Apple Watch Series 4; Instagram’s Story; Re-discovering The Beatles

After a summer hiatus, Codebrief is back! I’ll be experimenting with the format over the coming weeks, so let me know what works and what doesn’t. The general charge will be to “organize the internet“; There’s so much good content out there, my goal is to put it in front of readers each week. Additionally, I wrote two articles this week, one about the Apple Watch Series 4 (below), and one highlighting the history of watchmaker Patek Phillipe, for the rappers out there.

Main Course

In 2017, Tim Cook announced to the world that the Apple Watch was the “#1 watch in the world” – in revenue – not just in units sold. So how does the new Series 4 move the needle? Unlike most categories, Apple doesn’t make the “nicest watch” (leave that to others (my history of Patek Phillipe). But, wearing an Apple Watch does convey a different type of status, one equally coveted in today’s world: “Taking care of one’s self is the newest status symbol, and the Apple Watch might just be the best way to communicate to others that you live a life worthy of such status… Usually, an Apple product is a symbol that you own the nicest product in that given category (as John Gruber deftly put it in his review). The Apple Watch though, is something slightly different: it’s a symbol that you’re living the nicest life possible.” Read my full take here.

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📷 Why Instagram’s founders left: TechCrunch has an in-depth, well-sourced analysis of why Instagram’s two founders, Kevin Systrom and Mike Krieger, have put in their two weeks notice at parent company Facebook. Perhaps this paragraph explains it most succinctly: “Systrom and Facebook CEO Mark Zuckerberg historically got along, but they had occasional diverging opinions. A source said that a few times a year they’d clash before resolving things. Those clashes included “Sharing back to Facebook. Kevin wanted to keep the sharing on Instagram but at some point Mark wanted content production on Instagram to flow to Facebook. But things got more heated lately. “Recently Mark decided to pull all of the links to Instagram from Facebook.

In short, Instagram’s co-founders built a spectacular product and sold it to Zuckerberg before they had to worry about making money. The relationship was perfectly symbiotic: Instagram could build its ad business off the back of Facebook’s already well-developed network, and Facebook could continue to grow, even as its main product (Facebook.com, that is) stagnated. And now that it’s increasingly looking like Instagram has won the product battle against Snapchat by introducing Stories, it’s again up to Facebook to figure out how to monetize a well-built Instagram product. Oh, for another tale of founder-is-acquired-then-leaves-Facebook check out Forbes’ great profile of WhatsApp founder (and recent Facebook defector) Brian Acton. Key quote: “Facebook ‘isn’t the bad guy. I think of them as just very good businesspeople.’ Sound like the Instagram story?

Continue reading Apple Watch Series 4; Instagram’s Story; Re-discovering The Beatles

Lil Uzi Vert and the Timeless Appeal of Patek Phillipe

In Lil Uzi Vert’s latest single, “New Patek,” the rapper makes no effort to conceal his favorite watch brand, singing on the chorus: “New Patek on my wrist / white diamonds them shits hit pink”. He also sings that Franck Muller, AP (Audemar Piguet), and a new Rollie (Rolex) “made me proud of my wrist,” but Patek Phillipe takes the headline billing in a song dripping with references to luxury brands.

It’s the logical endpoint of hip hop’s obsession with luxury Swiss watchmaker Patek Phillipe. Like many trends in hip hop, noted watch enthusiast Jay-Z can take at least partial credit for the trend, but new artists – led by Migos, who mention the brand 28 times in Culture II – have taken the name dropping to the extreme. According to Genius, one of every eight hip-hop songs that charted in 2017 mentioned Patek (that’s Puh-tek). So what do you need to know about the legendary Swiss watchmaking company founded in 1839 to carry on a conversation next time you run into Lil Uzi at New York’s posh Wempe showroom?

A Brief Introduction

Patek Phillipe traces its roots to 1839, when Antoni Patek and Franciszek Czapek started making watches together in Geneva. They separated in 1844 and in 1845 Adrien Philippe joined Mr. Patek to form Patek Philippe & Co. Fast-forward to today, Patek Phillipe is the last truly independent, family-owned watch maker in Geneva. It has been owned by the Stern family since 1932, and Thierry Stern currently serves as the firm’s president. According to recent interviews with Stern, Patek Phillipe now produces between 40,000 and 50,000 timepieces per year; the company brought in 1.3 billion CHF in revenue in 2016. It’s said that less than 1 million Patek Phillipe watches have been created since the beginning of the company. To this day, every individual part of a Patek’s movement is hand finished, making these watches even more beautiful to look at from the inside than from the outside.

Continue reading Lil Uzi Vert and the Timeless Appeal of Patek Phillipe

How Social Media Influences Everything, from Architecture to the Outdoors

Because I recently graduated law school and I’ll be studying for the bar exam all summer, I’ve decided I’ll be doing something a bit different with this blog/newsletter for the next few months.

Recently, I’ve noticed a lack of a well-curated newsletter of long form essays on technology and its impact on society. Social media and other algorithms are great at surfacing the news of the day, but aren’t great at curating the long reads that step back and force us to think about the big picture.

This tweet from Andressen Horowitz’s resident tech pundit, Benedict Evans, crystallized the gap:

In short, this is what I’m going to do over the next few months. I’ll provide links to a few great long reads from the past week, with a short synopsis and some takeaways.

I love thinking in depth about technology and society, but more than that, I love reading others’ in-depth thoughts on how technology is impacting what it means to be human. While books often address these topics, technology moves so fast it can be better to read digital essays that don’t have to go through the time-consuming book editing process to understand quickly evolving trends.

And so without further distraction, here are this week’s long reads.


 

🗻 Death in the Alpine, High Country News

The story of two buddies who attempt to hike one of Colorado’s famed fourteeners, and what happens when outdoor adventures are inspired by social media.

“Even in the wildest places, we are connected to a universe of people and information through Instagram and Facebook, while those same apps bring distant landscapes into the comfort of our living rooms. That can affect people’s assessments of how dangerous things are: What once seemed extreme becomes normal if you look at enough Instagram photos showing other people doing it….

If mountain climbing has traditionally reflected the most heroic versions of ourselves — triumphant and invincible — social media has amplified that projection.”

It’s another story of the way the digital world has come to reshape the physical world around it, and how the physical world is responding to reshape that digital milieu.

 

⌨️ ‘Crush Them’: An Oral History of the Lawsuit that Upended Silicon Valley, The Ringer

On the 20th anniversary of the filing of the Justice Department’s antitrust lawsuit against Microsoft, the Ringer convened the lawyers who tried the case, the competitors who found themselves under Microsoft’s heel, and the journalists tasked with making sense of it all to recount tech’s most important legal battle, in their own words.

A fascinating oral history of the DOJ’s case against Microsoft, with little gems like this: “The line in the sand for Microsoft was the freedom to put anything it wanted to into Windows. And [Steve] Ballmer’s line was, ‘If we want to put a ham sandwich in it, we can.'”

It also tells the tale of lead prosecutor David Boies using Bill Gates’ awkwardness against him, starting with opening arguments (sound anything like another famous founder under regulatory scrutiny now?)

 

📺 Poppy’s Legal-Battle Woes Are Years in the Making, Polygon

Can a living art project be found guilty of identity theft? A new lawsuit alleges that a YouTube star Poppy “copied Mars Argo’s (a former YouTube star) identity, likeness, expression of ideas, sound, style,” and “dyed her hair a specific platinum blonde and, in character as Poppy, started to alter her voice to be a pitch higher to mimic Mars Argo’s distinctive speaking voice.”

In addition to concerning accusations of domestic violence and abuse, the lawsuit brings important questions regarding copyright and fair use to the fore. In a world where nothing is new and everything is derivative, every character or caricature that comes into question could be subject to legal proceedings. — an avenue few YouTubers want to travel down.

It’s quickly become one of the most important legal battles in YouTuber history, and an interesting challenge for adapting old copyright laws to new mediums.

 

😱 I Tried to Get an AI to Write This Story, Bloomberg

The author goes on a fun adventure to get machine learning tools (TensorFlow) to create real-sounding meetings. It highlights the promises and potential pitfalls of a future powered by machine learning, including the possible centrality of Google to AI infrastructure:

“Even if TPUs shrink and everyone in the world can do machine learning, I’ll (Google) have the data. The beautiful, expensive-to-acquire data. I will have turned all my maps into self-driving cars, all my conversations into phones that have conversations for you, all my emails into automated replies. And I will be providing the cloud infrastructure for a whole machine learning world—clawing back what’s rightfully mine from those mere booksellers at Amazon—because my tools will be the standard, and our data will be the biggest, and the applications the most immense.”

 

🏢 The Brand Builder, The New Republic

A profile of the work of “starchitect” Bjarke Ingels. Ingels’ firm, BIG, many current commissions include campuses for Google, station and car designs for Elon Musk’s Hyperloop, a private school for WeWork (“WeGrow”) in Chelsea.

“BIG is as much a brand as an architectural practice, devoted less to building timeless structures than to associating itself with the newest and latest. This might explain why Silicon Valley clients like Google and WeWork find Ingels’s sensibility so appealing.”

As BIG continues to win commissions and followers, the result may be a kind of aggregate BIG world, in which rapid change and flexibility take precedence over a textured sense of place and community, as architecture merges with brand building.

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BIG’s Via 57 West. It could be in any of today’s rich, cosmopolitan cities, but this one is in Manhattan.

 

🇻🇳 The Untold Story of Robert Mueller’s Time in Combat, Wired

Wired’s June cover story – an in-depth exploration of special counsel Robert Mueller’s time in Vietnam.

 

📜 Section 230 as First Amendment Rule, Harvard Law Review

Section 230 of the Community Decency Act, often referred to as the law that made the internet possible (the law provides for intermediary liability protection, which shields websites from lawsuits directed at user activity, while also encouraging these sites to engage in content moderation), has found itself the target of many attacks against big tech over the past couple years. Cary Glynn, a graduating Harvard Law student, argues that even without Section 230, protecting internet intermediaries from liability should be the First Amendment rule

 

The Bundle is Back 🗞

From Spotify to Apple News, bundles are back; are they better than ever?

One of the business world’s great apocryphal sayings goes something like this: “there are only two ways to make money in business: One is to bundle; the other is unbundle.” Netscape founder Marc Andressen attributes it to his buddy Jim Barksdale.

A recent spate of bundling news makes it clear that a new age of bundling is upon us:

  • Hulu and Spotify announced a $12.99/ mo bundle that includes unlimited access to both services. It’s a nice savings, as Hulu (with ads) cost $7.99/ mo and Spotify premium costs $9.99/ mo. It’s an expansion of the two companies’ partnership: last year, they offered a student bundle for $4.99/ mo.
  • On the heels of acquiring Texture, “the Netflix of magazines,” there are now reports that Apple is working to launch a subscription news in its Apples News app later this year. Apple has recently been pushing to bring in more revenue from its Services (think App Store and Apple Music), so this move fits in line with its broader strategy. Speaking of Apple Music, it was also recently reported that Apple Music now has 40 million subscribers, creeping towards Spotify’s 70 million.
  • Comcast and Netflix announced that customers will soon be able to add a Netflix subscription to new and existing Comcast Xfinity packages.
  • Medium’s Ev Williams wrote about the Medium model, bragging that it’s “one of the largest bundles of original content of its type, so it’s a great value for readers.” Medium launched its subscription model a year ago, and apparently it’s going great (graph without a y-axis be damned).
  • Jeff Bezos revealed in his annual shareholder letter that Amazon Prime – the bundle of all bundles – has over 100 million subscribers. By tacking on benefits at recently acquired Whole Foods, the scope of the Prime bundle continues to expand.

In addition to Netflix and Spotify proving that subscription bundles can work, the recent fire Facebook and other ad-driven companies have come under has give the bundle even greater tail winds.

Meanwhile, with the official launch of ESPN+, the sports broadcasting giant has dipped its toes in the water of the over-the-top future, albeit cautiously. ESPN won’t offer many of its flagship sporting events on ESPN+, indicating a reluctance to fully embrace a digital future. Despite staff upheaval and non-stop talk of “cord cutters,” ESPN’s cable TV business remains profitable. Further, ESPN owns (and continues to bid on future) rights to sporting events, meaning it has an intellectual property moat that others don’t necessarily have. Sporting events need to be seen live, while very few other events do. As such, ESPN doesn’t want to make the shift to digital too soon, thereby undercutting its existing cable business before it needs to do so.

Really though, the pendulum swinging from bundled to unbundled and back again is a reflection of the underlying technology: in the early 2000s we all carried around individual songs on our iPods. They took forever to update – and we had to hardwire the iPod into our PC – so it was fine if we just bought a few songs. Then, as cloud storage and streaming became technically (and economically) feasible, consumers shifted to streaming services. Chris Dixon has a great explainer on bundling economics here, but the conclusion is this: in the end, bundling is beneficial for buyers and sellers.

But, bundling can also be used as an anti-competitive mechanism. I recently warned that Google’s Chrome ad-blocker may be an attempt to do this:

This forced tying of products together is what often gets monopolies in trouble with the law, in one way or another. AT&T’s attempt to force consumers to buy its own phones and network attachments was eventually deemed unreasonable and unnecessary by the FCC. Similarly, Microsoft’s attempt to bundle Internet Explorer with the OS eventually caught the DOJ’s attention, leading to a landmark antitrust case. And now Google is attempting to leverage its browser to squeeze the ad blocker market.

Of course, Spotify is nowhere near anti-competitive behavior: it’s not even profitable, and tech giants like Apple and Amazon are nipping at its heels. In fact, the bigger anti-competitive worry is these tech giants that can bundle together any number of services making it almost impossible for startups to compete.

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Sometimes, what’s old is new again. Photo by Nikita Kachanovsky on Unsplash.

THAT’S NOT (WAY)FAIR

On Tuesday, the Supreme Court heard oral arguments in South Dakota v. Wayfair. It’s a case on whether to overrule a 1992 decision that prohibits individual states from requiring out-of-state retailers that do not have a physical presence in the state to collect tax on sales to state residents. States claim they’re losing massive tax revenue. Online retailers are concerned about a patchwork system of state and local taxes, making it hard for them to efficiently conduct business. Since you asked, Amazon already collects sales tax when it sells its inventory through Amazon.com, but when third-party retailers sell through the Amazon Marketplace, the company leaves it up to them to collect the sales tax. Most probably don’t.

Even this Amazon example illustrates that large companies may be better able to collect local tax revenue, and it might be more difficult for small companies or merchants to collect the sales tax, robbing the smaller merchants of a single national marketplace. Thankfully, it seems as though our President has a handle on the matter:


☁️ Microsoft dismissed, but a cloudy future. With the hasty passing of the CLOUD Act, the Supreme Court dismissed a long-running dispute between Microsoft and the Department of Justice that had made it all the way to the Supreme Court.  The CLOUD Act clarifies that warrants for data held by service providers like Microsoft and Google reach data stored anywhere in the world. But, questions over whether Microsoft will challenge the new warrant issued under the CLOUD Act and how foreign governments will react to the new, hastily enacted legislation leaves the potential high for fresh disputes to surface.

The new legislation authorizes the U.S. to enter into bilateral data-sharing agreements for law enforcement purposes, while allowing service providers to move to quash a warrant if they believe there is a “material risk” that the request would violate the laws of a foreign government.

This sets the CLOUD Act on a collision course with international privacy laws like the EU’s forthcoming GDPR. Meanwhile,

Meanwhile, the EU has introduced a similar law, that allow European prosecutors to force companies to turn over data such as emails, text messages and pictures stored online in another country, within 10 days or as little as six hours in urgent cases (Reuters).


👮‍♂️ FCC adviser arrested. Perhaps taking a cue from her boss, broadband adviser Elizabeth Pierce was arrested on charges of tricking investors to dump $250m into a fiber optic scheme by faking contracts (The Verge).

🔑 Post hoc, ergo proper hoc. Visualizing errors and manipulation in logical thinking. Oh, and also it’s “raise the question,” not “beg the question.”

Spotify, Copyright and the Death of the Album

Together, Spotify and artists have killed the album, perhaps bringing music copyright down with it

 

Analysis of Spotify’s F1 filing for its impending IPO have all rested on the fundamental assumption that power in the music industry flows from copyright control, and for Spotify to achieve sustained success, it’ll need to either gain leverage such that it can negotiate better copyright licensing deals or it’ll need to acquire its own copyrights.

This is incorrect. In fact, the long-term success of truly disruptive startups has long depended on upending old business models and creating value in new ways.

Spotify lost $1.5 billion in 2017, illustrating the current music industry dynamics that have made it nearly impossible for any digital music startup to build a sustainable business. The “problem” with Spotify has always been that the record labels own the copyright to the music, forcing Spotify to pay nearly 70 percent of its revenue to them in royalties.

Thus, Spotify’s margins are completely at the mercy of the record labels and the deals Spotify must cut with them. Generally, new music is granted a copyright for the life of the artist plus 70 years. The labels’ power stems first from their control of copyright on new albums. From this, they control distribution, marketing, and sales. But, both Spotify and artists may be pushing towards a future—inadvertently or not—where the album format, and thus copyright itself, is no longer relevant. This puts the labels in a precarious position and gives the streaming companies and artists an opportunity to explore new, innovative business models.

Continue reading Spotify, Copyright and the Death of the Album

Local News Is Dead; Long Live Local News

The old local news business model is dead, but technology might just empower journalists to deliver something better

During all four years of college, I wrote and worked for my student newspaper. Our little operation was a microcosm of the decimation occurring to local journalism outside our bubble. In short, we were beholden to our advertisers, but the only advertisers left were the very university and administration we were tasked with covering in a fair and honest manner. The conflict of interest was untenable, and it was happening to newspapers across the country.

The Chicago Tribune will be leaving its long-time home in the Tribune Tower (right) later this year. While local journalism has been decimated by the digital age, a new business model is emerging. Photo by Sawyer Bengtson on Unsplash.

Continue reading Local News Is Dead; Long Live Local News

HQ Trivia Should Fail, and That’s Good

RIP Scott, It Was Fun While It Lasted

Unless you’ve been living under a virtual rock the past couple months, you’ve probably played, or even read a think piece or two, about HQ Trivia. The app, brought to us by the genius bros who previously built Vine, has caused quite the stir, and reportedly seems to think it’s worth about $100 million now. Me too, me too. Unlike many an attention-garnering app before it, HQ must be allowed to succeed, or more likely, fail, based on its own merits. Facebook, or any other large Internet player (FAMGA, FANG, the Frightful 5. Choose whichever acronym you’d like), shouldn’t be allowed to swoop in and purchase a young, competing startup. The FTC has been consistently derelict in its duty of promoting competition on the Internet, leading to an increasingly closed ecosystem.

HQ’s meteoric rise has surely caught the attention of Internet giants like Facebook, but an acquistion shouldn’t be the answer to any perceived “threat.”

Perhaps the last app to cause such a stir was tbh, the app which gained 2.5 million daily active users in 9 weeks by allowing users to anonymously answer kind-hearted multiple choice questions (most likely to be President?) with a few of your contacts as the choices. tbh was quickly acquired by Facebook and now sits somewhere around the #63 most popular social media app on the App Store (a few spots below Google+ and a few above Grindr, for what it’s worth). The purchase price was reportedly below $100 million, but still not bad for an app with no obvious business model or route to monetization.

And so it is for HQ now. Perhaps its route to monetization is more obvious — advertising or sponsored questions/quizzes, a la the BuzzFeed model — but being just a few months old its sole focus is acquiring more users. Much the way Facebook snatched up Instagram in 2012 and tbh in 2017, I worry a larger competitor may try to buy HQ before it fully develops a competitive business model. These purchases of young, high-growth startups have created an unnecessary consolidation of power in three markets: (1) the “attention market,” or the game to attract and engage users, (2) social networking, and (3) digital advertising. The long term consequences of such consolidation are worrisome for us, loyal netizens.

First, the attention market. This is the game companies play to try and attract your attention, so they can (eventually) sell advertisements based on user numbers. HQ has obviously done something impressive, winning a few minutes of teenager and millennial attention in what is a zero sum game (a minute I spend playing HQ is a minute I don’t spend scrolling through my Instagram feed). Companies and apps should be competing to provide a better user experience for the attention we “spend” on the app. Save the constant technical glitches, the market has proven that HQ is providing users some enjoyment that Facebook, Insta, Snap, etc. are not. I’ll save my high-minded thoughts on how we should really be spending our limited supply of attention for another post, but the reality is we need competition in the market for our attention. Allowing Facebook to consolidate this market has worrying long-term implications: More ads, less (or no) choice, Facebook acquiring ever more user data, etc. Allowing a large player to acquire HQ lessens this competition, providing less incentive to continue building a great user experience and innovate.

Second, social networking. Acquisitions can hyper-charge the network effect of a social networking app. This is exactly what happened when Instagram was acquired: buoyed by Facebook’s social graph and ad platform, the Gram took off, soon passing upstart Snapchat in daily active users. While it’s not as obvious how HQ could benefit from being acquired by Facebook and having access to its massive resources, and most importantly, its social graph, it’s also not hard to paint a scenario where HQ moves beyond viral hit and becomes an app with real staying power, fueled by Facebook’s monetary and non-monetary resources (e.g. its social graph and ad platform). Not to mention the ‘book has long been interested in a live video play (what happened to all those Facebook Live billboards I used to see?). And rival Google has long been looking for a social media play — seriously, how is Google+ still #57 in the App Store?

Finally, the money. Digital advertising. In the U.S. in 2016, Facebook and Google accounted for 99% of all revenue growth in digital advertising. Resilient independent Snapchat has struggled since going public last year to gain any foothold in advertising. Again, the FTC and its peers across the pond have shown little interest in recognizing the importance of maintaining a competitive digital advertising marketplace. When evaluating the Instagram purchase in 2012, the U.K. Office of Fair Trading wrote “While Facebook generates revenue from advertising and users purchasing virtual and digital goods via Facebook, Instagram does not generate any revenue,” seeming to make the assumption that perhaps Instagram had no long-term interest in generating revenue.

For the sake of the Internet, HQ shouldn’t be acquired: it should be forced to succeed and innovate on its own laurels. Or, it’ll prove itself as another viral fad and we’ll erect a tombstone next to Yik Yak, Secret, Vine, and the other apps that demanded our attention just for a bit. By the way, HQ’s skeezy founders seem intent on staying independent. I am rooting for my Quiz Daddy though.

The reality though, is that the government has limited options for even stopping such an acquisition if Facebook were to make HQ an offer they couldn’t refuse. HQ is still only engaging a few hundred thousand users for less than 30 minutes a day, hardly an antitrust concern. For example, when Facebook acquired Instagram, the FTC issued no more than a stock letter approving the deal, seemingly unconcerned about the long-term implications of consolidation in the three markets mentioned above. Indeed, it’s unclear the FTC even acknowledges the existence or importance of the markets defined above, and their importance in the daily lives of most people. Sure, the parties will have to submit the merger to the FTC under the Hart-Scott-Rodino Antitrust Improvements Act, but there’s no evidence it’d get a second look as even remotely anti-competitive. And if AT&T-Time Warner or Disney-Fox isn’t anticompetitive, then who tho hell cares about a little app with a few hundred thousand users and a host with mediocre jokes that happens to ruin everyone’s New Year? That’s the larger, more worrisome piece of this. We have a system completely unresponsive and unable to address current market dynamics, which is leading us to an increasingly consolidated Internet ecosystem. It happened in radio, TV broadcast, cable, and so perhaps it’s only natural that the Next Great Communication Network would fall victim to the same fate.