The thing is, there never was a currency crash. There was a security breach at Mt Gox, one of the largest Bitcoin trading houses, which had dire consequences for their customers. But the journalists who wanted to analyse the impact on the Bitcoin market didn’t get any further than tracking the prices at Mt Gox, the very exchange that had just been cracked, and in the process mistook a bank run for a sovereign default. Limiting their view to this, it looked like the Bitcoin economy was in ruins. Looking beyond the Mt Gox exchange even briefly would have shown the rest of the economy was largely unaffected. Retailers continued retailing, exchanges continued exchanging, and coins that weren’t in your Mt Gox account were as safe as they ever were. If you considered Bitcoin to be a reasonable medium of exchange on the 18th of June, there was no reason to change your mind (though double-checking your encryption and backups wouldn’t be a bad idea).

There seems to be one sensible message to take away from the Mt Gox crash: the cyber-criminals have arrived. If Bitcoin ever was lucky enough to fly below the criminal radar, it certainly no longer is. Optimists will probably say that this moment was inevitable, and may even validate how seriously it’s being taken.

Bitcoin has very real, very interesting economic and usability difficulties that probably mean it will never be a viable currency. Suggesting that the recent security flaws in a single exchange undermine it is just lazy journalism.

Now let’s just think about this. When a PayPal account is compromised by the Ukrainian mafia or whoever, we can assume that they make use of it very quickly. Probably within minutes, certainly in less than a day. Who knows when the victim is going to get suspicious and change their password or notify their bank? Sitting on a compromised account has no upside and potentially a large downside.

In order for a particular random cancellation to be effective, it would have to occur by chance at the exact moment the account was compromised. If it happened beforehand, it would have zero effect (the new password would be compromised rather than the old one). If it happened more than a few hours afterward, the account would already be drained and any protection would be useless. The odds of a particular random check providing any protection are astronomical.

Of course, maybe they’re just lying to me. That would be a whole lot better.

• There’s no good evidence that QWERTY is substantially slower than DVORAK, indeed the QWERTY layout succeeded in a competitive marketplace against other keyboard layouts
• It was never true that QWERTY was designed to slow people down anyway; it was designed to reduce the occurrences of subsequent kepresses being nearby in space, not nearby in time, the former being more important to preventing jamming than the latter
• We have a far better metaphor now in the shape of Twitter

Allow me to explain. Millions of messages a day are now being shared via Twitter. Some people use it to communicate with their family, debate political ideas or get the daily news. Central to the Twitter model is that messages are strictly limited in size, to which many people ascribe its approachability and rapid growth.

But there was never any thought put in to what should be the optimum size for a Twitter message. No studies were done of what the trade-off is between messages long enough for rich communication and short enough to discourage excess verbosity. There were no competing systems. The founders of Twitter simply settled on 140 characters because it was envisaged that Twitter would heavily use the SMS system, and SMS messages are limited to 160 characters (truncating Twitter messages at 140 characters allowed for some metadata to be attached). It’s a technical limitation driving a supposedly human-centric tool.

But it’s even worse than that. The SMS system that set the boundaries for Twitter is itself a holdover from an earlier technologically limited era. SMS messages were originally limited to 128 bytes by the signalling formats used on the networks. Even though this was eventually extended to 140 bytes (the now-familiar 160 7-bit characters) I’m assuming the technological tail was still wagging the ergonomic dog. SMS was envisaged as primarily for traders to send terse stock market tips, not as a replacement for other forms of human contact (fact: you can contact The Samaritans for support with suicidal feelings via SMS; I can’t imagine a worse situation to be trying to repeatedly re-edit your message to fit it into 160 characters).

The problem started when we got to the bag drop desk (having “checked in” online, whatever that means, the previous night). It turns out that British Airways attempt to enforce entry visa requirements at the home end of the journey, and won’t let anyone on the plane who doesn’t meet visa requirements. This makes sense, since it’s a waste of time and jet fuel to take someone halfway round the world just to find that they can’t enter the country.

Unfortunately BA don’t apply the Zambian visa rules, they apply their approximation of the Zambian visa rules, and it turns out we’re an edge case. In particular, in BA’s version of things you can’t go unless you have a return flight booked within 90 days. This makes no sense at all in practice, since we were travelling on a business visa, and could only get a 30-day initial allowance anyway (to be extended later). In BA’s version of events, travelling on a 30-day visa with an 89-day return date is OK, while using the same visa with a 110-day return date is forbidden.

This seems like another case of bugs in real world rules to me. The BA staff at Heathrow had clear instructions, which they followed to the letter. They were courteous and understanding, but the fault didn’t lie with them. The rules are, to stretch an analogy, written to ROM. In the end, we did what any programmer would recognise as a workaround: changed our return flight to an earlier date, flew, then changed it back.

Which brings me to my related complaint: what exactly was the point of “checking in” online the night before if it didn’t ensure we were cleared to fly? As far as I can tell, online checkin consists of nothing more than allocating your seat number and asking security questions, which get asked again anyway. The seat number is sometimes changed later at the whim of the airline as well. In terms of seat allocation, it’s turned an orderly process of arriving at the airport early to ensure you get your preferred seat into a competition to see who can get to an internet terminal closest (to the second) to 24 hours before the flight is scheduled. I was delayed 20 minutes because BA’s mobile web site was either broken or just not implemented, by which time half the plane was already full. What exactly does this online bun-fight achieve?

But enough of the whingeing. We made it here on schedule, and we’re settled into our new house. It’s much harder to pity yourself when you see the conditions many Zambians live in, but that’s a topic for another post.

In the never-ending quest to get page views, the choices writers and editors are making to attract eyeballs and drive traffic are creating a new breed of low-brow, gimmicky disposable content.  At its best it adds little insight and at its worst amounts to a slimy bait-and-switch (catchy headline, nothing to say in the article).

It’s the new clutter. The article itself has devolved into a flashing, animated pile of fluff. The casualty of the rat race towards ad impressions isn’t just crappy layout and thoughtless art direction. It’s awful and useless content.

To me, this seems to be an all but inevitable result of attempting to fund the majority of the web publishing economy with advertising, which in turn is a natural outcome of the post-2000-goldrush exuberance that in the future, everything will be FREE.

The problem with advertising is that a casual or dissatisfied eyeball pays off just as well as an engaged, satisfied eyeball—quite possibly the former pays better, since a dissatisfied mind is more likely to wander away from the content looking for gewgaws to purchase. People (and companies) respond to this incentive, and attempt to gain maximal payoff with minimal effort.

Compare the open web with the content in Amazon’s e-book store (or any paid-content service): sure, there are plenty of bad books, but the vast majority are honest attempts to provide something of value, even if the author’s skill is found wanting.

Curiously enough, it’s not the lack of income that causes this: in places where advertising isn’t possible (e.g. wikipedia, feedbooks etc.) the average quality of content is higher. What seems to be important is not the size of the incentive, but the direction in which it pushes.

It seems odd that having immunity to a disease should drive up my costs for getting vaccinated for another disease. It seems downright bizarre that my making it easier (or at least, no harder) for the government to deliver the free service should mean I have to pay. It would be fashionable at this point to rail against the fundamental inefficiency of government-provided healthcare.

But I don’t think that’s what’s happening here. The mistake the NHS seem to be making here looks like the same sort of mistake that is made every day by thousands of software developers. The set of rules for Hepatitis has a bug in it (no pun intended).

It seems to me that in this case the bug is a leaky abstraction. The obvious goal is to provide immunity to both diseases, and a policy of providing a combined vaccine looks from a high level as if it fulfils that goal. When the details of the policy are implemented, an obvious refinement is not to provide a combined vaccine to someone who’s already had one shot (whether this is a matter of health or cost-saving I don’t know, but it doesn’t affect the argument).

Obviously this is an over-simplification; looking at the world through the eyes of a programmer, things naturally form into shapes and idioms that are common currency to the techie. But I think this there’s something to be gained from seeing the world this way. When people try and build rule sets, they get things wrong. Not because they are stupid, or unwilling, or corrupted, or bureaucratic, but simply because creating perfect rule sets isn’t something that humans are naturally capable of.

Currently some of the discussion in publishing centers on the fact that music is now sold in $1 downloads rather than $15 albums. But this too is an accident of circumstance. The length of a CD album is not a golden standard of the quantity in which people like to enjoy music, but one person’s personal taste: Sony vice-president Norio Ohga wanted a CD to hold the entire of Beethoven’s 9th symphony, and so for over a decade that is how we purchased our music.

Current commentary sometimes seems to imply that the music industry allowed the business model to be shifted to single-track purchases (to its cost) due to poor negotiation, and that the print industry might avoid making the same mistake. This is a delusion: certain changes in technology simply invalidate the old assumptions.

I expect the Amazon / Macmillan negotiation soap opera will resolve itself before long, but is in danger of drowning out discussion of the lasting shifts that the industry will inevitably go through. Here are a few of my predictions:

More competition with out-of-copyright works

In a physical book shop works that are out of copyright tend to sell for almost as much as recent releases. This is not unreasonable, since they still require editing, desigining and promoting, not to mention the cost of printing the physical book. Shelf space is a major cost in high street book shops, and costs no less when the work is out of copyright.

In a market for electronic books, some of these costs go away. The rest can be defrayed over a much longer period of time, since there is no opportunity cost to keeping books on the shelf. Competition with amateurish free copies will drive down the cost of a professionally-edited version to far below the cost of a new work, while still allowing publishers to turn a profit.

Most authors are not blessed with the wisdom of Marcus Aurelius, the wit of Jerome K. Jerome or the inventiveness of Arthur Conan Doyle (just three authors I’ve enjoyed for free on my Kindle). Of course the modern world has its own share of geniuses, and even those of middle rank can offer great value to readers by writing about the subjects that interest them, but it would be a sad world indeed if people didn’t capitalise on the opportunity to enjoy classic works for peanuts.

More flexibility in length of published works

It used to be that a book had to be of a certain length to be worth publishing. This is going to change, since the fixed costs of printing have gone away. The only question remaining is whether people will consent to pay small amounts for small amounts of content. There is no rational reason why not, but the field of paid content isn’t a shining example of rational consumer behaviour to date.

More competition from the back catalogue

The ‘long tail’ effect, where stock can diversify as shelving cost drops to zero, can flourish in the electronic market as the cost of warehousing drops out of the model. No book need ever again be out of print. This is going to help some authors and hurt others: books that have fallen from prominence aren’t necessarily bad, and if priced keenly they might prove a worthy substitute for recent publications at hardback prices.

More competition from the ‘gift economy’

Once you discard the requirement that books have to be printed on paper to be consumed, the barrier to entry to the market is much lower. Vast amounts of text in blogs, wiki articles and social network postings become readable in exactly the same circumstances as published books.

People who infer that this will drive the price of all textual content down to zero are unjustified in their conclusion and hopefully wrong. A well-researched, professionally-written and carefully-edited document is worth substantially more than an amateurish one, and a rational consumer will be prepared to pay more for it. However, for the portions of our reading time (hopefully not all) that are idle escapism, it may well be that the difference isn’t worth caring about.

Don’t shoot the messenger

I’m not saying the above out of ideology, but because I think the trends are inescapable, in direction if not in extent. More important is what won’t change: people will still exchange money for items that are of value to them. The lesson from the music industry’s experience is that the publishers that embrace the new rules and figure out how to turn them to their advantage will prosper.

A natural disaster befalls a certain part of the world, and people wring their hands over it. Soon this settles down and people devote their energies to providing aid: governments and NGOs swing into action, and the general public mobilise their best efforts to provide funds from T-shirts, concerts, bake sales and good old-fashioned donations. The sense of hopelessness is temporarily assuaged until news gets back that aid can’t get through: Haiti’s lack of infrastructure combined with the crippling effects of the quake mean that aid is blocked by sheer logistical difficulties—and we’re back to hand-wringing again.

Nobody likes to feel powerless. But if you want to prevent unnecessary deaths, then I have good news for you: it’s easier than you think. Around one million people die from malaria each year, and nearly two million from tuberculosis (TB). An incredible 36 million die each year from causes related to malnutrition (this number very likely overlaps with the numbers for malaria and TB). The vast majority of these deaths are preventable, and at surprisingly low cost, since the limiting factor isn’t the Herculean logistical task of getting emergency aid in through narrow transport channels already at maximum capacity—it’s simply lack of funds.

Haiti may not be getting all the help it needs right now, but it’s quite possibly getting all the help it can handle for the moment. Meanwhile, poverty hasn’t let up elsewhere in the world, and by the third day of the Haiti relief effort an equivalent number of preventable deaths had happened elsewhere in the world.

I don’t pretend to have any answers to global poverty, but I’d like to suggest two questions that could usefully guide our human desire to make the world a better place. Firstly, how can I target my giving to optimise the amount of suffering saved in the world? Secondly, how can I target my giving to be sustainable and continue to pay dividends over time? If we can satisfy these, then I don’t see what more can be asked of us.

I’m not too worried about Amazon’s technological ability to delete books that have been purchased and downloaded to the Kindle, because Amazon’s actions are still constrained by the only two things that really matter: the law, and good business sense.

If I go to eBay and purchase a laptop that later turns out to have been stolen, I don’t have any right to retain ownership of the laptop once that fact has come to light, no matter how innocent my purchase was. The laptop will (ideally) be taken away from me by the police and returned to its rightful owner. I won’t even get my payment refunded by default, it will be up to me to pursue the matter with the seller (who may themselves not know they had been dealing in stolen property).

The Amazon case isn’t so different to the stolen laptop. By selling the book to people, the right of the copyright holder to control distribution had been taken away from them, and it was only right that that was corrected. The innocence of the purchasers of the book (who received an immediate refund when the book was taken away from them) doesn’t change that.

The capability to remove books could in theory be used for suppression of ideas, but I can’t see it making business sense to do so. The Streisand effect means that removal of an existing book will make much more of a splash than not listing the book in the first place (which they are equally well able to do with plain old dead-tree books). The vast majority of books in the Kindle store sell so few copies that the best way to keep a text out of people’s minds is simply not to promote it.

Incorporating advertising into a web offering is often seen as a no-brainer: free money that you would be stupid to turn down, whatever your business model. However, I believe this assumption holds insidious consequences that can be bad for producer and consumer alike.

Advertising solves nothing

It always surprises me how blind people are to the cost of advertising. If I watch a movie on TV, I might sit through 15 or 20 minutes of advertising content that I wouldn’t say I wanted to watch. How much yould you pay to get 20 minutes of your life back to spend on something else?

Advertising has costs on the producer as well, in terms of trust. Seth Godin describes the problem eloquently:

The digital world, even the high end brands, has become a sleazy carnival, complete with hawkers, barkers and a bearded lady. By the time someone actually gets to your site, they’ve been conned, popped up, popped under and upsold so many times they really have no choice but to be skeptical.

Basically, it’s a race to the bottom, with so many people spamming trackbacks, planning popups and scheming to trick the surfer with this or that that we’ve bullied people into a corner of believing no one.

In addition to the hidden cost, advertising doesn’t bring more value into the economy, it merely reallocates it. Advertising-funded services aren’t really being provided for free, they are being paid for by the people who buy products that have been advertised (the sellers having passed along the cost of advertising to the consumer).

There are two possibilities as consumer of advertising-funded material: either you are one of the customers of the advertised products, or you are not. In the former case you are paying just as much for the content as you would if you paid directly. In the latter case, you appear to be getting a good deal by getting “free” content that is being subsidised by somebody else, but there’s a hidden problem.

The problem is that if you aren’t the one who pays, the content producers have no reason at all to cater to your tastes. If your favourite TV show is cancelled or your favourite blog stops being maintained, you don’t have any cause to complain: you were jus a freeloader, who was getting by on the fact that someone else was willing to pay for the content you enjoyed.

Missed opportunities from advertising

So advertising isn’t all that it’s cracked up to be, but it’s still the choice of individuals. If both the producer and consumer are happy with their ad-funded arrangement, even if it’s not 100% efficient, why should I care?

I care because I think using advertising has externalities. The most obvious is that making everything free at the point of use hides pricing signals. The amount of ad money made by reading a 3-page article is roughly the same as made from a worthless advert-packed spam page. In fact, you might be less likely to click on ads while reading a worthwhile article. Certainly there’s no way to show that you value one web page 3 times as much as you do another, when it’s all free at the point of use.

Right now I’m writing an article about internet business models, but it’s to my economic advantage to include terms like ‘mesothelioma’ or ‘acai berry’. In fact, I could probably do better for myself by dropping the whole attempt to create original content and writing keyword-heavy blogspam. Would this make the world a better place?

One of the most annoying things is that we’re missing the potential afforded by dynamic pricing. The real problem with charging for content isn’t that its value is zero, but that the price is rarely right. Paying newstand price for an online newspaper is a rip-off, getting it for free is a bargain. Somewhere between those two prices is the true value of the content, if only we could find what it was. Using advertising is tantamount to abandoning this search and letting the advertiser call the shots.

“Free” may not be as important as people think

On the topic of free news content, The Economist noted the following:

A poll by Harris Interactive for paidContent:UK, a website owned the Guardian, finds that three-quarters of Britons say they would switch to an alternative free news source if their favourite website began charging.

So what? Are you telling me that if Mars bars were free, their sales wouldn’t drop by 75% when they started charging? Nobody suggests that Mars have an unsustainable business model by trying to charge money for chocolate.

Strategically, a small number of customers who care about your product enough to pay is better than a large number of uninterested consumers, all other things being equal. With advertising in its current depressed state, it’s quite likely that payment from 25% of readers would amount to more money than they could make from advertising to 100%.