Think of phones networks, and their many operators. Imagine two people, living in two different countries, using different providers, one on a fixed line, and one on a mobile phone.

Can they call each other?

The answer doesn’t even require any thinking, and it’s obvious that their particular contracts with their individual providers don’t actually affect that they are in fact able to easily talk together at any given time.

Technically speaking, they are on the same network, even though they may feel they aren’t. One gets free minutes, the other gets unlimited calls to certain numbers, one has free call-waiting, the other gets an answering machine service and detailed invoices. But it’s still logical that they call one another by just composing a series of digits, always the same series, and they can even do it from some other phone too!

Now, think email. Does it matter that someone uses Gmail and someone else a business address provided by their workplace? Does it matter that one uses Apple’s Mail App, another sometimes uses web-mail and sometimes Microsoft Outlook? Again, technicalities have nothing to do with the fact that there are standards and everyone can contact everyone else equally easily.

There is a misconception that in order to win, Facebook — and before them, MySpace; and before them, Orkut; and before them, Friendster, and A Small World, etc. — need to get EVERY single Internet user as a member. Nothing could be further from the truth, and closed networks are aiming for the very unachievable goal that eventually make them obsolete when other networks unite and/or standards are adopted.

The web is still in it’s infancy, and the Net in general is still very young too. Things are still in a transitional, experimental, self-defining mode. If you remember, think AOL back in the days it was mainly an ISP, sending zillions of CDs to get more members to sign up. Think CompuServe, with its private garden of forums and content areas. Think back before Hotmail and Yahoo! mail, when you had to tell all your friends that your email address changed, just because you changed ISP.

It all changed for the better, and email became a commodity, allowing users to choose their preferred provider, system, software, etc.

As a Netizen, you should never have to ask “do you have Facebook?” to be able to communicate with your network of friends, family, colleagues. It should be as natural as asking for someone’s phone number, without asking who their service provider is. Savvy power-users and geeks will be on all networks, while others will see it as a waste of time and get social nausea and claim that “email is enough” for them to keep in touch with loved ones. It’s a ridiculous situation.

About a year ago I wrote about how everyone (from journalists to Telcos) seemed to be rallying against Facebook, and the opportunity for them to unite and set some rules that Facebook would then have to comply to if it didn’t want to be isolated. A year has passed and Google has now introduced their new attempt at social, which was well received among early adopters. So it seems we are still in the single player mode, and only smaller players like Twitter understand the benefit of being part of a larger and richer ecosystem.

Just like the open web eventually brought AOL to its knees, mainly through the rise of Netscape (and after that, Microsoft Internet Explorer), we will eventually see social networks being forced to interact. This will come in part from the arrival of decentralized networks that users can operate themselves (like Geocities and Tripod allowed anyone to create home pages and contribute to the open-web, back in the 90′s), and big networks opening access to their system from other networks because they are confident their service is better and will attract and retain members/users/customers.

Facebook is like a phone provider that gives you all you want as long as you call people using the same provider. So, for a while, you tell all your friends to join. Then, they find another, better provider, and they leave, taking you with them. This is what caused the death of MySpace by Facebook, and before that, the death of ICQ by MSN messenger.

Hopefully sometimes soon, a network — or, rather, a network of network — will have enough members to compete with Facebook, and will force it to open. It won’t be easy, and it won’t come overnight. But there will be a new Netscape, and everyone will benefit from it, users first, but also Social Networks themselves.

Google+, your move.

To sum up, Dropbox was loved for its simplicity and ease of use, and because it was perceived as a safe way to use the cloud. It is still dead-easy and very useful, but suddenly it may not be so safe anymore, and Dropbox now appears as a company who can’t deal well with security, communication, and privacy.

The business of Dropbox

The model of Dropbox is what’s called “freemium”, where the basic version is free but limited, and users can get additional features if they become paying customers. Usually, this should work well on several levels for the company, who can convert free users into customers as their needs and loyalty increase.

But there is one drawback to this model: online consumers got used to services being free on the Net, almost as a norm, and they tend to expect much more from a service if they are to pay for it. It is a fair assumption that a large percentage of Dropbox’s users are actually not paying for it. But this service still bears a cost to Dropbox nonetheless. The freemium model in that case can be somewhat of a gamble, and the company needs to convert casual users into loyal paying customers, if it wants to grow its business.

Vicious circle

This is precisely where the recent change in perception from users (and partners) can mean the death of Dropbox.

When a product is seen as “less trustworthy” than it used to, everything shifts down one step. Customers who used it for business won’t leave all at once of course, but they may tend to remove their most valuable content first, and use the service for less sensitive data, until they trust it again. At the same time, free users tend to hesitate more before crossing over the symbolic step of taking their credit card out.

And it goes down from there. Paying customers spending money for a service that they now only use for not-so-important things start questioning the justification of paying for it in the first place. They look for alternatives that are either free (for the non-sensitive data), or providing higher level of safety (for the sensitive data).

Since there is a free version, and it is still quite a convenient service, they simply don’t renew their membership, and naturally downgrade to the free option, while reviewing the competition. Meanwhile, free users still use the service to host and backup their everyday stuff but commit even less. Quality of what is hosted goes down, and users occupy space and bandwidth for data they don’t “care” about.

All this ends up costing money to Dropbox, while bringing no revenue.

Eventually, money runs out, investors get upset and encourage to kill the free version altogether, Dropbox’s give users an ultimatum, and their reputation as a business gets permanently stained because of their history and the online ecosystem they’re in.

Jumping back up

There is an alternative to this. If well executed, it could not only rejuvenate Dropbox, but actually get it to grow stronger, fast.

It goes like this:

1. Make your service appear not secure (done);
2. Make your business appear not privacy-friendly (done);
3. Get people to talk about you, through lack of transparency (done);
4. Offer new and improved 100% privacy & 100% security in the paid version, ideally with a new very affordable low-end plan for an easy no-brainer switch from the free version (to do);
5. Leave the free version alive for a while, but explicitly as a “semi-public” service (optional);
6. Profit!

In other words, this would mean to upgrade paying customers into a higher level of privacy and security, while offering hesitant free users an option to get what they thought they already have, for a small — but justified — fee.

I don’t think they had this plan in mind all along, because it would have been really risky to play it like they did. Even if they had, they probably won’t brag about it anyway, because what they need to show now is that they “listened”.

One year from now

Everybody likes predictions, so here is one: in the next few months, Dropbox will either get smart and become the native solution for automatic backup and synchronization embedded in every application you can think of, with only Apple’s iCloud as serious competitor, or keep slipping into the grave they have seemed determined to dig, and see their partners gradually replace them with new alternatives, pulling their users away even faster.

Hopefully for them, they will listen, and read this post.

You’re welcome, Dropbox.

Leaving aside speculations on whether or not this stop was planned (as they claim) or not (as many seem to think), it’s important if we want to understand the importance of what happened so far, to look into recent events, mostly the leaking to the press of an internal online chat transcript by a LulzSec member (link), the arrest in the UK of an alleged member (link), and the attack from another anti-security hacking team (link), among others.

The thing is, whether we like it or not, we collectively need groups like LulzSec, to expose the reality of dangers brought by the adoption of a new and “immature” system such as the Net, managed by humans with less than perfect knowledge of it, to handle all our activities, including those who require the highest level of security, such as credit cards information storage and transactions, or police internal activities.

LulzSec reminds us that if we choose to put all our eggs in the same basket, we need a stronger one, better managed by more competent people. It shows this to us the hard and painful way, so that we, as users, really get a feel of the danger. And it reveals how we never took it seriously so far.

Being told to use secure passwords other than “password” or “1234″ seemed not that important, until your Amazon account is abused by a prankster, who also erases all your email. Sad but true: Fear is a strong motivator. And blaming others doesn’t solve a thing when we didn’t properly take care of our own security in the first place.

Additionally, LulzSec — like Wikileaks not so long ago — also warns of an upcoming flaw in the system, which has been discussed in science-fiction literature since the beginning of the genre: the “Big Brother” syndrome in which authorities control the tools, and citizens lose their humanity. It is a vicious/virtuous circle, in which, the more governments want to censor the Net, the more hackers will offer ways for free humans to circumvent censorship.

You may like the idea of a strong government, and trust your elected representatives, but it is quite easy to imagine how Net censorship starts with child pornography and doesn’t end there, eventually getting abused into controlling what the people should or shouldn’t read/see/hear/know.

China is a good example of what not to do: if you ask the Chinese government, they will explain how important it is to obfuscate certain content, for the good of the Chinese people. Yet, there isn’t a student in China who doesn’t know how to use VPN and proxies to access censored material. If anything, Chinese students are effectively generally more computer savvy than Western ones because of that.

LulzSec (or any other anti-sec hacking group) is bad for now. It destroys and jokes about it. But its very existence is good, as a reminder that there *can* be a resistance, should everything turn bad. Somehow like the Cold War: it’s an “if” case scenario, a deterrent, effective if ever needed.

But unless there is a civil war or a revolution, such groups will always have to stay in the underground shades. Coming to the light of media like LulzSec did will invariably get them too close to sun and lead them to a crash-and-burn.

This is for 2 reasons:

The first one is that guerrilla follows the same rule as mafia criminality (and high-profile lawsuits): you need to be ready to go further than your opponent, to make them back down. If they know they can go further than you, and they are ready to do so, you are done.

When you are fighting governments, what matters is the final outcome of the war, not the individual battles.

The second flaw about being all over the press and stay anonymous at the same time, is that you can and *will* get responsible for all and any problems that arise, even those unrelated to your activities. In other words, you are guilty until proven innocent. This means it becomes increasingly difficult to control your communication, to cultivate the sympathy of your fans, and fight against disinformation, real or fake leakage of information, etc. Al Qaeda and LulzSec can’t really sue anyone for libel, can they?

This results in making the only response possible more aggressive than the previous one, losing more credibility and empathy every time.

If a group of young hackers are not ready to become full-fledged terrorists (some do, some don’t), they better stay underground. Or quit while they’re ahead. This rule doesn’t apply to governments nor international police organizations, obviously, who have a bigger margin of error.

LulzSec claims that they “planned” to be live for 50 days, and then quit. Believe it or not, it is quite clear that its members felt the heat and will be looking over their shoulders for a while. And also that some other group will rise from its ashes sometime soon, just for the lulz.

Pointing out Facebook slip-ups is like shooting fish in a barrel, except the fish is actually a dead horse. Facebook has replaced Microsoft as the dream target of everyone looking for a good rant on unethical business behaviour. But while Microsoft is like a vampire who can’t ever die, Facebook could easily pull a Hendrix (or worse, a Tony Soprano) any day if it’s not more careful. Read between the lines of recent headlines and ask yourself who will benefit from Facebook’s collapse.

Actually, the newest trend is to defend Facebook and Zuckerberg against seemingly exaggerated bashing… Yes, it’s arguably a waste of time to complain about who should or shouldn’t be able to see your drunken photos, as you already know that it’s never too clever to post them online in the first place. And quoting a 19 years old Zuckerberg writing six years ago: “I have over 4,000 emails, pictures, addresses, SNS. People just submitted it. I don’t know why. They ‘trust me’. Dumb fucks.” certainly doesn’t help his character’s reputation, but both Facebook and himself have grown up in the last few years.

Facebook is the Law

As usual, it’s fun to watch everyone barking at the wrong issue, i.e., “Facebook hurting our right to privacy”, while the big picture is being ignored. The problem really isn’t if your information is made private or public, but the fact that Facebook changes the direction of its service as it sees fit. Imagine an online bank suddenly saying “we realized that it makes more business sense for us to publish a top 10 list of our clients’ names on our homepage”. Or a law firm changing their business model by publishing a tabloid magazine. Sure, it’s a bit far-fetched, but while there are industry specific laws to protect customers of banks and law firms, it is commonly accepted that “Facebook is a private company and it’s their right to change anything they want, because users are free to leave” and that “it’s free and has to rely on advertising, so what else would you expect?”

Well, what I would personally expect is that when I join a service, it is clear what it will provide and what it will cost me (in money and/or privacy, for example). I want online business to come with a deal and stick to it. If Facebook wants to compete against MySpace, great. If by doing so it starts competing against Google, good for them. But when Facebook then realizes Twitter is an efficient and scaleable business model, and decides to change from a private “friend to friends” environment into a public “broadcasting” service, something is going wrong business-wise, as well as ethically. Sure, Facebook can do whatever it wants, but no one should be surprised that it creates a backlash, and that trust is being eroded.

Those Who Ignore History…

For years, Facebook has been following the principle of “better to apologize later, than to ask for permission first”, first introducing new invasive features and getting everyone angry, then apologizing about their eagerness to provide the best experience to their users, finally getting away with the implementation of an “opt-out” functionality. And the more confusing the settings become, the more chances users won’t go through the hassle of opting out. Remember how notoriously painful it was to leave AOL a few years back?

There are several examples of this attitude. Probably the most infamous one is Beacon, a part of Facebook’s advertisement system that sent data from external websites to Facebook, to enable posting of targeted advertisements directly to a user’s News Feed. Launched in November 2007, Beacon became the target of a class action lawsuit, and was shut down in September 2009.

September 8, 2006

An Open Letter from Mark Zuckerberg
“We really messed this one up. When we launched News Feed and Mini-Feed we were trying to provide you with a stream of information about your social world. Instead, we did a bad job of explaining what the new features were and an even worse job of giving you control of them.”

December 5, 2007

Thoughts on Beacon
“We’ve made a lot of mistakes building this feature, but we’ve made even more with how we’ve handled them. We simply did a bad job with this release, and I apologize for it.”

Content vs. Revenue

But Facebook’s conflict of interest is not new. For decades, the publishing world has been facing a similar one, always fighting to keep their editorial content independent from advertising. Facebook’s struggle is to stay friendly and safe while monetizing its leader’s position and assets of half a billion users. The more personalized the ads, the higher the revenue, obviously. And since Facebook knows where you go, who your friends are, and what you like, it can serve very efficient advertisement.

This in itself should not be a problem. After all, privacy has been dead for some time already. But because it reached huge proportions, everyone is getting all worked up, big media titles dig up dirt, politicians pay attention, valuable content partners consider breaking free, and early adopters are starting to leave:

March 5, 2010

The Full Story Of How Facebook Was Founded
“They made a mistake haha. They asked me to make it for them. So I’m like delaying it so it won’t be ready until after the facebook thing comes out.”

April 23, 2010

Matt Cutts, head of the webspam team at Google, deletes his account.

April 27, 2010

Senators Call Out Facebook On ‘Instant Personalization’, Other Privacy Issues
Facebook launched a product that has some serious privacy issues: ”Instant Personalization”, which automatically hands over some of your data to certain third-party sites as soon as you visit them, without any action required on your part. (…) And now four Democratic US Senators are calling on Facebook to change its policies.

April 28, 2010

Facebook’s Eroding Privacy Policy: A Timeline
Since its incorporation just over five years ago, Facebook has undergone a remarkable transformation. When it started, it was a private space for communication with a group of your choice. Soon, it transformed into a platform where much of your information is public by default. Today, it has become a platform where you have no choice but to make certain information public, and this public information may be shared by Facebook with its partner websites and used to target ads.

May 3, 2010

Top Ten Reasons You Should Quit Facebook
Let’s start with the basics. Facebook’s Terms Of Service state that not only do they own your data (section 2.1), but if you don’t keep it up to date and accurate (section 4.6), they can terminate your account (section 14). You could argue that the terms are just protecting Facebook’s interests, and are not in practice enforced, but in the context of their other activities, this defense is pretty weak. As you’ll see, there’s no reason to give them the benefit of the doubt. Essentially, they see their customers as unpaid employees for crowd-sourcing ad-targeting data.

May 5, 2010

New Facebook Privacy Complaint Filed with Trade Commission
Today, EPIC and 14 privacy and consumer protection organizations filed a complaint with the Federal Trade Commission, charging that Facebook has engaged in unfair and deceptive trade practices in violation of consumer protection law.

May 6, 2010

Peter Rojas, co-founder of Engadget and Gizmodo, deletes his account.

What Happens When You Deactivate Your Facebook Account
Facebook is a big part of millions and millions of peoples’ lives, but what happens when you pull the plug? Last night I met a man who walked to the edge of the cliff and nearly deactivated his Facebook account. He took a screenshot of what he saw after clicking the “deactivate my account” link on his account page – and it is pretty far-out.

The Age Of Facebook: Excerpts From The New Book By David Kirkpatrick
The long awaited book about the first few years of Facebook. The Facebook Effect: The Inside Story of the Company That Is Connecting the World

May 7, 2010

Zynga Gunning Up (And Lawyering Up) For War Against Facebook
Facebook is force feeding Facebook Credits as the only payment platform that Zynga and others can use. Facebook takes a massive fee – 30% – for Credits, and the big publishers like Zynga see it as little more than a protection racket. (…) Facebook is trying to get Zynga to agree to a long term deal where Zynga remains primarily on the Facebook platform.

The Evolution of Privacy on Facebook
Infographics of changes in default profile settings over time

Facebook’s Gone Rogue; It’s Time for an Open Alternative
Now, say you you write a public update, saying, “My boss had a crazy great idea for a new product!” Now, you might not know it, but there is a Facebook page for “My Crazy Boss” and because your post had all the right words, your post now shows up on that page. Include the words “FBI” or “CIA,” and you show up on the FBI or CIA page.

May 10, 2010

Growing On Google, People Asking “How Do I Delete My Facebook Account”
I did a “how do I” search on Google to see what was suggested as topics. To my surprise, “How do I delete my Facebook account” was one of the top choices.

May 12, 2010

Facebook Privacy: A Bewildering Tangle of Options
To manage your privacy on Facebook, you will need to navigate through 50 settings with more than 170 options. Facebook says it wants to offer precise controls for sharing on the Internet.

‘Act Now, Apologize Later’: Will Users ‘Friend’ Facebook’s Latest Intrusion on Privacy?
Whatever business models Facebook develops, experts at Wharton suggest that the company may not be invincible in the long run. It’s possible that privacy problems, user backlash and the need to generate revenue will create a toxic stew that erodes trust. “People stay with Facebook because they feel locked in, but they may lose trust over time,” says Matwyshyn. “It could be an ideal time for a competitor to come in and harness that trust deficit.”

The Big Game, Zuckerberg and Overplaying your Hand
You can only screw people for so long before it catches up to you. The entire industry went from rooting for Zuckerberg to hating him and Facebook–in under 18 months.

May 13, 2010

Price of Facebook Privacy? Start Clicking
Facebook’s Privacy Policy is 5,830 words long; the United States Constitution, without any of its amendments, is a concise 4,543 words.

Some quitting Facebook as privacy concerns escalate
In recent weeks more people appear to be deleting their Facebook accounts.

May 14, 2010

Cory Doctorow, author and co-editor of BoingBoing, deletes his account.

Who is leaving?

It takes time before cycles go through to completion of course, and no one is claiming that Facebook will empty out overnight. But cycles do have their way of moving forward, with giants dinosaurs eventually getting replaced by tiny mammals, who in turn will get bigger, you know the story… In this case, the early signs of the cycle moving to its next stage is not what everybody is saying, but rather the fact that everybody is talking about it more and more aggressively. And if it makes sense to look at early adopters to foresee the success of a new site, their departure should make us wonder if a negative trend is not on the way. There are reasons behind a sudden change of climate. Privacy is merely the trigger.

Nobody likes a bully (especially not the other big boys)

Two weeks ago, I participated in a workshop called Leapfrogging Facebook. Why We Should And How We Can, as part of the Lift conference. Participants from all backgrounds, from Vodafone to the W3C discussed together the details of possible alternatives to Facebook, involving — among others — big Telcos (the project is being spun off of Swisscom) who have members, infrastructure and hardware, reputation and trust, but no attractive social networking service to offer.

It makes sense because, clearly, something is happening at a high level, where existing giants don’t really want a newcomer to salvage their private club (and succeed where they failed, then kick them out). They were so used to fight against one another that they didn’t see Facebook becoming the next standard, to steal their leader positions one by one. Nobody necessarily wants to kill Facebook per se, but market leaders understandably want to make sure Zuckerberg plays nice, opens up his cards, and shares with his new friends. Not everyone wants to enter direct confrontation, as shown by the new iPhone OS rumored to include Facebook features natively, but everyone wants to at least piggyback, if possible. Or to create another Facebook, one with multiple heads, one that is so ubiquitous and legitimate that it can’t be challenged anymore, and becomes the new standard, managed and controlled by the “authorities” of the Net.

Tabula Rasa

Keep in mind the big picture: Facebook doesn’t want to “merely” become a portal à la Yahoo! or AOL. Without doubt, Facebook is aiming to become a “unique login” of the Internet, your universal digital ID card. Facebook vs. Google was only the beginning, but imagine when Facebook will get into the Paypal business for instance. And with a growing ecosystem of services using Facebook Connect, helping make your Facebook account the only membership you’ll ever need to use a multitude of sites, from group buying to social games, it’s only natural Facebook is now investing in an internal payment system too.

Example scenario, a few years forward: You just booked plane tickets on XX Airlines through Facebook Connect. You conveniently paid some of the total using your Facebook credits, and Facebook earned an automatic commission percentage on the sale. One of the reasons why the airline promoted login with your Facebook account is so that your identity and payment are guaranteed (the same way credit cards do it today, with lower fraud risks). Another reason is because they can track your loyalty and follow up with Facebook’s optimized Customer Relationship Management system. Google wants this position, Microsoft too, every Telecom company as well, not to mention PayPal/eBay. But by that time, few — if any — will be able to compete against Facebook on number of verified users.

This is why they don’t want to let Facebook grow even bigger anymore. If journalists, geeks, nerds, and other self-proclaimed web philosophers are concerned about privacy, and advocate a new open protocol, it’s a good idea to jump onboard and be part of the new system that will eventually become a plausible challenger to balance Facebook.

The cycles have evolved: it’s not “eat or be eaten” anymore, it’s become “join us or die”.

So, how do I leave Facebook?

It’s actually quite simple:

1. Go to: http://www.facebook.com/help/contact.php?show_form=delete_account,
2. Click submit,
3. Wait two weeks for your account to be deactivated (if you log into Facebook before the end of the two weeks, your deletion request gets cancelled and you’re back in).

But for more dramatic effect, make sure you do it on May 31st.

LINK

Foreword — Jobs has spoken

In case you missed it, you should know that everyone has been talking about Steve Job’s “Thoughts On Flash” in the last couple of weeks. This is an important read, not because it talks about what’s currently happening (i.e., the lack of Adobe’s Flash technology in the iPhone, and now the iPad), but rather because Jobs is writing about how Apple (and other Internet big players) are going to position themselves in years to come. Sure, the iPad is sexy, but the changes ahead go much deeper, and announce where Internet business is heading.

Yes, there is a “paradigm shift”

Charles Stross, the science fiction writer whose blog is very much worth reading because of his way to peek into the future and find just the right words to explain it cleverly, reacted and analyzed Jobs’ text, somehow re-introducing the notion of “Web 2.0″. To understand better what Web 2.0 really means, it’s useful to read how Tim O’Reilly coined the term and described it back in 2005 — before it became a buzzword, and especially before people started to confuse it with “you mean MySpace and Facebook?”. His article helps understand how we are smoothly sliding from a world of devices and personal software, into a new decentralized/distributed network of remotely operated services.

In short, remember when your email address was given to you by your Internet Service Provider, and you had to change address and warn all your friends when you moved to another ISP? Then came web-based email (e.g., Hotmail, Gmail) and it became natural to be able to access your mail from any computer, anywhere. Why? Because instead of using a software installed on your computer, you access a service on the web, via a browser. Any browser, on any machine, forever. Meanwhile, instead of downloading the email onto your hard drive then erase it from the server, you merely browse it, and leave it hosted on the server. Again, forever.

Similarly, it has become clear in recent years that Apple is moving from a device business to more of a service business. From a hardware-centric to a content-oriented company. Don’t act so surprised: they have been moving this way since they created the iTunes Music Store and forced the music industry, and then TV networks and movies studios, to face their fears and start selling virtual goods online.

Next, they take care of YOUR stuff

Google announced last November that within a few months you won’t need Microsoft Office anymore, as it claims you will be able to handle most of your documents directly online. With services such as Google Docs, the tools to edit and to host content are getting merged together. Users create documents online, which they can edit from anywhere through a browser. Sounds strange, almost scary, to trust them to keep all your precious files on their servers? Ask yourself: Where are your email messages physically stored right now? For most, the answer is “on the servers of my email provider”, and no one is too worried about it. And all your attached documents too, by the way. So why should it be a problem to get your documents remotely hosted too, if you trust your service provider?

But let’s put aside the touchy subject of personal documents, and look at commercial goods, such as books for instance. The Amazon Kindle and the iPad Bookstore are the most famous devices available to read ebooks, and manage magazines and newspapers subscriptions. Sure, there have been scary (and deliciously Orwellian) stories of book buyers who discovered one day that the distributor censored and pulled away a product from their device, remotely. Keep that in mind to understand how this new distribution system works, but don’t get too upset just yet.

Because the advantage of such a system is that it can also go the other way. Say you lost a actual paper book. The bookstore where you bought it would probably not replace it, because it means they would have to pay for the physical item, and they would have to have previously prepared a system to track their sales and customers, kept an inventory of what you bought, and ensure that you really misplaced it, as opposed to give it to a friend.

However, when goods are digital, it is easy to track them, keep an inventory of what you own, and it’s even free to duplicate them. Amazon or iTunes could easily re-populate your new ebook reader or mp3 player if you replaced the device and didn’t have any backup for example. That is, if you bought your media and media reader from them. Such a service creates then a new level of loyalty that makes the device an extension of the store.

Why do you think Amazon has been dumping the price of their ebooks all along, buying them from publishers a higher price they sell them, and subsidizing the difference? Because they now have 80% of the ebook market that’s why. They certainly made a few bucks with the Kindle, and at the same time, the use of the device itself reinforces the relationship between consumers and the shop/service. It’s all nicely linked together in the end.

The end of personal storage

In this model, you still keep your stuff in your device. Soon, you’ll keep the ownership of your stuff, perhaps even a “disposable” copy of it on your device at first, but you’ll just keep your goods stored somewhere else. And you’ll enjoy the advantages of additional services.

A good example of such a remotely hosted service is MobileMe, currently offered by Apple for /year, which has some great (and some not-so-great) features. MobileMe gives you an email address and keeps your mail, contacts, and calendar information all synchronized across your iPhone, iPad, Mac, PC, and the web automatically. It also lets you publish photos and webpages online, and provides online storage for backup and sharing.

Sounds good, but such features have become quite common nowadays, and some of them are even available for free from competitors like Google, Yahoo!, among others. Everyone, especially pure web companies but not only, want to get you locked into their service obviously.

But where MobileMe still makes a difference, is by allowing subscribers to locate their iPhone or iPad on a map, set a passcode lock remotely in case it’s misplaced, display a message or play a sound on it remotely, and last but not least, protect their privacy by remotely wiping all content off the device. Yes, you understood it right: it’s very powerful, very useful, and obviously, such a backdoor can only be offered by the company who created the device, and controls its distribution. This is where physical devices, digital products, and services, come together and make a difference for the end user. As long as the end user is loyal to the service provider, that is. For example, MobileMe can’t protect your data on a Blackberry. Maybe it could, but it won’t.

Your stuff anywhere

Back to the Kindle and the iPad Bookstore. With MobileMe in mind, it’s easy to imagine that in a very near future you could log into any iPad (for example your friend’s or one provided to you by an airline company) and access all your books, music, magazines and newspapers subscriptions, because the device would simply look at your preferences and settings directly on the centralized server, and tap into your personal library seamlessly. Such a system offers the advantages of not requiring you to even carry your own device, while providing you with generous storage capacity accessible at any time, from a variety of devices. For example, you have the same music in your phone and in your iPad.

The fact is, hard drives are fragile and eventually die. Rich geeks set up a redundant backup system, but most people will be better off relying on a good service provider who will take care of it for them. In the end, you’d rather have a lightweight device in your pocket, while archiving your increasing collections of photos and videos, movies (in increasingly higher quality and file size), music, etc. on some unlimited storage place.

The race is on

Companies who want to get their share of that future cake will need to:

1. bridge the gap between the media you buy (e.g., Hollywood movies) and the media you create (e.g., home made video), and
2. offer an all inclusive subscription system (and great software to go with it) to make it convenient, affordable, and logical.

So far, two companies are leading: Google has proven it is serious about documents and is moving into the device as well as mobile and PC operating system businesses, while Apple has shown it can offer a very reliable and safe environment, a ginormous and expanding store, and an expertise in the hardware AND software businesses. Another strong contestant is Amazon, who has established itself as the main competition for shopping and device, but also a leader in hosting, especially when it comes to cloud computing, which it sells as B2B to other web services.

Other companies such as Facebook are of course also in the race, trying their best to offer some edge over the competition, but it is already quite clear who has the advantage so far. In the end, the higher up you are in the food chain, the more control you will have of the business. Devices, networks, operating systems, browsers, and storage are the trump cards.

The tipping point will be reached when someone will offer a way to automatically backup of all our existing stuff, in a 100% safe and trustable way, allowing us to keep a copy all the content of our local hard drives safe in the cloud. Then, the next natural step will be to get rid of our hard drives altogether, essentially making our devices act as mere terminals, coming full circle to the beginnings of personal computing, with a monthly fee (or free ad-supported option) to Apple, Google, or [insert your favorite front-runner here].

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