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Please Ignore iPhone 3G Component Cost Reports

I’ve been seeing an increase in the number of “reports” [1] [2] about the new iPhone component cost. People seem to think this is some sort of useful information. It isn’t. Having only component costs is pointless. But what’s worse is that these reports are just an imaginary breakdown with a guess at the components and their prices. This makes it completely silly. Even if you had all that information it would still be pointless until products begin to magically do the following all by themselves:

  • research and develop
  • license technologies used in it
  • assemble
  • package
  • ship
  • store
  • promote
  • sell

component cost is just a fraction of a significantly bigger number. It might be useful if you have a good idea about the costs for the above, but considering no one has actually broken down an iPhone yet these reports are a bit hasty and most likely misinformation.

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My Angry Email to Sub Pop in 2005

In 2005 I wrote an angry email to Sub Pop because the album I wanted to download from iTunes could only be purchased one track at a time. In fact, I wrote an angry email and then accidentally sent it before I could make it sound at least slightly intelligent. But what followed from that first stupid email was a short series of emails where a Sub Pop rep (who’ve I decided to call SPR in these emails) and I debated Sub Pop and the music business.

For those who don’t know, Sub Pop was an indie label that got bought up (49% bought up anyway) by Warner Music. This means they aren’t indie any more, but since it is cool to be “indie” they still try to put on a good show. However, indie is more than just a business status, it’s a mindset. Sub Pop fails miserably in that regard to matchup at all with the spirit of independent music. A quick look at their FAQ speaks volumes (emphasis added):

A sync license for a Sub Pop artist will run you $500, ….If you do not want to pay money to use the music then why are you here anyway? Trust me, people, this is cheap. AND, you like this band, right? So now all of the sudden you’re going to try to take food off their tables by trying to bargain with me?! It ain’t gonna happen. Just so we’re very clear here: this is a festivals, student film or non-commercial license only. Any “for profit” uses of the film are not authorized under the $500 license. That, my friend, is an entirely different lecture.

This “lecture” was what sent me into an email rage. So, away I wrote…. (note: these are excepts, not the whole full text dealy)

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Sent: October 05, 2005
From: Jon

…I had just stumbled onto Sub Pop’s FAQ where I learned that students can’t get permission to use any music without paying $500. That to me rings of greed, considering students are not making money, or more accurately, that school is costing them money. What’s more it is petty to complain when someone tries to do right and get permission that doing otherwise would “take food off their tables” especially when there is no logic to such sentiment— people aren’t going to watch a movie instead of buying an album and if anything demanding $500 only decreases the chances of getting any money from students— but I doubt anyone at Sub Pop cares about that, which speaks volumes in itself.

…I read things like that and I see the mindset of a big label that disdains everything about its customers but their money.

——————————————————————————————
Sent: October 05, 2005
From: SPR

Jon! It’s called the music business for a reason, and I hate to burst the bubble, but if these awesome bands weren’t interested in making some money for their efforts they probably wouldn’t be ON a label. If you think you can find more another label this size that cares less about the business I’d be intrigued.

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Sent: Wednesday, October 05, 2005
From: SPR

Oh one more thing—regarding the use of music in student films: Did you know that most of the time I don’t even respond to people’s emails regarding using songs when I can tell that it’s just for some school project? …we have to give you the LEGAL* answer? Does this make any sense?

*jon’s note: apparently “legal” here means belligerently accusing student-fans who would like to share their enthusiasm for music with others of stealing food from artists. Rings eerily of the RIAA.
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Sent: 05, 2005
From: Jon

SPR, the first label that pop’s into my head is Dischord— maybe you’ve seen it already, but Ian MacKaye gave an interesting interview here* that is worth a read. What I find interesting is he responds as both a musician and the owner of a label. I’m not so optimistic as to assume that everyone could be like him, or fanatic enough to think everyone should be, but I have the hope that the artist and the idea of music take precedent over business. I really have to question any musician that is in it for money more than music, regardless of apparent talent.

…I like the idea of buying music over the internet because if it gets to the point where people can see it as a legitimate and feasible way to distribute music over time it will erode some of the power major labels have over musicians— which in my silly dreams means more creativity, more musicians, and more money for them (and less to gigantic labels). I think sooner or later labels will see that their role in music has changed, and that only the labels that can adapt to that change will survive. …but music wasn’t designed to be an industry in the first place, it’s inevitable that there would be business elements, but industry was never a logical conclusion. All of this is to say, yes times have changed and they will continue to do so in a very noticeable way despite anyone’s effort to suppress it.

*jon’s note: interview available here
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Sent: October 10, 2005
From: SPR

That is a very thoughtful response, Jon! I agree and disagree—I think Dischord is a little smaller than SP, but I see where you are going with it. I also understand the whole idea that the industry, for lack of a better word, is heading in a different direction with the internet and all …The real honest to goodness fact of the matter here is that there are always going to be HUGE companies pushing utter crap that the majority of the people eat up, whether it be by downloads or whatever. Additionally, there are ALWAYS going to be kids putting out records in their basements and small to large indie labels doing the same.

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There was one final email I sent but it is in the land of lost emails I’m afraid. My memory it could be summarized as something like:

  • The points MacKaye makes don’t really concern label size.
  • Change is inevitable, the big labels won’t change— they’ll just die.
  • People may still listen to crap, but maybe they wont.
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politics, technology

Will Yahoo! and the Others Change Their China Policies Now?

Shi landed in trouble three years ago when the Chinese government prohibited journalists to report on the anniversary of the Tiananmen Square crackdown on pro-democracy protesters in 1989.

When Shi forwarded the notice to human rights groups, the Chinese government pressured Yahoo to give them the name of the account holder, and they did so. Shi was also sentenced to 10 years in prison.

CNN: Yahoo settles dissidents suit

Yesterday’s announcement that Yahoo! is settling with the families of a men imprisoned and tortured with Yahoo!’s help sends a nice message, but is it enough to change the policies of companies like Yahoo!, Google, News Corp, and Microsoft which aid the Chinese government in suppressing democracy and commit human rights violations? Probably not. But that change is getting closer.

Yahoo! has tried to excuse their reprehensible actions by explaining that non-compliance with Chinese authorities could land their Chinese employees in jail. Clearly, the US needs to apply an equal pressure here. American companies must not be allowed to break national and international laws without consequence. NPR has reported that Congress is taking steps towards making this happen with something called the Global Online Freedom Act, which would make it an explicit crime for US companies to aid China’s effort to suppress and torture its people. The act finds that:

Technology companies in the United States that operate in countries controlled by authoritarian foreign governments have a moral responsibility to comply with the principles of the Universal Declaration of Human Rights.

Technology companies in the United States have succumbed to pressure by authoritarian foreign governments to provide such governments with information about Internet users that has led to the arrest and imprisonment of cyber dissidents, in violation of the corporate responsibility of such companies to protect and uphold human rights.

Technology companies in the United States have provided technology and training to authoritarian foreign governments which have been used by such governments in filtering and blocking information that promotes democracy and freedom.

The act also decrees that “A United States business may not locate, within a designated Internet-restricting country, any electronic communication that contains any personally identifiable information.” and that “Any information that may be provided under subsection (a) for legitimate foreign law enforcement purposes may only be provided through established legal channels as determined by the Department of Justice.”

The act basically says that America companies operating in China have conducted themselves in a way befitting of American values and laws. And since these companies are unable or unwilling to act in a lawful and moral manner the US Government will make them. While it would be nice if companies like Yahoo!, Google, Microsoft, and News Corp did what was right on their own it is good to see that at least Congress is trying to make sure US companies acting as the henchmen of dictators. That is, if the act ever gets voted on.

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business, politics, technology

Where is Capitalism Anyway

There’s a hard case for saying capitalism still exists in America. Calling our market a free one is like saying a cage-free chicken is honestly free. The irony is that it is the market leaders (often ones who clamor for deregulation) are the ones that are steering America’s market towards a feudal system.

The linchpin in this drive is patents & copyrights and to a lesser degree trademarks. Patents & Copyright aren’t necessarily bad, but they are being heavily abused in the US. It only takes one look at Marshal, Texas to understand where we are heading.

While small businesses and start-ups are hurt, the folks sitting at the end of the punch are the America people. The state of intellectual property laws are such that we’ve stifled innovation in America and reduced competition. The concept of the free market is that those who can’t survive in business are pushed out of the market, however through intellectual property management any company that has established itself can remain on artificial life-support by abusing the system through lawsuits that either give failing businesses a cut of their competition’s income or by blocking that competition altogether.

The result is that old weak companies wheeze along while newer innovative companies are left emaciated or quietly strangled out of existence through a feudal market. A feudal market is one in which companies survive only through virtue of their heritage (intellectual property). If a new innovative company enters the market it must pay the old company to work on the land (license fees) or it can not work at all.

Companies have learned this and have begun hoarding patents. These patents abused to the detriment of America. The long-term result of a feudal business model is that innovative products will cost more and come from other countries. While the old companies flail in their slow death they are taking the economy with them. And while their death is slow it will not be nearly as painful for them as it will be for middle and low class Americans.

The life-span of companies has been artificially prolonged leaving us with undead monsters who scour the market for the brains of the living. There is always a balance, the dead trees fall down and decompose, feeding the young trees as the stretch upward, the question is where those trees will be. Will innovation be able to survive in America or will it find more fertile soil elsewhere? And consider this, sometimes the old dead trees don’t fall down and decompose, sometimes they pile up— the only thing for that is a fire, but fire destroys everything and it takes years for a new forest to grow in its place. Do we really want to wait for the fire?

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