Christopher S. Penn – Marketing AI Keynote Speaker

Category: Rant

  • What is worth paying for?

    What is worth paying for?

    What is worth paying for? 1In the world of an information economy, information is effectively free. This, of course, has broad implications for anyone generating intellectual property, such as writers, musicians, and media makers.

    Effectively free means this: it is possible to mass produce and mass distribute information at near zero cost, laws and artificial scarcity notwithstanding. If you create a piece of music and record it, once the music is in an MP3 file, the distribution cost is near zero.

    If you write a book and the book is released digitally in a PDF, the distribution cost is near zero.

    Yes, lawyers can serve cease & desist and lawsuits, but once released, the information tends to remain free, if not necessarily in legally approved distribution channels.

    In a world where information is effectively free, where does value come from?

    Look to Google and Search Engine Optimization for the answer. In the world of SEO, there are catalogs upon catalogs of tricks you can do to achieve higher rankings when someone Googles for a search term related to your site. How does Google value things in a world where information is free?

    By measuring things that are not free.

    Google values, for example, domain names. A domain name for any kind of sustained campaign costs money. It is not free, and therefore Google assigns it more weight than, say, what you name individual files on your web site.

    Google values inbound links from sites not under your control. Why? Because it takes effort and time – of which money is a proxy for – to establish a lot of inbound links. Inbound links from certain top level domains such as .gov and .edu have more value than inbound links from domains such as .com, .net, and .org, because .gov and .edu domain names are restricted, and the content managers of sites bearing those domains tend to be more selective about who they link to.

    Google devalues things that are free, easy, things that require little effort and no commitment. Long strings of file names and directory names carry less value these days than in the early days of search engine optimization.

    What things in your world are of value that cannot be digitally replicated? For musicians, their core skill is not the music, the data. It’s the ability to create and perform music, and so the digital files, the recordings of the music may be free, but the performance of concerts are not, nor can the live concert experience be replicated. The sale of a CD is almost a souvenir, a proxy for having been at the live concert event.

    For artists, a digital photo can be replicated, but a personalized, autographed print cannot be, at least not easily, quickly, or cheaply.

    For people in new media, while the creation of media itself is easily replicated, the community cannot be, as recently discussed in the sale of Rocketboom founder Andrew Baron’s Twitter account. Community and word of mouth are fundamentally built on trust, which is a non-tangible, non-replicable resource. That’s why, as technology and information continue to blossom, things built on assets that are not free, easy, or fast will continue to grow in value – trust, sincerity, honesty, authenticity, experience, emotion.

    This is why conferences are so expensive – you can’t replicate face time with digital intermediation. Even with video chat, you’re still not getting the full experience.

    If you’re trying to figure out whether a new media outlet, deal, opportunity, or platform is worth your time, effort, and money, evaluate its value based on things you can’t digitally reproduce. You will quickly find what’s worth paying for.

  • Scratch troubled, we are screwed as a country

    Scratch troubled, we are screwed as a country

    I read with great alarm on CFO.com that as the housing and mortgage crisis deepens, people are dipping into or even cashing out retirement funds.

    “In the last four or five months we have seen an absolute onslaught of people trying to do hardship withdrawals and loans out of 401(k)s,” Mark Anderson, CFO of Granite City Electric, told CFO magazine in October. “What has happened with housing and the economy has really blown up for people at the lower end of the spectrum.”

    When you cash out a retirement fund to pay down a mortgage, you take a double hit. First, you lose the money itself in a market that is declining rapidly, dumping good money after bad. Second, and most perilously, you create an enormous opportunity cost for yourself that you will in all likelihood never recoup in your lifetime.

    Let’s do the math. Let’s say you are an eager 21 year old college graduate, with a great outlook on life, a job that pays a salary of 2,000 a month before taxes, and 45 years in the workforce ahead of you. If you start saving today, 3% of your income with employers that match with a 3% contribution, and your investments give a safe return of 6% over your working lifetime, you’ll retire at the age of 66 with roughly330,000, give or take.

    Now, let’s say you, at the age of 50, make some bad choices and consider bailing yourself out of a mortgage problem with the 110,000 you’ve accrued so far in life. Boom, problem solved, right? Wrong. You’re now in incredible trouble. You will retire in 15 years with a grand total of only35,000 in the bank (at the same savings rate). To retire with the same amount of money as you would have had, you would need to save 30% of your income instead of 3%, have an employer that matched 6%, and hope for an 11% return over those 15 years. Otherwise, you have to depend on the government and HOPE that Social Security is still solvent when you retire – otherwise, you will not retire.

    What SHOULD you do if you find yourself in super-serious, no end in sight mortgage trouble? Walk away. Mail in the keys to your lender, declare bankruptcy, rent a nice apartment somewhere, and work off the bankruptcy. Does foreclosure look bad? Yes. Foreclosure and bankruptcy means you’ll be paying cash for a lot of things for a while. But it lasts 7 or 10 years at the most. 7 to 10 years of bad credit is easily survivable, and you may even develop good personal spending habits by only being able to spend what you have. Compare 7 to 10 years of conservative living with 30 years as an elderly man or woman trying to make ends meet with meager savings. Can’t declare bankruptcy? Leave the country. As long as you have useful skills, there are PLENTY of nations on this planet that are all very nice, and very few of them have credit bureaus connected to the United States.

    Truth: the United States is NOT the best country in the world. It’s one of many very good countries, and any flag-waving moron who blindly believes that one country is the best has probably never traveled more than 20 miles past his doorstep. LOTS of good countries in the world.

    Unfortunately, for a lot of people, they’ve already dived off the cliff, and that means a certain percentage of the population in the years to come will be gambling that social services and the government can assist them in their “golden years”.

    Is that a gamble you’d take?

    Like the old Willie Nelson song goes, know when to hold ’em, know when to fold ’em, know when to walk away, know when to RUN.

  • Exhibit A in Net Neutrality

    Rogers Canada is modifying Web pages. Take a look at this Wired article.

    Is this a marketing dream? A marketing nightmare? Bit of both.

    If you searched for a student loan, I could buy a modification of the results you get from your ISP. Even if you wanted a loan from my competitor, if I paid enough, I could divert you instead.

    If you searched for my company’s products, a competitor could do the same to me.

    Expect this to become a hot button issue for net neutrality.  If this goes unopposed, just imagine what the political campaigns will do to every web site you visit. ISPs will be rewriting traffic all day based on bids. Rudy Giuliani needs a boost in Iowa, so he’ll pay Comcast to rewrite all requests for Mitt Romney’s web site to his. Someone might even play dirty and use soft money to redirect a candidate’s traffic to a Swift-boat style attack ad instead.

    Stand up for net neutrality, or you won’t be able to trust a thing you see online – ever.

    And if you use Rogers or any other ISP that uses these practices, drop ’em. Vote with your wallet, because that’s the only language some of these people will ever understand.

  • How bad is the housing bubble burst? THIS bad.

    Just when you thought the real estate market couldn’t get any more desperate:
    Housing bubble bursting ad in Craiglist
    I don’t know who to feel more sorry for – the person posting the ad or the sucker who buys a house in metro Phoenix, Arizona, where prices are falling on average about 30%. I guess it depends on whether you think US citizenship is worth $595K.

  • Politicians NEED Illegal Immigrants

    Politicians Need Illegal Immigrants

    Why, you ask, do politicians need illegal immigrants? Simple: economics. Illegal immigrants don’t show up in labor statistics or the official work force. Thus:

    – when the economy is good, illegal immigrants provide a labor boost, increasing productivity without increasing official payrolls. Illegal immigrants also don’t get health insurance or any other benefits, making them the cheapest labor for companies. Politicians can claim credit for economic improvements on their watch.

    – when the economy is bad, illegal immigrants can be terminated from the work force quickly and invisibly. They cannot claim unemployment and they do not show up in unemployment reports; as a result, politicians can claim that an economic downturn is not as severe because jobless claims didn’t increase very much.

    – illegal immigrants cannot vote. A politician can continue to disenfranchise illegal immigrants with no political consequences because there’s no voting repercussions.

    Given that the current status of illegal immigrants provides multiple positive incentives for politicians and few negative ones, is it any wonder that progress on a pathway to citizenship has not been made?

  • 2008 Recession or Depression is Likely

    2008 Recession or Depression is Likely

    I’ve been doing a lot of reading lately. Most of it has not been of good news and all of it has been about the economy. The economic issues that have caused disruption and disorder in 2007 – the credit crunch, housing bubble bursting, and high fuel prices – are, by my estimates, only going to get worse in 2008.

    Here, for example, is the number of subprime mortgages set to reset in the coming year, courtesy of the Dallas Federal Reserve Bank.

    subprime

    The economic difficulties that resulted from subprime mortgages going bad – loan portfolio writedowns, CDOs and other financial instruments imploding – all will only accelerate in 2008. Take a look at March, 2008 on the chart. From about 35 billion in resets to50 billion – and upwards of 70% of subprime mortgages seem to be going bust lately. This is going to be a major economic shock.

    On December 2, Venezuelan president Hugo Chavez may gain the power from his constituents to suspend oil production in Venezuela, according to the LA Times. Should he gain that power, he can throw America under the bus, as a hefty percentage of American fuel runs through the refineries of Venezuela. A fuel crisis just as the holidays hit would be a major psychological shock to the US economy.

    How do you deal with this all? Well, prepare as much as you can. Investments are likely to be unsafe – double check your retirement and where money is allocated. Look internationally or in secured accounts, and soon. Cash is king; debt is your enemy. On the fuel front, if you have any option of switching off fossil fuels to biomass – even a wood stove – do so, or have the capacity to do so. If you’re economically able to do so, now is the time to trade in the gas guzzler for the most efficient thing your money can buy. Negotiate with your office if possible to telecommute as much as you can – if gas hits $4/gallon, not driving a day a week to work could pay for the fastest class of broadband available in your area.

    It’s never a bad idea to have some emergency rations on hand. Brown and white rice store well in plastic, animal and insect-resistant containers, cook relatively easily, and last for months, if not years. Having a few gallons of water in your basement in sealed jugs is always smart, even in the best of times.

    Be ready. 2008 is going to be a rough ride.

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    2008 Recession or Depression is Likely 2 2008 Recession or Depression is Likely 3 2008 Recession or Depression is Likely 4

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  • Silly business term: thought leader

    I’m always amused when I see someone bill themselves as a thought leader in their field (heck, my own company’s marketing department does it to me), mostly because the term thought leader is a joke. You are either a leader or you are not. It’d be like having a thought quarterback in the NFL, a thought pitcher in Fenway Park, a thought general on the battlefield. Do leaders need to think? Of course! But then they need to demonstrate the true leadership part and do.

    Brilliant execution of a good plan beats no execution of a great plan every time.

    My final turn of phrase on this silly term that needs to be retired: a thought leader is someone who is thinking about leading – but probably never will.

  • Die In A Fire

    Die In A Fire

    Of the many expressions online that I really dislike, topping the list has got to be “die in a fire”. Like virtually every other Internet expression, it’s bandied about carelessly, and the people who use it probably don’t think about it a whole lot. So here’s a bit of perspective in the hopes that at least for the more thoughtful, careful, and socially sensitive people in the group of folks I like to call friends, we can retire this awful phrase.

    When you’re caught in a fire, the first thing that generally happens is that the hair and surface skin burns, usually very quickly. Anyone who’s singed themselves while cooking or tending a fireplace has gotten a taste of what this is like. The skin cracks, the hair burns off, and the nerve endings all fire at the same time, communicating only one thing – you’re in a heck of a lot of trouble and pain.

    As your body heats up from the fire, the fat underneath the skin melts. As with all animal fats, it melts at a relatively low heat point, instantly causing some skin to slough off in flakes and sheets. Your eyes will be especially affected – the eyelids are thin tissue and will be destroyed relatively quickly, but the liquid eyeball itself will boil first, then burst, and only then burn.

    If you’re exposed to direct flame, you will catch fire just like a wick in a wax candle. At this point, if you’re lucky, you’ll have a low tolerance for pain, fall unconscious, and never wake up.

    If you’re not lucky, you may live long enough to watch your body fall apart. Incidentally, the voice box is relatively well protected by heavy cartilage and muscle, so if you’re still conscious, you can still scream.

    Once the skin and surface tissue have melted and burned away, the proteins making up tissue and muscle are the next to cook, then burn. Internal organs heat to the boiling point, then explode, and as the muscles burn away, they too dry up, wither, and burn away.

    If the fire’s not particularly hot, what will be left will be a skeleton with carbonized tissue attached to it. If the fire is sufficiently hot, the proteins that bind the minerals in your bones will burn away as well, causing your bones to fall to ashes.

    This is what it means to die in a fire. To wish that on anyone, even casually or in jest, is to wish them one of the most painful ways to leave this mortal coil.

    If you’d like to see what happens when you only get injured by fire, take a look at Youssif, an Iraqi boy doused in gasoline and lit on fire.

    Now, can we retire that expression?

    post-script: in case you were wondering where the expression crossed my radar, someone invited to a Facebook group named People who Type Like This Can Die in a Fire. Needless to say, I declined the invitation (and the subsequent zombie requests as well)

  • A taste of things to come – stolen milk crates and peak oil

    Let’s talk briefly about polyethylene – specifically, high density polyethylene. It’s a dense plastic that is extremely strong and resistant to a bunch of things. Things like Tupperware are made from it. It in turn is made from petroleum – oil – in a lossy process that consumes 1.75 units of petroleum to produce 1.0 units of polyethylene.

    Why is this important? Well, it seems that milk crates – those super-high density crates that virtually every college student has at some point – are vanishing at a rate far beyond the usual theft rates. The dairy industry investigated and found that the price for recycled polyethylene jumped from about 7 cents per pound to 22 cents per pound over the last two years. Recyclers were accepted stolen milk crates in bulk, chopping them up, and shipping them to China to be used to make consumer goods.

    Think about that for a second. China, already one of the world’s largest consumers of petroleum, has companies paying 22 cents per pound for used polyethylene instead of refining petroleum to create new polyethylene. That means that in their manufacturing processes, it’s cheaper to recycle (or use recycled materials) than it is to manufacture new – which is not usually the case.

    What does this mean? To me, it hints that the cost of petroleum and relatively limited supply is causing one of the world’s largest consumer goods manufacturing economies to choose recycled materials over new, and that means that the supply of oil is probably tighter than we think.

    Peak oil, anyone? A harbinger of things to come?

  • Truth hurts.

    Lower 9th Ward, New Orleans - 2007

    Close your eyes when you don’t want to see
    Stay at home when you don’t want to go
    Only speak to those who will agree
    Yeah, and close your mind when you don’t want to know

    – Billy Joel, “Everybody Loves You Now”

    This is a picture of the Lower 9th Ward of New Orleans, captured by Europa in 2007. Despite nearly 2 years since Katrina devastated the Gulf Coast, little progress is being made in fairly large sections of New Orleans.

    For perspective, how large is this region of the city? About 1.6 miles by 1.2 miles, or just under two square miles. If it were Manhattan, it’d be the same area from West 53rd to 19th and from 10th Avenue to Lexington Avenue – or most of midtown. If it were Boston, it’d be from Government Center to Kenmore Square and from the Charles River to Jamaica Plain – most of the western part of the city. Know San Francisco? The Lower 9th Ward of New Orleans is almost identical in size to all of Golden Gate National Park. Know DC? It’s the same area as the Lincoln Memorial to the Smithsonian by the Lincoln to Dupont Circle. Been to Disney World? The Lower 9th is the same size as the Magic Kingdom – plus Epcot, MGM, and the Animal Kingdom.

    This is a large chunk of a major American city that has not been rebuilt.

    Think about it.

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