tech in changing society

Paul Graham on software patents

From Paul Graham’s “Are Software Patents Evil?“:

The situation with patents is similar. Business is a kind of ritualized warfare. Indeed, it evolved from actual warfare: most early traders switched on the fly from merchants to pirates depending on how strong you seemed. In business there are certain rules describing how companies may and may not compete with one another, and someone deciding that they’re going to play by their own rules is missing the point. Saying “I’m not going to apply for patents just because everyone else does” is not like saying “I’m not going to lie just because everyone else does.” It’s more like saying “I’m not going to use TCP/IP just because everyone else does.” Oh yes you are.

A closer comparison might be someone seeing a hockey game for the first time, realizing with shock that the players were deliberately bumping into one another, and deciding that one would on no account be so rude when playing hockey oneself.

Hockey allows checking. It’s part of the game. If your team refuses to do it, you simply lose. So it is in business. Under the present rules, patents are part of the game. …

When you read of big companies filing patent suits against smaller ones, it’s usually a big company on the way down, grasping at straws. For example, Unisys’s attempts to enforce their patent on LZW compression. When you see a big company threatening patent suits, sell. When a company starts fighting over IP, it’s a sign they’ve lost the real battle, for users.

A company that sues competitors for patent infringement is like a defender who has been beaten so thoroughly that he turns to plead with the referee. You don’t do that if you can still reach the ball, even if you genuinely believe you’ve been fouled. So a company threatening patent suits is a company in trouble. …

In other words, no one will sue you for patent infringement till you have money, and once you have money, people will sue you whether they have grounds to or not. So I advise fatalism. Don’t waste your time worrying about patent infringement. You’re probably violating a patent every time you tie your shoelaces. At the start, at least, just worry about making something great and getting lots of users. If you grow to the point where anyone considers you worth attacking, you’re doing well.

We do advise the companies we fund to apply for patents, but not so they can sue competitors. Successful startups either get bought or grow into big companies. If a startup wants to grow into a big company, they should apply for patents to build up the patent portfolio they’ll need to maintain an armed truce with other big companies. If they want to get bought, they should apply for patents because patents are part of the mating dance with acquirers. …

Patent trolls are companies consisting mainly of lawyers whose whole business is to accumulate patents and threaten to sue companies who actually make things. Patent trolls, it seems safe to say, are evil. I feel a bit stupid saying that, because when you’re saying something that Richard Stallman and Bill Gates would both agree with, you must be perilously close to tautologies.

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Douglas Adams on information overload

From Douglas Adam’s “Is there an Artificial God?“:

Let me back up for a minute and talk about the way we communicate. Traditionally, we have a bunch of different ways in which we communicate with each other. One way is one-to-one; we talk to each other, have a conversation. Another is one-to-many, which I’m doing at the moment, or someone could stand up and sing a song, or announce we’ve got to go to war. Then we have many-to-one communication; we have a pretty patchy, clunky, not-really-working version we call democracy, but in a more primitive state I would stand up and say, ‘OK, we’re going to go to war’ and some may shout back ‘No we’re not!’ – and then we have many-to-many communication in the argument that breaks out afterwards!

In this century (and the previous century) we modelled one-to-one communications in the telephone, which I assume we are all familiar with. We have one-to-many communication—boy do we have an awful lot of that; broadcasting, publishing, journalism, etc.—we get information poured at us from all over the place and it’s completely indiscriminate as to where it might land. It’s curious, but we don’t have to go very far back in our history until we find that all the information that reached us was relevant to us and therefore anything that happened, any news, whether it was about something that’s actually happened to us, in the next house, or in the next village, within the boundary or within our horizon, it happened in our world and if we reacted to it the world reacted back. It was all relevant to us, so for example, if somebody had a terrible accident we could crowd round and really help. Nowadays, because of the plethora of one-to-many communication we have, if a plane crashes in India we may get terribly anxious about it but our anxiety doesn’t have any impact. We’re not very well able to distinguish between a terrible emergency that’s happened to somebody a world away and something that’s happened to someone round the corner. We can’t really distinguish between them any more, which is why we get terribly upset by something that has happened to somebody in a soap opera that comes out of Hollywood and maybe less concerned when it’s happened to our sister. We’ve all become twisted and disconnected and it’s not surprising that we feel very stressed and alienated in the world because the world impacts on us but we don’t impact the world. Then there’s many-to-one; we have that, but not very well yet and there’s not much of it about. Essentially, our democratic systems are a model of that and though they’re not very good, they will improve dramatically.

But the fourth, the many-to-many, we didn’t have at all before the coming of the Internet, which, of course, runs on fibre-optics. It’s communication between us …

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Why businesses want RFID for inventory

From Technology Review‘s “Tracking Privacy“:

Technology Review: How would RFID work to track products?

Sandra Hughes [Global privacy executive, Procter and Gamble]: It’s a technology that involves a silicon chip and an antenna, which together we call a tag. The tags emit radio signals to devices that we call readers. One of the things that is important to know about is EPC. Some people use RFID and EPC interchangeably, but they are different. EPC stands for electronic product code; it’s really like an electronic bar code.

TR: So manufacturers and distributors would use EPCs encoded in RFID tags to mark and track products? Why’s that any better than using regular bar codes?

Hughes: Bar codes require a line of sight, so somebody with a bar code reader has to get right up on the bar code and scan it. When you’re thinking about the supply chain, somebody in the warehouse is having to look at every single case. With RFID, a reader should be able to pick up just by one swipe all of the cases on the pallet, even the ones stacked up in the middle that can’t be seen. So it’s much, much faster and more efficient and accurate.

TR: Why is that speed important?

Hughes: We want our product to be on the shelf for consumers when they want it. A recent study of retailers showed that the top 2,000 items in stores had a 12 percent out-of-stock rate on Saturday afternoons, the busiest shopping day. I think the industry average for inventory levels is 65 days, which means products sitting around, taking up space for that time, and that costs about $3 billion annually. Often a retail clerk can’t quickly find products in the crowded back room of a store to make sure that the shelves are filled for the consumer, or doesn’t know that a shelf is sitting empty because she hasn’t walked by lately. With RFID, the shelf can signal to the back room that it is empty, and the clerk can quickly find the product.

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Arguments against the Web’s ungovernability

From Technology Review‘s “Taming the Web“:

Nonetheless, the claim that the Internet is ungovernable by its nature is more of a hope than a fact. It rests on three widely accepted beliefs, each of which has become dogma to webheads. First, the Net is said to be too international to oversee: there will always be some place where people can set up a server and distribute whatever they want. Second, the Net is too interconnected to fence in: if a single person has something, he or she can instantly make it available to millions of others. Third, the Net is too full of hackers: any effort at control will invariably be circumvented by the world’s army of amateur tinkerers, who will then spread the workaround everywhere.

Unfortunately, current evidence suggests that two of the three arguments for the Net’s uncontrollability are simply wrong; the third, though likely to be correct, is likely to be irrelevant. In consequence, the world may well be on the path to a more orderly electronic future-one in which the Internet can and will be controlled. If so, the important question is not whether the Net can be regulated and monitored, but how and by whom. …

As Swaptor shows, the Net can be accessed from anywhere in theory, but as a practical matter, most out-of-the-way places don’t have the requisite equipment. And even if people do actually locate their services in a remote land, they can be easily discovered. …

Rather than being composed of an uncontrollable, shapeless mass of individual rebels, Gnutella-type networks have identifiable, centralized targets that can easily be challenged, shut down or sued. Obvious targets are the large backbone machines, which, according to peer-to-peer developers, can be identified by sending out multiple searches and requests. By tracking the answers and the number of hops they take between computers, it is possible not only to identify the Internet addresses of important sites but also to pinpoint their locations within the network.

Once central machines have been identified, companies and governments have a potent legal weapon against them: their Internet service providers. …

In other words, those who claim that the Net cannot be controlled because the world’s hackers will inevitably break any protection scheme are not taking into account that the Internet runs on hardware – and that this hardware is, in large part, the product of marketing decisions, not technological givens.

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Security will retard innovation

From Technology Review‘s “Terror’s Server“:

Zittrain [Jonathan Zittrain, codirector of the Berkman Center for Internet and Society at Harvard Law School] concurs with Neumann [Peter Neumann, a computer scientist at SRI International, a nonprofit research institute in Menlo Park, CA] but also predicts an impending overreaction. Terrorism or no terrorism, he sees a convergence of security, legal, and business trends that will force the Internet to change, and not necessarily for the better. “Collectively speaking, there are going to be technological changes to how the Internet functions — driven either by the law or by collective action. If you look at what they are doing about spam, it has this shape to it,” Zittrain says. And while technologi­cal change might improve online security, he says, “it will make the Internet less flexible. If it’s no longer possible for two guys in a garage to write and distribute killer-app code without clearing it first with entrenched interests, we stand to lose the very processes that gave us the Web browser, instant messaging, Linux, and e-mail.”

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Terrorist social networks

From Technology Review‘s “Terror’s Server“:

For example, research suggests that people with nefarious intent tend to exhibit distinct patterns in their use of e-mails or online forums like chat rooms. Whereas most people establish a wide variety of contacts over time, those engaged in plotting a crime tend to keep in touch only with a very tight circle of people, says William Wallace, an operations researcher at Rensselaer Polytechnic Institute.

This phenomenon is quite predictable. “Very few groups of people communicate repeatedly only among themselves,” says Wallace. “It’s very rare; they don’t trust people outside the group to communicate. When 80 percent of communications is within a regular group, this is where we think we will find the groups who are planning activities that are malicious.” Of course, not all such groups will prove to be malicious; the odd high-school reunion will crop up. But Wallace’s group is developing an algorithm that will narrow down the field of so-called social networks to those that warrant the scrutiny of intelligence officials. The algorithm is scheduled for completion and delivery to intelligence agencies this summer. …

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How terrorists use the Web

From Technology Review‘s “Terror’s Server“:

According to [Gabriel] Weimann [professor of communications at University of Haifa], the number of [terror-related] websites has leapt from only 12 in 1997 to around 4,300 today. …

These sites serve as a means to recruit members, solicit funds, and promote and spread ideology. …

The September 11 hijackers used conventional tools like chat rooms and e-mail to communicate and used the Web to gather basic information on targets, says Philip Zelikow, a historian at the University of Virginia and the former executive director of the 9/11 Commission. …

Finally, terrorists are learning that they can distribute images of atrocities with the help of the Web. … “The Internet allows a small group to publicize such horrific and gruesome acts in seconds, for very little or no cost, worldwide, to huge audiences, in the most powerful way,” says Weimann. …

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The growth in data & the problem of storage

From Technology Review‘s “The Fading Memory of the State“:

Tom Hawk, general manager for enterprise storage at IBM, says that in the next three years, humanity will generate more data–from websites to digital photos and video–than it generated in the previous 1,000 years. … In 1996, companies spent 11 percent of their IT budgets on storage, but that figure will likely double to 22 percent in 2007, according to International Technology Group of Los Altos, CA.

… the Pentagon generates tens of millions of images from personnel files each year; the Clinton White House generated 38 million e-mail messages (and the current Bush White House is expected to generate triple that number); and the 2000 census returns were converted into more than 600 million TIFF-format image files, some 40 terabytes of data. A single patent application can contain a million pages, plus complex files like 3-D models of proteins or CAD drawings of aircraft parts. All told, NARA expects to receive 347 petabytes … of electronic records by 2022.

Currently, the Archives holds only a trivial number of electronic records. Stored on steel racks in NARA’s [National Archives and Records Administration] 11-year-old facility in College Park, the digital collection adds up to just five terabytes. Most of it consists of magnetic tapes of varying ages, many of them holding a mere 200 megabytes apiece–about the size of 10 high-resolution digital photographs.

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Cameraphones are different cameras & different phones

From David Pescovitz’s “The Big Picture“:

Mobile researcher John Poisson, CEO of the Fours Initiative, focuses on how cameraphones could revolutionize photography and communication — if people would only start using them more.

As the leader of Sony Corporation’s mobile media research and design groups in Tokyo, John Poisson spent two years focused on how people use cameraphones, and why they don’t use them more often.

TheFeature: What have you learned over the course of your research?

Poisson: People think of the cameraphone as a more convenient tool for digital photography, an extension of the digital camera. That’s missing the mark. The mobile phone is a communications device. The minute you attach a camera to that, and give people the ability to share the content that they’re creating in real time, the dynamic changes significantly.

TheFeature: Aren’t providers already developing applications to take advantage of that shift?

Poisson: Well, we have things like the ability to moblog, to publish pictures to a blog, which is not necessarily the most relevant model to consumers. Those tools are developed by people who understand blogging and apply it in their daily lives. But it ignores the trend that we and Mimi Ito and others are seeing as part of the evolution of photography. If you look at the way people have (historically) used cameras, it started off with portraiture and photographs of record — formalized photographs with a capital “P.” Then as the technology evolved, we had this notion of something called a snapshot, which is much more informal. People could take a higher number of pictures with not so much concern over composition. It was more about capturing an experience than photographing something. The limit of that path was the Polaroid. It was about taking the picture and sharing it instantly. What we have today is the ability to create today is a kind of distributed digital manifestation of that process.

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Culture, values, & designing technology systems

From danah boyd’s “G/localization: When Global Information and Local Interaction Collide“:

Culture is the set of values, norms and artifacts that influence people’s lives and worldview. Culture is embedded in material objects and in conceptual frameworks about how the world works. …

People are a part of multiple cultures – the most obvious of which are constructed by religion and nationality, but there are all sorts of cultures that form from identities and communities of practice. … Identification and participation in that culture means sharing a certain set of cultural values and ideas about how the world should work. …

Cultural norms evolve over time, influenced by people, their practices, and their environment. Culture is written into law and laws influence the evolution of culture. Cultures develop their own symbols as a way of conveying information. Often, these symbols make sense to those within a culture but are not parsable to those outside. Part of becoming indoctrinated into a culture is learning the symbols of that culture. …

… there are numerous cultural forces affecting your life at all times. How you see the world and how you design or build technology is greatly influenced by the various cultural concepts you hold onto. …

… algorithms are simply the computer manifestation of a coder’s cultural norms.

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Google on the Google File System (& Linux)

From Sanjay Ghemawat, Howard Gobioff, & Shun-Tak Leung’s “The Google File System“:

We have designed and implemented the Google File Sys- tem, a scalable distributed file system for large distributed data-intensive applications. It provides fault tolerance while running on inexpensive commodity hardware, and it delivers high aggregate performance to a large number of clients. …

The file system has successfully met our storage needs. It is widely deployed within Google as the storage platform for the generation and processing of data used by our ser- vice as well as research and development efforts that require large data sets. The largest cluster to date provides hun- dreds of terabytes of storage across thousands of disks on over a thousand machines, and it is concurrently accessed by hundreds of clients. …

We have seen problems caused by application bugs, operating system bugs, human errors, and the failures of disks, memory, connectors, networking, and power sup- plies. Therefore, constant monitoring, error detection, fault tolerance, and automatic recovery must be integral to the system.

Second, files are huge by traditional standards. Multi-GB files are common. Each file typically contains many applica- tion objects such as web documents. When we are regularly working with fast growing data sets of many TBs comprising billions of objects, it is unwieldy to manage billions of ap- proximately KB-sized files even when the file system could support it. As a result, design assumptions and parameters such as I/O operation and blocksizes have to be revisited.

Third, most files are mutated by appending new data rather than overwriting existing data. Random writes within a file are practically non-existent. Once written, the files are only read, and often only sequentially. …

Multiple GFS clusters are currently deployed for different purposes. The largest ones have over 1000 storage nodes, over 300 TB of diskstorage, and are heavily accessed by hundreds of clients on distinct machines on a continuous basis. …

Despite occasional problems, the availability of Linux code has helped us time and again to explore and understand system behavior. When appropriate, we improve the kernel and share the changes with the open source community.

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Bruce Schneier on what we should do

From Bruce Schneier’s “Searching Bags in Subways“:

Final note: I often get comments along the lines of “Stop criticizing stuff; tell us what we should do.” My answer is always the same. Counterterrorism is most effective when it doesn’t make arbitrary assumptions about the terrorists’ plans. Stop searching bags on the subways, and spend the money on 1) intelligence and investigation — stopping the terrorists regardless of what their plans are, and 2) emergency response — lessening the impact of a terrorist attack, regardless of what the plans are. Countermeasures that defend against particular targets, or assume particular tactics, or cause the terrorists to make insignificant modifications in their plans, or that surveil the entire population looking for the few terrorists, are largely not worth it.

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Some thoughts on strong & weak social ties

From Ross Mayfield’s “The Weakening of Strong Ties“:

Mark Granovetter’s seminal paper, The Strength of Weak Ties (summary), revealed the difference between friends and acquaintances and how useful acquaintances can be for certain tasks like finding a job. The difference between a strong tie and weak tie can generally be revealed by time commitment underpinning the relationship. Strong ties are better for action, weak ties for new information.

But time has changed with new tools and social networking models at our disposal. For the first time many social networks are being made explicit, often without the knowledge of participants, at an accelerating pace and dramatically lowered search costs. This newfound transparency may very well make strong ties weaker. …

Top-down models, or weak tie systems, are particularly good at the breadth of sample and search. …

That said, weak tie systems provide real insight we didn’t have before. They have vast potential for revealing structural holes and other methods of enhancing social capital. So long as participation is voluntary, information flows monitored is public and constraints keep in check how people act upon intelligence these systems will become a critical competitive advantage for any company.

By contrast, bottom-up systems are built for people instead of companies. Within Friendster, Ryze, Tribe.net and LinkedIn connections are made through individual decisions upon of invitations, requests and confirmations. The network grows organically, decision by voluntary decision.

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What is a socio-technical system?

From “Why a Socio-Technical System?“:

You have divined by now that a socio-technical system is a mixture of people and technology. It is, in fact, a much more complex mixture. Below, we outline many of the items that may be found in an STS. In the notes, we will make the case that many of the individual items of a socio-technical system are difficult to distinguish from each other because of their close inter-relationships.

Socio-technical systems include:

Hardware Mainframes, workstations, peripheral, connecting networks. This is the classic meaning of technology. It is hard to imagine a socio-technical system without some hardware component (though we welcome suggestions). In our above examples, the hardware is the microcomputers and their connecting wires, hubs, routers, etc.

Software Operating systems, utilities, application programs, specialized code. It is getting increasingly hard to tell the difference between software and hardware, but we expect that software is likely to be an integral part of any socio-technical system. Software (and by implication, hardware too) often incorporates social rules and organizational procedures as part of its design (e.g. optimize these parameters, ask for these data, store the data in these formats, etc.). Thus, software can serve as a stand-in for some of the factors listed below, and the incorporation of social rules into the technology can make these rules harder to see and harder to change. In the examples above, much of the software is likely to change from the emergency room to the elementary school. The software that does not change (e.g. the operating system) may have been designed more with one socio-technical system in mind (e.g. Unix was designed with an academic socio-technical system in mind). The re-use of this software in a different socio-technical system may cause problems of mismatch.

Physical surroundings. Buildings also influence and embody social rules, and their design can effect the ways that a technology is used. The manager’s office that is protected by a secretary’s office is one example; the large office suite with no walls is another. The physical environment of the military supplier and the elementary school are likely to be quite different, and some security issues may be handled by this physical environment rather than by the technology. Moving a technology that assumes one physical environment into a different environment one may cause mismatch problems.

People Individuals, groups, roles (support, training, management, line personnel, engineer, etc.), agencies. Note that we list here not just people (e.g. Mr. Jones) but roles (Mr. Jones, head of quality assurance), groups (Management staff in Quality Assurance) and agencies (The Department of Defense). In addition to his role as head of quality assurance, Mr. Jones may also have other roles (e.g. a teacher, a professional electrical engineer, etc.). The person in charge of the microcomputers in our example above may have very different roles in the different socio-technical systems, and these different roles will bring with them different responsibilities and ethical issues. Software and hardware designed assuming the kind of support one would find in a university environment may not match well with an elementary school or emergency room environment.

Procedures both official and actual, management models, reporting relationships, documentation requirements, data flow, rules & norms. Procedures describe the way things are done in an organization (or at least the official line regarding how they ought to be done). Both the official rules and their actual implementation are important in understanding a socio-technical system. In addition, there are norms about how things are done that allow organizations to work. These norms may not be specified (indeed, it might be counter-productive to specify them). But those who understand them know how to, for instance, make complaints, get a questionable part passed, and find answers to technical questions. Procedures are prime candidates to be encoded in software design.

Laws and regulations. These also are procedures like those above, but they carry special societal sanctions if the violators are caught. They might be laws regarding the protection of privacy, or regulations about the testing of chips in military use. These societal laws and regulations might be in conflict with internal procedures and rules. For instance, some companies have implicit expectations that employees will share (and probably copy) commercial software. Obviously these illegal expectations cannot be made explicit, but they can be made known.

Data and data structures. What data are collected, how they are archived, to whom they are made available, and the formats in which they are stored are all decisions that go into the design of a socio-technical system. Data archiving in an emergency room it will be quite different from that in an insurance company, and will be subject to different ethical issues too.

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DRM Workaround #18: HP printer cartridges

From “Cartridge Expiration Date Workarounds“:

In light of the lawsuit against Hewlett-Packard over the expiration date of their cartridges, two ways to fix the problem:

1) Remove and reinsert the battery of the printer’s memory chip

2) Preemptive: Change the parameters of the printer driver

Search for hp*.ini … In it there is a parameter something like pencheck. It is set to 0100. … Set it to 0000 in the file and save the file and REBOOT.

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More distribution channels = more viewers

From “NBC: iPod Boosts Prime Time“:

NBC’s “The Office” delivered a 5.1-its highest ratings ever-last Thursday among adults 18 to 49, a bump the network credits in large part to the show’s popularity as an iPod download. …

Such a connection between podcast success and broadcast ratings success is particularly significant because the NBC data is among the first available evidence of what network executives have been gambling on when striking their new media deals-that the new video platforms are additive because they provide more entry points into a show for consumers. …

NBC is confident that the iPod exposure contributed to the rise. …

The iTunes offering is bringing new audiences to the show that would not otherwise have watched, said Frederick Huntsberry, president of NBCU Television Distribution. “Consumers have choices, and we are not reaching all consumers with one technology,” he said.

ITunes is one way to bring fresh eyeballs to the network, he said, in particular the younger demo that uses video iPods. …

Yet ABC has also seen a ratings increase for its iTunes shows. To date since their debut on iTunes in October, both “Lost” and “Desperate Housewives” are up versus the same period last year. …

That growth and the knowledge that iTunes distribution possibly grew and certainly did not cannibalize ratings gave the ABC Disney Television Group the confidence to add another round of iTunes programs last week …

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Blogs as patio space

From Jim Hanas’ “The Story Doesn’t Care: An Interview with Sean Stewart“:

I grew up in Edmonton, Alberta, during the winter. There are two very essential conditions in Edmonton. There’s inside and outside, and there’s no real doubt about which is which. There’s a sharp line preserved between the two.

I now live in California. California is an interesting place to me—and reminds me a bit of the South, where I spent my summers—because in California, what with the weather being clement and the price of real estate being high, you spend a lot of time in this hybrid space. We could call it patio space or—if you’re in the South—front porch space. It’s clearly inside in some ways, but it’s public in other ways.

The world of the blog clearly exists in patio space, in porch space, in that “I’m going to invite you into a level of intimacy not usually accorded to strangers, and yet you’re still a stranger. I’m going to write a blog, and you and I will communicate with one another, sometimes with startling candor, and yet in this mixed, hybrid place.”

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New communication, new art forms

From Jim Hanas’ “The Story Doesn’t Care: An Interview with Sean Stewart“:

I think that every means of communication carries within itself the potential for a form of art. Once the printing press was built, novels were going to happen. It took the novel a little while to figure out exactly what it was going to be, but once the press was there, something was going to occur. Once motion picture cameras were around, the movies—in some format or another—were going to happen.

I modestly or immodestly think that [developers of alternate reality games] got some things fundamentally right about the way the web and the internet want to tell stories in a way that not everyone had gotten quite when we lucked into it. What people do on the web is they look for things and they gossip. We found a way of storytelling that has a lot to do with looking for things and gossiping about them. …

Suspension of disbelief is a much more fragile creation in the kinds of campaigns we’re doing right now than it is in novels, where everyone has taken the last two hundred years to agree on a set of rules about how you understand what’s happening in a book. That hasn’t happened here. Right now, this is at an unbelievably fluid and dynamic stage—a whole bunch of things that have been figured out in other art forms, we’re working them out on the fly.

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Paypal’s numbers

From “PayPal Prepares For a Challenge From Google“:

Long the Internet’s leading online-payments service, PayPal has a 24% market share of U.S. online payments, according to financial-institution consulting firm Celent LLC. PayPal, founded in 1998, boasts 96 million accounts with consumers who want to send payments online without revealing their credit-card or banking information to vendors. To use the service, customers simply set up an account with their credit-card or bank-account details, fill out a payment amount and the email address of the recipient, and send the payment via the Internet to PayPal. If the recipient doesn’t have an account, he simply opens one in order to collect the payment. The service gained traction on eBay and proved to be more popular than an in-house payment system it had been using.

For eBay, which acquired the online-payment business in October 2002, PayPal has been a big asset. The unit has helped accelerate trading on eBay’s auction sites in the U.S., Germany and the United Kingdom. Most recently, PayPal generated 23% of eBay’s total $1.3 billion quarterly revenue. And PayPal’s revenue is growing steadily: It was up 48% to $304.4 million in the fourth quarter compared with a year earlier.

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