Month / October 1999

by Clay Shirky

The Future of Europe Lies In Email

What a cyber-cafe on steroids says about European Internet adoption.

First published in SAR, 10/99.

The future of post-national Europe is standing in line in London. A new
shop has opened opposite London’s Victoria rail Station, with a line out
the door from noon to night, selling the most addicitve product on
earth: connection. The shop, a cybercafe on steroids called
easyEverything, takes the traditional approach to cybercafes (“Like a
real cafe, but with terminals”) and turns it on its head (“Like a
college computer lab, but with latte.”) In return for providing
travellers with hundreds of terminals and cheap, accessible internet
access, easyEverything has been rewarded with an unexpectedly huge flow
of the under-25 set travelling across Europe, and these travellers
are all using easyEverything for one thing: HotMail. Thats it – almost
no one is surfing, buying, listenting, or any of the other things the
Web is being hyped for, just thousands of people sending tens of
thousands of emails a day, 24/7. The messages are short — ‘Here’s my
phone number, here’s my itinerary’ — and the turnover of customers is
high, but the message being sent out via these digital jungle drums is a
‘Map of Cool’, a traveller’s atlas of Europe. The subtext of the
messages is “London is good right now. Glasgow is good right now.
Frankfurt is lame, but Prague is cool…”, on and on, a vast interactive
‘Let’s Go’ produced in real time, and with far more accuracy than the
commercial travel guides. This may seem like nothing more than a
holiday pastime, but this kind of information moves markets, and is the
key to transforming the European Union from a free trade zone into a
real country.

The EU is the test case for the effects of the Internet on government.
No other multi-national region of the world has gone so far to
dismantle national broders. Within the EU there are no passport
checks, no customs checks at internal broders, and no barriers to work

  • any citizen of any of the 12 EU countries can work in any other EU
    country without needing a visa. Things that Americans take for
    granted, like being able to move 3000 miles for a job, are available
    to the citizens of the EU for the first time. In other words, the EU
    has most of the trappings of a country except the citizens, and the
    citizens are being produced at places like easyEverything. The people
    sending their email there are Europe’s first post-national generation,
    its first Internet generation, the first group of people who can move
    from one country to another if they hear that life is better
    elsewhere. The willingness of this generation to ignore national
    identity is going to confound their elders, the people who have grown
    up convinced that sentiments like ‘The Germans are efficient and
    humorless, while the Italians are undisciplined and fun-loving’ have
    an almost genetic component. Nationality matters less than economics
  • the Internet generation is going to behave more like customers than
    citizens.

There used to be a story in the automotive industry that went this way:
in the 1980s, American car manufacturers made expensive gas guzzlers,
while the Japanese made zippy little bundles of automotive efficency.
Lesson? Japan good, America bad. Then in the 1990s, the Japanese got
sloppy and smug, while the Americans re-tooled and re-engineered, and
the advantage switched to Detroit. New lesson? America good, Japan bad,
the opposite of the old lesson. This is the official history, anyway,
but there is another, simpler interpretation, one that doesn’t require
belief in a pair of opposite lessons in subsequent decades. That
interpretation is this: people buy the cars they like best, and don’t
care about nationality.

The reason that this simpler interpretation is not the official
history is that a global market is terrifying to people, or at least
to people who make cars for a living. Detriot’s “Buy American”
campaign was proof that producers thought that nationality could – and
should – sway consumer choice more than quality and price, but those
days are ending. Patriotism is the last refuge of an unprofitable
business. We are so used to seeing markets through the filter of
national borders that its hard to see what the emerging global market
is going to look like, but the behavior of the Internet generation in
Europe will show us its outlines.

The current cohort of European under 25s have several important
characteristics that make them immune to cheap nationalism — they are
the first generation whose parents didn’t live through WWII, and they
are richer, more mobile, and speak better English (the official second
language of the 21st century) than any generation in history. Add to
this that they are comfortable with the internet, that they can work
anywhere they like, and that places like easyEverything are springing up
to satisfy untapped demand for communications, and you get a generation
of rootless cosmopolitans, people who are unimpressed with arguments
that they should tolerate unemployment, or high prices, or limited
horizons, simply in order to defend national characteristics that boil
down to little more than a preference for different kinds of cheese.

This emerging European generation will run into a great deal of
hostility from the status quo –a continent that has erupted into war
twice in this century will give up its borders uneasily and unevenly
— but the transformation is inevitable. ‘National culture’ is just
another way of saying ‘arbitrage opportunity’. The internet has
created the biggest referendum on the ability of government to satisfy
its citizens in the history of the world, and governments that fail
the test will see their citizens vote with their feet. As the world is
increasingly divided into EU-like free trade arrangements — NAFTA,
OSEAN, OAU, MERCOSUR, CARICOM — the free flow of information about
jobs and prices across those borders will accelerate the transfer of
power to supra-national entities, and the loyalty of citizens will go
with it. This period has only just begun, and it will have a long
time to go before the post-national generation is in power, but you
can start to see what the world will look like in a 25 years while
standing in line at Victoria station.

by Clay Shirky

Culture is Just Another Word for “Arbitrage Opportunity”

The threat cross-border ecommerce presents to national culture.

First published in FEED, 07/99.

Britain’s Tory party’s use of ecommerce as an argument for retaining the pound is a new high-water mark in the internet’s influence on politics. Britain has been sitting on the fence for years about whether to scrap the pound in favor of the euro, and there has always been a significant block of British “euro-skeptics” who fear that economic convergence equals loss of sovereignty and national character. The Tories would love
to embrace these euro-skeptics (and their votes) by pandering to their sense that a strong pound stands for a self-sufficient Britain, but have been wary of doing so because rejecting the euro looks like a vote for economic weakness. With the rise of ecommerce, the Tories now think they can have it both ways — by mixing “new economy” optimism
with flag-waving they can embrace economic expansion while defending their cultural traditions against international dilution, a position likely to resonate well with the euro-skeptics. They are certainly right that a borderless economy could help preserve the pound, but if their aim is to defend Britain’s cultural identity, they will rue the day they ever heard the word ecommerce.

National character is driven by economic barriers. What a citizen eats, reads, drives, watches, and wears is shaped simply by what’s available, and what’s available is shaped by borders. Tariffs and customs sharply restrict the movement of both goods and services, so countries differ from one another in part because each population has different
limits on their choices in the marketplace. Any cross-border commerce — McDonald’s, Louis Vuitton, Jackie Chan movies — breaks down these cultural limits on choice to a degree, but ecommerce makes national borders so permeable that now it isn’t even necessary to open a shop in another country to start doing business with its citizens.

In an age of falling geographic barriers, culture is just another word for “arbitrage opportunity.” Until recently, geographic borders protected local businesses from serious international competition, but cross-border commerce is changing all that. Britain is currently seeing this in the form of a price war in consumer goods, precipitated by Wal-Mart’s entry into a market that has never seen a low-cost retailer before. The euro-
skeptics have grasped that joining the euro will expose Britain to far more of Wal-Mart’s style of ultra-efficient price-driven competition, but they have not grasped that keeping the pound and embracing ecommerce is no solution. Differing currencies are no longer much of a barrier — with online currency converters, foreign ecommerce companies offering cheaper goods to British citizens can switch prices from euros to pounds
instantaneously.

The Tories are relying on the pound’s symbolism as a barrier to foreign competition. But what they don’t mention is that embracing ecommerce and rejecting the euro will increase international competition faster than embracing the euro and fighting ecommerce. There are of course uniquely British products which are safe from competition — blood pudding, bagpipes, marmite — but these aren’t much of a counterweight to those products where quality and price matter far more than national origin — computers, books, cars, not to mention airline tickets and stock trades. By vastly increasing the width of choice offered to British consumers (and therefore the depth of competition faced by British producers), ecommerce will make the pound as a symbol of an aloof Britannia irrelevant through other means. No matter what currency their goods are priced in, a borderless economy will weave their island inextricably into the fabric of the world.

by Clay Shirky

How Television Ratings Portend the Death of Mass Media

Television is becoming more like the Web.

First published on FEED, 10/14/1999.

The fall Nielsen ratings are now in for the new crop of prime time TV shows, and in what is becoming a predictable pattern, the results are underwhelming. Despite the promotional avalanche that accompanies every new series, this year’s new shows failed to attract as much attention as the hits of previous seasons. This steady decline in popularity of each successive season’s offerings is fairly dramatic. Not since “Seinfeld” has a show managed to reach one out of four American households. The top three (“E.R.,” “Frasier,” “Friends”) only reach about one household in five, six, and seven, respectively, and even that tops the current season. The most popular new show (“Stark Raving Mad”) reached barely one in eight. There’s no mystery about this process: Proliferation of choices divides attention, and every year sees increased choices on cable, the video store, and the web. The mystery is that the price to run a commercial on one of these hit shows is at an all-time high.

If the most popular shows reach fewer people every year, why are advertisers willing to pay more for commercial slots on those shows? The first and simplest reason is that the dot-coms are pouring a huge amount of money into advertising, and driving up prices. But the more interesting answer has to do with the large-scale splintering of mass media. Broadcast networks and advertisers are used to buying audience attention in bulk, and in prime time bulk means at least 20 million households at a time. These massive audiences for prime time shows, developed when the entire TV universe included just ABC, NBC, and CBS, provided the kind of reach that made it possible for the General Foods of the world to turn a new brand into a household word in a few weeks, by simply buying the attention of a quarter of the country at once. As the shows which can offer this kind of mass audience disappear, things are getting trickier for the networks — they can sell the advertiser two shows that each reach an eighth of the country, but how can they prove that you are reaching two different people and not just the same person twice? They can’t. The symbiotic relationship between mass media and mass marketers is being threatened by the increasing number of media outlets, which sub-divides the mass audience into smaller and smaller niches.

Broadcast TV can charge higher prices for fewer households because the mass marketers simply have nowhere else to go. Despite the increasingly anemic performance of the most popular TV shows, there isn’t another medium that offers the option of reaching 10 million households at the same time with a single ad — even giant portal sites fragment their reach across a number of offerings. Indie mutiny has been in the works for years, but these recent Nielsen numbers may be a cultural bellwether — among the first concrete data to confirm the decay of mass media. Like a small island with a receding coastline, the total area the broadcast networks cover shrinks every year, but for mass marketers, it’s still the only ground above water. It is obvious that both the networks and their advertisers are soon going to have to adapt to a fragmented media market where nothing regularly reaches 20 million people, and the only way to get mass will be niche plus niche plus niche. In the meantime, though, old habits die hard, and it is these old habits of looking for mass that are driving ad rates up for hit shows even as those shows lose the very audience that makes them valuable. If the truth in advertising law had any real teeth, CBS would have to change the name to “Almost One Person In Eight Loves Raymond.” Don’t expect even that to last.

by Clay Shirky

Kasparov vs. The World

What the Kasparov community chess match tells us about community.

10/21/1999

It was going to be acres of good PR. After the success of Garry Kasparov’s chess
matchup with IBM’s Deep Blue, Microsoft wanted to host another computerized chess match this summer — Kasparov vs. The World. The setup was simple: Kasparov, the John Henry of the Information Age, would play white, posting a move every other day on the Microsoft chess BBS. “The World” consisted of four teenage chess experts who would analyze the game and recommend counter-moves, which would also be posted on the BBS. Chess aficionados from around the world could then log in and vote for which of the four moves Black should play. This had everything Microsoft could want — community, celebrity, online collaboration, and lots of “Microsoft hosts The World!” press releases. This “experts recommend, The World votes” method worked better than anybody dared hope, resulting in surprisingly challenging chess and the ascension of one of The World’s experts, Irina Krush, into chess stardom. Things were going well up until last week, when Microsoft missed a crucial piece of email and the good PR began to hiss out of the event like helium from a leaky balloon.

While Deep Blue was a lone computer, here Kasparov’s opponent was to be the chess
community itself, a kind of strategic “group mind.” Since communication was the glue
that held the community together, it’s fitting that the game came unglued after a missed email. During last week’s end game, it was generally agreed that The World had made a serious tactical error in move 52, but that there was still the possibility of a draw. Then, on October 13th, Ms. Krush’s recommendation for move 58 was delayed by mail server problems, problems compounded by a further delay in posting the information on the Microsoft server. Without Ms. Krush’s input, an inferior move was suggested and accepted, making it obvious that despite the rhetoric of collaboration, the game had become Kasparov v. Krush with Kibbitzing by The World. Deprived of Ms. Krush’s strategic vision, the game was doomed. The World responded to this communication breakdown by collective hari kari, with 66% of the team voting for a suicidal move. Facing the possibility of headlines like “The World Resigns from Microsoft,” the corporate titan rejected the people’s move and
substituted one of its own. The World, not surprisingly, reacted badly.

Within hours of Microsoft’s reneging on the vote, a protest movement was launched,
including press releases, coordinating web sites, and even a counter-BBS which archived articles from the Microsoft chess server before they expired. Microsoft had run afoul of the first rule of online PR: On the internet, there is no practical difference between “community” and “media”; anyone with an email address is a media outlet, a tiny media outlet to be sure, but still part of the continuum. Since online communities and online media outlets use the same tools — web sites, mailing lists, BBS’s — the border between “community interest” and “news” is far easier to cross. The Microsoft story took less than a week to go from the complaints of a few passionate members of the chess community to a story on the BBC.

Microsoft made the same famously bad bet that sidelined Prodigy: By giving The World a forum for expressing itself, it assumed that The World’s gratitude would prevent criticism of its host, should anything go wrong. As Rocky the Flying Squirrel would say, “That trick never works.” What started as a way to follow on IBM’s success with Deep Blue has become a more informative comparison than even Microsoft knew. Two computerized chess games against the World Champion — one meant to display the power of computation, the other the power of community — and the lesson is this: While computers sometimes behave the way you want them to, communities never do. Or, as the Microsoft PR person put it after the game ended: “Live by the internet, die by the internet.”

by Clay Shirky

Sun’s Quasi-Open Source Model

Sun Microsystems’s misunderstanding of Open Source.

First published in FEED, 10/7/1999.

If imitation is the sincerest form of flattery, the Open Source movement should be blushing from head to toe by now. Its most recent admirer is Sun Microsystems, who has just announced that it will make the source code to its Solaris operating system available under something it calls a “Community Source” license. In making such a bold move (Solaris is their core product) Sun is embracing everything that has made the Open Source movement such a success. Everything, that is, except that bit about opening up their source code.

Sun is attempting a quasi-Open Source move because while they want what Linux has (an army of talented developers working for free) they also want what Linux doesn’t have (commercial control, patents on intellectual property, and a steady stream of income). They are trying to split the difference by creating a license which only allows you access to Solaris source code if you promise not to make any money from it, and only if you agree to co-ordinate any changes you make with Sun. In order to stave off criticism of these restrictions (which don’t exist under real Open Source licenses), Sun has wrapped itself in the flag of community — after all, what could possibly be wrong with a “Community Source” license?

In net-speak, “community” no longer means “a gathering of likeminded people,” it is just a reductive variable written into every dot-com business plan. The problem with Sun’s “Community Source” is that Open Source software is not written by communities, it is written by individuals — thousands of individual developers, each sharing their work with the others. The difference is a subtle but important one; Sun is betting that Open Source software works as well as it does because of community feeling and collaboration, when in fact it is mostly driven by individual selfishness. In an Open Source project, new features come not from what a developer imagines some hypothetical client might possibly want to do someday, it comes from what the developer him or herself wants to do right now. Like a game of “Which of these things is not like the others?,” commercially developed software is starkly different from Open Source projects: Linux exists because Linus Torvalds wanted a Unix clone that ran on cheap hardware, Apache exists because Brian Behelendorf wanted a good web server, Perl exists because Larry Wall wanted to make writing reports easier, Solaris exists because Sun wanted to make money.

Most of the valuable aspects of open source software — its cleanliness in implementation, its compact size, its ability to run on cheap hardware — are a direct result of this selfishness, since developers are making the software they want to use. Like the paradox of the free market, where reducing central management increases economic efficiency, the paradox of Open Source is that by reducing commercial control, software can actually improve faster. What Sun doesn’t understand is that this core aspect of Open Source is indivisible: The thing that makes Linux so desirable for developers is the very thing that gives commercial software companies indigestion — it transfers control of the software to the individual. There’s no way to split the difference, because there’s no difference to split.

Sun’s license guts the very freedoms that drive open source adoption in the first place, because without real transfer of power, there is no incentive to use open source software. And this problem is not Sun’s alone — giants like Microsoft and Oracle will also need strategies for dealing with Open Source, and sooner rather than later. As with so much about the internet, Open Source is about removing the middleman and transferring control to the individual: Linux is the net’s first disintermediated operating system. No matter how many iterations of its “Community Source” license it goes through, in the end Sun is going to discover that the only way to get the advantages which the Open Source movement enjoys is to open its source.