Cheaper Music and Voice

Two different but related articles in the New York Times – one asks “What Price Music?” and the other on Skype, which offers free calls using a P2P architecture over the Internet. The common theme: digital technology is disrupting two key indsutries.

Music: “Battered by a sales slump it attributes largely to digital piracy and heartened by a limited test with Apple computer owners, this fall the record industry is trying to catch up with its file-swapping customers: the major labels and many independents have agreed to deconstruct the album, allowing anyone with a computer to buy any of hundreds of thousands of individual songs. Soon huge catalogs of every genre of music will be available for sale on the Internet from over a dozen retailers, bearing the blessing and license agreements of the major record labels…No one knows what all the effects will be. But one will certainly be on price; music in the new format will cost at least a little less than it did in the old. The standard charge has become 99 cents a track. Albums that cost between $12 and $18 on CD now sell for about $10 online. The labels have also authorized several services to offer a kind of online lease program for music: subscribers pay a flat $10 a month to listen to as many as half a million tracks as often as they want over the Internet, rather than storing them on a computer or burning them to a CD.”

Skype: “Skype’s software and audio connections are based entirely on the same peer-to-peer infrastructure that powers Kazaa. For example, if two users want to call each other, the call can be routed directly between their computers instead of having to pass through central servers. Peer-to-peer routing also frees the company from having to buy and maintain much equipment, because its system relies entirely on the computers of individual users. The company does not earn any money right now, but is betting that consumers will eventually pay for premium services, like voice mail. This winter, Skype plans to introduce a feature that will enable users to call people on regular telephones – for a fee it says will be ‘substantially lower” than current phone service. That means that Skype wouldn’t just allow computer-savvy users to call one another; it would allow them to call anybody with regular phone service…In a recent report on the telecommunications industry, Daiwa Securities wrote that Skype ‘is something to be scared of, and is probably set to become the biggest story of the year’ in the telecom sector. ‘We think the Skype offering (and whatever may follow it) is akin to a giant meteor hurtling on a collision course toward Earth,’ the report said.”

Modelling Complexity

From The Economist:

The scientists and engineers who gathered this week in Oxford for the first International Workshop on Complex Agent-Based Dynamic Networks are seeking to explain much of the world’s behaviour through the use of agents. In this context, an agent is a program that acts in a self-interested manner in its dealings with numerous other agents inside a computer. This arrangement can mimic almost any interactive system: a stockmarket; a habitat; even a business supply-chain. If the constituent parts can be understood, the reasoning goes, some insight into the whole will follow.

The systems that agents have been most successful in modelling so far are financial markets. This is partly because of the obvious interest that people have in understanding such markets, and partly because one of the challenges in setting up an agent-based model is defining clearly what individual agents want. In a financial market that definition is easy: money.

Entrepreneurial Pointers

Startup Journal has an article by Mark Feffer, where he writes about learnigns useful for entrepreneurs:
– Don’t forget how smart you are
– Stay calm
– Stay true to your vision
– Look forward, not back
– Beware of “partnerships”

A Small Business column in the NYTimes has a quote by Jere Ross, a lawyer with Bush Ross Gardner Warren & Rudy: “The inventor always thinks his idea is the best and the world will come to his door and he’s going to be rich and famous. What he learns to his chagrin is unless he has the money and strategy to develop the idea into a marketable product or process he won’t be able to accomplish anything. If something is selling, it will be knocked off instantly, not just in the United States, but all over the world, thanks to the Internet.” Entrepreneurs need to keep this in mind.