September 29, 2009

"The Internet is under new management, yours." What is more absurb than this declaration? In reporting the latest marketing campaign of Yahoo (*), Miguel Helft, whose beat centers around the Internet, must have found it hard to keep a straight face. As chance has it, long before bursting onto the stage, the absurb was already a frequent guest of mathematics. To demolish a statement, assume it be true and observe what follows.

This month the French National Assembly has once again voted to adopt HADOPI, despite its former bruising encounter with the French Constitutional Council (1). Under our management, President Sarkozy is still striving to turn IP addresses into legal identities and Internet access providers into police auxiliaries to better track illegal downloads.

To his Wladimir, Biz Stone is happy to play Estragon. According to Brad Stone (**), this Twitter founder swears "the company has no plans to begin widely running ads until 2010". Now we can be proud. We managed to create "a forum for the perpetual sharing of even the most trivial bits of information about people's lives". But can Twitter justify its billion dollar valuation without shamelessly exposing those bits to future advertisers?

If we hired a business consultant, she would tell us Twitter follows in the footsteps of Facebook. According to their Micawber business model, a social network company needs not prove it can earn a living. Each of their users is simply worth $30 a head because something will turn up, namely any attempt to firm up privacy laws and regulations will be defanged. The FTC for instance will content itself with the fact that targeted advertising only uses IP's since such non personally identifiable information safely preserves our anonymity.

Were she not afraid of being fired, she would say our management is inept. It encourages the companies of the future to bet their success against our own interests while propping up the companies of the past, despite their track record of ignoring the benefits of the Internet, i.e. the vanishing costs of reproducing and distributing digital information coupled with the social discovery of new popular talent, à la YouTube (2).

So we are either complete idiots or Yahoo takes us for such. Let my reader decide. To silly slogans, I prefer Samuel Laurent's reaction to the second act of HADOPI (***). Convinced this solution will not achieve its self-proclaimed goal, encouraging intellectual creation, he explores what Frédéric Mitterand, the French Minister of Culture, calls "la question de l'après", or as they say in the United States "now, what?" I wish I knew.

Pronaocracy is driven by rather than driving, competition. Under the opposite pull of so many corporate interests, the future is as unpredictable as the weather. Forecasts aside though the two economic foundations of our Information Age are not difficult to spot. Time, our own time, is the most limited and hence most precious commodity there is. While on the contrary truth is inexhaustible, this resource is hard to extract, hence no less precious, together with the recommendations on which we depend for doing so.

Unfortunately both foundations are overlooked and undervalued. Consumers' attention is there to be stolen and their privacy to be plundered for greater efficiency. Meanwhile who earns an honest living making online recommendations? Google is the only success I know, built on a two pronged recommendation system which barters answers to our searches in exchange for our attention and auctions off this attention to advertisers.

Not that others have not been successful. But recommendation mechanisms are so far ancillary to the model of Amazon, grounded on the logistics of delivering physical goods to consumers, and eBay, based on establishing a consumer to consumer market. And today no company seems immune to the lure of data piracy. Having digested DoubleClick with the blessing of both the FTC and the EU Commission, "Google is pushing for a second act" write Miguel Helft and Stephanie Clifford (****). But this time, in its planned ad exchange, "it might also let the exchange know something about that person, based on his or her past online activity or shopping habits". If Google's greed has not led it into spying on us all, search me.

To understand how serious the situation has become, read Ben Zimmer's essay on "the age of undoing" (*****). "In the 21st century, [...] whatever can be done can be undone, too. [...] This kind of instant reversibility is now an inescapable facet of our digitized life." Ben Zimmer may be conscious that "perhaps it just seems that way", but he missed the paradox of our age. Can we un-download a song, un-tweet a message, un-view a page under the watchful gaze of governments, lawyers, advertisers? Absurb but true. Un-doing an email may be one's undoing all the way to jail.

Were I Frédéric Mitterand, I would look for inspiration in the recent victory of Google over Louis Vuitton (3). Nikki Tait, Michael Peel and Maija Palmer warn us "Mr Poiares Maduro's opinion is not binding on the E[uropean] C[ourt] of J[ustice]" (******) but let us assume Louis Vuitton must abandon the hope of preventing Google to auction trademarks as keywords for ads and face the herculean task of fighting foreign fakes one by one.

In these circumstances the fact that handbags are not digital goods is not very material, is it? Must then Mr Bernard Arnault, who runs LVMH, Louis Vuitton's corporate owner, ask President Sarkozy to create an HADIL for the luxury industry? He may find more profitable to reflect that, like Google, LVMH is a recommendation business. Discriminating insiders with money enough to buy high quality goods may not need LVMH. But it serves two kinds of clients, the busy rich who need help to find such goods and the insecure who want to appear able to afford them.

To reach the former, LVMH should thank Google. The more AdWords advertises Louis Vuitton bags, the more business LVMH can drum up by offering rich prospects to pay for verifying the truth about their intended purchase. Forget the bag, the value to sell is in recommending its supplier. Forget the trademark, the value to buy is in confirming this recommendation online with the legitimate owner of the brand. One does not need to graduate from Ecole Polytechnique (4) to see this rule of three prevents forging by involving all parties concerned in an active loop.

Still to know they have purchased the right goods is not enough to satisfy the insecure. Their public too must know. Here is the opportunity for Mr Arnault to innovate. Put an RFID chip in each bag and distribute a cellular phone application to automatically pick up the signal, verify provenance and sound a discrete beep of approval. Now he can sell it to the public at large to spot posing cheapstakes. What a great social game! And why not charge legitimate bags' owners too, for fielding the calls on their honor? Built on mystique, luxury thrives naturally in a world of hidden truths.

Mr Frédéric Mitterand, drop HADOPI! Let artists release autographed képis, bérets, caps, hats to their fans for a fee. This is not the time to wait.

Philippe Coueignoux

• (*) ........... Yahoo Puts Emphasis on 'You', by Miguel Helft (New York Times) - September 23, 2009
• (**) ......... Twitter Appears Set to Raise $100 Million, Valuing It at $1 Billion, by Brad Stone (New York Times) - September 25, 2009
• (***) ....... Après Hadopi, quel avenir pour l'industrie musicale ?, by Samuel Laurent (Le Figaro) - September 23, 2009
• (****) ..... Google Aims To Wrest Display Ads From Yahoo, by Miguel Helft and Stephanie Clifford (New York Times) - September 18, 2009
• (*****) ... The age of undoing, by Ben Zimmer (New York Times Magazine) - September 20, 2009
• (******) . Google closer to victory in keyword ads legal battle, by Nikki Tait, Michael Peel and Maija Palmer (Financial Times) - September 23, 2009
• (1) see the texts of successive HADOPI bills with user-friendly comments on HADOPI-2 courtesy of the French National Assembly
• (2) see Tajik Jimmy in the Wikipedia.
• (3) see the text of Mr Poiares Maduro's opinion
• (4) see Ecole Polytechnique in the Wikipedia. Mr Bernard Arnault, Chairman & CEO of LVMH, is an alumnus. For full disclosure, the author is too.