Message to Comcast: You WANT your subscribers to use more bandwidth

Bloomberg has a story today about Comcast’s decision to delay their most active users’ broadband connections:

Comcast to Slow Some Web Traffic for Up to 20 Minutes

This is brilliant, simply brilliant. When a company’s roots are as a monopolist, they apparently need to be reminded about basic commercial principles. As the net grows in its usefulness and broadband applications like downloadable video reach mass adoption, consumers need more bandwidth. Instead of viewing this as a commercial opportunity, Comcast is trying to slow down their users from consuming more bandwidth. The customer wants more of the product, but Comcast doesn’t want to sell it to them. Why not introduce some concept of tiered pricing whereby customers consuming more bandwidth pay more? That’s how it works in corporate environments.

This reminds me of the early days of the net. Remember when we all connected to the net using modems over phone lines? The (monopolist) land line phone companies were complaining that customers were using up their copper line capacity. The nerve of those customers! Demonstrating demand for a product? Incredulous!

The biggest issue with Comcast’s decision, however much lack of business foresight it demonstrates, is that these actions will violate net neurtrality principles. It is no coincidence that Comcast will slow down your bandwidth-hogging activities like downloading movies, streaming video, and using skype to make free phone calls, while happily directing you to buy uninterrupted phone service and pay-per-view from them.

Why is everyone so confused about Muxtape?

The blogosphere is enraged at the shut-down of a popular site called Muxtape. I am not one to defend the overly litigious nature of the fading music industry (will the lawyers be the only employees be left standing at the four majors?), but this site was unlicensed and was offering interactive (i.e., on demand) streaming of copyrighted sound recordings. You need a license to do that. It’s not even a gray area of the law.

Muxtape took the common path of choosing to infringe rather than get licensed (i.e., the YouTube strategy). This is a legitimate strategy these days. The alternative involves the raising of at least $5M of venture capital and then forking that over to the majors for licenses at terms which do not allow a sustainable business to be built (i.e., the iMeem strategy). The YouTube strategy involves a bunch of praying. You pray that you can use viral marketing to get big enough and sell to a deep-pocketed acquirer who will defend the company in lawsuits and simultaneously use their leverage to get better economics in the licensing deals. Muxtape’s prayers were not answered, it seems, and the RIAA got to them before an acquirer stepped in.

Of course both of these paths are ultimately fruitless if the goal is to once again grow the music industry. The only way that happens is if the majors start viewing entrepreneurs as partners. Isn’t it better to license 1000 new startups with non-predatory terms and see who can build something consumers get excited about?

United is going down in flames

I basically stopped flying United and the other big domestic airlines three years ago. I go JetBlue whenever possible (90% of the time). They are always on time, have no “equipment” problems, and are generally not shoveling crap at you (although, this may be changing). Their staff is usually reasonable and helpful.

When I need to go to Chicago, I like to fly out of White Plains. It is 12 minutes from my house, and I time it so I arrive at the airport with 30 minutes to spare. The security line usually takes five minutes. I’ve done this about 20 times over the years with no issues.

This week I was booked on a 7:34am flight to ORD on United (JetBlue doesn’t fly there). I arrived at the check in desk (United still hasn’t figured out that kiosks reduce cost and customer wait time) at 7:09am. The desk agent said, “You got here too late so I am moving you to the 8:30 flight.” I explained to her that I could get to the gate in about two minutes, leaving 33 minutes before the flight departs. The regulations say you should be at the gate with 20 minutes to spare. She told me (fabricated) that passengers “must” arrive at the airport 45 minutes before takeoff. I told her I had never heard that but it needn’t matter…give me my 7:34 boarding pass and let me take my chances at the gate. She refused. I asked why and she actually said, “Because I said so.” After arguing for five more minutes (wasting time I could be boarding), I understood Lucy Chaus’ power trip was going to cause me to be late for my 10am meeting in Chicago and there was nothing I could do about it.

It gets better. When I got to the gate with plenty of time to spare, the gate agent told me that I was no longer booked on that flight and that she couldn’t change me back to it, but that the front desk could.

If you have any doubt why the major airlines are hemmoraghing cash, tanking and will once again soon be in need of a taxpayer-financed government bailout to save them from extinction, yes soaring oil costs and inflexible labor unions have something to do with it. But downright hostility to their customers — their only source of revenue — might be a contributing factor.

What did I learn from this experience? 1) Arrive at HPN earlier than 30 minutes before my flight, and 2) Never fly United again.

Nice going Glen Tillton, you’ve got it all figured out.

Want to see how bad United is doing? Check out www.untied.com.

iTunes is a 28% GM business? Huh?

How is it that Saul Hansell, who has been covering technology and media for so long, thinks iTunes is a 28% gross margin business? Given that most of the purchases are made 99c at a time, the auth + transaction credit card fees alone (even though Apple tries to hold them for a few days to batch them together) bring it down to about 18%. Then with bandwidth, servers, and other cost of sale items, it’s about an 11% gross margin business.

iTunes Store: Profit Machine

That, he thinks, is good for Apple? Are you kidding me? A company who’s hardware GMs are 40+%? Jobs is right and Hansell’s wrong — iTunes and the AppStore are low-margin businesses which enhance the hardware products.

Why so many of us hate Martha

The Queen of Audacity and faux-ness launches her attempt at self-criticism. From today’s New York Times:

Show Skewers Martha Stewart, With Her Blessing

I wrote to Brooks Barnes and asked why he didn’t have the motivation to point out that this effort is precisely the very reason so many are put-off by Martha Stewart; namely that of all her critics and detractors prepared to criticize her, the two she came up with are…(wait for it)…her daughter and the daughter of the company’s notorious chairman.

Thankfully, in this age where consumers have taken control of our media, we don’t need to wait for Ms. Stewart to enlist her daughter to mock her own amusing shortcomings. Instead, we have the millions of web pages already devoted to this.