Environment Minister Hilary Benn again rebuffed calls this week for WW2-style energy rationing to return to the UK. He was responding to a Select Committee report urging ministers to issue 45 million Britons with an energy trading “credit card” – a mammoth techno-bureaucratic exercise costing several billions of pounds a year to operate.

What’s interesting is how the normal parliamentary business was turned upside down.

Usually, it’s ministers who propose batty and unworkable legislation, and fail to cost it, while select committees are supposed to scrutinize the proposals: picking apart the logic and bogus cost estimates. But in this case the select committee in question – the “Environmental Audit Committee” – is positively evangelical about a return to rationing. Perhaps not surprisingly, ministers are wary of committing electoral suicide, or at least, not in quite such an obvious fashion.

Benn said his department DEFRA had made its own enquiry, which unlike the watchdog’s investigation, included costs. A rationing scheme would cost between £700m and £2bn to set up, he said, and between £1bn and £2bn a year to operate he said.

“In essence it is ahead of its time,” the minister said Tuesday. “The cost of implementing it would be quite high and there are a lot of practical problems to be overcome.” Front bench Tories are equally wary.

So what are the MPs proposing?

The ration, or “personal carbon allowance” or PCA, is a measure of an individual’s energy usage, either at home or traveling. Such usage is capped, and “further emissions rights will simply not be available,” the Committee says. You may choose between a holiday, and turning on the heating. Points win prizes, however, and frugal individuals would be rewarded financially from the creation of an internal market.
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While Bill Gates now holds a lucrative monopoly on digital images, his successors don’t see the same prosperous future for the digital word. Microsoft is withdrawing from the Open Content Alliance digitisation project and will cease to scan books, the company said on Friday. It’s abandoning its Live Book Search venture – a curious decision, since it effectively hands the future of the book to arch-rival Google.

Why? Because the Open Content Alliance is out of money – and Microsoft was by far the biggest financial backer.

Brewster Kahle, whose Internet Archive project is a key OCA member, admitted the financial impact of Microsoft’s withdrawal was “significant” and that the Alliance now needed fresh resources to keep the scanners running. The initial $10m was almost completely exhausted.

Google differs from the impoverished Alliance in that it doesn’t ask for permission from copyright holders; it simply instructs its stormtroopers – the participating libraries – to rev their machines and start copying.

For this, the ad giant has received lawsuits in the US and France from authors and publishers. Google has fought back using sock puppets of its own. Stanford Law School’s anti-copyright centre has been helping out the Google cause – and received a $2m thank you in return.

(Curiously, “anti-corruption campaigner” Professor Lessig omits this relationship in his own, verbose declaration of interests – a taste of things to come, perhaps.)

Yet the policy will be brutally effective, with Google holding a monopoly on the printed word in book form.

Microsoft says it will donate the books digitised by Live Book Search to the copyright holders. Meanwhile, Google will surely never see a monopoly fall into its lap quite so easily. The future of digital books is now entirely in its hands.

(But perhaps not the future of books – given how superior paper technology is to digital. As Simon Jenkins wrote recently, the physical book just looks better all the time.)

Two articles were published today of some note, and if you can put them in context, you can begin see the true, scary picture of internet economics today. The one that’s usually too scary for the posh papers or broadcast media to describe.

Exhibit One is a deadpan report in the Financial Times, bylined to Chris Nuttall and Richard Waters. It’s titled, “Web 2.0 fails to produce cash“.

This could be the least-surprising headline of this (or any) year. Dog Bites Man rarely makes the news. As we predicted years ago, Web 2.0 was only ever a rhetorical bubble, designed to boost a clutch of no-hope investments into the arms of an acquirer. For a handful of others – mostly pundits – it was a lifeline from a dead-end media job into gurudom. It didn’t take a genius to work that out.

(We also despaired that Web 2.0 failed to address any of the significant technical challenges of the day. Which, alas, has proved true – even after VCs have spunked $1.5bn of cash at the Javascript kiddies, we’re no nearer to solving these problems. That’s because Web 2.0 was “interface” level people trying to solve “infrastructure” level problems – which is a bit like supposing that a talent for painting garden gnomes qualifies you for designing skyscrapers that don’t fall over.)

Nuttall and Waters point out that now the VC money is drying up, investors can see that there’s precious little to show for Web 2.0 in terms of sustainable businesses.

A good example is YouTube. Acquiring the site cost Google $1.7bn, but even with a “global” audience and Google’s best brains now piloting the operation, it only earned $31m last year. Even bullish analysts (Bear Stearns) don’t expect this to get beyond $90m this year, and around $165 in 2012. Page rates, which the industry measures in CPMs (cost per thousand), will barely eke above $5. Someway short of hopeful, recent estimates.

So where do Web 2.0 companies go from this vale of tears, this endless sea of red ink, populated by the pastel-coloured rounded rectangles of sinking startups?

Exhibit Two gives us a clue.

We’re broke. Can you help us?

It’s a post by Gertrude Stein-lookalike Michael Arrington, an investor who hypes companies he invests in. And who recently suckered the Washington Post into reprinting his nepotistic little tip-sheet, Tech Crunch. Arrington’s advice?

“It’s time to rethink copyright laws, and it’s time for copyright holders to rethink their business models…

“The winners … [will] be the companies that throw out everything that’s come before, and build new businesses around the natural behavior of people.”

All of which is like telling successful passenger liner operators to get more “Titanic-like”. But Arrington does us a great service, albeit unwittingly.

He’s reminding us that what great internet audiences flock to is copyright material. A web that consists only of User Generated Content might be fun for a while, and even illuminating in places, since “amateurs” are doing much of the work that lazy professionals cannot, or dare not do. But with no income coming in, most will eventually cease to do it. One can only remain a sucker for so long.

And so what Arrington, and other sock puppets for the giant internet companies crave, is really quite simple. They want to the lower the cost of their raw material – preferably to zero.

That’s in keeping with the recent call by anti-copyright activists to be paid for P2P file sharing: in other words, the copyright holders should pay them. But Arrington is a “freetard” through necessity, not by ideological choice.

Having succeeded in using “people power” to get innocents to contribute labour for nothing, the Web 2.0 deperados now need copyright holders to follow suit.

And they’ve been pretty successful at it, too. Newspapers are acting like lemmings, in the hope that the “future value” of the web will save the physical businesses they’re helping destroy. But it’s asking a lot for people to give up a modestly successful business model, for one that’s already, demonstrably broken.

The truth is that outside certain lucrative niches, it’s impossible to monetize the web from general purpose content. It’s a telephone network – with pictures – and the most people will pay for a telephone network (even with pictures) is a buck or two a month.

As it happens, I’m in favour of copyright reform too – but it’s predicated on gathering more money for creators, not propping up serial business failures like … Michael Arrington. So the next time you hear the ritualistic whining about the trouble copyright holders cause plucky internet startups, remember who really needs who.

With exquisite timing, a book that should serve as a tombstone for Web 2.0 plopped out recently. It’s called Once You’re Lucky – Twice You’re Good: The Rebirth of Silicon Valley and the Rise of Web 2.0.

I’m going to snap up a couple as novelty gifts – and one for myself. It’ll go next to my treasured Pets.com puppet.

Technorati, the comically inept search engine, has redesigned itself again – knocking itself out in the process.

The site was down when bloggers checked in yesterday.

More importantly, the latest redesign is a tacit admission that it’s given up on its original mission – indexing the world’s weblogs. Technorati now claims to present “zillions of photos, videos, blogs and more”, and rather apologetically adds the rejoinder: “Some of them have to be good.”

No. Why?

In practice, Technorati now returns only a tiny number of blogs – and prefers to offer thumbnails of digital images already tagged with a keyword. A technical challenge that does not exactly require the algorithmic prowess of a Donald Knuth.

Technorati, the comically inept search engine, has redesigned itself again – knocking itself out in the process.

The site was down when bloggers checked in yesterday.

More importantly, the latest redesign is a tacit admission that it’s given up on its original mission – indexing the world’s weblogs. Technorati now claims to present “zillions of photos, videos, blogs and more”, and rather apologetically adds the rejoinder: “Some of them have to be good.”

No. Why?

In practice, Technorati now returns only a tiny number of blogs – and prefers to offer thumbnails of digital images already tagged with a keyword. A technical challenge that does not exactly require the algorithmic prowess of a Donald Knuth.

So what was always a lousy blog search tool is now little more than a lousy image search tool – this is not going to worry Yahoo! or Google.

Call it a strategic retreat. The site has fought heroically to stem the Rise of the Machines, exemplified by tools like this, but lost. Who would have guessed?

Well, not the journalist pals of founder Dave Sifry, and A-list bloggers who gave Technorati oodles of back-scratching press when it launched in 2003. Hacks were as keen as Sifry to evangelise blogging, and instantly conferred guru status on him; here was a man with the numbers that mattered! Reports were invariably too kind to mention that Technorati rarely worked well, and often didn’t work at all.

The moral of the story is hard to miss. Maybe ideological evangelism and engineering don’t really mix. Evangelism and honest reporting certainly don’t.

In 2003 the journalist Ron Suskind captured one of the quotes of the decade when he cited an unnamed Bush administration official as saying:

“When we act, we create our own reality. And while you’re studying that reality, we’ll act again, creating other new realities.”

On the web today, “political activism” has become a virtual reality game that anyone can play, whoever you are. To succeed, a campaign need not be reality-based at all: it can generate its own fictional cause, complete with symbolic heroes and villains. Eventually the “campaigners” bump into physics, or economics, or real electors – who may have different, more urgent priorities – and the “campaign” vanishes as quickly as it appeared.

But what’s interesting is the real world consequences of the virtual campaign can be the complete opposite of the campaigner’s stated goals.

For example, have a look at this exchange with Ben Scott. Ben is a policy director at Free Press. The outfit describes itself as a “national, nonpartisan organisation working to reform the media”. A goal is a media more responsive to citizens, and more accurate too.
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The Phorm bug is spreading. The idea of collecting a user’s browsing history and flogging that data doesn’t just appeal to ISPs. The Mozilla Foundation, the people behind the Firefox browser, want some of that action too.

The Foundation is officially a tax exempt non-profit – but still manages to pay its chairperson $500,000 a year. Executives last week confirmed they are working on a project referred to internally as “Data”. This would gather anonymised data on a voluntary basis, and provide the analytical information for anyone who wanted it.

But recent history reminds us that “anonymised” data is anything but anonymous. Meanwhile, bugs in the bloated browser have blown supposedly “private” data wide open.

Mozilla claims Firefox has around 170m users, which means it has more users than the largest ISP outside China. So it’s easy to see why the temptation is there.

“There are worlds of information about how people use the web that are locked up and not currently shared,” tootles Mozilla CEO John Lilly.

But what’s a non-profit web browser doing building in a data-gathering infrastructure? It would be creepy if we discovered say Nokia putting stealth recording equipment into its handsets. But this is creepier still.

Michael Arrington, who Nick Carr described as the “Madam of the Web 2.0 brothel”, thinks it’s a great idea.

“The potential is huge. Tell them in the comments below and on Lilly’s blog how much you want this to happen,” he urged in the Washington Post.

(You can’t trust Web 2.0 evangelists with privacy, we’ve noted before. People forget that AOL’s notorious data leak was not accidental, but intentional – a gift to the hive mind. For some network utopians, the biggest regret about the scandal was that we wouldn’t see more such gifts.)

Cryptome puts it more succinctly – “Firefox Ponders Suicide“.

The former security director of the One Laptop Per Child non-profit has blasted the project for losing sight of its goals, accusing chairman Nicholas Negroponte of deceiving the public. It’s all about shipping kit, says Ivan Krstić in an incendiary essay.

“I quit when Nicholas told me — and not just me — that learning was never part of the mission. The mission was, in his mind, always getting as many laptops as possible out there; to say anything about learning would be presumptuous, and so he doesn’t want OLPC to have a software team, a hardware team, or a deployment team going forward,” writes Krstić.

“Nicholas’ new OLPC is dropping those pesky education goals from the mission and turning itself into a 50-person nonprofit laptop manufacturer, competing with Lenovo, Dell, Apple, Asus, HP and Intel on their home turf, and by using the one strategy we know doesn’t work.”

Ouch.

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Copyright is over, and musicians should make themselves as pretty as they can for big brand advertisers, says top music manager and label boss Terry McBride.

McBride’s Nettwerk Music manages artists including Avril Lavigne and the Barenaked Ladies, and it’s been an indie label for over 20 years. He’s put his thoughts into a Music Tank report published today, and a keynote at Brighton’s Great Escape music festival.

It’s an upbeat vision of the future that eulogises free music, mash-ups and corporate sponsorship. It’s just not a vision of the future everyone is going to welcome – for example, Billy Bragg, who warned against corporate-flavoured feudalism here recently.

Last night Terry was named Music Manager of the Year by his peers. So we caught up with him today ahead of the keynote, to find out where the RIAA scourge thinks the money’s going to come from.

In the report, entitled “Meet The Millenials“, McBride writes -

“Discovery of new music in the digital economy will be synonymous with consumption”. The money will come from ad-supported music services and subscriptions.”

He predicts:

“Premium data services will be the new format of chic within social connections of friends and like-minded individuals”.

“Price will be a fluid definition and more indicative of a response to demand and freedom to use the file after purchase. The definition of what is ‘free’ and what is ‘paid’ will merge, and become a relative point of view.”

That’s one to remember when your landlord knocks on the door, demanding the rent.

“You might think I’m two months behind,” you’ll be able to say, “But that’s a relative point of view.”

Actually free music will become “an upsell technique for other music related products, e.g. concert tickets, clothing, music or artist branded physical products,” reckons McBride. The recorded music helps establish a larger commercial presence. And don’t forget micro-monetisation of P2P recommendations, he writes.

So let’s hear it from the horses mouth. Show us the money, Terry!

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Some quangos, like jellyfish, seem to be able to reproduce asexually. It’s what they live to do. What this means is that without any contact, parthenogenesis occurs and they simply spawn off a little version of themselves, which may grow as large as its parent. Britain’s uber-regulator Ofcom, I learned this week, definitely falls into this class. I just hadn’t realised how badly it longs to plop out lots of baby Ofcoms.

Ofcom recently proposed that the BBC should share the licence fee with commercial rivals. But with one exception, none of the commercial rivals actually want this to happen – which leaves Ofcom keenest of all on the idea.

At the Westminster Media Forum debate on Wednesday, executives from the top of British TV management discussed the regulator’s review into Public Service Broadcasting, in which “top-slicing” the licence fee is The Big Idea.

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Although the New Statesman magazine’s annual New Media Awards (NMA) don’t quite match up to the EFF’s annual Nepotism Award – nothing quite does – they’re still a rich source of humour and embarrassment.

Getting an NMA is the equivalent of getting an orange at half time from the coach of your village football team, just for turning up in the rain. But this year, even by its own standards, New Statesman appears to have outsourced the nominations to a team of satirical writers.

What else can explain one nominee, East Devon District Council, which is lauded for “using AJAX web technology” to “provide efficiencies in waste collections”.

Rubbish enabling rubbish, if you like.

But Garbage 2.0 faces a tough challenge from another nominee, Jimmy Leach, “head of digital communications” at 10 Downing Street.

“Since he started in his post at Downing Street,” we learn, “Jimmy Leach has transformed the government’s approach to new media”.

That’s remarkably similar to the boilerplate text Number 10 sends out to accompany Jimmy Leach’s forays into the real world:

“Since he started in his post at Downing Street, Jimmy Leach has transformed the government’s approach to new media,” apparently.

How? Well, “he executed the e-petitions strategy which has resulted in many millions of people engaging with the website. He has also instituted a series of podcasts featuring the PM and personalities such as Eddie Izzard, Stephen Fry, Chris Evans, Bill Bryson and more”.

Your taxes at work, there.

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