Wired Archive

Techcrunch’s Michael Arrington is reporting that technology site Ars Technica has been acquired by Wired. Arrington notes that his sources suggest the price is around $25 million. SAI also has received confirmation on the sale.

Ars will become a sub-brand under the Wired Digital brand and CondéNet will take over ad sales. Ars Technica has a very strong and loyal userbase – this is evident by their continual Digg frontpage status.

This type of acquisition makes sense from the purchaser perspective. Ars isn’t run by one voice that "powers" the brand – rather Ars has multiple writers that contribute to the overall site. When I think of most of the major blogs, there is one (sometimes two) names that are behind the blog. This is why we haven’t seen many acquisitions of these single-force blogs – potential suitors wonder if the blog can exist without the name behind it. We will certainly see some tech blogs acquired this year, there is money around and some of the blogs have large brand recognition.

Here’s Compete’s U.S. Ars Technica unique visitor count:

I respect Chris Anderson and his work regarding The Long Tail.  But his prediction that free is the future of business is wrong.  There are many reasons why.  I’ll start with the one I think is most critical.

“Free” increases alienation of labor

At the beginning of the industrial revolution, Karl Marx argued that under capitalism, workers inevitably lost control of their labor, and hence became separated from:

1) their humanity, being treated more like machines

2) their community, because everybody was equally interchangeable and no longer dependent on each other’s varied skills and interests

3) the act of production, since people had to do what they were told and couldn’t enjoy the process of creating from their heart

4) the product they produced, since it was now owned by somebody else (the capitalists)

What I and people around me were most excited about in the mid 1990s, when the Internet began to really take off, was the hope that we could reclaim our creativity and our labor.  Musicians wouldn’t have to “sell out” to record labels, writers could bypass “clueless” publishers, artists of all types could reach audiences directly.  This was the promise of the Web.

But now, over a decade later, instead of being brought closer to our labor and its fruits, people like Chris Anderson and Fred Wilson want to tear us farther away by putting a lot of convoluted monetization schemes between what we do and how we get paid. 

The people who enjoy the benefits of your product or service should be the ones who pay for it.  The more we remove the payee from the payer, the more problems and the less fairness we’ll have as a result.

Take the writers’ strike.  Those three dry months were the direct result of uncertainty regarding what would be fair compensation in a digital world where monetization doesn’t have a clear link to production.

If you write a story or draw a picture or record a song, the more you’re pushed away from the person who enjoys those things, the less likely it will be that you get compensated swiftly and fairly.  Instead of only you having your hand out, now there are several more hands (not to mention sharp elbows).

Furthermore, if you can’t see a clear and direct connection between what you do and what you earn, your work will suffer, because you will be less motivated, less energized, and less happy. Compensation is the best feedback there is. The more removed the compensation is, the more confused and frustrating the feedback will be, if it exists at all.

“But everything digital can be easily copied, so it must be free.”  Nonsense.  There are already existing technologies to stop, or at least minimize, wanton copying.  And I don’t mean DRM. 

It’s not really a technical issue at this point. It’s the attitude of free that needs to shift. Tech caused the copying problem and tech could solve it, if it wanted to.

Here’s the truth about the “free culture” movement:  geeks started it, geeks push it and geeks almost solely reap the financial rewards from it.

In January of 2003, I made a handshake deal with Brad Fitzpatrick who started LiveJournal and now works for Google.  The deal was that I would gather up cartoonists to sell comics on LiveJournal, and we would all share the proceeds.  After I spent considerable time, effort, and money, Brad reneged on the deal, deciding that LiveJournal’s culture wouldn’t/shouldn’t support paying for cartoons (or anything else, presumably). They preferred to steal comic strips and panels from the feeds that were set up by syndicates to supply cartoons to their client newspapers.  When I told Brad this was wrong, because the artists weren’t being paid, and free distribution would depress the price for online comics (which it did, severely), he actually told me that if the syndicates didn’t want their comics taken, they wouldn’t make it so easy for him to swipe them.  About two years later, syndicates (not known for keeping up with technology) started sending out cease and desist letters to get their feeds taken off LiveJournal.

From the beginning, geeks didn’t want to have to pay for any form of information or entertainment or service on the Internet.  And since they essentially were the Internet at that time, and because payment was difficult and vulnerable, anyway, the “everything must be free” culture took firm root.  Sure they needed music and art and animation and photos and stories and video to make what they created more interesting and more attractive, but they didn’t want to pay anybody for it.  They created the means to take it freely, and they did.  “Copyright is dead!” is the still the war cry of Robert Scoble and most everybody else in the tech world, who think of themselves as the good knights who have slaughtered a dreadful beast, those “greedy record labels” and everybody else who gets in their way of free.

Of course, they — the geeks — are the good guys here, in their own mind.  After all, they give stuff away all the time (Fitzpatrick was one of the original Open Source advocates), so why shouldn’t everybody else? 

Here’s why:

Geeks are in short supply relative to their high demand.  Giving away free code never put their jobs or their incomes at risk.  In fact, it enhanced their ability to earn money.  They could hack free code in their spare time for the fun of it (literally the FUN of it, as geeks are as passionate about their work as any other creator), but still earn high wages at their day jobs.  And they soon learned that the more platforms and applications and features and such that were out there, the higher in demand their skills were.  This worked for them uniquely, because hacking is still very new in the grand scheme of things.  Being a nascent industry made giving away their work an opportunity rather than a risk. 

It’s like Anderson’s Gillette example of giving away free razors so that people would buy the blades. 

A “free” strategy worked and still works for geeks.  But what about other professions?

The argument is that there is always something to sell, despite the profession.  For example, musicians can sell tickets to live performances instead of (gasp) making people pay for recordings. Okay, but what about singers who happen to be young mothers and don’t want to be on tour? And what happens when you get too old or too burned out or too sick to perform?

Hugh MacLeod is a popular cartoonist who gives away his work and does well financially by selling wine and whatever.  Okay, but what if the cartoonist isn’t a marketer like Hugh is, and what if her style requires a lot of time to produce, like Hugh’s doesn’t?

Well, then she needs to sell T-shirts and mouse pads, of course.

Can you imagine a lawyer or a doctor or a software engineer being told they must work long hours for free, but nevermind, they can make up for it by being a salesman after hours?

If a newspaper publishes a story that a nonstaff member writes, or a cartoon that a nonstaff member draws, they pay for that content, up to several hundred dollars, depending on the size of their readership.  This is justified because it’s this content that helps draw eyeballs to the ads that generate the revenue.  But TechCrunch is said to make over $200,000 a month in ad revenue — more than many newspapers do.  But does Michael Arrington pay for animations or any other outside content that he publishes?  No.  The people who create it are supposed to just feel happy and grateful that he ran it and gave them “exposure.”

Web culture scorns newspapers and magazines, known as “dead tree media.”  But “old media” generated income for great numbers of writers and artists and editors and photographers.  By contrast, the Web seemingly doesn’t care that those jobs (with their steady salary and much needed benefits like health insurance) are going away, but Web users still want all the skilled output of these talented, experienced, professional people to entertain and enrich them — for free.

Just like capitalists, geeks brought opportunity.  And just like capitalists, they’ve kept most of it to themselves, while collapsing the ability of countless others to even eke out a living, much less get mega-rich as so many geeks have.

If Karl Marx were alive today, instead of the dreaded capitalists, he would hate geeks.

But Marx was an angry extremist.  I’m neither anti-capitalism (I’m a Republican and an MBA, for pity sake) nor anti-geek (my beloved late husband was a geek at Intel).  But I do believe, as I’ve said many times, that we need to get other professionals more involved in molding Web culture.  The tech world has created a culture that uses non-techies for its own financial benefit, whether intentionally (which I don’t believe) or by misguided accident (yep, that one).  And “free” is at the basis of this exploitative, alienating culture. 

Despite what Anderson says, Free will not be the future of business, because justice and prudence will win out and not allow it to be.

Revenge of the Non-Nerds

My company, and I’m sure many others, are working to monetize non-techies via the Web. Among other things, this means changing web culture so that copyright is respected and protected.  The most successful way to bring this about is to give all Web users a clear and reasonable stake in doing so.

In the coming few years, I guarantee you’ll see less “take whatever you want, copyright be damned” attitude and more “hey, stealing content isn’t cool.”  The wealth the Web generates must be distributed fairly within the U.S. and to all countries overseas, and across all digital professions.  And it will be, as more non-techies gain power through tech companies like mine that take the “tech” for granted and focus on changing the world in a more thoughtful, deliberate way, not just blindly disrupting it.

See, the thing is, free isn’t the Web’s essence.  FREEDOM is.  People should be empowered to use their talents, skills, experience and passions to make money any way they can legally do so.  If one cartoonist wants to sell T-shirts or wine or cow dung, more power to him.  But if another wants to sell his drawings, then nobody should stand in his way or thwart his ability to do so because of their own “must be free” religion that denies artists the ability to be directly compensated for their work.

Everybody is different, and artists are especially unique.  One of the best comic strips of all times was Calvin and Hobbes.  There is no free business model that the creator, Bill Watterson, would have allowed.  He is so anti-commercial, he gave up millions of dollars by refusing to license Calvin and Hobbes for merchandise like T-shirts and stuffed animals.  Attaching ads to his work would be unthinkable.  And he’s so anti-social, to this day if somebody recognizes him in public, he will literally run away.  So public book signings, etc. wouldn’t work either.  In Chris Anderson’s world, Calvin and Hobbes would never have existed.   Surely, that’s not what we want.

More Problems with Anderson’s article (and coming book)

1) The concept of free is nothing new, as Anderson himself makes clear.  But he wants us to believe that “freenomics” is exploding and will change everything.  I don’t buy it.  Yes, “free” as a business model is now a lot more consciously held, and it certainly is getting (overly) emphasized, but we’ve always had it, and in a lot more pervasive ways that Anderson cites.

Ever stop at a McDonalds because you desperately needed a bathroom?  I expect we all have, and 95% of us likely purchased something while we were there, if for no other reason than to keep from being embarrassed.  What we really wanted (a toilet) was free, but we paid for an icy drink to get it, which in turn increased the likelihood that we would need another McDonalds down the road, and so it goes on any cross country trip — freenomics in action for the past half century!

If you think about what you actually want compared to what you’re paying for, you’ll see that “free” has always been a part of every transaction:

Free is already universal.  Making it a deliberate part of a business model is anything but earth shattering.

2)  “Free” is a misnomer.  As Anderson admits, the “free lunch” may be free for you, but somebody else is paying for it.  If “$0.00 is the future of business,” then why do we need “six broad categories” to set prices for this “priceless economy”?

Turns out that it’s not really free, after all. What a surprise.  But you can feel good, because you’ve been manipulated into thinking it’s free, and if you’re really lucky, some other sap is subsidizing you.

3) In all Anderson’s long description of how marginal costs are dropping to zero – thus supposedly securing the success of our free society – never once does he mention human beings. Any business person will tell you that human labor makes up the bulk of a company’s costs.  These costs will never, ever go to zero nor anywhere close to zero, because humans must be fed, housed and cared for on a daily basis.  Humans require regular paychecks, not to mention benefits, even if it’s just paying into social security and medicare by government mandate. 

4) Anderson uses all this sensational “free is the new norm” gimmickry to state his true thesis which is (I think…it’s so buried under hyperbole I can’t be certain) that as marginal costs of the digital economy go to zero, we will see increased processing power, storage and bandwidth being used for applications that were once cost prohibitive, and this will transform the world.

Yeah, okay.  So what?  Isn’t that what we already expect?  We’ve all lived for years with falling prices and increased performance.  I don’t think anybody is expecting innovation to end.  I doubt there is one single person in the world who thinks the Web that exists today will be the same in five years.  Or even next year.  How is this big news?

I must say I’m disappointed in Anderson’s thinking regarding free.  This Wired article just made me decide that I won’t buy his book when it comes out.  Without this free article, I likely would have, because of The Long Tail.

I wonder what he’d say about that ironic backfire to his free strategy.

Dawn Douglass is founder and CEO of a seed stage startup with a mission to monetize digital creatives, and to put Web and mobile users in control of their own social graph and compensate them for its use. Dawn’s blog is Dawnkey Notes. She can be reached at dawn at inkswig dot com.

Image credit: Wired Cover, March 2008

This week seemed to yell "controversy" to me. All over the place, there was controversy. PPP vs. Calacanis, Wired vs. Digg, Arrington vs. Wired, Best Buy vs. The Consumer, reasons to unsubscribe from a feed and Seeking Alpha vs. Yahoo's Semel. There are a lot more, please add other controversy in the comments.

PPP vs. Calacanis

Will this feud end already? Geez. I am frankly bored with it. It's kind of like when you see the same 2 wrestlers fight for 3 years, move on already dammit. The latest bit is Ted (Payperpost CEO) stating that Jason should win the "donkinator" award and even went so far to show his picture on a donkey's behind. Ted states, "Time and time again Jason has climbed upon his stacks of money and jumped upon his high horse, declaring PayPerPost and the other companies that have followed our lead "evil"." And then he goes on to discuss how Jason uses a company he is on the board of to promote their service on his blog without disclosing. I think this constant bantering and name-calling does not help anyone. In fact, I think it hurts PPP even more than it hurts Jason. Jason is a "name" in the business and will continue to get the speaking engagements and so forth. PPP is trying to show that they are a legitimate organization and silly name calling on their home page is just plain stupid. I can just see the PPP booth at the next event riding donkeys. You want to build up a reputation, you don't do this Ted. Take the high road. You have the posties (which appear to all be stay at home moms) behind you, but that won't get you to the promised land.

On a side note, I am not against the idea of paid advertorials and will cover this whole debate (hopefully using my diverse background for leverage) in the next few days.

Another side note, Jason, I am still waiting for the results of your gaming Alexa post last year.

Wired vs. Digg

Wowzers! Wired comes out with an article about how to game Digg and the blogo' goes off like a tea kettle boiling over. And guess what? This controversy got Wired 342 links to that article (courtesy Technorati). Did Wired do the right thing in showing that you can game Digg? I am on the fence on this one frankly. Wired is owned by Conde Nast, who also owns Reddit (a main Digg competitor) so that makes the article a bit harder to swallow. However, from what I can tell, the article is factual based on the events that took place. Should a mag which has a dotted line up and then a dotted line down, not write about the lead dog from a journalistic pov?

Reddit is not in the same league as a traffic magnet as Digg is. I think Reddit remains because it is cheap to run. The site generates no (basically) revenue for Conde. I am sure you can game Reddit and every other system out there. This would probably be considered cheap link bait. She probably paid User/Submitter $100 and got major press and 450 links in the process.

Side note… the latest issue of Wired has 186 pages and 85 of those pages are advertisements. Thats a 46% ad rate, meaning that basically one out of two pages is an ad. Yes, I am that lame to count this after attempting to read this mag last evening. Shame.

Arrington vs. Wired

When the above story came out, TechCrunch's Arrington wrote a post about it that became a massive discussion board. As of now, there are over 230 comments on that post! Mike titled the post, "Digg should sue Wired" and notes that, "But my bigger problem is that Wired isn’t simply reporting news about Digg. They’re making the news. And they’re going negative. In the first example, no news was reported – it was just an out of the blue roundhouse punch at Digg. In the second example the reporter actually creates the story she writes about, and willfully violated the Digg terms of use in the process. And this was done for commercial gain – the Wired story describing this has received a ton of traffic (and is actually the number 1 story on Digg right now)."

What I would like to read from Mike is a semi-indepth to what grounds Digg has against Wired. Many of the commenters on the story asked for the same thing. Investigative journalism is hot all over, how many TV news reports don't have at least a bit of it every night? I think that Mike's point is that a service by Wired's owner is a direct competitor to Digg and this hit to Digg could help Reddit grow it's userbase. In a later comment last evening, Mike notes a quick reasoning for his title, "It’s not the disclaimer that’s the issue, and most readers get that. It’s the fact that they targeted and then trashed a competitor with an investigative journalism piece. They violated the Digg T&Cs and engaged in fraud to make their point. That’s what the problem is."

Mike did note this in the comments, "we don’t care that much about digg traffic actually. it’s far less than 10% of our total traffic, and when we aren’t on digg the comments are much more intelligent. digg is good for a quick traffic spike, but it isn’t a useful way to build an audience. I like digg as a business, but don’t really care about the links. most of our revenue comes from our sponsors, who pay a flat fee per month regardless of traffic. they want quality readers, not quantity. And digg basically sends a never ending stream of angry 16 year olds. not something the sponsors are that interested." I have to say I agree and disagree with him. I agree that a lot of the traffic is usually "mad" for some reason, but I disagree about the links. Everyone will agree that links are gold, and his post has about 100 links. These links remain forever, even when the Digg goes into the sunset.

Best Buy vs. The Consumer

This one reminds me of the days when Amazon charged different pricing based on purchase patterns in the early-2000s. It appears that Best Buy has a secret intranet site designed to make sure they get the top price for their items. Best Buy admitted to having this intranet site after pressure from the 'sphere took off.

State Attorney General Richard Blumenthal, "Their responses seem to raise as many questions as they answer, their answers are less than crystal clear."

ProBlogger's reasons to unsubscibe to a feed

Ok, now I must admit this is not as controversial as the above, but I believe there is one reason in there which I disagree with. Not that Darren is wrong, he is right. He surveyed 103 people (is that a statistically relevant sample? sorry could't resist using my mba education lol) and 25 of them said they unsubscribed from a feed because the feed was a Partial Excerpts Feed. Well duh. Everyone wants a full feed. Everyone wants a shiny mercedes. I have been in so many debates over this. Had blogs only offered partial feeds, no one would care. I am willing to bet that at some point this year, blogs will want to start to monetize the full feed. I love to debate this so if you see me at an event yell out "full feeds rock" and let's go 10 rounds. But just know, I am like Rocky and you will be Drago. :)

Seeking Alpha vs. Yahoo's Semel

It's not bad enough that Yahoo is not the front runner anymore, now the CEO is getting beaten up like a bumfight video. Oh wait, most are saying he has caused a lot of this trouble. Aah. Whether you agree or disagree with the writer, this is an excellent piece of writing. It is very detailed which it must be to call for a CEO axe. This comment basically describes the entire column, "Google’s stock price is up 336% versus Yahoo!’s stock price being up only 16%. Google has grown its shareholder value 21 times more efficiently than Yahoo! over this time period, when the Internet ad market has been booming."

I wonder if Semel gets a Home Depot package if he goes. Oh wait, he already has made $550 million in 4 years. And that's for a company who is running a horse race on 3 legs. Where is that Sarbanes-Oxley when you need it!? I still believe that Microsoft and Yahoo will merge at some point in the next 12-18 months.