Jeff Jarvis wrote a post today saying, “The old building block of journalism — the article — is proving to be inadequate in the current onslaught of news. …the new building block is the topic.”

I agree. Not that that’s any surprise, given we’ve built Veritocracy around that concept. I would extend Jeff’s point though and say that on a fundamental level, topics have the potential to improve journalism by creating a much more efficient market place for ideas.

As readers we want the absolute best, most complete information on the subjects we’re interested in. If you group all the articles (mainstream media, bloggers, reader comments) about a specific topic (i.e. ‘Is the Bailout Plan the Right Move?’), you effectively allow those articles to compete against each other. You can also then have topics compete against each other. It’s effectively like introducing “specialists” on the floor of the stock market. Topics bring together all the buyers and sellers of a specific “idea” so everyone gets a more efficient result.

To make topics really work though, you need 1) a way to accurately organize content from millions of sources into specific, but narrow topics; 2) a way to separate out what is good information from what is bad information, within each topic, on a personalized basis; 3) the ability to learn to feed each reader the topics they are actually interested in.

This is what we’re doing with Veritocracy, and it is essentially the vision that Jeff lays out in his post. I strongly believe that this is the future of news and information, whether it’s us that ultimately succeed with it, or someone else.

Feedback? Write a comment, or e-mail the author at lee(AT)squawkingtech.com

Both John McCain and Barack Obama (like most of Washington) are supporting the bailout. But despite the bipartisan support for the bill, this may prove to be the single culminating event that loses McCain the election.

By nature of being a moderate republican, McCain tends to share a lot of common ground with Democrats. There really are not many issues that separate him from Barack Obama. The one big one that does, though, is their fiscal platforms. With the economy likely to be at the forefront until election day, voters will no doubt be judging both candidates on their strategies for fixing it.

So assuming that McCain and Obama both openly support the bailout, and it passes (as expected), how is the American public likely to interpret things post-bailout?

Well, since both candidates will no doubt proclaim that the bailout is unpleasant, but essential to the functioning of the economy, the logical conclusion is that free markets do not work without serious government intervention. This, of course, is the center of Barack Obama’s economic policy, as he contends that the economy needs regulation to protect the middle class. McCain’s central selling point is that the economy works better when government is smaller, and thus we lower taxes across the board.

So how will this actually play out? No doubt, Obama will aggressively push the idea that a massive intervention was needed to correct the problems that occurred because of deregulation. McCain will then either have to contradict his support for the bailout, or contradict his own economic policies. Checkmate Obama.

The biggest irony is that this could have won McCain the election, if he had taken the conservative (and popular) stance. By rejecting the bailout, McCain could have reinforced his position as a true maverick, and demonstrated how a commitment to free markets and smaller government directly benefits the people. In effect, he could have pulled in a broad sector of populist support, while simultaneously energizing his existing Republican base.

At this point, it’s probably too late. But in November, when he looks back on the results of the election, McCain may very well realize that he lost by simply failing to act as the small government maverick he promised to be.

Feedback? Write a comment, or e-mail the author at lee(AT)squawkingtech.com

Tuaw.com is claiming that the Apple TV is going to be killed off shortly in favor of an entirely new product. Whether or not this  turns out to be true, it’s very clear that the Apple TV has failed.

It’s easy to see why this happened. What made iTunes and iPod so successful was that millions of users could transition their existing music over to the new digital platform. With the single purchase of the iPod, a user could instantly enjoy all of their existing CDs (and downloaded MP3s) on a simple, efficient, and portable iTunes/iPod platform.

Apple TV, on the other hand, may as well require an engineering degree. Converting and copying existing DVDs (or downloaded videos) to Apple TV is so overly complex, it kills the usability of what could be an amazing product. I personally have a computer connected to my TV that runs VNC. Needless to say, the setup is very kludgy, but it’s still easier than converting videos over to a format usable by the Apple TV.

In effect, the Apple is asking you to not only purchase the Apple TV, but to repurchase all of their videos. Likewise, while millions of TV shows and movies are now available for free on Hulu, Netflix, and dozens of other web sites, Apple TV insists that all new content be acquired through purchases.

With all of this said, there is a huge demand for an Apple TV-like device. There is no better place to consume video then on a large screen television. And with infinite amounts of content available online, a TVOIP product seems like a perfect evolution.

So the question is, how will this ultimately play out? Here is my prediction: within 24 months someone will offer a digital video device compelling enough to make consumers really start to bite. To do so, the device will:

• Have at least 500GB of storage, enough to hold 1000 hours of HD video.
• Play just about every video and music file format in existence
• Have a simple interface to queue and play streaming video from major streaming sites (Netflix, Amazon, Hulu, PBS, NBC, CBS…)
• Offer a simple drag and drop system to add and remove media over wifi from other computers in the house. This could be done through a local web interface, desktop software, and/or finder/desktop file sharing.
• Be simple to setup, configure, and install.
• Will include a simple remote, and third parties will offer software to do more complex interactions from local computers (and even mobile platforms).
• Will be compact and cost less than $300.

None of the above are all that complex, but they address the key friction points consumers currently experience. The two biggest challenges will be 1) making the system easy to use for the average consumer, and 2) not being sued out of existence by the entertainment industry.

There are a number of companies that could do this, from Apple and Amazon, to Netflix and Hulu (Netflix already has a box, but the value proposition is still too weak). The question isn’t whether Internet video is coming to your TV, but only how and when will it be delivered.

Feedback? Write a comment, or e-mail the author at lee(AT)squawkingtech.com

Mark Cuban just wrote a really interest blog post suggesting that the government create an ETF with the assets it purchases as part of the bailout. The key point of this strategy is that the government would sell shares in the ETF to the private sector, thereby reducing the load on tax payers, and adding a level of transparency to the fluctuating value of the assets.

The idea is very interesting, and it’s hard to argue that anything requiring less tax payer dollars or more transparency would be a bad thing. The problem with this strategy is that it does not address the key problems with the bailout:

• If the ETF shares are sold initially at purchase price asset value, no one in the private sector will invest. The point of the bailout is that banks aren’t willing to sell their assets at the prices the private sector is currently attaching to them given the risk profile. The reason the government is stepping in is because it is the only buyer willing to pay above market prices for those assets.

• The ETF shares could be sold in auction, and the government could release full financials on all the assets. This would probably be sufficient to get the private sector to purchase vast amounts of the shares in the ETF. However, it will also cause the government to take an immediate loss on the value of the shares being sold, with no potential upside later on.

• In either case, the companies selling these assets will still be taking a net financial gain on the asset sales at the cost of the tax payers. This will still create distortions in the market (allocating resources to the players that deserve them the least, while robbing resources from everyone else). Likewise, the enormous losses accrued by the government (and the need to still finance them with public money) will serve as a further tax on the American people through depreciation of the dollar.

I applaud Mark for both putting new ideas into the fray, and also for being willing to put his money where his mouth is. But while the ETF idea has some nice features, it still won’t address the key issues of the bailout.

At the end of the day, as the guys at The Mises Institute often point out, when you have a major investment bubble, the only true solution is to allow the excesses to liquidate. Allowing the market to do it tends to be the fastest and most efficient path.

Feedback? Write a comment, or e-mail the author at lee(AT)squawkingtech.com

Listening to the congressional testimony over the last few days, it’s clear Hank Paulson and Ben Bernanke believe a $700 Billion dollar bailout is essential. Their central assertion is that the government must act because the private sector is incapable of buying that bad debt. I’ve heard several explanations for why this is the case, but none of them make a lot of sense:

1) Not enough capital in the private sector. This is clearly absurd. There are trillions of dollars in US and foreign companies sitting in cash. Berkshire Hathaway just bought a piece of Goldman yesterday for $5 billion. The private sector has so much cash they are buying treasuries hand over fist. There is far and away sufficient capital to buy all the bad debt in the private sector.

2) The debt is too complex and difficult to understand. I can understand this. These financial instruments are obviously very complex, and many companies holding them have been opaque about what they actually have on their books. Here’s the problem though: the government won’t be able to deconstruct these assets any more than the private sector will. Is it realistic to believe that a handful of federal accountants will be able to determine a fair value for trillions in assets, when the companies holding them, and millions of potential investors around the world, could not? Doubtful.

3) The market’s psychology is so broken, only a massive government bailout will prevent a major catastrophe. I understand this line of thinking, even though I disagree with it logistically. Bankruptcy of major companies like Lehman Brothers are painful and costly, not only to those companies but to many others. But it’s not the end of the world. Lehman went under, and the healthy segments of the company were immediately purchased and put to work in a productive matter. The existing shareholders will now fight over the remaining bad assets. If AIG went under (or companies dependent on AIG reinsurance), there is plenty of capital around to buy up the solvent and productive remains.

The two primary differences I see between the bailout and bankruptcy are:

1) With bankruptcy, solvent (well run) companies would be buying the productive assets, instead of leaving them in the hands of those that created the crisis in the first place.

2) Tax payers wouldn’t have to risk $700 billion dollars, or 5% of GDP.

At the end of the day, the only thing the government can do that the private sector can’t is print enough money to pay more for the asset than they are worth. In other words, tax payers would be taking an immediate loss on an investment so that companies holding bad debts can sell at a profit.

Every action in the economy as an equal and opposite reaction, the bailout is no exception. $700 Billion dollars will deflate the dollar and prolong the time it takes to truly liquidate the assets being held (the government will hold them and liquidate them at some later point in time). In other words, we’re trading quick and deep pain for long, protracted, slightly, less intense pain.

If this sounds familiar, it should; it’s what the government did during the Great Depression, and it’s what made the Great Depression last as long as it did.

There is topic on Veritocracy for this debate (Is The Bailout Plan the Right Move?), if you want to check out a number of other perspectives on the issue. Email me if you need a beta code.

Feedback? Write a comment, or e-mail the author at lee(AT)squawkingtech.com

In a nutshell, the Google Phone manifests of all the things Google tends to do well, and all things it tends not to. Much in the same way the iPhone does for Apple.

T-Mobile’s G1 by Google launched today, and based on the videos and information being released, the phone looks to have solid software, exceptional internet apps, and an ugly UI/hardware design.

Not surprisingly, the G1’s most appealing and innovative features are its internet applications. Full wireless syncing with Google apps could be a killer app. The iPhone offers similar wireless sync features through Mobile ME, but Mobile ME is new, less than stable, and not free.

Google is also offering  “Compass View” on Google Maps, which is truly impressive to look at, and will be infinitely useful if it works as advertised.

Where the G1 clearly misses (as most Google products do) is usability and design. The phone is ugly. The UI is even uglier. And while other manufactures of Android phones will work to improve that situation, they’ll have a tough time matching or exceeding Apple in this respect.

Long story short, Android looks very promising. I don’t see it taking the crown for best overall smart phone experience from Apple any time soon. Nor do I see it being compelling enough to employees or employers to gain significant enterprise penetration in the near future. However, for non-enterprise, non-AT&T users, Android will be a big winner - most specifically to the detriment of Microsoft Windows Mobile and Palm.

Feedback? Write a comment, or e-mail the author at lee(AT)squawkingtech.com

Was Bill Gates right when he said that spam would be eradicated in the near future?

I hadn’t thought about this in a while, which I guess is a big part of the answer. Blogs, social networks, search engines, and social content sites where I used to be bombarded by spam now seem relatively clean.

This is anecdotal of course, but a quick check of Google Zeitgeist seems to back me up. Over the last four years, there has been a 60+% decrease in the number of searches for the “spam” on Google. If this number is even somewhat correlated to the actual prevalence of spam (and therefore need to look for solutions to it), there certainly seems to have been a significant decline.

Spamming itself, though, has not stopped. These two Squawk blogs get tons of spam comments coming into the queue, and my spam folder can catch hundreds of messages on a given day.

The difference now, of course, is that there are better filtering tools. For bloggers, Akismet and others have help keeping spam out of viewable comments. On Squawk, we simply review comments before they go live, which seems to be a disincentive enough for spammers to not overload us. Sites like Facebook and Digg largely solved the spam problem simply by creating a barrier to signup (email activation + captcha) and then vigilantly deleting accounts used for spam. I’m guessing Google combines a similar human diligence, with some automated anti-spam content filtering and page rank magic to keep the problem in check on its various search indexes.

Overall, the procedures and tools we as a community have developed seem to have created a high enough barrier to make spam ineffective in mainstream sources. In other words, like a growing and evolving society, has the Internet matured from a wildwest, to a society of some law and order?

Feedback? Write a comment, or e-mail the author at lee(AT)squawkingtech.com

Mark “Rizzn” Hopkins at Mashable wrote an interesting article asking whether social media is failing for political discourse. The answer is that all media fails to different degrees at handling political discourse, but technology is improving the situation.

The problem of finding quality information in social media has frustrated me for some time. However, it’s one that is prevalent not only in social media, but in all news/information media. The crux of the issue is that humans are inherently biased. Even when the New York Times or Wall Street Journal sets out to write a factual news story (non-editorial), they are still offering a perspective by mentioning (or not) specific facts, arguments, or pieces of analysis. Social media simply lowers the barriers to entry for content creation, and in doing so magnifies the volume of both good and bad information.

With this said, there is a solution, and it’s the one that humans have been using to find truth since the beginning of time. In the words of Oliver Wendell Holmes: “The best test of truth is the power of the thought to get itself accepted in the competition of the market.” The solution to getting the best information, is to get as many people as possible to contribute their differing perspectives, and then let people (over time) figure out which are truly the best.

While social tools have allowed millions of people to have their voices heard, they have done a poor job at facilitating the next piece of the equation: helping people actually find the best information. This has resulted in an imbalance favoring more information, but % wise less quality.

What’s needed are tools that help facilitate the process of finding and determining quality. In other words, a more efficient market place for content. The next generation of social tools are starting to tackle this problem. What we’re working on at Veritocracy is one example of this, but there will be (and are) others doing the same.

Feedback? Write a comment, or e-mail the author at lee(AT)squawkingtech.com

Google Android’s first phone, the G1, is being priced at $200 $179 - virtually the same as the iPhone. This is most likely a strong indicator that Android phones won’t significantly undercut the iPhone on price.

However, it may say more about Apple than Google or T-Mobile. When Android was first announced, the general consensus was that an open and free OS from Google would allow third party phone manufacturers to develop cheaper phones without the “Apple Premium.” The question now is whether there still is an “Apple Premium” to circumvent.

2008 seems to be the year that Apple has begun shifting gears, making production efficiency a key competitive advantage across its product lines. From iPods and iPhones, to its computers, Apple’s products have increasingly closed in on their competitors’ pricing. The ultimate objective, likely being, to deliver “better” products at the same price points - while maintaining fat margins. Apple is increasing market share, which seems to be allowing them to increasingly dictate supplier pricing. Their recent purchase of PA Semi will also help widen margins, since they will at some point manufacture their own iPhone chips.

The question is whether Apple can continue to increase efficiencies enough to offset the downward pressure on its margins. My gut says they will, but they’ll have to remain on the high end of their markets.

UPDATE: It looks like the G1 is being priced at $179 with 1GB of storage, compared to the $199 iPhone’s 8GB.

Feedback? Write a comment, or e-mail the author at lee(AT)squawkingtech.com

Over the last three years, “going green” and conserving energy has become cool, fashionable, and morally sound. But in all the hype, people are failing to realize that going green doesn’t necessarily mean going without. In the long run, conservation will never be the solution.

In a world of cheap energy, people bought big cars and SUVs. With oil prices above $100/barrel, the prevailing sentiment seems to that there has been a fundamental change of desire towards smaller cars. In a recent interview with Business Week, Bill Ford said:

“I’ve been an environmentalist my whole life, and I’ve fought a lot of battles during 30 years at Ford…. I don’t think we’ll ever see a shift back to [big cars and SUVs]… This is a permanent shift in the marketplace. “

While it’s somewhat refreshing to see major car companies acknowledge the changing realities of the market, jumping 100% on the small car bandwagon is really more of the same catchup that they’ve been playing for the last decade.

The fact remains, people like big cars. As long as this desire exists, there should be smart people competing to create technologies that make those big cars and SUVs affordable. In today’s world, this means building vehicles using energy systems that are far less expensive and more environmentally sound.

In fact, while it’s easy and fun to poke fun at the big US car manufacturers, all of them (and most international ones) have to some degree wised up to the inevitability of electricity as the optimal alternative energy system. In the next 24 months, GM, Ford, Toyota, and Honda all plan to release cars that are at least partially electric. And upstart Tesla Motors is already rolling cars off the production line as we speak.

The problem is that while the big car manufactures are taking steps forward, they are doing so at a glacial pace.

If people want SUVs, the future will be in making those SUVs. Investing 101 tells us: buy low, sell high. If you’re a car manufacturer and you want to step ahead of the crowd, the solution is not to kill your SUVs and big cars, but to invest more in them by rapidly transitioning them over to electric fuel systems. For a company like GM, this means pouring more money in a brand like Hummer, instead of selling it.

Now, this isn’t all so simple and easy. There are significant technical and logistical issues to be resolved, and all of these companies have earnings calls to worry about. But if the major auto manufactures don’t learn to anticipate what people will want in the future, they may not be around to see those vehicles being delivered at all.

Feedback? Write a comment, or e-mail the author at lee(AT)squawkingtech.com