June 2, 2009

"You cannot ban tweeting in parliament" declared the vice president of the Bundestag, forsaking the obvious remedy of transforming the Reichstag into a Faraday cage. After the ramming of the anti-piracy, anti-privacy HADOPI law down the throat of the Chambre des Députés and the current antics du jour at the expense of the British Commons, Chris Bryant, Bertrand Benoit and Tim Bradshaw must have had fun reporting how poorly house trained German representatives beat their official channel by a full fifteen minutes (*).

Meanwhile Juliet Macur was reduced to follow Lance Armstrong on Twitter as "he [was] not speaking to reporters at the Giro" (**). To have been beaten by a full fifteen minutes may have been one of his reasons as bearers of bad news prefer one way communication channels. The point though is that Twitter once again undercuts the middleman. A sore point surely for the traditional media, which attract many readers by covering celebrities, whether from sports, the arts, politics or business.

Speaking of business, I strongly recommend the SEC get a serious look at Twitter despite its being private. One duty of the SEC is to make sure public corporations disclose relevant information on a timely basis. In the view of the German "twittergate", the SEC may want to review its interpretation of "real time issuer disclosures" (1). If the CEO can twit the election of a new officer to her followers, a four day reporting deadline is simply irrelevant if not worse, an entrapment mechanism. Are they going to be guilty of insider trading if they anticipate the current SEC channel?

Let the SEC lists the material events which can safely be reported in 140 characters or less, call it the K-9 form, mandate such information be made public through micro-blogging. There. I have single-handedly given Twitter a source of revenue. Charge public corporations for their K-9 channels.

Sustainable business models in our Information Age are of course as elusive as unicorns. Andrew Edgecliffe-Johnson tells us the fight against epiracy is now supported by "unions on both sides of the Atlantic" as it threatens payments, jobs and benefits (***). It is a fact that those who work for a failing industry suffer from its economic decline. Yet seeing the unions endorse asymmetric justice, which only catters to the noble by brand, is a bit ironical. They could at least exchange their support on epiracy for some consideration on eprivacy. Aren't data aggregators the bigger pirates?

Much more positive are the developments around Hulu and Spotify. Both services offer free downloads supported by advertising revenues, Hulu for videos as described by Andrew Edge-Cliffe-Johnson and Joseph Menn (****), Spotify for music as reported by Brad Stone (*****). Both have embraced the concept of giving their users the choice to pay "not to see the ads".

It would be an error to think to pay "not to see the ads" is the same thing as paying for content. Content loses its money making prime in the time of a twit. Past that point however, convenience is highly valued by consumers and that includes ad skipping, as shown by Tivo with much gusto.

In fact the content providers should go further and discover the hidden paradox of personalized media. The more a consumer values ad removal, the more the advertiser values this consumer's attention and conversely. Thus putting a fixed price on ad removal is giving the store away. Tradition bound economists may offer no solution to manage such a system of personalized prices but clever marketers have done it and Tim Harford uncovered it (2). I call markets where price is personalized as one variable of a complex transaction value markets.

I sincerely apologize to my faithful readers. They have read what follows one time too many. And yet how can I stop repeating my two lessons? Value markets can be implemented on the Internet, as ePrio has demonstrated (3). But in the case at hand, it also requires all participants to recognize the underlying value of consumer eprivacy.

Instead of fighting against epiracy, content providers should tap their reputation to promote eprivacy and get advertisers bid for consumer attention.

Despite Justice Scalia, eprivacy is not the same as secrecy. It is about creating sustainable value from our personal profile, those million little pieces.

Philippe Coueignoux

• (*) .......... 'Twittergate' furore in Berlin as early birdsong reveals poll result, by Chris Bryant, Bertrand Benoit and Tim Bradshaw (Financial Times) - May 28, 2009
• (**) ........ An Italian's Challenge Is Turned Back in the Mountains, by Juliet Macur (New York Times) - May 30, 2009
• (***) ...... Unions and publishers join to fight piracy, by Andrew Edgecliffe-Johnson (Financial Times) - May 28, 2009
• (****) .... Hulu eyes charging viewers not to see ads, by Andrew Edge-Cliffe-Johnson and Joseph Menn (Financial Times) - May 30, 2009
• (*****) .. Music Labels Ease Up to Assist Web Start-Ups, by Brad Stone (New York Times) - May 28, 2009
• (1) see the SEC Final Rule: Additional Form 8-K Disclosure Requirements and Acceleration of Filing Date, quoting section 409 of Sarbanes-Oxley.
• (2) see The Undercover Economist, by Tim Harford.
• (3) see ePrio services for more details