On walkabout in life and technology

Carriers Are the Biggest Threat to Innovation

Nilay Patel, writing for The Verge gets it in Five years after the iPhone, carriers are the biggest threat to innovation. Extremely clear and well written, too many awesome quotes.

Getting a device on a major carrier can take up to 15 months and cost millions of dollars; carriers are notorious for demanding custom devices in order to create customer lock-in. "Exclusivity is the bane of my existence," says one source at a major phone manufacturer. "But it's the only way business gets done."


Understanding why the industry is cheating us out of innovation is great, but a look at the landscape makes it clear that it's time for the cheating to stop.

I have been talking about this for ages, the carriers over-control, lock-in and crapware have stifled innovation in the mobile phone space in the USA, and only when they finally realize they are dumb-pipe services will service and pricing get better. Consumers know this and want this and will pay for this, but the carriers will not give up on their ridiculous monopolistic profits no matter the cost to innovation or customer satisfaction. Why? We need them, and we have no choice but to pick one monopoly from the cartel.

Project Folder Layout

We all work on multiple projects. And we’re creating new ones all the time, whether for new engagements, new personal projects or spikes. I personally like to have all my project files properly organized, every component of the project has its place, so I have been using my own standard project folder layout for years.

Until now. The old one was no longer working.

So I rearranged my standard project folder layout. This time I automated the creation of these folders. This time I made a single tree. This time I think I got it right.

In this post I present the new Hiltmon Standard Project Folder Structure ™, and describe what goes where and why. Download the folder creation script and VoodooPad document here.

The structure

Each project has a project VoodooPad document in the root of it’s folder. This document contains all the key project information that’s usually spread all over the place such as:

  • Client contact information
  • User accounts that we need to login to the project in production
  • System Services to document any encryption key files, config files and other stuff needed to work on the project
  • Names and IPs for the addresses, logins and passwords to access the project servers, databases, networks, routers, VPN’s, etc.

I always have this file open when working on a project, and it’s great to come back to a project later and have all this information at your fingertips.

And then there are the project folders themselves:

  • archive: As I iterate on a project, or create new versions of a product, I move old code, designs, artwork in here. When I work on other people’s products, I keep a copy of the original in here in case I mess things up.
  • artwork: All project artwork goes in here, especially Photoshop and Illustrator master files. The idea is that anyone should be able to recreate all project image assets using the files in here. I often subdivide this folder with subfolders for the product master files, the media master files and other related master files.
  • code: All source code goes in here. Since most projects contain more than one deliverable, there is a subfolder for each in here. I also create TextExpander snippets to help me cd to each subfolder quickly, e.g. the snippet ;cdhi expands to cd /Users/Hiltmon/Projects/HiltmonDotCom/code/hiltmon.com/ which is where this site’s Octopress source resides.
  • data: A lot of projects involve client supplied data, which is saved here. I also save project system logs and data backups here so I can recreate issues or configure my development environment to match production.
  • design: All design work happens in this folder. This almost always contains a research subfolder where all technical and competitive research goes. I also have a pre-sales subfolder for any design notes created as part of the project planning phase. Then I save all designs, wireframes and design notes in versioned subfolders here so I have a record of all design decisions.
  • documents: This is the “catch-all” folder for documents that have no regular place in the structure. I mostly use it for the creation of knowledge-base documents, news articles, and as a place to store any other files related to the project.
  • management: Here we have copies of the contract, the statements of work, estimates, scheduling and planning documents, letters and correspondence, project reports, invoices and all other project management files.
  • marketing: I really should call this the “success”, “feel-good” or “shipped” folder. In here I save any PR statements we send out (hence marketing folder) but also archives of any web articles on the project, any tweet mentions, any ranking screenshots, basically anything that is publicly said about the project. If we ever need a feel good moment, or a reality check, this folder has it all.
  • media: Here we store all presentations, brochures, screencasts, videos and other media created to market or support the product. I often find it useful to create screencasts while making the project and sending them to clients so they can see the product as it grows.
  • notes: I create a weekly markdown file where I log all the work I did on the project. It’s an old habit but a goodie. All meeting notes, call notes, procedure notes and other ramblings are stored in markdown files in this folder. I always have BBEdit running with the latest assembly note open to jot down all that I do.
  • partners: Many of our projects involve third parties, whether they be software vendors, designers or wordsmiths. Save all their deliverables and documents here so we have the originals. We can then create the project assets and masters from these files.
  • support: If we make it, we have to support it. All support notes (that eventually become knowledge-base documents), bug reports, and templates go here.
  • tools: Some projects rely on third party libraries, open source tools, or other products that may be needed to make it work. They go here.

The location

My Projects folder is in the root of my home folder (in my case /Users/Hiltmon). I have added it to the sidebar in Finder so I can navigate to it quickly from everywhere. It contains all current projects. There is an Old Projects folder inside my Documents folder where I drag old or completed projects.

Aside: In my previous folder layout, I used to only keep only code in the Projects folder (like most people do), and used to run a separate Products tree for each engagement containing all the project documentation and a separate Clients tree for client information. This worked for a while, but the client files would get mixed up between projects and I found myself navigating between Projects and Products a lot while working. So I consolidated all three into one, one tree per project, easy.

The tools

Note: I store all my personal scripts and utilities in ~/Scripts and I’m lazy in that I generally hardcode this path.

Download a ZIP file with the script and blank VoodooPad document.

The new_project.sh script creates the folder tree and and VoodooPad document for a new project. The script uses the first parameter as the project name, e.g.

$ ~/Scripts/new_project NewProjectName

Note that I always use single-word project names because I hate spaces in paths, and because I am graybeard enough to remember tools that used to fail when there were spaces in paths. The script will not work for projects names with spaces in them.

#! /bin/bash

# new_project.sh
# Hilton Lipschitz (https://hiltmon.com)
# Use and modify freely, attribution appreciated
# Script to create a new project tree with all the folders I need.
# Requirements:
# - Set the PROJECT_ROOT to your projects folder
# - Set the BLANK_VPDOC_PATH to your blank VoodooPad file
# Usage: new_project.sh <ProjectName>

# Set these first


echo "Creating $PROJECT_PATH..."

if [ -e $PROJECT_PATH ]; then
    echo "$PROJECT_NAME already exists!"

for folder in 'archive' 'artwork' 'code' 'data' 'design' 'documents' 'management' 'notes' 'media' 'marketing' 'support' 'partners' 'tools'; do
    mkdir "$PROJECT_PATH/$folder"


echo "Tree for $PROJECT_NAME created at $PROJECT_PATH"

The result

So, right now I have 9 active projects in my Projects folder. All of them are using this folder structure. It’s new, and it seems to be working well.

How do you structure your project folders, product files and client files? I’d love to know, and improve on this structure. Send me a link in the discussion below or catch me on twitter @hiltmon.

iPhone Is 5 Today

Five years ago, the first iPhone went on sale. My, have mobile phones changed since then.

My Mobiles before the iPhone launch

When I first came to the USA, the only phones I could get were pay-as-you-go bricks. After some time, I finally became eligible for a contract phone.

My first was the Verizon V710 flip phone (first left). It was sold as the first phone to allow bluetooth sync between the phone and your computer, so I got that one. Then Verizon disabled the bluetooth, lost a class action lawsuit, settled and never fixed it.

My next phone, as a result of the class action suit, was the Motorola Razr (second left). It was shit, mostly because Verizon destroyed it’s OS. So I rooted it and installed the secret Motorola OS instead of the Verizon one and it worked OK.

After that, my company got a great deal from T-Mobile and I moved to the Blackberry 8700 (third left). This device worked quite well, but was bulky and plasticky and required you to remove the battery all the time.

My last pre-iPhone was the Blackberry Curve (far right), it felt better than the 8700 in build quality, was was a much worse phone, worse voice, had a slow operating system and the frakking nipple always got stuck.

My Mobiles since iPhone launch

I’ve had the iPhone 3G, so much faster and easier than the old curve. Then the 3GS, one of the best phones ever. Then upgraded to the iPhone 4, love the display. And now I am on the iPhone 4S, the best iPhone yet. I still use the 3G and 3GS when I travel as unlocked and synced phones.

With the iPhone there have been no hardware problems, no slowdowns, no battery replacements, no stuck nipples and all devices remained up-to-date in software through their operating lives. In fact, I’ve had no complaints about these phones at all.

The only thing that has remained consistent pre- and post-iPhone launch is the carrier’s terrible voice and data service quality in New York.

Syncing the Desktop and the Laptop

For the past few years, I have been working about 5½ days a week on the desktop and 1½ days a week on the laptop. The desktop is a monster 8-core Mac Pro with loads of RAM and my good old 23" Cinema HD Display, which makes it perfect for compiling, graphics work and the usual day-to-day work stuff. The laptop is a mid-2009 MacBook Pro 15", perfect for on-site work and demos.

When I started working in this dual environment, one of my critical needs was to have all the latest files I work with to be available on both the laptop and the desktop. Which means I needed a way to synchronize the two computers.

Dropbox was not a viable option, the three folders that I need to be on both machines, Documents, Projects and Pictures, exceed the maximum Dropbox size, and I do not need them to sync in real time.

Having a server is not a viable option because my home IP connection is residential so my server is not readily accessible. I did try DynDNS for a while, and Back to My Mac too, but the connections were unreliable and slow. And I would need a network connection which is not always available when demoing.

So instead, I purchased ChronoSync ages ago and set up synchronizers for each of these folders. And it has worked beautifully for years.

Just before I leave the office with the Laptop, I boot it up, open ChronoSync and run a sync-volatiles container process which runs synchronizations for my documents, projects and pictures folders. This process is quite quick as ChronoSync only moves new or changed files between computers. When I return to my desk to continue working, I run the same process again to sync any laptop updates to the desktop.

The lovely benefits of this process are:

  • I get what I want, all the same documents on both devices. I never have a situation where a key document I need is not directly available on my current device.
  • I have an up-to-date backup of all my key working files on two machines, so I’m not worried if one dies.
  • Even though I use git without fail for all my source code, I also sometimes have feature branches lying around, which I do not commit to GitHub. This sync process ensures that these feature branches are available on both devices. I can stop working on one computer, and continue on the other without missing a beat

But the hassle is that I have to run this process manually. And I am an automate or die fan. What I really want is for ChronoSync to detect when the desktop is on the same network and sync, without me doing anything. And I do not want it trying to sync when I am on another network or doing a demo.

I tried scripting this with rsync but the startup and read time for these large folders was too slow, and the network detection code I wrote was horrible.

Then I found the ChronoSync Agent, a $10.00 additional component that allows you to install an agent on one computer that talks to ChronoSync on another. It speeds up the already fast sync because the agent does its scanning locally instead of the remote having to scan over the network.

But the biggest win comes in the ChronoSync scheduler. I can now schedule a sync to happen when an agent becomes available. Which means that whenever my laptop wakes up on my home network and sees the agent running on my desktop, it does a fast sync. Every time. All I have to do is flip up the screen, and it just works.

I had seen the agent advertised on the ChronoSync website before, but only now realize how awesome it really is, and how much effort it saves me. My desktop and my laptop remain in sync automatically. Thank you, @JoeJapes and the gang at @econriver.

Data Presentation at Its Best

One thing we all try to do is to simplify the presentation of data and tell a story. That’s why charts, graphs, infographics and dashboards are so popular these days.

At the UEFA site, they created a brilliant way to present the story of the tournament. Instead of the usual brackets with the final in the middle and the upper and lower quadrants blank wasted space, they created a railway network, wherein you can follow the story of each team as the tournament progressed (the lines highlight as you hover over them). See it live here.

Clever and beautiful.

On the Nexus 7

Yesterday, Google announced the Nexus 7, their first hardware and software combination tablet.

In short, and in my opinion, they have created the reference platform for Android tablet development. Pair that with the Galaxy Nexus phone and you have the best Android pair since the iPhone/iPad duo, for development.

But until I need to develop for Android, I’m not going to buy one. I already have an iPad and an iPhone.

Several of my takeaways from the announcement:

  • The new Jelly Bean Android 4.1 looks great, is very powerful and has many excellent features, it’s the best Android yet.
  • It’s integration into the Google ecosystem is well done and complete. They are the only ones who can and do compete with Apple and iCloud (who knows if the Microsoft Surface even works, right!)
  • The size and weight are admirable, the number of built-in sensors make it akin to a Star Trek tri-corder, but the bezel is too big.
  • The price point is perfect, the same as a Kindle Fire.
  • You can buy it without a carrier contract, all other Android tablets have been hobbled with this requirement except the Kindle. I think this in itself has limited the potential of all other Android tablets, and makes the Nexus far more attractive.
  • But, like the Kindle Fire that it targets, it’s all about getting the owner of the tablet to spend more money at Google. Cheap razor, expensive blades! Almost everything you do on the Nexus requires access to the Google Play store. To me, the biggest issue with the Kindle Fire is that ‘lock-in’ to Amazon’s stores and the fact that it’s designed to consume Amazon product, not create your own. One could argue that the iPad is the same with Apple’s iTunes store, but the difference is that Apple does not nag or force you to use its store, nor is the iPad designed for pure consumption of Apple’s products. The iPad is a multi-purpose tablet, the Nexus and the Fire are consumption tablets.
  • They did not put in a rear-facing camera, a good thing because anyone who uses an iPad as a camera is an idiot.
  • Their solution to laggy scrolling and heavy background use is to go massively multi-core, an inelegant brute force approach that kills battery life. Apple’s solution that relies on native coding and limited background use is more restrictive, but more elegant and far better on battery.
  • The Nexus Q, their Apple TV competitor is a $299.00 version of the $99.00 Apple product and it does nothing more or better. And then there is the expensive cables and speakers. No good.

All in all, I do expect this product to do very well, and certainly squeeze the Kindle Fire out of the game. This may be the first non-iPad I see on the subway. But it’s no threat to the iPad, it’s not even in the same competitive space.

I also wonder how they are making any profit on this.

Someone Is Coming to Eat You

Michael Lopp, for Rands in Repose, wrote Someone is Coming to Eat You, a brilliant article on success and competition, well worth reading.

Appleā€™s current biggest competitor is itself, and I think Steve Jobs learned this the hard way - from the sidelines. When he returned, one of his first hires was a gentlemen named Tim Cook, and while Tim Cook holds a degree in industrial engineering, he is not an engineer, a designer, or a poet. Tim Cook is an execution machine and he exists at Apple to enable them to pull off one thing - the iPod Mini moment.

Compete to Maintain, Disrupt to Succeed

There is a huge difference between competing in a market and disrupting a market. When competing, a company tries to make a similar product in a given market segment, then competes against incumbent products on price or features to gain share and hopefully profits. When disrupting, a company produces a whole new product (or a viable derivative) that creates or changes a market, then dominates share and profits in that segment.

Competing is comparatively easy; disrupting is hard, expensive, bet-your-business risky, and prone to failure. But the rewards are sweet.

I went to business school back in the day when dinosaurs roamed the earth. The one thing that they drummed in to me was that corporate success was measured in market share. The bigger the share, the higher the revenue, the greater the profit, the better the success. A implies B implies C implies D. For some industries, that’s probably still true, look at oil or retail, the bigger the market share, the better the revenue.

But in the modern, nimble, changing technology business environment, larger market share no longer implies larger share of market profits. In fact, it seems the opposite is true, niche players are drawing all the profits. Yet analysts, market watchers, the media and the market players themselves still focus on share, not profits.

You know I’m building up to a point about Apple, Google, Microsoft and the other big players, but bear with me.

Lets look at the car market, my favorite example stalking ground. Kia chose to compete. They produce a line of generic cars that fit each market segment from small hatches though sedans to SUV’s. In each segment, they produce a similarly equipped car to the Toyota, Nissan, Mazda triumvirate, add a few extra features and price just below their competition. As a result, Kia has gained a huge percentage of market share off their rivals. Kia competes very well. By the old rules, they should make more profit. But they don’t. In tech, think HP, Asus, Dell and all the other clone PC makers.

Subaru, on the other hand, chose to disrupt. One could argue that they produce cars in the same market segments as Kia, but that would be missing the point. They decided to differentiate their products by ensuring all Subaru’s are 4WD and boast higher-performance engines. By creating ‘cooler’, outdoorsy, quirky, fun, greener cars, they created new market segments out of traditional ones, disrupting the market, in which they now dominate. And they do bring in the profits. In tech, think Apple.

You don’t have to disrupt with your entire product line either. Toyota competes in all its lines, just like Kia, and is struggling. But they did create one disruptive product, the Prius. They created a new market segment, the small hybrid, and dominated it for years. Note that the Prius though is in no way a better product, the build is Toyota’s usual, but the pricing is higher, and the fuel economy and environmental benefits are handily beaten by the Bluetec diesel engines popular in Europe. But it disrupted the market so much that they not only created the hybrid market segment, but dominated it’s share and profits for years.

So, getting back to the tech industry.

Today, Apple is the world’s most successful company. But it’s not even within spitting distance of owning the market share that old school business teachings say it should have. Lets take a closer look at the iPod, the iPhone and the iPad.

Back when Apple announced the first iPod, there were hundreds of portable media players in the market. Apple’s iPod did not try to compete against these, it totally disrupted the market. The iPod created a new market where having more songs, a sexy device and an easy-to-purchase ecosystem existed. The other players were competing against the old walkman market or whether to include FM radios. It still took a while for Apple to gain market share, but they were raking in the profits from day one.

The iPhone is the same disruptive business idea. RIMM’s Blackberry and Palm’s Treo owned the smartphone market, until the iPhone launched and totally disrupted their business. Today, the iPhone barely holds 2 digits in global smartphone market share, yet rakes in more than two thirds of all global profits from smartphones. In response, all smartphones now look like iPhone clones, which means the other manufacturers are competing, not trying to disrupt the iPhone juggernaut. And they are all barely breaking even. Or their businesses are failing.

And the iPad redefined the nascent tablet market. It’s running hot as it’s still being the main disruptor. To date, the competition is still trying to make a competing tablet to the iPad, and none have yet tried to disrupt it.

So, last week, Microsoft announced the Surface tablet. It seems nice. But in making the Surface, Microsoft played it safe and chose to compete, not disrupt. The Microsoft iPad competes with ultra-thin notebooks and full blown PCs with a traditional keyboard and desktop OS, it competes against the Apple iPad, Android tablets, Amazon’s Kindles, B&N Nooks and RIMMs playbook with it’s phone Metro interface. In choosing to compete, Microsoft blew it’s chance to create a stand-out tablet device that could challenge the iPad. And it’s a little too late. Competing in this highly competitive and highly dynamic space is unsustainable and unprofitable.

I actually think that Microsoft no longer has the talent to disrupt markets. Their XBox team managed to do it, by changing how social gaming works. Their Zune team did not disrupt. Their Windows Phone team may have a pretty Metro interface, but they are competing against Android and iOS, not disrupting. And their core operating system, enterprise and office businesses are languishing. They missed their chanced to disrupt even after the lessons learned and success of the XBox. Unfortunately the compete mindset has taken over.

And next week, the other big player in this space gets it’s chance to make a move, at Google IO. There, they will announce a new version of Android. But all that does is keep them competing in the smart phone space. It won’t disrupt.

But they will also announce their new Android tablet software, and here they have the chance to disrupt the iPad market. How? By using their core assets to create a disruptive tablet product, from hardware to services, soup to nuts as they say.

Let me put on my Robert X Cringely tinfoil hat and start making wild predictions based on known Google strengths. Google can do hardware, the Nexus phone hardware and Chromebook are both excellent devices. They can do software, the latest version of Android is excellent. They can do services, is there any data or service not available today that does not have a Google moniker - mail, web browsing, documents, collaboration, finance, social networks, media (books, music and movies), photo sharing, and then some. Integrating their own hardware, with their own operating system and their own services creates a compelling tablet, but that only competes with the iPad.

Google also has a large amount of WiMAX spectrum and dark internet fiber sitting idle. If they took this device and married it to a carrier-less, Google-owned and run network, they will totally disrupt both the tablet and probably the phone market too. Imagine a device with Google hardware, Google OS, Google services and cheap always-on Google network access, and you’ll have the ultimate all-in-one communicator. By introducing a compelling tablet and taking the hated carriers out of the game, they’ll disrupt it all, and people will switch in droves. I believe they can do this, disrupt it all, I just don’t know if they have the risk appetite to do it.

If you intend to move into the technology market space, you need to disrupt it. Making yet another clone phone, clone tablet, clone media player, clone TV is not good enough. Sony, are you listening? Making a disruptive phone, disruptive tablet, disruptive media player, disruptive TV is how to succeed. Apple did it with the Apple II, and again recently with the iPod, iPhone and iPad. Microsoft, Google, RIMM, Motorola and Nokia used to do it. They all grew through disruption. If they want to succeed again, they’ll need to disrupt again.

Non-upgradable Smartphones

Today, Microsoft announced it’s new Windows 8 smartphone platform, and it looks quite good. But they also announced that their recently released Windows 7.x phones cannot be upgraded to Windows 8. Which means all those early Metro interface adopters who purchased the brilliant Nokia Lumia smartphones are screwed until their lock-ins expire in two years time.

It’s the same in the Android space, whether caused by manufacturers or carriers, they both seem to spend too much time blaming each other so in my book, they’re both responsible. If you buy a brand new Android phone from Samsung or HTC or Motorola today, chances are it’s still running Android 2.1 and will never be upgraded to the latest version 4. Oh, promises have been made, none kept.

What none of these suppliers understand is the smartphone is no longer an appliance like the old school ‘dumb’ phones. It’s no longer the carrier’s device. It’s a fully fledged personal computing device that just happens to also connect to the carrier’s network for voice and data communications. Users of dumb phones understand that they will never change. But users of computers expect that their computers can and will be updated to the latest and greatest software during the viable life of the computer. They expect to keep up. And are very disappointed when they are stuck with a faulty or old device while locked into a carrier contract.

The carriers and the phone platform providers still have the dumb phone mindset.

Consumers who purchase smart phones have the computer mindset.

They assume that their new devices will remain at the leading edge for at least the 2 years of their contract lock-in. They expect bugs will be fixed, new features will be released, just like they expect on their computers.

But, so far this has not happened. And based on this year’s CES and Microsoft’s announcement today, it does not seem likely. You’ll either be stuck on Android 2.1 or Windows 7 this year.

Which means that consumers are being mistreated by the carriers and the smart phone platform makers. As their software falls further behind, bugs do not get fixed, new services and features remain unavailable, and their devices become useless without recourse to update or replace until the contract expires. And consumers do not like this. An unhappy consumer will not use your network or device again, they’ll tell their friends to go elsewhere, and even though these unhappy people are locked in now, you can be sure they’re gone at the end of the contract.

There is only one who truly gets that the smart phone is a personal computing device and ensures that it is maintained and updated for its useable life. Apple and it’s iPhone. They battled the carriers to ensure that Apple maintains control of the platform and thereby enabling them to update and upgrade the device on Apple’s schedule. Making us iPhone users very happy. Even those with the more-than-2-year-old 3GS will get iOS 6, on the same day it’s released for all.

This is yet another reason why I stick with this platform and support Apple.

Single-pay, Ad-pay or Both-pay?

Author’s note: This article makes no point, takes no stand and argues no single position. I wrote it to see if I could come to come conclusion on which of ‘user-pay’ vs ‘ad-pay’ vs ‘both-pay’ makes sense, and failed. But published it anyway to see if it spurs others smarter than me to explain and solve this conundrum.

It used to be in the old days when news was delivered to your home in paper form that the only way to get coupons or know about a sale at Macy’s was from the advertising in this newspaper. If you wanted to save money, or learn the price of products or see what’s new in fashion, you bought the paper. The value proposition was that the only way to access this information was to pay, and the information itself had value. Both the ads and the news had value, so we happily paid, knowing that the advertisers paid too.

And then the coupon people and Macy’s found that direct mail was cheaper, faster and got a better response from customers. So they started the junk mail barrage we deal with today. And then they put it on the internet for free. And Groupon happened. Since we as consumers now get this information for free, the value proposition of the newspaper has dropped somewhat, to only the value of the news. That’s still a high value proposition. But it still operates on a ‘both-pay’ model.

In my opinion, most newspaper ads are now ignored by consumers. Instead of viewing them as additional information sources, we view the ads as the means for newspapers to fund their news gathering and reporting functions. We put up with the fact that only 40% of the page is news and the rest ads because we know that if the ads went away, so would the news. And we rely on that.

But we have also gotten used to news web sites that run on the ‘ad-pay’ model, where news is free to us. We don’t seem to mind that most of the page is ads and not content, because we perceive that the ads have the right to be there because they have paid for the content to exist and for us to consume.

I think we’re starting to questions this ‘both-pay’ model a little further. If the ad is paying for the news to be gathered and reported, why are we also paying? We’re starting to decry the news organizations as being ‘greedy’ by asking for money on both sides of the equation, ads and us, even though that’s what they have always done. For the record, I do not believe they are ‘greedy’, they are simply maximizing their revenue sources to enable them to stay in business. But the perception that they are getting paid twice is growing. The ‘both-pay’ model is under threat.

My summary of this perception is this:

If we see an ad, we assume the advertiser has paid the full amount needed for that service, so we should not have to pay for that service.

And based on this perception, people are wondering whether a ‘single-pay’ model is better, either we pay or the advertiser pays.

We see this happening in many other areas. We pay for cable TV, yet we now face ads on paid-for channels, we face ads intruding on the actual shows with the new 1/3rd overlays and we observe a lot of product placement and in-show advertising. It’s annoying as anything. We perceive that the ‘ad-pay’ money has gone way up, because there are just so many ads. So why should we also have to pay for these channels if they are getting so much more ad revenue? I think this is partially driving the ‘cord-cutting’ movement.

We buy a DVD, yet it contains ads which we cannot skip. If there are unskippable ads, based on this perception, why should we ‘both-pay’ for the movie? We buy an app, and it contains ads, why did we ‘both-pay’ for an app that is sponsored by ads?

How this perception came to be, or why it did is unclear to me. The fact that it has become quite pervasive is very clear. We no longer buy apps that have ads and a fee. We happily pay to rent movies on iTunes because they are ad free, or watch shows for free on Hulu because they have ads (but no-one subscribes to Hulu). We read the news on news web sites for free, assuming the ads have paid for the news cycle, and get mightily annoyed when they put up paywalls and retain the ads, trying to return to the ‘both-pay’ model.

The move away from ‘both-pay’ is not consistent nor complete, either. There is a class of consumers who do not seem to mind the ads on paid-for items if the ads make these items perceptibly cheaper. Laptops with crapware are a perfect example, consumers seem happy to put up with slow, crapware and ad filled laptop computers because they are cheaper, so ‘both-pay’ seems to work here. People seem happy to save $30 on a Kindle that has ads, again ‘both-pay’ seems to work. We put up with a plethora of ads on seat-back TV’s on our flights perceiving (incorrectly) that these ads help keep the cost of flights down. And lets be fair, can you imagine the cost of the news and TV if it weren’t for the ads!

Maybe it’s this inconsistency that I am seeing between when ‘both-pay’ works and fails that is confusing me, sometimes we want the ads to make things cheaper, and sometimes we defer purchasing because we do not want to buy something that we perceive has already been paid for by advertising.

Or maybe there is no inconsistency at all, just apathy. People feel there is nothing they can do about it, so they either pay and live with the ads or crapware, or stop consuming. I do not know.

As an individual consumer, who values his time quite highly and is not overly financially strapped, I find myself personally moving away from a ‘both-pay’ model wherever possible. If something has ads and a purchase price, I tend not buy it. I will, do, and have done, however, paid more for an item that has no ads. I perceive the value of the ad-free experience to be worth the higher price, and equate that to a better quality experience and use of my time.

But, based on current market trends, I guess I am in the significant minority. When should ‘user-pay’ work? When should ‘ad-pay’ be the model? And when is ‘both-pay’ best? I have no idea.