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Dana Dana Blankenhorn has been a business journalist for over 25 years and has covered the online world professionally since 1985. He founded the "Interactive Age Daily" for CMP Media, and has written for the Chicago Tribune, Advertising Age, and dozens of other publications over the years.
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November 10, 2005

Binary Thinking in an Analog World

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Posted by Dana Blankenhorn

howard%20stringer%202.jpgTwo press releases came in today and demonstrated to me that the biggest problem we have in this world right now is a lack of ethics.

In one a business research group, Info-Tech, is asking us to ban eBay's Skype from corporate system, saying the software is dangerous. In the other, the Electronic Fronter Foundation basically wants us to boycott Sony CDs because they're secretly installing malware disguised as a DRM that keeps people from fairly using what they thought they bought.

What these stories share is an assumption, a very dangerous assumption in an interconnected world.

The assumption is a lack of ethics by all. Sony is treating all its customers like criminals, and acting in a criminal manner in response. Info-Tech is assuming that Skype, along with other "peer to peer technologies" such as "IM," (as noted in their press release) is dangerous and must be outlawed from corporate networks.

We can speculate over why this has happened, but a fish rots from the top. CEOs get the big money because they're responsible. So in the case of Sony Corp., it rots from Howard Stringer. In the case of Skype, it rots from eBay CEO Meg Whitman. If we can't assume good ethics in their products, nothing their employees do matters much.

It's one thing for large institutions to be on guard against consumers or employees, to take precautions against theft. It's quite another for them to take the law into their own hands, or to take on the characters of a police state in response, to assume by their actions that everyone is a thief.

Once that line is crossed, all bets are off and the market becomes a war of all against all.

This assumption that the other side, so-called, has evil intent is rampant throughout the society. In the past, however, we assumed that most people were ethical and treated them as such. We assumed, as employers, that most employees were on our team. We assumed, as vendors, that most consumers weren't stealing.

The assumption of evil intent is binary thinking in an analog world. It's all absolutes to each of us, but real life isn't like that. What began in politics is now poisoning the market, getting sand in its gears, slowing it down.

It's when our markets fail that the true evil-doers prevail. In the case of the technology markets, we have truly met the enemy in the mirror.

Until we get ethics, starting at the top of our corporate and political pyramids, ethics based on an assumption of goodwill, our markets and our society can't go forward, only backward. That means going backward in time, building a bridge to the 14th century. It's one we all build by our actions, and one whose construction all people of goodwill should condemn absolutely, not just by saying nice things but by behaving ethically, behaving as though everything we say and do is being televised and shown to our mothers.

Comments (3) + TrackBacks (0) | Category: Business Models | Business Strategy | Consumer Electronics | Copyright | Internet | ethics


1. Brad Hutchings on November 10, 2005 01:43 PM writes...

Dana, you kinda turn the old "Democrats think Republicans are evil and Replublicans think Democrats are stupid" maxim on its head. I guess your version is everyone in power thinks we're evil and they're stupid. OK.

But consider the business case of DRM and what players in the market are doing right now. They are experimenting, and when an experiment doesn't quite work or goes outside what people expect, maybe there is some push-back, and then some response. The Sony/BMG root-kit thing is a little egregious, not because it takes away "fair use" (a legal defense BTW, not a positive right in any sense despite how many times the copyfight crowd claims so in blog postings) but because of the technical means it uses to accomplish what it does.

What's happening with DRM in content space is much like what commercial software developers have figured out in the last decade, particular small developers who have used an Internet/shareware model of distribution (i.e. try for free before you buy, unlock additional features, etc.). Adding reasonable DRM usually boosts sales, and quite a lot. This is not about assuming your customers as dishonest. It's not even about (where my knee-jerk position is) not wanting to treat your paying customers like chumps (for paying while everyone else uses for free). It's about revenues going up when you add reasonable DRM to give people a reason to pay, i.e. getting past the registration screen. Go overboard or inconvenience customers too much and you'll sink. But generally, having it gives you a significantly better revenue story than not having it. If we polled our customers at the ballot box, they wouldn't want DRM. When we poll them at their pocket books, they sure seem to lap it up. I have a feeling you'll see a similar revealed preferences with music and other content. Call the music publishers opportunistic if you like, but not evil.

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2. Jesse Kopelman on November 10, 2005 04:25 PM writes...

I don't think this has much to do with what we traditionally think of as politics but more to do with our lawyer-dominated culture. In this culture, you almost have to assume you are at fault unless you can afford the lawyers to prove you are not. If you can afford the good lawyers, you start thinking you are invincible (companies releasing defective products because the potential liability was less than the cost of fixing the defect). Big companies get into the habit of thinking that the consumers are of a similar mindset -- how dare they try and violate usage terms, don't they know how many lawyers we have? Meanwhile, there is the separate issue of the paid media having to make every story about a potential threat. Fear sells, always has, always will.

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3. sergio on November 13, 2005 02:24 AM writes...

Let's hope that the busuiness case of lost revenue from product sales and class action lawsuits resulting from using this so-called XCP "Technology" is greater than the potential revenues gained from Joe Sixpack's kind of software piracy.

And if the recent allegations of possible copyright violation (used in Sony's rootkit code) are true, then we really have an ironic twist to this saga.

Well, Sony, I don't plan on buying your music again, ever! Take those profits to the bank.

But sadly, DRM/TPM is heading the consumers way in force with no appeal process in place. That is, your DRM Operating System in conjunction with TPM hardware will enforce IP owners wishes whether it violates the consumer's rights or not. So vote with your dollar.

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