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Last week Cisco Systems made a big product announcement that the networking giant said would change the Internet forever. What could it be? Well it was a big router, a really big router that would allow more bits than ever to flow over the world’s fiber backbones. And the market yawned, because bits are a commodity and it is hard to tell a million bushels of wheat in a pile from two million bushels of wheat. And Cisco’s enterprise customers — its biggest business customers — have plenty of bandwidth already, thanks.

Well that’s the entire point: corporations, where T1‘s still dominate, use less bandwidth per person than we do at our house, where Dora the Explorer is our goddess and Netflix rules. So the pundits and analysts looked at this new Cisco router, the CRS-3, and saw it as either logical growth driven by Moore’s Law or logical growth driven by competition from Juniper Networks, or both. No changing the Internet forever, they wrote. Nothing to see here, folks. Move along.

Except this time the pundits and analysts were probably wrong.

The CRS-3 is not for the Fortune 500 guys. Cisco has accepted that they can’t easily get big companies to expand the pipe and expand the router much beyond where they are today. HTTP just is too simple and clean. Cisco’s last stab at building enterprise bandwidth demand was telepresence, which needs a DS3 per node, but their Tandberg acquisition (telepresence lite) shows they are taking even that down-market.

So why the CRS-3?  The CRS-3 is for all the all-IP network of the future and as such is aimed primarily at telcos, not big business. The CRS-3 will enable the all-IP all the time future Internet as described just this week by the Federal Communications Commission:

– Video over IP

– Voice over IP

– TV over IP

– Radio over IP

– 3D over IP

– IP over IP

The difference with the CRS-3 is thinking globally. Why not watch a Russian TV station with subtitles or translations? Listen to music from anywhere, since it generally needs no translation. This is the new market for AT&T and global members of the Fortune 500. They get it; the market is not the USA, but the right demographic group globally. The CRS-3 is going to be the IP carrier to these demographic groups.

It’s a new kind of market segmentation that really makes sense when bits are what is being sold and those bits travel near the speed of light.

And, despite Cisco’s evident failure to explain itself well, the CRS-3 will change the Internet forever.

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It’s not that hard to predict what will happen in the future (I will die; Fifi, my son Fallon’s stuffed orca, will eventually need restuffing, etc.) but it is very hard to predict with any accuracy when things will happen. For technologies, I tend to see events happening long before they actually do, which makes me something of a prophet, though a pretty useless one.  This may be proved yet again in the coming months as Apple and other companies attempt to take most of the paper out of publishing, something I thought we were about to do 15 years ago, but didn’t.

Back in 1994, I proposed to my employer at the time that we start a strictly online publication to cover just Microsoft. We called the proposed e-magazine MicroSquish and took it so far as to make a pilot issue and do some very interesting market research. The World Wide Web was only a couple years old at the time, and I was unconvinced that it presented a suitable delivery platform in an era of dial-up Compuserve accounts and 2400 bps modems. So MicroSquish was conceived as a downloadable publication to be distributed by e-mail in the new PDF format then called Acrobat. It looked just like a print magazine, right down to the 75 percent ad-edit ratio. And just to be cool, we built into the technology the ability to report back data from readers. We could not only track who read each issue, but how many times it was read and which stories or ads. We figured this data of who read what and in what order would be very useful to advertisers and ad agencies. But we were wrong.

Ad agencies 15 years ago didn’t want to know whether or not their ads had actually been read, they told us. This was simply because if an advertiser discovered that few, if any, people were actually reading their ad on page 113, the company might just pull that ad and save their money, taking revenue away from the ad agency in the process. The entire ability to sell an ad-edit ratio of 75 percent (which was needed to qualify for printed distribution by second class mail – yet another buggy whip in a digital era) was based on this deliberate ignorance. Ad agencies and publications alike knew that many — even most — advertising dollars were simply wasted, but it wasn’t in their interest to admit that, so they didn’t.

Contrast this to pay-per-click, which is brutally honest, where every successful ad has efficacy and advertisers have a pretty darned good idea what they are getting for their money. This reality is precisely why ad-supported magazines, newspapers, and television are losing revenue. It is a trend that is likely to continue, and can only result in a degradation of production standards on the print side to match the reduced revenue potential of the online business, where BS gives way to measurable, though impoverished, results.

It is not a pretty picture. More pay-per-click means more online content but ultimately less money for producing that content. Print publications fade from sight or continue primarily as art forms, rather than businesses. None of this is intentional. This isn’t Google or Apple or any other company setting-out to destroy an industry. It is simple Darwinian evolution that will ultimately make many print publications as obsolete as I already am.

Back in 1994 I proposed to set an example with Microsquish but it never saw the electrons of publication.  Computer professionals who were already spending eight hours per day in front computer screens told us in focus groups that they didn’t see themselves reading a publication on those screens. Think about that statement for a moment and you’ll realize how crazy it was. But my bosses were, I think, relieved to hear it, because they weren’t ready to give up print distribution. Then there was the little problem of distributing up to 200,000 one-megabyte files per week, which looked like it might take more than a week back then simply to do. You can’t publish a weekly magazine that takes eight days to deliver.

Well what goes around comes around I guess because the rumor this week is that Apple’s long awaited tablet computer is some form of electronic reader and that Apple intends to get into the distribution of content for this new platform, just as it earlier did for the music, TV and movie businesses with the iPod and iTunes.

I have no inside knowledge about Apple’s plans, but as one of the guys who came up with the whole electronic publication idea, I think I’m in a position to put it in perspective.

Technology is the least of this.  Yes, we need an electronic medium that is price-competitive with what it replaces, but it doesn’t take an Apple per se to do that. The much harder parts are the business model and the mojo.

Mojo?

Mojo!

Let’s assume that Apple or some Apple competitor announces a really good electronic reader, which means one that costs little, is super-easy to use, stores a lot, and has very low power consumption.  That’s just the beginning.  To go with that reader they’ll need sources of content and a way to make money from the new content business.  Just making the reader isn’t enough: if you build it they won’t come. But in order to get the content you have to be able to convince content owners to share and that requires mojo – the perception on the part of the content owners that this thing is going to be a success whether or not they participate.

An important thing to remember here is how Apple evangelized the Macintosh 25+ years ago. For the Lisa, which predated the Mac, Apple didn’t bother to lure developers: Apple just wrote itself the seven core applications it thought would be enough to make the platform a success.  Only that didn’t work.  The Lisa was too expensive and seven apps weren’t enough.  So for the Mac, which was developed for far less money than the Lisa, Apple turned to third-party developers. And here’s the line they used, which I believe was the work of Alain Rossmann: “It’s obvious that graphical computing is the future, whether the Mac is a success or not. This is your chance to learn how to develop for such an environment. Choosing not to develop for the Mac, then, is choosing for your company to eventually die.”

The argument obviously worked, especially when persuasively made by guys like Steve Jobs and his surrogate, Guy Kawasaki.

Apple is doing it again, from what I understand, only this time the evangelizing is being done among print and electronic publishers. And what’s being dangled before this New York and L.A. crowd is the Hope diamond of modern electronic publishing – PAID CONTENT.

Every publisher wants to make money. The six ways to make money in publishing are: 1) selling the product outright, whether it is a book in a bookstore, a magazine on a newsstand, or a pay-per-view TV show; 2) selling subscriptions; 3) selling ads; 4) selling a combination of subscriptions and ads; 5) syndicating content – selling it for use by other publishers, or; 6) giving the thing away for free to support a live tour or event of some sort to which people in many cities and countries will buy expensive tickets.  The Internet era has supposedly taught us that almost nobody is willing to pay for a subscription so that limits publishers to ads, syndication, or touring/events – none of which appear to generate enough revenue to pay for the kind of lunches publishers like to eat, hence the fading print and broadcast industries.

Part of the difficulty here is that while we’ve effectively removed most of the production and distribution expenses from publishing, we’ve added some expensive layers, especially portals like Yahoo.  Also the old-line publishers like Time-Warner that are used to OWNING their content haven’t shown themselves to be as good as Lonelygirl15 at MARKETING it. And unlike Lonelygirl, T-W is saddled with very high overhead if very little teen angst.

Enter Steve Jobs, stage left, proffering an appealing concept (I make lots of money selling content: look at iTunes), embodied in an attractive package (the Apple tablet/reader/thingee), and suggesting an exciting outcome (the salvation of Big Publishing). And his mojo is having some effect. The New York Times, for example, is suddenly talking about paid content, having a couple years ago specifically walked away from that business model on empirical grounds. The Times and most of the other publishers (like Rupert Murdoch) suddenly taking another look at paid content have all been drinking Steve’s Flav-R-Ade.

But that’s not enough.  If Steve is going to change publishing the way he’s already changed music, he’s going to need more than what I’ve described so far.  He’s going to need a new publishing platform, a new kind of product to sell on that platform, and a new business model to pay for it. Anything less will not succeed. I’ll get into those details in my next column.  Until then talk among yourselves.

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There was lots of good discussion last time about cyber warfare, cyber security, and U.S. policy, but what most respondents seemed to miss was the international nature of the IT business — all the outsourcing and offshoring that we were told was so great — and its implications for U.S. security.  The upshot is that any U.S. cyber warfare czar will have to effectively function as a WORLD cyber warfare czar, a fact that neither Republican nor Democratic Administrations have yet been willing to embrace, at least in public.

Forget for the moment about data incursions within the DC beltway, what happens when  Pakistan takes down the Internet in India?  Here we have technologically sophisticated regional rivals who have gone to war periodically for six decades.  There will be more wars between these two. And to think that Pakistan or India are incapable or unlikely to take such action against the Internet is simply naive.  The next time these two nations fight YOU KNOW there will be a cyber component to that war.

And with what effect on the U.S.?  It will go far beyond nuking customer support for nearly every bank and PC company, though that’s sure to happen.  A strategic component of any such attack would be to hobble tech services in both economies by destroying source code repositories.  And an interesting aspect of destroying such repositories — in Third World countries OR in the U.S. — is that the logical bet is to destroy them all without regard to what they contain, which for the most part negates any effort to obscure those contents.

You can have 1000 safe deposit boxes with only three holding anything of real value, but that obfuscation is meaningless if the target is ALL safety deposit boxes.

To this point cyber security conferences tend to concentrate on intelligence (probing attacks to learn about a potential enemy, gather information and map defenses) and tactical deployment (using that intelligence information to blind, disable, or defend some network resources in what’s usually perceived as an encounter lasting hours).  There is little to no regard for strategic use of cyber warfare as in the India-Pakistan example or the nuking of source code libraries.  We don’t talk about it because it is too horrific, not because it can’t happen.

The result, of course, is that any major power has to be concerned about the cyber security of all its technology partners, which over the last decade has come to include a lot of Third World nations.  Try to do a security audit of Argentina or Bangladesh and see what nightmare is unveiled.  Yet this is exactly where major international companies are deploying more and more technical resources.

The military answer of course is to isolate network traffic, as many readers have suggested.  But how do you enforce that in other countries?  And how effective is it at all against a strategic attack on essentially commercial resources?  Not very.

This is not a battle but a war and wars take a long time to prepare for and wage.  As readers have pointed out we’re not just concerned with malware and viruses but even hardware-based attacks. Who knows if that flash memory from Malaysia or that router card from Taiwan is compromised?  Who CAN know?  And if you’ve found one hardware exploit in a product does that mean you’ve found all that are there?  Hardly.

One point of view is that this makes both old tech and traditional firepower more valuable.  Analog systems, for example, are unlikely to be compromised by digital exploits. And 2000-pound bombs are a pretty darned effective response to a cyber attack IF you can clearly identify the attacker and figure out where to drop the bombs.  Both effects tend to neutralize the effect of advanced systems, making Syria a more effective opponent against Israel, AND push superpowers toward brandishing their biggest guns — nuclear weapons.

So cyber warfare is internationally destabilizing in whole new ways with the world being dramatically less safe as a result.  This works mainly to the advantage of the bad guys.

Then there’s the Code God Effect — the potential strategic impact of a single programmer with commanding skills.  That very guy or gal who typically is the creative heart of an entire company (but they never admit it) because he is the equivalent of 100 average coders can be the secret weapon in a cyber war, too.  And the distribution of such megabrains is random enough that to say one or more aren’t working right now in North Korea would be a bad bet — one that a nation like the United States would be unwise to make.

We see the Code God Effect happening right now with publicized Chinese Internet incursions and those are just amateurs: the real damage is being done by much more skillful players we have yet to even detect.

What this means for any major power is that they aren’t as powerful as they think they are and that power is even less across borders.  There isn’t a U.S. agency I know of — ANY agency — that is prepared to win such a war against a clever and determined opponent of almost any size.

If the game is U.S. versus Albania, who wins?  I don’t know.

We need new tools and new weapons.  We need to find ways of changing the battlefield to negate opponents (this is HUGE), not just shooting back.  We need leadership that understands this.  Maybe President Obama understands it, maybe not.  He hasn’t demonstrated yet that he does, at least not to me.

Let’s hope that’s just part of an incredibly clever master plan.

Yeah, right.

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My last column generated a lively debate on the prospects for various business and technical options for the delivery of Internet TV so it makes sense to continue this topic and build it into a more full-featured model.  I used to write quite a bit about this back when I was trying to get NerdTV going.  The core of what I’ll write here can be found in a couple dozen columns from back then — columns that would seem to have been for the most part forgotten given the direction last week’s discussion took.  You see the future of television IS Internet television.  There is no other in sight.

No business or technology exists in a vacuum.  They all have customers, users, competitors, and make use of resources in an environment that is not one of total abundance.  This means that if there is going to be something like television in the future it is going to adapt to the distribution model that offers the highest price/performance, which is to say the highest performance for the lowest cost.  That is not how one would traditionally describe the Internet, but then times are changing.

Whatever country you live in there are generally four models for live entertainment video distribution — broadcast, cable, satellite, and Internet.

Broadcast is a limited local resource and therefore more highly regulated than the others but it has traditionally featured the lowest cost per marginal user.  That means it costs a lot to build and maintain a TV station but additional viewers within the service area can be added pretty much for free.

Cable offers more channel capacity than does broadcast but requires building a distribution network that’s fairly expensive.  While one could imagine a cable TV “station,” the way the industry has grown is through cable operators becoming content aggregators offering many services over their expensive networks.  That’s the most efficient way for cable companies to serve the broadest audience and the only way that enables them to sell extra-cost services like pay-per-view, premium movie channels or, indeed, Internet service.  Remember, though, that cable operators pay for nearly all of the content they carry, which is different from broadcast, where a lot of content is free to the broadcaster and some content even comes with money attached.

Satellite operators pay for their content, too.  Satellite initially used wireless technology to offer cable content in rural areas where it was too expensive to build a wired network.  Having gained economies of scale in the rural markets cable couldn’t compete for, satellite has come to town competing generally on price.  But satellite offers no practical Internet service.  I know there are some and I tried one years ago (Starband) but they don’t work well.

Internet TV is different from all these others.  It began as a parasite on telephone and cable networks so the cost of building the network generally wasn’t there, having already been covered for the most part by those earlier services.  Internet TV is less of a network than a conduit; at present the Internet Service Providers don’t pay for video content but then neither do they get paid for it.  Yet this common carrier attribute also makes Internet service often more profitable for telcos and cable companies than the core services those companies were established to provide.  Whatever you pay for Internet service, it is mainly profit for your ISP.

The important lesson to learn when it comes to these competitive services is that the first three — broadcast, cable, and satellite — are all going up in cost to their providers while the cost of providing Internet service is going down.  In the USA, broadcast viewership is dropping, which means the cost per viewer is rising.  Same for cable where viewers are stagnant, viewership is declining (number of hours of viewing) and the cost of content is rising.  Satellite has been growing marginally but that could end at any moment and it shares the same content cost increases as cable.  Meanwhile Internet service just gets faster and cheaper thanks to a Moore’s Law double whammy.

Remember Moore’s Law works in two ways.  It makes digital products ever cheaper AND ever more powerful.  This has profound meaning for Internet TV because it continually increases the bandwidth we can get for the same dollar while giving our devices the capability to do even more with the same bandwidth.

Here’s an example.  My primary Internet connection is an 8 megabit-per-second business cable line with a service level agreement and static IP addresses.  I pay more than you do but then I get more, too, though even my service is crap compared to what you can get in Japan, Korea, and much of Europe.  My primary computer WAS a Mac Pro G5/1.6 circa 2004.  I should have replaced the G5 a couple years ago, I know, but my kids are in private schools and I keep buying airplane parts. I finally replaced the G5 last week, though, with a dual-core Mac Mini 2.0.  Both the old and new computers had four gigs of RAM.  Though my Internet connection can easily carry one or more 1080p H.264 video streams, there is no way that old G5 (which cost me $1999 in 2004 dollars) could play it.  It didn’t do much better with 720p for that matter.  But the $750 Mini (small drive but lots of RAM) can easily decode 1080p.

This is the trend, then: our available bandwidth will go up while our devices will become more powerful, making better use of the bandwidth.  The result, as always with Moore’s Law, is either better services or lower total cost or maybe a little of both.

What this means for the future of television is that we’re approaching a point where Internet service will equal and then be lower than the marginal per-viewer cost of the broadcast TV model.  This crossover will inevitably happen with the only question being when. That’s a function of bandwidth costs decreasing at 50 percent per year and processing power increasing at 50 percent per year.  My calculations suggest the crossover will happen around 2015, which used to seem like a long time away but no longer does.

When Internet TV becomes dramatically, unequivocally, and inexorably cheaper than the other three distribution models, those other models will quickly go away.  That’s why I argued in PBS meetings to forget about spending $1.8 billion to upgrade local stations for digital TV and instead sell or lease that spectrum for commercial data use and throw the resulting $3 billion (lease revenue plus the $1.8 billion savings) into rebuilding the network solely as an Internet service.

Nobody listened.

So there is a cliff rapidly approaching for television.  Five years from now local TV stations will have the same complaints that local newspapers have today as many of them go out of business.  Cable TV operators will become ISPs, period.  Phone companies will be ISPs, too, and analog voice service will be gone completely.  The regulatory implications of these changes should be interesting.

Who, then, will be the players in this future TV?  For the most part they will be the content providers, which probably doesn’t mean traditional networks.  And the networks know this, by the way. Hulu.com isn’t called NBCFoxABC.com and TV.com isn’t called cbs.com for a reason. Networks will go away.

But content will endure, bringing new value to I Love Lucy episodes and almost anything else people like to watch.

The TV networks are throwing their lot together.  CBS chairman Sumner Redstone will come to his senses one day and merge tv.com into Hulu, I am sure.  Their big competitors will be Google, Apple, and a player yet to be even founded (definitely NOT Yahoo OR Microsoft).

Google will differentiate itself as always through technology.  Those shipping container data centers I first wrote about in 2005 exist not just because they are easy to stack inside big Google plants.  Why botehr with weatherproof containers if they are to be used exclusive indoors? Because they are even easier to put in the parking lot at the telephone company central office or at the cable company head-end, both of which will by then be strictly ISPs.  Google will proxy content at every major ISP in America.  And they’ll do this because Google has no idea what people want to watch on TV, nor do they particularly care.

Apple, on the other hand, cares.  Following the content development scheme I laid out last time Apple will attempt to become the dominant content provider to the 20 percent of the market that spends 80 percent of the money, with margins high enough to use Google distribution and still come out ahead, leaving to Page and Brin the 80 percent of content that generates 20 percent of revenue.

But wait, isn’t Apple just a maker of hardware?  Don’t they do iTunes just to sell iPods?

No.

Apple is a software company that has traditionally packaged its software in attractive hardware boxes.  The fact that any new Mac is essentially a Windows computer proves that.  But price points have been eroding in every hardware category and will continue to do so.  Microsoft right now makes more profit from every Windows PC than does the maker of that PC.  Apple is not immune to this trend.  So the company needs to find ways to sell more and more software.

Content is software.  TV is software.  And the great thing about entertainment is that it is software we can be induced under some circumstances to buy over and over again like those teenage girls who paid to see Titanic dozens of times.

What does that leave, then, for that player to be named later?  I’ll get to that next time.

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This column has a global audience so sometimes I have to defend my tendency to see things from an American perspective.  But I’m not sure there even IS a defense for this particular item so I’ll just jump into it, because I think even readers from Kazahkstan and Kuwait (my two big K’s) may ultimately find it interesting.  It’s about Apple and Hulu and the direction Internet TV is going in the United States.

It’s not headed where you think it is.

Hulu is the ad-supported video distribution site set up by NBC-Universal and Fox.  It’s where, in addition to the TV network pages, viewers can go to watch thousands of television shows, old and new, supported by commercials.  Of the four big broadcast (as opposed to cable) networks in the U.S., Hulu until recently had half of them with CBS hiding out at TV.com and ABC residing solely at ABC.com.  But now ABC, which is owned by Disney, has decided to join Hulu and the pundits think that’s generally a big deal, not only because of the whole three-to-one thing but because Steve Jobs is the largest shareholder in Disney and on the Disney board and this would appear to be a kick in the face to Apple’s iTunes, where people rent or buy the same shows without commercials.

Is it or isn’t it a big deal?  And what does this move mean for Apple?

There have always been two general methods of distributing Internet video — downloading or streaming — and three business models — buying, renting, or watching with commercials.  Conventional wisdom — what THEY say — has it that streaming (YouTube) is better than downloading (iTunes) and watching with commercials (Hulu and TV.com) are better than renting or buying (iTunes again).

No, they aren’t, at least not as businesses, not yet.

Business Week, among others, made a grand effort this week to present Hulu as a masterstroke that will hurt or kill iTunes rather than what it is — an expensive streaming service that doesn’t make money.

My wife and I last night watched an episode of Chuck on Hulu.  We started on nbc.com where I thought we might see the show in HD but that wasn’t the case.  And even the standard definition version at nbc.com didn’t play well despite our dual-core 2.4-GHz system with four gigs of RAM and an eight megabit business broadband connection.  So we switched to Hulu where the 480p version stuttered a bit so we dropped to 360p where it played fine except for having to rebuffer a couple of times during the show.

In contrast to this with iTunes you have to wait for downloading but then none of this performance stuff happens. If you want HD you get HD, but then again you are PAYING for HD.

We watched the episode (fun) and all but one commercial was for Rwandan relief.  There is no way Hulu or NBC-Universal were making a profit on that stream, and this was a very popular show.

When you buy an episode on iTunes everyone in the production food chain makes a profit.

Hulu and its ilk are money-losing services that rely largely on concessions in various guild contracts that pretty much keep the writers and producers and actors from sharing in profits that aren’t there anyway, at least not yet.

How is this a threat to iTunes?

Fox owns a big chunk of Hulu, yet American Idol performances are exclusively available on iTunes, not Hulu.  Why is that?  Because American Idol performances on iTunes make a lot of MONEY, that’s why.  Adam Lambert downloads alone make more money every week — a LOT more money — than do ALL the shows on Hulu put together.

So Apple is being criticized and seen as an Internet antique because it is making a profit?  I don’t get it.

I’m not saying here, by the way, that there is no room for commercials on Internet TV.  Nor am I saying that Apple won’t possibly move to commercials or streaming at some point.  This is not gratuitous Apple ass-kissing. What I AM saying is that it is a lot easier to move from paid to free than it is to go from free to paid.  Hulu can’t choose to emulate Apple and become profitable that way because viewers would flee.

As I’ve written over and over, Apple is moving slowly and steadily toward becoming primarily a content provider.  Microsoft is trying to do the same but without Apple’s discipline.  Apple is putting in place all the pieces it needs to make a run at dominating the future of TV, but they know it takes time to get all those bits where they need to be.

What’s needed are devices and services and bandwidth at a given price point where it all works smoothly not just from a technical but also from a commercial standpoint.  Apple is there right now when it comes to downloading and selling or renting, but not for streaming or commercials — the numbers aren’t right yet, nor is the mix of devices.  But the time is coming soon when it will be right, certainly in no more than two years and maybe less.

Now here’s the key for all the pundits who see Apple failing or faltering: you are looking in the wrong direction.  It doesn’t matter how many networks are part of Hulu.  In time they will probably all be there.  But Hulu will remain an artifact of network labor agreements and will be vulnerable for that reason.  Hulu can’t afford to PAY its way.

Follow the money.

Apple has at this moment just under $29 billion in cash and not many good ways to get a reasonable return on that money.  Only Microsoft has more cash than Apple and Microsoft is being pulled in a lot more directions so Microsoft doesn’t have Apple’s flexibility.

What will Apple do with that money?

Most of it will remain unspent is my prediction, but I’m guessing we’ll shortly see $3 billion or so per year go into buying Internet rights for TV shows — not old TV shows but NEW TV shows, shows of all types.

TV production in the U.S. is approximately a $15 billion industry.  An extra $3 billion thrown into that business would change its dynamics completely.  Most production isn’t done by networks but by independent producers who are hungry for revenue and risk reduction.  Three billion Apple dollars spread around that crowd every year would buy Internet rights for EVERY show — more than every show in fact.  Whole new classes of shows would be invented, sapping talent from other parts of the industry.  It would be invigorating and destabilizing at the same time.  And because it is Apple — a company with real style — the new shows wouldn’t at all be crap programming.  They’d be new and innovative.

And just as the artistic heart of TV shifted to cable with HBO in the 1980s, so it will shift to the Internet and Apple.

And where will be Hulu?

Nobody will care.

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This week more than 20 million people watched on YouTube and other video sharing sites a single performance from the ITV show Britain’s Got Talent in which a frumpy spinster from Scotland sang like an angel. You can see her astonishing performance here.

It’s not the singing that makes me write this, though the singing was good. I lived as a boy in the north of England and knew ladies like this Susan Boyle. What makes me write about it is the effect she and her singing had on the Internet and the Internet in turn had on the performance and its aftermath.

The video file as presented on YouTube is just over seven minutes and 26 megabytes long. Twenty million (and counting!) times 26 megabytes is 520 terabytes or approximately half the size of the Internet Archive. That’s 520,000 gigabytes or the equivalent of maxing-out in a single week the monthly bandwidth allotment of 260 co-lo servers at Rackspace.com. Running at top speed for a week would require 1040 such servers to do the job and we haven’t even made it to a week yet. That’s 520 million-million bytes.

Okay, so it was a nice lady singing a nice song, but what’s astounding is the performance had been round the earth twice or three times before the broadcast in the UK was even over. It was one of those seminal moments of mass-communication that showed the world was different than it used to be and thank God it didn’t require a wardrobe malfunction to do so.

What resonated with audiences about this performance was that it hit everyone – everyone – the same, as a long-coming reward for a life of good cheer and choir practice. I make documentary films from time to time and this performance is one of those emotional moments that every documentary director dreams of. It’s not the facts, you see, or even the stories that matter, it’s the emotional state of the people on-screen and how the viewer relates to them that matters. Real feelings count.

And thanks to the Internet in this instance such feelings count everywhere, it seems. For one happy moment we’re drawn together as a single audience to share a single emotional high that involves, for a change, no losers at all.

Think how rare that is, which explains its power.

Marshall McLuhan, who seems smarter every day, called it The Global Village. He said communication technology would link us together in ways we couldn’t imagine and those ways would lead to common experiences and shared values. McLuhan didn’t know about the Internet when he wrote that and he sure as Hell didn’t know about Twitter. But his prediction came true.

This Susan Boyle experience doesn’t come along very often, but with the growth of broadband technology it can’t help but happen more and more. It’s not the Super Bowl or the World Cup — it’s better. That’s because it is personal – a moment we all can share, well so far 20 million of us, one at a time.

Now the folks at Google are no doubt scratching their heads, as are the TV producers back in the UK, trying to figure how to put this effect in a bottle and make a living from it. But it can’t be done.

This is an event that was created for TV but not really anticipated by its creators, I’m guessing. They couldn’t reliably repeat it if they tried.

If they did try, it wouldn’t work.

That’s the beauty, because every time this happens, every time our Global Village comes together in this way, it’s because of a shared delight that makes us feel more alike and less apart.

We could all use more of that.

And the next time it happens, now we all know what to do.

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Last week a story broke about a former Fannie Mae IT contractor accused of planting malicious code that would have taken down systems and destroyed data right at the epicenter of today’s global financial crisis. The accused former employee has since surfaced claiming innocence so I prefer not to go into that specific case but rather use it to consider the likelihood that similar crimes could take place in other companies.

Well of course the probability is 100 percent simply because similar crimes HAVE taken place in other companies. It happens all the time at an annual cost of BILLIONS.

IT crimes go grossly under-reported because they are so embarrassing to their victims who convince themselves that saying something will only embolden the bad guys and lead to further losses. In one sense this is true, but in another it creates a false sense of safety. This is one area where we really SHOULD feel vulnerable yet most companies don’t and have lax procedures as a result.

So just in case you are interested in this topic or have some influence in data security, here are my overkill ideas on how to lock things down. It is doubtful that any company or agency would do all these things, but doing at least some of them makes good sense to me.

Many years ago good business practice was to put all critical systems on an internal, isolated network that did not have a path to the Internet. This would prevent someone from the Internet accessing a bank’s ATM network, or a chemical company’s process control system, or a power utility, etc. Recently I’ve been amazed to find how many firms are not doing this anymore and worse, they don’t understand why they should even try.

So here are my recommendations to avoid those nasty logic bombs. Your mileage may vary.

1) Route admin access to all systems through a logging proxy server. Each administrator must be authenticated by the proxy server and their access to systems logged. Keep the logs and check them on a regular basis.

2) All admin personnel will be assigned two user IDs. One will be a normal, non-privileged ID they will use for routine things like email and office applications. The other ID will be privileged and include a special character, maybe a “$.” You can’t check your email or run a business application with this ID. All admin access is done with the special ID. Use of generic root or administrator accounts is not allowed after the system is set up and running.

3) Scripts are run on each server (or domain) to check user IDs. All privileged IDs must have the special character and the right rules. All non-privileged IDs must not have the special character. Logs are checked for login by generic root or admin accounts. All deviations from policy are flagged and investigated. Scripts automatically disable all out-of-policy accounts.

4) After a system is set up, install a script to reset weekly the generic root or admin password. No one is supposed to use this account and no one knows the password. If you need access to the generic system ID, then run a tool that will tell the password of the week. This is a logged event too.

5) All admin access to a system should be logged and recorded in the change control system. If you fixed something or changed something, you need to note it by editing the record of your access (you can’t delete the record, only add to it.). On important systems run a trip-wire tool and post its report in change control too.

6) Privileged IDs must have their passwords changed at least once a month. Longer password expirations are acceptable for non-privileged IDs. There are password rules on content and length. Manage all IDs with LDAP.

7) HR manages user IDs. In the case of a departure or termination, the user’s IDs are disabled. The passwords are changed. Their managers are given access to the IDs and new passwords. All IDs are maintained in a database. When each system is checked, the IDs on it are checked against the HR database. Exceptions are flagged and investigated. When someone leaves the company for any reason, reports are created showing all their system access and changes.

Now would these seven steps stop a determined and talented former employee or contractor? Nah. And that’s the part that’s really distressing, because I am sure we have built into our IT overhead 5-10 percent simply to cover sabotage – a crime we otherwise try never to mention.

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Just in case you ever sue me, you should know that I have every e-mail I have ever sent or received since 1992. That’s crazy from a legal standpoint, I know, but I can’t help myself. I’m obsessive-compulsive that way. But having a clear view of 16+ years of mail amounting to more than four gigabytes of mainly ascii text gives me a sobering sense of how poorly e-mail does the job lately compared to its glory days of, say, 1999.

More than ninety percent of my mail today by volume is spam. Back in 1999 spam was about 15 percent of my mail. Of course I am in large part to blame for this because I sign up for services and tell them, yes, I would like to receive news and offers by e-mail. I do this because I think it is my job to keep a finger on the pulse of the Internet and if you don’t get spam there isn’t much of a pulse. But it sure gets in the way of staying in touch with friends. And as you can imagine, I have a lot of friends.

As e-mail fails, then, we jump to instant messaging and social networks to take up the slack. Instant-messaging, which remains delightfully spam-free, is also like allowing casual acquaintances easy access to your IV drip: they can drop the worst stuff on you with no notice and no way of avoiding it. At least with e-mail you can decide when to check it or not, but IM is relentlessly in your face.

Well then there are the social networks, right? I tried to avoid these for years. I mean YEARS. People would want me to sign onto one or another so we could “keep our address books synchronized.” Why would I want that? But eventually some of my best friends began to take personally my resistance to being part of their automated lives, so I eventually signed-on to Plaxo, LinkedIn, and FaceBook. I might have a MySpace page, too, I’m not sure, but I certainly don’t visit there.

I barely visit Plaxo, but I am pretty consistently on Facebook and at least once a week get to LinkedIn. But that’s it. As far as I am concerned, if you want me to join Bebo or WhereAreYouNow or some other social networking startup, well forget it. Plaxo, LinkedIn, and Facebook do a perfectly adequate job of defining my culture, thanks. I can’t imagine needing another, especially ones that are so gimmicky. Why the hell, for example, would I want to rate my friends or have them rate me? That’s simply stupid.

There’s my money quote for FriendChat, PeopleRadar, RateMyEverything and a hundred other similar sites: “Rate my friends? That’s stupid” – Bob Cringely.

Keeping up with Plaxo, LinkedIn, and Facebook is bad enough, but I now sense that really ugly things are happening to those platforms making them less and less useful to me. It’s the rise of the social networking application.

You know what I am talking about, those applications that are built by third-party developers to take advantage of the social network ecosystem the companies are so proud to create but we all come to hate over time.

My friend Ira is a Facebook whore. He signs-up for every cause, group, or application sent to him by, well, anybody. Then what’s even worse is he expects me to sign-up too so he can send me whatever crap is the specialty of that subgroup.

I love you, Ira, but I just can’t do as you ask.

This is nothing more than social networking spam, folks, and it is sucking the value out of social networks just like mail spam sucked the value out of e-mail. And to those venture capitalists who see all these applications and rejoice because of the added network volume, which they think translates into higher valuations, understand that this very volume will eventually KILL every one of these companies, making your investment in them worthless.

If you think Facebook is immune to this effect because of its success, you are wrong. It’s very success makes Facebook even more likely to fail as a result. It won’t happen right away but it will happen when we’ll all jump overnight to some other platform whose only advantage over Facebook is that it lacks such sludge.

So if you are in touch with me for any reason please understand that while I will become your friend or contact on these services I will NEVER join a group, NEVER join a cause, NEVER accept an invitation (even if I actually end-up attending the event), NEVER become a fan, and NEVER, NEVER, NEVER install third-party applications.

And you shouldn’t, either.