Sunrise

I got up early today and decided to bike down to the beach to watch the sunrise before work. It’s really convenient that our office is actually at the beach, because I get to do this more than just about anyone else I know. Except, I guess, the people I work with…

I’m going to sound like a crazy hippie here for a minute, but every time I watch the sun lift up over the ocean, when the sound of that warm salty breeze mixes with the subtly crashing waves, I feel like the world becomes a mirror possessed of the ability to simplify and refactor and strip to the essence any problems or worries incident upon it. It presents an austere but elegant reflection to an observer that accentuates that what is important and discards that what is trivial.

I told you I’d sound like a hippie.

So this morning, I went to the beach looking to clear my mind of some heavy thoughts related to work. The whole reason I was up at 5AM in the first place was because of said heavy thoughts, so it’s a good thing for me that the sun rises in the morning when I needed it!

Redux: The whole point of mVisible and MyxerTones is to radically simplify mobile content and services. Over the past two years that we’ve been operating, we’ve basically lumped the factors contributing to the complexity of developing mobile content and services into two camps: technical challenges and bureaucratic hurdles. What I’ve come to understand is that the technical challenges, while real, are really just engineering exercises. Not to belittle the scope of the technical challenge, but the fact is, you can (and we have) put together a competent team of engineers and build a platform that is technically capable of delivering content to just about any device on the planet.

And while we’ve framed the other class of problems as bureaucratic in the past, I think I have to now reclassify them as institutional. It’s not, as I’ve believed in the past, simply a matter of going through all of the required mating dances with the mobile carriers and the sea of companies in the so-called “value chain” beneath them. Yes, you certainly have to do the dance. But No, that doesn’t solve all the problems of complexity.

It turns out that the mobile industry as a whole has a tremendous amount of inertia behind the notion that delivering mobile content and services should remain complicated.

Carriers like Verizon force device manufacturers to cripple the phones they distribute to prevent consumers from using their full capabilities. They intentionally break existing applications with firmware “upgrades” not requested by subscribers. They take 50% of the revenue from any purchase made through their premium SMS channels – and at the same time contractually forbid partners from using any other competitive payment processors. Even if you don’t call it larceny, it’s an ugly oligarchy to be sure.

Speaking of ugly oligarchies. The recording industry, for its part, has apparently determined that its best chance of self-preservation is in assembling an assortment of extortionists, fear-mongers, and racketeers to harass and intimidate the very same people to which they market their limited catalogs of plastic pop stars and on whose computers they install spyware rootkits.

It must be a really weird thing to work in an industry that has harbors such blatant disgust for its own customers.

So what’s happened is that we, as MyxerTones, went into this whole “simplify mobile” endeavour bright-eyed and bushy-tailed, taking as common sense the notion that the easier you make it for anyone to offer their own content and services for mobile phones, the more value there will be in the entire ecosystem. Rising tide lifts all boats, that sort of thing. Anyone who has taken even a casual interest in understanding the history of the internet knows that every billion-dollar internet company (as well as the aggregate trillions in small companies doing business on the internet) is directly and unequivocally indebted to the uncompromising openness built into the network.

To think that mobile phones are anything but an extension of the internet is to embrace a legacy mindset. So to think that what’s best for the mobile industry is anything different than what’s been proven to be best for the internet in general is either arrogance or ignorance, neither of which is likely to bring longevity.

And what’s happened is that we’ve gotten caught up in the machine a little too much. We’ve started making product decisions based on who might sue us as opposed to what would bring the best value to our customers and to society as a whole. That’s what the sunrise made clear to me, and that’s why I’m so glad I watched it this morning, because I’m now 100% refocused on what it is we have to do.

There was a recent incident involving Digg a couple of weeks ago that you may have heard off. Turns out some super-secret magic decoding ring for DVD copy protection was figured out by some hacker somewhere. (Probably the Ukraine. They’ve got a lot of crazy number-smart people out there. ) So people started posting the magic decoder ring to Digg. Digg apparently gets served with a cease-and-desist or some such thing, and yanks references to the key. The users basically revolt, until Digg’s founder, Kevin Rose, eventually overrules their own lawyers and says screw it, we are a service, we are by and for the people, and we will not get in the way of what the people want to do.

Gutsy move. I mean, wow. It’s still not clear what the ramifications are for that. When Kevin refers to “a bigger company” in his post, he’s potentially guilty of a felony understatement.

This is my point: I, like Kevin Rose, believe that the pendulum has swung waaaaay too far toward the special interests and entrenched oligarchists, and away from The People. The entire reason I am involved with computers in the first place is because I was inspired by the early hackers who saw the great potential for individual empowerment through information. (Oh, and video games. I really loved video games.) So I’m going to make sure that when we’re building features into MyxerTones, we’re always thinking about enabling, and we’re going to stop spending so much of our time worrying about this guy or that guy suing us or whatever.

Mobile phones are the first exposure to the internet for most of the world’s population, and it would be a lost opportunity of unparalleled scale if the openness of the internet didn’t follow to the new devices. Like, lost opportunity akin to losing the recipe for penicillin on the way home from the lab.

Lighten up, Myk. It’s just bloody ringtones.

No. No, it isn’t. The whole bloody reason people think mobile content and services is just Madonna ringtones and the Pope’s “Thought of the Day” is because the platform has been locked up so tightly, with so few people able to address it. It’s only when the barriers to entry are removed that we will start to see the truly innovative applications arrive.

I don’t pretend that there aren’t issues to be confronted by opening the mobile internet airwaves to anyone to share and sell anything they want, but I believe the issues need to be be framed in a larger frame of discourse than the narrow-minded worlds of the mobile industry or the music industry. Our society still has a very long way to go before it has a mature understanding of how best to balance individual rights with those of rights holders, and the way things are right now it’s clear to me that society would be much better served if companies like MyxerTones was less timid and more focused on enabling rather than restricting.

Board of Directors Presentation 2007Q1 – Part 3/3

[Continued from Part 1 (Vision) and Part 2 (Technology)]

Let’s talk products.

Products is what it’s all about. Technology is really fun to work on, and it’s extremely important for us to continue to push the envelope of what’s possible on the web and on mobile phones. But all of the technology, when it works, should be truly invisible, exposed to the world only through a sanitized viewport that is a product. As we say on the MyxerTones website, “the technology is mvisible.”

The focus of our entire company is the product currently called MyxerTones (with the Tones part giving off a kinda shimmery semi-opaque vibe like the picture of Marty in Back to the Future when he was in danger of never having existed). But we really have three distinct families of offerings, because the people we sell on our services can be divided into three main groups: web surfers; independent artists; and partners.

Web surfers are people that are interested in getting mobile content. These are people that we market to with “make your own ringtones” types of advertisements, and the people that we’re really going to start selling MyxerMagic to. They’re normal people – not power users, not content owners, piercings optional, etc. They have a run-of-the-mill phone from their carrier, and they want to get some cool stuff on it. They’re the people that get the most attention from the product team, because they’re the people with the biggest numbers.

The Independent Artists is meant to include anyone from a local band to a small record label that might manage, say, a few dozen acts. We have specific functionality baked into MyxerTones to support the kinds of things that these guys want to do – mainly connect with their fans to build loyalty by giving out ringtones/wallpapers, etc., but sometimes sell their own content for profit. The piercing ratio is definitely a lot higher in this group than the other two. We built MyxerTags and FanLists especially for these guys, and we have some other things in the works (geotargeting, MyxerTunes, etc.)

It turns out that most of our artists identify themselves as HipHop/Rap, with Rock following not too far behind. We also have reasonable showings in Country and Latin categories.

Finally, the Partners bucket represents everyone from PohDunkBands.com to [LARGE PARTNERS]. There’s obviously a lot of variation in the kinds of services various partners want, but the constant stream of partner requests we get into our mailbox every day (honestly) is a real indication that we have an opportunity to make some turnkey products that target these guy’s wishes to add mobile functionality to their own websites.

I’d like to point out that, while we will likely talk about [BUSINESS DEVELOPMENT ACTIVITIES] at this meeting, those types of partnerships are not the kind of thing the products team is overly concerned with on a day to day basis. We are much more interested in bringing value to users at the other end of the size spectrum. That is, we’re trying to support the millions of people with audiences in the low thousands or hundreds, as opposed to going after the biggest companies out there. We believe in the long tail, be they musicians or small website operators or someone else. The key is making everything as simple as possible, completely turnkey from our website, requiring no human interaction.

This is directly analogous to how we don’t really care about going after the Madonna’s and U2’s of the music world – sure, we’d like to have a couple more big names in the “partner” bucket to add to our credibility in the business world and visibility in the “real” world, but our success is only going to be assured when we have products that appeal to the much larger aggregate of the smaller guys out there.

As Executive Vice President of Products, a fancy title I just last week created and am trying out today for the first time to see how it fits – I’m mainly concerned with defining the feature sets that we should deliver in the products we build to address the real needs and desires of our various constituents (product management), overseeing – and participating in – the development of the actual bits that make up the features (product development), and working to ensure that we expose the merits of our products in the best possible light to the largest possible market (product marketing).

The current state of things is that product development (and I include QA, support, and IT operations in that bucket, mainly because it’s all handled primarily by Bill) is as healthy as it could possibly be in an organization of our size. Product management, which is mainly myself, could perhaps benefit from another worker bee to spend time, for example, fleshing out partner programs. But the need for a high level product marketing person isn’t as clear as it seemed a while ago.

We have a PR firm handling traditional PR, and while we weren’t overly impressed with the results of PR efforts last year, we do feel that we’ve made a lot of progress and are pretty well positioned to start reaping some very tangible benefits from our PR efforts in the coming year (news stories, bylines, speaking engagements, etc.). We have a part-time (but in-house) PR/Marketing consultant that is helping PR considerably, while at the same time helping to hone the marketing message more effectively.

And we had the VP of New Media at [A LARGE RECORD LABEL], while viewing the MyxerTones website look at us and say “obviously you guys are marketing experts.” I’m sure there will be more discussion on this as we go forward, but marketing is building a brand, and our brand is definitely building.

Enough organizational talk. Here’s what’s going on with our products.

We released MyxerTones 2.0 just a few scant months ago. The traffic grew that day, and hasn’t stopped growing since. I think it’s funny that we call it MyxerTones 2.0, even to this day, because we’re probably on like the 200^th version of the website that we’ve deployed to production. That’s the way we like to do things – we try to update the website every week or two, which might not seem like a big deal to some of you, but the difference between this type of development environment and one in an enterprise software company (how many years did Vista take?) is staggering.

What this means is that we can really quickly bring new features and bugfixes to the site, which keeps things fresh for the users. It’s awesome to be able to write some new code and have it live on production two days later.

So what are some of those features? MyxerTones is the best place to make and share mobile content. I’m going to save the statistics for Bill, but I can certainly tell you that it’s probably one of the most popular places to make and share mobile content anywhere. We’ve been innovating like made in the last quarter; after releasing 2.0, which was a complete redesign of the entire user interface of every page on the site, we’ve added: fan lists, comments, tags, search capability; image support; video support; MyxerMagic; artist profile pages; and that’s only what I’m able to recall off the top of my head. The site is alive with activity and change, and is really turning into a first class community site.

MyxerMagic, which I’ve alluded to, is the latest and greatest feature. It’s a tiny little piece of software that integrates into the web browser to add a “send to phone” option to every image on the web. It’s going to be huge.

MyxerFlix is what we’re calling video support in MyxerTones. While the first releases simply allow for the delivery of video clips that are manually uploaded from a PC, we’ll soon enhance MyxerMagic with video capabilities which will allow, for example, any YouTube video to be sent directly to a user’s mobile phone right from the browser. How sweet it that?

Finally, as a teaser, these are the things that I expect the labs to kick out over the next months. MyxerFlix is basically an extension of the system to support video content (up to 3 minute video clips) alongside images and ringtones. MyxerTunes will be OTA delivery of free or premium full-track, high quality audio. Given recent industry trends with regard to increasing bandwidth availability and more capable phones, we believe that 2007 is a practical year to offer this service.

Board of Directors Presentation 2007Q1 – Part 2/3

Continued from part 1 (vision)…

My next title is Chief Technology Officer. So let’s talk about technology.

First of all, we are unabashedly a technology-focused company. We make no apology for that, and we will continue to be a technology-focused company for as long we exist. We rely on our technological savvy to enable us to build the kind of compelling products we’re becoming known for. The novelty, reliability, simplicity, and sheer power of our products is dependent wholly on our technology.

We have a tagline on the bottom of our Myxer web pages that says “the technology is mVisible.” That’s a shorthand way of saying, yes, there’s a hell of a lot going on under the covers, but you don’t have to worry about that. We’ve welded the hood shut. Punch in your phone number and click “send to my phone” and we’ll do the rest. It’s invisible.

We’ve got a platform that can ingest content in virtually any existing audio, image, or video format, chew it up, and spit it out in a nice little package delivered to the doorstep of just about any phone on any carrier out there. We’ve got huge tracts of really cool technology that allow us to automatically identify the phone model of a requesting user and the carrier they’re with, we’ve got a database of phone characteristics that’s plugged into an automated feedback loop so that it stays constantly updated with new information, we have multiple messaging gateways giving us redundancy and flexibility, we basically have this whole content preparation and delivery thing down. That is soooo last year.

We leverage web services extensively in our platform, and intend to do so even more in the future. Already we depend on Amazon S3 for storage and backup, mBlox web services for delivering premium content, Google Maps for geocoding, RSS feeds from Blogger for our news capability, and I’m sure I left off a couple in there somewhere.

We believe that companies that embrace the loosely-coupled, scalable nature of cloud computing are going to have tremendous advantages over companies that fail to take advantage of them. And that advantage is coming a lot sooner than some people may think.

We work with what’s there, in terms of software. Forcing a local installation of software on a user’s PC is a definite disadvantage for any company, and requiring special software on the phone is about 10x worse. Aside from the logistics of actually developing the software and testing it on all supported platforms, there’s the huge hurdle of getting users to actually install it successfully. It’s just not worth it. See point #1.

In our short history, we’ve already created an impressive track record of innovation. Building on the core Myxer platform, we’ve developed innovative technologies like MyxerTags, allowing our users to effectively host their own ringtones from their website or MySpace profile page; MyxerCodes, allowing automatic shared use of the MYXER shortcode for mobile originated content purchases; dynamic delivery, providing the possibility for ultra-personalized content to be delivered through our system by our partners; and most recently MyxerMagic, which promises to make all web content just one click away from being mobile content.

We’re just now rolling out core support for video delivery, the technological challenges for which are mainly architectural (spreading the CPU load efficiently, storing and caching files, etc.) in nature rather than innovative. I expect the next jaw-dropping technological advancement we’ll make is when we delivery the MyxerMagic + MyxerFlix technology that will let anyone with MyxerMagic send any video they see online directly to their mobile phone.

We’ve filed for patent protection with claims covering aspects such as the core architecture and the (really smart) way we harvest metadata about a song unknowingly contributed by one user and use it to improve the experience of subsequent users that use the same song. Most recently, we’ve crafted claims around the recent MyxerMagic and dynamic delivery inventions.

We have a regularly scheduled process with our IP legal team when we file provisional applications that cover our newest innovations, and convert previous provisional applications to full-fledged utility applications when appropriate.

So from a core technology point of view, we rock. We have probably one of the most robust mobile content delivery platforms available anywhere; we have unique technologies that take full advantage of the internet; and we have a group of awesome engineers churning out a lot of really cool stuff every day just waiting for the right time to spring out of the labs.

Inventions and the core technology that power our platform are only part of my concern as chief technology officer. High on my list of priorities is the scalability and reliability of our platform. Operating a website is serious business, especially when it gets the kind of traffic that Myxer is now getting.

Our website scaling plan is built to support the business model we’ve developed. The business model has conservative growth estimates that require the website to support ten times the current user load in the next year. That’s ten times as many visitors to the site, ten times as many ringtones delivered, ten times as many SMS messages sent, ten times as many files to store, ten times everything. And because the business plan estimates are conservative, we’re very likely to need even more capacity than that.

Late in the year, it became obvious that disk storage was a real bottleneck for us. We didn’t have enough local storage to hold onto the hundreds of gigabytes of files we needed to operate the site, and every time we needed to expand the amount of storage it required physical changes to our production facility. So, embracing the web, we built our own hierarchical file system based on Amazon’s S3 storage solution, to effectively give us infinite disk storage scalability at extremely reasonable rates. Following our commitment to automate everything automatable, this new system will basically operate on autopilot from now on; as local disk storage becomes sparse, files that haven’t been touched in a long time are simply deleted. If they are needed again in the future, they are retrieved from Amazon’s servers over the backbone without anyone ever knowing what happened. It’s really cool stuff.

What’s even cooler is that we built the system so that it can recover from a complete local disk failure, or even an obliteration of our production facility. If, for example, the great state of Texas (where our production facility is located) is swallowed up by a giant rabid sinkhole, we can bring up a new web server, point it at a backup database server, and the new web server’s local disk will be populated with all the files it needs from Amazon, as it needs them. We haven’t tested the bit about swallowing up the production facility yet, but the other stuff seems pretty solid.

Other scalability growing pains will come in the areas of page serving and transcoding CPU. The next few months will see us bringing up our web capacity with additional web servers and potentially a dedicated transcoding server or two to handle the CPU-intensive tasks of translating input media into the various output formats needed by our target devices. We’re also planning to mirror our front end web servers for extra capacity as well as fault tolerance.

Continued in Part 3 (Products)…

Board of Directors Presentation 2007Q1 – Part 1/3

Presentation to the

Board of Directors

of

mVisible Technologies, Inc.

 

 

Myk Willis

Founder, CTO, EVP Products

2 Feb 2007

 

[Note: this is based on the original presentation script, and not an actual transcript. Also note that some confidential information has been excised where necessary by contract.]

First of all, I’d like to welcome everyone to the first really formal board of directors meeting for mVisible Technologies, Inc. I guess it’s still not really all that formal, but this is the first time I remember wearing shoes at a director’s meeting, so I guess we’re moving more in that direction. Quite a few more lawyers here than I remember, too…

Let me start by saying that it is truly an honor and a privilege to be addressing my fellow board members, my fellow shareholders, and my friends (some of you are all three), all of us compatriots and companions on this crazy journey into the uncharted waters where the mobile industry meets the internet.

As I sat staring at Microsoft Word last night, trying to figure out how to segue from here into the meat of my soon-to-be-written presentation, an email dropped into my inbox announcing IDC’s estimate that over 1 billion mobile phones were sold last year alone. Holy crap. That’s a lot of ringtones!

Unfortunately, that didn’t make for a very good segue, so I’ll have to engage the abrupt gear-shift method instead, before I run out of time.

In preparation for this meeting, in true corporate America style, I whipped out PowerPoint and started building the scaffolding for my presentation. The handy little outline view on the left side makes it really easy to craft a perfectly balanced presentation – the intro slide, the agenda slide, the 3-5 slides for each item on the agenda, the summary – in about 5 minutes, leaving you plenty of time to simply fill in the bullet items at your leisure (for example, in the backseat of Bill’s car on the way to the meeting).

You may note that we’re still on the intro slide, and so you may be quietly wondering to yourself, if not quite concerned about the matter, precisely how many items are there on said agenda slide to follow?

Let’s cut to the chase. I’m the founder of mVisible, so I get to talk about the Vision (capital ‘V’) of the company. I’m the chief technology officer, also, so I’m going to spend some time talking about the state of the technology we’ve been growing. Finally, I’m responsible for Products, so I’m going to talk about our product management, development, and marketing activities.

Now might be an appropriate time to point out that mVisible doesn’t have a Vision statement, nor for that matter do we have a Mission statement. If you vaguely remember seeing some such thing in a document resembling a business plan for mVisible that may or may not have been distributed prior to our recent Series A funding round, well, I’m sorry to report that you must be mistaken, because we don’t have a business plan either.

So this part of the slide deck should go pretty quick, right?

The truth is, we do have a vision (and a mission, and a mantra), but instead of being some suitable-for-framing holy words that we mount above all of our desks (and put at the beginning of our PowerPoint presentations), our vision is a living being; an amorphous, low-frequency life form that lives inside us and uses us, the host being, to shows facets of itself from time to time; in late-night emails from conferences; in spontaneous comments to reporters or analysts; in job interviews; at the bar of the Wynkoop Brewing Company in Denver, CO; in the products we build.

I’ve collected an assortment of mission- and vision-like emissions from my email Sent folder that will hopefully prove useful to show what we’re about. I’ll warn you in advance that I plan to spend a fair amount of time on this topic, because it’s extremely important to our success as a company.

“Myxer is a startup company founded with the intent of revolutionizing the manner in which people use technology for personal communication. Myxer is focused on bringing powerful and unique capabilities to the mass-market through existing wireless devices.”

10/1/2004

 

So even at the very beginning, in fact before the very beginning, we can see that our core beliefs (and even our trademark rights to the Myxer name!) were well-established.

 

“[Our mission is] to develop innovative enabling technologies and products that empower individuals through mobile phone technologies.”

10/1/2004

 

Innovate, enable, empower: these concepts were baked in from the very beginning of our company, and they continue to be what drives what we do.

 

“We’re working to fulfill the promise of the mobile phone as the first truly personal computer.”

11/10/2005

 

I used to hammer on that truly personal computer theme a lot, but it might have lost some of its luster after being co-opted by H-P’s new “the computer is personal again” ad campaign. Because that’s exactly the opposite of what I mean. The idea I’ve always tried to conjure up with that phrase is that what we’ve previously called personal computers are anything but. Sitting at a desk in a back room of your house, staring at a bulky computer screen – is that personal? The mobile phone should not be treated as a shrunken-head version of an IBM PC. It is a conduit that has the potential to enable communication and entertainment in a very personal way. But to reach that potential to be truly personal, we – as an industry, as a company, as individuals – have to rethink every application and try to unlearn a lot of how we did things when the computer was on a desktop.

Obviously, this is a very high level idea, which is why it’s in the Vision part of the presentation and not the “features coming soon” part later.

 

“We have a vision of a mobile internet in which everyone is empowered to use, produce, share, market, and sell content and services unique to the mobile platform, and we’re creating valuable products in pursuit of that vision.“

11/10/2005

 

Now this is something that’s a lot more concrete and I think we can all appreciate how we’re making dramatic progress on this front. The fact of the matter is, we are delivering on this vision every single day, when thousands of bands use our products to share or sell their content through Myxer.

 

“I have visions of cheeseburgers dancing in my head.”

ScottK, 7/4/2005

 

Now, I just had to use this quote from ScottK, from an email in which he was expressing glee (I think) upon some milestone achievement or another. I still have no idea what this means, but it’s obviously a vision, right?

 

“everything’s mobile”

1/7/2006

 

This is what Kawasaki-San would probably refer to as a mantra. It’s a tight little phrase that is meant to be repeated in a barely audible, semi-conscious manner, several times a day, to help maintain focus on what’s important to our company. The MyxerMagic product feature, which we’ll speak about later, is a direct bloodline descendent and concrete incarnation of this mantra, and many more offspring are in the works.

 

“Myxer is about […] leveraging the respective strengths of the internet and the mobile phone to make digital content easily discoverable and accessible anywhere you are”

1/25/07

 

This is a very recent glimpse of our vision in which you can see our product bias toward digital content leaking through. While perhaps this statement would be too limiting for a traditional Vision statement at another company, the fact that we are content to allow our vision to live and breathe means we can embrace it fully without losing our understanding of larger goals waiting to be achieved after this one is accomplished.

 

Now, before jumping into my next topic, technology, I do want to talk very briefly about the industries we’re involved with. We like to think that we’re positioned at the center of three more or less distinct industries:

The Mobile Industry – what an ugly mess.

The Music Industry – what an ugly mess.

The Internet – what a beautiful mess!

 

While the mobile industry struggles under the sheer weight of the carriers;

While the music industry struggles with how to stay relevant in a world where musicians can get their digital content to their fans without requiring the distribution that labels have historically provided;

The web continues to produce a beautiful, if fractured and unpredictable, steady stream of innovation, built on an open network. Today’s web applications are flourishing because of the ‘openness’ of web 2.0, and we’re right in there. It’s a great time to be writing software for the web, there’s a lot of excitement, there’s a lot of expectations.

…continued in part 2…

Transparency

Now is the time in the calendar quarter when I’m supposed to have my presentation for the Board of Directors of mVisible Technologies, Inc. ready for binding and distribution to the other board members. Of course, I haven’t even started this yet.

This quarter, I’ve decided that I’m going to do something different. I’m going to make my presentation not just to the board, but to the whole world. While most companies consider the kind of internal information I present to be highly confidential and all that, I am a firm believer in transparency in my business. I have two primary reasons for this.

First, I believe our success is dependent almost entirely on our ability to execute as opposed to protect. Our execution is not hurt at all by exposing to the world what it is that we’re trying to do, what we’re doing well, and what we’re having problems with. In fact, I think going open kimono keeps you focused on the important goals, and insures that there is never discord between the company’s publicly-stated goals and those of internal operations.

Second, I believe that the mobile industry (in which we mainly operate), is doing a disservice to itself and to consumers by operating in such a short-sighted and protectionist manner. It’s been going on for a long time, but I’m reminded daily (see Verizon’s latest round of intentionally crippling their phones) of how the carriers practices are retarding the growth of a healthy industry. We’re committed to bucking that trend. The mobile industry needs to be dragged – kicking and screaming, most likely – into the internet age of open, free market competition based on merit rather than history.

Anyhow, I’m getting a little sidetracked. Hell, why wait til I’m done with the next presentation. I’m going to follow up this post by publishing my presentation from last quarter’s meeting to see how it’s received. It would be really cool if this kind of thing started to be the norm for businesses in our space. I think it would help us to advance the industry for the benefit of all.

Pricing of mobile content

I had an interesting discussion yesterday with Lucas Hrabovsky, CTO of Amie Street.  If you don’t know Amie Street, they’re a new independent music store that has a rather unique pricing scheme.  Songs start out free, but gradually rise in price as their popularity increases.  It’s a pretty nifty algorithm, and a hook that’s gotten them plenty of press.

I was talking to Lucas because we’re working on a way for MyxerTones and Amie Street to work together to provide the same kind of variable pricing scheme for mobile content (ringtones) as is currently provided for full track desktop downloads.

In a world where Steve Jobs all but set the global retail price of a digital full track download at $0.99 (oh, he’s just added a $1.29 option for DRM-free tracks…more on this later!), the variable pricing model of Amie Street offers quite a contrast.  But, as I pondered pricing issues with mobile content (thanks to Lucas for a follow-up email that piqued my interest),  I realized that neither the fixed price model of iTunes nor the variable price model of Amie Street really allows the artist any control over the retail pricing of their products.  While I have heard justifications offered up for why fixed pricing is a Good Thing for the Consumer and the Industry, none have been really compelling, and I think it’s really a regrettable accident that isn’t helping anyone.

At MyxerTones, we have a fixed retail price for each ringtone or other mobile content item, but we’ve always let artists choose what that retail price should be.  Let’s call it artist-controlled pricing.   Artists can either give away their content for free, or they can choose to charge between $0.99 and $2.99 per download.  We did this because, well, we had no idea what the right price for an arbitrary piece of mobile content should be, and we suspected different content was worth a different amount of money, so we figured we’d let the artist do whatever they thought was best.

What do they choose?  Well, perhaps not surprisingly, the majority of the content available from the MyxerTones catalog is made available at no charge, as this pacman chart shows:

This means most of the ringtones are used as promotional content; artists create them, then send out MyxerTags in bulletins to their fans on MySpace, or give out MyxerCodes at their shows, so that their fans can load them onto their phones in a show of support.  It’s a great use of mobile technology to connect bands with their fans, and we’re happy to provide these delivery services for free, based on on ad-supported model.  There’s probably similarly poised PacMan chart on some MySpace presentation somewhere, that shows how many bands are chosing to give away their songs as downloads from their profile pages.

But a relatively large percentage of our artists choose to monetize their works by charging for the ringtones they offer . Of this premium (non-free) content hosted by MyxerTones, the distribution of retail prices (chosen by artists) looks like this:

So we see that, more than half the time, artists are chosing the lowest (non-free) price for their content, which is $0.99.  Second in line is $1.99, probably owing to the popularity of that price point for ringtones on the mobile operator’s deck.  Together, those two prices make up more than three quarters of all items; the rest are variously priced up to $2.99.

What’s interesting is that when you look at the actual transactions taking place on MyxerTones, the items being purchased by consumers don’t match up with this pricing distribution at all.  In fact, more items are sold at $1.99 than at any other price point, despite the fact that far more less-expensive content is available on the site:

(Note that this pie chart sizes each slice based on the total number of transactions at the given price point, not based on the total value of those transactions.  This data is from the first three months of 2007.)

You can see the discrepency between what artists are most often asking for their ringtones and what consumers are actually paying when you look at a histogram that compares the two side-by-side:

Despite having only half as many items priced at $1.99 than at $0.99, there were more sales at this higher price point than at the lower. There’s a bit of hypothesizing going on here, but I think what this data means is that, for those people willing to pay for premium mobile content, the difference between $0.99 and $1.99 is relatively unimportant. Presumably, the higher priced content is more desirable in some way (higher quality, more established artist, etc.), but prior to this analysis, it wasn’t clear to me that people would be willing to shell out two bucks for something they really want, even when they can probably get something they just want for half the price (and tons of other stuff completely free on the same site!).

It also leads me to believe that a lot of MyxerTones artists could do better, revenue-wise, if they chose a higher price point (such as $1.99), for their mobile content.

Of course, there are lies, damn lies, and statistics, so one has to be careful about jumping to any firm conclusions with this data.  But what strikes me is that this quick and simple analysis I’ve just done on MyxerTones mobile content pricing and resultant consumer behavior is possible only because we allow artists to set their own prices, and cannot be effectively performed on the dominant pricing models for full-track downloads.  Whereas I was able to take a half hour of work and come up with an optimized trajectory for revenue generation (“encourage more artists to charge $1.99 for their content instead of $0.99 and it should increase their (and our) total revenues”), the music industry is handcuffed and blinded by their existing pricing model.  It certainly seems careless of them.

I’m no economist, but I think a healthy, reactive free market in which prices can float and adjust based on the wisdom (or whim) of crowds, including half-baked analysis like this – will ultimately benefit the industry more than any pricing structure enforced from the top down.

Of course, fixed pricing is probably far from the biggest problem preventing the music industry from continuing its download spiral into lower and lower sales numbers.  The biggest problem is DRM, and it looks like that problem’s finally going to get some attention.  Hopefully I’ll be able to give it some attention here shortly.

For now, Amie Street’s variable pricing is novel and has a lot of benefits, especially for emerging artists.  It isn’t quite a free market, and the feedback loop is rather limited, but it’s certainly a great experiment and I’m looking forward to working with them and others, and playing our part in evolving the economics of mobile content.

unnatural numbers – the short version

So the short version goes something like this: “natural” numbers (the non-negative integers we use for counting) are a man-made invention, and do not connect deeply with the fabric of our existence. There, I’ve said it.

I can’t tell you what a relief it is to finally say that out loud. So to speak.

Why do I emit such drivel? Well, it’s a rather long story, and I’ve been writing about it on again/off again for the past couple of months, and I have yet to sufficiently refactor my reasoning such that I am comfortable exposing it to public scrutiny. So I wanted to at least lead here with the short version so that I could briefly touch on some of the troubling consequences of this belief.

The biggest trouble is that I am now unable to map conclusions reached through any formal system – including, tragically, that old standby of geometry – back to the real world with any deep sense of certainty.   If the axioms on which these formal systems are based don’t have a basis in the real world, how can we trust that the theorems we derive with them have any semblence of Truth when mapped back to the natural universe?

But surely, natural numbers must exist, you say.  Why, look here: I have exactly 5 fingers on each hand.  And I have exactly one car that I drive to work.  And three quarters in my pocket.  And so on.  I’ll have to save my expanded reasoning for the long version of this story, but basically, I say that’s not true.  In your mind, you have elected to partition a specific clump of spacetime and model it as “your car,” and for the purposes of reasoning (in your own mind) you find it convenient to think of all the components of the car as making up a single entity.  But the idea that all of those components actually comprise a single, atom entity is a figment of your mind alone.  The universe has no need to oversimplify patterns of matter such that they may more easily be manipulated by logic, and so doesn’t see things that way.  I’ll look forward to digging into the reasons I think this is true later on.

For now, I’m just happy to have that zinger off my chest.

Smartphones are Dumb

I was asked recently by a reporter to comment on how advances in the smartphone industry were going to affect digital multimedia distributors and aggregators like Myxer.  At first, I was basically looking over each of my shoulders in turn, trying to figure out who he might be talking to. But then I figured that since he’d asked me via email, I could be fairly certain that he couldn’t've seen anyone mingling behind me in my office, so he must’ve been addressing me.

Being addressed as a representative “digital multimedia distributor and aggregator” was kind of like being called “Mr. Willis.” I was like, oh, right! That’s me!

His question was a follow-up to a fractured and ultimately really expensive conversation we’d had the week before. I was in the States and he was in Thailand with a Chinese phone number. Or vice versa. Something like that. Anyhow, I figured that was the perfect situation for Skype, so I charged up my account (with Euros! how quaint!) and dialed him up for an exiting game of “guess what that guy is saying during the 3 out of every 5 seconds you can’t hear him.”

After playing that game for a while (“what do [you think about?] the idea that [bilateral cuspids?] will lead the [periodontal revolution?] against Windows Mobile?”), and answering a great many questions that I’m quite sure I wasn’t actually asked, I decided I’d better try the landline. Boy, did BellSouth love me that day. To their credit, I got through on only the fourth try, and the satellite delay was only moderately annoying after the Skype fiasco. And they agreed to spread the long distance charges out over 3 years, so that’s great.

It is funny that we were talking about how, boy, these cell phone providers better watch out, because people can just use a WiFi-enabled cellphone with VoIP and not have to deal with their stinkin’ GSM and all that. Right. Funny, because (1) I can’t even reliably use VoIP from my desktop PC chained to a fat-pipe internet connection, and (2) it never even occured to me to try out my cell phone for the call.  (I’ve long been saying that VoIP/WiFi is going to bring disruptive change to the mobile industry, but we have several years before this starts to bring the big guys down.)

On to the smartphone topic.

First of all, the word smartphone means different things to different people, and so it’s slippery to talk numbers and trends about them. The traditional smartphone, I think most people agree, is something with a heavy user interface, built to reproduce some subset of the features of a desktop PC. This, based on what I’ve seen to date, is absolutely the least exciting thing since PDAs.  Positively boring. Get Excel spreadsheets on my phone while on vacation! Great. Just what I wanted.

So I think that smartphones have traditionally been marketed at the ‘mobile salesforce’ and other UMMTE  (Upper Middle Management Through Executive) types that prioritize staying in touch with ‘the office’ over things like, say, their kid’s high school graduations.  Fortunately, this is a relatively small market, which is why these devices account for something in the low single-digits as far as the percentage of worldwide phone sales.

So, I said to this reporter, I don’t think smartphones have had any effect at all on mVisible or most other mobile content distributors.

Uncomfortable silence.

It didn’t take me too long to realize I’d broken some cardinal rule of press communications, exactly which one I didn’t know, because I’m not that far into “PR for Dummies” yet.  But I did know that if I was going to continue to be consulted as an expert in digital media and all things mobile by the press, I’d better bring up the iPhone, and do it fast. So I said something along the lines of:

“Although predictions that Apple’s iPhone will disrupt the smartphone market may turn out to be true in the long run, I don’t think it’s for the reasons most people seem to think.”

Brilliant recovery! See how I joined the in-crowd with a reference to the iPhone, tied it right back to the original question by inserting the word ’smartphone’ where ‘mobile’ should’ve been, and then topped it off with the old “most people seem to think” trick?

Honestly, despite the wonderful Steve Jobs reality distortion field, which has led various writers to predict the collapse of existing smartphone makers under the weight of the iPhone, the numbers just don’t support that. Apple’s hoping to sell 10M units in their first year. Nokia, in contrast, sold 70M music-focused phones in 2006. That’s more music devices sold in one year than all of the iPods that have been sold over the five or so years they’ve been on the market. And if you think I’m comparing apples to oranges (ahem) by contrasting Apple’s OSX-based computer with Nokia’s music phones, why don’t we compare the iPhone sales to the traditional smartphone market.  When you look at those numbers, Apple’s looking at about 1% of the smartphone market if they meet their goals.

The biggest effect the iPhone is going to have on the industry is that it’s going to force other companies to take a hard look at the cool factor of their own devices. And it’s about time. Aside from the tired and restrictive business practices of the mobile carriers, the biggest inhibitor to the realization of the true power of the mobile phone has got to be the user interface, and Apple’s made a bold innovation in that department. Traditional smartphone makers have for the most part treated the mobile phone as an inferior PC with a tiny display and crippled keypad for data entry. The lack of imagination is depressing, but it’s inevitable when companies like RIM and Microsoft see the smartphone primarily as a tool for knowledge workers as opposed to recognizing it as a fundamentally different device.

For mVisible and our Myxer platform, it’s critically important for us to provide a good user experience and unparalleled choice of content to mass market devices. The billion or so mass market mobile phones that will be sold next year are more important to us than smartphones, and it’s the capabilities of those mass market devices that are most important to our segment of the industry.

The most important advances in mobile phones from mVisible’s point of view are multimedia capabilities based on open standards and platforms, and unhindered by draconion rights management and feature crippling. We’ve certainly seen a marked increase in the number of devices that are capable of playing high quality music and video. We’re really excited about the opportunities that these new devices’ capabilities present to us, but unfortunately, open platforms are hard to come by in the U.S. mobile industry.

mVisible owes its existence and early success to the way we’ve been able to overcome so many of the technical and bureaucratic difficulties that currently exist to just get content to mobile devices. But we’re looking forward to being able to focus our creative energies on creating new and exiting products that take full advantage of the unique aspects of the mobile phone without having to worry about these artificial barriers that keep getting erected. So we’re interested in seeing DRM disappear, and we’re interested in device manufacturers selling unlocked (and therefore not crippled) phones direct to consumers, and we’re interested in realistic, sustainable business models emerging for mobile content (for example, doing away with today’s ridiculous per-transaction charges for digital content where the carrier takes fully 50% of retail price of an item for doing virtually nothing) .

I might add that this is one area in which Apple is certainly not innovating with the iPhone. Apple’s control freak tendencies line up pretty well with the history of the mobile industry, and delivering a locked operating environment for a device artificially tied to one mobile operator is certainly not a platform begging for others to add value to.

So, I’m not sure I answered the question posed to me, but hopefully I gave a sense of why I see traditional smartphones as fairly unimportant to digitial content distributors. The real trend that is important to us is open multimedia capabilities emerging on mass market phones – when that becomes commonplace, you’ll start to see the mobile content market really mature.

Write about what you don’t know

I am acutely aware that I never seem to write about things that I know much about. The wry and cynical amongst you are, no doubt, already crafting wry and cynical reactions to that statement in your head, sticking me with little half-vocalized jabs – “that certainly doesn’t limit the topic very much,” etc. Everyone that’s ever been on the receiving end of an email alias for which I’ve been allowed send privileges, on the other hand, is rolling their (collective) eyes, memories of one of my melodramatic missives discovered in their inbox like a phonebook on a dew-covered doorstep in the morning. Heavy. Appearing mysteriously in the night. Full of words, but having no real point.

I will admit that some of this probably stems from my rebellion against those cliched words of wisdom so often espoused for aspiring writers, that they should “write about what you know.” You know what I think? That’s crap. People writing about “what they know” is the primary cause of me being subjected to the multitude of bland, self-indulgent, and plain played-out plays and movies about (what else?) a struggling writer living in New York City, or about an eccentric [actor | director | screenwriter | key grip] trying to make it in Los Angeles.

My advice to aspiring writers is: don’t take advice from me. I write to exercise parts of my brain that don’t get much use in my day job, not to advice anyone else on how to go about their business (and certainly not to entertain).

I used to have a friend with whom I would spend lunch breaks talking about all kinds of weird stuff. Then he died in a tragic accident involving camouflage pants, a blender, and one of those “green screens” they use for special effects and weather reports. Ha, ha. Of course that’s a joke. He’s still alive. But he may as well be dead, because I never talk to him because he moved to Milwaukee so he could hang out with other (apparently geographically-challenged) artist-types who want to spend their time making films and goofy art exhibits and generally prance around like life is supposed to be fun or something.

Anyhow, this friend, let’s call him “Bob,” because that’s really his name, was a good outlet for wacky ideas. We could riff on things like numberometries like a couple of stoned philosophy majors getting a dip of the professor’s stash, only we were stone sober on account of (1) having jobs, and (2) realizing that they don’t call it dope for nothin’. (Bobby has since descended deep into the artist community, so I’m not really sure number (1) still applies to him, and number (2) might be losing its force of argument, too.)

Sometimes we’d talk about less crazy topics, like gravity and tides, or regular expressions, or fashioning makeshift splints. And that’s fun to a certain point. Knowledge for knowledge’s sake is rewarding and all, but after a while, when you get back to your office, you Google the stuff, and, yup, some guy spent 8 years getting his doctorate studying what you talked about over lunch, and more answers than you would ever want are available here and here and here.

It was a lot more fun to talk about stuff that we really didn’t know how in the hell it worked, and – more important – we’ll probably never know how it works. Because nobody knows.  That’s the kind of stuff that makes for interesting conversations, and sticks to your brain bones for a long time. That’s worth talking about.

But now that Bobby’s dead, it’s just me and my blog.

2006 was the year of user generated content

I was recently asked to explain what I thought was the top tech trend of 2006. Having spent much of the year heads-down cranking out more and more features and functionality for MyxerTones, I had to kind of step back and try to get a higher-level perspective. Having done that, I think that it’s pretty clear that the biggest technology trend of 2006 is the explosion in the availability of user generated content.

What happened last year was that it became practical and commonplace for anyone with sufficient creative energy to produce content and have it discovered and enjoyed by anyone else on the planet. Anything from offbeat homegrown videos (YouTube), articles on any and every conceivable topic (what would I do without Wikipedia?), and mobile phone ringtones (MyxerTones) can now be produced and shared by anyone, without requiring them to somehow be associated with a traditional publisher like a movie studio, record label, or news agency.

Obviously, the ability to share online has been baked in since the beginning of the internet.  I still remember reading Monty Python scripts online (via USENET?) sometime around 1991, and Napster had a fairly well-publicized run of things, no?  And personal web sites have been around since the beginning as well, though they’ve recently been fairly completely replaced with “profile pages” on sub-webs like MySpace.  So why is 2006 anything special?
I think what happened in 2006 was that broadband penetration, disk storage costs, video camera availability, powerful editing software, and a host of other forever-unknown factors finally collectively reached the ignition temperature of social content.  Media that was once forced by the brutal economic reality of distribution costs in the real world to have large companies built up to support it (newspaper publishers, the ‘music industry’, etc.) can now be uploaded by the producers themselves and spread around the world at virtually no cost directly to the consumers.  It’s a new world.

While I wouldn’t say I regularly look to Time magazine to spot tech trends, I think the fact that that mass-market publication’s 2006 Person of the Year was “you” is a good data point to support the idea that something important happened last year.

I think we at mVisible have a unique perspective on this, because in many ways we’re right in the middle of taking the top trend of 2006 (user generated content) and turning it into the top trend of 2007, which will be an explosion new and useful mobile services. The mobile phone will be taking the reigns from the PC as the preferred way to create and consume user-generated content, while the desktop PC will likely continue to serve as the best discovery mechanism.

All of these trends are just that – trends -  so it’s not like you draw a line and you say “this is the year bloggers buried Reuters” or anything like that.  But this very real shift of broadcasting power back toward the individual and away from an ‘industry’ is a welcome development, and I think 2006 will be remembered for it.  Power to the people!