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Tuesday, May 1, 2012

Piracy, Privacy and Money, Money, Money - Part III

This is the third and final part of a series.

Money. Money, Money

Deep Throat: Follow the money.
Bob Woodward
: What do you mean? Where?
Deep Throat
: Oh, I can't tell you that.
Bob Woodward
: But you could tell me that.
Deep Throat
: No, I have to do this my way. You tell me what you know, and I'll confirm. I'll keep you in the right direction if I can, but that's all. Just... follow the money. 
Social networking, Internet businesses and technology are big business today.

Facebook has $4 Billion in cash and has filed papers to go public with speculation that its initial public offering price may put the value of the company at $100 Billion.  Facebook recently made an offer to acquire Instagram, photo sharing social networking site, for a reported $1 Billion.

"I'm excited to share the news that we've agreed to acquire Instagram and that their talented team will be joining Facebook."  Mark Zuckerberg

Apple, once counted out as an interesting piece of technological history, has seen its market capitalization eclipse the once mighty Microsoft and oil behemoth Exxon.  It is the biggest company on the planet.  If you go to the link at the beginning of this paragraph, the list of market capitalization includes Microsoft (now No. 4), followed by IBM (No. 5).  Google is at No. 11, just ahead of Warren Buffet's Berkshire-Hathaway.  Remember when we thought IBM was relic of the past?  There may be hope still for Yahoo!

Money makes the world go round
The world go round, the world go round
Money makes the world go round
It makes the world go round.
Money, Money, Money - Cabaret
This surely could be the sign of another technology bubble in the stock market, but it also is a sign of how important technology has become to our economy as well as the world economy.

Let's reflect a bit more.  In a prior column, I wrote about a new the new music service Spotify.  Spotify did not start in the U.S.  It started in Europe and became very popular there before coming to America.  Spotify had to negotiate first with the Neolithic music industry in this country, which seems unable to grasp the potential and power of digital distribution of music and unable to figure out how to fashion a new business model to capture that potential and power.  The U.S. music industry (and its global counterparts) seem to want the money, but only if they can collect it in the old fashion way -- one record, cassette tape, compact disk, song (??) at a time.  The music (and film) industry seems to be spending more time and money fixated on digital piracy.  It has failed again and again to realize that times have changed.  To paraphrase Satchel Paige, looking backward is likely to reveal that someone is catching up with you.

Most technological successes  did not start out as the product of trickle-down capitalism.  Whether you were named Hewlett or Packard, Steve Jobs or Steve Wozniak, Zuckerberg, or Gates, or Paige or Brin, their first was an idea, then there was a lot of  scrambling and tinkering and writing code, some fortuitous opportunities seen and taken, and, finally, in the modern era, a form of trickle-down capitalism:  venture capital firms.  NPR recently did an interesting series of reports on the rise of Silicon Valley, including a timeline and a profile of the early venture capitalists.

Venture capitalists started out driving around Silicon Valley almost literally trying to give money away (in return for a piece of the action).  Now, the investment side of the technology business is more like a tech version of American Idol, with bright innovators auditioning their start-ups to see if they can get funding from the venture capitalists.

So what are the venture capitalists looking for?  What, for that matter, is Mark Zuckerberg looking for when Facebook acquires Instagram for $1 Billion?  Look in the mirror.  Money is chasing money, specifically the money that we ("we" being the great huddled masses, the 99%) have.  We are were the real money is, and all of this consumer-based or social networking technology, in one way or another, is looking for us as users so that it can get to our dollars.  And in order to get to our dollars, these businesses need to know a lot about us; they need to create profiles of our likes, dislikes, interests, questions, searches.  From this information , these businesses can create a picture of us, so that, either directly or indirectly, someone can sell us something.

There are easy illustrations that I have used before.  Facebook posts ads on our pages that result from knowing what we "like" and, thus, are targeted to sell us something we are predisposed to like or want.  Facebook is being paid to broker this kind of advertising.  Amazon recommends products to us based on our shopping history, knowing that we are predisposed toward these items based on what we bought in the past.

Here is a more interesting example reported by Marketplace Tech in late April.  When we think of Walmart, the most immediate imagine may be of a mom & pop store gone wild.  The old  5 and 10 cent stores of another era on steroids.  (Interestingly, in typing this, I noticed that the modern computer keyboard no longer as key for the cent sign; you have to select it as a symbol and Google's Blogger does not seem to have this function.)

Well, Walmart also sells things online.  Walmart noticed an interest fact about its in-store shoppers.  Many of them pay in cash.  (Many Walmart shoppers are a true part of the 99%, part of a cash based economy, which the Walmart spokesperson described as:
unbanked or underbanked, “meaning they either don't have access to a bank or they have limited banking services or they don't have credit."
Walmart also figured that many of these customers would like the convenience of shopping online but for one small, but important problem:  you cannot stuff cash into your computer to pay for your purchases.  So, Walmart is now letting people order online, then come into a Walmart store and pay in cash and have the items purchased online shipped to them.  This, of course, also gets the customer into the store and may result in them wander around and spending more money.  (Presumably, as the customer has to go to the store to pay, Walmart has enough stuff available online that the customer cannot simply buy in-store or that the customer may purchase online more readily than they would want to wander around the store looking for.)

Let's go a bit further.  Let's examine the concept of "free."  If you have a iPhone or Android smartphone, an iPod Touch, or a iPad or other tablet computer, you probably have apps (short of applications), those tiny little titles which take you to all kind of stuff.   iTunes tells me that I have 155 apps on my iPhone, iPod Touch and one that I purchased for an iPad that my partner loaned to me.  Some of these cost money, like the Brian Eno ambient music apps, Bloom and Trope, or the Notetaker HD app that I purchased for my partner's iPad.

Many apps are "free," which encourages you to grab a big handful of them each time go to the app store.  It seems like there is an app for nearly everything, so why not try these free apps and see how they work.  After all, they are "free."  Not exactly.

Most free apps do one or both of the following:  (1) try to sell you upgraded versions that cost money or other related apps and/or (2) mine your activities for data on you and your usage of the app.  This still may seem like a sweet deal, because you can ignore the ads and who really cares if you just played "exhalent" in Words with Friends for a ton of points (a word which the spell checking in Google Blogger does not recognize, but Words with Friends accepts, much to the delight of my wife, who played it in a game with me.)

Stop playing Words with Friends for a minute and think a bit more.  Like many newer apps, Words with Friends is designed as social interaction with others and pretty much requires that you connect through social networking sites like Facebook so that you can connect with your friends who also have the app.  (I admit that I took the easy way of connecting through Facebook, which allows me the joy of regularly being beaten by my youngest daughter.  There may be a way to connect using Facebook or other social networks, but is not likely to be as easy to use.)  This tie-in fosters more users for Words with Friends and for Facebook.

The dark side is in the details when you decide to connect to Facebook.  In a brief notice before you connect, you are told that in making the connection, you are allowing the app and Facebook to access your personal information and usage records.  You want to play the game with your friends, so you click and move on thinking that one day you will have to go review those privacy setting in Facebook.
There’s a saying that’s used a lot in the online world: if you’re not paying anything, you’re not the customer, you’re the product.
Where is all this going?  Go over to Marketplace Tech Report and listen to/look at this linked report:  Send a $5 gift card to your friend free? What’s the catch?  It tells the story of a new app called "Wrapp," which enables you to send "free" gift cards to your friends.  What a deal!  "Free" right?  Not really.  Wrapp requires that you allow access to your data on Facebook.  The social networking connection here is essential.  Merchants are not giving away free gift cards; they are buying customers much more cheaply and effectively than an old fashion sales ad in the newspaper.  As the Marketplace report states:
So instead of the newspaper bringing the product to the consumer, you bring the product to your friend.  “We already know that ties between people in social networks can be power channel for marketing a product or brand,” says Alessandro Acquisti, co-director of Carnegie Mellon University's Center for Behavioral Decision Research. “This new application takes things one step further, effectively enlisting your friends as their own marketing agents.”

So you are really selling yourself and your friends in return for those "free" gift cards.  Are you at the crossroads about to sell your soul?  May be not, but before you agree to the "access my personal information" deal the next time, thing a bit more about what that means and what your are sharing.  Perhaps all of that personal information results in a small window to your soul.
The best things in life are free
But you can give it to the birds and bees
I need mon-ey
(That's what I want)
That's what I want, hey!
(That's what I want)
I need money, that's what I want
That's what I want


source: http://www.lyricsondemand.com/soundtracks/m/madmoneylyrics/moneythatswhatiwantlyrics.html

Piracy, Privacy and Money, Money, Money - Part II


This is the second in a series.

PRIVACY

I have written here before about privacy and likely will again.  It has been an important area of  American constitutional law since the drafting of the Bill of Rights.  Since that day when Alexander Graham Bell summoned Watson with words spoken over his telephonic invention, we have becoming increasing concerned with protecting various forms of telephonic and electronic communication.

In January, the U.S. Supreme Court unanimously ruled United States v. Jones that the government needs to obtain a search warrant to track the public movements of a person by attaching a GPS device to the person's vehicle.  Antoine Jones was a suspected drug dealer who lived in DC.  Authorities had a warrant for Jones in the District of Columbia and attached a GPS device to his car to follow his movements.  Information on Jones' movements in Maryland was collected, however, and authorities had failed to get a warrant in Maryland. The Court split 5-4 on how the 4th Amendment applied in this situation.  Here is a link to a further discussion of the case at Marketplace Tech Report

The  Jones decision may become landmark of constitutional law.  It certainly will be important in understanding the current interface between technology and privacy.  We have seen societal situations that raise significant questions in this area. In recent political movements from the "Arab Spring" to the "Occupy" movement, electronic means of communication such as Twitter and Facebook have been used to organize protest. In response, Arab governments first tried to shut down these communications.  More recently, and more ominously, governments have been monitoring these communications in order to find dissidents and suppress protest.

The Jones case may begin to tell us where constitution protections attach in a world where we are revealing more and more about ourselves through electronic communications.  Consider, however, that we now reveal a great deal of information about ourselves willingly on Facebook and Twitter and other social networking services.  If Antonie Jones had been checking in on Facebook or FourSquare, would government monitoring of his postings and travels been protected?

One important question continues to be what expectation of privacy we have when we use such social networking services.  When people sign-up for these services, they must agree to contractual agreements that provide the terms under which the service is provided.  These terms of service agreement set out important legal rights to material posted and privacy policies.

Of note recently is that both Google and (yet again) Facebook have changed their privacy policies.  These changes have received wide publicity. As we provide more and more personal information on such services, including using such services to reach  or interact with others online destinations, these policies are very important to our online privacy.  These policies, however, are not really intended to protect our privacy as much as they are to govern what information Google or Facebook or other service providers can access and use for their own business purposes.
Remember that Google, Facebook and other online services are businesses looking to make a profit. 
These social networks want you to post personal information on their services.  Such sharing is fundamental to the business model on which such services are built.  The information that you share encourages your friends to join to see your posts and to share their own information.  This cycle brings more and more people onto the network.  Participants keep the treadmill of information spinning round and round by providing the product for the social network.  In one way or another, good Internet businesses use our information and usage history to make money.

Not only are the users the product, but they are also a potential customer. Let's take a look at a simple scenario.  You go to Google and search for information on the book, "The Devil and the White City".  You find links to various bookseller's sites and go to them.  Google now knows that you may be interested in books, even the type of book, and can place paid advertising for a booksellers on your search pages.  Or you go to Amazon and buy the book.  Amazon knows that you purchased this book and will recommend similar books to you in the future when you visit Amazon.

In one sense this is good for you.  You may get "better" search results or better service, because the search engine or the vendor knows something more about our preferences.  This is certainly a critical element that makes such services "smarter" and, thus, faster in getting us to the things we are trying to find.  What you may not realize, however, is that your activities are leaving behind a kind of electronic footprints or fingerprints, showing where you have been on the Internet and what you have been viewing.

Technologically, much of this deals with little pieces of code called "cookies" that you leave behind in your travels in cyberspace.  These markers allow sites to recognize you next time you visit and improve your use of sites, but they are digital signposts as to where you have been and what you have seen or done.

Do we want this kind of information available?  If we do, to whom -- Google? Facebook? Amazon? The government?  What limits are there?  Privacy policies and terms of service are designed to protect this information from general dissemination.

There is a conflict of interest, however, because most commercial sites want to use such information to target you for advertising or products when you use the sites.  Such sites do not want to give up the use of such information entirely, because it would mean cut off a significant source of their revenue and profit -- advertising or sales.  Once the site has the information, however, when should it be made available beyond the reach of the terms of service to which you agreed?

These are important societal questions deeply embedded in the technology that we use today.  It will not be easy to draw lines here, especially because of the money involved.  More on the money in the final post in this series.


Wednesday, February 29, 2012

Smartphone Security

Even if you are not worried that one of Rupert Murdoch's publications is trying to hack into your cellphone, you may be interested in information on how to security your smartphone and the personal information that you keep on it.  Here is some good advice on the subject from the good folks at the Maryland State Bar Association:

TIPS FOR SECURING YOUR SMARTPHONE

Here are some basic tips for securing your smartphones. 
1.  Make certain that all your mobile devices have passcodes.
2.  Disable interfaces that are not currently in use, such as Bluetooth, infrared, or Wi-Fi.
3.  Set Bluetooth-enabled devices to non-discoverable.
4.  Delete all information stored in a device prior to discarding it.
5.  Do not “root” or “jailbreak” the device.
These tips and more were taken from Cyber Threats to Mobile Phones published by the United States Computer Emergency Readiness Team.
Check out the links above for more information.  Thanks to Pat Yevics and her staff at the MSBA.  Go to this link:  February  2012 MSBA Tech Tips and find all of the MSBA 2012 Tech Tips.  There are posts on protecting your computer from tracking cookies and Google's new privacy policy.

More on privacy issues in an upcoming post here at Reality Bytes.

Friday, February 17, 2012

Piracy, Privacy, and Money, Money, Money! - Part I

This post is the first part of a round-up of significant developments in 2012.

Piracy

"Well, yes mate. See, I’m dishonest. And a dishonest man you can always trust to be dishonest. Honestly. It’s the honest ones you need to watch out for, because you never know when they’re going to do something incredibly… stupid."  Captain Jack Sparrow (IMDb Link; captainjackblog.com Link)
In January, the Justice Department took down one of the largest file sharing services on the Internet, Megaupload, for alleged piracy of copyrighted material.  The colorful cast of characters involved in Megaupload will guarantee a forthcoming movie to rival Social Network.  You can read more details, including endorsements of Megaupload by celebrities, its purported rapper CEO, and its founder Kim Dotcom and his $6 million worth of automobiles in these linked reports from Marketplace Tech Report and The New York Times.

Here is what I find interesting about this story:
  • There seems to be little dispute that Megaupload was trafficking illegally in copyrighted material.
  • Megaupload was wildly popular, being ranked in the top 20 of Internet sites.
  • The Justice Department had to reach across the waters to take down Megaupload, which is based outside the United States, and to arrest some of the indicted principals.  Kim Dotcom (a.k.a. Kim Schmitz) was living in New Zealand.
  • The Justice Department’s action prompted a retaliatory protest from Anonymous, a loosely organized group of Internet hackers (more on which can be found at this NYT link).  In what the Times called "digital Molotov cocktails," Anonymous appears to have launched digital denial of service attacks on computers at the Justice Department and major entertainment companies as protest over the shutdown of Megaupload.
  • The scope of action taken by the Justice Department is significant.  The Times reported:
As part of the crackdown, more than 20 search warrants were executed in the United States and in eight other countries.  About $50 million in assets were also seized, as well as a number of servers and 18 domain names that formed Megaupload’s network of file-sharing sites. 
Concurrent with the Megaupload take-down, Congressional consideration of legislation to stop Internet piracy came under attack from major Internet players.  Two bills were before Congress: the Stop Online Piracy Act, or SOPA, in the House, and the Protect Intellectual Property Act, or PIPA, in the Senate.  The day before the Megaupload take-down, major Internet sites such Wikipedia and Google launched campaigns in opposition to the legislation, arguing that it would result in serious impairment on the freedom to share information on the Internet.  Wikipedia actually "went dark" for a day, taking down access to its site, one of the most widely used on the Internet, and posting instead a message to users who accessed the site asking them to oppose legislation and to contact their representatives in Congress to pass the message along.

The SOPA/PIPA protest is notable for several reasons.  It marks an historic moment when Internet giants like Google and Wikipedia set aside commercial and competitive differences and acted in concert to express a political view.  More importantly, they did so in a way that demonstrated again the considerable power that the Internet has to reach people, communicate ideas and organize political action.

These Internet companies are expressing valid issues about the provisions of SOPA/PIPA, particularly whether the measures to prevent piracy go too far and would impede legitimate exchanges of information.  That does not mean, however, the the proposed legislation is wholly wrong or the that Internet companies, most of whom have commercial interests to protect as well as the freedom of information sharing, are completely right.  New York Times columnist David Pogue has a good commentary on this protest of SOPA/PIPA.

In that commentary Pogue points out that the opposition to SOPA/PIPA falls into two different groups that are not really in agreement with each other.  The first group would agree the piracy of protected intellectual property should be stopped, but takes issue with the steps that SOPA/PIPA would take to stop such piracy.  The concerns of this group could be addressed by re-writing the provisions of the legislation.  The second group really believes that piracy is good, a kind of an Internet variant of Gordon Geko’s famous "Greed is good" statement from the movie Wall Street.  This second group wants to be able to have free Internet access to copyrighted material, whatever its nature.  The second group wants no legislation or enforcement efforts at all.  In this respect, the people protesting the take-down of Megaupload, including Anonymous, also may represent those who want free information without cost, even if it is protected by copyright or other intellectual property rights.

With these two developments occurring side-by-side, it is also most interesting to note that the existing laws that were used to take down Megaupload appear to have rather far-reaching enforcement powers already.  If you believe that the artists and businesses who create music, film, literature, photograph and other forms of intellectual property should have their rights protected and that fair compensation should be paid for use of such material, then it would seem important to improve the existing laws that protect such rights in a way that does not threaten the free speech and the free exchange of ideas.