The concierge economy

My Observer essay on the implications of Uber:

In a way, the name of the company – Uber – gives the game away. It has connotations of elevation, superiority, authority – as in Nietzsche’s coinage, Übermensch, to describe the higher state to which men might aspire. Although it’s only been around since 2009, Uber, the smartphone-enabled minicab company, is probably the only startup of recent times to have achieved the same level of name recognition as the established internet giants.

This is partly because Uber is arguably the most aggressive tech startup in recent history and partly because it has attracted a lot of bad press. But mainly it’s because a colossal pile of American venture capital is riding on it. Its most recent investment round valued the company at about $40bn, which is why every MBA graduate in California is currently clutching a PowerPoint presentation arguing that his/her daft idea is “Uber for X” – where X is any industry you care to mention.

What lies behind the frenzy is a conviction that Uber is the Next Big Thing, fuelled by the belief that it is the embodiment of what Silicon Valley values most, namely “disruptive innovation” – as in disruption of established, old-economy ways of doing things…

Read on

LATER

Om Malik has a very thoughtful essay which starts with a meditation on a conversation he had with an Uber driver, and then moves into a meditation on the apps economy.

Keith [Malik’s Uber driver], who aspires to be in the fashion business was pretty ruthless in his assessment of the company and brought up many questions that have coursed through my mind. He appreciates the financial flexibility Uber has provided him — his luxury car rental business wasn’t enough and he has benefitted from this augmented income. He isn’t the first one who felt that Uber look some pressure off their back — the other day I met a $12-an-hour bouncer at a Tenderloin music venue who is happy dealing with traffic rather than drunks and strung out addicts. “It was worth $19 billion three months ago and now it is worth $41 billion,” says Keith, “isn’t that something. And yet they don’t care about their contractors.”

Still, like many others Keith is befuddled by Uber’s treatment of its contractors. Many of the rule changes seem arbitrary and he too is confused by the tone-deafness of the company. He laments the recent directive (later modified) by Uber to classify all cars before 2010 as a UberX and thus relegated them to lower money making tier. When I point out that as a customer if I am paying premium prices, why shouldn’t I get a premium experience. Today, you end up riding in “black cars” who are a pale imitation of their real self. Shouldn’t the car upgrades result in better cars and through process of elimination bring fewer, but better drivers on the road? Like most drivers, Keith agrees, but points out that logic and reality of being a contract driver are two different things.

It is very hard for people to understand that it isn’t easy to upgrade your car, especially when you are trying to make a living driving an Uber in an intensely competitive marketplace where there are more cars on the road and the pie is getting sliced into thinner and thinner slices. Still, Keith said that he was planning to upgrade, though he didn’t care much for Uber’s financial plans or deals with car companies — he is going to get a Mercedes as part of the upgrade. During our conversation, Keith points out that Uber is good for helping him and others make money in the near term, but the current model doesn’t allow much optimism for the future, thanks to too many cars, too many rules and demand which isn’t rising as fast as the cars.

LATER STILL: this:

Dan Sperling, Founding Director of the Institute of Transportation Studies at UC Davis, says that while Uber “will continue to do battle with local and state authorities, it’s pretty clear that they’ve got a very good business model, they’ve got a lot of momentum, and they’ve got a very good product that people love. They’ll figure out a way around the challenges because it’s clear they provide a valuable service. And that’ll force regulators to reassess their rules, some of which were written up years ago and make absolutely no sense today.’’

As Sperling sees it, “while it’s true that taxis are way over-regulated, the answer is not to smother all the babies competing with them; the answer is to regulate the Ubers of the world better while you deregulate the taxi industry.’’

And what about that $40 billion price tag? Uber and its rivals “are entering a marketplace that has seen almost no innovation in many decades,’’ according to Sperling, who says adding courier and food-delivery services could make Uber even more of a behemoth. “There’s a lot of pent-up demand for real-time, on-demand-type services, so there’s huge upside potential here.’’

Books like running water

This morning’s Observer column

Once upon a time, 12 years ago to be precise, David Bowie said something very perceptive. “Music itself is going to become like running water or electricity,” he told a New York Times reporter. “So it’s like, just take advantage of these last few years because none of this is ever going to happen again. You’d better be prepared for doing a lot of touring because that’s really the only unique situation that’s going to be left. It’s terribly exciting. But on the other hand it doesn’t matter if you think it’s exciting or not; it’s what’s going to happen.”

I thought of Bowie and his perceptiveness last week, when – in a rare piece of corporate carelessness – Amazon inadvertently provided a fleeting glimpse of what it has in store for the publishing industry. A new page appeared on its website only to be very quickly withdrawn, but not before it had been cached by Google and spotted by a hacker website.

What was on this elusive page? Why, nothing more or less than an introduction to a new service called “Kindle Unlimited”. Subscribers will be invited to “enjoy unlimited access to over 600,000 titles and thousands of audiobooks on any device for just $9.99 a month”. One commentator described it as “Netflix for books”. David Bowie would doubtless have said that it’s the turn of books to become like running water or electricity.

Read on

Amazon has now confirmed the launch of the service.

Our Kafkaesque world

This morning’s Observer column.

When searching for an adjective to describe our comprehensively surveilled networked world – the one bookmarked by the NSA at one end and by Google, Facebook, Yahoo and co at the other – “Orwellian” is the word that people generally reach for.

But “Kafkaesque” seems more appropriate. The term is conventionally defined as “having a nightmarishly complex, bizarre, or illogical quality”, but Frederick Karl, Franz Kafka’s most assiduous biographer, regarded that as missing the point. “What’s Kafkaesque,” he once told the New York Times, “is when you enter a surreal world in which all your control patterns, all your plans, the whole way in which you have configured your own behaviour, begins to fall to pieces, when you find yourself against a force that does not lend itself to the way you perceive the world.”

A vivid description of this was provided recently by Janet Vertesi, a sociologist at Princeton University. She gave a talk at a conference describing her experience of trying to keep her pregnancy secret from marketers…

Read on

On being a partly-boiled frog

I’m an Amazon Prime customer, because it looked like a no-brainer for a household that buys quite a lot of stuff online. But now the cost of Prime has suddenly gone up from £49/year to £79.

That’s a huge hike. To conceal it, Amazon tells me that my Prime subscription will now include a subscription to Lovefilm. Big deal! I watch very few movies and have never contemplated subscribing either to Lovefilm or Netflix. A subscription to Lovefilm is completely useless to me.

So the question is: will I stick with Prime at £79?

Answer: maybe — for now. But it’s clear that this is part of a bigger strategy: capture->lock-in->exploit. Or, as the always-perceptive Jason Calcanis puts it:

Does anyone know the actually number of @amazon prime subscribers? Can anyone with Prime imagine life without it? Would you cancel Prime over the $20 a year increase?

Note: Amazon is starting to boil us frogs. Prime goes up 25% and none of us notice. Up another $25 in two years–no one will notice. Eventually it will be $20 a month and have 100m subscribers.

Amazon says it has at least 20M prime subscribers as of Jan ’14, according to [Macquarie] (http://launch.co/story/amazon-prime-has-20m-subs-macquarie-analyst-ben-schachter-reportedly-confirme)

Internet giants: capitalism red in tooth and claw

This morning’s Observer column.

Like the other titans of the online world – Google, Facebook, Yahoo and to a lesser extent, Microsoft – Amazon is driven by data and algorithms. But not entirely. What many of its customers may not realise is that the results generated by Amazon’s search engine are partly determined by promotional fees extracted from publishers. In his book The Everything Store: Jeff Bezos and the Age of Amazon, Brad Stone describes one campaign to exert pressure for better terms on the more vulnerable publishers. It was known internally as the gazelle project, after Bezos suggested “that Amazon should approach these small publishers the way a cheetah would pursue a sickly gazelle”. (With a nice Orwellian touch, company lawyers later changed the name to the “small publisher negotiation programme”.)

That’s a revealing metaphor: capitalism red in tooth and claw. And it’s a useful antidote to the soothing PR of the corporations that now dominate our networked world…

Read on

LATER: Ram Reddy emails to point out Jeff Bezos’s wife’s very critical review of Brad Stone’s book — published on the book’s Amazon.com site. Excerpt:

Everywhere I can fact check from personal knowledge, I find way too many inaccuracies, and unfortunately that casts doubt over every episode in the book. Like two other reviewers here, Jonathan Leblang and Rick Dalzell, I have firsthand knowledge of many of the events. I worked for Jeff at D. E. Shaw, I was there when he wrote the business plan, and I worked with him and many others represented in the converted garage, the basement warehouse closet, the barbecue-scented offices, the Christmas-rush distribution centers, and the door-desk filled conference rooms in the early years of Amazon’s history. Jeff and I have been married for 20 years.

While numerous factual inaccuracies are certainly troubling in a book being promoted to readers as a meticulously researched definitive history, they are not the biggest problem here. The book is also full of techniques which stretch the boundaries of non-fiction, and the result is a lopsided and misleading portrait of the people and culture at Amazon. An author writing about any large organization will encounter people who recall moments of tension out of tens of thousands of hours of meetings and characterize them in their own way, and including those is legitimate. But I would caution readers to take note of the weak rhetorical devices used to make it sound like these quotes reflect daily life at Amazon or the majority viewpoint about working there.

Interestingly, when she came to look for a publisher for her own novel, she took it to an old-fashioned bricks ‘n mortar publisher: Knopf.

Finished that ebook yet? Hang on…

This morning’s Observer column.

A few weeks ago I bought a copy of The Second Machine Age by two MIT researchers, Erik Brynjolfsson and Andrew McAfee, who are two of the most insightful commentators currently writing about the likely impact on employment of advanced robotics, machine learning and big-data analytics. Since I already own more physical books than my house and office can hold, I tend now to buy the Kindle version of texts that are relevant to my work, and so it was with the Brynjolfsson and McAfee volume.

Yesterday, I received a cheery email from Amazon. “Hello John Naughton,” it read. “An updated version of your past Kindle purchase of The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies by Erik Brynjolfsson is now available. The updated version contains the following changes: Improved formatting for readability. Significant editorial changes have been made. You can receive the improved versions of all your books by opting in to receive book updates automatically.”

Note the phrase, “significant editorial changes have been made”…

Read on

If Big Data is “the new oil” then we’re the wells

This morning’s Observer column.

Should you be looking for an example of hucksterish cynicism, then the mantra that “data is the new oil” is as good as they come. Although its first recorded utterance goes as far back as 2006, in recent times it has achieved the status of an approved corporate cliche, though nowadays “data” is generally qualified by the adjective “big”. And if you want a measure of how deeply the cliche has penetrated the collective unconscious, ponder this: a Google search for “big data” turns up more than 1.5bn results. And a search for “data mining” turns up 167m results.

The idea of big data as a metaphor for oil is seductive. It’s also revealing in interesting ways. Given that the oil business is one of the biggest industries in the history of the world, for example, the metaphor hints at untold future riches. But it conveniently skates over the fact that oil wealth overwhelmingly benefits either ruling elites in corrupt and/or authoritarian countries, or huge corporations in democratic states.

But at least oil is a physical, non-renewable resource that is extracted from the earth. Big data, on the other hand, is extracted from the activities of people and machines…

Sic transit gloria mundi

This morning’s Observer column.

Some years ago, when the Google Books project, which aims to digitise all of the world’s printed books, was getting under way, the two co-founders of Google were having a meeting with the librarian of one of the universities that had signed up for the plan. At one point in the conversation, the Google boys noticed that their collaborator had suddenly gone rather quiet. One of them asked him what was the matter. “Well”, he replied, “I’m wondering what happens to all this stuff when Google no longer exists.” Recounting the conversation to me later, he said: “I’ve never seen two young people looking so stunned: the idea that Google might not exist one day had never crossed their minds.”

And yet, of course, the librarian was right. He had to think about the next 400 years. But the number of commercial companies that are more than a century old is vanishingly small. Entrusting the world’s literary heritage to such transient organisations might not be entirely wise.

Compared with my librarian friend, we have the attention span of newts. We are constantly overawed by the size, wealth and dominance of whatever happens to be the current corporate giant.

To which, of course, the best riposte is probably Keynes’s: In the long run, we’re all dead.

Quis custodiet ipsos custodes?

This morning’s Observer column.

The first thought to strike anyone stumbling upon the now-infamous Innocence of Muslims video on YouTube without knowing anything about it would probably be that it makes Monty Python’s The Life of Brian look like the work of Merchant Ivory. It’s daft, amateurish beyond belief and, well, totally weird. So the notion that such a fatuous production might provoke carnage in distant parts of the world seems preposterous.

And yet it did. In the process, the video created numerous headaches for a US administration struggling to deal with the most turbulent part of the world. But it also raised some tricky questions about the role that commercial companies play in regulating free speech in a networked world – questions that will remain long after Innocence of Muslims has been forgotten…

A renaissance of reading?

Hmmm… I’m not entirely surprised by this Guardian report. I’ve noticed that teenagers of my acquaintance who have Kindles are definitely reading more. An interesting way-point on the journey to a new ecosystem.

Underlining the speed of change in the publishing industry, Amazon said that two years after introducing the Kindle, customers are now buying more ebooks than all hardcovers and paperbacks combined. According to unaudited figures released by the company on Monday, since the start of 2012, for every 100 hardback and paperback book sold on its site, customers downloaded 114 ebooks. Amazon said the figures included sales of printed books which did not have Kindle editions, but excluded free ebooks.

In a surprise move in May, the company went into partnership with the UK’s largest bricks-and-mortar books retailer, Waterstones.

Much to the consternation of the publishing industry, Amazon has refused to release audited figures for its digital book sales, something it does for printed books. It told the Guardian that the company would not discuss future policy on the matter.

The company said its figures also showed that British Kindle users were buying four times as many books as they were prior to owning a Kindle, a trend it described as a renaissance of reading.

“As soon as we started selling Kindles it became our bestselling product on Amazon.co.uk so there was a very quick adoption … [And they] are buying four times more books prior to owning a Kindle,” an Amazon spokeswoman said. “Generally there seems to be … a love of a reading and a renaissance as a result of Kindle being launched.”

So much for “the end of the book” complaint.