BuzzMachine

I was talking with a media exec who started a blog ad network — bless him — but who I thought was taking too high a share of the revenue: at least half. That’s a natural reflex, perfectly understandable: Get what you can. Other networks do that. But the problem for me is that by taking too much, he excluded me from the network — I’m sticking with BlogAds, which takes only 20 percent — and the problem for him, then, is that this slows the growth of his network and a smaller network is a less valuable network. He understands this will because he’s a smart media guy. He wants a large network.

I was actually just trying to channel the network wisdom of Yochai Benkler, author of The Wealth of Networks, and Tom Evslin, who had talked about how to grow networks at a Union Square roundtable about collaborative production more than a year ago. I wasn’t sure I was getting it right, so I went to Evslin’s blog and asked him for a reprise, which he has just provided, brilliantly. I’ll summarize:

The first counterintuitive lesson: Companies that build large networks on the web don’t charge users what the market would bear; they charge as little as they could bear. That is how they maximize growth and value for everyone in the network on top of the platforms they provide.

In his blog post, Evslin takes this a step farther, pointing out that if you run a network that depends on scale, such as an ad network, then the more pages you have to sell, the bigger and better advertisers you can attract and the more you can charge. So if you take a smaller commission for each ad in the network, more sites will join it with more pages, which can now be sold at a higher value.

It gets even more head-scratching: Evslin argues that if you are too profitable, then you will attract competitors who will undercut you and steal market share. “If you’re doing well but running at or close to breakeven,” he explained, “you’ve made it impossible for anybody to undercut you without running at a deficit, which is hard to get funding for.”

So, to sum up: Take the minimum value out of the network to make it grow to maximum size to enable its members to charge more for their value while keeping costs and margins low to block competitors.

That’s not how old networks operate. Cable companies wrap their wires around you and squeeze maximum fees out of you. Ditto phone companies, newspapers, and retailers. But they all face competition from next-generation networks.

craigslist is the Evslin poster child. It foregoes revenue for most listings in most markets—charging just for job ads and for real estate in a few markets—and that turned it into the critical-mass marketplace for most listings. “If Craig now attempted to maximize revenue by charging for a substantially higher percentage of ads, a door would be cracked open for competition,” Evslin writes. “There is no chance at current rates for a competitor to steal Craig’s listings (and readers) by charging less.”

I’m writing about the network model in the book and this will also be a key topic of discussion in our event at CUNY on new business models for news; that’s why I’m talking about it.

Mark today in the history of media. In today’s NY Times, we hear an ad guy praising networks over portals (and by portal, we don’t just mean Yahoo, we mean any closed media property, including TV networks and newspaper sites). Networks used to have cooties; they were supposed to be nothing but aftermarkets for unsold inventory — or so the big media properties wanted us and media planners to believe. But networks are quickly becoming more targeted, more efficient, and more economical. From the Times:

Some of the ad dollars that in the past had been spent at portals are being spread around instead. Ad networks, which fan out ads to thousands of sites, are adding targeting and are signing up reputable sites, making them more attractive for advertisers.

“There was a time when we would go out and buy inventory on the portals,” said Quentin George, global head of digital media and strategic innovation at Universal McCann, which plans media for clients like L’Oreal and Sony. “Portals make it easier for us to buy and place media on behalf of our clients. But as time continues and as analytics capabilities increase, you find that your media dollars can work better elsewhere across a range of different sites.”

Michael Hayes, senior vice president and managing director for Initiative Interactive, which handles digital spending for clients like Home Depot and Bayer, said that advertisers might be turning away from broad buys and looking for more targeted campaigns on smaller sites.

“This is hurting the portals,” he said. “There are more options.”

This is why I say that the Glam model — whether that includes Glam itself or not only time will tell — is a key business model for the future of media. Welcome to the post-scarcity post-media economy.

I have been the greatest fan and booster of Facebook but I have to wonder whether they are leapfrogging the shark by cutting off Google Friend Connect — not because it is evil but because it is closed, limiting, wrong, and not in their own self-interest, a key and possibly fatal strategic mistake.

The essential question for Facebook is this: Do you want to be a closed site or an open platform? Do you want to be a closed social network or enable the open social network the internet already is? Clearly, it is better to be the platform. But Facebook is being strangely blind to that.

At the same time, I’ve become less addicted to Facebook because there isn’t enough there. That could be because I hang with old farts, who’ve cooled on the fad. But it’s more likely because Twitter has become a more meaningful platform for keeping in touch with friends (though that, too, could change). Though Facebook still has more functionality enabling me to organize those friends, Twitter is better at distinguishing acquaintances (the followers) from friends (the followed). That is, whereas on Facebook, I have — I’m sorry to say — 1,030 ignored friend requests, on Twitter, I have 1,765 followers. Twitter has learned from Facebook’s mistakes. So has Google.

Facebook should have asked — pardon the plug for the book — WWGD? If they had thought like Google, they would have tried to figure out how to use what they had built — an organizing system for friendship — and turn that into a platform we can use — and control — anywhere on the internet.

Google has quite cleverly done that as they explain on their code blog. They used Facebook’s API by all appearances legitimately. They give us control of how we use our data (and our friends are our data). They also kluged it a bit so they don’t retain data (which also means that other sites can really manipulate it, losing some potential functionality but keeping Google on the safe site of the line).

People find the relationships they’ve built on social networks really valuable, and they want the option of bringing those friends with them elsewhere on the web. Google Friend Connect is designed to keep users fully in control of their information at all times. Users choose what social networks to link to their Friend Connect account. (They can just as easily unlink them.) We never handle passwords from other sites, we never store social graph data from other sites, and we never pass users’ social network IDs to Friend Connected sites or applications.

Google is only doing what Facebook should have done: open up to be more useful across the entire internet. Now Google is giving Facebook the opportunity to do that — the dare to do that — and Facebook is chickening out. Big mistake.

I wrote back in 2006 that the internet is the social network. The winner will be he who brings that — to use Mark Zuckerberg’s own words and credo — elegant organization.

But the truly valuable network, the network of networks, the unbreakable bubble of bubbles, will be the one that manages to bring people together wherever we are, not just on MySpace (read: RupertsSpace), not just in Flickr or Del.icio.us, and not even just in the blogosphere, but everywhere. The internet doesn’t need more social networks. The internet is the social network. We have our identities, interests, reputations, relationships, information, and lives here, and we’re adding more every day. The network enabler that manages to help us tie these together to find not just connections or email addresses or information or songs but people — friends, colleagues, teachers, students, partners, lovers — across this open world, that will be the owner of the biggest network of them all: The Google of people.

I’m no mathematician or scientist, so I have to express this in words, but here’s the way I calculate the value of networks:

The Law of Open Networks: The more open a network is, the more control there is at the edges, the more the edges value the network, the more the network is worth.

The business lessons from this: Any choke point of control, via ownership, decreases the value of the network. Enablers increase the value of the network. The network will abhor and find ways around choke points. The network will value enablers and that is the point at which value may be extracted from the network. The value in networks in the open future is not in ownership and control but in enabling others to control.

Facebook put a chokehold around our data about our friends. Huge mistake. As Steve Gillmor said in his excellent Techcrunch analysis:

Facebook finally has a real problem to deal with - an exceptionally rational and well-thought-out strategy by Google that puts the leading social media cloud in the path of a wave of angry users. The only thing Facebook has going for it is that said users don’t yet know they’re angry.

Umair Haque has been purposefully over-the-top calling Facebook’s act “evil” (a few Twitter folks said his language gets in the way). But when you dig down, Umair, as is his habit, finds a brilliant and new law at work here:

What’s really going on here? There’s a massive tectonic shift rocking the economic landscape. All these players are discovering that the boardroom’s first and most important task is simply to try always and everywhere do less evil. In the dismal language of economics: as interaction explodes, the costs of evil are starting to outweigh the benefits.

Let’s repeat that and dub it Haque’s Law: As interaction explodes, the costs of evil are starting to outweigh the benefits.

That, ladies and gentlemen, is what Google is really talking about when it promises not to be evil. It is not a campaign pledge (”Yes, we cannot be evil!”) or a geeky Bible lesson about good and bad (open unto others as they would open unto you) but a cold, calculated business rule:

When the people can talk with, about, and around you, screwing them is no longer a valid business strategy.

Be warned, cable companies, airlines, insurance companies, real estate agents, ad agencies, and governments: choke points are evil and evil is bad business.

This is — sorry for the second plug — at the heart of my book. Interaction turns control over to the public and that fundamentally changes business and society. Oh, I know, that drives various curmudgeons, cynics, and polemicists nutty but I do believe it is true. Google has found (not created but exploited) a new economy and only a fool would not try to learn from that and follow its lead if at all possible.

And I can’t believe that Mark Zuckerberg is a fool. I’ve said in the past that he makes mistakes, but he makes mistakes well — listening, learning, and changing quickly. Well, he’d better change quickly on this one. And the lesson here is no different at all from the lessons he learned with the botched announcements of Facebook’s news feed and ad program: It’s about control. We want control of our data.

But there’s a bigger lesson here: It’s about being a platform instead of a service (or portal). Last year, I disagreed with friend Scott Heiferman when he said that Facebook was the new AOL — and, indeed, Scott quickly disagreed with himself. But Zuckerberg may be proving him right after all. If he tries to build his business by attracting us to his garden and then fencing us in, if he doesn’t give us control and let us use Facebook and our identity there as a platform for our lives, then he is turning it into the next AOL when it could be the next Google. And that would be tragic. Tragic.

This is the critical moment in Facebook’s history. This is the moment when they realize that they have to give control to us and to the internet and become a platform. If they do, I’m likely to use my Facebook identity as my key identity only because it is tied to my social network; that is precisely what makes it more valuable than others. I don’t think that Twitter will be that but it may be the best second choice and it is tied to more dynamic information from my friends. Whether friend or follower, I want to link with people online. Who will help me? Who will stop me? He who helps, wins.

: More from Fred Wilson, Marc Canter, Robert Scoble.

: LATER: The irony of Google, of course, is that it’s open when it’s fighting closed systems (advertising, media, Facebook) but its instinct is closed. They wouldn’t even let the NY Times give them harmless publicity for their Lego logo. Don’t need it, they say. Would rather hide in a dark room.

: LATEST: This is why I don’t bet against Zuckerberg. Already, he says he wants to meet with Google and work it out. Smart.

I heard vindication for my advocacy of the network model of media online in today’s DLD panel on ad exchanges (aka networks) with Samir Arora of Glam, Christoph Schuh of Burda, Magid Abraham of Comscore, and others. Randy Rothenberg was moderator.

One of the most controversial posts I’ve ever written — politics and Dell aside — was about Glam and its network model of media, arguing that in the connected internet, this will be a major factor. Some agree. Some disagree. The ones who disagree are generally from big, old media and it seems they find the network model threatening. They sell their premium on being brands and destinations and they fear — but shouldn’t, I say — this opening up of their space. See my spat with the Times’ Martin Nissenholtz at the Online Publishers’ Association in which I argued media should be asking “what would Google do?” — WWGD? — and thinking distributed while Martin argued this his brand is worth our trip to it. Those folks argued with me that only they could sell quality because they owned their content; Glam owns little of its. One wonders, then, why the Times is now selling Freakonomics.

In today’s discussion, networks are critical to the future, Comscore argued, because without them, even the biggest online brands don’t reach that much of the audience that much of the time. The top four sites, the search monsters, have only 5% share of page views on the internet and 7% share of their users’ page views. So networks extend them. That is why AOL, Microsoft, Google, and Yahoo have been buying big ad networks.

But Glam is different. It is a content and ad network that curates blogs and sites for women and sells ads and shares revenue on them. Some say that because it isn’t produced by big media, its quality is low. But I heard today that Arora insists on no automated, Googly ads; they only deal with agencies. Networks online are often remnant space filled with dancing monkees. So he wanted to avoid that. When he took over Glam, he asked, “What would it take for advertisers to act on the internet as they act in traditional print?” He also asked: “What is the definition of media going forward?” His next frontier, he says, is to define prime time and prime placement on sites.

OK, so that’s his pitch. That’s just one network. My problem is that there aren’t more of them and that big, old media don’t sell them. Oh, they get involved in networks like Tacoda. But they don’t curate and enable and encourage outside distributed networks. That’s what I want to be a part of.

Kevin O’Keefe is inspired by Glam and ScienceBlogs to work on a network of law blogs. Good idea.

I was terribly impressed picking up the Forbes 90th anniversary issue. No stodgy, self-congratulatory looking back there. The entire issue is devoted to “the power of networks.”

And online, they prove they get it by putting up an org-chart wiki asking us all to tell all about the organization of companies we know. They say: “It’s a new way to tap the collective knowledge of our community…” That’s the sort of thing I would have — should have — expected from new-fangled Portfolio, not from old Forbes. Instead, Portfolion gave us a bunch of old-fangled magaziney features. Go figure.

In the network package, Rupert Murdoch (whom I happened to run into on the street in Manhattan today, moments after buying the magazine, and whose confab in Carmel I’m attending in a week . . . who needs a network when you have New York?) says:

Traditional companies are feeling threatened. I say, bring on the changes. . . .

Those of us in so-called old media have also learned the hard way what this new meaning of networking spells for our businesses. Media companies don’t control the conversation anymore, at least not to the extent that we once did. The big hits of the past were often, if not exactly flukes, then at least the beneficiaries of limited options. Of course a film is going to be a success if it’s the only movie available on a Saturday night. Similarly, when three networks divided up a nation of 200 million, life was a lot easier for television executives. And not so very long ago most of the daily newspapers that survived the age of consolidation could count themselves blessed with monopolies in their home cities.

All that has changed. . . .

Companies that take advantage of this new meaning of network and adapt to the expectations of the networked consumer can look forward to a new golden age of media. [T]he future of media is a future of relentless experimentation and innovation, accelerating change, and–for those who embrace the new ways in which consumers are connecting with each other–enormous potential.

YouTube’s Chad Hurley adds:

We are at an unprecedented time in the history of entertainment media. Never before has the opportunity been so great for independent writers and actors, musicians and producers to create compelling content on par with the studios, networks and labels. With easy and affordable access to cameras, editing software and computing power, the playing field has been truly leveled. . . .

YouTube represents the first time media has become truly democratic for both the audience and the content creators.

Continuing this superlativefest, Howard Dean says:

The Internet is the most significant tool for building democracy since the invention of the printing press. People are now easily able to create, discover and connect with networks within hours, anywhere around the globe.

This connectedness is creating a huge shift in power as ordinary citizens decide what’s important and most relevant to them. They can network with like-minded individuals to create a technology-enabled global grassroots movement. . . .

Fundamental trust in your users is the only way to have a successful relationship with them.

That is a revolutionary idea, one that politicians are not particularly comfortable with. But it’s now the reality. The power in campaigns now belongs as much to these shifting networks of committed citizens as it does to the political establishment.

There’s a fascinating — and entertainingly pissy, if sometimes obtuse — argument going on over Metcalfe’s Law (which states that the value of a communications network grows exponentially as its number of users grows). On one side are three authors of an article in IEEE Spectrum, who insist that the law was wrong and even dangerous, for it justified the first internet bubble, and they fear it is being used now to inflate a second social bubble. On the other side is Ethernet inventor Bob Metcalfe himself, arguing at VC partner Mike Hirshland’s blog that his law is not only still valid but, when you tie it with Moore’s Law, it leads to the Law of the Long Tail.

And I will argue with them all — not against Metcalfe’s Law but against the way they value networks. The IEEE authors try to tote up the value of a network in terms of who owns it: the market capitalization of companies controlling networks. In other words, they — like telecoms of old — try to value the network at the center. But that is no longer how networks are valued at all. No, now they are valued at the edge. You and I value the networks we choose to connnect to in ways only we can measure. Metcalfe starts down the right path when, as Hirshland summarizes, he argues that with social networks “we need to consider not just the number of users but also the affinity between the members of the network.” Yes, and each network connection we make carries an intangible, personal quality that has direct impact on how much we value those networks and thus how much they are worth as a whole. We tote up our own value in terms like trust, engagement, joy, relevance, excitement, reputation, need, sex, and money. Human networks must be measured on human terms.

Network providers used to try to measure the value we put on networks negatively, in terms of switching costs. That was what AOL counted on for too damned long as they thought it would cost us too much hassle to switch off our AOL email addresses. Ha! But we each value a network positively on what it brings us. That is different for each of us and each of our connections. For example, I see no value, personally, in LinkedIn; it has never done a thing for me but attract a new form of spam, inconvenience, and embarrassment when I don’t link to someone. But for others I know, LinkedIn provides jobs, business, income, reputation; it is damned near invaluable. Similarly, I see little value in MySpace; for middle-aged me, it is merely a curiosity. For others, of course, it gets them songs or gets them laid. Put a price tag on that, if you dare. I see value in my Treo phone because it keeps me connected to anything, anywhere, anytime. I see great value in having a blog in the ’sphere, for it brings me learning, ego gratification (I admit it), jobs, and money (but no sex).

An important factor in this is openness. The more open the network, the more valuable it is — but the harder it is to own, and thus the harder it is to value in old terms of ownership and market cap. That’s what really argues against the IEEE authors. They are trying to put a corporate value on networks. You can’t. That’s like trying to value air… or the internet. They defy ownership.

Can a network be too open? Of course. Email, one could argue, is too open because it permits spam. It remains valuable only if I gain control over that spam thanks to enabling tools. Usenet was too open and there was no such control, so its value sank to nil. Some wonder whether MySpace will be too open or at least too big: When everyone is your friend, you have no friends. So here we see the value of niches and of communities: the right people in the right relationships. Small is the new big.

Does this argue against Metcalfe? Does it show, as the IEEE guys want to, that the exponential growth in the value of a network does not continue and, indeed, topples? No, the problem is that all these calculations leave out the most important X factor to which Metcalfe alludes: affinity. And affinity is fed by many of those human intangibles I listed above: relevance, emotional connections, convenience, reputation, and on and on. So, I will argue, the value of a network should be calculated with a multiplier, which is the value a network’s members put on it:

Network value = the sum of the value each member of the network places in it.

But, of course, that is incalculable (what, again, is the dollar value of love?).

Does this further argue against Metcalfe that small networks can have more value than big networks? No, because one should value a network as the sum of its networks. We see the internet that way. We also should see the blogosphere that way. This is why I continue to think it is absurd and wrongheaded to analyze the blogosphere on its supposed A-list. The vast majority of people who read blogs never read any of the blogs on that A-for-alleged list. They read and interact with the ones that are meaningful to them. The blogosphere is not the value of the few on top or even of the total but instead of the unlimited connections enabled within. This is also why I see such power in networked journalism: the network is additive.

This is also about the mass of niches. When television as a medium stopped having to serve everyone at once — when cable, VCRs, and now the internet allowed it to serve smaller interests, tastes, and audiences — television as a whole grew; this explosion is far from over. Fewer people watch HBO than NBC but those who do clearly value it more because they pay for it.

And this is about the value of being the right size: I value the Continental President’s Club because everyone in the airport does not belong; if everyone did, its value would fall to nil. This isn’t about snottiness. It is about control.

So all of this leads to my law — everybody has to have a law — which I think I first stated here and have restated ad nauseam.

Jarvis’ Law: Give the people control, and we will use it. The corollary: Don’t give us control, and you will lose us.

The more we control the network at the edge, the more valuable it is to us, and the more valuable it is as a whole, but the harder it is to own and control. Yet that doesn’t stop you from making money. See: Google. It grew by making connections — establishing unlimited networks of information and now advertising — with content and connectivity it did not own or control. See Skype, which didn’t so much grow its own value as deflate the value of its competitors down to their true worth as communications networks stripped of their monopolistic advantages. If you want to talk a bubble, there was none ever bigger than the artificial bubble of the telecommunications companies and their closed networks; open networks have certainly popped that. (See Isenberg’s Law: “Just deliver the bits, stupid.” See also Yochai Benkler’s The Wealth of Networks.)

I think the next valuable network will rise out of helping us find the good stuff in video anywhere — not just on networks and not just on YouTube, anywhere.

But the truly valuable network, the network of networks, the unbreakable bubble of bubbles, will be the one that manages to bring people together wherever we are, not just on MySpace (read: RupertsSpace), not just in Flickr or Del.icio.us, and not even just in the blogosphere, but everywhere. The internet doesn’t need more social networks. The internet is the social network. We have our identities, interests, reputations, relationships, information, and lives here, and we’re adding more every day. The network enabler that manages to help us tie these together to find not just connections or email addresses or information or songs but people — friends, colleagues, teachers, students, partners, lovers — across this open world, that will be the owner of the biggest network of them all: The Google of people.

I’m no mathematician or scientist, so I have to express this in words, but here’s the way I calculate the value of networks:

The Law of Open Networks: The more open a network is, the more control there is at the edges, the more the edges value the network, the more the network is worth.

The business lessons from this: Any choke point of control, via ownership, decreases the value of the network. Enablers increase the value of the network. The network will abhor and find ways around choke points. The network will value enablers and that is the point at which value may be extracted from the network. The value in networks in the open future is not in ownership and control but in enabling others to control.

: And as if all that’s not enough, see also Tom Evslin and Fred Wilson on Reed’s Law — which holds, in Fred’s words, that “if each node of the network was itself a network (a GFN) then the value of the network scales with the exponential of the number of nodes in the network” — and my clumsy efforts to get my head around it here and here. Fred Wilson begs Metcalfe to also tackle Reed. See as well Umair Haque on Google and Reed and on Metcalfe and the edge.

: Here’s Om Malik on Metcalfe.

: Proving that one Hugh cartoon is worth 1,200 of my words:

I was lucky to get the chance to spend a morning last week at Bell Labs with a few editors and reporters from the Star-Ledger, and I was struck by the many parallels between the telecom and newspaper businesses.

The first and most obvious is the business turmoil each faces as an open, competitive, and distributed world overcomes their legacies as closed, monopolistic, and centralized businesses. In that sense, the telcos are farther along this trail of tears — not yet on the other side of the gorge, but perhaps able to see the bottom — and newspapers know this disruption and uncertainty lie ahead.

But more interesting are the parallels in the future. Telcos saw themselves as technology and distribution companies and newspapers as content and distribution companies. But it turns out they are meant to be networks, connection companies that put people together with the right people and relevant information.

Gee Rittenhouse, Bell Labs’ vp for technology integration, told us that newspapers have an advantage: locality. I agree. In fact, I say it is more than that: Locality is the essence of a newspaper. Sid Ahuja, a vp in charge of software and convergence, had a wonderful perspective about media and place. He talked about his childhood in a village in India that was not connected to the outside by technology. When broadcast radio came along, he said, it made people think outside their villages, as a nation. But now, technology brings us back together in villages, albeit often virtual ones. Newspapers, too, can bring us back to the villages once they don’t have to broadcast to everyone at once in print and can become more local online.

Rittenhouse talked about how telcos now must concentrate not on the plumbing but on the “higher application level.” Translated to newspapers, they need to concentrate not on printing but on enabling people to act. Ahuja, too, talked about the need to look at application networking atop the infrastructure of the internet. Google is such an application, he said. So should newspapers be, as they use technology to help people make connections.

They each talked about relevance and trust as ways to accomplish this for their networks. Ahuja spoke of the need for metrics and systems of trust to raise the value of the network (in, for example, an email network where 60 percent of the messages are spam, are untrusted). Well, won’t it be the job of newspapers to share trust, to find not only the facts and also the correspondents — professional or amateur — to rely on? And that doesn’t just mean editors deciding who and what are trustworthy; in lab speak, that won’t scale. They need to build rules engines and content handlers to make this happen, Ahuja said. And to do that, they must learn from the people, from the network. It means helping people to share trust among themselves. This is why both industries are trying to figure out how to work with social networks.

Bell Labs, of course, has learned how to innovate in an open-source world. They invented Unix there and saw its value increase with the contributions of people. Similarly, newspapers must find open ways to work with citizen journalists. [See also yesterday's discussion at the hyperlinked society conference on the competitive, complementary, or destructive -- take your pick -- relationship of amateurs to professionals.]

Finally, from a business perspective, Bell Labs in particular has had to find new efficiencies as they downsized while, of course, continuing to innovate and invest. That is precisely what newspapers must do. When I last visited there many years ago, the pride in pure research was like that which I saw at the MIT Media Lab: almost a determination not to be practical. That has changed at both institutions, I hear. At Bell Labs, the scientists talked about how happy they are to both work in the long-term — in pure research without immediate business application or impact — and to work on current projects that bring their work to the market and give them feedback as a result. There is a new practicality and from what I could see, it’s energizing. In my last parallel, I’ll say that’s what news organizations must do as well: For too long, editorial staffs stood apart from the market and I say the market will give them the feedback they need. Bell Labs is doing this by reviewing the business potential of ideas and setting up incubators where mistakes and learning can happen apart from the risk-killers of big business. News organizations need to incubate new ideas, fail at it sometimes, and then bring the best to market.

The rest of the day was spent on higher science and even this had analogues in the media world. One scientist has studied how spiders make webs to learn how to improve networks. To way oversimplify the work, one lesson learned is that spiders make local measurements to get global information. Isn’t that what happens when Google, Flickr, or Del.icio.us gets each of us to make local measurements, and that creates global information? Other scientists talked about quantum computing; see how I inserted this into Saul Hansel’s description of media as quantum mechanics yesterday.

There is good news in all this. We all sensed an impressive new energy and enthusiasm at Bell Labs. We walked through the halls where so many brilliant people invented so much incredible technology and some of the laboratories were empty except for stacks of old cabinets and desks. It’s smaller now. So will news organizations be. But Bell Labs has found ways to innovate, invent, and adapt to a new world. So must newspapers.

ABC, CBS, NBC, Fox, Universal, Paramount, and Disney are suing Cablevision in an effort to stop them from offering a DVR in the cloud — that is, from recording and serving shows on-demand not on a TiVoesque device in the home but on a server that lets us — the viewers, customers, former prisoners of network schedules — watch what we paid for from anywhere in the house.

Twits and fools. It has to be a pretty dumb and dorky bunch that can get me to side with my cable company!

But rather than trying to fight our proven desire to watch what we want to watch when, how, and where we want, the networks should be embracing it. The smart network will see this as another way to get more shows recorded and thus watched. They will recognize that there is no real difference — only an attempt at a legal one — between us recording a show on your VCR (if you still have one) or DVR (the TiVoish thing) or on someone else’s server. In fact, by recording the shows up in the cable cloud, we’re less likely to be able to copy and distribute them. The networks might have argued that Cablevision was just recording everything and serving it up at will — which wouldn’t be a bad idea at all — but to get around that, the cable system is, quite inefficiently, recording the same show separately for every customer who wants to. The networks are arguing that this is competition with their on-demand strategy. They should see it as part of their strategy.

You’re just not going to be able to make a business anymore on the backs of stopping people from doing what they want to do. That was the old network model. In the new network model, you recognize that we’re in control and if you do that — if you embrace every way you can find to distribute and promote your shows — then you might survive. Yes, the world has turned upside down. Figure it out.

Tribune Company just bought ForSaleByOwner.com. That’s a bigger deal than it may appear in the rearview mirror.

When I worked in newspaper companies, I quickly learned that FSBO was a dirty word that made publishers sweat. On the one hand, they wanted all those by-owner ads; they needed to be seen as the marketplace for homes. But on the other hand, the Realtors who paid the big bills hated by-owner ads; their lost customers were their competition. So publishers always danced a delicate two-step, trying hard not to promote the FSBO ads even as they counted the bucks from them. The terrible irony is that the real customers — home sellers — were treated like caged animals by both Realtors and newspapers.

But, of course, the cages are gone and the first to escape were the Realtors themselves. When the web came along, real estate agents realized they could deal directly with customers and no longer needed newspapers to create the marketplace. In fact, newspapers realized that they needed the Realtors’ listings for their own online sites — ads became content — and so the Realtors still ended up holding publishers by their delicates. FSBO was still a dirty word.

I saw this coming a decade ago and argued that newspaper companies should go into the real estate business themselves, becoming brokers to get listings into the closed multiple listing services and putting buyer and seller together directly because the Realtors would inevitably abandon papers. I thought I was going to be fired for speaking such heresy.

But now Tribune is going into the FSBO business.

Isn’t it fascinating how desperate companies are now willing to piss off the channels of sales, distribution, and revenue they so coddled and feared for so many year: ABC tells its affiliates to lump it as it distributes directly to consumers; Warner Brothers tells its network to lump it as it distributes around networks; and Tribune tells its Realtor-advertisers to lump it as it enables sellers to avoid Realtors. The question is whether they spent too long coddling the middlemen and forgetting who the real customer was all along.

Proving the point that the future of media is not distribution, it’s aggregation, TiVo announced today that it had recruited critics, magazine editors, and such to recommend TV shows — to create ad hoc networks, in other words. This cuts across and devalues the old networks; it unbundles and then rebundles them. The magazines are doing it for free because it promotes them and, they hope, their ability to find the good stuff for you: to aggregate. The next step for TiVo should be to have the people become guru guides for each other. Then I could subscribe not just to your blog and blogroll but also to your TV network.

This week’s Media Guardian column is an open letter to Mark Thompson, head of the BCC, arguing that the beeb shouldn’t think as a competitor to big media but as a laboratory for innovation. (Here it is without registration required.) Excerpt:

The BBC can become the grand laboratory of media. For because of those licence fees, you are in a better position than any organisation anywhere to think generously, to share knowledge and audience - and thus revenue and support - with your media confreres. More important, you can afford to make mistakes. You can try to figure out how to let the people pass around your shows, how to distribute information and entertainment to new devices, and how to gather and share content from the public in new ways, and you can stumble along the way without risking shareholder revolts. The problem is, of course, that you are now facing a revolt of media moguls, instead. So you need to demonstrate that Auntie comes in peace, that you will involve them in your Creative Future, understanding their needs and sharing your answers. For the truth is that the news and media industries desperately need reinvention, they need to benefit from your experimentation and innovation, so long as you are open with your lessons.

Right after that went up, a BBC friend pointed me to wonderful thinking from Azeem Azhar two years ago proposing details of how to manage an open-source BBC with a BBC Public License (see his own site as well). Excerpt:

The internet, then, is where re-invention of the public service principle can begin.

Under the BPL, the BBC’s internet content, for example, would be available for third parties to access and syndicate. A non-commercial user, such as a charity Web site, could put up a BBC news feed free.

Under the BPL, the BBC’s software code would be freely available. Development for certain types of projects would be done publicly, using an open source framework.