Scobleizer Weblog

Daily link Sunday, March 21, 2004

Eben Moglen asks an interesting question: "If I can provide to everyone all goods of intellectual value or beauty, for the same price that I can provide the first copy of those works to anyone, why is it ever moral to exclude anyone from anything?"

Because humans are incented to do more when there's motivation, that's why.

Society learns this over and over and over and over. Communism vs. Capitalism. In every instance, humans do better when the people who do more for society are rewarded.

But, arguing over this stuff is lots of fun.

Let's take it into digital photography. I have a digital camera. I spent $1000 to buy it. My marginal cost of taking a new photograph is near zero. Except for my time. So, I take a picture. That's intellectual property. After all, I had to learn how to take a good picture that you all will like looking at.

Now, Eben says it's immoral to sell that photo. He wants me to give away my photos for free. After all, the marginal cost of distributing a digital photo is near zero. See this in action: my free photos of a $700,000 Mercedes are here.

I understand this concept quite well. But, one problem. Giving away those photos for free didn't help me pay my mortgage. Didn't help pay for the dinner I ate last night. Didn't pay for the jeans I'm wearing. The shirt I'm wearing (which, right now, is an Apple shirt I got for free at the store opening).

So, now what? Do we all give away our photos for free? Maybe. But, the reason I am able to buy the $1000 camera, and post them on the Internet is cause I have a job and get paid a salary by Microsoft.

What happened if my job disappeared? If it got offshored? Or given to some Linux guy who's willing to work for free (just like I'm willing to give away pictures for free)? Well, then, I'd have to sell my digital camera on eBay to pay my mortgage and I'd have to find another job to survive.

Now, what if there were a way for me to sell photos for $200 a copy? Would that motivate me to go out and take more pictures instead of sitting inside typing like a madman? Damn straight it would.

Is it immoral for me to try to get $200 a picture if I'm a professional? No way. I met someone once who made $100,000 off of a single picture. In fact, that's what motivates me to carry around my camera. I might get a picture that no one else has and that you all want to see. Very valuable. Has nothing to do with the cost of production.

Is that immoral? Well, some people see making a profit as being immoral. I see it as incentive for a whole raft of people to go to work at 7 a.m. everyday when they'd rather be out surfing or skiing.

Speaking of which: software has marginal costs. Why? Ever hear of support? Microsoft has huge buildings in the Seattle area housed with tech support people. One of my neighbors, who lives two houses away from me, works the support lines and drives that point home for me everyday.

Also, let's take this outside of Microsoft. Let's look at Silicon Valley. Sand Hill road, to be more exact. On Sand Hill you'll find tons of venture capitalists. What are the looking for? To make a profit. A huge profit. Not just a little teeny profit, but an over the top profit.

Now, if you remove the profit motive from software, what happens? They stop spending their money. After all, they will only invest in things that will pay their investment back and then some.

Is that immoral? Well, ask Google. They got their start with an investment from one of them. Ask Apple. Wozniak and Jobs got their start with an investment from one of them. Ask Cisco. Same thing. Ask Yahoo. Same thing. Ask eBay. Same thing.

So, do you really wanna make it immoral to make money off of software? Ask yourself about the unintended consequences of doing just that.

4:44:43 PM    comment 

Some interesting resume writing tips over on the Microsoft recruiter's JobsBlog.

4:14:32 PM    comment 

Dan Gillmor, in his San Jose Mercury News column today: Microsoft change? Don't hold your breath.

Disclaimer: I'm not an executive at Microsoft. And I didn't play a part in anything Dan wrote about today. But, I think that Dan only presented one part of the story today.

Note that earlier this week, Microsoft, for the first time that I remember seeing, apologized in an official forum (the Minnesota trial) for our anti-competitive behavior: "The conduct involved competition that went over the line," said Microsoft's lawyer, David Tulchin, according to an Associated Press account. You can read more in the Seattle PI's Microsoft weblog about that.

There are many examples that Microsoft is changing (and note that Gillmor didn't mention even one of these).

For one, Microsoft's execs are now compensated on customer satisfaction scores. Guess what, getting sued for being a jerk, er, anti-competitive, does hurt customer satisfaction (I've seen those numbers and we study them quite closely). Why? Customers want great technology without strategy taxes applied. And, they want to be seen as supporting a winning team, not one that gets where they are through legal or other tactics that don't have anything to do with making a better product.

That's a major change and just happened about a year ago. It takes a while for such a change to translate into different behavior, though. Note that the EU is going after us for behavior that was decided on before the compensation policy changed.

The second change is that now we have a corporate mission and values policy. That came online about a year ago. And, clearly it's aimed at getting us to change how we work with the market.

Third change is employee-produced, non-censored, weblogs. How many of those existed two years ago? One that I remember. Today? 400. As more of our employees engage with customers online, we're going to change toward a company that does more and more things in a customer-centric way and less of a company that relies on stuff that customers don't care about or don't want. Why is that? Because if you take a position online that isn't something that the community wants, they'll beat you up for it. For instance, I'm sure that Jeremy Allison will tell me everytime we do something that's anti-competitive (he is a frequent commenter here, and testified against Microsoft at the EU). It's hard not to hear that feedback, even if you don't want to hear it.

Fourth change is the marketplace itself punishing Microsoft. Our stock price is down from where it was when I joined Microsoft 11 months ago. Linux and Apple are showing us that if we don't change our products to be more customer focused (marketing talk for "better"), the customers will go elsewhere.

Fifth change is how employees are compensated. We used to be given stock options. Having options puts a lot of pressure on you to get the stock price to go up. Why? Well, because you're rewarded if it does! Hey, we're human. If I'm rewarded for doing something, I'm more likely to do it again. When I joined Microsoft, the stock was at 26.10. Right now it's less than that. So, in the old system, I don't get any reward. The new system gives out straight stock. So, I care a lot less if the price goes up (yeah, I still do care, but I don't care nearly as much -- in the old system I wouldn't get a dime, in the new system I'd get quite a bit). Again, that policy was just put into place, so changes are slowly happening.

One ironic thing, Dan implies that having competitors is a good thing. Dan, do you really agree with that? If so, why do you work for Knight Ridder (the corporate owner of the San Jose Mercury News)? After all, Knight Ridder has put their competitors out of business in many of the markets it serves (including in San Jose, where the Mercury News is Silicon Valley's only daily newspaper of note).

Sixth thing: freedom to speak. Don't assume that just cause I work at Microsoft that I can't tell my employer off (Dan, have you ever tried telling your employer off in public? Why not?) Remember, I'm one of the only webloggers who's gone on record telling Bill Gates that he should voluntarily split up Microsoft (I said that before I was a Microsoft employee, and now that I'm inside Microsoft I'm still taking that stance -- one nice thing about Microsoft is a diversity of points of view are allowed and encouraged here). And, just two years ago I was arguing voiciferously with Microsoft employees about doing nasty stuff against users. Remember SmartTags in IE? Do a Google search on that one and see just how anti-Microsoft I was.

One last thing: corporations exist to serve their investors. I'm an investor in Microsoft and right now I'm not happy. My stock price has gone down. Apple's has gone up. Most other tech companies' stock has gone up. If you owned a market index, for say, NASDAQ, over the past 12 months, you would have made money, but Microsoft's stock has gone down.

So, is the market rewarding us for our behavior? No. Is Microsoft going to change because of that? Well, I'm betting my stock shares on it!

Personally, as I interview various people throughout the company, I see that we're focusing on making our customers lives better. Just talk to Kam, who's team is working on the next UI. Or Bill, who's team is working on new fonts and new ClearType technology. Or the XPSP2 team, which is making XP a ton more secure. There are hundreds of such examples of things we've done recently to make our customer's lives better.

It's those things that make me proud to work at Microsoft and, yes, I see a ton of examples that Microsoft is changing internally and becoming a better company too. But, yes, we have a long long way to go.

2:33:16 PM    comment 

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Robert Scoble
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Last updated:
5/11/2005; 12:48:38 AM.

Robert Scoble works at Microsoft (title: technical evangelist). Everything here, though, is his personal opinion and is not read or approved before it is posted. No warranties or other guarantees will be offered as to the quality of the opinions or anything else offered here.

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