Exploring the impact of broadband and technology on our lives, our businesses, and our communities.

Thirty percent of households shop online

The New York Times (registration required) has an article on the growth of online shopping during this holiday season.

Two numbers stand out: There was a 25% increase in Internet sales over last year, and about a third of all U.S. households bought something online. And L.L. Bean took more orders over the Web than over the phone, which is a watershed.

I have thought, since the early days of the BEV, and still think that local and small businesses are missing out on this boom. Many have never tried to sell anything online, and others were burned in the go-go dot-com days by the then high expense of online catalogs and the low sales rates.

Anecdotally, I see lots of small businesses doing very well on the Web when they have identified a unique product or service *and* develop a marketing strategy around it.

Economic developers ought to be doing a lot more to help local businesses grow in this area, but still see very little effort being made here.

Technology News:

NSA cookies

There is a tempest in a teapot over the National Security Agency's use of cookies on its Web site.

Let me say first that cookies can be and often are mis-used, and I routinely delete a lot of cookies left on my computer. And the NSA did use persistent cookies, which is against the Federal government's rules.

But having said that, the AP article being published almost everywhere is misleading, and perhaps intentionally so. Here is one example:

"....privacy advocates complain that cookies can also track Web surfing..."

The statement makes it sound like the NSA cookies could be used to see where you have been anywhere on the Web. There is no way to do that with cookies. They can be used to track where you have been on the NSA Web site, but that's all. It is a huge difference. Many sites do use cookies to see where you have been on their particular site. And they often use the cookies to see how often you visit their site, and so on. Companies like Google and Amazon can build extensive dossiers on you by using cookies to figure out what kind of books you like (Amazon) or what kinds of topics interest you (Google). But they can only track where you have been on their site, not on other sites. And they can only store personal information that you have typed in yourself, on some form on that site.

Here is another misleading statement:

"...NSA site created two cookie files that do not expire until 2035 - likely beyond the life of any computer in use today."

The reality is that many sites do this routinely--again, check the expiration date of the cookies Google leaves on your computer. The article tries to attach some sinister meaning to the long expiration date, but fails to provide any evidence and fails to note that many sites (millions and millions, probably) do exactly the same thing.

This site uses cookies because it makes the software a little more responsive and improves the browsing experience. No personal information is stored, and you can safely delete the cookies as often as you like. We don't use the cookies to maintain any kind of dossier on our readers, and never will. As far as I can tell, neither did the NSA.

Lots of private companies use cookies inappropriately, but the article fails to note that. In the case of the NSA, they turned the persistent cookie feature off immediately when it was pointed out to them. I think this was nothing more than a case of a Web site administrator who did not know the rules, and a lack of oversight. The rules for government sites are that cookies should be deleted automatically at the end of the browsing session, instead of leaving them on the computer. It saves a little time to be able to leave the cookie around for next time, but sites work fine without persistent cookies.

Cookies are entirely under your control. I recommend that you review your cookies regularly and delete ad-related cookies (usually obvious because 'ad' appears somewhere in the domain name), as well as Google and Amazon cookies, and any other cookies from sites that might have an incentive to create a dossier on you. Note that some sites use cookies to remember your userid/password information, so if you delete those, you will have to log in. Newspaper sites tend to use lots of cookies.

The Internet is scary only if you don't understand it, and it is unfortunate that some news organizations would rather write a lurid story than to help explain how things work.

Knowledge Democracy:

Economic Development blogging

This new blog is a great example of the potential of local blogging to enhance economic development and to educate/inform local leaders and citizens. This new Blacksburg area blog has a nice mix of job opportunities, economic development news, and leadership issues. It is just what is needed in many local areas.

To make it successful, though, most communities will also need some training sessions to teach people about blogs, RSS feeds, and how to make good use of this new communications styles. Blogs are still poorly understood, and few people, even among the young, can tell you exactly what a blog or an RSS feed is.

Every economic development authority should be running a blog and a series of RSS feeds on a variety of topics, including enterpreneurial news, local quality of life issues, retail/commercial real estate opportunities, business management, and local governance.

How about your region? Are your economic developers using this new medium to communicate more effectively? If not, why not?

Bottom line: an economic development group that is blogging and using RSS feeds sends a strong message to businesses and entrepreneurs who might be looking at the region that the community is technologically savvy and connected. It's a powerful marketing tool. If your economic developers won't do this, maybe you need some new leadership at the helm.

The emerging Agriculture Economy

I've added a new category called the "Agriculture Economy" to the Technology News section. For several years, I have encouraged rural regions to look closely at new models of agriculture that are entrepreneur-focused, rather than relying on traditional agriculture models where the farmer is basically just the factory floor--food products are "produced" and then put on trucks, hauled away, and sold by others, who also make most of the profit.

In the emerging Agriculture Economy, technology and entrepreneurism are drivers of successful ag businesses. One of the most profitable areas is organic and/or fresh food. Month by month, the organic produce section of our local grocery stores expands. Five years ago, you had to make a special trip to the local health food store to buy organic carrots. Now, the local Kroger offers organic carrots as well as a wide variety of other organic foods.

Specialty fresh foods are also an emerging market opportunity, and I decided to add this new topic area after reading an article in the Roanoke Times about a tobacco farmer who just harvested his first crop of shrimp. Grown in freshwater ponds, the shrimp sell for $7 a pound, and the shrimp farmer had a huge crowd of people lined up to buy them. He is now thinking about adding a pick your own broccoli field.

With heightened awareness of chemicals, additives, and genetic manipulation of factory farm food, more and more people are willing to pay a bit more for locally produced and/or organic food. Sold directly to grocery stores by the entrepreneurial farmer, the profit margins are much higher. The high tech/entrepreneur farmer will also be using technology to monitor crops, keep quality high, and to reduce the human labor required to produce food. And the Internet is a key marketing partner; fresh food can be sold directly to customers via the Internet, delivered fresh by overnight delivery services.

There are simply not enough "high tech" software and technology firms to bring jobs to every rural area of the country. A tunnel vision economic development strategy that places too much reliance on "high tech" or "biotech" without looking realistically at the odds of being successful is just as damaging as continuing to hope for some good Manufacturing Economy jobs.

Tobacco farmers are well positioned to make this transition successfully, as they already understand how to manage small acreage, high cash value crops. But small farmers in other regions may need help from economic developers, especially on the technology and business/entrepreneurial side of the business.

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Community news and projects:

Space: The Next Frontier, fueled by dot-commers

Jeff Bezos, the billionaire owner of Amazon.com, is funding a space start up with offices in Texas, and what is likely to become a spaceport in west Texas. Bezos is apparently building a rocket ship that takes off and lands vertically, unlike the space plane designed by Bert Rutan for Virgin Galactic.

What is different about Bezos' plan is that the entrepreneur is looking ahead to colonies in space, where Richard Branscom's Virgin Galactic is focused primarily on space tourism. But the two are complementary, as space tourists need someplace to go, and honeymoons on a space station fitted out like a luxurious hotel are likely to be popular. And hotels need big staffs that have to live nearby.

Texas is the winner; west Texas is dry, dusty, and barely fit for cattle raising. A new high tech space business will bring good paying engineering and support jobs to the region. And there is more synergy--check the map. West Texas is just a short hop from the New Mexico spaceport. Development of the next Silicon Valley may already be underway.

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Community news and projects:

The high cost of music

I was looking for a CD the other day, and was surprised to find that it cost $19. The music industry has been crying in its beer for years now, claiming CD sales are down because of grandmothers and 10 year old girls downloading pirated copies of music.

Meanwhile, over at the Apple iTunes store, I can buy the very same album for $10, with some mild restrictions on how I can use it. So while the music companies have legal competition (with themselves, since they get most of the money passing through the iTunes store) with legal music downloads, their response to that competition is to raise CD prices to all time highs.

What is wrong with this picture? Any rational business, faced with competition, looks for ways to reduce costs and compete. But instead, the music industry seems to have a death wish. With CD sales down, their thinking is, apparently, "We'll show them--if our thieving, pirated-minded customers won't buy CDs, we'll teach them a lesson by making CDs even more expensive than ever!"

With the cost of producing a CD at most about a dollar, it's hard to imagine that CDs can't be sold for less than an $18 markup. And in fact, you can find lots of music CDs at online stores (mostly older stuff) for well under $10.

We're watching the death of an industry, and it is slow suicide. People love music, and are very willing to pay for quality; there is a role for the music companies. But those same companies are refusing to adjust to a new market reality.

There is a lesson here for communities as well. If your leaders refuse to adjust to new market opportunities, continue to chase old, Manufacturing Economy businesses, and insist on steering the economic ship of the community onto the iceberg, everyone loses.

The world and our local/national/global notions of "the economy" have been changing ever since the first person bought some clay pots in exchange for two sheep. The idea that we can somehow stop the world and keep our communities just the way they were forty years ago is slow suicide, and it is the community itself that will die.

We can't stop change and growth--we can only manage it.

Technology News:

The unstoppable iPod

Apple is apparently set to sell about 4 million iPods per month in the last quarter of 2005, breaking all records. The iPod has crushed the competition in Japan by capturing 60% of the marketplace, with Sony a huge loser. And more than 73 million cars will be manufactured in 2006 as "ready for iPod."

But wait, there's more! The market for iPod accesories continues to grow so fast that it is really difficult to keep up. I just stumbled onto this "accessory," which is a set of high fidelity headphones with an iPod dock built in. You drop your iPod nano into the dock, put the headphones on, and you can listen to your entire music collection of thousands of songs--no wires, no base station, no nothing. It's a wearable stereo system.

My first stereo system cost as much as an iPod nano, weighed about forty pounds, including two speakers, and played about six songs at a time--what would fit on one side of a vinyl LP. And it required AC power--lots of it.

Technology News:

The look of "new" computers

Engadget has some pictures from a design competition sponsored by Microsoft. The company wanted industrial designers to think about what personal and office computers might look like in the future.

Some of the designs are interesting, and suggest that what we call a "desk" may change dramatically as displays get larger and we spend more time (if that's possible) connected.

But some of the designs are just goofy, like the computer that looks like plant, and, well, something that also apparently doubles as a vase for flowers. I'm just not sure I want to be pouring water into a vase that also holds all my business data or the family baby pictures.

And the first design, as Engadget points out, may make Microsoft happy but otherwise makes no sense at all. It is a computer that looks like a shelf of books, and you add content by plugging big, bulky square things into the "bookshelf." It forces you into buying music and videos in a format Microsoft and the music/video/TV industry loves, but your computer keeps getting bigger and bigger and bigger as your music/video collection expands.

Technology News:

Diebold voting machines banned in Florida

Two counties in Florida have decided to dump electronic voting machines manufactured by Diebold after it was shown how easy it was to alter voting results.

County and city supervisors and elections officials across the country have failed miserably to do due diligence on this issue. Millions in taxpayer funds have been spent on faulty machines. It is a national disgrace.

Technology News:

Real Networks says iPod users are pirates

Real Networks president Rob Glaser stated in a recent interview, "Most users that are filling their iPods are still doing it through piracy."

This is the same line that the music industry uses. I have never understood the marketing value of claiming that all your existing and future customers are crooks. And these companies usually go farther and whine that these crook customers "...just don't get it." Where "get it" means they won't buy their stuff.

What has been happening to the music world for the past two years seems quite clear to me. Customers are voting with their pocketbooks, and what that "vote" says is that there is a clear preference for owning music as opposed to renting it month by month.

Glaser, in the interview, talks at length about what good deal renting music is, but his examples are trumped up and compare apples to oranges. It does not take a rocket scientist to figure out that you can buy a song for ninety-nine cents from iTunes or spend $15 for a CD and play it for the rest of your natural life without ever spending another nickle.

On the other hand, renting by the month is an extraordinarily bad deal.

Let's suppose I want to start a record collection of the equivalent of 100 CDs, or about 1000 songs. The lifetime cost (say forty years of listening pleasure) of buying the music is $1000. The lifetime cost of renting the same 100 CDs is $7,200. And you can't give the music/CDs to someone else when you pass on. So you spend $7,200 and have no equity. Zip, zero, nada. If you spend $1,500, you own 1,000 songs.

This is not hard to figure out. Real's deceptive pitch centers in part around the fiction of "unlimited access" to music, with a lot of happy talk about the wide variety of music you can listen to.

But the fiction here is that we all tend to have very specific tastes. I don't care how much rap music Real offers for rent--I'm not going to be listening to it, ever.

The market is speaking, and what it is saying is that we want to own our music and media. A similar fight is going on with movies. The studios and music industry want to discard the ownership model completely and make all media be based on a rental model. Bizarrely, many in Congress agree. Right now, many of our elected representatives are trying to make it illegal to tape or record anything, and proposed legislation would require consumer electronics manufacturers to build in expensive circuits that would make it difficult to tape anything--from a TV, from a radio, from any kind of media player (e.g. CD, DVD, tape, etc.).

Supposedly all this is necessary to keep the music and movie industries from going out of business from all those bad "pirates." Meanwhile, Apple has sold (as in, people PAID for) a billion songs, more or less. If we are all pirates, who is buying all that music?

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