher salaries etc.

Overall developers working on open source come out ahead by participating in the open source projects.

Conclusion

Open source movement has become a powerful value creator. In addition it has created an interesting and somewhat egalitarian wealth distribution mechanism, where on one hand it has made it hard for one stakeholder to extract inordinate rent, on the other hand it has created right incentives for a lot of people to participate and have a stake in its success. No wonder it is becoming a popular model for more and more businesses and social activities.

Fascinating piece in the post today, related to how scientists are finding evolutionary basis for human morality.

Pic via MrFarber on Flickr

Grafman and others are using brain imaging and psychological experiments to study whether the brain has a built-in moral compass. The results — many of them published just in recent months — are showing, unexpectedly, that many aspects of morality appear to be hard-wired in the brain, most likely the result of evolutionary processes that began in other species.

No one can say whether giraffes and lions experience moral qualms in the same way people do because no one has been inside a giraffe’s head, but it is known that animals can sacrifice their own interests: One experiment found that if each time a rat is given food, its neighbor receives an electric shock, the first rat will eventually forgo eating.

…

Joshua D. Greene, a Harvard neuroscientist and philosopher, said multiple experiments suggest that morality arises from basic brain activities. Morality, he said, is not a brain function elevated above our baser impulses. Greene said it is not “handed down” by philosophers and clergy, but “handed up,” an outgrowth of the brain’s basic propensities.

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In one 2004 brain-imaging experiment, Greene asked volunteers to imagine that they were hiding in a cellar of a village as enemy soldiers came looking to kill all the inhabitants. If a baby was crying in the cellar, Greene asked, was it right to smother the child to keep the soldiers from discovering the cellar and killing everyone?

The reason people are slow to answer such an awful question, the study indicated, is that emotion-linked circuits automatically signaling that killing a baby is wrong clash with areas of the brain that involve cooler aspects of cognition. One brain region activated when people process such difficult choices is the inferior parietal lobe, which has been shown to be active in more impersonal decision-making. This part of the brain, in essence, was “arguing” with brain networks that reacted with visceral horror.

Such studies point to a pattern, Greene said, showing “competing forces that may have come online at different points in our evolutionary history. A basic emotional response is probably much older than the ability to evaluate costs and benefits.”

…

Why is it that people who are willing to help someone in front of them will ignore abstract pleas for help from those who are distant, such as a request for a charitable contribution that could save the life of a child overseas?

“We evolved in a world where people in trouble right in front of you existed, so our emotions were tuned to them, whereas we didn’t face the other kind of situation,” Greene said. “It is comforting to think your moral intuitions are reliable and you can trust them. But if my analysis is right, your intuitions are not trustworthy. Once you realize why you have the intuitions you have, it puts a burden on you” to think about morality differently.

I guess we (and other animals) are really social beings…It also means that its easy for us to empathize and interact with people in face to face settings…This really presents a dilemma for social media where the geographical or even chronological proximity is not required for most interactions…I am pretty sure our genes provide no direction on what to do there? What do you think?

Interesting article in the Times today (NYT guys have really gotten their act together and are producing some good content about social media of late) about the high price of creating free ads.

Pic via NYT

From an advertiser’s perspective, it sounds so easy: invite the public to create commercials for your brand, hold a contest to pick the best one and sit back while average Americans do the creative work.

In one of them, a teenage boy rubs ketchup over his face like acne cream, then puts pickles on his eyes. One contestant chugs ketchup straight from the bottle, while another brushes his teeth, washes his hair and shaves his face with Heinz’s product. Often the ketchup looks more like blood than a condiment.

Heinz has said it will pick five of the entries and show them on television, though it has not committed itself to a channel or a time slot. One winner will get $57,000. But so far it’s safe to say that none of the entries have quite the resonance of, say, the classic Carly Simon “Anticipation” ad where the ketchup creeps oh so slowly out of the bottle.

Consumer brand companies have been busy introducing campaigns like Heinz’s that rely on user-generated content, an approach that combines the populist appeal of reality television with the old-fashioned gimmick of a sweepstakes to select a new advertising jingle. Pepsi, Jeep, Dove and Sprint have all staged promotions of this sort, as has Doritos, which proudly publicized in February that the consumers who made one of its Super Bowl ad did so on a $12 budget.

But these companies have found that inviting consumers to create their advertising is often more stressful, costly and time-consuming than just rolling up their sleeves and doing the work themselves. Many entries are mediocre, if not downright bad, and sifting through them requires full-time attention. And even the most well-known brands often spend millions of dollars upfront to get the word out to consumers.

Some people, meanwhile, have been using the contests as an opportunity to scrawl digital graffiti on the sponsor and its brand. Rejected Heinz submissions have been showing up on YouTube anyway, and visitors to Heinz’s page on the site have written that the ketchup maker is clearly looking for “cheap labor” and that Heinz is “lazy” to ask consumers to do its marketing work.

“That’s kind of a popular misnomer that, somehow, it’s cheaper to do this,” said David Ciesinski, vice president for Heinz Ketchup. “On the contrary, it’s at least as expensive, if not more.”

I am not surprised that the Heinz Ketchup folks ended up not having a good experience with what they were trying to do. Their approach does not make any sense on so many different levels:

1. They are trying to take community content to put it on mass media outlet like TV. The content created by the community is not going to be polished or suitable for mass media. Its like taking square shaped, rough edged user generated content and trying to fit in in a round hole of mass media outlet. No wonder they are not happy…
2. Its kinda cynical approach to engaging the community to just do your Ads…if they were really interested in working with the community they should have empowered them more…and allowed them to have real influence in the direction of what they are doing. I am not sure what they are trying to achieve here.
3. If they are interested in really having a conversation with their user they should build up a process for interacting and really listening to them..it would also mean giving up some of the control…its really a tall order and not many companies are up for the challenge…

What do you think?

Check out this fascinating piece from NYT magazine by Clive Thompson about the new dynamics/business models in the entertainment industry…I have to warn you that it is kinda long but its really well written…Also be sure to look at this video about “Code Monkey”, which seems like an anthem for computer programmers everywhere…

(Pic via NYT as well)

The Hold Steady’s online audience has grown so huge that Kubler, like Jonathan Coulton, is struggling to bear the load. It is the central paradox of online networking: if you’re really good at it, your audience quickly grows so big that you can no longer network with them. The Internet makes fame more quickly achievable — and more quickly unmanageable.

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To cope with the flood, the Hold Steady has programmed a software robot to automatically approve the 100-plus “friend” requests it receives on MySpace every day. Other artists I spoke to were testing out similar tricks, including automatic e-mail macros that generate instant “thank you very much” replies to fan messages. Virtually everyone bemoaned the relentless and often boring slog of keyboarding. It is, of course, precisely the sort of administrative toil that people join rock bands to avoid.

Things sure are a changing.

Great opinion piece by Tom Grubisich at Washinton Post. It talks about the lack of transparency with user generated content.

These days we want “transparency” in all institutions, even private ones. There’s one massive exception — the Internet. It is, we are told, a giant town hall. Indeed, it has millions of people speaking out in millions of online forums. But most of them are wearing the equivalent of paper bags over their heads. We know them only by their Internet “handles” — gotalife, runningwithscissors, stoptheplanet and myriad other inventive names.

Imagine going to a meeting about school overcrowding in your community. Everybody at the meeting is wearing nametags. You approach a cluster of people where one man is loudly complaining about waste in school spending. “Get rid of the bureaucrats, and then you’ll have money to expand the school,” he says, shaking his finger at the surrounding faces.

You notice his nametag — “anticrat424.” Between his sentences, you interject, “Excuse me, who are you?”

He gives you a narrowing look. “Taking names, huh? Going to sic the superintendent’s police on me? Hah!”

In any community in America, if Mr. anticrat424 refused to identify himself, he would be ignored and frozen out of the civic problem-solving process. But on the Internet, Mr. anticrat424 is continually elevated to the podium, where he can have his angriest thoughts amplified through cyberspace as often as he wishes. He can call people the vilest names and that hate-mongering, too, will be amplified for all the world to see.

This is a real problem with the Internet (Although I am not sure about “transparency in all institution” especially with the government)…With the lack of incentives to participate and lack of tools for the community to control the conversation, the vocal and vilest few take over the conversation and bring down the quality of discourse. Tom suggests a few solutions:

Until recently, many of the site’s posters identified themselves with anonymous Internet handles — which were the site’s default ID. Now, people must enter a “user ID” that appears with their comments.

Hal Straus, washingtonpost.com’s interactivity and communities editor, says the changes “move us in the direction of transparency.” But the distinction is not quite a difference, because washingtonpost.com user IDs can be real names or fictional Internet handles. While the site prohibits comments that are libelous, abusive, obscene or otherwise inappropriate, Mr. anticrat424 could still find a well-amplified podium at washingtonpost.com.

The news and opinion site Huffingtonpost.com requires posters to register with their real names but maddeningly assures them that it will “never” use those names.

Though not foolproof, there are ways to at least raise the bar. Gordon Joseloff, a former CBS News correspondent who owns WestportNow.com, a popular grass-roots site in Westport, Conn., used to employ the standard permissive registration process. But in late 2005, turned off by the venom of anonymous posters, Joseloff instituted a policy requiring anyone who wanted to comment to use his or her real name. Joseloff also requires registrants to give their phone numbers. Numbers aren’t posted on the site, but they give him and his team an additional check against false registration.

Only the big sites like the Washington Post or Huffington Post can pull off requiring users to register…And its really painful for readers to have to remember another username and password. So what is the solution? Also there is a need to strike the right balance between the need for anonymity and identification…At times Anonymity is justified, like with whistleblowers etc. but at the same time anonymity all the times provides perverse incentives…What do you think?

Interesting and scholarly study from Kennedy School of Government’s Viktor Mayer-Schönberger, titled “Useful Void: The Art of Forgetting in the Age of Ubiquitous Computing”. In the study, the author points to change in our default societal behavior, from forgetting unimportant things to remembering everything.

In March 2007, Google confirmed that since its inception it had stored every search query every user ever made and every search result she ever clicked on. Google remembers forever.

“хранить вечно“ (to be preserved forever) the KGB stamped the dossiers on its political prisoners. The Communist state would never forget the identity, believes, actions and words of those that had opposed it.

Like the Soviet state, Google does not forget. But unlike the Soviet Union that ceased to exist fifteen years ago, Google has become an indispensable tool for hundreds of millions of people around the world, who use it every day. We seem to have accepted that our digital society may forgive, but no longer forgets.

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This has resulted in a drastic shift in our data retention behavior. For millennia it was difficult and costly to preserve. We would only do so in exceptional circumstances, and most frequently only for a limited period of time. For almost all of human history, most of what humans experienced was quickly forgotten. Today, however, retention of digital data is (relatively) easy and cheap. As a consequence, and absent other considerations, we keep rather than delete it. This is the central point: In our analog past, the default was to discard rather than preserve; today the default is to retain.

Credit bureaus store extensive information about hundreds of millions of U.S. citizens. Daniel Solove writes that the largest US provider of marketing information offers up to 1,000 data points for each of the 215 million individuals in its database. We also see the combination of formerly disparate data sources. Solove mentions a company that provides a consolidated view at data from 20,000 different sources across the world. It retains the data, he writes, even if individuals dispute its accuracy.

Companies keep our air travel reservations on file even when we decide not to buy the ticket, together with rich information about us and our previous travel patterns.21 Millions of cameras in public places – the UK alone is said to operate between 2 and 3 million produce records of our movements that are kept. Law enforcement agencies store biometric information about tens of millions of individuals even if these have never been charged with a crime. Search engines retain each of our search queries, and keeps archival copies of our web pages long after we have taken them offline.

This is only the beginning. With the advent of ubiquitous computing, of cheap GPS chips in our cell phones, cameras and cars, of RFID tags in everyday objects, and of tiny, networked sensors that surround us, a more comprehensive trail of our actions will be collected than ever before. Given low cost of storage, ease of retrieval and potential value in accessing information, much of the data that is being collected will be kept for months if not years, as our societal default has shifted from deletion to retention.

This has drastic consequences beyond the obvious ability to know much more about other people’s preferences, behaviors, actions and opinions than in the analog world of incremental forgetting. Living in a world in which our lives are being recorded and records are being retained, in which societal forgetting has been replaced by precise remembering, will profoundly influence how we view our world, and how we behave in it.

If whatever we do can be held against us years later, if all our impulsive comments are preserved, they can easily be combined into a composite picture of ourselves. Afraid how our words and actions may be perceived years later and taken out of context, the lack of forgetting may prompt us speak less freely and openly. This is the temporal version of a panoptic society, in which everything is being watched; it is a society in which most of what is being recorded and collected is being preserved. Regardless of other concerns we may have, it is hard to see how such an unforgetting world could offer us the open society that we are used to today.

So what is the solution? The author suggests a combination of legislative and technical approaches that restore the default of forgetting in our society. So if some entity or person wanted to remember things beyond certain time period, they would need to do some special action like writing down in digital terms…I think this makes a lot of sense and could prevent common people from becoming more and more like stage coached politicians who  plan and practice each and every one of their moves and utterances…What do you think?

This is a familiar enough story (Via SF Gate)…And the people hit have few avenues for relief:

The first postings appeared soon after Sue Scheff, who runs a Web-based referral service for parents with troubled teenagers, advised a woman from Louisiana to withdraw her twin sons from a boarding school in 2002. Scheff is “a con artist,” “a crook” and “a fraud,” according to the messages, which peppered blogs and Internet forums for parents of troubled teens.

Soon, calls to Scheff’s Parents Universal Resource Experts dropped by half, said Scheff, 45, who lives in Weston, Fla. “People would say: ‘You know, I just read this about you online. How do I know I can trust you?’ ”

Scheff, whose 6-year-old service usually draws a lot of traffic, is a victim of an emerging phenomenon: online smear campaigns, which can wreak havoc in the victims’ professional and business lives at the touch of a few keystrokes.

We need an identity and reputation infrastructure that puts all opinions, expressed by all people, in perspective based on what they have done in the past. Such a system will help online communities maintain decorum by penalizing participants who don’t add value to the discussion (much like discussions in real community) and rewarding those who do…This is quickly emerging as an important requirement for wider adoption of social media…

Fascinating article in the NYT today (I am again quoting NYT…It seems they have really gotten their act together of late in the high-tech/network world space). The article talks about the theory of “Cumulative Advantage” or the “rich get richer” effect. In summary the theory suggests that our preferences/decisions are very much effected by what other people are doing. So if a technology or a singer or a movie is liked by our peers we are more likely to try it and like it. We provided another example of this phenomenon (without naming the theory) in a prior post related to behavior of users at Digg where we observed that a fake article got a number of Diggs just because a user paid of a few Diggs to get initial momentum.

Conventional marketing wisdom holds that predicting success in cultural markets is mostly a matter of anticipating the preferences of the millions of individual people who participate in them. From this common-sense observation, it follows that if the experts could only figure out what it was about, say, the music, songwriting and packaging of Norah Jones that appealed to so many fans, they ought to be able to replicate it at will. And indeed that’s pretty much what they try to do. That they fail so frequently implies either that they aren’t studying their own successes carefully enough or that they are not paying sufficiently close attention to the changing preferences of their audience.

The common-sense view, however, makes a big assumption: that when people make decisions about what they like, they do so independently of one another. But people almost never make decisions independently — in part because the world abounds with so many choices that we have little hope of ever finding what we want on our own; in part because we are never really sure what we want anyway; and in part because what we often want is not so much to experience the “best” of everything as it is to experience the same things as other people and thereby also experience the benefits of sharing.

The authors set out to test out the theory with an interesting experiment:

Because it’s not possible in the real world to test theories about events that never happened, most of what we know about cumulative advantage has been worked out using mathematical models and computer simulations — an approach that is often criticized for glossing over the richness of real human behavior. Fortunately, the explosive growth of the Internet has made it possible to study human activity in a controlled manner for thousands or even millions of people at the same time. Recently, my collaborators, Matthew Salganik and Peter Dodds, and I conducted just such a Web-based experiment. In our study, published last year in Science, more than 14,000 participants registered at our Web site, Music Lab (www.musiclab.columbia.edu), and were asked to listen to, rate and, if they chose, download songs by bands they had never heard of. Some of the participants saw only the names of the songs and bands, while others also saw how many times the songs had been downloaded by previous participants. This second group — in what we called the “social influence” condition — was further split into eight parallel “worlds” such that participants could see the prior downloads of people only in their own world. We didn’t manipulate any of these rankings — all the artists in all the worlds started out identically, with zero downloads — but because the different worlds were kept separate, they subsequently evolved independently of one another.

This setup let us test the possibility of prediction in two very direct ways. First, if people know what they like regardless of what they think other people like, the most successful songs should draw about the same amount of the total market share in both the independent and social-influence conditions — that is, hits shouldn’t be any bigger just because the people downloading them know what other people downloaded. And second, the very same songs — the “best” ones — should become hits in all social-influence worlds.

What we found, however, was exactly the opposite. In all the social-influence worlds, the most popular songs were much more popular (and the least popular songs were less popular) than in the independent condition. At the same time, however, the particular songs that became hits were different in different worlds, just as cumulative-advantage theory would predict. Introducing social influence into human decision making, in other words, didn’t just make the hits bigger; it also made them more unpredictable.

Where does this leave us with the rational choice and perfect market theory? Do you think people are more rational when it comes to money? What about making investments? How should VCs or any investor for that matter, evaluate a new consumer technology or a mass market product? This is powerful stuff.

The new state of the blogosphere report (its called Live Web now - interesting repositioning by Technorati) is out now…Some of the interesting takeaways from the report are:

1. The total number of blogs is increasing (we already were counting 80M). Technorati is now tracking 70M blogs. Below is how the growth curve looks and it is following kinda of the same pattern we expected.

2. While the growth rate is slowing down (law of large numbers) the influence of the blogosphere/citizen media/Live Web is increasing in a big way (22 blogs in top 100 media influencers compared to 9 last time)

3. Tagging of content is on the rise…It looks like tagsonomy is here to stay.

4. Blogosphere is becoming more global.

Net Net…Blogosphere is maturing. More people know about blogs so the kind of blog accounts where users were experimenting with starting a blog and then abandoning is slowing down and so the size is growing but more reasonably.

Update (more data from web 2.o via RWW)

David Sifry notes that influential bloggers post more frequently, on average twice a day. Whereas “magic middle” bloggers (about 3M) post on average once a day. Also influential bloggers have been at this at least 1-2 years. Finally, 88% of the top 100 is different than one year ago - i.e. it’s very fluid.