Christopher Herot's Weblog

Good Cases Make Bad Law - United States v. Drew

When Lori Drew and her teenage daughter Sarah created a MySpace account in the name of a fictitious "Josh Evans" they apparently neglected to read the MySpace Terms of Use Agreement which, among other things, requires that "all registration information you submit is truthful and accurate."  Anyone who had read it probably would have concluded that the worst that would happen would be that MySpace would terminate their account, which MySpace reserves the right to do "at any time, for any or no reason, with or without prior notice or explanation, and without liability."  Of course that was before they used the account to torment Sarah's (former) friend Megan Meier, who committed suicide shortly after receiving a message from "Josh" suggesting the world would be better off without her.

Officials in Missouri were dismayed to find out that there was nothing in the state's laws that could be used to prosecute the Drews, but that didn't stop Thomas O'Brien, the U.S. Attorney for the Central District of California, who claimed jurisdiction because even though the both Lori Drew and Megan Meier lived in Missouri, MySpace had its headquarters and server in his district.  He got an indictment charging that Lori Drew had violated the 1986 Computer Fraud and Abuse Act (18 USC 1030) by providing false information to MySpace when she signed up for the account and had used the account for the "intentional infliction of emotional distress."  The former would be a misdemeanor but the latter a felony if deemed to be "committed in furtherance of any criminal or tortuous act in violation of the Constitution or laws of the United States or of any State."  He further charged Drew with conspiracy for involving other, unnamed persons in the venture.

The jury deadlocked on the conspiracy count and acquitted on the felony charges, but did find Drew guilty of three counts of violating paragraph (a)(2)(C) of the Act, which states:

Whoever--...
(2) intentionally accesses a computer without authorization or exceeds authorized access, and thereby obtains—
...
(C) information from any protected computer if the conduct involved an interstate or foreign communication;

is guilty of a misdemeanor, in this case because on three occasions, she, "In violation of MySpace TOS, accessed MySpace servers to obtain information regarding [Meiers].

As the Electronic Frontier Foundation pointed out in an amicus brief this interpretation of the law essentially gives rules made by a private company the force of criminal law.  In this particular case, the defendent's actions were particularly egregious and the results tragic, but none of that was material to this case.  All that was legally required to win a conviction was to prove that the defendent made some material misrepresentation which induced MySpace to grant access to its system.  One suspects that the prosecutor and the jury were looking for something to throw at someone whose actions were truly appalling, but there is nothing about this interpretation of the statute that would prevent it from being used in the future against any unpopular defendant.

United States v. Drew CR-08-00582-GW

www.cacd.uscourts.gov

Grandma's on the Computer Screen

On this holiday when many of us are traveling to visit far away family members, the New York Times ran an article, Grandma's on the Computer Screen , about how video calling has taken the place of some of those trips, or filled in the gap between them.

While there are the inevitable concerns that video might become a poor substitute for in-person contact, the article offered an alternative - that video enabled people, especially grandparents and toddlers, to maintain a long distance relationship that might otherwise fade: 

But many grandparents find that the Web cam eases the transition during in-person visits, when grandchildren may refuse to sit on their laps or may reject their hugs because they do not recognize them. As one Web cam evangelist wrote on her blog, www.nanascorner.com: You’ll be able to pick up where you left off without those warming up to you, awkward moments."

Of course, video can't deliver Grandma's apple pie.

Turkey Time

Only 50 people ahead of me to pick up their birds at Owen's Poultry Farm in Needham, Massachusetts.

ArcLight Cinema

One of the joys of travel is enjoying the unique offerings of a particular place - the food in Paris, the theatre in London.  Something Los Angeles does better than anywhere else is - no surprise - the cinema.  Despite reports that Americans are forsaking the bijou for the big-screen TV, and the generally sorry state of theatrical exhibition throughout the country, L.A. has the ArcLight Cinemas, a 14-seat complex on Hollywood Boulevard and a second facility in Sherman Oaks. I recently had a chance to see Changeling at the Hollywood Boulevard location and can say it does show how a high quality experience can entice people out of their homes and into the theatre.

To begin with, the Web site offers reserved seating so one does not need to arrive early and stand in line to get a good seat.  If you do arrive with time to spare, there is a bar, restaurant and a book store/gift shop (and Amoeba Music across the street.)  The seats are wide and comfortable, and before the movie starts, a member of the staff comes out and announces the movie, and states that someone will be present in the theatre after the movie starts to make sure the focus and sound are OK.  There are no annoying commercials to sit through (although they do have the usual trailers).  The screen is bright and evenly lit, the print clean, and the sound system well-tuned.  It's what a movie theatre should be.

ArcLight Cinema Company is a subsidiary of the privately held Decurion Corporation.

Demo Session at Future Forward 08

The most fun panel at Future Forward 08 was the demo session.  Instead of presenting yet another social networking service, the last event of the day showed off mostly physical objects with high-tech inside.

One of those was Siftables, little motion-sensitive tiles from the MIT Media Lab. They can sense the proximity of other tiles, enabling them to interact.  In the photo at right, placing the photos together causes the two people pictured to turn their heads and look at each other.  It might be a while before someone figures out how to make money with these, but I like the way it creates a more physical way of interacting with information.

And speaking of interacting, OnLatte showed a prototype of an ink-jet printer adapted to print on cappuccino or (pictured at right) on beer. The technology was demonstrated on glasses of Guinness at a reception following the panel. You can see the video here.

Customer Acquisition Panel at Future Forward 08

My vote for the most useful panel at Future Forward 08 was one moderated by Doug Levin, entitled New Strategies for Customer Acquisition.

The speakers were:

• Paul Gaffney, Desktone
• George Grey, SnapMyLife
• Brian Halligan, HubSpot
• Nabeel Hyatt, Conduit Labs
• Bill Lucchini, Intuit

All were remarkably candid about the challenges of acquiring customers in the cost-efficient manner dictated by the current environment.

While there was some debate about the return on investment in "marketing" there was complete agreement on the importance investing in acquiring customers.  The difference, the panel agreed, dwells in being analytical about comparing the cost of acquiring a customer to the lifetime value of same.  While acquisition costs are declining, there are pitfalls, such as overpaying for Google Adwords.  As Nabeel Hyatt put it, in an auction system it is easy to overpay, especially where there is always some new company with $10,000 to spend trying to build market share.  Even if they go bankrupt trying, they will just be replaced by another company who is equally unconcerned about losing money on each customer in the hope they will make it up in volume. Brian Halligan pointed out that there is no substitute for putting "remarkable content" on one's Web site and thus making it a magnet for customers.  Hubspot hired a former New York Times reporter and a musician to create content for their site.  Halligan did allow as to how "turning up the knob on Adwords" could be effective for a month or so, but that was was not a sustainable practice in the long run.  Of all the panelists, only Bill Lucchini was bullish on paid search, perhaps illustrating how it works better for a company such as Intuit with deep pockets.

The freemium model was popular with the panelists.  While customers may not be sensitive to the difference between $0.99 and $3.99, offering something for free can increase the number of downloads by 15x. Offering multiple levels of features at different prices can alleviate the inevitable problem of over-charging some customers while undercharging others.  Hubspot offers a free Web site analyzer which generates an email lead from a third of those responding.

There was a lot of discussion about metrics, especially the importance of determining the cost of acquiring a happy customer. Several speakers said their sales compensation plans included some sort of clawback on commissions for customers who signed up but later dropped the service, thus incenting the salespeople to make sure the customers understood what they were purchasing and were a good fit for the product.  Doug Levin mentioned that sales at Black Duck started to take off after they methodically deconstructed the sales process and found 64 discrete steps that could be improved.

In summary, customer acquisition requires a combination of talents: creative, which can be outsourced, and analytical, which needs to be closely aligned with the business.  It is an area that is only ignore at one's peril.

Future Forward 08

The high tech world has plenty of events where techies and executives gather, from small, local gatherings such as Lunch 2.0 to big, international conferences such as the recent Web 2.0 Summit and the upcoming Le Web.  Most of these seem to be in California or Europe, but New England has a series of events all its own, produced by the team at Future Forward Events LLC,.  Last week, they produced the Future Forward Retreat which drew 135 local executives and entrepreneurs to Henderson House in Weston for a day of discussions ranging from what analysts predict for the future to the issues faced by the CIOs of the local sports franchises.

Some memorable quotes:

"All over-hyped technologies eventually become successful" - Josh Bernoff of Forrester talking about interactive television and mobile applications.

"There is nothing strategic about Game Day." - Pat Curley, CIO of the New England Patriots, describing how everything has to work when the fans show up, down to the machines that print the receipts.

All of the panel sessions were informative and interesting.  The most useful was one on customer acquisition.  The most fun was the demos.  More on those later. 

Thank you Alyssa Stern, Shayne Gilbert, and Scott Kirsner for putting on this fine event.

Pro Sports CIOs at Future Forward

Halley Suitt admires championship rings of Jay Wessel (Boston Celtics) and Steve Conley (Red Sox)

Does anyone use payphones any more?

L.A. Skyline