Tuesday, January 31, 2012

Apple and the China Syndrome

The latest threat to Steve Jobs' legacy has been the news that workers laboring in Apple factories in China work long hours, are paid little and are required to perform the same function thousands of time during a long shift as they bring iPhones and other products to market. The question raised in American media is whether Apple's reputation can survive this latest blemish. Will American consumers continue to buy Apple products that are brought to market on the backs of Chinese workers who are little more than slaves in service to a brand and the Chinese Comunist state?

Say what?

I would suggest those asking these questions spend some time visiting factories in Asia. I've been visiting bike, car, and electronic factories in Asia for twenty-five years and find the above story, without the hyperbole, predictable and economically necessary. My first visits to factories in Japan, Taiwan, and Korea--in that order--turned up similar stories about working conditions and low wages. Even then the dynamic was clear. American manufacturers outsourced the low-end products and as Japan, for example, moved up the product value chain, production of the these items moved to countries such as Taiwan and Korea. In time these countries developed the necessary workforce skills, computer aided design, and overall tech sophistication so that few would suggest today that products sourced in these parts of Asia are in anyway inferior to what we produce in the states. It's actually been the inverse.

And this is just not an Asia story. One of my favorite pieces of geography is the stretch in northern Italy from Milan to Venice, where one can draw a rhumb line through the heart of traditional bicycle country of craftmen and artists, including Columbus, Campagnola and Cinelli. By and large manufacturers were slower than their American counterparts to outsource to Asia but they eventually followed the same pattern, grumbling all the way. They subsequently focused on high-end products that Americans and others will continue to pay for because of the brand, the craftmanship and the history that is incarnated annually in the spendor of the Tour de France.

This shedding of low-end, low-value products continues apace. China is losing business to Vietnam, Thailand, and the Malay Peninsula. The 100 million Chinese workers who have just returned home, largely in the west, to celebrate the Year of the Dragon, will need these jobs to return to if China is to continue to fan its version of state capitalism and hold our debt. Ironically, the assembly of electronics, including iPhones, is made-to-order for a workforce like China's which does not want a labor pool that literally has time on its hands.

This is a delicate dance of course, as China has made remarkable strides up the product value chain. The dance is really about maintaining and growing types of businesses, especially in electronics, that require millions of hands to do the numbing, repetitious piece work that is the shadow side of product manufacturing. The last thing China wants to do is to introduce too much technology, too fast when there is a restive work force that has already shown its contempt for a system that has created a cadre of billionaires overnight. Labor unrest, especially in the west, is China's great worry.

My guess is that Apple consumers won't care too much about this shadow side and might even point to  China's burgeoning middle class of 300 million, literally up-from-poverty in a generation, as an example of wise capitalism at work.

But there are other economic and market forces at play. Mobile phone companies shipped 500 million smartphones in 2011 with Apple and Samsung leading the way. There is every reason to believe the predictions that use of mobile phones will surpass desk top computers for Internet access by 2014.

Add to this that the business model for mobile networks continues to change. For example, according to IGR research, in 2009 almost 58% of AT&T's new subscribers were postpaid. In 2010 this number fell to 24% and continues to decline.

With the introduction of the iPad there was a sense--and perhaps a desire--among publishers that consumers would settle on three devices: a smartphone. a tablet and an e-reader. The world doesn't seem to be unfolding out that way. We know that data consumption is expected to increase by 530% from 2010 to 2014.  And given consumers' movement away from postpaid to pre-paid plans, carriers have made it very clear they will bring more devices on line and that they are interested in pre-loaded content and enterprise offers to help differentiate a device. It is not unreasonable to think that families will have 5-7 mobile devices on average in the household by 2013. The carriers are counting on this.

Harrison Research has suggested that the most important by-product of this multiple-device adoption is that it is being led by consumers, rather than technology companies. To that end there is an element of fashion to device acquisition, one for every pocket and purse, shed frequently.  Asia hands should be busy for a while.

And times change. My local wine merchant in Nyack, New York tells me that China is importing the bulk of the expensive wines from Italy, Spain and France. Also vines. His prediction: get ready for the Great Wall brand, led by a robust cabernet. Almost hand-made.  



Friday, January 13, 2012

On the Language of Culture and Code

We are coming up on the Chinese New Year so it's a good time for rivals to criticize Republican Presidential candidate John Huntsman for speaking Mandarin. Slipping into Chinese during a New Hampshire primary debate might not have been politically wise, but he might been better off doubling down and adding an instructive coda: given China's ascendancy, we would all profit from learning Chinese. 

I've worked in China, on-and-off, for years and am increasingly struck by the interest there in English-language education. No wonder Reader's Digest. Macmillan, Scholastic Magazine, Highlights for Children, among others, are so engaged in developing English language learning activities in China, especially in Beijing and Shanghai but increasingly in second and third-tier cities. I have consulted with Chinese ereader companies and there is a high interest in bundled English-language content on devices at birth as a differentiator in a very competitive product marketplace. The Chinese government might paint American pop culture influence as demonic--and indeed, has just severely restricted similar fare on national television, but officials are very clear about the need to understand the language of the foe. Obviously, there is a lot of interest in speaking Chinese in America, but it is not as deep-rooted, pervasive and as well-funded as learning English in China.

I have been thinking about what happens when the language of culture, discourse, and vocation fails us.  In her Planned Obsolescence: Publishing, Technology, and the Future of the Academy, Kathleen Fitzpatrick explores the future of scholarship within the Humanities, calling for a kind of community scholarship she had explored extensively through Media Commons. Digital, of course, is the great leveler and shines the cold light of day on the lone scholar examining the individual linear text. For Fitzpatrick the answer seems to be in social, sharing, and the scholarly version of remix. I think she's on the right track.

My dissertation advisor has spent most of his career assembling a comprehensive bibliography of John Updike. Most of this work was done the old fashion way--by hand.  Given Updike's brand, I see this as a worthy effort and mean no criticism.  But with sophisticated search tools one might be able to do this in far less time.

As an former University English professor I'm not sure if the textual criticism of literature, whether from a psychological, mythological, or archetypal perspective, fundamental to the discipline for more than fifty years, makes much sense any more. I remained amused years later that a fellow graduate student was able to write her PhD dissertation on the medical imagery in John Donne's poetry. More fool me for writing the following dissertation: Aesthetics and the Religious Mind in Three Catholic Novelists: Francois Mauriac, Graham Greene, and Flannery O'Connor.  This august work found its way, along with thousands like it, forever entombed,  in a decaying, undigital file.

I think English Departments would be better off teaching writing, semantics, structural grammar, lingustics, and with help, coding, electronic publishing, and archive construction. The discipline has largely abandoned the structure of language, grammar, and linguistics in favor of publishing literary criticism for job security and tenure.

Not surprisingly interest in programming skills, once considered the province of the geek in the corner office, have taken center stage in an increasing digital economy. Ironically, the Computer Science Teachers Association, reports that the number of high schools in the US offering introductory courses in programming dropped from 78% to 69% since 2005. This might say more about our schools than digital opportunities.

That said, there is a growing interest in the investment community to fund online and physical schools that teach programming and related skills, including Treehouse Island Inc., Competitor Codecademy, and General Assembly. That Greylock Partners, Union Square Ventures, and Jeff Bezos are funding these efforts underscores the seriousness. 

Yesterday I attended a Big Data Visualization event, organized by NYC Media Lab and hosted by Bloomberg LLP.  Speakers included data scientists from bit.ly, Seed Media, Foursquare and NYU-Poly. I will devote another post to this extraordinary event, but here I want to say a key takeaway was how important the technologist, designer and scientist have become as we try to better understand and visualize massive data sources that for magazine publishers will increasingly come from outside their traditional sectors and relationships, mashed up in ways we have yet to understand.

The next generation of publishers will likely be more scientist and less English major.

Wednesday, January 4, 2012

Curation Nation

I found this book, written by Steven Rosenbaum, founder of Magnify.net, under my Christmas tree and figured I had better read it before the digital world turns again. And this is the challenge associated with writing about curating the web and other brave new worlds. There are always enough  technology-challenged folks in the US Congress who want to adopt draconian measures like SOPA, that will finally bring Internet piracy to heel. So you never know.

That said, I like this book, the keen insights and the solid research. I'll hand it to Rosenbaum: it's not easy to discuss curation, an art that has long been exiled to the local museum, as the new post-aggregation tool that will finally put human intelligence where it belongs: shoulder-to-shoulder with the muscular algorithm. 

The author's history of curation is interesting and useful. Everything old is new again--if you throw in a few million videos. He is certainly correct about Reader's Digest being one of the first and best magazine examples of curation; classic in every way. The challenges Reader's Digest faces today are more about demographics and digital extensions than the business of creation. One could argue the publisher was in a better position than most, early on, to develop curation as an important part of its cross-platform growth. Rosenbaum gets it right: content makers have to become content curators to grow. The Huffington Post understands this. People don't want to just consume information; they want to participate.

The content entrepreneurs the author invokes are well-known. Rosenbaum gives About.com good coverage. About, with subject guides for about 750 content areas, seemed a very good idea from the beginning. I cut my teeth on special interest magazines and thought this company had found the perfect content and advertising formula that was testimony to a familiar mantra: specialists win. About appears not to have lived up to earlier expectations, at least on the part of investors.

The author seems to understand that it is a little trickier for glossy magazines at the top of the editorial food chain to embrace curation in the fullest sense.  For the sake of discussion Rosenbaum differentiates between content creation, content aggregation, and content curation, with the acknowledgement that these are not neat categories and magazines to varying degrees have been in the game of aggregation and curation for some time. New York Magazine and NY Media are rightfully cited as an example of a business that has successfully curated content across the magazine, blogs, and various web sites. NYmag.com has significantly enlarged the practice of curation by incorporating a sizable number of appropriate web videos on the site. Digital revenues are through the roof.

So, curation without expertise is just scrapbooking. It's not about magazines per se. Rather about "magazining--a fun reading experience with great design and all the audio and video links that the Web makes possible." Curation is an evolutionary step beyond blogging.

The book examines a few of the machines that create content, such as Demand Media, Yahoo's Associated Content and AOL's Seed. It is no longer news that these services, especially Demand, are considered by many a race to the bottom and an insult to mainline journalists. The Man vs. Machine is a good headline but at the end of the day I suspect the market will address these offerings.

For the last five years I've been watching blog networks such as Blogher, Glam Media, and SB Nation as examples of curated, blog networks. These represent three different approaches to finding, curating, and monetizing content.  I have long thought that magazines publishers paid insufficient attention to these businesses.

I get the sense that the author thinks the verticals are the best content areas for curation and that micronets for video sharing, such as Web Video 2.0 and especially Blip.TV, offer a huge potential for content creators. The latter hosts and delivers more than 50,000 Web series on its network.  In 2009 the average running time for the blip.tv's top 25 shows was 4 minutes. A year later viewers were watching videos that averaged 14 minutes.

In a way all of the above is just prelude to Twitter, Facebook, Foursquare and the like. Social media is a curation mechanism, both accidental and purposeful. Facebook's Open Graph gives rise to presentation software like Flipboard, according to Rosenbaum. We are all accidental curators. And as Bill Gates is supposed to have said, the future of search is verbs, not nouns. People want to find something to do something.

Whether the world is ready for Stocktwits, a trader-focused social network with all the personal data sharing implied. I'm not sure. Given developments of the last decade it does seem plausible that certain demographics would be open to a Facebook of Finance, with all the attendant risks.

I have my quibbles but this is a meaty book and a worthy read for anyone in the content  business.