Coop's Corner

What with a deepening global recession it's been pretty much a lousy 2008 for most folks, but it's closing on a very good note--if you happen to be an elephant, that is.

Come January 1, eBay's worldwide ban on ivory products goes into effect, a move that animal rights advocates hope will help protect elephant populations around the world.

The proliferation in the illegal trade of wildlife species has been aided by the use of the Internet. In a recent report (PDF), the International Fund for Animal Welfare found that about two-thirds of the global online trade in protected wildlife takes place on eBay's platform. The group said that poachers kill more than 2,000 elephants in Africa and Asia annually to meet demand for ivory products.

The sale of elephant ivory has been illegal since 1989 (although there are certain exceptions to the prohibition).

In a statement, Jack Christin, senior regulatory counsel for eBay had this to say:

"Due to the unique nature of eBay's global online marketplace and the complexity surrounding the sale of ivory, we decided to ban the sale of ivory on eBay. We appreciate the support from the IFAW in assisting us and we look forward to continuing to work with them on the implementation of the global ban. Like the IFAW, ultimately we feel this is the best way to protect the endangered and protected species from which a significant portion of ivory products are derived."

Must be the special circumstances regarding current events, but folks again are losing their minds in very public fashion--on the Internet.

Monday's New York Times ran a piece detailing how a fringe activist has helped spread the rumor that Barack Obama is a Muslim.

The press release was picked up by a conservative Web site, FreeRepublic.com, and spread steadily as others elaborated on its claims over the years in e-mail messages, Web sites, and books. It continues to drive other false rumors about Mr. Obama's background.

(And while I write these words, another e-mail arrived, asking in the subject line: "Does Obama fulfill Muslim prophecy?" and linking to one of the more insane videos that I've seen devoted to the topic.

I'd like to give my follow countrymen credit for being more discerning than to trust everything they read or view on the Internet as fact. (Although I'm still not sure what to make of the fact that the movie Beverly Hills Chihuahua is No. 1 at the box office.) Well, we are in the midst of the political silly season and you can discount some of what's going on as part of the quadrennial nonsense that gets tossed around during any presidential campaign.

But the tone of the junk mail flooding in the last couple of weeks is boiling over with rage--and it's not just directed against Obama's supposed effort to conceal his "real" identity.

In the aftermath of the market meltdown, the Anti-Defamation League reports a "dramatic upsurge" in "the number of anti-Semitic statements being posted to Internet discussion boards devoted to finance and the economy."

Here's a sampling of some of the pearls of wisdom the ADL found posted:

•  "(Jews have) infiltrated Wall Street and government and have ruined our country."

•  "What is a GS Jew? Goldman Sachs? Jews are greedy, rotten slime balls."

•  They (Jews) love money nothing else, no faith or religion can be so heartless to their victims."

•  That's how they work, they short the stock all the way making billions and then cover right it up sell (sic) and then taxpayers to the rescue and it is true all those institutions are ran by Jews ....

This is of a piece with the post-September 11 rumors about the Mossad reportedly issuing secret instructions to Jews not to go to work on the morning of the attacks on the World Trade Center. The latest story line focuses on the collapse of Lehman and "Jewish control of the banking industry and suggestions that Jews hold complete power over government and the financial services sector," according to the ADL..

It's easy to blame a lot of this on the spillover of rants commonly associated with Internet forums for white supremacists and neo-Nazis, making their way into more mainstream venues. Extremists always shout loudest during times of political or economic crisis. So it is that the latest conspiracy making the rounds details how "senior Jewish officials at the Lehman Brothers investment bank passed their clients' money on to three Israeli banks, with the intention of then escaping to Israel to enjoy the take without fear of extradition."

The stock market's sharp rebound on Monday notwithstanding, this remains a lousy economy and people are rightly scared. And with another couple of weeks to go before the nation chooses its next president, there's a lot more bile waiting to be spilled. Before we lapse back into something resembling normalcy, I fear that there are more days of rage ahead.

And so it starts.

Earlier Friday, analysts lowered estimates on Amazon.com and Yahoo, setting off renewed worries about the earnings outlook for Internet companies. The Nasdaq finished Friday in the red, even as the Dow Jones climbed back from an early morning sell-off with a triple-digit gain, ostensibly, on hopes that Congress would come up with a financial bailout plan.

What to make of all this? Up until lately, most of the people involved in Internet companies (and particularly, Web 2.0 types) shrugged off the gyrations in the financial markets as Wall Street's problem. The standard refrain was that the Internet economy "is a lot different."

Well, not really. Go back a few years and you'll find that was pretty much the same line of jive peddled by the folks pumping Internet stocks. That lesson got learned the hard way. Fact is that the economy is intertwined and the ripples--both for good and ill--touch every sector. So it was that more than a few of today's current class of born-again pumpers snorted derisively when Marc Andreessen last year quipped that Ning's decision to raise $60 million in private equity would prove handy during the coming nuclear winter. They're going to eat their words before long.

Talking about his August channel checks at Amazon, Lazard Capital analyst Colin Sebastian reports that online spending trends "remain challenging" and may have deteriorated since then. Citing a customer survey by Billme, an Internet payment services provider, Sebastian notes that almost half of the consumers polled said economic uncertainty had convinced them to delay purchases, with 42 percent saying they intend to cut back on credit cards. What's more, Sebastian expects competitive holiday promotions to hit even earlier than usual.

Was there any good news out there? Well, sort of. "We continue to believe that e-commerce growth should outpace brick-and-mortar retail as consumers seek better values online and are now more accustomed to shopping online for the holidays," he wrote.

Meanwhile, Collins Stewart analyst Sandeep Aggarwal's dismal note on Yahoo easily could apply to any number of advertising-dependent Internet companies:

We believe that the fundamentals at YHOO are deteriorating. On the one hand economic headwinds and turmoil in the financial markets are causing weaker display ad revenues. On the other hand changes with the minimum bid with search and a possible GOOG/YHOO deal are causing an outcry among many advertisers. To further complicate the situation is an ongoing loss of talent which might accelerate with the renewed restructuring efforts. We don't see any near-term upside in the shares of YHOO on fundamental basis. However, we would not rule out a possible MSFT/YHOO deal in the future.

The evidence is piling up every day. During the just-concluded Advertising Week conference in New York, Wenda Millard, the co-CEO of Martha Stewart Living Omnimedia, said during a panel that the financial crisis is going to reverberate through the economy with "pretty severe implications for medium-sized and smaller businesses and consumers."

The venture capitalists who've invested in sundry Internet start-ups (most with unpronounceable names) are spinning this as a passing event. Once Congress and the president agree on the $700 billion bailout (or rescue, if you prefer), we'll return to normalcy. Suuure.

I can't put it any better than did AllThingsD's Kara Swisher's recent post, where she wrote that "the economic crisis is likely to become a whirlpool that will be hard for any ad business to avoid, even the often recession-proof digital sector."

Translation: It's only a matter of time before the stuff hits the fan in a big, big way.

You can look this one up on the "tubes."

Alaska Senator Ted Stevens was indicted today for making false statements to federal investigators.

The seven count indictment charges Stevens, a Republican, with lying on his Senate financial forms.

The Senate's longest-serving member, Stevens became an Internet celebrity a couple of summers ago after an audio of his "The Internet is a series of tubes" speech to the Senate Commerce Committee wended its way round the Web.

He made the comment during a debate on Net neutrality when he was still the chairman of the Senate Commerce committee. Stevens had been a critic of extensive Net neutrality mandates. At the time, he accused proponents of a Congressional bill of "imposing a heavy-handed regulation before there's a demonstrated need."

I spent Tuesday afternoon as a guest of Beet.TV impresario Andy Plesser, who hosted a fascinating colloquium at Stanford University. It was a small group, maybe a couple of dozen people altogether, drawn from the technology industry, the venture capital community and media to discuss the state of online video.

The conversation was thoughtful and there was no shortage of intellectual firepower in the room. But as I listened to these bona fide A Listers grapple with the new economics of a rapidly shifting media landscape, I couldn't escape a sense of deja vu. Questions such as: How would mainstream content providers ever build a profitable business for their video content on the Internet? Should the rise of amateurs, or citizen journalists, be treated as potential friend or foe? Would the advent of online video and citizen journalism erode the role of the "traditional" journalist.

Yes, I'd been there before. Years ago these questions got a thorough airing and, truth be told, I thought the discussion was over. Citizen journalism was here to stay, so-called amateurs were now part of the conversation and any media organization worth its salt should be manic about opening itself up to new ideas and new ways of doing the job.

Of course, the complicated reality is that the big networks now struggle with enormous cost structures built up over decades. The equipment used to produce and distribute their content doesn't come cheap and it's not at all clear what they should do in order to monetize their stuff on the Web. Meanwhile, the likes of YouTube are enjoying viral growth. Steve Grove, who heads up news and politics at YouTube, said the company receives some 13 hours of video every minute.

That's a telling sign of the times. How much local and national news do you still watch? If I want to find out what's happening in the world, the boob tube's the last place I'll check--and then only if I can't find it first on the Internet. TV knows it's losing its hold on what used to be its bread-and-butter audience. That's why their executives are nearly manic about figuring out the Internet before it's too late.

"The thing I find hardest to struggle with is how the different business models will work," said Kleiner Perkins' William Hearst III. "I still think there's value to people who make a career out of news gathering and don't make a lot of mistakes."

"How do you monetize a lot of these changes...where's the money in these changes?" added Richard Moran, a partner with Venrock. "That's the question that the venture world asks. You have infinite demand for the unavailable. And when it becomes available, is there any money there?"

A dozen years after presidential politics first moved online, it's remarkable how entirely unremarkable it is to page through the findings in a newly published Pew report on the Internet's role so far in the 2008 election.

In increasingly greater numbers, adults are using the Web to regularly contribute to the political conversation--if not to contribute to the politician of their choice. And no surprise, that's why three of the contenders for the Democratic presidential nomination basically declared their candidacies on the Internet.

None of this has been lost on the party hacks managing the Barack Obama and John McCain campaigns, who have followed the voters to their cyber hang-outs on social networks. I wonder how an increasingly Internet-savvy electorate will react to blatant attempts at crowd manipulation. I'm not saying this is going to happen, but the past is often prologue when you're talking about presidential politics. Take a gander at the following table. Already, most adults have a healthy distrust of what they deem to be misinformation and propaganda.

The more intriguing trend is that the promise and the potential of the Internet are fusing in a way that may--and here I'm hedging--help us break out of the quadrennial descent into stupidity which informs most modern presidential campaigns. Politicians may still treat voters like children, but according to Pew, people are using the Internet to move "beyond the sound bite." To wit:

•  More than one-third of adults have watched politically-related videos.

•  Some 16 percent of adults have read candidate position papers online while 9 percent have read the full text of a candidate's speech online.

•  39 percent of adults say they've gone online to fetch original, or unfiltered, documents, or observe campaign events.

Pretty good, but there's ample room to grow. And of course, this remains part of a slow-motion story in development. Not surprisingly, the young grok this stuff more quickly than the their parents.

Then again, I'm an optimist (at least most of the time). I'm curious on your take now.

What is it about Nick Carr, a very bright guy, that inspires the not-so-bright guys to bring out the knives? Criticism of his recent Atlantic piece has ranged from the predictably ungenerous to the downright bitchy.

So it goes. The chattering class always gets irritated when convention gets challenged. After Carr published his thoughtful Harvard Business Review article in 2003, "Why IT Doesn't Matter," many technology leaders and trade press opinion makers reacted harshly.

They so caricatured Carr's nuanced thesis that they entirely missed his bigger point about IT's declining importance as a competitive asset. In the end, of course, it turned out Carr was quite right.

Now history is repeating. Part of the problem, I suppose, is Carr's headline. "Is Google Making Us Stupid?" Catchy? I'll say! That headline rates right up there with the New York Post's 1982 gem, "Headless Body in Topless Bar."

But that's just a tease to draw in readers. Carr's real concern is less with Google as the new bogeyman than on how our reliance on the Web might be turning us into multitasking scatterbrains.

He may be onto something, though all we can do at this point is share anecdotes. Apropos, I came across a doozy that speaks to Carr's point.

Former chess champion Josh Waitzkin returned to Columbia University, where he sat in on a class taught by a former professor. The class was taught by Dennis Dalton, who Waitzkin described as "the most important college professor of my life." Here's what followed:

Over the course of a riveting 75-minute discussion of the birth of Gandhian non-violent activism, I found myself becoming increasingly distressed as I watched students cruising Facebook, checking out the NY Times, editing photo collections, texting, reading People Magazine, shopping for jeans, dresses, sweaters, and shoes on Ebay, Urban Outfitters and J. Crew, reorganizing their social calendars, emailing on Gmail and AOL, playing solitaire, doing homework for other classes, chatting on AIM, and buying tickets on Expedia (I made a list because of my disbelief). From my perspective in the back of the room, while Dalton vividly described desperate Indian mothers throwing their children into a deep well to escape the barrage of bullets, I noticed that a girl in front of me was putting her credit card information into Urban Outfitters.com. She had finally found her shoes!

When the class was over I rode the train home heartbroken, composing a letter to the students, which Dalton distributed the next day. Then I started investigating. Unfortunately, what I observed was not an isolated incident. Classrooms across America have been overrun by the multi-tasking virus. Teachers are bereft. This is the year that Facebook has taken residence in the national classroom. Students defend this trend by citing their generation's enhanced ability to multi-task. Unfortunately, the human mind cannot, in fact, multi-task without drastically reducing the quality of our processing.

How much blame does the Internet deserve here? What about the effects of too much television, or poor parenting? Maybe all of the above. In his essay, Carr observes that the Internet is projecting its influence in other parts of the culture. For example, the old-media world, anxious not to wind up in history's dustbin, is adopting some of the popular conventions of the Internet. He notes:

As people's minds become attuned to the crazy quilt of Internet media, traditional media have to adapt to the audience's new expectations. Television programs add text crawls and pop-up ads, and magazines and newspapers shorten their articles, introduce capsule summaries, and crowd their pages with easy-to-browse info-snippets. When, in March of this year, The New York Times decided to devote the second and third pages of every edition to article abstracts, its design director, Tom Bodkin, explained that the "shortcuts" would give harried readers a quick "taste" of the day's news, sparing them the "less efficient" method of actually turning the pages and reading the articles. Old media have little choice but to play by the new-media rules.

It's a provocative idea, though even Carr is not entirely certain how far to push it. He acknowledges that any final determination of how Internet use impacts cognition must await extensive neurological and psychological testing. That's as it should be.

Until then, Carr may remain a voice in a snarky wilderness, but at least credit him with initiating a important conversation.

Talk about missing the forest for the trees. With everyone and their mother-in-law predicting a coming wave of acquisitions of so-called new media companies by old media outfits, that future's already snuck up on us.

In the last year:

•  Cox bought Adify
•  Hi-Media Group bought Fotolog
•  Time Warner's AOL bought Bebo, Quigo, Third Screen Media
•  Comcast bought Plaxo
•  Disney bought Club Penguin
•  CBS bought Last.fm, CNET Networks, Wallstrip, Dotspotter
•  Microsoft bought 1.6 percent of Facebook
•  Hearst bought Kaboodle and Answerology
•  Jupiter Media bought MediaBistro
•  News Corp. bought Photobucket, Beliefnet
•  The New Times bought Freakonomics blog
•  Forbes bought Clipmarks
•  Discovery bought Treehugger

If you use News Corp.'s 2005 acquisition of MySpace.com as the starting point, the list gets longer. Going back that far, there's been more than $19 billion worth of significant mergers between the biggest old and new media players in the online media industry.

After Microsoft launched its late January takeover bid for Yahoo, a lot of new media start-ups hoped it would trigger a chain reaction where they'd be able to cash out. It's easy to understand their anxiety. A recent report from PubMatic concluded that:

• On average, Web site monetization dropped by 23 percent from 49 cents in March to 38 cents in April.

• Among the verticals, social networking led the plunge with monetization dropping 47 percent, from 37 cents in March to 19 cents in April, below January lows of 22 cents. Entertainment monetization dropped 17 percent from 40 cents in March to 33 cents in April. Gaming and sports were down marginally (4 percent and 5 percent, respectively). Technology remained relatively flat at 83 cents in April vs. 82 cents in March, but is still off January highs of 92 cents.

Maybe a bunch will still cash out before the window slams shut but the more interesting question is why more media giants haven't built their online empires organically? The snarky explanation is that they're too hidebound and slowed by bureaucracy to think creatively about this stuff. But that's too easy and misses the bigger point.

I think Piper Jaffrey's Gene Munster offers a better answer when he wrote in a recent report that Google "has forced old media companies to realize they must act immediately or lose relevance in the Internet space." He may be right about that. These companies typically came late to the party when they recognized that lots of their customers (and advertisers) were heading to the Internet. And thanks to the Yahoo novella, we've seen how even a company like Microsoft, which doesn't fit under the "old media" label, finds itself scrambling to find answers to the Google question.

I just don't know whether the land grab strategy will be enough to restrain Google's growing appetite. Maybe it is, but I wouldn't want to take that bet.

• Update: 2:05 PM
And the beat goes on. This afternoon comes word that Conde Nast is buying Ars Technica. So who's next?

SAN FRANCISCO--Jonathan Zittrain recently published a terrific book with the suggestive title The Future of the Internet--And How to Stop It. But as I settled into my seat to report on his talk at the Web 2.0 Expo here Thursday, the Internet stopped me.

Dead in my tracks.

It was a confluence of events. In a switcheroo, what we witnessed was actually "virtual Zittrain." The good professor--he teaches Internet governance and regulation at Oxford University and is the co-founder of Harvard Law School's Berkman Center for Internet & Society--appeared on the big screen in a brief pre-recorded disquisition about the state of Internet computing.

The show organizers did arrange with Zittrain to follow up with the audience on a Meebo chat room. (You can follow the archived chat conversation). Unfortunately, the wireless connectivity here at Moscone Center has been flaky all morning, and I spent half of the duration of his presentation trying to get a live connection. So was my welcome to Web-minus-2.0.)

Zittrain covered familiar ground from his book, starting off by noting that his writings may make many of the people in the audience "dyspeptic." (I'm sure that word sent half the people here scrambling for online dictionaries.)

He painted a troubling picture of the direction in which technology is heading. Zittrain's main concern is that consumers may inadvertently be making surveillance of individuals easier for companies and government agencies.

In his writings, Zittrain has raised a red flag over the hidden price paid by consumers who willingly adopted so-called closed devices in return for a promise of stability. Also, he has concerns about the trade-offs involved when smaller applications developers agree to terms set by big platform makers.

Zittrain suggested that we're at "a constitutional moment" akin to the founding of the United States. "The original plan--U.S. 1.0--was: everyone's really nice, and if not, we'll just move west. The framers of the U.S. Constitution--U.S. 2.0--saw that not everyone could get along, and needed a system of checks and balances."

He raised an interesting analogy by pointing out the separation-of-powers doctrine famously articulated by James Madison (and I should add Alexander Hamilton and John Jay in the Federalist Papers), which articulated reasons to avoid investing in any single institution with too much power.

Zittrain finished up with a call for ad hoc "bottom-up" citizen community-based models to take the lead. Otherwise, he cautioned, we deserve the future that's otherwise heading our way.