Rolling into 2006

I don't usually plan the next year. But I'm making an exception with 2006. There are too many issues coming to a head, too many insights that need substantiation, too many related topics to explore — and too little time for all of it. So I need to focus more, be more deliberate — even formal — about it.

So, naturally, I look for help. Today began with a visit to Terry Heaton, a broadcasting veteran who consults the commercial television business. Terry is the best thinker about What's Actually Happening in and around that business. This morning, fortuitously, he treats us to some important wisdom in 2006: The Unbundled Awakening. Here are the core paragraphs:

It's a very dangerous time for any broadcaster to be making assumptions based on history.

But the biggest problem for broadcasters is their crumbling core competency and the shrinking value propositions they offer to both viewers and advertisers. The natural ability of the Internet to distribute unbundled media is disrupting broadcasting's basic business, and that will accelerate in 2006. Most broadcast companies have responded to the disruption by forcing their mass marketing value propositions into the situation (it's what they know), but most are finding that such a response — while creating some revenue opportunities doesn't produce the kind of scale necessary to make up for the kinds of losses to their core business that they're facing.

The irony is that the same disruptions that are eating away at the business of broadcasting offer tremendous opportunities, if broadcasters could simply rise above defending their old turf and play a little offense in the new stadium. Local media companies have a tremendous advantage over outside threats like Google and Yahoo!, because they're already firmly established in the local advertising community. It's time we used that connection and reputation to lead a boom in online local advertising. Most of the ad experts are projecting that online advertising will jump to a $33 billion market by 2010, and researcher Gordon Borrell predicts much of that growth will be local.

I believe history will look back at 2006 as the year of an unbundled awakening in the media world, ushering in an era of creativity the likes of which we've not witnessed in recent history, especially in the advertising community. Unbundled media is clearly what people want, and when that kind of energy bubbles up from the bottom, media companies of all sorts have no choice but to respond. This is currently happening in the worlds of entertainment, education and information and one day will be realized in every institution of our culture.

Beyond what is happening in media itself is the unbundled awakening that's taking place in our homes, schools, and offices. The Pew Internet & American Life Project reported earlier this year that half of all teens in this country — and 57% of those who use the internet — have created a blog or webpage, posted original artwork, photography, stories or videos online or remixed online content into their own new creations. This awakening of creativity among our youth — and their ability to do something with it — is the essence of what's known as Web 2.0. We've moved past the early adopter stage with young people, and that will continue to flourish next year.

"Unbundling" is a good label for the breaking apart of both the goods and the mechanisms of the intermediation business that includes commercial broadcasting. I think now we need to take a closer look at what's actually happening with the bundling that "bubbles up from the bottom", as Terry says two paragraphs up.

Bundling isn't just want people "want". It's what they do all the time here, at the "bottom" that isn't.

I'm bundling Terry right now. I'm mashing him up with my own thinking and that of countless others who have influenced both of us.

We've always done this, of course. Human thought is a constant recombination of others' thought-DNA. We recombine knowledge and thought through conversation, in both the original and the metaphorically leveraged senses of the word.

For seventeen years, I've been bundling Reese Jones, the former Berkeley brain researcher who co-founded the Berkeley Macintosh Users Group, and then founded Farallon Computing, which helped explode Macintosh sales by making it possible to network Macs (and, for that matter, PCs) of any number, through plain old phone wiring (rather than Apple's own proprietary and expensive wiring).

I was an outside guy brought in to help Farallon with PR and marketing. With me I towed a raft of my own writing about groupware and how groups work together and stuff like that. Reese read it all with interest, then dismissed it.

Conversation, he explained, was the fundamental way human beings, and human societies, work together. We are conversing creatures. Our brains are built for conversation. Consider, he said, our inability to attend with full comprehension to more than one source of information at a time — usually (and originally) another human being. Short-term memory, he said, was a decay of remembered specifics that forces us to retain meaning once verbatim streams of words are forgotten (seven seconds or so beyond the moments they are spoken). Nothing could be more productively human than paying singular attention to what another person is saying, even while forming our own meaningful responses. And what could be more social than the combining and recombining of original and re-usable thoughts and ideas, through countless conversations between pairs of individuals? Even when those pairs are formed by books, lectures, videos and broadcasts.

Even when it appears that the flow of information is top-down, the relationship is still one-to-one, Reese told me, because attention itself is unavoidably singular. Right now, for example, it's you and me. Yet I'm useless to you if you can't re-use, in your own way, what I'm saying. And what Reese and others have said to inform me. in the past.

It was because of Reese, I just realized, Tim O'Reilly and I could reach the conclusion, in the midst of a conversation, that "information" is not only derived from the verb to form , but that authority is the right we grant others to form us, and that therefore "we are all authors of each other".

Conversation, Reese explained, is why the technology of telephony preceded personal computing by nearly a century, and why personal computing would be re-absorbed somehow into telephony. Conversation, served so efficiently by telephony, served as base molecular structure (in the sense of what individuals do with other individuals) for whatever the Net would become. When asked about Farallon's mission, Reese replied, "software for telephones".

As a compbination of three words, "markets are conversations" began with me. But as an idea it began with both Reese and myself, snowballed through the Cluetrain co-authors, then out to the world, where it continues to snowball — or to bundle and rebundle — as we talk and write and blog about it.

Now think about code, and the ideas behind sharing code, and the snowballish way good code grows and evolves to become as productive and useful as possible. Seems to me the GPL is an expression of the interest those of us who write "bundle-able" code have in the continued bundle-ability of that code. It's an explicit, rather than an implied, understanding about the constructive nature and purposes of the code itself.

Dare I say "code is conversation"?

I'm teasing here, but only a bit. I have a larger points to make, about markets. Here goes:

First, free markets naturally involve the bundling and rebundling of other people's thoughts and ideas.

Second, in free markets production has more original value than consumption, because anybody is in a position to produce. And to reproduce. And the threshold of both is very low.

Third, the Internet enlarges every market category it supports by facilitating not only the original sharing of ideas, but the bundling and rebundling of those ideas by others.

Fourth, markets supported by the Internet expand value through the because effect, rather than the with effect. For example, far more money will be made because of the Internet than with the Internet. More money will be made because of Linux than with Linux. (Just ask IBM.) More money will be made because of blogging than with blogging.

All these points are snowballs that rolled from my observations, over the last ten years, of free software and open source development. What I saw was the demand side supplying itself.

And what we saw first with programmers we will eventually see with everybody who operates in the connected world.

Now, back to television.

A couple nights ago I watched the 11pm news on our local station (KEYT/3) here in Santa Barbara. I'd guess about half the time was taken up by advertising, and that about 2/3 or 3/4 (perhaps more) of the advertising was for cars. What will happen, I wondered, when Toyota does the math, realizes how inefficient local TV advertising is, and drops its dealer advertising co-op program? Is this not inevitable?

Why don't we have better ways for sellers and buyers to inform each other? Terry puts the onus on advertisers, who are on the supply side; but why not equip demand to notify markets about what it desires? Why should I not be able to publish, selectively, and in a private yet usefully exposed way, that I would like to rent a 4+ bedroom house on Younameit Beach for the last week in April? Why should I have to go hunting among sellers for the same thing, ignoring all the promotional crap that goes with the seller-controlled nonconversation we call marketing?

These questions are why I've been obsessing for years about Identity, by the way.

Thanks to my familiarity with the free software and open source communities, I believe the need for more efficient networked markets will call forth the right code for the job. And the right thinking to shape that code. And plenty of money for the people whose businesses depend on that code. And plenty of money for the programmers who write the code in the first place.

I also believe that the living social ecosystem we call the marketplace will grow on what we're calling the Live Web. (Which I've written about in Linux Jounral here and here; and spoke about in this keynote last week )

But before that happens, we have to finish shedding the idea that a free market is "your choice of silo". This is a supply-controlled assumption that developed during the Industrial Age, when the economics of scale almost exclusively favored large producers. In today's networked markets, anybody can originate, bundle, bubble, sell, resell or whatever. The value chain is being replaced by the value constellation, where any of us are free to be stars.

The value constellation idea isn't mine, by the way. I got it from Richard Normann and Rafael Ramirez, in their essay "From Value Chain to Value Constellation", in the July-August 1993 issue of Harvard Business Review. I kept a copy of that issue laying around for years. A minute ago, I looked it up on the Web, and found that Normann and Ramirez had expanded it into a book. I just bought the book on Amazon, a company made possible, and efficient, because of Linux, free software, open source, and the Net.

As I said in my Suitwatch this morning (it will be up on Linux Journal tomorrow), I want to build a better understanding of all this stuff, in 2006. In addition to writing about it in Linux Journal here and other usual places (which I plan to do for the duration), what do I want to do? How? Where? With whom? Should I work on a book? A conference? Should I engage more academics, lawyers, programmers or all the above?

I have some thoughts and plans in mind, but I'm not done making them yet. Meanwhile, I've got some bundles growing here. And I plan to have them in some kind of useful shape before the end of next week. Stay tuned.