Technology

Another Win for the Tax Man?

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The threat of collecting sales taxes for Internet-based commerce has been rumbling in the background for years. But the latest news out of Washington may mean it’s finally coming to pass. And it’s generating its share of controversy.

A bill is expected to be introduced soon in Congress that would force Amazon, Overstock and other Internet retailers to collect sales taxes from their customers who shop online or through mail order. Co-sponsored by a Republican senator and a Democratic congressperson – which means almost certain passage – the bill would require states to inform retailers whenever there is a change in their tax code. This will have the effect of simplifying the tax collection and data reconciliation process.

State officials are understandably excited over the prospects of gaining additional sales tax revenue. And why wouldn’t they be? After all, sales tax receipts have dropped off in recent months due to a general decrease in retail activity. To them, this seems like a quick and easy way to replenish their coffers.

Plus, some brick-and-mortar retailers are surely happy about having a more level playing field. No longer will they have to compete at a disadvantage against online retailers that are saving their customers 6% or 7% sales tax on every purchase.

Of course, sales tax regulations have long been a thicket of complexity. In fact, a tidy number of sales tax collection software/service companies have sprung up over the years to help retailers make sense of it all. Not only are a myriad of different sales taxes set by individual states, but cities and other municipal entities within states can also set their own sales taxes as well.

To add even more to the potential confusion, each state has its own individual laws regarding what type of merchandise is taxable, or whether things like shipping expenses are taxable. So collecting the correct figure is often a tricky business, even for large online retailers.

As for sellers having multiple physical locations in addition to their online presence, depending on where those business locations are in relation to the online consumer’s place of residence can make for an even more complicated picture.

Are we having fun yet?

It’s no wonder online retailers intensely dislike playing the role of tax collector for the states. On the other hand, government officials absolutely love the idea that they can collect new funds without actually having to raise taxes.

And that’s what’s so interesting about this latest maneuver. No one is talking about an official change in tax law. Technically, online shoppers have always been required to keep their receipts and pay tax funds to their home state when filing the yearly state tax return. But be honest … do you know anyone who’s actually ever done that?

UPDATE (4/28/09): BusinessWeek is reporting that the particulars of the legislative bill are still being drafted. Of course, this isn’t the first time movement on a bill has been delayed in Congress. The magazine is also reporting that the bill’s passage is not a foregone conclusion … although opposition in this Congress appears to be lower than in previous ones. We shall see.

Is “Pay to Play” the Future of the Web?

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More than a few feathers were ruffled by Kodak’s announcement that the multiple millions of users of the company’s Kodak Gallery online photo-storage service may have their photos subject to deletion if they don’t begin paying an annual service charge ranging from $5 to $20.

Is this the beginning of a trend? Some web observers seem to think so. David Lazarus, in his recent Los Angeles Times business column, draws a parallel to automated teller machines that were introduced by the banking industry back in the late 1970s. At first, there were no service charges assessed when using ATMs. The banks wanted their customers to start using ATMs, thus helping to reduce the demand for more labor-intensive (read: expensive) teller stations.

Then, after a number of years of free service the banks began charging ATM service fees for out-of-network transactions and even some in-network ones. The idea was now that consumers had become comfortable with the technology and the “24/7/365” convenience of the machines, they would accept the fees without resistance.

“Why should the Internet be any different,” Mr. Lazarus asks?

I think the comparason isn’t totally apt. It’s true that there is a cost for Kodak or others to maintain the infrastructure (hardware and software) to provide archiving and other web-based services. But the fact is, those costs are not nearly as high as the “brick-and-mortar” expense of building an ATM system.

What’s more, the banks were in a stronger position to move en masse toward charging fees. After all, they operate under a government-issued charters. The barriers to entry – both regulatory and financial – are far more onerous than anything in cyberspace.

Anyone ever heard of Flickr?

And that’s the real challenge today. Who is going to be the first to jump into the fee-based waters? And will anyone else follow? Put it another way: will others follow the leader … only to find themselves drowning in a sea of new, free alternatives that spring up in response?

Just ask the newspaper industry how simple it is to successfully implement fee-based services on the web. There’s your answer as to how easy “pay to play” will be to implement.

What is YouTube’s Business Model?

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The information is starting to trickle out. YouTube is hemorrhaging red ink. Credit Suisse estimated recently that YouTube will make approximately $240 million in advertising revenue – revenue that has come from a cavalcade of different forms of advertising, licensing and partnership deals.

Balance that income against estimated costs of over $700 million and you get a loss of more than $450 million.

What’s wrong with this picture?

Advertising Age magazine has just reported that YouTube is now selling advertising against 9% of its video views. That’s up from 6% a year ago. But those figures are still paltry. And it’s really no surprise since so much of YouTube’s content is user-generated, devoid of any significant interest and thus not really “monetizable” for advertising purposes.

No one – not even parent company Google, with a market capitalization of over $100 billion – is going to put up with such a scenario forever. The question is whether YouTube will ever be able to generate enough ad revenue to offset the huge bandwidth and storage costs associated with managing a humongous repository of video material. It’s a question that, even if Google’s own senior management doesn’t ask, the company’s shareholders should.

Paid subscriptions, anyone?

Holy Smoke! Social Marketing Gets Religion

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As if we needed further proof that today’s social marketing phenomenon is seeping into every corner of people’s lives … faith-based web sites are now embracing the latest social techniques full-on.

One such example is Tangle, a site that provides family-friendly content and forums with a Christian perspective. Since merging with GodTube earlier this year, Tangle has experienced rapid growth. Particularly popular is the site’s interactive “prayer wall,” a kind of cyber equivalent to Jerusalem’s Wailing Wall where members can post prayers and petitions to the Almighty.

But in a 21st century twist, other members can comment on those prayers, a kind of running commentary from the spiritual side chamber. Talk about spilling the beans! It’s certainly a far cry from the Holy Week tradition of private auricular confession to a priest.

Not all of the action is on the Christian side of the ledger, either. Our Jewish Community, a project of Cincinnati’s Congregation Beth Adam, provides information, insights and discussion points related to Passover and other Jewish holidays – complete with blog entries and Twitter feeds.

These social marketing initiatives, in combination with the proliferation of faith-based informational web sites, prove yet again that old-time faith is flourishing in new-world cyberspace. Indeed, the web has provided the most effective means yet for like-minded, smaller or geographically far-flung religious communities such as Eastern Orthodox Christians, Traditional Anglicans/Episcopalians and Sephardic Jewish communities to find themselves and nurture their shared beliefs and culture. Hey, more power to them.

Now, before we get too breathless about the mobile media revolution …

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For those of us in the communications field or otherwise on the bleeding edge of communications, it may come as something of a surprise to learn that the rest of the world isn’t all that engaged with (or even interested in) many of the communications techniques and gadgets that so absorb us.

To underscore this point, a study published recently by the Pew Internet & American Life Project reports that only about one-third of the adult U.S. population finds mobile Internet communications to be particularly interesting or attractive to them. And, horror of horrors, the remaining two-thirds aren’t being pulled by mobility further into the digital world.

The Pew study categorizes information and communication technology users into different sub-groups that have been given catchy descriptive names. Five of them, labeled “digital collaborators,” “media movers,” “roving nodes,” “ambivalent networkers” and “mobile newbies” collectively make up just over one third of the population. The study combines these groups together as people who are “motivated by mobility.”

On the other hand, a clear majority of people fall into a second segment dubbed the “stationary media majority.” Sub-groups within this segment include “desktop veterans,” “drifting surfers,” the “information encumbered,” the “tech indifferent,” and those who are just simply “off the network.”

While it may be tempting to assume that the ranks of the “motivated by media” segment will continue to grow at the same rapid pace (or even faster) going forward, the Pew study throws cold water on such a notion. Indeed, it finds that the “stationary media majority” segment, far from becoming more comfortable or accepting of cell phones and other mobile devices, is actually displaying increasingly more negative attitudes about them.

Maybe it’s an understandable reaction to the relentless press of new technology for people to push back like this. And we’ve seen it before – back in the 1970s and ’80s with the high-tech/high-touch phenomenon when desktop computers were being introduced in a big way into the office environment.

People do come around eventually, of course. But it takes longer than many would expect. And it’s really too bad when some early adopters respond with impatience and exasperation. Instead, why not just chill and give the rest of the world a chance to catch up?

Even better, let them do it on their own terms and at their own pace.

The Titanic Tribune

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The news about newspapers has been unremittingly bleak in recent days. The Rocky Mountain News.  Chicago Tribune.  Minneapolis Star/Tribune.  Going bankrupt or shutting down altogether.

And now we read that the Chicago Sun-Times has announced that it, too, is filing for bankruptcy.

Even more depressing than these reports is reading about the tactics some news organizations are adopting in order to roll out a new business model that’ll supposedly keep their brand “on the beat.” So now we discover that the Seattle Post-Intelligencer is going all-digital. The Hartford Courant is sharing its staff with two local TV stations and combining newsgathering duties. And the Detroit Free Press is cutting home delivery to three days a week.

This is like rearranging the deck chairs on the Titanic.

Strip away the flurry of activity and it all boils down to this: How many consumers really need newspapers anymore? Sure, there may be a smidgen of news in the paper that can’t be found (easily) on the Internet. But the issue is really one of preference and behavior.

Ask yourself: Who do you personally know who subscribes to your daily city paper? How old are they? I’d be surprised if they were born after 1950. And while the over-60 set may still prefer the ritual of reading the paper over a morning cup of coffee (a paper they paid for, no less), that’s a scenario one encounters less and less in the rest of the population.

The fact is, people want quick access to the news when and where they need it. Usually in short information bursts. On the go or at their desk … but far less often in an easy chair at home. The online sites of newspapers can provide this, of course, but so can so many other sources. No longer the big kids on the block with little competition and huge barriers to entry preventing others from encroaching on their turf, today’s newspaper publishers must clamor for attention among a gaggle of other online outlets – most of whom know how to play the game a whole lot better.

Darwin … or dinosaurs? The final verdict may not yet be in. But we already know how this is going to turn out.

Search … and destroy? Nah.

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New statistics published earlier this month by Hitwise show that Google continues merrily on its way to even greater heights of dominance in the search engine field.  Despite the Don Quixote-like efforts of other search engines like MSN, Ask and Yahoo to take a run at Google’s position, the latest stats show that Google’s search engine is as popular as ever.

More popular, in fact.  The numbers reveal that Google’s share of search activity has now risen to 72% versus 67% a year earlier, whereas the others continue to decline.  Yahoo is in second position, but getting 21% of search share is about on par with H. Ross Perot’s vote percentage in the 1992 presidential election – all hat and no cattle.

More startlingly bad is MSN’s performance at around 7% of search activity, because they’ve been trying hard to make a dent in Google’s position. Keep on trying, gents.  Maybe you’ll break 10% share before long, although I doubt it.

Does any of this come as a surprise?  After all, people are creatures of habit. And when a habit gets as big as this, it’s really hard to break.

Also, most people typically take the path of least resistance. And when it comes to search, isn’t Google the easiest path?  Simple visual layout … easy to use … robust results.  What’s the point of going anywhere else?

UPDATE – 4/1/09 – As if on cue, another search engine bites the dust.  Wikia has announced it is closing down its Wikia Search project.  Introduced to great fanfare last year, Wikia was intended to be a user-generated, open search engine.  The problem?  Wikia Search was simply not generating any sort of worthwhile volume.  In fact, traffic was running about 10,000 unique users per month.  That’s just a blip on the screen — and certainly disappointing considering the success of other initiatives like Wikipedia and Wikia Answers.  Further proof that to be first in cyberspace with a good idea and good execution is a huge advantage … and to be fourth or fifth is considerably more difficult, even fruitless.

Welcome to the Customer Service Department … Dante Alighieri will be your tour guide.

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Who hasn’t faced the frustrations of dealing with what passes for customer service today? I recall an ordeal several months ago when I spent the better part of three hours on the phone with Hewlett-Packard’s customer service department – if you could call it customer service – trying to get an issue resolved with reloading a printer driver for an HP model that is no longer classified as “current” – which in my case was a printer I purchased five or six years ago.

Because my model was older, I was transferred to a different help desk that turned out to be an outsourced/offshore area of HP’s customer service. (Presumably, the good folks at HP seem to think that outsourcing technical questions about older equipment will actually give their customers access to better knowledge than their own in-house personnel can provide …?)

The first 90 minutes of my ordeal were spent trying to talk to someone who could actually solve my problem, but about 90% of those 90 minutes were basically spent on hold. The next nearly 90 minutes was taken up with attempting to get my $59.99 service charge reversed, since I had been unable to speak with anyone who could actually assist me with my problem.

That’s an evening of my life I’ll never get back.

… Which made a new book just published on the woeful state of customer service capture my attention all the more. In Emily Yellin’s book “Your Call Is (not that) Important to Us,” (Free Press, ISBN-13: 978-1416546894 … also available in a Kindle edition), the author gives us plenty of statistical information, polling results and excerpts from studies to help chronicle the sorry state of today’s customer service affairs.

But it is Yellin’s “customer service hell” anecdotes – far more horrific than my own experience with Hewlett-Packard – that stick most in the memory. Those stories certainly provide fodder for a sort of morbid fascination; reading them is not unlike seeing an auto accident unfold in slow motion before your very eyes: You know what the final result is going to be but you can’t resist seeing it through all the way to the end.

Fortunately, not all is bad news. The author also cites some examples of where companies are trying – pretty diligently – to deliver a customer service experience that is at least “serviceable.” The book is a worthwhile read.

But back to my own experience. How did things turn out? Well, after nearly three hours on the phone, I was finally able to get my charge for service reversed. Then, rather than spend any more time trying to work with my HP printer, I simply purchased a new one. It was a Canon.