Tim Oren's Due Diligence

Dubious Distinction: The Associated Press

What is the AP? With even some of its member companies tabbing it as a faceless large news organization, you could easily miss the historic and economic background to this past week's kerfuffle. (I've you've been signed off the nets during that period, the AP attempted a number of DMCA takedown orders against the 'Drudge Retort' website, based upon short excerpts, headlines and occasionally naked links to some its stories. The excerpts, BTW, were shorter than those the above-linked Knoxville News blog post, written by a professional journalist, made of the New York Times article it cited as primary material. Well within fair use, IOW.)

The Associated Press is actually a cooperative, an corporate organization formed by old media companies as far back as 1846. Its main function has always been to collect and sometimes edit stories written by reporters at its member companies, and circulate them for possible publication by other member organizations. Back in the day, it was a way of economizing on costs like wire charges for international coverage. It's also a way for papers to get stories on distant local events that reach national prominence; the chances of your local rag having a reporter in (say) Des Moines when the levee goes down aren't too high - their reportage is almost certainly a locally written story carried by, and perhaps edited by the AP.

Put another way, the AP is an aggregation and distribution business. Of information. It's one of those 'infomediaries' that were supposed to have died a decade ago, with a dagger labeled 'Internet' stuck into the heart. Why is it still alive to annoy the blogosphere?

Part of the reason is that the AP's customers are also its owners. Take a look at the board of directors list. It would be hard to come up with better definition by example of 'vested interest'. These are not people motivated to change the AP's way of business until they are forced. That force has now arrived.

Not many posts after journalism insider Jeff Jarvis' screed against the AP, you will find the latest recital of bad financials from the newspaper biz. Among other discouraging numbers, a 14% quarterly fall in advertising revenue. And the AP both buys from, and sells to, that industry. They are getting it coming and going.

While the AP doesn't publish its financials, you can well imagine that they are pretty grim. And the 'net, a main driver of the newspapers' debacle, is likely even worse for the AP. While analysis suggest that online ad revenue will never fully replace print for the newspapers, the AP generally gets no revenue at all from Internet ads carried on sites that republish its stories. While Eric Schmidt may dubiously think Google has some moral duty to bail out display ad venues, it's hard to see how that would equate to making life better for the AP. After all, it's just redistributing stories written by reporters at its member newspapers. Google might be forgiven for thinking it's doing at least as good a job at that itself.

No matter how insulated the business and board, reality will eventually pay a call. Having been involved with boards full of 'strategic partners' before, I can attest to how much fun they can be when the business model evaporates and the owners' own strategies are all to seek. Rather than spending his time bleating about the imagined impact of 9/11 on the suffering press, the AP CEO and President now gets to work on the more mundane issue of how to stop the walls from coming in. Perhaps leading to certain desperation mode attempts to regain control over a distribution choke point that has long since evaporated, rather than figuring out how his organization could add some value. Links, huh, what a concept!. Maybe they should try it.

Nobody gets their own set of facts, and nobody gets their own set of laws. Having gotten squishy on the former, the AP now seems to be forgetting the latter. For legal overreach and brand destruction in the aid of staying in the buggy whip business, the AP is awarded this blog's Dubious Distinction award for business folly.

Update: Here's another worthy take along similar lines. Update 2: And more.

Further update: Jeff Jarvis makes essentially the same points, with more sympathy and less snark.

Dubious Distinction: Comcast

Let the record show that I am not a fan of most so-called 'network neutrality' legislation. Tiers of service date back to the oldest profession, and the government shouldn't generally be screwing around with private contract. But while that oldest profession is inherently WYSIWYG, most people have to take the delivery of network services on faith. Few users have the sophistication to analyze IP traffic and find out if they really are getting best efforts service - they need some trust in the good intent of the provider.

Comcast has apparently been caught red-handed, violating that assumption of trust, by disabling network sessions that can be identified as coming from the BitTorrent peer-to-peer application. This apparently also affects Gnutella, another P2P app, as well as IBM's Lotus Notes business collaboration suite. (One presumes the latter is through incompetence.) After a certain amount of shucking and jiving, Comcast seems to have admitted "Yeah, we kinda sorta do that".

I do have some sympathy for Comcast's plight, having managed an ISP back in the mid-90s. Peer to peer and other high duty cycle applications can mess up your assumptions for provisioning both neighborhood and head-end bandwidth and routing resources. With that occurring at the same time as networked video is gaining wide adoption, I'm sure the life of an MSO or LEC IP network planner is an interesting one these days. 'Traffic shaping and grooming' is part of the toolkit to make sure that the higher duty cycle and bandwidth users don't squeeze out the less demanding user who just wants a web page to load, or to run a Skype session. (Disclosure: We have an investment in a company, Bay Microsystems, whose products can be used to construct packet filtering and traffic shaping systems.)

However, Comcast has crossed the line in two ways. First by selectively impeding certain types of traffic, without disclosing the fact to the customers. Whatever boneheaded logic led to this, any perceived PR benefits from concealment have now blown up in its face. Customers with no interest in hosting a Torrent are going to read the stories and wonder if their applications are being treated fairly or not. Slowdowns natural to a shared neighborhood network will lead to new suspicions. Network neutrality regulation and legislation that have been languishing may get new momentum.

Secondly, if the traffic analysis is correct, Comcast has stepped over a technical line in a way that may have legal ramifications: All IP networks dump data packets when they become congested. That's how the Internet works, and any application level protocol running on it is set up to deal with packet loss. But Comcast has been going further, acting as a 'man in the middle' and forging packets that tell both ends of a connection to drop the session. That's deliberate sabotage of the user's system and intent.

The two faults add up to a PR bloody nose, and could skate close to the edge of false advertising and outright fraud. Ironically, session trashing might also invoke a DMCA violation. IANAL, but I expect some of those who are will be looking at the implications, including class action. This could all have been avoided by a full disclosure.

For boneheadedness beyond the call of duty, I hereby bestow on Comcast this blog's Dubious Distinction award for business idiocy. Hey, it's Comcastic!

(Update: Since I already gave this coveted award to Comcast once before, perhaps this time just gives them a poison oak leaf cluster to add to their decorations. The older post makes interesting reading - their corporate culture seems to be intact, let's say.)

(Update 2: Yup, here come the lawyers, right on cue - the post also contains a more detailed analysis of the packet forging technique.)

(Update 3: And the congresscritters are close behind them.)

Dubious Distinction: Dell

It's been quite a while since I've handed out one of my awards for business idiocy. Not only is this one well deserved, it's alliterative!

Michael Dell became a famous business case by understanding the commoditization of the PC, the decay of the retail channel, and building a competitive edge around a ruthlessly optimized supply chain and logistics system, and selling direct to the users. Still true. But the model requires customers, and unless Dell (the company) is deliberately abandoning the consumer market, some of them are going to be individuals, families, and small businesses without inhouse tech support to do things like diagnose or rebuild splattered hard drives, misconfigured drivers and the like, which seem to leave their final assembly point a little too often for comfort.

Bringing us to the proximate cause for this post, the travails of my blogdaddy, Jeff Jarvis, in getting Delll to live up to a service plan he bought on a recently purchased machine. Here's the whole saga, a true CRM nightmare of the blind leading the clueless through an twisty maze of canned scripts, all the way up to the senior spokesperson level.

That's bad enough. There's a bit of insanity somewhere in every large business, and these days you can't know (without having both a clue and a datamining operation) that the voice on the phone also commands a megaphone of its own. But Jeff's dual position in the old and new media worlds led to followup in both of those worlds, from the Houston Chron tracking a company flak's bafflegab rendition of "we ignore blogs", and the "Social Customer" blog discovering Dell is in the process of closing its customer support forums, apparently due to the 'non-technical issues' (take a guess) that are cropping up there. Rather than assuming every customer has a voice, let's just pretend none of them can speak.

For its ability to not only create a stinker of a problem, but to follow up with the corporate equivalent of sticking its hands over its ears and singing "La, la, la, la, I can't hear you...", this blog's Dubious Distinction award is hereby bestowed on Dell Computer.

On the Road Again...

As mentioned a few weeks back, I'm about to take our new rig on the road for a couple of weeks of vacation. The tech and biz blogging neurons will be standing down for some R&R; travel blogging may occur if bandwidth and attitude permit. I'll be back with more of the usual on 10/12 at the latest.

While I'm missing, let me commend you to Winds of Change, where I've recently become a contributor. You can start with this magisterial post by Armed Liberal on the nature of terror.

As my last act, I'm going to expand the scope of my Dubious Distinction award to CBS News to Viacom generally. While they have finally acknowledged malfeasance in the specific matter of the forged memos, they seem to be in nothing more than incremental damage control mode on the larger implications. As someone said - for those of us of age and memory - it's the "modified limited hang out option" over again. That's likely to be as effective this time as last. CBS News is looking more and more like a party organ media outlet. If they blundered into that position, then Sumner Redstone is asleep at the switch. If they walked there deliberately, it's a reprehensible violation of trust by a network that claims access to a large chunk of the public airwaves.

I'm outta here....

Dubious Distinction: CBS News

OK, this is dangerously near flogging a moribund equine, but this blog's Dubious Distinction award for business idiocy is hereby conferred on CBS News, for destruction of brand equity.

Before yesterday's statements and broadcasts, there was a case of willful neglect of due diligence on the document set. After yesterday, there's aprima facie case that CBS has been taking its conclusion as a premise all along. There's a name for that, and it isn't 'journalism' - it starts with a 'p'. It's hard to think of a better way of destroying the accumulated trust going all the way back to Edward R. Murrow, and the impact has been immediate.

Caveats: The transformation now engulfing legacy media may be creating niches for 'ideological specialists'. Indeed, it's telling that the viewership stats linked above show a rise in San Francisco only. But undertaking such a move ad hoc without some understanding of the splash onto the overall CBS brand and Viacom generally is madness. Unless Sumner Redstone engineered an ideological shift deliberately (and that would be a story!), he and the Viacom board must be livid. Another week will tell whether Rather and CBS News have now become 'coyote ugly.' Then I may have to revisit the scope of the DD award.

By seeming coincidence, this all popped up while I've been playing with an extended post regarding an economics driven look at the impact of citizens' media on the legacy media. Trust was always at the core of the analysis; the issue just become rather poignant. The piece will be up by tomorrow AM.

Dubious Distinction: The Athens Olympics

Don't get me wrong. I'm having fun watching. Shot put in the original stadium - cool. Cheered the Iraqi soccer team. Watched the gymnasts' impossible moves. Give you all joy of them.

But people, just because you're in the land of the ancients doesn't mean you can turn back the Internet clock. I'm referring, of course, to the Athens04 site's ludicrous linking policy. It's 2004 - says so right here in your URL. Most people have caught on that links are a surrogate measure for attention, something you all could use just now, capice? You would want to encourage that, rather than discourage, one might think. Not to speak of the ludicrous idea of extraterritorial enforcement of your cute little 'link wrap' contract. One further clue: Beware of Americans bearing old media attorneys. I will now turn you over to Ken Layne for further taunting.

Some fine day - may it come soon - the IOC is going to realize their best bet is to get multiple webcams per venue, fire them up and let them run the whole time. Put the official media in the position of having actually add value to that raw feed, rather than just being another MSM choke point. Let us see all of any event we care about, even (gasp!) watch athletes who aren't from our home country, or events we aren't likely to win. Why, that might actually widen up the audience, getting more people interested enough to buy tickets and show up next time. But that would be wrong.

The Dubious Distinction award, for living in the last Internet century, goes to the International Olympic Committee and the Athens 2004 organizing committee.

Hat tip: Michael Totten for the Layne link.

Update: Oh, yeah, and don't even think of blogging the Olympics if you're a competitor. So now they'll Google you as well as run drug tests. Sic their media attorneys on you as well as pull your medal. I suppose this gets attention for the IOC, but not the right kind. So let's give them a Poison Oak leaf cluster to go with their Dubious Distinction medal - er, award.

Dubious Distinction: The New York Times

This is about as smart as sticking a 'kick me' sign on your own back. For those late to the story, a political blog called The National Debate put up a 'corrections' page mocking the NYT's apparent policy of not correcting factual inaccuracies in its editorial columnists' writings. Argueably, the bogus page imitated the NYT's trade dress, which might or might not fall under fair use guidelines as a parody. What cannot be argued is the folly of management in threatening the author with dire legal consequences. Shortly, the offending page had metastasized all over the blogosphere, and now a pro bono attorney has stepped forward to defend the original blogger.

Maybe the Times' management should have had a chat with some of the flacks who pitch them every day before they embarked on this course. After Jayson Blair, et. al., their credibility is already low. This little flap is allowing mockery of their inaccuracy to turn into a legitimate big vs. little media story. And the next wanna-be Times mocker knows just where to stick in the needle to get a reaction that might turn into a national story.

This blog hereby presents its Dubious Distinction award for business idiocy to the management and legal staff of the former Newspaper of Record.

Update: The NYT has backed down. Glenn Reynolds linked the item twenty minutes after this post went up. The award stands, though. I'll retract it when and if the Times actually bothers to run its own corrections.

Dubious Distinction: Comcast

Dubious Distinction: Comcast

As pretty much anyone in the Bay Area knows, Comcast labels itself as a 'different kind of cable company.' And it needs to try to make that distinction, since it's following in the wake of (and using the same plant as) TCI's legendary low-ball infrastructure build-out, and AT&T's refusal to take responsibility for pretty much anything that happened on their system. Cable has been bleeding customers for years around here - every home on our little cul de sac has a dish.

Considering the nature of Silicon Valley, naturally Comcast has been promoting its cable modem service heavily. Unfortunately, someone forgot to give their ISP marketing and legal crew a clue. Via the Prof, we find that Comcast is cutting off customers for overusing their 'unlimited' service. There's nothing necessarily wrong with defining and charging for different tiers of service - that's a competitive issue - but there's definitely something wrong with telling someone they're buying one thing, and then delivering another, particularly when the change in terms is not even defined. Why, one might even think that instead of actually installing the equipment necessary to implement real tiered service, that they were instead resorting to FUD and misrepresentation!

Comcast has a serious fight on its hand to control customer churn in the limping systems they picked up from AT&T/TCI, and to make some inrounds on those customers lost over the years to satellite. Of course, Comcast's business extends well beyond the Bay Area, but that's the point: all of their current and potential customers can now talk to each other. Pull something bogus in one territory, and the word will quickly spread, undermining the marketing position everywhere.

For bogus implementation and marketing myopia above and beyond the call of duty, Comcast is awarded Due Diligence's mark of Dubious Distinction.

Dubious Distinctions

Dubious Distinctions

In 2003, this blog gave out a number of Business Idiocy of the Week awards, on an occasional basis, as a recognition to enterprises that seem to aspire to the corporate form of Darwin Award.

With the New Year, it's time to formalize this custom. To this end, and for the furtherence of alliteration, the Due Diligence idiocy award will henceforth be known as the Dubious Distinction, and when I get around to it there will be a sidebar link to the rogue's gallery of winners.

To get 2004 off to a good start, the first Dubious Distinction of the year, for continuing efforts in operating a business plan which is largely illegal, goes to fax.com. This is occasioned by the FCC levying a $5.4m fine against the company for repeated and flagrant violations of junk fax/do-not-fax regulations. Yes, before there were spammers, there was fax.com, and they are still at it, as I can attest. Pacifica's inbound fax is a known good number, and we get ads for fly-by-night insurance and refis, with the characteristic fax.com footer format. After a few, one of us gets annoyed enough to call the remove number, and they stop for a while - and then start again. This has happened enough times that it has clearly moved from incompetence to 'enemy action'. At $11,000 a pop - the fine levied by the FCC for flagrant violations - each of these could be a significant step toward bankrupting these bozos, so maybe I'll start saving them...

Update: Sounds like the fax.com clowns need a RICO investigation more than fines which they ignore.

Diebold wins again

Diebold wins again

Since there's nothing in the rules for the Business Idiocy of the Week award that prevents repeat winning, it once again goes to Diebold, maker of fine dubious electronic voting machines. Following their first victory, this enterprise maintained winning ways in the quest for this coveted award by peddling unaudited software in California, thus coming to the edge of losing sales rights in the most lucrative state. Further, they were caught red-handed planning to pad prices on paper output features, for those jurisdictions already locked into their products but deciding they might just want an audit trail. Well done!