Tim O’Reilly, founder and CEO of O’Reilly Media, talked about the tensions between individuals wanting to monetize their work and the broader value they can create by making their content available to everyone.

“I think there’s an area of our economy that’s really not studied enough, or it’s not thought about enough. What happens when people give things to each other without getting paid? Think about the revolution with YouTube,” he said, pointing to children choosing between a Disney cartoon or a video created by another child that was uploaded to the site. “From the point of view of a director who wants to get paid, that’s a negative thing, but from the point of view of the consumer, that’s a positive thing.”

O’Reilly pointed out that some people might think that free material, once widely circulated, would make it hard for others to eventually make money, but that might not be the case:

“Businesses do arise. The world wide web and open source software turned into Google and Facebook and Apple building all this incredible technology that they were able to monetize. So I’m interested in this economic activity that comes from this open source and open sharing. What does it tell us about the possibility of new jobs?”

These issues are very much at play when looking at companies like Twitter, which started with a free product embraced by a geeky, early-adopter audience and is trying to become a mainstream media business. O’Reilly cited the idea that once an item becomes free something else becomes necessarily more valuable. But Jeremy Howard, president and chief scientist at Kaggle, said he thinks for most creative types, there doesn’t have to be high demand for a product to keep them going:

“I’ve been coding every day for 30 years,” he said. “The idea that unless you create scarcity around intellectual property or creators will stop creating, is just crazy.”

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Listen to the noises coming out of the local companies, and it’s clear that they feel good about this. Former Facebook executive Joanna Shields, now working for the government’s Tech City organization, said it would help turn a “vibrant community” into a “global leader in tech innovation”. And the head of Google Campus, the internet giant’s local bridge-building effort, said it would “help to establish London as a global center for tech entrepreneurs”.

London’s time, you’d assume, is now.

But here’s the message I took away from it all: it’s time to step things up.

Promised unfulfilled

Britain’s government has been one of the biggest cheerleaders of London’s nascent startup scene over the last few years. While the Old Street area has been a center for the country’s digital economy ever since the birth of interactive media, the decision to create an official “Tech City” movement has seen a concerted effort to court technology companies.

This is for a few reasons. It’s partly an attempt to find some light in the economic gloom. It’s partly an attempt by Prime Minister David Cameron to appear connected, forward-thinking and switched on (look at his relationship with Google to understand the positioning here). And it’s partly an attempt to turn the legacy of the Olympics into something more by enticing big tech firms to the area — even if they don’t contribute much in the way of tax revenue to the British economy.

But Cameron’s commitment to bolstering the startup economy is actually even deeper than that.

Right now, I think the British government — or at least it’s gov.uk team, which is rebuilding government services to be “digital by default” — is actually the most exciting startup in the country.

It’s dealing with big problems in a smart way, tackling and operating in a lean, mean, aggressive manner: a world-leading approach that Tim O’Reilly recently said set the standard for governments. And to do that, it’s hired some of the most impressive coding, design and strategic talent around. Over the last couple of years a sequence of great talent — mainly from London, many of them friends of mine — have been sucked into the gov.uk machine as they try to reinvent the way Britons connect to their public services.

Don’t get me wrong: tackling big problems is great, and the work that Government Digital Service is doing is extremely important. But I think it’s an indictment of the local scene that so many great people are choosing to work for the civil service, and that the apparently thriving scene around Old Street seems to be more and more reliant on government boosters.

So how do you fix that?

The challenge to Britain’s startup community

A few months ago, I wrote that London’s tech community was looking at “golden moment”: a confluence of circumstances that could see the region really push on and make good on its promise.

Now, however, I’m less optimistic. There are lots of great companies and strong ideas floating around the UK startup scene, but right now there are too many poseurs and very few world beaters. The latent potential is not being achieved, and the signal is being crowded out by all the noise of bearded startup hipsters tapping away aimlessly in local coffee shops.

Still, I believe this is a glass-half-full situation. Those who are really taking the bit between their teeth and developing serious businesses are doing very well. Moshi Monsters has turned into a massive children’s brand; online loans company Wonga is doing things that banks can’t; innovative smaller outfits like BERG and Makie and others are making waves in their industries.

But the scene needs an injection of real talent and ambition — in part from the same people who have been subsumed into the government’s digital efforts. While they get down to Important Public Service stuff, the hangers-on have fallen into a self-congratulatory funk, drunk on applause from boosters and ego massages from investors looking to pump up their own interests.

Fortunately, most some of the talented individuals working on gov.uk are contractors, not staff. When their time is up, they’ll be back out. Let’s hope they do something great when they’re free again.

In the meantime, listen up, Silicon Roundabout: don’t buy into the mirage of success. It’s time to stop combing your mustaches and build something important.

Update: Mike Bracken, who heads the GDS project, has been in touch to say “most of our people are civil servants, as we’ve removed loads of contractors as per government policy”.

Glass of wine photo courtesy of Flickr user Davide Restivo

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Some people are taking the idea a little further however.

Just look at Estonia, the tiny Eastern European nation (population 1.3 million), where a new project is being put in place with the ambition of getting every six year old to learn coding at school.

The “ProgeTiiger” scheme, according to reports, will begin pilots this year with the ambition of getting school kids of all ages to start coding. There’s no suggestion yet that the classes will be mandatory, but the organization behind the move the Tiger Leap Foundation, says it wants to produce more creative computer users.

“The first e-courses are meant for primary school teachers and they will take place at the educational portal http://www.koolielu.ee (Koolielu is Estonian for “school life”) that the Foundation maintains,” the group’s head of training, Ave Lauringson, told me. ”We expect about 30 teachers to take part in the first course. So we are just taking our first steps now, but we intend to expand the program significantly.”

The idea — which is being developed with funding from the Estonian Ministry of Education and Research — is that children in grades 1-4 will take coding classes as part of their normal curriculum. After that, they can join extracurricular “coding clubs”, explained Lauringson. The foundation itself was developed by current Estonian President Toomas Hendrik Ilves and education minister Jaak Aaviksoo in the late 1990s, with the aim of bringing internet connections to all schools in the country.

Given those credentials, it’s clear that while Tiger Leap has no concrete agreement to expand the pilot into a mandatory system, it’s clearly a stepping stone to a larger national program.

If it seems ambitious, you must understand the context. Not only do many Western education systems fail to teach computer science to any meaningful degree — the paucity of teaching in Britain left Eric Schmidt “flabbergasted”, for example — but Estonia is already a hotbed of technical talent. There are dozens of big companies that use Estonian engineers and whole startups (Skype being the most famous example) whose products were built on the back of Estonian skills.

So how do you inculcate an entire nation like that? It’s partially possible because Estonia is a small country, but also because it’s made some decisions along the way to prioritize technical literacy.

Since gaining its independence from Soviet Union more than 20 years ago, its politicians and business leaders have followed a deliberate, direct path to try and build the country into a technologically-advanced nation.

These days most of Estonia’s government services are run online, most of its banking is done online, and there’s a significant corps of programmers who have built some really important companies. It’s working, and Tiger Leap’s idea is clearly to try and muscle that advantage along even further.

How do other countries replicate that?

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Google used to pride itself on the speed with which it helped you find the information you want, and then get out of the way. ‘Time on site’ is a terrible metric for an information utility! – Tim O’Reilly

Tim argues that in chasing Facebook, Google has started to lose its Google-ness and is going to fall into the Yahoo-trap.

There’s a real danger here that Google will fall into the Yahoo! trap, forgetting who they are by pursuing the competition. Yahoo! was a terrific content destination, and lost its way trying to be a search engine.  Might Google be doing the same in trying to become a social destination?

Maybe now Google should pause and listen.

This post was updated at 1:01 pm to clarify the context for O’Reilly’s comments.

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The Department of Justice’s lawsuit against two major book publishers — for allegedly colluding with Apple to keep the price of e-books artificially high — continues to make its way through the courts, and it has set off a frenzy of finger-pointing about who to blame for the destruction of the book industry at the hands of Amazon’s evil monopoly. I have argued that there’s a little bit of evil on both sides of this issue. But one thing seems fairly certain: If the publishers dislike the power Amazon has over them, they need to recognize they shoulder much of the blame, since they helped to forge the DRM chains that have kept them shackled to the company’s platform. Why not break those chains and try to set their content free instead?

The publishers have tried to argue they were forced to cut a deal with Apple to institute an “agency pricing” model for e-books — which allows them to set the ultimate price for their titles instead of giving that power to the end retailer, the way they did with Amazon until Apple came along — because otherwise Amazon would push prices down to unreasonable levels and take even more control over the industry. But who gave Amazon a lot of that control in the first place? The Big Six publishers themselves, by requiring DRM. As author Charlie Stross argued in a recent post:

By foolishly insisting on DRM, and then selling to Amazon on a wholesale basis, the publishers handed Amazon a monopoly on their customers.

Amazon no doubt wanted to lock up all of that e-book content with digital-rights-management protections just as badly as the publishers did, since that helped tie customers to its Kindle platform and the Amazon ecosystem. But the Big Six enthusiastically embraced the idea, because they believed piracy was a major risk with digital content and the only way to prevent it was to wrap it in Amazon’s proprietary file format. Further, those DRM controls also allowed publishers to set all kinds of restrictions on what e-book owners could do with their books, including how many times (or even if) they could lend them.

Has DRM prevented piracy? That seems unlikely, since it is relatively easy to get around those locks and copy a book if you really want to. What is pretty clear, however, is that those rights-management locks have cemented Amazon’s control over the publishers’ content. In other words, it has given the online retailer a stick with which to beat them, as Stross described it recently. And it has also made it more difficult for some independent e-book sellers, because publishers won’t let them sell their books without DRM.

Those DRM chains are hobbling the industry, not pirates

When it comes to readers and book buyers, meanwhile, DRM has been nothing but a source of pain and frustration, just as it has been in every other content market, including digital music. Books from the Big Six can’t be loaned or borrowed, or they can only be loaned or borrowed a certain number of times. And they can only be used on one platform, with all kinds of restrictions. What these chains and locks do, more than anything else, is to make the simple act of buying and reading a digital book horrendously complicated. Does that make more people want to buy and read e-books? It’s hard to see how. In a very real sense, those locks are hobbling the industry.

I think Christopher Mims of MIT’s Technology Review is right when he says the only option for publishers is to embrace the disruption that digital provides and do their best to disrupt themselves — and Amazon — rather than setting up artificial barriers:

It’s abundantly clear that publishers that survive in an Amazon world will be those who disrupt Amazon itself. If Amazon’s aim is to “cut out the middleman” then the next logical step is for publishers to cut out the middleman that is Amazon.

Some publishers refuse to bow to the god of DRM: O’Reilly Media, for example, sells all of its titles without any digital restrictions whatsoever. Tim O’Reilly has said he isn’t concerned about digital piracy, because most of the people who take his books without paying probably never would have bought a copy anyway. So it’s not as though he has lost a sale, and someone who reads them for free might later decide to pay (musician Neil Young has said that “piracy is the new radio”). And J.K. Rowling sells e-book versions of her massively successful Harry Potter series without DRM, although digital locks are added when a copy is downloaded to a Kindle.

Some, including Financial Times writer John Gapper, are skeptical that giving up DRM would make much of a difference for traditional publishers, since Amazon would presumably just continue to push down prices of e-books regardless, putting pressure on their profit margins and inexorably gaining more market share. And abolishing DRM certainly wouldn’t be some kind of magic wand that would return the book-selling business to the glory days of old. But at least it would give publishers a chance to be more flexible and adaptable, instead of trying to prop up their failing business model with price-fixing.

Post and thumbnail images courtesy of Flickr user Christine Zenino and Marcus Hansson

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Now London’s Bethnal Green Ventures wants to help redress that balance with an accelerator program targeted at spawning a new generation of technology companies focused on tackling big problems.

Starting this June, the group will take in its first cohort of early stage technology startups who “aim to solve a social or environmental problem.” As they say:

That could be anything from fixing healthcare to reducing carbon emissions or improving education to reducing crime – the key is that your idea must have the potential to help millions of people somewhere along the line.

To be clear, however, this isn’t a charity. Only those with for-profit companies (or intending to build for-profit companies) are able to apply, and director Paul Miller says he is inspired by those who combine ambition and business smarts, like “AMEE, Fitbit, Meetup, OPower, Patientsknowbest, Whipcar, Zopa,” he says. “For me they’re all putting tech to use to solve important problems and have the potential to grow to benefit millions of people.”

And while the outfit is taking the now-traditional model — three months, small investment, intensive mentoring — but says it’s not just a copy of Y Combinator with a bit of do-gooding layered on top. In fact, the team was intimately involved in producing the recent Startup Factories list of European accelerators, so they have spent a long time trying to understand what makes them work.

This is not the first attempt at an accelerator-style approach to social entrepreneurship — there are events like Boston’s MassChallenge, which has been running for several years.

But Bethnal Green Ventures isn’t new to this game either. It’s been around for a couple of years in various guises, and originally span out of Social Innovation Camp, a weekend hacking series that started in 2008 and now has events across the globe. For this, they’re bringing in mentors — so far those announced include two big engineering talents, former Twitter lead developer Blaine Cook and Matt Biddulph, co-founder of social travel website Dopplr, which was sold to Nokia in 2009.

The deadline for applications is April 29.

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Tim O'Reilly

As the debate about the Stop Online Piracy Act (SOPA) rages on from Silicon Valley to Washington DC, a number of the technology industry’s most influential leaders have come out against the proposed legislation, which would give the government and private corporations unprecedented powers to remove websites from the internet for any alleged copyright infringement.

On Thursday, I interviewed Tim O’Reilly about why he believes SOPA is wrong and what the tech industry can do to stop it. His concerns fell into five main categories:

Piracy is not a real problem

The way I see it, there’s a lack of need for any legislation at all. As a publisher, I have a very deep experience here, and the fact is that piracy is not a significant problem. Yes, there are people who are pirating my books, there are people who are sharing links to places where they can be downloaded. But the vast majority of customers are willing to pay if the product is widely available and the price is fair. If you have a relationship with your customers, and they know you’re doing the right thing, they will support you.

The people who are pirating are most likely the people who would never give you a nickel to begin with. Piracy serves people on the fringes who are not being served adequately by legitimate markets. Frankly, if people in Romania can download my books and enjoy them, more power to them. They weren’t going to pay me anyway.

SOPA protects the wrong people

I talked with Nancy Pelosi about SOPA the other day, and she said that the experience with piracy is different for people in the movie industry. Maybe — I’m not a movie producer. But I do know that right now the entire content industry is facing massive systemic changes, and to claim that declining sales are because of piracy is so over the top. Any company that is providing great content online in a way that’s easy to use with a fair price has a booming business right now. The people who don’t are trying to fight that future.

So here we have this legislation, with all of these possible harms, to solve a problem that only exists in the minds of people who are afraid of the future. Why should the government be intervening on behalf of the people who aren’t getting with the program?

SOPA ignores history

If you look at it from a historical perspective, the American book publishing industry as a whole began with piracy; there are lots of documents of Charles Dickens and the like taking a stand against these American pirates who were stealing their work. But America went on to become the largest publishing and copyright market in the world. Once the market matures, the pirates go away. They always do. Legitimate markets work better than pirate markets.

More recently you can see this in what happened with the music industry. For a while, music companies were fighting peer-to-peer file sharing. But once Apple came out with iTunes, which was an alternative that was easy to use and fairly priced, it became a huge business. Our policy makers need to encourage the people who get it right, not protect people who clearly didn’t get it right. They need to protect our future.

Tech and lobbying don’t mix

Certainly, the tech industry needs to do a lot more lobbying in Washington, DC. But the whole notion of lobbying is anathema to so many tech people, and for good reason. We’re used to a world in which people design products that have a purpose, where your work speaks for itself. So yes, the tech industry should try to communicate more with the people in DC, but at the same time, congresspeople need to use more of their own independent judgement.

[Update: O'Reilly has expanded upon the topic of tech industry lobbying in a Google+ post, which can be found here. A portion of his additional comments has been added below.]

For example, when I talked with Nancy Pelosi at [San Francisco] Mayor Ed Lee’s inauguration on Sunday, she assured me that she was opposed to SOPA, but that the bill couldn’t just be voted down because of the concerns of the movie industry. I had this bizarre image of the Google Search Quality team meeting with content farms before rolling out the Panda search update to “take into account their concerns.” In the end, Google was making changes that they knew were in the best interest of their users, and the fact that this would hurt the business of various companies producing low-quality content shouldn’t (and presumably didn’t) enter into the equation.

… This isn’t a matter of simply weighing the concerns of one set of lobbyists against those of another, but using a standard of care and independent judgment about what is best for our society. If Congress isn’t knowledgeable enough to make that determination, they need to be consulting independent experts, not lobbyists for one side or the other.

The US needs tech innovation

Laws like SOPA make us sclerotic as a country, where we have all these extra burdens that provide little benefit. In general it makes America less competitive. If SOPA goes through, it could very well force certain innovative companies to go offshore. There are incumbent industries that will always protest every new technology; but any forward-looking country needs to protect its emerging industries.

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Now it seems that a spat between two leading figures has left the movement facing a divisive split.

The controversy centers on a new book by Gabe Zichermann of GamificationU.com, a self-professed “gamification thought leader” and chairman of a New York conference called the Gamification Summit. Co-authored by Christopher Cunningham, Gamification by Design was launched last week by popular technology publisher O’Reilly.

At the time, Sebastian Deterding, a designer and Ph.D. candidate at the University of Hamburg who is studying game design and behavior, posted a long and detailed rebuttal on the Gamification Research Network outlining what he believes is wrong with Zichermann’s book. Specifically, Deterding claims the book misunderstands a number of pieces of crucial terminology, makes statements that fly in the face of established research, and generally encourages the use of gamification as a cheap marketing gimmick.

The original piece — which, at more than 8,000 words, suggests that the author is clearly angry at what he feels is Zichermann’s misrepresentation of a growing industry — also accused the book of lifting liberally from the work of another researcher, Amy Jo Kim.

In the end, Deterding summed it up in no uncertain terms:

A hundred-or-so pages of other peoples’ ideas hastily copied together, incoherent, often contradictory, and riddled with errors . . . lacking due credit to an extent that borders on plagiarism; mixed with claims that are boasting, unfounded, false, even positively dangerous . . . misunderstanding games and their appeal; promoting a flawed and unsustainable “loyalty-for-cheap” philosophy; artificially pumped up with a long advert . . . and littered with further ego-adverts to go and visit GamificationU.com

The criticisms clearly cut deep, prompting publisher Tim O’Reilly to say on Google+ that he was “puzzled” and planned to examine the claims more closely.

“The issues Sebastian raises are serious enough that I thought I’d try to get more input on the book from those with more expertise on the subject than I have,” he said. “But if the critiques of the book made here are accurate, I’d love to see our team work hard to make it better in future editions.”

That response seemed to have quelled some of the fires, and the affair looked to have died down a little — until yesterday, when Zichermann responded by firing back.

In a response titled “A teachable moment,” Zichermann said that Deterding’s post was a “deliberately libelous” piece of work from “a vocal critic of the Gamification industry.”

On the claims of copying, Zichermann said he had built upon prior art, not plagiarized, in order to “remix, refine and filter a wide range of concepts to distill those that are most relevant” to his audience of marketers and strategists. And then he slammed his critics for being academics engaged in theory, rather than practitioners:

It is spectacularly naive to suggest that research – by mere virtue of its publication – is somehow “the one truth”. Almost every piece of work in social science and psychology has significant methodological problems, and opinions about what works (and why) go in and out of fashion as quickly in academia as they do on the runways.

But Gamification by Design is a practical book for practical purposes, focused not on games at all, but Gamification as a unique, emerging and hybridized discipline. Whether or not academics believe the techniques in the book work, they are based on my experience with dozens of clients, interviews with hundreds of practitioners, and extensive review of the literature and case studies.

This appears to have stirred things up again: Just read the comments.

It’s not clear what will happen next: Despite calling Deterding’s comments libelous, Zichermann does not seem to be suggesting that he will take legal action.

So is this just a tempest in a teapot? Two rivals in an industry going head-to-head is certainly not unusual, and audiences love a good catfight, whether it’s in an area like gamification or between the employees of a blog like TechCrunch. Does this actually mean anything in the larger scheme of things?

The future of play in products is important

I think it means something, because I think gamification is an important topic right now. And it’s no wonder: Games have been one of the most incredible boom industries of the past 30 years, and everybody realizes that making products that reward and delight people can be incredibly powerful. Who wouldn’t want that?

But just as the appropriate use of a playful voice has mutated into the ill-conceived marketing trope of hypercasual language (which I wrote about last week), I think it is fairly clear that we are watching an explosion of applications that misunderstand what being “gamelike” actually means.

Where research shows that real people get a deep and abiding enjoyment from solving puzzles, meeting challenges and achieving self-improvement, the dominant applications of gamification are the most facile: offers of virtual currency, shiny digital badges or a higher position on leaderboards. This concern — that correlation does not equal causation — is at the heart of Deterding’s criticism, and I do not think it is unfounded.

In some respects, this always happens. In his Google+ post, Tim O’Reilly makes a good point, that it is inevitable that those whose work is built upon end up feeling that their ideas are diluted or perverted. To illustrate, he picked his own experience as the man who popularized the term “Web 2.0″ and then saw it change into something different, something more crude:

Yes, I was disappointed to have the term I intended for one meaning be hijacked by marketers to mean something far more shallow, far less interesting. But in the end, I came to accept that it was all part of the hype cycle, and that as Tevye said in Fiddler on the Roof, “Good news will stay, and bad news will refuse to leave.” It’s always a mixture of good and bad.

It’s a fair point. Originators of ideas have little ownership of them, and now that gamification is now firmly on Gartner’s Hype Cycle, any misunderstandings or movements are only likely to get cruder.

It seems to me, however, that there is a difference between understanding that such a shift is always likely to happen, and embracing or endorsing it. Goodness knows I am not suggesting that we leave ivory-towered academics to lead the discussion: Indeed, as a journalist, I am probably considered a bastardizer of almost every idea I lay my hands on.

But I think that when we subscribe to ideas, when we spread them, we make a choice in how we do that. We can act in good faith, we can read the literature, we can try and understand why something happens. Or we can remodel the world to fit an easy, commercially viable message.

Tim has previously argued that we should work on stuff that matters — in his words, that you should “create more value than you capture.” And that, ultimately, is what I think Deterding was arguing, too: that the practice and research shows that gamification can be useful, but that it is about more than just trinkets and psychological manipulation.

Yes, marketers are abusing the principles of game design to try to make crappy products cheap, addictive and, ultimately, more profitable. It’s a growing industry. But it’s fast food for the soul, and we don’t have to revel in it.

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GE said in January that some of the home-focused startups that entered the challenge could get investment from GE and its VC partners, and some will receive $100,000 in award money. As of January, $55 million of the $200 million fund had been committed, and out of 4,000 ideas submitted, there had been more than 1,100 in the category of home energy, said GE.

Back in November, GE named 12 winners of its smart grid challenge, which split the first $55 million, and five “innovation award winners” that received $100,000 each. The 12 winners included some bigger companies like OPower, Consert, SynapSense, Soladigm, Scientific Conservation, and SustainX, while the innovation winners included smaller companies like Winflex, IceCode, and GridON.

GE has a strong interest in the home energy market. At CES in January, GE showed off its new Home Energy Management business, including its Nucleus home energy device, as well as its Brillion line of smart appliances and smart thermostats. All these are meant to connect within the home to GE’s smart meters, then as a gateway to the smart grid.

At GE’s event on Thursday, it will also feature an 8-hour discussion between tech execs and pundits, which will include speakers like entrepreneur Tim O’Reilly, designer Yves Behar, and inventor Saul Griffith. Behar designed GE’s electric vehicle charger.

We’ll bring you the winners Thursday morning!

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Of course, building such databases is a lot easier when you have a federal administration that committed to publishing government data online. “It is very clear that the Obama administration understands startup culture,” O’Reilly says. However, there are still lots and lots of people within and close to the government that view making data public with suspicion. Said O’Reilly: “Many people in these organizations are threatened by the idea that some young developer could say, ‘I can build for $5,000 or in six weeks something that you are gonna say takes six years and $50 million.’ “

So, how do you convince official agencies to trust that young developer, and how do you get that developer to start toying with government data? First of all, by getting them to talk. O’Reilly Media is holding a Gov 2.0 Summit this September in Washington with the goal to showcase innovation inside and outside of the government. (Wired launched an “Open Up Government Data” wiki earlier this week, as well.)

And then, there’s always money. The new administration loves technology partly because it’s cheaper, O’Reilly speculated. “A lot of it is: How do we get more bang for our buck?,” he said. However, it’s not just about spending less: “Reinventing our sources and distribution systems for energy, reinventing our educational system, reinventing our communications infrastructure are all very powerful stimuluses for new economic activity.”

In other words: Supporting the new administration could turn out to be the Valley’s very own stimulus plan.

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