Sunday, May 15, 2011

The Latest from TechCrunch

The Latest from TechCrunch

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The Illusion Of Social Networks

Posted: 15 May 2011 07:21 AM PDT

Editor's note: Guest contributor Semil Shah is an entrepreneur interested in digital media, consumer internet, and social networks. He is based in Palo Alto and you can follow him on twitter @semilshah.

The world is full of illusions. Magicians use a cascade of mirrors, smoke, and misdirection to trick their audiences into believing the unbelievable. In the process, they mystify them, capturing their attention. Whether it's David Copperfield cutting his lovely assistants in half with a saw, or David Blaine wowing street audiences by levitating himself, these types of artists rely on illusions to thrill, captivate, and influence in their followers.

None of these magicians, however, hold a candle to the illusions provided by the characters who dance on television channels. For decades, the masses have been planted in front of the tube, waiting for packaged content to tickle their eyeballs and smooth the edges of modern life. Whether it’s the stars of a soap opera, anchors on political news networks, or preachers channeling the wishes of higher powers, TV provides the possibility of distribution according to audience segments in return for huge sums of advertising revenues.

Even criminals and mass murders try to create these illusions. In the wake of Osama bin Laden's death, one of the most fascinating kernels of information to emerge from the raid on his compound is the video footage of the world's most notorious terrorist watching himself on television replay. These particular clips are disarming because while the world painfully knows that bin Laden is a master communicator, we have yet to see how he makes his particular brand of sausage. There are parts of bin Laden's image that now, in retrospect, seem to have been carefully crafted. He wasn't hiding in the caves of Tora Bora, and his age showed in his graying beard, which he dyed black for cameras.

And now we have the Internet, especially social networks, where the multiple forms of content shared by people and brands form signals that amplify in even greater ways. Today, those who participate in various social networks online also engage in a form of magic, using illusions to broadcast signals to their audiences. Instead of studios producing content on television, the willing participants play the part of studio and producer, using a variety of mechanisms to interact with audiences. We share check-ins from concerts and sporting events, and send Instagrams to make sure others know how yummy weekend brunch looks. We are in the age of the ubiquitous status updates, constantly sending ambient signals, where our audience has only two choices: to form some loosely-tiled mosaic of who we are—or to tune out entirely.

Surely, the benefits of participation are well-documented, but there are costs, too. While information is being channeled through these social networks, the fact remains the same illusions created by television have mutated into a stronger strain within social media. While more interesting information gets to us faster, the downside is that the new channels—and, we are all the channels—sometimes unknowingly create "little white illusions" that, over time, compound into something that may or may not reflect real life.

Well, life is full of illusions. And on social networks, those illusions are amplified. Many who broadcast are not who they appear to be. I don't say this negatively—rather, this is the magic of social networks. All of the tools we have to update our status, to share pictures, to broadcast location, and any other signal empower us all to express ourselves online and (hopefully) eventually help us end up where we'd like to be.

The dark underbelly, however, is that much of the content we consume through these networks are highly subject to illusion. We may get the impression that folks are more famous, powerful, influential, or informed than they really are, or funnier or nicer than they really are. Social networks naturally concentrate and amplify particular voices, no matter whether those voices are right or wrong. We've all at one time at least fallen prey to these false signals, myself included, further fueling the engine of social networks.

I have recently met more people who tend to only inform themselves by what they read online, particularly Twitter, putting real-time information ahead of real-life information and basic common sense. I see folks who assume that because they are followed by someone with influence or because they engage in light @reply banter with specific people that they have the inside track on access, and that eventually that access could convert to something real. Sure, this can and does happen once in a while, but the reality is that most of the time, it does not.

We are all following someone we want access to. It all has a cumulative effect, and we are all both pushers and addicts. The combination of blogs, tweets, updates, mentions, and @replies oftentimes act as mirrors and smokescreens, potentially tricking us into believing that what we see on social networks may truly be what actually occurs in real life. Enjoy the show.

Image by Alex Clark

Access To iPad App Flipboard Compromised In China

Posted: 15 May 2011 02:30 AM PDT

As of today certain aspects of the Flipboard experience have been blocked for Chinese users, at the very least access to Facebook and Twitter according to Flipboard CEO Mike McCue. While direct access to Facebook and Twitter is routinely blocked in China, the Flipboard app talked to its own US-based servers, which in turn talked to Twitter and Facebook so this block is particularly interesting.

“Lots of folks in China had been using us happily until now,” McCue said, “Guess we had unwittingly poked a hole in their wall which has now been shut down… Presumably unless we block Facebook and Twitter ourselves in China.” The iPad app is still available in the Chinese app store.

McCue tells me that it’s still unclear if you can access Google Reader, Instagram or Flickr from China and that we’ll know more in the morning about what exactly is going on.

While McCue says that a small percentage of the app’s users are Chinese, Chinese clones like Tencent’s ICare, MagSina and the NetEase Reader are quite popular. Flipboard itself recently raised $50 million on a $200 million valuation.

Says McCue on the clones, “They are complete replicas visually (though they are super slow performance wise),” begging the question, ”Do the Chinese censor US services to protect their regime or to protect their market?”

I’ll update this post when I hear back from McCue in the a.m.

Bradley K. Newman
@ @ @ whats the difference between China's regime and its market?

Wait, You’re Going to Pay Me to Watch Movies All Day? (TCTV)

Posted: 14 May 2011 07:31 PM PDT

Earlier today, I wrote about our brush with machetes, the chaotic world of Nigerian filmmaking, and a company called Iroko Partners that’s working on bringing order and YouTube distribution to Nollywood. It’s made stunning progress in the short four months it has been in business, and it’s barely scratched the surface of Nollywood demand.

Below is a video we shot with founder Jason Njoku. He describes the business in more detail, and the clip opens with some glimpses of the chaotic Alaba International Market where Nollywood movies are bought and sold.

Video below.

You Think Hollywood Is Rough? Welcome to the Chaos, Excitement and Danger of Nollywood

Posted: 14 May 2011 03:14 PM PDT

It was when they pulled out the machetes that I started to worry.

I’d seen men with machetes in Africa before, but they were rusty, practical tools used for clearing away brush by the side of the highway. These were long, shiny and housed in decorative sheaths, pulled out ostensibly so the men could sit down more comfortably, but done with a clear, understated flair. They were more like sultan swords than jungle tools.

The kicking in my six-month pregnant belly had gone eerily silent since we entered the vigilante court at Alaba. I reassured myself that I’d been through things like this before. The time I went to visit Brazilian entrepreneur Marco Gomes’ hometown in the crime-ridden slums of central Brazil, comforted only by his reassurance that “No foreigner has ever died in my hometown, because no foreigner has ever been to my hometown.” And the time I was driving along the boarder between Rwanda and the Democratic Republic of Congo and armed Rwandan guards stopped our car, wordlessly got in the backseat and hitched a ride for several miles. And then there was the time we were charged by a baboon.

Looking at those beady baboon eyes rushing towards me, I was instantly convinced I was losing an arm. Now, in this Nigerian “courtroom,” my husband was looking at the machetes having the same thought. I was just hoping they didn’t realize he’d slipped the camera’s memory card in his pocket. I tried to pat my stomach as apologetically as I could. Sorry, son. Welcome to life as my kid.

Sometimes I write provocative leads that aren’t quite what they seem. Like the time I said I was in a wheelchair getting a blood transfusion in Singapore. As the second graph explained, I was actually at a hospital-themed bar where you sit in wheelchairs and drink out of IV bags. My cocktail was called a “blood transfusion.”

But this time, I’m not being hyperbolic or clever. There’s no twist coming. My husband, our unborn child and I were actually sitting in a Nigerian vigilante court being tried for– as near as I could tell– taking photos and not respecting authority. The makeshift courthouse looked like a set of a Western. The judge was named “Bones.” The police? Well, there was a station not too far from here, but the police ceded Bones authority in Alaba. They didn’t what to get involved.

It could have been a scene in a movie. That irony wasn’t lost on us, because our accusers, the people speaking for us, and the judge, jury and — well, let’s just call them the guys with the machetes– were there to protect the interests of the rough-and-tumble world of the Nigerian filmmaking. They call it Nollywood.

Nollywood sprung up a few decades ago and is the second largest film industry in the world by volume. Producers churn out hundreds of movies a month, most shot on a shoe-string budget of about $15,000 per picture. We visited a set of a film called “The Stripers.” It reminded me of the photos in Larry Sultan’s book about low-frills porn sets, “The Valley,” sans sex and nudity of course.

The film– a romantic comedy where one of Nollywood’s hottest actresses turns a gay man straight– was shot in an empty suburban house rented for a few days with a crew of no more than ten. The assistant did the hair and makeup, and the producer did most everything else.

There are few theatrical releases in Nollywood. Most of these movies– which Nigerians consume as rabidly as Brazilians devour their telenovelas–  are seen on local TV stations and sold over DVDs. And these producers move fast: Last week we saw a movie on the market called “Dead at Last: Osama Bin Laden, Complete Season One: Life and Death.”

Like most industries in emerging markets, Nollywood is developing in a very different time than Hollywood or even Bollywood developed, and that alone means it’s developing in a very different way. On the plus side, cheap modern digital production tools have made it all possible. But rampant digital piracy means there’s no honeymoon period for producers to build an industry around protected copyrights. They produce content millions of people love, but most of these scrappy street producers are constantly operating on shoe-string budgets, lucky to break even on each film.

Alaba International Market is where the producers all have their store-fronts and distribution hubs. We met dozens of them inside a long, dark cave-like hallway where each producer operated out of a cell-sized office, filled with paper records, movie posters pasted over movie posters, and spindles of thousands of DVDs.

Some of these producers are highly-educated entrepreneurs following their passion the same way the best entrepreneurs in Silicon Valley have. We met one man named Ulzee, a Nollywood pioneer who decided to make movies after getting a science degree. (Pictured right.) His wife, trained as a lawyer, joined him along the seemingly crazy journey. His biggest hit was “Osuofia in London,” one of the first Nollywood films to get international attention. He shot it on location in London and it cost about $6,500 to make– a jaw-dropping investment for a Nollywood picture back in 2003. But it grossed more than $650,000.

Much like the 419 scam business, members of Nigeria’s 50 million-person unemployed class see the glamorous, seemingly easy money of Nollywood and have flooded into the business. Ulzee doesn’t respect many of them, saying they aren’t artists. They shoot once and release the same movie with four different covers just to make an extra buck. Of course, given the rampant piracy that’s destroyed their margins, you can understand why these producers are constantly trying to milk revenues out of the same film.

Here’s what makes the mood at the Alaba market so tense: Before you get to that hallway of producers peddling their movies in their cell-like offices, you walk past the open air markets where the software and DVD pirates have set up shop. Unlike Hollywood where the producers  reside in glamourous offices and pirates operate the the shadows and basements of the Internet, in Alaba the content creators and those destroying their hopes of revenues reside in the same place, selling the same product side-by-side. Fire-and-brimstone evangelical preachers set up keyboards and microphones in the middle of the street to save souls, only adding to the chaos. (Video of some of this in the next post.) So I could understand why Bones and his council occasionally need some machetes to keep the peace.

After 40 weeks in emerging countries, markets tend to blur together, but Alaba was unlike any place I’ve seen before. It was rawly and intensely Nigerian. Nigeria isn’t a culture based on pleasantries. A local saying painted on the backs of trucks sums it up: “No Paddy for Jungle,” or no one has friends in the jungle.

And Lagos is like a jungle. On Victoria Island– the ritzy section of Lagos– incomes are high even for a dual economy, thanks to oil and corruption. The most basic four-star hotels cost upwards of $500 a night, and the rich buy up rooms for a whole year or more, artificially constricting supply. Plots of land cost millions and a middle-of-the-road dinner for two without drinks can run $100 or more. But on the mainland in Lagos, you see the real Nigeria, the one where one-third of the population is unemployed. I talked to people furious by the corruption in the country, and what they felt was an unfair nepotism among the rich that made it almost impossible to climb the societal ladder.

Even the people I met in “easy money” businesses such as scamming and Nollywood toil entrepreneur’s hours to build their fortunes, constantly under pressure to outsmart the people out to kill their livelihoods– whether that’s law enforcement in the case of scammers or pirates in the case of Nollywood.

The tension is palpable. Stuck in traffic on the freeways, we saw fist-fights break out. Unlike some other developing countries where hawkers will smile and flatter Westerners in an attempt to sell them outrageously priced goods, Nigerians don’t play that game. They’re happy to sell you something if you show the cash. Otherwise, keep moving. They have little use for smiling, nodding and pandering. It’s not necessarily that there’s more anger, resentment or corruption in Nigeria than the rest of the emerging world; Nigerians just wear it on their sleeves.

Part of me loves that. The warm hospitality many people showed us– in both poor and rich areas of the city– was genuine. You know where you stand in these places; it’s all out in the open. But it makes walking through these markets intimidating. Look at a hawker and smile on the wrong day, and you’ll get screamed at just for being there. As one 419 scammer told me, “If I can’t even trust a man with the black flesh, why should I ever trust you?”

Our guide through Nollywood was an entrepreneur named Jason Njoku (seen on the right in this photo, haggling with producers). His parents are Nigerian, but he grew up in the United Kingdom. He became entranced with Nollywood a few years ago and was bored with London. So he moved here, stunning his family and friends. He started Iroko Partners to catalog this vast Nollywood inventory and give it a new global distribution life on the Web. It sounds like a recipe for a city boy to get fleeced, but so far that hasn’t been the case.

Njoku spent weeks trolling the Alaba markets introducing himself to producers and trying to explain to them how a YouTube channel could be an answer for revenues, not simply another channel for the pirates to steal their intellectual property. Once he sold a few of the bigger ones like Ulzee, word spread and more producers piled in. Just four months in to his business, Njoku has bought the online rights to 500 movies from 100 different one-man production houses. Last month his YouTube channel had 1.1 million uniques, 8 million streams, and is on pace to do more than $1 million in revenues this year from YouTube ads. Those numbers are massive for a Nigerian-based Web company, particularly in such a short time. Facebook has one of the largest user-bases here, feeling ubiquitous in the city. And yet it has less than three million users.

Njoku is playing a long-game. Most of his traffic is from outside Nigeria, because broadband penetration is still so low there. He’s paying more than he would have to for rights; about $3,000 per film, roughly what TV stations pay. That immediately returns about one-third of the production costs, a welcome surprise for a new medium that most of these producers had never really considered before. He provides a lot of other value-added services too, like creating an IMDB-equivalent for the messy Nollywood industry, and watching all movies to strip out things like the unauthorized use of a Beyonce song. In the future, he’s going to provide French subtitles so the movies can find new audiences in surrounding West African nations.

The checks have endeared Njoku to this rag-tag community of producers. One of Njoku’s several cell phones rings constantly with producers calling him to check on contracts, release dates and when they’re getting their next checks.

And that loyalty came in handy about the time a screaming mob broke out in Alaba over the presence of two unknown Americans taking pictures. I’m still not sure if they actually thought we were spying on their business or just wanted to extort us for cash. I’m still not sure whether it was the pirates, the producers or other rabble rousers who were the instigators. The ring leader appeared to be a terrifyingly huge, enraged, bald guy wearing a tight, white muscle shirt that said “SKULL SHIT” in big letters.

We barricaded ourselves in Ulzee’s cell-like office until it died down. We didn’t have another choice. We were half way down a long, dark hallway of offices, and there was no way out without going through the mob. Ulzee’s wife, who’d been lounging on some boxes when we arrived, sprung into action, explaining to the accusers that we were their guests and welcome to do what we wanted.

Eventually, the chaos died down, we promised not to take anymore pictures and we tried to leave. But as soon as we left the office, it erupted again and the crowd encircled us. The screaming intensified, echoing through the cave-like hallway. I tried to go back into Ulzee’s office, but the doors were being locked behind me by Bones’ crew. We were trapped, and the angry faces were circling in tighter, the screaming unintelligible as it echoed from wall-to-wall.

“Trust me, it’s better that this plays out here than on the street,” Njoku said. “Half of the people yelling are on our side.”

News of the uproar reached Bones, the man entrusted to keep the peace between producers, pirates and rare interlopers like ourselves. And that’s when we were summoned to his court. A phalanx of producers escorted us through the streets making sure no more harm came to us before we got there. “Don’t worry,” Njoku whispered. “As long as I have my checkbook, they still need me alive.”

We sat on one bench. The producers sat on the other. And that’s when Bones and the machete-men strolled in. After hearing all the  evidence, our insistence that we respected his authority, the producers vouching for us, and of course, some cash changed hands, the machetes stayed sheathed and they let us go.

Njoku didn’t break a sweat. Rather than convincing me he was trying to regulate something that couldn’t possibly be regulated, the whole episode made me more bullish on his company. It was clear how much the legitimate entrepreneurs in this community valued him, the depth of his relationships after just four months, and his innate understanding for navigating crisis in a terrifying situation.

If a businesss like this were being built in the West, there’d be few barriers to entry. Someone can always just pay higher license fees. But in a country like Nigeria, these sort of relationships, this kind of trust in a place where no one trusts anyone are more solid barriers to entry than patents.

The demand is there. The supply is there. Nollywood will emerge out of this chaos as something hugely profitable. There’s suspicion, competition and chaos surrounding the market, but that’s business in emerging markets. At the end of the day the producers weren’t unreasonable. They asked that next time Njoku bring guests, he give them a heads up and they’d provide protection. They’re justifiably suspicious because their industry is finally starting to take off, and they sit next to the people trying to eroding it every day. And my bet is that when Nollywood does take off, Njoku will be one of the guys to reap the benefits.

Of course, we couldn’t leave without pressing our luck and asking to take Bones & Co.’s picture. It’s below, and he’s on the bottom right. Note: Those smiles were nowhere to be seen before the cash changed hands.

(All photos © Geoffrey Ellis. The fact that you are seeing them is courtesy of Bones.)

Gary Vaynerchuk’s Next Wine Business: “Reverse Deal Of The Day” (TCTV)

Posted: 14 May 2011 12:30 PM PDT

In part III of Erick Schonfeld’s interview with the man of many interests, Gary Vaynerchuk, Gary discusses his daily-deal wine venture, Cinderalla Wine and throws props to similar deal delivering sites like Lot18. Overall, he says, on the need of these sites to strategically position themselves. “I think the acquisition of consumers might be on the verge of being mapped” says Vaynercuck, "the battlefield is going to be retention and lifetime value."

Vaynerchuk has been spending more time lately with Daily Grape, where he combines videos about wine with deals and reviews. He also owns the domain for Monthly Grape, which may become a future product. At about 5:30 into the interview, Gary dishes up another interesting bit of information. "I am thinking about launching a wine website where there is a deal and the crowd can dictate how cheap it can get." He calls it, "reverse deal of the day." The more people who sign up for the deal, the lower the price will get. Make sure to check it out.

In the final part of the conversation, Vaynerchuk tells Erick why he is no longer tethered to a 10-book contract deal, and says sales of his latest book, The Thank You Economy, are trending above his last book, Crush It (which ended up selling 190,000 copies). When asked if he is going to continue writing, Vaynerchuk says, “I think I need to shut the hell up.”

He explains below.

When Dinosaurs Ruled The Books

Posted: 14 May 2011 11:30 AM PDT

This is a really weird time to be a writer. Agents are becoming publishers; publishers have moved to “the agency model“; and some self-published authors are making millions—all because e-books are now outselling all other segments. Magazines and newspapers are dying, blogs and aggregators are thriving, and the line between them all is blurring. Last year Apple was their savior; now it’s damned as a destroyer.

So what’s a writer to do?

These days I’m mostly a developer, but I’ve had a clutch of novels (thrillers about globetrotting techies) published by traditional houses, and also experimented with just about every form of The New Publishing. My latest book (an epic urban fantasy about a squirrel) was Creative Commons-released and self-Kindle-published before I sold it to a publisher. I’ve scripted a Vertigo Comics graphic novel, and a free online comic for Plus I write here, and for magazines. And the news I bring from all my literary peregrinations is this:

…in the immortal words of William Goldman, nobody knows anything.
And that is awesome.

Sarah Weinman
I'll say it again: Hachette digital sales are at 22% of total, S&S at 18%, Random House around the same. Future is here, ladies & gents.

Goldman was talking about Hollywood in the 1970s, before Steven Spielberg singlehandedly ushered in the blockbuster era. Now, 70s music, fashion, politics, economics, and culture may have been a waste of time, but it was the greatest cinematic decade in history—precisely because nobody knew anything; so they had to experiment. Until, alas, the studios figured out how to please audiences with cookie-cutter three-act pablum, and the raging bulls and easy riders were tamed.

We are about to enter just such an era with books. Got a well-written story with no easily defined genre or obvious target market? Experimental form or content? Not long ago, that would have been a big problem. Nowadays, though—nobody knows anything. I’ve been calling the major publishers dinosaurs for some years now, but they are slowly being forced into greater willingness to experiment… and even if they don’t, you can always pull a Hocking and e-publish your book yourself. Sure, most such books will be crap, and most of the rest will fail to catch fire; but a few will become cult classics, and a tiny handful may turn into modern-day The Godfathers.

What’s a writer to do? Glory in this febrile, fecund chaos, is my answer. There has arguably never been a better time to write.

But unfortunately this is also, simultaneously, a bad time to be a reader. Because the dinosaurs still don’t get it. Ten years of object lessons from the music industry, and they still don’t get it. We have learned, painfully, that media consumers—be they listeners, watchers, or readers—want one of two things:

  • DRM-free works for a reasonable price
  • or, unlimited single-payment subscription to streaming/DRMed works

Give them either of those things, and they’ll happily pay. Look at iTunes. Look at Netflix. But give them neither, and they’ll pirate. So what are publishers doing?

  • Refusing to sell DRM-free books. My debut novel will be re-e-published by the Friday Project imprint of HarperCollins UK later this year; both its editor and I would like it to be published without DRM; and yet I doubt we will be able to make that happen.
  • crippling library e-books
  • and not offering anything even remotely like a subscription service.

Book piracy isn’t a big problem yet—though it’s certainly happening; too cheap to buy my book Blood Price? Here’s an illegally pirated edition—but I hereby predict that it’s only a matter of time before it and its concomitant scare tactics, moral panics, and ethical dilemmas raise their ugly heads in a big way. Sorry, readers. Maybe you should try writing instead. These days, that’s a lot more fun.

[Image: Geek and Poke]

Gillmor Gang 5.14.11 (TCTV)

Posted: 14 May 2011 09:42 AM PDT

The Gillmor Gang — Craig Burton, John Taschek, Kevin Marks, and Steve Gillmor — survived the week of Google AeeEeeI/OUuu, Facebook slimeware, and the embalmerization of Microsoft with nary a scratch. Robert Scoble briefly joined via the iPad and FaceTime from a layover at O’Hare, but he couldn’t hear us and we could hear him say so, over and over. Kinda like Facebook, who somehow got its Dumb on with a PR campaign designed to dredge up all the privacy stumbling of yore.

MG probably has it right that we will forget this by next week, but not if Google continues to wander around in the social desert. Larry Page doesn’t seem to have made the case for a change in leadership, as Google extends its lead in automated cars to automated houses. Google TV and Music continue to languish without support from any real vendors, while the New Yorker, Fortune, and a stampede of streaming players rush into the AIrPlay cloud. With Skype the new dongle for Windows and only Dave Winer thinking Apple will give up on its Flash boycott, the move toward iOS took several giant steps for mankind. If only we could hear any of this over Craig’s lawn doctors.

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