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HD Digital Radio Alliance crash-burns, but won't admit it

I'm reading through the consumer electronics trade journal TWICE and bumped into this fascinating article: HD Radio Ads Combat Perceptions.

The story's really summed up in this sentence, that the Alliance's new "radio-ad campaign will combat the mistaken perception by many consumers that they already own an HD Radio."

That's an extraordinary problem to have, isn't it? Apparently the higher clarity, greater dynamic range digital "HD" radio is a baffling proposition to consumers, who either think that if their radio has a digital tuner they're set or that it's somehow related to satellite radio (Sirius/XM).

The metaphor that comes to mind is that it's like the rats organizing and having a rally as the ship they're on slowly swirls through the whirlpool and into the briny depths.

For better or worse, AM/FM works pretty well, it's cheap, pervasive and now that there are so, so many different alternatives for listening to music (for example, I have an 80GB iPod plugged into my car stereo so I have an enormous music library on the road and far more flexibility - and sound quality - than any on-air alternative) it doesn't need to be supplanted.

That's the core problem that Sirius/XM have been having for years too. It's just alien for the vast majority of consumers to think about paying for radio. I mean, it's just airwaves, right?

Meanwhile, the spokesperson for the HD Digital Radio Alliance explains that the ads are intended to make people go to the HD Radio.com Web site so that people will view HD station guides because, as she explains, "we know if listeners find a station they want to hear that is not on the AM or FM dial, they will buy a new radio."

Uh, no. If they realize that there's music that they want to hear but don't have access to on their radio dial, they'll create a playlist on their music player, plug their smartphone into their stereo and turn on Pandora or Slacker or otherwise sidestep the entire over-the-air infrastructure.

That's not the only place they're out of touch with reality, though. Alliance president Diane Warren explains that “In this economic environment, being able to receive all these extra stations around the country for free is immensely appealing.� Unfortunately Diane forgets that you have to buy new radios to get these additional channels, and the cheapest option is almost $100.

Then again, perhaps I'm wrong and lots of my friends and colleagues have their HD Digital Radio devices and are happily listening to all the additional high quality channels. Are you?

One question with Tim Jackson of LendAround DVD swapping service

I recently bumped into Tim Jackson and after talking about films, he invited me to join his nascent online DVD swapping social network LendAround.

A DVD swapping service? Ah, well, those are harder to pull off than it might seem. The other attempts I've seen fail due to a mismatch of movie quality and gradual attrition.

Tim's response, which he's generously let me republish here:

Three reasons why it's different, three why it's better.

DIFFERENT

1. It's lending, not swapping or trading: that means it's about sharing stuff you like, not dumping stuff you hate. You get things back afterwards. Our early user research discovered that if you ask people to list things they want to swap, they basically just reveal 10% of their collection (ie the stuff they hate). Ask them what they're willing to lend, and they reveal 90%.

2. It's about friends, not strangers. Our research revealed that people need help getting used to borrowing and lending. Asking everyone to open their collections to the world right from the start doesn't work. We have built in little messages so you can say something directly to your friend when you lend to them or borrow from them. You can of course add (and silently remove) friends dynamically and individually; there have been previous systems of closed groups (eg students at x university) but these missed the point that you may not trust someone you've never met just because they study at the same college as you do.

Note: if you're thinking that sounds like Facebook, yup: we've also built a Facebook app, so you can invite FB friends and they can see your collection and learn about what you're watching and borrowing.

3. We've built technology to support pass-ons. This one is subtle and you only discover it after using the system a bit, but it's incredibly important. Suppose I lend Fight Club to my friend Michael . You're also my friend, but you don't know Michael at all. What happens when you ask to borrow the movie while Michael has it? In previous lending systems, he'd send it back to me, and I'd send it on to you. But we've set things up so that if you want it, Michael can send the movie onwards to you without even knowing you.

Here's how it works: you get an email saying please pass on the DVD. When you click on it, you download a printable letter-sized sheet that folds into a wrapper showing Michael's address. You simply put the DVD inside (in a clamshell or sleeve -- we're sending them out free to beta users later this month), and put a 43c stamp on it. (Or if you're a student on campus, a wage slave in a big office, or a resident of a big apartment building, you walk it round for free.)

Here's why this is a really big deal: fast-forward to when you have 50 friends who've each lent out five movies. Without pass-ons, once things start working, you're soon going to start feeling that you have an unpaid job dealing with returns and requests. With pass-ons, your 5 DVDs can circulate among your friends without you knowing or caring who has it (remember that you can always instantly excommunicate anyone, find where each of your DVDs is, and request an immediate return, and that your friends can't pass on your DVD to their friends). And from your perspective, the service begins to look like Netflix for free -- you receive a disk, print a wrapper, and pass it on. The only work you have to do is in connection with new movies that you're enjoying watching.

Also, think of the speed and environmental benefit. With rental-by-mail, each movie makes two journeys per viewing: out and then back to the warehouse. With us, it makes one journey -- twice as fast, half the environmental impact. Instead of going in to the center and out, our users' DVDs go round -- that's why we called it LendAround.

This will raise lots of questions in your mind (eg I don't have stamps, when will you start to print the postage on the wrapper?), and I'm happy to answer them. But we've taken a strategic decision that you only have 30 seconds to explain to potential users what you're doing, and so it doesn't make sense to shout about this now. What we'll do instead is gradually introduce people to the functionality we've built as they become first members and then active members.

BETTER

1. No credits, bucks or fake currency, and no fees. Other services worked by giving you credits for each item sent; some added a charge to you when you receive something, eg a 'mere' 79 cents fee for each swap. We think quasi- or real currencies reduce usage and promote abuse and attempts to game the system. Our focus is about encouraging people to be sociable and friendly.

2. No need for simultaneity. Some attempts at swapping have relied on bilaterality (ie you want to find someone who's got Fight Club and wants The Ten Commandments), or have created complex multilaterality, where they build a chain of people who can each pass an item around so that everyone gets their request. Such complexity reduces the probability of successful matches, and hence the number of 'transactions'.

3. Network, not personal requests. Once you invite some friends, you'll probably find I'm not the only person you know who has Fight Club. In other systems, requests are made directly from one user to another. What we do is different. When you request Fight Club, we can check to see who's got it, and make an intelligent decision about where to request it based on not only availability but also other factors like the reliability of the other person and outstanding balances of borrows and lends. The result is that while you make only one request, we can work in the background to find the smartest way to fulfil it. And if someone you know only buys Fight Club after you requested it, then your loan request can still go to them.

I know it's hard to convey the subtleties of all this in a 500-word post. But we're convinced that once a user signs up, there's a much higher probability of our being able to give them a reliable and useful service that they love.

A tour of 3D model fabrication company Archetype 3D

I had an opportunity this morning to meet with the team that runs Archetype 3D, a 3D architectural modeling company based in Louisville, Colorado.

What's a 3D modeling company? Well, have you ever seen those incredibly intricate and detailed models of upcoming buildings or building complexes at sales offices? Or perhaps at City Hall? Or maybe you've seen a 10-foot three-dimensional terrain map of a National Park or similar? Those are all the kinds of things that Archetype 3D makes for clients, ranging from relatively simple jobs that are in the few hundred dollars to amazingly detailed work (like what I'll show, below) that cost tens of thousands of dollars and is used to sell multi-million dollar works.

Archetype 3D describes itself thusly: "Since 1984, we have been building professional scale models in Colorado. We started making 3d architectural models for the ski industry and for residential developers within the state and have grown to include work building industrial design models, satellite / aerospace models, museum and display models along with courtroom models and graphics."

I'll start with a photo of the model they were just wrapping up today, after six weeks of detailed fab and modeling work. It's the proposed Ritz-Carlton hotel for the beautiful ski resort town of Vail, Colorado. Looks like the real thing, doesn't it?

In this picture you can see more that it's a scale model. But look at the detail: even within the entrance carport you can see the doors from the architectural plans.

In this one you can see shop manager Mike Johnson etch some fine details on one of the windows in the Ritz-Carlton model.

This model is approximately 6-foot by 5-foot, took six weeks to produce and costs $50,000. As I clarified, they do not tend to play frisbee on the fabrication floor. :-)

This is pretty interesting too and considerably smaller in scale: it's a (theoretical) model of the Sun, being produced for the Space Science Institute. It cost about $1000 and will be part of a traveling exhibit shown in libraries around the United States.

This is the illustration upon which they based the Sun model shown above. Quite impressive to go from a 2D drawing to a 3D model!

This is a model used to sell a mixed-use facility in Beaver Creek, Colorado, another ski resort town. Once the models are used and the project sold, they often end up at Archetype3D rather than just being trashed, so the company has a nice wall of display models representing hundreds of thousands of dollars worth of incredibly detailed work. (If you've been to Beaver Creek and can identify this building, please do leave a note telling us what's in the structure now!)

So how do they make these incredibly detailed models?

The first step is what they call their topo machine (topo for topographic). What you see is a device that lets them cut urethene foam in three dimensions to whatever shape is needed. The device works with urethene ranging from 3lb to 20lb density, and I imagine it's quite noisy, though we didn't see it actually in use (I also worry about the employees breathing the dust from this process, but imagine that they follow full OSHA regs in that regard).

One of the most interesting machines to me was this behemoth: their 3D modeler. Yes, it actually creates highly detailed 3-dimensional models based on computer data fed to it. The raw material is a combination of plastic and wax and it's created with the help of industrial lasers. On the earlier Ritz-Carlton model, this is how they created the incredibly intricate window railings, for example. No human would want to do that by hand for hundreds of windows!

To create the nuances and appearance of reality, the Archetype 3D team also has quite an array of paints, as you can see. One of the other modelers told me that as best they can, they use the exact color swatches from the architects, for maximal realism. The exterior yellow on the Ritz-Carlton model, for example, is based on an exact color specified by the client.

Much of the paint work is done by spraying paints evenly on parts before they're added to the model, but there's also a lot of work done by hand. While we were there, an employee was adding touches of snow by hand, something that made me think of the character Slartibartfast, who, in the great Hitchhiker's Guide to the Galaxy, "specialises in fjords, having won an award for Norway."

If you have any knowledge of HO train layouts and the people that work ceaselessly to make complex, rich and incredibly detailed models, that's what this is like. In fact, as you can see in the above picture, they also utilize model elements from train hobbyists.

And, finally, one more picture, showing the full Ritz-Carlton model and some humans for scale. Or was it Attack of the 50-foot Guys?

Anyway, many thanks to the team at Archetype 3D for both sharing what they do and helping me get all the facts right in this blog entry too.

How do you know when CEOs are being paid too much?

There's an interesting - though not surprising - debate happening on the Web site of my local paper, the Boulder Daily Camera. The article that started things going is New Crocs CEO Getting $850K Salary Signing Bonus and it's tied to a local shoe manufacturer, Crocs, Inc (NASDAQ: CROX).

The debate is about whether an executive is worth their paycheck, basically, and I'm being generous calling it a "debate" as most of the comments are of a considerably more hostile nature.

For example: "It is obscene that one man - John Duerden - make that kind of income while this company disregards and disrespects those who actually do the work." or "No wonder this company is broke." or "People are starving. This is awful."

And the most unhinged of all: "CEO's, Enjoy your dishonest wealth and mansions here on earth, while you still have breath. Because, in HELL you won't find mansions or luxury, just pure torture, terror, and torment." That one makes me wonder about their personal story, but not so much that I'd risk having tea with them, since I'm one of those capitalist people.

Fortunately, there are some people who seem to understand that as you work your way up the executive ladder at a company your salary naturally increases too. People leaving comments like "Tough job, seems about right to me......" and even backhanded swipes like "Crocs is a bad company with a fad product that probably should never have gone public; but this CEO is hardly in the upper echelon with this compensation package"

What I want to examine here isn't whether new Crocs CEO John Duerden is underpaid or overpaid but rather to explore the idea that executives should be paid whatever the market allows.

We're not talking about the manager of the local Starbucks (NASDAQ:SBUX), note, but a large publicly traded company with a global presence.

This is quite relevant for another reason too, because with the bailouts and other government attempts to shore up our broken industries, the question of how much is too much for CEO pay immediately comes into question within that context again, and vociferously.

Anyone being paid millions for doing their job seems hard to justify, but it's like athletes: if you're playing at the level where you should get $4mil/year, why would you take a job offering you $500K instead?

And if you, as a top athlete, won't take the offer that's undervaluing your skills and expertise, who would take that kind of job offer and would they really help build a winning team? You know the answer: someone less capable, someone less valued by the industry at large.

This is directly relevant to executives. If you're looking for a new CEO to take over your publicly traded company and try to restore the stock value for the many shareholders, isn't it your fiduciary and moral obligation to find the very best person you can to fill that job?

It's clear, I hope, that you can't get top quality people by offering a second-rate salary. Ergo, Duerden at Crocs being offered what seems like a tremendous salary but in fact is probably an average salary for a clothing company of the size of Crocs. If he were #1 at

Yet when we hear about the executives of major corporations like General Motors (NYSE: GM) being paid huge salaries even as the company goes to Washington to ask for bailout money, people go apoplectic. I just ask that you think about it for a minute instead of being enraged.

Do you really think that a company like General Motors can attract the top-notch people it needs to reinvent itself by offering salaries that are 10x what a line worker makes? I don't.

And the consequences of getting an inferior candidate because you can't offer a competitive salary? Well, that should be obvious.

Contextual ad shoot-out: Infolinks versus Kontera

I've had a very good relationship with Kontera and have been a premier advertiser through the use of its ad network on my Ask Dave Taylor.com site.

Many people in the online advertising space eschew the kind of contextual pop-up ads that Kontera run, however, because they say that it's confusing to users: is a word in a different color, underlined, a hypertext link or a pop-up ad? Here's how one looks:

My use on Ask Dave Taylor is perhaps even more confusing because I generally have it customized to be a single underline and to have the same color as a regular link (and my regular hypertext links are italicized, not underlined at all). Since the ad pops up on "mouseover", I believe that it's quite unusual for people to accidentally click on the ad. I will also say that I have served up millions of these ads since I started working with Kontera and never received a single reader complaint.

Other contextual ad networks have seen my busy site and asked me if I'd switch and generally I say no. The folks at InfoLinks.com persisted, however, and I decided it would be very interesting to test Kontera versus Infolinks on the site. They swore they could earn me significantly more money than Kontera was paying me and that sure got my attention.

I told each company they were going to be part of a test and that I would publish all the results, including actual earnings. Both companies agreed and were excited (and perhaps a little bit anxious) about the test.

I ran the A/B split test for the month of February, 2008. I used the following code to split ads 50/50 between the two networks:

The result? I've taken a 20 day slice to compare between the two, from Feb 5-25, and here first is the result from Infolinks:

The second result is from Kontera:

Though you might initially think that the total amount earned is the most important, to me the key figure is the eCPM (effective cost per mil -- where "mil" in this context is actually 1,000). With this figure you can see that Kontera offered up more valuable links: $4.39 versus InfoLink's $4.23.

The two networks had exceptionally similar earnings: $1939 for Kontera and $1905 for Infolinks. Notice, though, that Infolinks had a higher click-thru rate (CTR) and more ad impressions to generate this slightly lower revenue when compared to Kontera.

The winner? Kontera, but only by a hair. We're talking about a difference of about 1.8%, after all.

If you're looking for an ad network to experiment with, Kontera might well be just what you seek. And if they don't work out for you? Perhaps Infolinks would work instead.

Either way, my thanks to both companies for letting me run and publish the results of this test. I hope you find it interesting!