Embracing Chaos

Revolutionaries are idealists.  They have to be.  They risk their lives to fight for what they believe in.  Lenin, Mao, Castro — they all truly and deeply believed that they were fighting for a better way of life for their people.  And to a varying degrees, they accomplished that.  In fact in all three of these cases — Russia, China and Cuba, the early years after the revolution were relatively good for the people.  Wealth was redistributed and poverty decreased.  The second world is generally better than the third world.  When I was living in communist China, I found it to be a lot like camping — everything worked and was possible, but nothing was quite as convenient or comfortable as I would have liked.

But as communist governments age they tend to become corrupt and dictatorial.  Why?  Unchecked power.  Without elections or a free press, there is essentially no way to remove a bad leader.  Highly secretive control structures like the politburo tend to select for leaders that can amass and wield power by any means possible.  These traits tend to become much more concentrated than any traits related to good governance.  This was the undoing of the Soviet block and hopefully soon will dismantle North Korea.  How China managed to avoid this state I won’t ponder here.

Despite what the US State Department would like you to believe, Cuba’s government has not (yet) devolved to this state.  Cuba is still highly egalitarian where top government officials only earn twice what a factory worker might make — not the wretched excess of a corrupt system.  They probably get to drive cars, but are required to pick up all hitchhikers since really it’s the people’s car.  For the most part Cubans trust their government and with good reason.  Cuba is not corrupt.  Of course if you’re smart and ambitious you have much more to gain in a capitalist system which leads to justifiably frustrated opponents.  While their lifestyles are anything but luxurious, Cubans are generally fairly happy, healthy and well educated.  Happiness is subjective, but statistics clearly show Cuba to be on par if not better than the US for healthcare and education in most measures.  It’s not a bad place to live.

The success of Cuban communism should not come as much of a surprise considering what we’ve discussed so far.  Castro was idealistic when he led the revolution, and he’s still on power.  Corrupt leaders have not been able to take control yet.  A problem with communism is that what happens next will depend very strongly on one individual.  Will they be more like Fidel or Kim Jong-Il.  We’ll have to wait to see.

Many times I’ve been asked about the possibility of Apple offering a subscription music service for iPods and iTunes.  Here I’ll lay out why I think this will happen, what the timeline is for it, how that relates to the future of DRM, and what impact it would have on the competitive landscape.

First off, I am confident Apple will launch a subscription music service.   As every Rhapsody fan and many industry analysts agree, subscription services are the best way to consume music.  Just like Hotmail moved email into the sky, and Google Docs are doing the same for office productivity applications, music can and will go the same way.  Being tied to a specific piece of hardware to enjoy your information services is so 20th century.  The reason we’re not there yet is that it’s not easy to provide a great experience.  And considering people’s long-standing investments in legacy music media like CD’s, non-hosted music services actually provide a smoother transition.

When I worked for Real people generally spoke of Apple launching a subscription service with fear.  I argued that it would actually be one of the best things for the company.  The reason being that even modern electronic music consumers don’t understand what a music subscription service is.  If Apple started spending their quarter-billion dollar per year marketing budget to explain this to consumers, it would do wonders for Rhapsody.  Especially considering the low-quality, poorly-funded advertising campaigns Real has traditionally engaged in.  I wish I could find some of the infomercial-style TV ads they used to run.  Glaser built Real Player without advertising and still believes all internet services should be able to bootstrap themselves.  Maybe the alliance with MTV will help there. 

Also, managing a multi-million song library is not easy.  Rhapsody does a pretty great job of it.  Although they’re going to get obsoleted unless they can figure out how to democratize the music editorial process.  But they’re still way better at it than Apple, who has frankly never been very skilled at online services.  So if Apple were to start spending their huge marketing budget tomorrow to explain why it’s not important to own your own music, it would be a huge boost to Rhapsody.

It won’t happen tomorrow though.  My guess is that within 5 years iTunes will offer all-you-can-eat music for a recurring monthly fee.  The timing depends on a couple of key factors:

• Uptake of network-enabled iPods
• Availability and quality of wireless net access

Before the iPhone, Apple could not launch a subscription music service for one simple reason.  If you stop paying your monthly fee, your subscription tracks need to be disabled from your portable device.  Otherwise somebody could pay the fee for a single month, go on a shopping spree and load up their device with all the music they’ve ever wanted, and never pay another dime.  So even though DRM is going away for track purchases, it has to stick around for subscription models, at least until many other things change.  How does this limit Apple’s ability to launch a subscription service?  As anybody who has used a portable music device with a subscription service can tell you, it is incredibly frustrating to pull your mp3 player off the shelf only to see a message that says it won’t play any of your music because your licenses expired and you need to plug it into a computer to verify that you have been paying your bills.  Even if you are paying, you need to constantly tend to your device or else it bricks itself after a few weeks, by design!  Steve Jobs would never allow his iPods to do this.  The solution is to enable the device to check your subscription entitlement itself — wirelessly, in the background, automatically. 

That’s exactly what the iPhone and iPod touch can do with their built-in networking stacks.  Even a slow network like AT&T’s EDGE network is good enough to verify that the monthly fee has been paid up.  Or for the wifi-only Touch, at least once per month you need to pass by an open hotspot or be in your house where it knows how to connect and it keeps working.  Not a serious burden.

So once there is a sufficiently large installed base of connected iPods, Apple will start selling a subscription service.  If I had more motivation to figure out the timing of when this would happen, I’d look at adoption/saturation curves for iPods and typical turn-over rates for such consumer electronic devices.  Other factors include the financial and market success of competing services.  I leave all this as an exercise to the reader for those of you working in this challenging industry.  My gut says it’ll be in 2010.

My 14-year old Subaru is on its way out, and since I’m commuting to Kirkland almost every day I really need a new car.  Primary criteria for me are safety and fuel economy / ecological impact.  Safety seems to correlate very strongly with model year so I’m looking at new cars.  In theory running on bio-diesel gives your car essentially zero net carbon impact.  Also, many new renewable organic fuel sources seem to be more like diesel than gasoline.  So I looked at what diesel cars can be purchased new in the US these days.  I was amazed at how slim the choices are.  If you want a new diesel vehicle in this country, here are your choices…

• Pickup trucks — many models, small and large
• Full-sized vans — think church-group van or delivery van, not soccer-mom minivan
• Mercedes — 3 models: E-class sedans, R-class station wagons, and GL-class or M-class SUVs.  All $45k+
• Volkswagen Taureg 2 — VW’s SUV has a diesel option starting at $68k
• Jeep Grand Cherokee — starting at $37k for diesel

Color me underwhelmed.  I might have missed something, but as far as I can tell there is exactly one non-SUV non-pickup diesel car on the market in this country: the Mercedes E-class.  Yowza.   Seriously, what gives?

In Europe, diesel cars are totally common-place.  While here we’re all abuzz about our fancy hybrids that can get 40+ mpg, Europeans can choose cars like the Citroen C4 which gets 46 38 mpg city and 71 59 mpg on the highway!  [Correction: These are per imperial gallon, which are 1.2 US gallons.]  I drove a Citroen (might even have been a C4) from Paris to Tuscany and back a couple of summers ago.  Let me assure you these are not stereotypically crappy French-engineered clunkers, but actually pretty nice cars, and not old-world tiny either. 

That number bears repeating.  71 59 miles per gallon on the highway.  When is this country going to get it together and raise the CAFE standards in a meaningful way and not just for show?  It’s for everybody’s good.

[Photo courtesy of Robert Candelori]