Western Union had its own corporate troubles; the financial predator Jay Gould was seeking to devour it as he had devoured the Erie a decade earlier. Beginning in the middle 1870s, Gould had launched a characteristically intricate scheme to conquer Western Union by first bringing it to its knees. While attacking Western Union’s stock price in a series of bear raids in which, according to a contemporary observer, he used “every trick and art of Stock Exchange manipulation,” he quietly established a rival telegraph network of his own, the Atlantic and Pacific Company. As a result, Western Union’s business declined by two million dollars in one year. When the combination of stock manipulation and competition had forced Western Union’s price down to rock bottom, Gould secretly bought up its stock, and at last, in 1881, emerged in control of Western Union and of the national telegraph business. During 1877-79, when Western Union was striving to take over the telephone business from Bell, Gould’s Byzantine maneuver was in full cry. Western Union, at that time, was controlled by another notorious financier not noted for gentleness or sensitivity, William H. Vanderbilt. In sum, Western Union was in the thick of battle between jungle titans. If Vanderbilt had been victorious over Bell as Gould eventually was over Vanderbilt, the telephone business would have fallen into the hands of the most sinister and devious of all the beasts in the post-Civil War financial jungle, and one hesitates to think what its subsequent development might have been.
What I find remarkable about this is passage is that it’s almost complete bereft of substance. I learned from this that Gould bought up Western Union stock and obtained a controlling interest in the company. And I know he did some things in the stock exchange the author doesn’t approve of. And I learn that the author really, really dislikes Gould, for reasons that aren’t clear.
It is, again, hard to imagine a modern writer writing like this. We still have bitter power struggles in corporate boardrooms. But it’s hard to imagine a serious journalist or historian writing about “the financial predator Larry Ellison, the most sinister and devious of all the beasts of the Silicon Valley financial jungle.” I suppose that might make business stories more entertaining (and come to think of it, Ellison might enjoy the resulting notoriety), but it would certainly be an abdication of the historian’s obligation to strive for objectivity.
The century of invention was at zenith. Robert Fulton’s first commercially successful steamboat dated from 1807, Mcihael Farady’s dynamo from 1831, Samuel F. B. Morse’s telegraph from 1835, the steam-driven electric generator from 1858; in 1875 Thomas A. Edison’s phonograph was three years ahead, his incandescent lamp four years, the skyscraper about a decade, the automobile and the airplane a generation or less. Behind them all was a persuasive idea; as Alfred North Whitehead would write, “The greatest invention of the nineteenth century was the method of invention.” Moreover, the economic rewards of invention under the U.S. patent system were great and well advertised; Bell and others like him knew well enough that the inventor and original backer of the telegraph had become millionaires, and his passion for secrecy about his experiments, along wit his early and intimate association with the Patent Office through Hubbard, suggest how well he realized he might be onto something commercially big. And he was urged on by both his philosophical background and the current social climate in America. The Scottish Calvinism of the nineteenth century made a primary virtue of material success achieved through hard work, and as an example Bell had his countryman Andrew Carnegie, twelve years his senior, who had come to the United States from Scotland in 1848 and by 1875 was already a millionaire in the process of consolidating the largest steel company in the world. As to the social climate, 1875 was the heyday in America of laissez-faire venture capitalism, when men had a kind of savage fury for fame and fortune that the more jaded twentieth century can scarcely conceive of.
I think that last sentence is fascinating, not so much for what it says about the 19th century as for what it says about the late 20th century. I find it hard to imagine someone writing that sentence today. We certainly don’t consider the pursuit of fame and fortune through invention passé these days.
Via The 463, you’ve gotta hand it to Consumer Electronics Association head Gary Shapiro. He’ll go to the most inhospitable climates and do the most disgusting things. To wit, “debating” free trade with Lou Dobbs on his show.
I spend a lot of time here pondering media industry business models, and I’m particularly interested in how traditional media providers are trying to reinvent their business models in response to new marketplace developments. One of the more interesting models I’ve been waiting to see rolled out is called “MagHound–The Magazine Lover’s Best Friend.” Time Inc. is the creator. I am a magazine lover–my house is practically wallpapered with magazines–and MagHound offers folks like me an intriguing business proposition: Instead of an annual subscription to a magazine, just pay MagHound a small monthly fee and then pick-and-choose which magazines you want each month. Essentially, it’s “Netflix for magazines,” as severalotherbloggers have already noted.
Unfortunately, the service has just been vaporware for the past few years. A website has been up and running for awhile now, but it doesn’t provide many details. There’s a small blurb about the service on the Time Inc. press releases website that says the service will launched in the second half of 2008 with over 200 magazines being offered. Pricing details were not offered there, but a recent Ad Agearticle said that the users will get 3 magazines for $4.95 a month, $7.95 a month for five, or $9.95 a month for seven. Again, people can mix and match online according to taste.
Will it work? I’m skeptical that 200 magazines will be enough to draw in a big enough audience to sustain the service. What makes Netflix so great is not just the convenience factor–no need to drive to video stores anymore–but also the huge selection they offer. Every once and awhile I will search for an obscure movie on Netflix and come up empty. But that’s fairly rare. Netflix still has a massive back catalog for movie buffs like me.
I’m going to be on the road a lot in March and April speaking at or attending some exciting technology-related events. I thought I’d just mention one today since they recently updated their speakers list.
The 2nd annual “Tech Policy Summit” is taking place March 26-28 at the Renaissance hotel in Hollywood. (Here’s a short overview / preview). The list of speakers is very impressive (and not just because I’m on it!) I’ll be speaking on a panel about online child safety issues that features MySpace chief security officer Hemanshu Nigam.
Alex Iskold has a very interesting post about “The Danger of Free” over at the Read Write Web blog. But I think he overstates the case a bit when he asks “is the concept of free taking us down a dangerous road?” He pretty much answers that question in the affirmative:
Marketers long ago figured out the attractiveness of free. For decades companies have been playing tricks using free to lure naive customers. But recently, our obsession with free has given rise to a new phenomenon – where the customer is never asked to pay. How? Because the business makes their money on advertising. Marketers are happy to pay for access to customers, who in turn love not having to pay. So the web plays the glorious role of middle man. Are we heading into dangerous territory? The paths that we are taking lead to confused customers at best; and monopolistic practices at worst. A culture where consumers think that increasingly more and more services should be free is not healthy.
I’m not so sure. I don’t want the digital generation to grow up thinking everything online is one big free-ride, but do they really think that? They still pay for plenty of stuff, after all. (I wish they’d be willing to pay a little something more than zero for copyrighted content, but that’s another story). Generally speaking, this generation is paying for plenty of gadgets and gizmos (think game consoles and games themselves, or iPhones and other mobile devices, or PCs, etc.)
But what’s so bad about them pushing for more and better services at a lower price, or even no price? They understand there are trade-offs to getting “free” goods or services just like previous generations did when the sat down in front of the boob-tube to watch “free” over-the-air television, or listen to broadcast radio in their cars. As Iskold correctly notes in the conclusion of his essay:
The bottom line is there is no free lunch. When you go on vacation and see a sign that says Free Lunch you know that the timeshare sales pitch is going to accompany it. The free on the web is not free either. We are receiving the services in exchange for our time and attention, in exchange for the opportunity to be advertised to.
Yeah, so what’s the problem again? Most of us understand the trade-offs and that there really are no perfectly free lunches. But the danger of Iskold treating “free” as a problem and going so far as to conclude (incorrectly, I might add) that it leads to “confused customers and monopolistic practices” is that it is just another invitation for government to come and muck things up. Think about it: the logical conclusion of Iskold’s argument is that the government should step in to protect consumers from free goods and services! We truly are a spoiled lot in America.
.. would free shipping for books be illegal! According to this IHT story, the French impose limits on price discounts for books in the form of restrictions on free shipping on book purchases. Amazon is apparently fighting the law. Good for them. Here’s the beginning of the story…
The online retailer Amazon.com said Monday that it would pay €1,000 a day in fines, rather than comply with a court ruling upholding French limits on price discounts for books. The company decided to pay the daily fine worth $1,500 rather than eliminate its offer of free shipping on book purchases, said Xavier Garambois, director of Amazon’s French subsidiary.
“We are determined to follow every avenue available to us to overturn this law,” Garambois said. The company appealed the ruling Friday. Jeff Bezos, founder and chief executive of the company, based in Seattle, was equally defiant in a weekend e-mail message to French customers. “As unbelievable as it appears, the free delivery of Amazon.fr is threatened,” he wrote in the French-language note. “France would be the only country in the world where the free delivery practiced by Amazon would be declared illegal,” the Bezos e-mail concluded, inviting consumers to sign an online petition. By Monday evening, more than 120,000 people had clicked in favor of maintaining free delivery.
A couple of corporations or trade associations have started blogs about technology policy that are worth checking out. Here’s a partially list of some of the ones I follow in my Bloglines account. I’m interested in hearing from readers about others that should be added to the list. Perhaps we should add a new section to our blogroll to help readers keep tabs on corporate tech blogs like these.
For someone who’s portrayed as an economic reformer that understands, for example, why a 35-hour workweek is a disastrous idea, French President Nicolas Sarkozy’s newly announce plan to tax Internet connections to subsidize television is quite shocking. From the IHT:
But France, like other countries around the world, is struggling to find ways to keep cultural industries, like video and music, afloat at a time when their traditional audiences are waning.
Sarkozy, proposing “a real cultural revolution” and stressing twice that his proposal was “unprecedented,” said: “I want us to profoundly review the requirements of public television and to consider a complete elimination of advertising on public channels.”
Instead, he said, those channels “could be financed by a tax on advertising revenues of private broadcasters and an infinitesimal tax on the revenues of new means of communication like Internet access or mobile telephony.”
Do I really have to spell out how this not only props up an antiquated technology that people seem not to want, but simultaneously stifles innovation of the technology that people do want? You know, maybe we should tax digital cameras to subsidize Kodak’s film technology.
Yesterday at the Consumer Electronics Show in Las Vegas, General Motors chief executive Rick Wagoner delivered an address on the future of automobiles and technology and hyped the concept of “autonomous driving.” “Autonomous driving means that someday you could do your e-mail, eat breakfast, do your makeup, and watch a video while commuting to work,” Wagoner said. “In other words, you could do all the things you do now while commuting to work but do them safely.”
Now don’t get me wrong, I’m no Luddite. Matter of fact, I’m obsessed with technology and A/V gadgets, and I have covered tech policy issues for a living a 3 different think tanks over the past 16 years. I love all things tech. But I love driving more. A lot more. I have been fanatical about my sports cars ever since I was a kid. From my first car–a 1979 “Smokey & the Bandit” Pontiac TransAm–to my 86 Mustang GT, to my 90 Nissan 300ZX Twin Turbo, my BMWs (two M3s and an 850i) all the way to my current 2005 Lotus Elise–I have been completely obsessed with cars and the joys of motoring throughout my life. And the idea that we’ll all one day soon be driving to work in the equivalent of personal subway cars makes me a little sad because it means the joy of driving might me lost in coming generations.
I wonder if my son will grow up with the same passion for motoring that I have, and that my dad had before me. (I’m certainly going to have something to say about it!) And I wonder if, a generation from now, “driver’s education” classes will consist of little more than downloading a user name and password for your computer-car.
On the upside, I suppose I could see the advantage of making the driving experience fully automated for all those idiots on the road who really do engage in risky behaviors in their cars, like “e-mail, eat[ing] breakfast, do[ing] your makeup, and watch[ing] a video while commuting to work,” as Wagoner suggests. I hate those SOBs. They give me nightmares because, at a minimum, I fear what they might do to my car when they are not looking at the road. Worse yet, I think of the danger they pose to pedestrians (like my kids). So, perhaps a Jetsons-mobile for these morons will be an effective way to reduce accidents and traffic fatalities.
But as for myself, I will pass on “autonomous driving,” thank you very much. I want to be fully in control of my motoring experience forever more. Especially behind the wheel of my beloved Lotus Elise!
The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology. Learn more about TLF →
For someone who’s portrayed as an economic reformer that 
The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology.