Rob Pegoraro

[Editor's Note:  This will be Rob Pegoraro's last post for the Disruptive Competition Project.  With the New Year, Rob is joining Yahoo Tech.  He will be missed here at DisCo.]

If you’d like to buy an argument on the Internet, Alexis Ohanian can probably help get you started. Shortly after graduating from the University of Virginia in 2005, he founded Reddit; a year later, that discussion forum was acquired by Condé Nast.

A mix of seemingly endless comments threads and high-profile “Ask Me Anything” interviews featuring everybody from President Obama to an anonymous shipping-company employee, it’s since become one of the Internet’s most popular discussion sites, with almost 91 million visitors in November of 2013.

Ohanian remains a frequent commenter on his own site and has since branched out into other ventures. He started using the proceeds of Reddit’s sale to invest in such startups as the crowdfunding site Crowdtilt and the professional-education service General Assembly (the name of his investment firm, “Das Kapital Capital,” suggests the history major he once was).

In 2008, Ohanian founded Breadpig, a “sidekick-for-hire” that provides a variety of services for startups. And in 2010 he became an advisor to Hipmunk, a crafty little travel-search site co-founded by his Reddit co-founder Steve Huffman.

Ohanian’s role in founding a site based on the input of its users made him one of the more prominent opponents of the Stop Online Piracy Act, which would have made a site like Reddit essentially impossible. The experience of seeing Hollywood’s lobbying push for that bill defeated by a popular outcry seems to have emboldened him to speak out on other tech-policy issues that can hinder startups—in particular, reforming the patent system to punish patent trolling.

Ohanian’s also an interesting guy to talk to in person, as we did for about half an hour in late November during a Washington stop on the tour for his book “Without Their Permission: How the 21st Century Will Be Made, Not Managed.” Here are some highlights of our conversation.

Q. We’re looking at a site that lets people post with no prior filtering. How much did intellectual-property risks factor into founding Reddit?

A. Safe harbor was really helpful, because we would occasionally get takedown notices. But that was pretty rare—I mean, the fact is, Reddit works by linking to other Web sites, so we’re not hosting that content ourselves. The only content we have on Reddit are in the comments.

And fortunately, we have a reasonable understanding of fair use. You know, if someone is citing a paragraph in an article because they want to critique it, then most reasonable people will agree that that’s acceptable.

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If you’ve paid off your phone, you can treat it as your property instead of your wireless carrier’s. That’s the not-exactly-revolutionary upshot of yesterday’s voluntary agreement by AT&T Wireless, Sprint, T-Mobile, U.S. Cellular and Verizon Wireless to unlock out-of-contract devices.

But only 11 months ago, the government had extinguished the right of customers to unlock their phones. In light of that, the unlocking agreement pushed by new Federal Communications Commission Tom Wheeler looks more significant.

This deal essentially changes the operative verb in phone unlocking from “may” to “shall.” Those five carriers have pledged:

• to unlock postpaid phones that are out of contract or have a financing plan paid off, as well as prepaid phones one year after their activation (military personnel about to be deployed don’t have to wait);

• to have qualifying phones unlocked within two days or explain why they can’t;

• to notify customers when they’re eligible to get their devices unlocked;

• to make these changes within a year.

Bear in mind the limits to this shift that keep it from representing a fundamental reboot of the U.S. wireless market.

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Starting Sunday, phone prices will look a little less fake in the U.S. That’s when AT&T will follow the lead of its competitor T-Mobile in offering lower prices to subscribers who bring their own phones to the carrier—and giving existing subscribers a discount if they keep their old devices once they conclude their contracts.

AT&T’s announcement of this new Mobile Share Value option on Thursday came almost a year after its far smaller rival announced that it would scrap traditional subsidized phone pricing entirely.

You could easily forgive T-Mobile for gambling on blowing up its business model in late 2012: It was the fourth carrier in what often looked like a two-carrier market. AT&T, however, is not only the second-largest carrier in the U.S. after Verizon Wireless but the company that two years ago counted on buying T-Mobile.

But T-Mo’s seemingly foolish move to give up the easy money of service charges inflated to recoup subsidies on phone prices—a loan subscribers could only close out by buying a new phone and restarting the cycle—is working. The carrier grew faster than AT&T and Sprint in its last quarter, adding more than 600,000 postpaid users while narrowing its losses.

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In conversations and blog posts over the future of musicSpotify has often served as a convenient punching bag.

In concept, this Swedish startup can seem to threaten the entire existing music business model by letting people stream the songs of their choice for free in return for listening to the occasional ad, or without ads or a usage cap for a small monthly fee.

In specifics, it’s left people to guess what royalties it pays to artists–with some of the most public evidence being complaints by musicians such as Thom Yorke and David Byrne about how little they made on the service.

On Monday, Spotify offered new answers to the “when did you stop beating your wife’s CD collection?” query at a site called Spotify for Artists.

The first was a reasonably clear response about what it pays. There is no one per-stream rate–how roughly 70 percent of its revenue gets distributed to rights holders varies according to such criteria as listeners’ countries, how many Spotify users paid for access and particular contracts with labels–but it averages between .6 and .84 cents per stream.

Lest you think that’s a pathetic reward–if far more than the .007 cents per-stream rate Songwriters Association of Canada president Eddie Schwartz cited from an unidentified artist’s Spotify royalty statement at the Future of Music Summit in October–a subsequent section provides anonymized examples from July 2013.

Over that month, a “niche indie album” netted $3,300, a classic-rock album $17,000 and a “breakthrough indie album” $76,000. And with 40 million paid subscribers, instead of the current 6 million, those releases would have netted $17,000, $87,000 and $380,000–but Spotify has to get those other 34 million premium users first.

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Last Friday brought reports that Comcast had begun seeking counsel on the finer points of it possibly buying Time Warner Cable.

Comcast is the biggest cable operator in the United States and TWC is the second-biggest. And yet you could forgive an individual subscriber for saying “who cares?” — in most markets, one cable firm has a 100 percent share of the market for cable TV.

Giant firms like Comcast and TWC were built on locally-granted monopolies, and the 1990s dream of small “overbuilder” cable franchises providing direct competition to incumbents like Comcast and TWC dimmed and died years ago as the expansions of firms like RCN slowed and stopped.

Cable still has to contend with satellite and fiber-optic services, plus the more existential threat of cord-cutters switching to Internet streaming and over-the-air broadcasts. In the third quarter, cable operators lost 687,000 subscribers, leaving the subscription-TV business down 113,000 after gains by cable rivals.

But Comcast engulfing TWC — or carving it up with another cable firm, possible Charter Communications — would not add or subtract pay-TV choices in any of those firms’ markets.

Indeed, the big cable operators not only seem resolutely uninterested in poaching on each other’s territory, they’re sufficiently comfortable with one another’s company to give everybody else’s customers free access to their own WiFi.

But even companies that face no direct threat from each other can still take different paths in the market that, in turn, open or close other possibilities.

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I have a crazy request for the wireless industry: I want to see the carriers provide a fast, reliable signal to my phone–and not much else.

I don’t need a wireless carrier to pick my phone for me, any more than I need my Internet provider to sell me a laptop. And if they can provide quicker, cheaper service over WiFi instead of leased mobile-broadband frequencies, even going as far as transmitting voice calling and text messaging as packets of data, that’s fine with me too.

A couple of recent developments suggest the wireless business’s slow movement away from its locked-down status quo is picking up speed.

One is the increasing quantity and quality of budget-priced phones. When T-Mobile announced almost a year ago that it would switch to unsubsidized pricing, my hope at the time was that a service that didn’t punish people who brought their own phones would goose the market for manufacturers selling directly to customers.

I can’t say the unlocked, unsubsidized business has blown up since then. But it is getting busier. With the Lumia 520, Nokia has built a good entry-level Windows Phone device that goes for only $100 and change; in the $300-and-up range, Google’s Nexus 4 (my own phone) and the new Nexus 5 compete effectively with smartphones that sell for twice as much.

And in January, Google’s Motorola subsidiary plans to ship the Moto G Android phone for only $179 unlocked. That’s an attention-getting price even compared to the fake, subsidized numbers you see in ads and some news stories.

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TUCSON—There’s little that the tech industry can’t do… if only the rest of us would leave it to its own devices.

That was one conclusion I could not help drawing at times from Techonomy 13, a three-day conference that wrapped up Wednesday at a Ritz-Carlton resort here.

This big-picture talkfest offered its share of useful insights in panels and presentations (for instance, the NSA would have done well to attend a Big Data discussion that warned how a collect-everything obsession can leave you dumber than before). But it also served up a few sales pitches and forecasts that seemed to wish away too much inconvenient reality.

Entrepreneur Max Levchin assured us that market trends would lead China to become a better citizen of the world without mentioning pollution or human rights (after confidently forecasting that science will extend human lifespans to “some definition of forever”). Researcher Kate Krontiris made an effective case for using to technology to ease voting without noting how some politicians are working to make voting harder. Writer and veteran futurist Stewart Brand said we’re not that much R&D funding away from reviving extinct species through genetic engineering–and we’re all sure nothing could possibly go wrong with that, right?

The idea that we’d be better if we just let the techies have at it, without interference from incumbent competitors or governments, has had a powerful appeal in digital circles since at least John Perry Barlow’s 1996 “Declaration of the Independence of Cyberspace” and its grandiose opening sentences:

“Governments of the Industrial World, you weary giants of flesh and steel, I come from Cyberspace, the new home of Mind. On behalf of the future, I ask you of the past to leave us alone.”

I heard a version of that at last year’s Tech Policy Summit, when a variety of Silicon Valley types expressed their wish that the government would just leave them alone to innovate. It came up again at Google I/O this summer when Google co-founder Larry Page mused that it might be helpful to experiment with technology on some plot of land beyond governments’ reach, leading to a memorable parody by Wired’s Mat Honan.

And at startup pitch conferences like TechCrunch Disrupt and DEMO, the sense that we’re the right app or API away from upending an entire market might as well be piped into the room through the air-conditioning ducts.

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In retrospect, the technology industry must have seemed so trusting of the government just a year ago.

Back then, hardly any big-name firms produced “transparency reports” outlining how many law-enforcement inquiries they received, and many hadn’t even taken the lesser step of publishing the guidelines governing their responses to those queries.

And even when they pushed back against government curiosity, they didn’t bother telling us about it. Google, Yahoo and Microsoft had all decided to require warrants before turning over stored e-mail to law-enforcement investigations—an interpretation of the Electronic Communications Privacy Act’s loose provisions only upheld by one circuit court—but didn’t disclose that until early 2013.

And then the agency charged with cracking the digital security of American adversaries elsewhere found itself thoroughly “p0wned” by contractor Edward Snowden.

Snowden’s exposure of the National Security Agency’s PRISM scheme for data queries and a massive phone-metadata-collection effort soon enough set off a rush to publish transparency reports—FacebookYahoo and most recently Apple have followed the lead of GoogleTwitter and Microsoft.

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The new iPad Air Apple launched Friday and its upcoming retina-display iPad mini bring some welcome changes, but in one aspect they don’t advance things at all.

That would be their onboard storage. The 16 GB entry-level storage allocation on each new model and the $100 price to upgrade that to 32 GB remain unchanged since the first iPad’s 2010 debut.

Since then, there’s been a population boom among iPad apps–now 475,000-plus. And many of these apps have themselves bulked up from retina-worthy graphics and other feature additions that, in turn, have eased doing laptop-grade creation that generates accordingly more data on the device.

Unfortunately, the rest of the mobile-device business hasn’t seriously tried to undercut storage pricing that might make the markup on printer ink look reasonable.

The markup for extra storage may look less extreme elsewhere–stepping up from 16 to 32 GB carries a $50 premium on many Android phones–but you’re also more likely to see devices with even weaker entry-level storage. I’ve recently tested a few phones with only 4 GB onboard, leaving barely a gigabyte free for the user.

This is not because flash memory remains a frustratingly-expensive commodity.

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Screengrab of presentation provided by author Jean Cook. Survey and slides are available at: http://money.futureofmusic.org/findings/

The future of independent music doesn’t lie in selling t-shirts and other merchandise, but teaching can be a surprisingly rewarding sideline. Touring can be a net money-loser, but streaming services just might wind up providing a decent chunk of income. And the artists objectively doing worse may feel better about the market’s value of their work.

Those were some of the takeaways from the 2013 Future of Music Summit. This gathering at Georgetown University staged by the Washington-based Future of Music Coalition brought its usual mix of pessimism and hope–not a surprise coming from a group founded in 2000 to speak for artists outside the major-label system and its potential for stratospheric paydays.

(Disclosure: I’ve spoken at FMC summits before, including last year’s).

The conference hit peak despair late Monday morning with a preview of an upcoming documentary, Unsound, that “reveals the dramatic collapse of the music industry.”

(Note that the alleged Hunter S. Thompson quote about the music industry as “a cruel and shallow money trench” that leads off the movie’s trailer is actually a remix of something he wrote about the TV industry.)

Yes, much of the old business model has been blown up, and a lot of artists haven’t figured out how to replace it. But it’s no good to mope about how MP3s, Napster and the iPod ruined everything–those products or things like them were going to be invented anyway. The only question then was what to do next, and vague promises of collective action aren’t enough.

That’s where the summit’s conversations got more interesting–and new research presented Monday provided useful insights on that issue.

FMC program director Jean Cook outlined how its ongoing online survey of some 5,300 musicians revealed that most did not feel that their music had been devalued–even though they were making less money on average than the artists who felt otherwise–and were staying in business through a diverse assortment of income streams.

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