Technology Futures

Apple quietly edged closer to a full-fledged video download strategy yesterday with a free upgrade to the company's iTunes software, which works on both Windows and the Mac. EnGadget and other sites are discussing the upgrade, which now allows users to store videos in the iTunes library along with music.

Apple is not saying much about the new feature, which means they aren't ready to lay all their cards on the table. But selling movies is the next logical step after the hugely successful iTunes music business.

What Apple is likely to pioneer is a video distribution system, which will really be more interesting than the content, and will open up all kinds of opportunities for independent producers of video content. While it is still a stretch to download a 2 hour movie using the twenty year old, copper-based DSL and cable modem broadband, the average 22 minute TV program is a different matter.

Instead of having to set up the VCR or the TiVo to record a program at a certain time, imagine if you could go to the iTunes store and just pay ninety-nine cents to buy a copy. And imagine if you could browse an archive of every television show from the last forty years, and you could buy programs in bulk for under fifty cents?

If I was looking for content to test the waters of the iTunes video store, I'd be looking at back episodes of The Simpsons. There would be huge demand, I'd bet, and with it we would come closer to the death of television as we know it.

In a great victory for the rest of us, a Federal appellate court told the FCC to quit mucking with television receivers and to stop meddling in areas for which the Commission has no authorization. If that sounds harsh, it's mild compared to what the judge actually said:

You're out there in the whole world, regulating. Are washing machines next?" asked Judge Harry Edwards. Quipped Judge David Sentelle: "You can't regulate washing machines. You can't rule the world."

Back in 2003, the FCC had declared that all television tuners and receivers sold in the U.S. after July 1st, 2005, had to respect the "broadcast flag," which is a gimmick dreamed up by Hollywood (the Motion Picture Association) to control content unfairly and to force everyone in the country to eventually buy a new TV, among other problems. The broadcast flag, a digital code that would be included on every television broadcast, would tell VCRs, Tivo-type devices, computers, and anything else capable of recording video that the material could NOT be recorded, or if it could, under very limited circumstances.

The FCC rules flew in the face of decades of court rulings that generally said consumers had the right to make recordings for their own use and certain other uses (in libraries, as one example). The "fair use" doctrine has consistently been supported and extended by the courts, even for related technologies like photocopying.

The court ruling will keep some manufacturers from having to drop whole product lines because the cost to add the complicated broadcast flag circuitry was prohibitive.

Space Exploration Technologies, Inc., or SpaceX, has received a $100 million dollar Air Force contract to build and supply launch vehicles for the Defense Department. This could be a breakthrough for the emerging Space Economy, as the Department of Defense had apparently decided it can't keep all its launch eggs in the costly technology of the sixties (traditional booster rockets) and the now thirty year old Space Shuttle.

This could play out like some other hard to fund from the private sector projects that explode once government steps in and puts money on the table. The funding for SpaceX will likely attract venture capital to both SpaceX and to other fledgling space vehicle companies. The competition will keep innovation high and prices low, and will open space to nongovernment activities like tourism, although the FAA is meddling already with Virgin Galactic's plans to use new designs from Bert Rutan's Scaled Composites, which won the X Prize last year. The FAA is determined to make sure that space tourists know that space flight is "dangerous." Unless you have lived under a rock for the past thirty years, I don't think that needs a lot of explaining.

Most of the Wright Brother's early test pilots died in crashes, as did many others anxious for a joy ride in the new flying machines. If the FAA had been around then, the Wright Brothers never would have been able to cut through the red tape that would have been required for the Kitty Hawk flights, and we'd still be taking steamships across the ocean because flying through the air is "dangerous."

Keep an eye on the Space Economy. As it unfolds over the next thirty years, it will dwarf any previous economic boom in history, and make the dot-com bubble look like a an awfully small bubble.

The Wall Street Journal reports that the New York Times is considering a new approach to providing access to its news articles. Currently, you can view any article less than a week old. After that, you have to pay an absurd $2.95 to see the article.

Under the new scheme, you would pay $50/year to get access to any article in the past 365 days. They are apparently also considering an alternate scheme that would give you full access to the whole NYT archive.

With newspaper circulation in free fall, the Times is only one of numerous papers that must be trying to figure out what to do. While "the Internet" is often blamed for the general decline in newspaper circulation, I think the problem is more basic. I travel a lot, and try to read local papers wherever I go. What I see is a general lack of innovation, creativity, and news. I see this as the ClearChannel problem (ClearChannel owns 1000+ radion stations in the U.S.). As large chains have bought out more and more papers, those papers look more and more alike. Bean counters at the corporate level cut local staffs and budgets, force papers to use more syndicated content, and the result is dull newspapers with all the same (word for word) stories you can find on the Internet.

Newspapers don't look that different than they did one hundred years ago--the big innovation of the last twenty years is color pictures. I'm actually bullish on the future of newspapers; we still need someone to edit the news for us. In fact, I would argue that the role of newspapers--editing the news and providing quality control--is more important now with so many alternate sources available to us. Who has time to check dozens of Web sites daily? Papers condense many news sources and help us sort out the important issues. Newspapers and TV news will never again be primary sources of information, but I see the editorial function as still very relevant.

As for the Times and their $50/year subscription, I don't think it makes sense. Most people won't subscribe at that level, and I think they are missing a huge market opportunity. In the Internet age, it is the market, more than ever, that determines the value of something. Too many businesses are trying to set costs based on past Manufacturing Economy metrics of value. The distribution cost of an online NY Times article is nearly zero--so small that is barely measurable.

Here's the math. Which would you rather have? A million subscribers at $50/year, or 20 million subscribers at $10/year? I'd rather have the latter, because I'd have four times as much money in hand. For $10/year, or less than the price of one large pizza, you'll get a lot more subscribers. And a lot more money.