Innovation in Software

Ladies and gentlemen, I have something valuable to offer you: a big pot of bubbling time.

I’ll be frank with you about something nobody ever tells you about this industry when you get into it: every year during December and January work gets quiet for a bit. As a consequence, I get bored. Very, very bored.

I have spent the last few weeks banging the sales drum to try and stop the interminable coma that normally sets in, but once again everything looks quiet. That leaves me with a conundrum: what to do for the 8-10 very quiet weeks that are about to arrive.

I’ve thought through some options. There are some projects on the go based on Lean Product Development principles I’ve been ranting about, and that will occupy some of my time, but I thought I would propose an idea I’ve wanted to do for some time. It’s only now I feel it might actually come off.

In short, I’m prepared to offer 50% of my paid time to the local (Northern UK), digital sector community in return for a heavily discounted fee.

That time would be in addition to the time I already spend working on Fly The Coop, at events like GeekUp, replying to e-mails from people seeking advice on a whole host of matters, and generally championing the local sector.

With this additional time, I could take on one or more of a variety of projects:

• Do some research/development on behalf of the community
• Travel around as a kind of Northern “digital ambassador” promoting local firms and startups
• Work on some open-source software of particular benefit to the community
• Organise some community events
• Go and spend some extra time on circuit-rider activities helping local charities
• Write up some training materials or run workshops (with caveats: see below)
• Some of the ideas from the Geek Social Responsibility Page could be worked on more intensively
• Anything else you can think of by adding an idea in the special idea forum I’ve created for this

The appropriate skill set you can work with is:

• 15 years commercial software development experience
• About 3-4 years experience of providing training (I’m now a part-time lecturer to boot)
• A well-known community champion who could network on behalf of sponsors
• Ability to churn out research and reports, as well as pretty much any kind of written word you can imagine (heck, I’d try and write you a musical if you really wanted one)
• Lots of contacts across technology, finance, public sector and other fields

What’s more, I’m prepared to do a deal on costs: I will give my time to these projects for £200/day + VAT, which is considerably less than my clients pay for my time (ask them if you want). I feel I can afford to do this discount because it’s only half my time, and these projects will benefit the community at large and so I will be compensated for the loss of income via a warm feeling inside.

To summarise, I’m prepared to offer 30 days of my time over the next 3 months for a total of £6,000 + VAT for a community-orientated project or group of projects. This is for time only, so any material costs (such as travel, etc.) would need to be found too – I’ll work that angle once we get there.

Now, here’s where you get involved. I could just go and try and find one big sponsor and spend the next few months spending their money doing what they thought would be good for the community. I’d like to try something more creative and inclusive: I’d like to try and get 100 people or businesses to pledge £60 each (£69 including VAT) to these projects. In other words, I’d like to be the “employee” of you, a substantial number within the community for half my time for the next 3 months.

Some people/organisations may wish to pledge more, but I don’t feel that should give them more voting rights – the community will decide what the work consists of, not just a few with deeper pockets.

What do you get in return in addition to my time? Simply: your name/company name and logo or picture and link up as a sponsor; the ability to ask me to fetch you cups of tea from time to time; knowledge that your will is being done on behalf of the community; a subsequent warm, fuzzy glow inside that a small amount of your money has gone into benefiting the community.

This might seem a crazy idea, I know. If it doesn’t work, we’ll all have learned something I hope.

The first thing is for you to decide how you think I should spend that time, so:

1. Go to the Pledge ideas forum
2. Add ideas, or vote for other ideas
3. AND/OR fill in the pledge signup form so we can keep you updated as we move into the next stage
4. Once 100 people have expressed an interest and the ideas are getting more solid, I’ll set up a proper pledge at pledgebank.com and you can decide if you want to go ahead or not. We’ll contact you using the details below

If we don’t get the full pledge, we’ll revisit what the sticking point might be and take it from there. If there are several projects with lots of votes, time will be divided up between them, and you can always withdraw your pledge, it’s not a bind commitment (we’ll ask for cash down the line though).

There are however a few caveats:

1. I/Vagueware can’t do anything illegal, so please do not pledge if your idea is a bank robbery on behalf of GeekUp attendees.
2. Vagueware banks with the Co-operative Bank which places some ethical constraints on our business activities as a condition of us being able to bank with them (which I agree with). No arms trading or ideas involving animal testing, please.
3. Vagueware can’t go into breach of contract, so I can’t work on something competitive to an existing Vagueware client project, and some areas of training may be off-limits due to exclusivity guarantees. I don’t think this will be a problem, but if it is, I’ll say so as soon as the idea is mentioned
4. I get final say on whether I want to work on a project. If you suggest something I would loathe or is unworkable, I’ll let you know and you can choose to withdraw your pledge or not.

Feel free to discuss in the comments or elsewhere. You should soooo discuss this on Twitter and your own blog…

I await your thoughts and instructions. In the meantime some FAQs:

There is this project that needs some work, and…

OK, stop right there. Projects should ideally be discrete. If I need to go and convince somebody else to show me stuff or let me in behind the scenes because a mob has asked me to, this could get complex. We’ll need to negotiate. Ideally this should be completely blue-sky, blank, brand new projects. If you have an amazing idea that needs me to go in and “fix” something, I’ll look at it, but it’s probably – 90% of the time – going to be a bad, bad idea. I’m also not interested in helping people with projects they’ve messed up without a good reason – it causes political issues all over the place. If it’s a commercial project that needs fixing, it’s probably not even worth suggesting it.

Why would I trust you? Is this a ruse/scam or something?

Vagueware Ltd has been trading for nearly 4 years, and we have never had a problem with trust. I personally am well-known locally in parts of the tech/digital sector in the North of the UK, and I don’t want to trash my reputation. If you don’t know, you might have to take it on trust that I’m not going to run off with your cash, but to further put your mind at rest, you will be able to pay in instalments and get regular progress updates if you wish. Further, I can’t actually touch the cash until the work it corresponds to has been completed – to do so would basically be illegal (or at the very least would upset my accountant and other advisers).

Can I pledge less than £60? I’m skint but want to support this!

If lots of people pledge less, we need more people or the time that’s paid for has to come down to reflect that, but yes, email me and we’ll talk about it.

I am a multinational corporation who wishes to abuse this project for my own nefarious means. Where do I sign up?

If you want to pledge more that’s fine, but realise that one pledge is one vote in terms of how I spend my time, no matter how big the pledge is. If you’re cool with that, email me and let’s talk.

Can we just gang together and pay you to do something stupid?

No. I get final refusal on all project proposals, and will only do things that have a clear benefit to the community either in a broad sense or specifically the digital community. My time is scarce, please consider using it for a greater good.

Hey I’ve got a question you haven’t answered!

Leave it in the comments, and I’ll address it.

For the last two years, the digital sector has been a minor miracle in the wider economy. Whilst everybody else was fretting over bank collapses and credit crunches, the software sector has held firm.

Services companies (like Vagueware), have seen revenue growth as people seek efficiency gains, more streamlined processes supported by software and ways to leverage data in more creative ways. Product companies have ridden the wave of efficiency gains as people upgrade to compete. Together, we’re probably the only areas still recruiting and holding firm. The recession is something we’ve been sheltered from for the most part.

No more.

This morning Adobe – creators of the cornerstone software of many a web outfit in Photoshop, et al – announced they’re shedding 680 employees, a total of 9% of their workforce in order to “align costs with its 2010 operating plan and budget [...] and the realities of the business environment”.

So that’s 9% from one of the industry top dogs. Ouch. Maybe they were heavy, and it was time to restructure, but that’s one big kick in the stomach for a sector that’s been strong whilst all else flails.

Add into the mix EA’s 1500-job cull and things start to look grimmer still.

One phrase springs to mind: buckle up.

Source: Wikipedia

Somaliland is an autonomous region that is probably very much like your pre-conceived notions. Its 3.5 million people have struggled through warfare (many suffer post-traumatic stress disorder), the economy is “in early stages of development” and it has suffered greatly to gain recognised independence.

Few people know of its existence, fewer still care about its future. But we should. The Horn of Africa has seen great misery and human suffering over recent decades, and whilst it is a country that has many faults including widespread corruption, it is at least a better attempt at democratic, peaceful governance than anywhere else nearby.

Alas, the entire country is now at risk, thanks to a technical “solution” to a problem that never really was.

The current edition of Private Eye has in its column “From Our Own Correspondent” a story from Hargeisa that should make all involved ashamed of themselves. Emphasis throughout is mine:

Somalialand is the only place in the Horn of Africa that is democratic, stable and tolerant. Yet because of misplaced fears of the mushrooming of micro-states, we remain unrecognised by the international community, 18 years after declaring our independence. As a result the world keeps us at arm’s length and has instead forced on us consultants so greedy and inept that the very peace we now enjoy is under threat.

Elections in an impoverished, nomadic society are never easy, but our record of closely contested polls compares pretty well with our neighbours [Somalia, Ethiopia, et al]. Our friends faraway nevertheless thought that what we really needed was a state of the art biometric finger printing and facial recognition system to compile a voter’s roll. But an operation of such complexity – not to mention the $10m funding – could not possibly be trusted to us natives.

[...]

Alas, this model [...] has somewhat underperformed. Presidential elections have been postponed four times now and are 18 months late, and now we have the prospect of civil war as our politicians cannot agree on a way forward.”

It’s a stable country that has a reasonable record on electoral fraud prevention. Who then thought that an advanced biometric system was what this country needed?

I’ve left out from the Private Eye piece the criticisms of how NGO Interpeace are (mis-?) handling this, how Britain and the US are washing their hands of it, and the details of who is blaming who, but the error was there at the start: they placed the country’s future in a technology system that wasn’t needed. No doubt it was profitable for somebody.

This is a country with a GDP per head of $226 – the vast majority of the population are living on less than $1 per day. $10 million could have helped address woeful statistics such as only 25% of Somaliland adults are literate, and just 17% of children go to school. The funding could have even helped the 72% of the population without access to clean water get some new wells.

But it gets worse.

The nomadic culture that dominates Somaliland (any two citizens can work out how they are related by sharing their names and clans), is culturally sensitive to finger-printing. That of course makes a biometric database a fatally flawed model. The problem they are attempting to address – that people from neighbouring countries could vote – has been “solved” with a system that introduces new problems, that means not even all of those entitled to vote want to necessarily register.

To cap it all off, the people who went about delivering the system didn’t just do a bad job at implementation, but a thoroughly awful one. According to some sources on the ground:

The current voter list is neither accurate nor can it form the basis of a fair and transparent election. The only alternative is to go ahead with the election without voter lists.
Interpeace stated in a controversial and a very contradictory press release dated July 25, 2009:

“The Voter Registration system was seriously abused during its implementation, with widespread corruption and systematic fraud, resulting in the failure to record the fingerprints of more than half of all registrants. In other cases, over 150 registrations were made with a single fingerprint at the same registration centre, or through photographs instead of in person.”

Say what? There are voters walking around with 150 polling cards, and others who got registered without ever actually turning up? That sounds like the kind of thing the project was meant to protect against. But the systems can spot all that and deal with duplicate registrations, right? Well, according to another source close to the action:

IT Professionals advised the hardware of the server should be upgraded and software to be reexamined to be fit to handle database of 4 million voters in Somaliland. The testing phase must include plan for next 20 years according to population growth rate.

They called for upgrade of both hardware and Software including the operation system, which should have latest security and performance tuning patches. The hardware upgrade should include Hard Disk, RAM and the Processor. They highlighted that majority of the data captured in the server are not in text [but in] binary format like picture and fingerprint, which needs massive storage area. RAM and Processor helps the server to boot and run quickly particularly during filtering the duplicates. [sic throughout]

Failures then, include:

1. The whole project has several fatally flawed assumptions under-pinning core choices
2. The money could have been put to more effective use elsewhere
3. The software was designed incorrectly and therefore its output is unreliable and can’t be trusted
4. The server infrastructure is under-equipped and under-managed so now they need to add more storage, more memory and increase processing power (and by the sounds of it, whack on a few service pack upgrades).

These are all failures we see in IT projects on a regular basis. If this were a new ERM or accounts platform we’d sit around the board room table, gravely shake our heads, talk about “lessons learned”, and put it all down as a bad job. We’d move on, avoiding the compulsion to try and “fix it” due to our own notions of “sunk cost”. This is in essence, like thousands of IT projects that have happened over the last few decades.

Except in this case, the consequences are more serious: the country now faces civil war.

As you go about your daily work rolling out technology to your clients and customers, you may not think that your potential failure to deliver will result in human fatality. However it will have consequences.

Iit’s important we think carefully as our industry takes a greater hold on the workings of civilisation and shapes ever more its potential, about what our lust for automation and control can do to lives if we fail to live up to expectations. Somaliland is an extreme – but sobering – example.

As an early supporter of NO2ID and long-term member of Liberty, Amnesty International, and others, I have heard enough stories about technology tampering with elections that even as an advocate of the power of software to improve society, I am perfectly happy that my native democracy requires nothing more than pieces of paper and some pencils to conduct an election. I sincerely hope that somebody decides it’s good enough for Somaliland too, before it’s too late.

One of the problems I sometimes have when heading up a developer team is just getting the right kit in the right hands. I have a project now where I need to get an iPhone and a Blackberry 8900 Curve to a developer, but we’re blocked.

I speak to teams occasionally that need to get iPhones to developers but don’t want to take on contracts, nor do they want the devices locked to O2 for ever more (or even in the first place). You can buy them online, but at around £650 for each 32GB 3GS, kitting out at a team of just a few developers can be painfully expensive.

Sometimes I’ll see a team come together that needs a pile of development kit just for a couple of months to see a project through. I’ve even heard of one team buy half a dozen Mac Minis at the start of a project, bill it to the client, and then come the end of the project they had no use for the machines any more. Talk about waste!

The logistics of this stuff is scary. Managing cashflow, sourcing equipment, it all just takes time.

When I see something that is taking a developer away from getting product shipped, I wonder to myself “isn’t there a better way?”. And tonight, I realised when it comes to sourcing hardware and software for development teams, there is. Vagueware could, if people wanted, help.

We can source kit, (including legitimate and factory-fresh unlocked and SIM free iPhones), for considerably less than you can pick the same equipment up for on the high street or eBay. Need 20 machines by Monday? With Photoshop installed on 5 of them? And XCode or Visual Studio ready to roll on the rest? We could do that, quite easily thanks to knowing enough guys on the wholesale side of the hardware business.

In essence, I’m thinking about offering hardware/software bundles for developers – custom packages, tailored for projects – priced at wholesale prices. Even renting out kit if that’s what people need.

I’m just floating this as an idea right now, if the feedback is good, I’ll look into making it happen.

Simon Owens dropped me a line to point out that when Huffington post linked to him, his traffic rose dramatically

In other words, I was right the other day when I pointed out that links are currency.

This played on my subconscious a little more than normal, having read the story about Murdoch in this month’s Wired UK magazine. I am becoming increasingly certain of something that would have sounded ridiculous a year ago and might still sound insane. However, you may quote me on it:

News Corp will file for bankruptcy/bankruptcy protection within five years. Probably less.

Putting content behind a pay wall is an action designed to kill audience. Without audience, they will fail. And if News Corp can fail, so can anybody else who has a similar business model and cost structure.

All is not lost however. I think I’m starting to see how the next breed of media organisations will emerge and take over from the old guard has let down society. More on that later in the week.

The second article of the day discussing firms few have heard of outside of the industry. Bad habit. Sorry.

VMware makes some pretty interesting technology. Initially their product was as simple as allowing multiple virtual machines to operate on one physical computer. Then came the ability to dynamically move a virtual machine from one physical computer to another, seamlessly. That elegant addition to virtualisation allowed IT managers to condense application servers onto less physical hardware, reducing costs.

Now they’ve spotted that cloud/on-demand services are a possible future and have unveiled a cloud operating system that allows for, quote, “the foundation for internal and external clouds, using federation and standards to bridge cloud infrastructures”.

In other words, sometime next quarter you will be able to build out your data centre in such a way as to ensure that as demands increase, you can easily and seamlessly move some of the applications and services you are providing off into off-site data centres – even harnessing existing cloud infrastructures, if supported – so that you transparently respond to load conditions. You can have a smaller data centre for day-to-day operations, confident that if you need more processing power for a few hours, you can quickly and seamlessly hire it and pay for just what you use.

It’s a hard concept to get your head around, but once you do, you realise it is a powerful notion:

1. Here is my application stack consisting of web, application and database components
2. I am committed to this set of parameters in terms of SLA: do not let any of it fail; I need 99.999% uptime on the DB, 99.95% on the app; never move data outside of the EU
3. I’m off for a coffee now

If it works like that – and it’s a big “if” – it radically changes the way we think about building out infrastructure and using clouds. Right now I’m building three applications currently hard-coded to Amazon’s AWS due for launch within weeks. I’m now convinced I will need to refactor all of that code within six months. I also realise that the cool tools I’ve been building on to automatically respond to high-load periods are on the verge of being made redundant.

But there are downsides to vSphere. Big ones, too.

Firstly, see how they talk about “standards”? As Larry Dignan points out briefly in his analysis, there aren’t any standards. We’re in a whole new World here, and we’re starting from scratch. It could take 2-3 years for open protocols and standards to emerge with enough software being “cloud-aware” using them to make all this a reality.

Secondly, this is VMware, so make sure you bring money.

In fact, to get started with the “Standard” edition of vSphere you need to come to the party with $795 per CPU. That is not a typo. Got a quad-CPU machine you want to add to the cloud? Yup, you can get started for just $3,180. Got 200 of those machines in your data centre? That’ll be $636,000 please. What’s that you say? You need the “Enterprise Plus” edition for “Tier 1 applications”? Ah, that’s $3,495 per CPU, so for that data centre make your cheque out for just short of $2.8m please… thank goodness they aren’t pricing per core!

When VMware realise that the power of the cloud is with the small guy sat at home building an app that could scale beyond his wildest dreams but who needs to get started cheaply, that’s when this thing will take off. Until then, it’s just a beautiful idea at an ugly price point – and for the majority of web developers out there, that’s as good as making it a complete and total irrelevance. Shame.

I am truly amazed at the story the WSJ ran today suggesting that there are more people making money blogging than programming in America today. From the article:

When you think about it for a moment, this is insane. I don’t know how they are calculating their figure as there is no “blogger” row in the table they cite, but assuming it’s true It means that there are literally 452,000 people out there making a living (at least partially) from affiliate programmes, advertising and selling information products. Four hundred and fifty two thousand.

Maybe I’ve seen so many bubbles over the years that I’m now cynical of large numbers, that seems an awfully large number. What’s more, it’s no surprise that this content with its sensationalist, highly-segmented and tailored tone is taking readers away from newspapers. I’ve discussed before the problems of newspapers and I don’t wish to discuss them again just yet, but the WSJ does ask some interesting questions about this new breed of content producers:

“While many bloggers probably support unionization in general, they have no union of their own. Most have no benefits, yet they work long hours in front of computer screens which could cause a variety of health ailments. And the owners of the big sites most often pay their bloggers as freelancers, avoiding all of those taxes and benefits that newspapers have to pay for their writers.

For now, bloggers say they are overwhelmingly happy in their work, reporting high job satisfaction. But what happens if they, too, lose work; are they covered by unemployment insurance if tastes change and their sites go under? Are they considered journalists under shield laws? Are they subject to libel suits? Are there any limits to the opinions they churn out, or any standards to rein them in? Is there someone to complain to about false blogs or hidden conflicts? At the recent Consumer Electronics Show, Panasonic outfitted bloggers with free Panasonic equipment; did that affect their opinions about the companies they wrote about? There are more questions than answers about America’s Newest Profession.”

I feel that as newspapers submerge into the quagmire of their own making, the trained journalists they release will emerge on their own two feet and find a way to take some of the earnings pie out there for themselves, whilst also addressing these issues. There are plenty of models on the horizon for individuals or small teams of journalists to be able to produce the content we need, get paid well for it and in a work setting that protects them, and all without the flabby masses of managers who don’t understand this new model of the World.

Interesting times we live in, eh?

There is an awful lot of consternation going on amongst the suits behind online news websites.

The problem, it seems, is a colossal error made by most newspapers in offering you all their content without asking for some money from you. Their reasoning is that this forced them into the route of monetising their websites through advertising. This has never been profitable from the day they first did it. Now, they argue, the time has come to change all this and you must pay.

I want to briefly point out how this happened, why it’s the news organisations’ own stupid collective faults, why people will never pay for this content, and how business models online will need to evolve over the next few years. I pick “News” as a sector, simply because that’s where my head is right now but it applies to any other sector as much.

I also want to point out that whilst I contribute to a blog over at The Manchester Evening News this isn’t about the MEN. This is about a global industry that is in trouble. I don’t know if a single word of what is written below applies to the MEN, because I don’t work for them and don’t have enough experience of the inside of the organisation to know what happens there. Maybe some of the below does apply, but I’d be surprised if it all does.

Let us travel back in time to the early 1990s. Back then, 28.8K modems were considered speedy and there were but a handful of ISPs offering dial-up access in the UK – typically for about £10/month – to the Internet. The main applications were mail and Usenet. The web did not exist.

But one bright day, it did, and then there was light, etc. There was a rush to this new territory and a few keen early adopters started to think about what this might all mean to newspapers.

Strangely, the gentlemen of perhaps the UK’s then most-traditional newspaper, The Daily Telegraph, were the first to consider publishing their content online. They decided then that advertising was the way to support this venture and so the first UK newspaper website was launched with all manner of gaudy, flashing images helping to prop up its cause.

Why did they do that?

Well, let’s think about how newspaper management typically think about their business. To you or I a newspaper is a source of news. To a journalist it is a means of employment that allows keen types to investigate the World around them.

To newspaper owners, it’s an advertising hoarding they sell space in, and in order to get people to look at it, they shove some news stories in next to the main content in as inexpensive a manner as possible.

That might sound cynical, but reality often does.

When Rupert Murdoch’s advisers were trying to convince him to buy MySpace the argument that sold him was “you’ll be selling advertising next to content you didn’t have to pay for the production of. What gets better than that?”. That mindset is dominant in online news.

When you buy a newspaper (if you still do), your money is not to pay the wages of the staff who produced the paper – the money is to offset distribution costs mostly. The printing, shipping and selling of newspapers is an inconvenient but necessary cost and in order to keep everybody from the newsagent all the way through to the inky-fingered man who produced the paper happy, you pay your pennies for the finished article.

The main source of income always has been and always will be, the advertising. In case you’re wondering, it’s the same story in the magazine industry.

Now, let’s move things online. The distribution costs of a website are tiny compared to that of a physical newspaper. If you were to choose the comparatively costly hosting services of Amazon’s EC2 cloud resource, and had 10 small server instances running and were fortunate enough to be shifting a few hundred gigabytes of data a day, your total costs would be less than $60 a day. That’s about £40. Compare that to the £650m needed for the printing presses of the modern paper editions.

Therefore if distribution costs are near enough to zero for online editions, why bother asking the customer to pay for them? It’s almost sound logic, except they then made a major, major error.

They gave the advertising away for free.

Phone any regional newspaper title in the country and speak to their ad sales team. The conversation will result in them offering you a rate card for the print edition. Sound sceptical about the costs and benefits. They will offer space online for free. Every time. I know, because I’ve spoken to quite a few ad sales teams in the last year.

In essence to secure the advertising for the print edition, they have in the past completely undermined the business they need to survive in the future. They have told every one of their advertisers that online adverts are not worth paying for.

Let’s move forward and look at the state of business affairs within the news sector today.

All of a sudden, as if by magic, the clouds have moved apart and revealed that their website is a cost-centre. In order to keep up with the Jones’ they have had to build dedicated online news teams, larger server infrastructures, bring programmers onto the staff and throw money at their website in order to remain attractive to shareholders and other investors. Slowly the ad sales team realise that in fact the future of their business is online and they start to unpick their years of collective suicide, slowly trying to build up the revenues they have worked so hard to destroy.

It’s all a bit grim. One newspaper group dominant in a Southern part of the UK almost sounds desperate when you phone them and enquire about online sales. I genuinely feel sorry for them sometimes.

In short, none of the people responsible for picking up revenues really know what they’re doing any more. The World has changed around them whilst they have stood still, and it’s all too much. They are thinking in terms of traditional newspapers and traditional ad sales, and struggle to find the revenues they need to break even. Slowly, they realise they can’t fix this. They need people to blame. The usual people they wag their fingers at are:

• The BBC. They get a license fee, they operate the largest online news websites and hey, it’s just not fair, right? They should stop!
• The advertisers for not spending enough, mainly because for 15 years they’ve been told that online adverts are basically free
• The audience for demanding free online news like some sort of self-interested collective mob (which they are!)
• Anybody and everybody but themselves.

But wait, there’s hope. Amazon’s Kindle is being thought of in some quarters as the “news iPod”. The people behind the curtain at major newspapers groups all over the World are lining up to try and sell you subscriptions to their content via eBook readers like the Kindle (and perhaps the iPhone and other mobile platforms), and then slowly their digital operations will move to subscription-only content. News websites will slowly shut down and become adverts for the print and subscription-only content via the new technologies sure to become dominant in coming years.

Except of course, the audience won’t care. They won’t sign up. Why would they if even a few websites remain free and open for business? Nobody at Wikinews is busy trying to find a business model that works. I’m pretty certain the BBC won’t be allowed to. That’s enough to wreck this plan.

And yet, the news organisations lumber on hopeful something will change soon. No changes in business structure, no clear thinking about how to go forward, no understanding of online business models.

Here’s a good example of bad thinking about what it takes to succeed online. Craigslist has about a dozen employees and clears about $100m a year in revenues, thanks to their UGC structure. That’s some margin! The BBC gets £3 billion a year in license fees, so by the same gearing (ignoring the obvious differences in structure and intent of a non-commercial entity like the BBC) they shouldn’t need more than perhaps a few hundred journalists. Do you know how many journalists the BBC employs? 7,000. Seven. Thousand. And they, for their budget, are considered quite an efficient news outfit.

So, let’s summarise where they’ve gone wrong so far:

• Newspapers didn’t understand the web when they got started
• The ad sales teams on newspapers took too long to understand online business models
• They then undermined their own business model
• Newspapers realised they need to take a new mindset and blame everybody else for where they are right now
• They then decide the option is to try and get customers to pay for content they don’t want to pay for
• Absolutely no consideration is made of what being an online newspaper consists of

Not sounding good is it?

What to do? It’s OK me sat here mouthing off about how stupid they all are, but can I offer some insight? Well, here’s some thoughts to people running newspaper groups right now:

• Online news is not the one-way broadcast medium you’re used to. Use your audience. Wikinews is cheap to produce. Your newspaper could be. Kagtum will be.
• Online ads are not the same as print ads and can’t be sold in the same way. I don’t know of a single news website in the UK where I can buy PPC ads with my credit card right now.
• Even worse, online ads aren’t very profitable anyway. Google ads work because they enhance the product. How do you make money whilst enhancing your own content? Price comparison, auction and digital distribution models have figured this out well.
• Customers do not want to pay for anything. Ever. You have to work hard to convince them it’s worthwhile. You’re doing an awful job of that, so stop trying to do it
• Invest in journalists, programmers, graphic designers, information visualisation specialists and people who understand online content. Fire the majority of your middle management who aren’t directly involved in producing content or ad sales.
• People will always value investigative journalism
• Think laterally about revenue in an online medium

It might all sound a bit extreme, and I’m sure many will criticise me for my naive attitude, but I say these things because I care. We need good journalism. Wikinews might be cheap to produce, but it doesn’t allow for investigative journalism, an aspect of news reporting which I believe is critical to democracy. We need newspapers.

I’m writing this because I want to both signal where I’m thinking in terms of my own projects, and because I’m also fed up sifting through dozens of articles a day by everybody in the industry from the Western US to the East of Asia all blaming the dire position of news today on a lack of subscription models. I think there is a future for online news, but I suspect it will need the current generation of newspapers to go bust for the new models to successfully emerge.

What fascinates me about all this though, is that there are so many people whose future relies on online business models, and yet they don’t understand what that means operationally. Interesting times.

I like Twitter. I like it enough that over there to the right of this blog under top posts is an import of the Vagueware Twitter feed where I mostly share articles I’ve just read on the Web. I have a personal twitter account as well, and find it invaluable to keep up with friends, peers and colleagues. I do not ask inane questions like “what is Twitter for?” or “is it any good?” like some commentators. I love the platform. It’s great.

I am however completely confused by their business strategy, and the news that they’re raising more capital from VC funds. This quite frankly makes me mildly angry that they’re screwing things up for themselves – and perhaps for the rest of us too.

Here’s a couple of facts to mull over:

• They are hitting the mainstream in a big way. In the UK, celebrities like Stephen Fry and Charlie Brooker are in on it, and Fry even discussed it on Johnathan Ross’ show, the most watched chat show in the country. Even the nefarious money-grabbing sweatbags that promote Britney Spears have advised their client to get in on the act.
• Despite the fact their UK user base was prepared to hand over cash to buy credits to support it, Twitter withdrew outbound SMS notification (direct messages and replies sent to your phone) in 2008. People screamed about this. I’m amazed somebody hasn’t monetised the demand for the service already and built a tool via the API that does all this – perhaps everybody who has thought of doing it is incredulous that Twitter aren’t doing it themselves.
• They have no business model right now. They generate zero revenue. They are burning cash.

So, they’re talked about in the mainstream press, people love them, people want to give them money, they’re not taking it, and now they’re taking VC funding to stay alive.

Think about that for a minute.

It’s not just me, right? They are insane, yeah?

This is the time to build monetisation options onto the platform. SMS credit packs, extra features in ‘pro’ accounts, heck put some fricking advertising in everybody’s feeds if you think it’s 1994, we don’t mind! Here, I have a tenner in my wallet, just take it! Take another next month, I don’t mind!!

To turn down a $500m acquisition bid, seek VC investment at a $250m valuation and do nothing – absolutely zero – to build revenue is the sign of a company run by people who don’t realise they’re running a company. They seem to think this is a hobby and somehow the money will just keep on coming.

This is dangerous for all of us interested in twitter or the web industry in general.

It’s bad for users because they are increasingly loving the platform, and this strategy puts the availability of the platform at significant risk. Servers cost money to keep turned on. Eventually the money will run out. Users will not be happy.

For those of us in the industry, it’s even worse: when Twitter goes to the ultimate fail whale, it will completely destroy any chance for us to open up liquidity in the VC or loan markets any time soon. It will be so high profile a failure due to its “success” there won’t be an investor on the planet who doesn’t hear about it and think “well, if they failed, what chance anybody else in the web industry?”. They are effectively playing Russian roulette on behalf of the entire industry. Thanks Twitter, you $!**&@!! morons!

I’m really hoping whoever is on this round of funding is going to insist on a clear revenue plan soon. Companies exist to make money, and right now Twitter only seems to exist to see how much investment they can take. This is bad news all round.

Over 2008 some remarkable technologies emerged quietly that seem to be gaining traction within the industry. Whilst around for years, I am confident their time is about to come proper.

If you were to ask most people on the street who the most innovative technology firm was of 2008, you are likely to see a familiar list: Google, Apple, maybe Microsoft or perhaps some of the smaller outfits that have crossed into the mainstream like Facebook or Twitter.

Few people will mention Amazon.

In fact, if you point out that Amazon is right now perhaps one of the most innovative technology firms on the planet, people will raise an eyebrow and ask “What? The online shop? Where I get my my books and DVDs from?”.

This typical reaction is perhaps caused by only industry participants having seen so far just how Amazon are disrupting the economics of doing business online. Now anybody can have access to infinite storage arrays, huge compute clouds, masses of humans to complete complex tasks and distribute content across the globe as fast as possible, all without a penny of capital expenditure: you pay only for what you use. You can even send your physical products to be stored in Amazon’s warehouse and they will for a fee handle order fulfilment for you, again only paying for what you use.

Capital expenditure is a start-up company’s biggest problem. Remove it and suddenly anything becomes possible in the start-up World. This is big. Very big.

The real beauty is perhaps the fact Amazon made this move originally to use their own infrastructure more efficiently. If Amazon has lots of spare compute capacity ready to serve pages during their busy season (the run up to Christmas), why not lease it out the rest of the year? And yet this strategy has started to offset their own infrastructure costs so much I wouldn’t be surprised if within a few years their operational costs tend towards zero. The most powerful e-commerce platform on the planet, and everybody else is paying for it for them.

This has caused people to sit up and notice. “The Cloud” is now the hottest buzz term in the industry and all players are trying to figure out a strategy to compete.

One of the issues is that Amazon’s infrastructure is not as simple to use as it could be. Plenty of firms see a gap to try and make things simpler: one of the biggest complaints about S3 is that you need to use custom APIs instead of open standards like SFTP or WebDAV; EC2 needs a more complex understanding of systems administration and data storage than traditional models; for many applications it’s overkill or too generic, and so on.

If you break the components needed for a web application into its constituent parts from platform and compute capability through to storage services, you realise that at each level there are numerous companies trying to find a place in this market from Google and Microsoft through to unknown start ups, some of whom are attempting to make access to other cloud services easier to use and therefore are some sort of “meta-cloud” service.

This is thought to be a paradigm shift in how developers think about developing and delivering applications, but what we have seen to date is likely just the tip of the iceberg. For a number of years now traditional engineering firms (notably Rolls Royce in particular), have realised substantial revenue growth comes not from product sales – competitors can easily counter advances in product development – but in services. It seems the computer industry is starting to cotton on, and companies like AMD are thinking about how to ride the Cloud hype into the services sector. Even Microsoft are considering versions of Windows that users pay for by the hour.

It is perhaps because these service revenues lock a user into a provider’s business that some point out the dangers but I believe in time we will allay such fears by changing how we describe, define and use cloud capacity: it’s perfectly possible for us to control our own data and rent storage and compute capability as we need it, perhaps without realising that is what we are doing, without surrendering our rights and privacy. It is not yet a trivial job to do so, but surely over 2009 we are likely to see services emerge that allow consumers to harness cloud concepts and capabilities without needing to understand the detail.

Ultimately though, the real benefit over the years ahead will be the possibilities these services offer the programmers wise enough to harness them: without the CAPEX requirements, the only limitation developers seem to encounter is that their imagination struggles to break free from the bonds that have dominated careers to date. It is hard after decades of worrying about RAM, storage and CPU limitations to have all them removed, or at a minimum re-shaped. This is the beginning – if we can struggle to imagine it – of something huge.