What Skype Can Learn from EDI & Economics
Tom has a good post on Skype’s acquisition value. The golden nugget is Tom’s historical re-telling of communication networks industry history (mainly e-mail) which can be applied to any type of network effects or platform effects driven businesses. Anyone who has taken an micro-economics class knows that in a perfectively competitive market, Price=Marginal Cost, and that if MC = 0 (in this case), Price will become 0 too. . . This also means that open network inter-operativity potentially creates perfect competition, and thus price will eventually drives down to 0. Openness might be good for customers but not so good for companies . . . (see Microsoft and its desktop monopoly) . . . In the world of open source, this is probably not such a “pc” statement but its exceedingly true. . .
Another good analogy and perhaps more recent is what the Internet did to EDI. Per 1,000 character prices when from over $1.00 to $.07 or lower in a matter of 5 years. It used to be that connectivity and cross network integration were the main reasons for getting EDI. (ie, you are on GE but your supplier is on Sterling) But since the Internet commoditized those “functionalities” (no need for dial up or ISDN VPN connection to an EDI network, an ubiquitous IP address will do) EDI networks has been struggling to provide “value added” services to their network such as in-network translation/XML mapping. The pricing pressure has been so bad that the new age web services networks (see grand central) are having a hard time justifying their price points as well (lets not forget XML=ASCII=EDI). So what does this say to me? That connectivity is overwhelmingly the main value proposition of any communication platform, once that is commoditized/(compromised?), the value of the network is reduced by an magnitude. . . and there is very little that an network operator can do to regain that value through providing incremental none network effects services.
Barry Diller Doesn’t Get Blogging
As part of his keynote speech during Shop.org, Barry Diller essentially gave blogging the thumbs down as both a phenomenon as well as a marketing channel. He jokingly pointed out that the bloggers are not people and that 99.999% of blogs are pretty much worthless. Essentially he argued that writing is hard and it takes special talent to create a “voice” and since most people do not have that talent, most blogs suck. Giving blogging its due, Barry went on to say that as a purveyor of facts to the masses in cases where time is extremely sensitive, blogs do have an important but small role in the landscape of publishing.
What Barry Diller said is hard to refute since I know I’ve never been a good writer and that my blog is and will never be massively consumed. However, I think Barry and the general public do not really know what blogging is. Most people seem to think the dominant form of blogging is similar to theonion.com, Gawker.com, BoingBoing, or even this particular blog, but they are wrong. I hate to beat this point to death, but as I wrote before, most form of blogging is not some guy massaging his own ego by espousing his random ideas in the hopes gaining some audience where there is none (read me :) ). Most bloggers do not need a “voice” (or good spelling or grammar for that matter) because they are not blogging for the masses. Instead they are writing for their circle of friends and family to keep them updated on their lives without having to spam everyone with an obviously impersonal email. Sometimes they are hoping to make some friends along the way that share their love of music or lifestyle. This is what blogging really is, not some glorified way to make a name for yourself but simple new way to communicate your thoughts and life happenings to a not too distant circle of friends.
I don’t blame Barry, he is mostly right after all. Most blogs are 99.999% useless to the general population. All the blogger cares about are the .0001% of people who are in his virtual or physical social circle that do think it’s useful.
Live From Shop.org
So here I am standing in the middle of a convention floor at some random internet kiosk that I finally hacked to let me out to the ‘net to type this out. . .
More interesting posts to come, but for now, just blogging just to take a break.
Shop.org has to be the “best looking” tech conference I’ve ever been to. For one, the male/female ratio is close to 50%. Furthermore, since majority of the conference goers are far from the valley geek types like me, the demographics are very different beyond gender as well. I say half of the people here are internet or multi-channel executives of major offline brands like Gap, Tommy Hilfilger, Polo, Anthropology, Tiffany’s, etc. . . Given their back ground in fashion and luxury goods, it was not surprising the amount of “good-looking” people here on the convention floor. And Just in case someone accuse me of being sexist, this applies equally to the male and female gender. For example, I’ve never seen this many pairs of flat front khakis, fitted trousers, and multi-colored stripped bottom shirt in one convention floor . . ever . . . I almost feel like I’m walking around SOHO shopping for shoes . . .