Michi Knows

A Russian court ruled that a former executive at AllOfMP3 was not guilty of copyright infringement. After this verdict, it seems the site is ready to re-launch. This puts Russia’s bid into the WTO into murky waters again and will likely cause a whole new media circus.

In the meantime, you can use AllOfMP3’s reincarnate.

I’m always torn on this particular issue. I think AllOfMP3 fills a void that current exists in digital music: DRM free, cheap music. While labels are starting to finally see the light, so long as DRM is the standard, sites like AllOfMP3 will prosper. As for its *really* low prices, that’s another point. Music tends to be very expensive when you buy it in CD form, and a per track price that is dependant on the file size (quality) is very fair.

That said, selling music without paying royalties to the labels is clearly wrong, but I think the issue has always been how much royalties the labels deserve, since AllOfMP3 has always offered to pay (small) royalties. Lastly, while it’s clearly a little shady, it was also legal by Russian copyright law.

What do you think of AllOfMP3’s business practices?

A new report indicates that one in ten employers are looking at an applicant’s social networking profile.

More than 60 percent said the information they see on these profiles will influence what they think about the job candidate, and more importantly, who gets hired and who doesn’t… Employers have a lot of leeway when deciding who they should and should not hire. Unless an applicant is being discriminated against because of race, age, gender, or ethnicity, there is very little the applicant can complain about later on.

I’ve been trying to warn people about this for a long time now. This all goes back to controlling your online image. Everybody goes out once in a while and gets a little plastered, but not everybody proudly displays photographic proof on their profiles.

With social networking becoming increasingly pervasive, it is becoming harder and harder to stay off the grid. That said, whatever part of you is on sites such as Myspace or Facebook needs to be tempered. This raises some scary questions about the future since I think social networks will eventually use an open directory system that centralizes the data in a decentralized distributed grid. When that happens, it will be very hard protecting your identity and image between different sites while still keeping it an accurate reflection of you.

Still, I can’t wait for elections in 2020 when the first of the Myspace kids begin running for president. I just know there will be a scandal around something they posted when they were 18. Accountability for lasts a life time now that the Internet caches everything.

While there is very little visibility into the searches performed on YouTube, Hitwise noticed some things can be inferred about its traffic. For example, they found that searches for “Funny Videos” dropped steadily as searches for “YouTube” grew.

As in, people figured out that funny videos always ended up on You Tube, and thus, there was little purpose in searching on Google for them.

I think this is one of the first real pieces of evidence that shows how YouTube was a good buy for Google. If You Tube was owned by Yahoo, that would be a lot of searches that got gobbled up by a competitor’s site. YouTube is becoming an actual video search engine, at times completely bypassing Google. In short, Google saw an emerging search market on YouTube — now that is some good foresight.

About time. It seems a class action suit is now brewing against the RIAA. I’m not so sure they can win on all of their claims, but they’ve got the main one in there (malicious prosecution).

The development, first reported by p2pnet, hopes to make a class out of those “who were sued or were threatened with sued by Defendants for file-sharing, downloading or other similar activities, who have not actually engaged in actual copyright infringement.”

This is rather funny. Down 71% for the day.

Many of you may not read about this until Monday (it’s Friday now), but in the case between Novell and SCO regarding the copyright of some UNIX code, the court ruled in favor of Novell. The ruling also (explicitly) destroys SCO’s case against IBM. The court denied SCO’s motions regarding slander, breach of contract, and other bogus claims. Lastly, SCO owes Novell a ton of money for the cross licensing deal they made with Microsoft (to be worked out later).

For those of you who don’t know, SCO started threatening companies and even sued Novell and IBM over it’s supposed mystical ownership of key UNIX source code, the foundation of the now-popular Linux. Had SCO won here, it could have been major legal black eye for the open source community, probably eliminating any major corporation from wanting to take up UNIX out of fear of being sued.

But, Novell won, and buried SCO in the process, shattering any lingering doubts that open source code is safe. I was looking forward to IBM firing its cannons too (that would have been fun).

How much yearly profit would you expect from a $500 million purchase? How about a profit of just $10 million equating to a profit margin just under 2%. That’s right, the world’s largest social networking site, constantly in the top 10 web sites in the world, managed to make only $10 million on $550 million in revenue!

I’m not an expert, but a 1.9% margin is pretty low. For example, the average profit margin for a company in the technology sector is currently 14%. It’s insane to think Myspace is worth “20 billion.” Even at a billion dollar valuation and revenue increased five fold, it would take 20 years to repay the purchase price while assuming social networking stays hot the entire time!

The most important distinction to make is that Myspace is in the notoriously fickle and very untested social networking market. It must recruit a completely fresh batch of users every few years as people grow older and move on. It must fight against social stigmas that come from the younger generations that might sound something like, “Ew, Myspace? My mom is on there.” For all we know, social networking as we know it may fade out of prominence in the next three years. Or even more likely is that another new competitor will eat into Myspace and take away its page views.

I have been observing signs of a significant bubble re-emerging, and this is the straw the breaks the camel’s back. Worse yet, when professional analysts throw out insane multi-billion dollar valuations on Myspace without sound financial reasoning, it’s time to be scared. Valuations are always relative, but I disagree with this valuation without having access to some more impressive metrics. Myspace is already at the top of the web — it doesn’t have opportunities to grow 1000% in the next few years.

Let me frame this in a more understandable way, if I told you this blog makes $200 a year in profit, would you be willing to buy it for $10,000? That’s the same ratios used assuming Myspace’s original valuation ($580M). But if Myspace is worth a little more than $5 billion as some people seem to believe, it would be like selling this blog for $100,000 on the $200 a year profit. Granted, maybe you could improve the profit margins by a factor of ten to $2000 a year (20% margins) — good luck.

Doesn’t seem like such a sound investment now, does it? The top social networking site in the world is barely profitable and there’s talks of it being worth 20x its purchase price. There’s a bubble, folks.

I guess I was wrong… Google really is going to release a phone in the coming year.

This news comes only days after Google tried to get the FCC to change how the wireless spectrum could be used by would-be bidders in the upcoming spectrum auction. Google accomplished some of its goals when it managed to get half of its proposals approved.

Anybody with half a brain can see that the next phase of the Internet will live on our phones. Google finally beat down Microsoft during the Internet Explorer era only to be introduced to a new competitor: cell phone carriers. Google sees this and is doing its best to ensure that round won’t be another David vs. Goliath.

It’s actually rather surprising, in this context, that Microsoft isn’t doing more to fight for its share in the mobile age. If everybody begins to use the phone to browse the Internet, where exactly is Microsoft’s “MSN is IE’s homepage” edge? It seems as if Microsoft might end up becoming less relevant in the coming years.

All this still irks me since Google’s CEO is on Apple’s board of directors. I guess they see it as pals fighting together against the carriers rather than real competitors (for now).

While the article (stupidly) focuses on the ad supported nature of the Google phone, if the execution is done right, it could be a godsend. The idea of “free” goes a long way, and perhaps Google’s market is the direct opposite of Apple’s iPhone: go after everybody and anybody who can’t otherwise afford a phone.

This post is less about politics and more about the Streisand Effect. Lately, I’ve noticed that the Ron Paul campaign seems to be benefiting from the Streisand Effect:

The name Streisand effect comes from a 2003 incident in which Barbra Streisand sued photographer Kenneth Adelman for $50 million in an attempt to have the aerial photo of her house removed from the publicly available collection of twelve thousand California coastline photographs, citing privacy concerns. Adelman was photographing beachfront property as a way to document coastal erosion. The picture of Streisand’s house that previously carried almost no interest to anyone suddenly spread all over the Internet.

In short, an attempt to cover up a piece of information leads directly to its rapid ascent in the consciousness of Internet users.

By my observation, the mainstream (especially the conservative) media has been playing down Ron Paul because they dismissed him as a long-shot candidate. Despite this, he has numerous accomplishments that are impressive for a candidate with only 1% of the national polls: #1 recipient of military donations, winner of the first Republican debate, and more money on hand than Giuliani. And yet you will have a very hard time finding main stream articles that cover these successes (go ahead, try to find them). Of course, Ron Paul supporters have been very active in pointing out these information deficiencies, creating an “outrage” against biased reporting.

As result of these facts being pointed out, we are seeing a massive interest in his candidacy on the Net - A.K.A. the Streisand Effect. Many times, I have wondered how much worse he would be doing right now if the media simply reported his accomplishments instead of omitting them in related articles. I can tell you right now, if it weren’t for the Streisand Effect being in action, I would have never written about this candidate (text book example of the Streisand Effect).

For example, when Ron Paul came in second at the FOX Republican Debate online poll, one of the anchors claimed that getting 10,000 people from the Net to vote is “not that tough.” (Prove him right by getting this article Dugg 10,000 times!) The video contains a humorous segment of the anchors insisting at how impossible it is to send a text message using a phone.

Or another example was when FOX dismissed the news that the top recipient of military donations was Paul by claiming he used some kind of “mailing list” that clearly no other (bigger) candidate could top…

I believe that as a direct consequence of videos such as these being spread, the Streisand Effect is dramatically helping the Paul campaign. When these videos were circulating about a month ago, the search term for ”Ron Paul” on Technorati (a very popular blog search engine) was #1. As recent media attention has begun to recognize Paul in recent weeks, his rank has sunk to #3 (no other candidate currently appears in the top 10). In other words, the active suppression of his accomplishments may have contributed to his skyrocketing popularity online.

What makes this particular instance of the Streisand Effect so interesting is that its effect is not limited to online, which has been the case with most other popular instances of the effect. This makes sense given the state of the Internet as compared to a few years ago: it is now even more mainstream than ever. A staggering 1/3 of young adults get the news exclusively from the web (I am one of those people). So unlike previous incarnations of the effect, this instance is manifesting itself into “real life” in places like the debate polls.

So now that I have thrown this theory out there, keep a watchful eye on the media’s effect on his popularity. While it is possible that he is gaining popularity regardless, my theory is that his popularity grows much faster while the media continues to ignore him. This will hold especially true so long as his most loyal supporters continue to call the media out on their omissions.

Anyway, in closing I’d like to post this humorous video of Ron Paul owning a kid at some kind of talk show. It’s from 1988 and widely circulated, but it’s very funny if you haven’t seen it yet.

All this (plus the YouTube debates) just goes to show just how much the 2008 elections may be influenced by the Internet.

In case you missed the news, the latest Democratic presidential debate was hosted by CNN and YouTube last night. YouTube users were invited to submit questions, which were played live at the debate.

This was the first big step YouTube needed to break out of the “online only” mold. If all goes well, we should see YouTube grow even more as the mainstream world becomes aware of the site through the debate. It’s likely that many of the candidates never even saw a video on YouTube until last night, as with much of the audience watching them.

Anyway, the questions were fresh in the way they were presented, although there were a lot of regular fluff answers. Some of the questions asked were definitely tough. We should look forward to the CNN/YouTube Republican debate on September 17th. Now that this debate has been aired, I hope to see a new twist at the Republican debate after people saw what sort of questions would make it on the air.

You can find all of the questions here.