The Flickr effect

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This morning’s Observer column.

Because Flickr is so prominent, it’ll get most of the blame for the destruction of yet another venerable profession. But in fact the rot had set in long before the site launched in February 2004. The main culprit was the idiot-proof digital camera, which enabled almost anyone to take a decent photograph, or at any rate one that was accurately exposed, in focus and sharp — and to delete it and try again if it hadn’t turned out right.

Digital cameras had a powerful ‘levelling-up’ impact on amateur photography. Once upon a time, only professionals could consistently deliver images that were technically excellent. And even then, analogue technology often let them down. I’ve just been looking through a book of Henri Cartier-Bresson’s collected portraits, for example. Out of 94 images, only 66 approach contemporary standards of sharpness and focus. That doesn’t mean that most of them aren’t memorable pictures; but it does illustrate how digital technology has levelled the playing field…

The Irish mess

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If you thought Greece is a mess, think again. My homeland is, in significant ways, worse: more like Sicily without sunshine. There’s a great column by Elaine Byrne in today’s Irish Times that sums it up.

Appropriately enough, Black Tuesday coincided with the birthday of Vincent van Gogh, a man consumed by madness. By the end of that day, the Irish taxpayer was the owner of one debauched bank, two building societies and now holds a majority and minority stake in two other banks. On our behalf, the Government committed some €32 thousand million to the financial sector as a consequence of their mistakes. By the end of year, the taxpayer, through the offices of Nama, will also own €81 thousand million of property loans.

Wednesday’s front-page Irish Times report outlining Brian Lenihan’s banking plan contained 22 references to “billion”. That word has no meaning anymore because it is too big to appreciate fully. As Des O’Malley observed yesterday, the UN estimated cost to rebuild Haiti is a quarter of what we will spend on bailing out Anglo Irish Bank.

Those that seek to remember, to call to account, are often chastised for their anger. The capacity continuously to forget, our lack of memory or collective amnesia, has been a destructive virtue of Irish public life.

There will be no apologies or statements of regret from the political, financial or regulatory authorities. As Seán FitzPatrick said on RTÉ radio days after the September 2008 Government guarantee: “It would be very easy for me to say sorry, but the cause of our problem was global so I couldn’t say sorry with any degree of sincerity and decency but I do say thank you [to the Irish taxpayer].”

Patrick Neary, the financial regulator, was rewarded with an early retirement golden handshake of €630,000. Irish Nationwide’s Michael Fingleton retired with a €27 million pension fund and a €1 million bonus.

Seán FitzPatrick enjoys a large pension and got a €400,000 golden handshake. Former Anglo chief executive David Drumm went to Cape Cod with a €659,000 bonus. Anglo doesn’t expect €109 million of some €155 million owed by former directors to be repaid…

It’d be nice to think that FitzPatrick and the other rapacious creeps who ran the Irish banks into the ground will eventually go to prison. But somehow, although he has been interviewed for 30 hours by the cops, I suspect that he will go unpunished. Think of him as Ireland’s very own Fred Goodwin. But at least Goodwin had his windows broken and his car vandalised…

My, my, MiFi

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For over a year I’ve been using a 3G dongle to access the Net when on the move. My experience has been patchy, but one of the main irritations is having to hook the gizmo to a laptop using a USB cable. (Another grouse concerned the fact that the drivers for some Linux distros seemed erratic.)

So I’ve cancelled the network account for the dongle and bought this MiFi on a pay-as-you-use tariff instead. It’s a really neat gadget. It hooks up to the 3G network and then becomes a tiny WiFi hub which sits in your pocket but gives anyone around you a connection if you’re willing to let them have the password. This means, among other things, that my iPod Touch now has a serious mobile capability. And no more drivers to worry about: if your device does WiFi, then it can talk to this device. Why can’t everything be like this?

Full disclosure: it was the inimitable Michael Dales who gave me the idea.

Ed Roberts RIP

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From this morning’s NYTimes.

Not many people in the computer world remembered H. Edward Roberts, not after he walked away from the industry more than three decades ago to become a country doctor in Georgia. Bill Gates remembered him, though.

As Dr. Roberts lay dying last week in a hospital in Macon, Ga., suffering from pneumonia, Mr. Gates flew down to be at his bedside.

Mr. Gates knew what many had forgotten: that Dr. Roberts had made an early and enduring contribution to modern computing. He created the MITS Altair, the first inexpensive general-purpose microcomputer, a device that could be programmed to do all manner of tasks. For that achievement, some historians say Dr. Roberts deserves to be recognized as the inventor of the personal computer.

For Mr. Gates, the connection to Dr. Roberts was also personal. It was writing software for the MITS Altair that gave Mr. Gates, a student at Harvard at the time, and his Microsoft partner, Paul G. Allen, their start. Later, they moved to Albuquerque, where Dr. Roberts had set up shop.

Dr. Roberts died Thursday at the Medical Center of Middle Georgia, his son Martin said. He was 68.

This is touching, because Gates and Roberts were famous for not getting on. Wikipedia entry for Roberts is here.

LATER: Just noticed that Steven Johnson found a way of linking his Wired piece about the iPad to news of Roberts’s death:

I was pretty much sold on the idea that the time was right for an iPad-like tablet to bring us to the next step in computing, and using the actual iPad has only strengthened my view.

Despite what looks like a big initial wave of buyers, this shift won’t happen overnight. Lots of people will balk at paying between $500 and $830 for something that they think is an unnecessary complement to what they already have.

But eventually, as prices come down, power and connectivity increase and developers create unexpected and wonderful apps, I think this format will find its way into people’s hands as ubiquitously as smartphones. And though Apple has thrust itself into an early lead, there will be competition for the Third Way, and we’ll all be better for it.

Back in 1975, Ed Roberts’s Altair cost $397, only a bit less than the iPad does today. But it had no screen, no web, no apps and you had to assemble it yourself. We’ve come a long way since then. And as of Saturday, we’re a little way further.

P-day arrives

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Stand by for TV news footage of the faithful queueing outside Apple stores in the US. It’ll be like the iPhone all over again. Or will it?.

“The first five million will be sold in a heartbeat,” said Guy Kawasaki, a Silicon Valley entrepreneur who was a marketing executive at Apple in the 1980s. “But let’s see: you can’t make a phone call with it, you can’t take a picture with it, and you have to buy content that before now you were not willing to pay for. That seems tough to me.”

Apple and other technology companies that are introducing a wave of touch-screen tablets face an ambitious challenge. The industry wants to create a market for a new type of device that most people do not really need — or do not yet know they need.

Tablets are intended to allow people to watch video, browse the Web, play video games and read books, magazines and newspapers everywhere they go without the bulky inconveniences of a full-fledged laptop.

The people who have already ordered an iPad or will show up at the Apple store on Saturday “are technophiles — the phrase ‘leading-edge technology’ sends goosebumps all over their skin,” said Eitan Muller, a professor of high-tech marketing at New York University’s Stern School of Business.

But those people make up only 16 percent of the total potential market for the iPad, Professor Muller said. “The main market is made up of pragmatists, and the same phrase sends them into convulsions.”

My hunch is that those people who already have iPod Touch devices will be the hardest to convince. Either way, Apple’s big bet is that the iPad can create an entirely new market niche between smartphone and netbook.

Which brings to mind James Surowiecki’s thoughtful piece in the New Yorker recently about the way the market for devices has evolved. Here’s the nub of his argument:

For Apple, which has enjoyed enormous success in recent years, “build it and they will pay” is business as usual. But it’s not a universal business truth. On the contrary, companies like Ikea, H. & M., and the makers of the Flip video camera are flourishing not by selling products or services that are “far better” than anyone else’s but by selling things that aren’t bad and cost a lot less. These products are much better than the cheap stuff you used to buy at Woolworth, and they tend to be appealingly styled, but, unlike Apple, the companies aren’t trying to build the best mousetrap out there. Instead, they’re engaged in what Wired recently christened the “good-enough revolution.” For them, the key to success isn’t excellence. It’s well-priced adequacy.

These two strategies may look completely different, but they have one crucial thing in common: they don’t target the amorphous blob of consumers who make up the middle of the market. Paradoxically, ignoring these people has turned out to be a great way of getting lots of customers, because, in many businesses, high- and low-end producers are taking more and more of the market. In fashion, both H. & M. and Hermès have prospered during the recession. In the auto industry, luxury-car sales, though initially hurt by the downturn, are reemerging as one of the most profitable segments of the market, even as small cars like the Ford Focus are luring consumers into showrooms. And, in the computer business, the Taiwanese company Acer has become a dominant player by making cheap, reasonably good laptops—the reverse of Apple’s premium-price approach.

While the high and low ends are thriving, the middle of the market is in trouble.

Very perceptive IMHO.

Sad but true: the iPad won’t save the magazine industry

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Insightful piece by Rory Maher.

Some believe the iPad will enable magazines to reverse course in the near-term, but we believe these expectations are way off the mark. In particular:

* It’s going to be years for mobile ad revenue to become material.

* As a result, in the near-term magazines will need to look to subscription revenue to drive incremental profits.

* But, even if iPad sales wildly exceed expectations and users rush to purchase lots of magazine subscriptions (we don’t think they will), this will not be enough to drive meaningful revenue at most magazines.

He does some calculations, based on assumptions that :

* iPad owners are early-adopters that consume a lot of content so let’s say 50% of them subscribe to two iPad magazines each.
* Magazine subscriptions on the iPad are higher than print subscriptions (most magazines plan to charge more initially), so assume an average $15 per monthly subscription.

His conclusion:

Even if iPad sales soar past expectations and reach, say, 16 million units over the next two years total magazine subscription revenue would equal about $2.8 billion per year under the above case scenario. That’s less than 30% of annual circulation revenue for the entire magazine industry and only about 10% of overall industry revenue (circulation + advertising).

Sobering but true. As Derek Thompson points out in The Atlantic:

It’s useful to step back and consider the long game for publishers. Magazines get money from (1) readers and (2) advertisers looking for readers. The problem today isn’t the readers, who are all over the Internet. It’s the ads. Magazine advertising has slipped in the last two years by 12%. Nobody expects print ads to rebound to their early 2000s levels, and everybody is still waiting for That Big Idea that helps publishers monetize their online content. Maybe it comes from location-based ads. Maybe it comes from cross-publisher partnerships and a Netflix model that bundles magazine subscriptions and distributes them electronically to computers and e-readers. Nobody knows.

But this is the key to the story: magazines are losing ad revenue, but they’re not losing readers. In fact most of them are gaining readers — they’re just gaining them online, where our eyeballs are poorly monetized. All publishers really want is a platform where they can charge readers for reading. The iPad gives them that opportunity. It’s fair to say publishers are being overly-optimistic with their prices for iPad apps. It’s not fair to say they’re wrong for trying.

The basic problem, I suspect, is that the traditional print newspaper and magazine businesses were cash cows for so many generations that those who were conditioned in them simply cannot conceive of a future in which returns are much more modest. They grew up in a world where a TV franchise or a big newspaper or magazine brand was a licence to print money. There is a future for journalism and publishing, but it’s one in which companies work harder, smarter and in much more diverse ways. And for lower margins.