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Dave posts about some great airline experiences and it doesn’t surprise me that the airlines involved are Southwest and Jet Blue. There is this great opportunity for up and coming airlines that emulate these guys to take over and provide a great, efficient air travel system for our country. The main thing holding this back is the lobbying efforts of the old guys. The old guys grew up under the old system of regulated air travel and while they adapted once the industry was deregulated, they never figured out how to escape the trap of their old business models that were based on charging 10x fares to last minute and business travelers compared to everyone else. They also appear to be stuck in a fundamentally hostile management/labor relationship and the combination results in the bizarre poor service that we all see.

There was a thing on the radio yesterday about a movement to create a passengers bill of rights. This appears to be driven by people who are focused on the incidents where they have been trapped in airplanes sitting on the ground for 5+ hours. My feedback would be that there are some good ideas in this movement, but they are missing the bigger picture. Passing new rules that protect passenger rights is putting a band-aid on the gushing wound. What we need to do instead is to stop subsidizing the old-style airlines and let the bad ones fail. In the mean time we need to provide good customer information on how the airlines are doing and try to remove some of the restrictions that are holding them back. I understand Southwest still deals with some bizarre rules about flights into and out of Texas, and if you look at the pain that Virgin America went through to get permission to fly in the US, its just a shame. Another great move would be to pursue a more consistent energy policy that helps the airlines have more predictable fuel prices. One of the cornerstones of Southwest’s strong business performance over the past decade is that they did a great job of locking in fuel prices before they went swinging all over. In theory the government could be helping provide this kind of stability for the whole industry and even making it available to new entrants in the market.

A shill for the “Copyright Alliance” was given a venue to write on news.com and wrote a piece that could have come right out of the movie “Thank You For Smoking”. Maybe if they do a directors cut of that movie they can add the copyright guy into the back-room along with the smoking, alcohol and gun lobbies.

Copyright is indeed an important thing for our society and as someone who creates intellectual property for a living I rely on it quite a bit. But the take that Patrick Ross takes in his piece deliberately misstates the origin and concept behind copyright (and patents for that matter). Both were created intended as a balanced sets of rights and responsibilities between producers of creative and innovative works and industry. With both copyrights and patents the idea was that the creator would be given exclusive rights to their creation for a limited period of time in exchange for making it publically available and adding it to the body of human knowledge. This was always explicitly balanced by the notion of fair use that these copyrights and patents could not be used abusively.

Now forward in the current era, greedy folks are making land-grabs to increase the value of their intellectual property and lobbyists like this guy are trying to confuse the public about their fair use rights. Copyrights were supposed to expire after the death of the creator, but various entertainment interests (especially Disney) keep pushing Congress to extend their copyrights almost indefinitely. Meanwhile the copyright lobby keeps trying to diminish your traditional rights to purchase a piece of creative work and use it as you would like and protect it with backups by layering on DRM, the DMCA, and hostile legal threats at the beginning of videos and TV programs. Not content to sell you a song for a buck or two, they want to charge you an extra $1-2 for a 30-second excerpt of that thing you already own, but used as a ringtone. They want you to have to buy new copies of all your media every few years as there are new technological shifts and as the CD/DVD media you own wear out.

Lets be clear. There are vibrant and creative entertainment industries and despite the fear-mongering by the copyright lobby, they are not going away. Sure, they are going to have to shift and adapt with new times and new technologies. Some industries that have made money in the past as middle-men might be going away (for example the big record companies and tv networks) as these new technologies reduces the need for their role (and creates new middle-men like Google, Amazon, Apple). But just because a given big record company isn’t healthy does not imply that musicians are somehow going to go away.

Anyway, I’m fairly annoyed with news.com for running this propaganda piece without enough context and wanted to call it what it is.

Andy writes about how Amazon is going into the home grocery business similar to the WebVan/HomeGrocers of the past. I’m hoping this will be successful. I’m assuming this is also related to the same-day delivery thing that Amazon has been already offering in certain markets. If so they are well set up to have the critical mass necessary to make this sort of thing work. I’m hoping they pull it off- we order from Safeway sometimes for home delivery but I miss the level of service that Home Grocer used to provide.

I was chatting with some friends recently about buying TV on the Internet. It was on the way towards almost making sense not getting cable or messing with DVR and just getting the individual TV shows you want a-la-carte. With Unbox, iTunes, and the XBox video service you just download the shows you want, pay for each show, and enjoy.

Done right this should be a huge win for the TV networks. It seems like the only downside for them is that they lose the advantage of their wide distribution, but that is going to happen whether they play or not. The only stumbling block to make it more widespread is cost. At $2 for most TV shows whether they are 20 min (cut out the ads) or 40 minutes, high definition or not, its just not quite a no-brainer to watch everything online. If the Daily Show and Colbert Report were more like $1 per show and even better you could get a cheaper subscription I’d be there. But at $2 per show, that is 20nights/month X $4/night = $80/month. Sounds like the studios are being greedy. Here they have this opportunity to make some really solid revenue streams from their shows and get off the falling interruption advertising market.

And then the news today is that NBC is pulling out of iTunes because they want to charge $5 per show. Wacky and clueless. NBC was slow to put many of their shows on Amazon Unbox, but I see that Law and Order is up there now.

Hopefully they won’t jack it up to $5. Like I said, and $2 per HD episode, they have a great thing going and probably have ~$40/season extra revenue from me, especially if they do a better job posting the episodes right around when they go live. If they get greedy I’ll just continue to DVR it…

Word is out that the BioShock game installs a rootkit on your system to implement some wacky copy-protection scheme. Too bad, I’d heard interesting things about this game but there is no game in the world worth destabilizing your system with a rootkit.

Moreover its amazing that folks are still not getting it with things like this. I understand publishers wanting to protect their IP, but why not go with the Valve Steam approach or the World of Warcraft approach? I’m sure lots of people would be annoyed that they need to register an account on an Internet site to play a game they buy in a store but (a) Stores and physical CDs are just so old fashions, and (b) however annoying it might be, its way better than copy protection and physical CDs.

I’d MUCH rather have an account I need to sign into than having to tote around physical CDs. With the account approach you can let people install the game on multiple computers because they can only sign in to one at a time with the account they have registered.

Yesterday I placed an order with Amazon. I ordered a couple of older CDs, the new album from M.I.A. (which is only $7.99- its cool to see the prices of music coming down), and a spare battery for my camera. I’m a Prime member so its all free two day shipping, but I think I missed the cut-off for shipping yesterday so it should all be here on Friday.

Today a package shows up from Amazon with the $13.30 battery. It appears it was delivered by “WRX”, which I assume is their same-day service for stuff they have in the Seattle warehouses. Pretty amazing.

Tafiti has just gone online- it is a new web search experience by Microsoft and Jackson Fish with a lot of the development work done by my Launch21 partner Peyman Oreizy.

There are two immediate things that strike me as cool about Tafiti- first of all, its built in Silverlight and is a great showcase for how the Silverlight platform can enable much richer web experiences than we have seen before.

The second aspect is as a different angle on vertical search. Rather than doing a vertical focus of topic (like CouponLooker which specializes in coupon codes), it focuses on helping when you are using search as a research tool. I probably won’t be going to Tafiti if I just need to do a simple query to find the name of a web-site I need to visit, but for drilling down into a topic across book results, news, photos and more, it provides some neat capabilities to “bookshelf” results as you go along and come back to them.

All done in a gorgeous UI that should help clarify the sort of thing that the Jackson Fish folks mean when they talk about great software experiences. Congrats to Microsoft for pursuing this project and finding great ways to experiment with new innovative interfaces.

There have been a couple of posts lately about VC funding and how much money you should take. The frequent advice from all sides (not just the VC guys) is to not get too hung up on what percentage of the company you end up with- get enough money to make the company successful, give enough equity to the other major players in the company to make the company successful.

This is all true as far as it goes, but it glosses over the key distinction between the non-VC funded company where the founders are keeping close to 100% vs. the situation once you accept funding. When you take that step, you are greatly increasing the size of the bet you are making. It is easy to think of it as “this should be a safer business play since I have money in the bank to fund whatever I need to do to be successful”. But at the same time you have changed the level of the acceptable outcomes. As a 3 or 4 person founder-bootstrapped company, you can all be very happy making $1-2M revenue or selling out for $5M. There are tons of business ideas that fit in this space that represent perfectly reasonable “base hits”. But generally with that bigger investment you are now in a mode of swinging for the fences, needing to target $100M+ in value to make it all work out.

Now, there are also lots of businesses that fit this model, but I suspect there are a lot more of those base-hit opportunities than the home-run ones. In baseball, the big home run hitters tend to not have the highest batting averages…

Please don’t misinterpret this post as to suggest that I’m down on VC. Its just that many new entrepreneurs I speak with at meet-ups seem to assume that it is the only model and/or don’t take the time to think about whether it is the right fit for their specific business idea and/or life goals. It is also worth noting that some segments of the VC industry are adapting and figuring out ways to make smaller investments make sense, creating incubators, etc.

I’ve been a reader of Slate since way back a long time ago when they first figured out that they couldn’t charge subscriptions to the site. I’ve always found it to be a nice mix of news, eclectic interesting articles and opinion.

Lately they seem to be trying to chase the latest hot Internet trends by offering many of their articles as video under the brand “Slate V”. To me this effort falls totally flat. The type of mental place I’m in when I check in on Slate is not somewhere where I want to be having to listen to the audio and move along at the pace that they set. Now, I understand catering to different audiences, so if this is just a supplement to the existing content, fine. I also understand that sometimes pictures, video, or audio really are important to communicating the story. They have long had slide-shows (and video slide shows) for pieces where that fits. But it feels like many of the Slate V pieces are not available as normal text and would have been much better suited to sticking with that medium.

Slate has an article about how the airlines are seeing record profits while service is at an all-time low. I’d just like to add a few notes to the article.

The article points out that customers can blame others for their misery- the FAA, the TSA, and the weather. Except as far as I can tell the FAA air-traffic system is overall working really well. The airlines try to hype how much of a problem it is, but that is mostly because its their favorite excuse and they hope to make a grab to get other users of the airspace (small airplanes, other carriers) out of their way. As for the weather, it can sometimes be an issue when there are actual big storms, but its not the sort of thing that a well-run airline couldn’t accomodate for. Plus, I’ve caught airlines lying numerous times about either FAA traffic issues or weather as an excuse for late flights. If you are a pilot its not that hard to hear the gate agent blame one of those two for a delay, go sit down in your seat with a laptop and a wireless connection, and check for actual flow-control notices and/or weather issues. So far my experience is that about 50% of the time its a straight-out lie. I’m not saying that the gate agent knows that its a lie, but someone at the airline is spreading false information to pass the blame.

But the article’s main point is true- most people believe this stuff, so the airlines manage to dodge the blame for their mismanagement.

Of course to call it mismanagement in the technical sense would imply that its poor business for the company involved. The amazing thing with the screwed up situation with this industry is that the companies have managed to position themselves so that not only do they make big profits while treating the public like crap, but we also subsidize them to the tune of billions of dollars to do it. I guess when you put it that way, maybe it should be written up as a nice Harvard Business School Case Study “how to treat your customers like crap and make billions”.

My favorite example is what I realized American Airlines is doing with overbooking in my little incident with them. The article points up that the load factor (filled seats) has risen from 66% to 78% over the past decade. Handled correctly this is a good thing for everyone because it results in a more efficient economic system. The catch is that there are supposed to be protections in the system against the airlines pushing it too hard in their favor.

If they overbook an airplane and have to bump you, they owe you some money. So if they do it too much, they start to lose money. Except that American has realized that by causing passengers to miss their connections, even when its 100% the airlines fault, they get out of the bump fees. Everyone misses the flight they were booked on and winds up on the next flight, but with no rights to any compensation. The airline gets all the money from filling every seat in every flight, working their bizarre pricing schemes to maximize the pennies they wring out of every passenger.

And THAT is I guess what you would call good management. Hand out those big bonuses!