Yahoo’s settlement with families of Chinese dissidents may not change its ways in China

Internet company Yahoo Inc. has settled a lawsuit brought by the families of a Chinese dissident and a journalist, who claim they were jailed after the company cooperated with Chinese authorities, according to a report in CNN.

Yahoo's decision to settle comes a week after the company was criticized in Congress, with one congressman accusing the company of being moral pygmies. "While technologically and financially you are giants, morally you are pygmies," House Foreign Affairs Committee Chairman Tom Lantos, said at a hearing.

Yahoo and other Internet companies have maintained that to operate in countries like China they have to play by local rules. This stand has however come in for criticism that when it comes to business interests, Internet companies like Yahoo and Google give democratic norms the go by.

In this instance, the Chinese government demanded from Yahoo the name of the account holder who was using a Yahoo account to send out pro-democracy documents, and Yahoo complied.

Tom Lantos called on Internet companies to "resist any attempts by authoritarian regimes to make them complicit in cracking down on free speech, otherwise they simply should not do business in those markets", according to this report by the Associated Press.

In interviews, Yahoo executives have said that their refusal to comply could land their local employees in China in trouble. They add that the technologies for online community and sharing that they offer will in the final analysis promote democracy in countries run by repressive regimes.

There may be some merit to this argument. During the violent repression in Myanmar earlier this year, the Internet has proven to be an useful conduit to the world for people to communicate the atrocities to the rest of the world. Even as Pakistan places curbs on traditional media and television in Pakistan, the Internet has emerged as a key alternative.

Yahoo and other Internet companies have argued that it is not for one company to challenge the system in China. It requires an inter-governmental resolution between the US and Chinese governments.

It is not clear at this point whether the settlement by Yahoo reflects a change in the company’s position on how it operates in China. At this point it seems that the company settled to avoid further embarrassment and scrutiny in the US.

The company may now be in a better position legally in the US after it handed over the management of its Chinese operations to Alibaba.com in which Yahoo has a 40 percent stake. It is now more likely to argue that it has no control over Alibaba.com in which it holds a minority stake.

Media companies see the light with Hulu

Hulu, an online video service from two large media companies, News Corp. and General Electric's NBC Universal, started testing its service Monday. Using an advertising based business model, Hulu will have programming from a number of media companies including now shows from Sony Pictures Television and Metro-Goldwyn-Mayer Studios.

The move by these companies to move their programming online indicates the growing popularity of online video, as is evident from the success of Google Inc.’s YouTube. Besides adding a revenue stream for these companies, the programming online may also prove to be a promotional medium, providing users a sample of movies and other video that they could then buy on DVDs or view at the local theatre.

Along with Hulu's own site, the company said its videos would be available through partners such as America Online Inc., MSN and MySpace.com, although links for Hulu on these sites were not apparent at the time of writing, according to a report by Computerworld.

The companies involved are likely to ensure tight control over their copyrights on content, including discouraging download and distribution of their content. Leading Internet and media companies announced earlier this month a set of guidelines for user-generated content (UGC) services, without infringing copyrights.

Among the measures proposed is the implementation of filtering technology with the goal to eliminate infringing content on UGC services, including blocking infringing uploads before they are made available to the public.

Given that the high Internet bandwidth required for the services proposed by Hulu is not available even in some parts of the US, Hulu will likely be more popular for viewing short clips from movies, and other short content, rather than as an alternative to television, and other medium for watching TVs.

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Throwing computers at the digital divide won’t help

Every other multinational technology company these days has a strategy for bridging the digital divide, which in many emerging economies usually adds up to bridging the rural divide. While students and the rest of the people in the cities have access to the Internet, and consequently to information, rural economies do not, goes the story line.

The spiel continues: If only rural economies have access to the Internet, and consequently to information, that would eliminate middle men when farmers sell their produce, help farmers get the best price for their produce, ease out the village money-lender, and generally usher pastoral bliss.

Thus you have low-cost technologies like the One Laptop Per Child (OLPC) project's XO laptop, and Intel’s Classmate PC, and Internet Kiosks aiming at the new big market – bridging the digital divide in rural markets.

The management guru they often quote is C.K. Prahalad, author of the famous book “ The Fortune at the Bottom of the Pyramid”, which argues that there is money to be made at the bottom of the economic pyramid as well, if only goods are packaged in the right way, and at the right price points.

There are however a number of faulty assumptions in the strategy for bridging the digital divide adopted by multinational companies for emerging economies like Brazil and India. The divide in these countries is not only digital, but fundamentally one of inequality. It covers lack of access to sanitation, housing, electricity, education, and a whole lot of other things that the elites in these countries enjoy.

Thus technology, and the information it brings, is likely to be the least among the priorities among the poor and the governments in these countries. Perhaps that is the reason why the Indian government declined to join the OLPC project. It would rather spend money on setting up more schools, and outfitting them with blackboards, benches, and inexpensive writing equipment, than invest in a laptop for each child.

Prahalad has often been misunderstood by technology pundits. The management guru was largely talking about companies re-packaging and pricing necessities and small-value luxuries for rural masses. Thus Lever introduced its shampoos in small, single-use and low-cost sachets rather than in the costlier, gigantic packs they sell to well-heeled consumers. You just can’t re-package technology in small dollops and try to pass it off as a necessity to poor users who still can’t take advantage of it because they are illiterate, and whose primary concern is still their next meal.

A more appropriate metaphor is the public call offices (PCOs) set up in both urban and rural India by the government under license to small-time entrepreneurs. These phone booths were a success for one, because it met a felt need for communications among India’s urban and rural masses. India’s rural masses often migrate to the city for work, and need to stay in touch with their family back home. They can’t write letters, because they are illiterate. So they rely on messages sent through acquaintances, and the telephone, which does not require people to be literate to use them.

Illiteracy and poverty, and not lack of access to the Internet, is one of the more pressing and urgent problems in many developing economies.

The plans by tech companies to bridge the digital divide may in fact accentuate inequalities in rural economies. The computers and the Internet, and the information that it provides, may well go to the rural elites, rather than the rural poor, who are by the way mainly illiterate.

To the middlemen already holding sway in the rural economies, the tech companies may well help add another set of middlemen – those with access to information. Throwing computers at the digital divide, besides being fruitless, could even be dangerous.

Corrupt bloggers: part of the dark underbelly of the Internet

Blogs and bloggers have always been romanticized as the ultimate example of freedom of expression. Citizen journalists, with fire in their belly, were expected to give their own unique perspective on events, new information that the traditional media had missed out, and a freshness of outlook and analysis. Information, we were told, would be really free, both as in unpriced and uncontrolled.

Unfortunately some corrupt bloggers are quickly turning that dream to dust. Some bloggers are putting up content on their blog posts up for sale to the corporate sector and other buyers. Their line: pay me and I will put up your news release.

Marketing communications managers in companies currently budget payments to bloggers that, depending on the popularity of the blogs, range from hefty checks to not-so-hefty checks, or even just a meal at an expensive restaurant.

“Soon after we issue a press release or make a product announcement, there are a large number of bloggers calling to discuss payments for running the story on their blogs”, said the communications manager of a leading multinational Internet company.

Why do companies pay ? Blogs are competing as news sources for the public because of their viral nature and quicker time to getting a story online. A good report helps a company, as it goes that much further, and more quickly, across cyberspace. By the same token if one of the more popular blogs ignores the news or publishes a competitor’s news item, the company that didn’t pay up stands to lose.

Bloggers are quickly realizing their importance, and some of them now demand that they be invited for press conferences, media briefings, and even company-paid junkets to exotic locations.

In an earlier posting, I had quoted Google Inc.’s president and chief Internet evangelist Vinton Cerf as saying that the Internet is a mirror to the population that uses it. “When you have a problem in the mirror you do not fix the mirror, you fix that which is reflected in the mirror”, Cerf said while rejecting regulation of the Internet.

The dark under-belly of society has moved to the Internet, but now more powerful, more viral because of the reach, and anonymity that the Internet offers.

There have been many instances through the decades of some small town journalists and publishers, and even some big city journalists and publishers, corrupted by handouts from politicians and companies. I knew a publisher who brought out his newspaper with a circulation of about 5,000 every time a company or a political party had an axes to grind through his newspaper.

But for these few black sheep, there are solid doyens of journalism, both publishers and journalists, committed to delivering to the reader a great, interesting, and accurate story.

This pattern too will likely emerge on the Internet, but the numbers are so many, that separating the wheat from the chaff is an impossible task for readers online. And there are more news and commentary blogs and product review blogs getting added each day. That is because the barriers to entry to becoming a purveyor of news and opinions has come crashing down.

If in the old days you needed to have a degree in journalism, and required an appreciation of the finer points and the ethics of the profession before you were credible, now anybody with an Internet account and access to a blog hosting site can set up a news blog.

Citizen journalism therefore is fraught with danger. I am worried not only of citizen journalism promoting corporate interests, but of citizen journalism promoting political interests, promoting disharmony between religions, at a price. Aggrieved folks may sometimes be able to slap the blog with a “cease and desist”, but the problem with such orders is that by the time your lawyer has finished drafting it out, various versions of the story may be on hundreds, nay a million other blogs.

My guess is that a confused public will eventually go back to their traditional gatekeepers of the news, like online editions of some of the established newspapers, and narrow down to a few blogs they have thoroughly vetted for quality. But until then it will be corruption and chaos in the blogosphere.

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Advertising in print newspapers on the decline

As more people go online, and news is available for free for multiple sources, will it be a matter of time before print newspapers go the way of the dinosaur ? Will newer sources of news, including blogs, replace the online editions of traditional newspapers ?

Advertisers seem to think so.

Data available from the Newspaper Association of America (NAA) in Arlington, Virginia suggests that advertising in print is on the decline. Spending for print ads in newspapers in the second quarter of this year totaled US$10.5 billion, down 10.2 percent from the same period a year earlier, according to the NAA.

This data seems to bear out the forecasts by many pundits that as print gets less popular, advertising dollars will move away from print editions. But it hardly provides conclusive evidence that print newspapers are dying. It could be just that some advertising is moving to other newer opportunities, including online. It may be just the same as when TV advertising started cutting into newspaper advertising decades ago.

However whatever advertising is moving away from print editions of newspapers is not necessarily going to their online sites.

Advertising expenditures for newspaper Web sites increased by 19.3 percent to US$796 million in the second quarter versus the same period a year ago, according to preliminary estimates from the NAA.

This sounds great in isolation. But the newspapers that saw a decline of about US$1 billion in advertising in the second quarter, witnessed an increase of less than $200 million in advertising from its online properties.

As a result, total advertising expenditures at newspaper companies were $11.3 billion for the second quarter of 2007, an 8.6 percent decrease from the same period a year earlier, according to NAA.

The NAA puts down the reduced advertising revenue for newspapers to cyclical swings in the U.S. economy, as well as structural changes in the businesses of major advertisers, which continue to affect print advertising revenue.

NAA is a nonprofit organization representing the newspaper industry and more than 2,000 newspapers in the U.S. and Canada.

Online editions of established newspapers appear to have established their popularity, perhaps because of their strong brands as print newspapers. More than 59 million people (37.3 percent of all active Internet users) visited newspaper web sites on average during the second quarter of 2007, a record number that represents a 7.7 percent increase over the same period a year ago, according to custom analysis provided by Nielsen//NetRatings for the NAA.

As print newspaper move online, they are going to need to learn a new bag of tricks, including embedding video, and offering podcasts from their sites. These technologies would require a totally different set of skills than are what are currently found in traditional print newspapers. All of a sudden reporters, whose faces we rarely saw, and whose voices were never heard, are going to have to metamorphose into sleekly dressed and groomed TV reporters.

Already as print advertising looks shaky going forward, and reader’s preferences shift, a number of publications, including IDG’s Infoworld, have moved online.

A caveat about the NAA data. It is primarily about newspapers in North America. Print newspapers are far from declining in a number of markets, including India, where there has been a sudden rush of new print publications. Established publishing companies, and start-ups have also set up online news sites.

In India, for example, the current transformation appears to be less about the transition by users from print to online reading, and more about more readers getting into the mainstream. As long as Internet usage is limited to urban elites, and is cheaper than buying a print publication, the outlook is very positive for print, analysts say.

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Finding gold on the Net is a long shot

Do a search for “reggae” on YouTube and you find a large number of videos put up by aspiring musicians hoping for their place in the sun. Try a search for “Fado”, and you will of course find some clips from the celebrated Portuguese singer Amalia Rodrigues, but you will also find a number of amateur groups playing their own rendition of these songs.

Video sharing sites like YouTube, blog hosting sites like Blogger and WordPress, are a great opportunity for people to unleash their creativity and be heard or read. In a sense, it is “The Long Tail” unleashed, as the cost of putting your stuff out on the Internet has crashed dramatically, and the theoretical reach multiplied.

The Long Tail is the title of an article in October, 2004 in Wired Magazine by its editor-in-chief, Chris Anderson, who later wrote a book by the same title.

The gist of the theory as explained by Anderson in his blog is that as the costs of production and distribution fall, especially online, there is now less need to lump products and consumers into one-size-fits-all containers. In an era without the constraints of physical shelf space and other bottlenecks of distribution, narrowly-targeted goods and services can be as economically attractive as mainstream fare, he adds.

Video sharing, blogging sites, and other web sites dispensing entertainment have indeed made it possible for a lot of people, who believe they are creative, to go out and try to make an impact, at a very little cost. Publishing and distributing the content of this blog would have been close to impossible for me say five years ago when we were still tied to the economics of the print world.

But one upshot of the Long Tail is that apart from a few good upcoming musicians or writers or photographers or poets that are visible on the Internet, there are thousands of wannabes with little or no talent. This leads to a whole lot of clutter competing for our attention on the Internet. To find gold on the Internet you have to be as patient as panning for gold in an ocean.

Great, but as yet unknown talent, may also go unnoticed in the deafening contest for our attention. To be noticed and rewarded, the aspiring artist or writer may have to either advertise extensively, spending a lot of money, or yes, go up to one of the record labels or publishing houses, and hope they will sign a contract with him.

To get a break through the Internet, a musician still depends to a large extent on getting backed by the big brands, or some of the mid-range brands that have emerged. If you are a blogger, your chances are far higher if you are hosted, for example, by one of the top publications like BusinessWeek or CNet or Computerworld.

There is one possible way out for wannabes whose pluck more than make up for their lack of funds. Look out for new gatekeepers, that will filter out the chaos and the rubbish that abounds on the Net, and will, in fact, be your new age mentors and guides.

I am talking about folks like eMusic who offer Long Tail music on their web-site. These are the kind of companies that can do people on the Internet as well as upstart artists and writers a favor, by building a list of recommendations for the confused user.

But before they can emerge as effective gatekeepers to the Internet, these folks will have to build their own brands, and their credibility as mentors. eMusic has certainly built a solid brand, made all the more strong by AT&T offering downloads from eMusic on mobile phones. But it still has a long way to go to become a comprehensive source of advice on what music to buy.

Reviews by other users of the site are nice to read sometimes, but they don’t carry the same credibility as eMusic giving a recommendation on a musician, and giving a detailed explanation and reasons for the recommendation. eMusic does it for some of its music, but not all. For the rest you are generally groping in the dark, basing your buy-or-dump decision entirely on the few seconds preview eMusic offers.

If new and credible gatekeepers don’t emerge fast enough to help us find our way through the burst of creativity on the Internet, it will be an opportunity for the big brands again, whether the record labels or publishing houses, to act as arbiters of quality and good taste. After all, these are the brands we have traditionally used and trusted in some measure. But these established brands, with their focus on big hits, will certainly snuff out the creativity of the smaller guys on the net.

If Net Neutrality goes, the world may no longer be flat

Network neutrality has ensured so far that we are able to access any web site we want, at the same speed, whether it is a corporate web-site in the US, the site of an out-of-garage operation, or the web site of a vendor in India, Ghana, or anywhere in the world.

This neutrality ensured that the Internet was a great leveller. Besides giving a fillip to businesses selling into the US and other developed economies, including small operations like garment and handicraft makers, it also gave a fillip to blogging, because now we were communicating with anybody, anywhere in the world at little or no cost.

The world may however no longer be flat if new rules come into force in the US aiming to create a two-tier Internet. The Internet service providers (ISPs), who have invested in the big pipes that transfer Internet packets, plan to speed up or slow down Web content based on its source, ownership or destination.

If you want traffic to your site to be faster, you will have to pay the owners of the pipes for premium, high speed movement of data to and from your site. It also means that video and audio content providers that pay for this premium service, or services operated by the owners of the pipes, would have access to the faster lane, while merchants, bloggers, and various content providers who can’t afford the fast lane, will just have to putter along the slow lane.

Once again an opportunity to create an equal opportunity society may be missed. Not only will the digital divide in the US get excarcebated, but it will have global ramifications, between the “haves” and “have nots” among countries.

Economies like India, China, which tend to be US-centric in their markets, may find themselves perhaps slipping into the slow-lanes of network traffic, and consequently the slow-lane of business.

The removal of net neutrality will also make cable and telephone companies like AT&T and Time Warner the filters, the gatekeepers in the two-tier Internet economy, deciding which traffic will flow faster, and which won’t, based purely on considerations of profit. Free access and disemmination of information could be in jeopardy, as also probably consumer choice and the free market.

The battle is just beginning. Weighing in favor of the network operators, the US Department of Justice (DoJ) on Thursday said that “some regulatory proposals offered by various companies and organizations in the name of “net neutrality” could deter broadband Internet providers from upgrading and expanding their networks to reach more Americans.” The DoJ was responding to a US Federal Communications Commission (FCC) Notice of Inquiry regarding broadband practices.

The DoJ said in a statement that precluding broadband providers from charging content and application providers directly for faster or more reliable service could shift the entire burden of implementing costly network expansions and improvements onto consumers. If the average consumer is unwilling or unable to pay more for broadband Internet access, the result could be to reduce or delay critical network expansion and improvement.

The Internet has until now been about freedom of expression (blogs etc.), freedom of communication (email, instant messenger etc.), freedom to socialize (social networking sites), and freedom of choice (online commerce). That could fade away or get compromised going forward. We are all up against commercial realities, unless US lawmakers intervene. The party may be getting over.