Eric Schmidt criticises David Cameron's proposal that potential rioters should be barred from social media

Google's executive chairman, Eric Schmidt, has criticised David Cameron's proposal to limit the use of social media sites during civil unrest in the wake of the riots that took place across England earlier this month.

Schmidt, speaking at the MediaGuardian Edinburgh International Television Festival on Saturday, said that such a move was likely to backfire, highlighting how when the Egyptian authorities turned the internet off to try and quell unrest earlier this year it merely "enraged the citizens and got them to leave their homes to protest".

Asked in Edinburgh what he thought of Cameron's suggestion, Schmidt said: "I think it's a mistake. It is a mistake to look into the mirror and try to break the mirror. Whatever the problem was [that caused the riots] the internet is a reflection of that problem. If you have a problem, use the internet to understand what the problem is."

Cameron suggested in the aftermath of the unrest that social media services like BlackBerry Messenger, Twitter and Facebook could be closed down temporarily to prevent a repeat of the trouble.

Schmidt, appearing in a Q&A session following his MacTaggart lecture at the festival on Friday evening, said such a move would be a "strategic error … like turning off the water".

"When the Eygtian revolution happened a number of people were busy being revolutionaries and a majority where at home being afraid. The government turned off the internet for about four days. They enraged the citizens and got them to leave their homes to protest," he added.

"It was a strategic error. It's like turning off the water. An awful lot of people use these [sites] in essential ways every day of their lives and if you switch them off you're really going to piss them off."

The government already appears to be rowing back on Cameron's initial suggestion.

On Thursday the home secretary, Theresa May, told social networks at a meeting to that the government had no intention of "restricting internet services".

BlackBerry maker Research in Motion, Facebook and Twitter were summoned to the meeting with May after Cameron's post-riots comments about social media.

May is understood to have opened the meeting by immediately ruling out restrictive measures and indicating that it was a discussion about improving law enforcement online.

According to sources at the meeting, police acknowledged that they "needed to do more" with regard to learning how to use social media. The Metropolitan police are understood to have said they were "slightly behind" other forces when it came to Twitter and Facebook.

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I've been trying to get a sense of the full range of streaming music and video projects, such as Reelr.tv and Chill, that draw on services like YouTube and SoundCloud to both avoid licensing issues and to offer new ways of enjoying content from such sites. My favorite service to date is actually one that gives the listener the least amount of choice and music marketers little chance to market music, it's called "You Are Listening To" and it features a streaming mashup of SoundCloud tracks, police radio streams and a background pic from Flickr!  It also illustrates the creative forces from which the music industry has resisted benefiting all along.

The original You Are Listening To site featured You are listening to Los Angeles. and I've found its odd juxtaposition of ambient music and the LAPD Radio Stream to be quite soothing, something I would never have imagined until listening to it. Since the initial launch, New York, Montreal, San Francisco and Chicago have been added along with a somewhat hidden channel that switches out the cop streams for audio from YouTube of different speakers on serious topics called You are listening to Deep Thought.

You Are Listening To is a unique project but it's just one example of what can happen when innovative thinkers have access to streaming music and/or music videos. The "what could have been" tale of Napster has been followed by an astounding range of startups and hacked together services which have either infringed upon or skirted the edges of infringement until the music industry's hands were forced by the likes of YouTube to capitulate while streaming music services still struggle to survive the weight of licensing fees.

Though yesterday's ruling in favor of MP3tunes has opened up space for music locker services, the reluctance of major labels to join in the experimentation has resulted in music business models that remain somewhat stunted. But the creativity of web service creators who now have access to streaming audio and video sources without having to pay licensing fees has revealed the even larger potential for new music business models from which the music industry cannot fully benefit because they have kept such developments at arms length.

The creation of APIs, which allow third parties to access content, has facilitated services like You Are Listening To to become what Roman Mars described, in an interview with site creator Eric Eberhardt, as an unofficial "R&D department". As Eberhardt put it:

"RadioReference, Flickr, SoundCloud, and the artists offering Creative Commons royalty free music on SoundCloud could not imagine this content."

But, as Eberhardt also notes, many artists have asked to be on his site, even though the rewards are not monetary.

While the industry's resistance has been well documented, I don't think it's that hard to understand why Napster and the filesharing phenomenon has thrown folks for a loop. Yet it's also becoming evident that in the industry's hardline resistance to any change, many opportunities to benefit from the full creativity of artists and programmers experimenting together has been lost.

Hypebot contributor Clyde Smith is a freelance writer and blogger. He is currently relaunching Flux Research to pursue his long-standing obsession with web business models. To suggest music services and related topics for review at Hypebot, please contact: clyde(at)fluxresearch(dot)com.

But instead of avoiding bad publicity over the shooting death, BART's cell phone censorship has drawn even more attention to the agency and has called into question the legality of its actions.

On Monday, the ACLU of Northern California sent a letter to BART chief of police Kenton Rainey, noting:

BART's actions must be seen in the context of today' s events. All over the world, people are using mobile devices to protest oppressive regimes, and governments are shutting down cell phone towers and the Internet to silence them. BART has never disrupted wireless service before, and chose to take this unprecedented measure for the first time last week in response to a protest of BART police. BART's decision was in effect an effort by a governmental entity to silence its critics.

Take action: Tell the FCC to conduct a thorough investigation and insist that government agencies must not censor cell or internet communications, even if it doesn't like the content of those communications.

Learn more about free speech: Sign up for breaking news alerts, follow us on Twitter, and like us on Facebook.

Scientific American has an explainer that breaks down how BART officials killed the transit system's base stations, disabling various cellphone services in an attempt to thwart planned protests. For about three hours on one day, transit riders were blocked from calling 911, making voice calls, accessing the internet or using any mobile data services.

The government-run public train authority did not, as some mis-reported, "shut off cell towers."

BART's wireless service is provided by a company called WiFi Rail. According to its web site, the WiFi Rail network utilizes a backbone of fiber-optic cables that run throughout the underground transit system. These connect a network of wireless access points, routers and switches. Because BART privately owns and operates this underground network, BART officials have the power to switch it off.

Read: How Did BART Kill Cellphone Service?: Scientific American.

Bart's mobile phone shutdown to prevent protests after police shot a man only turned a civil rights issue into a free speech fight

What does the police killing of a homeless man in San Francisco have to do with the Arab Spring uprisings from Tunisia to Syria?

The attempt to suppress the protests that followed. In our digitally networked world, the ability to communicate is increasingly viewed as a basic right. Open communication fuels revolutions – it can take down dictators. When governments fear the power of their people, they repress, intimidate and try to silence them, whether in Tahrir Square or downtown San Francisco.

Charles Blair Hill was shot and killed on the platform of the Bay Area Rapid Transit (Bart) system's Civic Centre platform on 3 July, by Bart police officer James Crowell. Bart police reportedly responded to calls about a man drinking on the underground subway platform. According to police, Hill threw a vodka bottle at the two officers and then threatened them with a knife, at which point Crowell shot him. Hill was pronounced dead at the hospital.

Hill's killing sparked immediate and vigorous protests against the Bart police, similar to those that followed the Bart police killing of Oscar Grant on New Year's Day 2009. Grant was handcuffed, face-down on a subway platform, and restrained by one officer when another shot and killed him with a point-blank shot to the back. The execution was caught on at least two cellphone videos. The shooter, Bart officer Johannes Mehserle, served just over seven months in jail for the killing.

On 11 July, major protests shut down the Civic Centre Bart station. As another planned protest neared on 11 Aug, Bart officials took a measure unprecedented in US history: they shut down cellphone towers in the subway system.

"It's the first known incident that we've heard of where the government has shut down a cellphone network in order to prevent people from engaging in political protest," Catherine Crump of the American Civil Liberties Union (ACLU) told me:

"Cellphone networks are something we've all come to rely on. People use them for all sorts of communication that have nothing to do with protest. And this is really a sweeping and overbroad reaction by the police."

The cellular service shutdown, which was defended by Bart authorities who claimed it was done to protect public safety, immediately drew fire from free-speech activists around the globe. On Twitter, those opposed to Bart's censorship started using the hashtag #muBARTak to make the link to Egypt.

When the embattled Egyptian dictator Hosni Mubarak shut down cell service and the internet, those in Tahrir Square innovated workarounds to get the word out. An activist group called Telecomix, a volunteer organisation that supports free speech and an open internet, organised 300 dial-up phone accounts that allowed Egyptian activists and journalists to access the internet to post tweets, photos and videos of the revolution in progress.

"We were very active – Tunisia, Egypt, Libya, Syria – trying to keep the internet running in these countries in the face of really almost overwhelming efforts by governments to shut them down," Telecomix activist Peter Fein told me:

"Telecomix believes that the best way to support free speech and free communication is by building, by building tools that we can use to provide ourselves with those rights, rather than relying on governments to respect them."

Expect hacktivist groups to support revolutions abroad, but also to assist protest movements here at home. In retaliation for Bart's cellphone shutdown, a decentralised hacker collective called Anonymous shut down Bart's website. In a controversial move, Anonymous also released the information of more than 2,000 Bart passengers, to expose the shoddy computer security standards maintained by Bart.

The Bart police say the FBI is investigating Anonymous's attack. I interviewed an Anonymous member who calls himself "Commander X" on the "Democracy Now!" news hour. His voice disguised to protect his anonymity, he told me over the phone:

"We're filled with indignation, when a little organisation like Bart … kills innocent people, two or three of them in the last few years, and then has the nerve to also cut off the cellphone service and act exactly like a dictator in the Mideast. How dare they do this in the United States of America?"

• Denis Moynihan contributed research to this column

© 2011 Amy Goodman; distributed by King Features Syndicate

Alice Taylor, CEO of Makielab and wife of BoingBoing’s Cory Doctorow, took a nice snapshot of a anorexic mannequin in an “Always Skinny” display at the Gap. The mannequin is clearly emaciated and, skinny tights or no, probably should get some help. Alice snapped a picture, Cory posted it, all was right with the world.

The Daily Mail’s blogger, one Ariel Ramerez, asked if they could use the image in a blog post and Alice asked for a £250+ donation to a charity of her choice – a fair request, especially since she hates the Daily mail. Back and forth ensues, Ariel first:

Hello Alice,
Thank you for getting back to me. Appreciate it.
We are the MailOnline – the web portion.
Unfortunately, your listed price far exceeds our
budget – which also comes in $. We’d be happy to
make the donation however we would need it to
meet our budgetary constraints.

… and from Alice to Ariel:

Oh well – it’s a no then.
(IMHO, obv, the Mail can afford it, and
I have no love for that paper so
- apols!)
Thanks for the interest tho!

Case closed, right? Wrong. The image appeared on the Daily Mail unaltered next to a “post” on anorexic models (remember, news is what the editor sees on her way to work or, in this case, on BoingBoing). The best thing? The blogger used Taylor’s quotes from another piece she commented for in the Washington Post, a paper she does support. Not only did they steal her image, they stole her words.

Where does this leave us? Well, for one the Daily Mail has a history of copyright infringement when it comes to photography. For a title dedicated to the resale of images of Julia Roberts’ backside, it’s a pretty self-destructive stance to take.

Over the past few years, “amateur” bloggers have become surprisingly aware of photo rights and copyright. Except for a few rare occasions, for example, we use our own photos, press images, and creative commons photos. However, as mainstream news organizations moved towards blogging, they have yet to learn the same thing many bloggers learned five years ago – images belong to someone, somewhere. Just because you can get away with ganking someone’s shots without attribution doesn’t mean it’s the right way to run a railroad.

The line between public domain and private property, on the aggregate, is thin and rarely understood. Is my Twitpic my property? It’s public, after all. What about these images from GIS? Who owns the porkloin? Is it obvious?

Sites like GumGum offer strong methods for photographers to license their work, but if the blogger literally ignores a request not to publish an image without payment, how can any form of technology help?

This is the age-old problem of “user content creation:” it’s just about the swellest thing ever until someone abuses it. It’s tragedy of the commons – at some point someone is going to drive their ATV all over your public land and throw beer cans at your communal sheep. It’s just sad that these abusers are coming from old media and not necessarily the new.

Incidentally, if you want to donate to Alice’s favorite charities, MIND or ORG in the Daily Mail’s stead, feel free. I sent in 20 quid to pay down the Daily Mail’s debt to society in general.

...when people are using social media for violence we need to stop them. So we are working with the Police, the intelligence services and industry to look at whether it would be right to stop people communicating via these websites and services when we know they are plotting violence, disorder and criminality. I have also asked the police if they need any other new powers.

Exactly what kind of government censorship of social media Cameron has in mind is unclear, but he went on to urge Twitter, Facebook, and Blackberry to remove messages that might incite further unrest across the country. British Home Secretary Theresa May is reportedly meeting with all three companies to discuss their “responsibilities” in light of the UK riots. Twitter has steadfastly refused to bow to government pressure to shut down the rioters’ accounts or delete their Tweets, referring to a blog post written by Twitter co-founder Biz Stone and General Counsel Alex McGillivray earlier this year, near the start of the Arab Spring:

Some Tweets may facilitate positive change in a repressed country, some make us laugh, some make us think, some downright anger a vast majority of users. We don't always agree with the things people choose to tweet, but we keep the information flowing irrespective of any view we may have about the content.

It was a sentiment shared by Cameron as recently as this February, when he gave a speech in Kuwait in which he asserted that freedom of expression should be respected "in Tahrir Square as much as Trafalgar Square." The Prime Minister’s 180-degree shift on freedom of expression unfortunately places him one step closer to the growing, worldwide cohort of politicians and despots seeking solace in censorship.

EFF urges Facebook, Blackberry, and Twitter to fight for the rights of their users. In large part, this means refusing to censor speech, protecting users' data unless compelled to do otherwise by law, and informing users if their data is sought by the government. But the companies' hands may be tied if Cameron takes advantage of hysteria over the riots to pass shortsighted legislation meant to protect Britons from the so-called “misuse” of social media.

Over the past week, I've had several conversations with friends in various parts of the music business and there are a number of recurring themes that I thought I'd blog about. This post is about the recorded music part of the business, not publishing, not touring, not movie or video game soundtracks.

Physical distribution (ie buying CDs in stores) is still more than 50% of the recorded music business but it won't be long before digital revenues will eclipse physical. It might happen this year. Physical revenues won't decline on a straight line. They will collapse at some point as retailers start to take away shelf space. Within five years, physical distribution will likely be history.

Digital distribution is largely files (mp3 and aac) sold via iTunes and to a lesser extent Amazon and a few others. Digital also includes streaming license revenues, both compulsory license revenue from Internet Radio (Pandora, radio.com, etc) and licenses from on demand services like Rhapsody, rdio, Spotify, Napster, etc.

Digital revenue today breaks down as 95% files, 5% streaming. And within the 95% that is files, iTunes is 80% or more. But iTunes is not growing that much. It was flat last year and is growing only slightly this year. Amazon is still growing nicely but from a much smaller base. File based digital revenues are maturing and are not likely to make up the loss in revenue from physical distribution.

Streaming is growing very nicely and has the potential to develop into a large business but the companies that provide streaming services are struggling under the weight of the license fees.

The average iTunes customer purchases music that generates roughly $50 to $60/year to the record companies after Apple takes its cut. So the record companies want to get $50 to $60/year from the on demand services. The on demand services have not been able to make that model work for them yet as it requires a $100 to $120/year subscription to breakeven. And worse, the record companies are reluctant to support freemium models out of fear that they canibalize file based revenues.

I've long said that music listening is going to move into the cloud and that the dominant model will be streaming via free ad supported Internet Radio and paid subscription services. If that is to come to pass, the record companies will need to take some risks to grow this market. Converting user behavior takes time and requires free trials, subsidized offers, and a concerted marketing effort by the entire industry.

I'd advise the record companies to partner with the innovators in the digital music sector, something that they have largely been unwilling to do as long as physical distribution pays the bills. But the end is near for CDs and iTunes isn't going to replace physical at the rate it is growing. So it is high time to invest to build the streaming market. And for the record companies, that investment means subsidies and attractive license terms so that innovators can profitably build the services of the future. You have to invest in new businesses to grow them. That's what I do all day long. And I'd love to see the music industry do the same.

The text of the letter is below. If you agree with these sentiments, please take a minute to speak out.

* * *

Dear Members of Congress:

On behalf of the thousands of local artists and arts organizations we represent, we want to express to you the unique importance of the noncommercial radio sector to the viability and success of American arts and culture and encourage you to strongly support the strengthening of this critical resource.

Our members make up the entire range of American artistic enterprises — music, theater, dance, visual arts, film, and more. While our disciplines, audiences, funding sources and aesthetics all vary, we are united in our reliance on local non-commercial radio to promote, discuss and critique our work. Non-commercial radio — from larger public radio stations to independent community radio to college and high-school outlets — provides an essential and irreplaceable element of local cultural infrastructure.

Non-commercial radio stations provide social and cultural value that their commercial counterparts do not. We value and appreciate commercial radio; in fact we wish there were more commercial stations committed to the traditional values of localism, competition and diversity. But we recognize that, ultimately, the overwhelming majority of today’s commercial radio stations exist to deliver specific demographic audiences to advertisers. When it makes business sense for these stations to discuss or promote a local symphony or band, theater performance or new gallery, they do it, and we appreciate it. But these are programming exceptions, not the rule.

By stark contrast, the discussion and promotion of local arts is central to the mission of noncommercial stations, from huge National Public Radio affiliates to tiny low-power FM outlets. Non-commercial radio stations promote their local cultural scenes, provide platforms for review and discussion, and are key supporters and sponsors of cultural events. These stations do this not because it delivers an audience to advertisers but because such programming is central to their missions. It is hard to overestimate the damage that would be done to local arts scenes if these stations were taken off the air.

For many years, arts leaders have called on policy makers to expand and protect this unique resource. It is therefore very troubling to read that some members of Congress believe it is a good idea to reduce or even eliminate funding for the Corporation for Public Broadcasting and National Public Radio. Such an action would have a devastating impact on thousands of local arts organizations and arts supporters that rely on these stations to learn about and discuss upcoming arts events in their communities. If anything, this entire infrastructure warrants increased federal investment, including additional licenses and funding.

We have encouraged some of our constituents to contact you directly to explain how these stations are so integral to the viability of the American cultural marketplace. In the interim, please feel free to contact us if you have any questions or concerns.

Sincerely,

Alternate ROOTS
American Federation of Musicians
Americans for the Arts
American Music Center
Association of Performing Arts Presenters
Chorus America
Dance/USA
Fractured Atlas
Future of Music Coalition
League of American Orchestras
National Alliance for Media Arts and Culture
National Alliance for Musical Theatre
National Association of Latino Arts and Culture
National Performance Network
OPERA America
Performing Arts Alliance
Theatre Communications Group

by Diane Ragsdale (originally posted February 7, 2011 on Jumper)

I’ve been following the responses to Rocco’s ‘decreasing supply‘ comment and his subsequent post on the NEA blog. Some believe that supply/demand is the wrong framework through which to look at the sector; some that there is no such thing as too much art and that we should increase patronage rather than ‘kill’ organizations; some agree with him but believe it was inappropriate for him to make the statement; and a few seem to agree with his points and believe that it was beneficial for him to make them. I’m in the last group.

Rocco has done the arts sector a service with his ‘decreasing supply’ comment as I think it has created an opening for a candid discussion about an elephant in the room: the U.S. lacks a mechanism for identifying and dealing with mission-failing arts organizations and (because competition for resources exists) the nonprofit arts sector might be healthier overall if some mission-failing organizations were to close. Following on my overstocked arts pond post of a few weeks ago, here are some further thoughts on the supply/demand issue.

Competition among arts organizations for earned and contributed income exists. Some markets and organizations experience more competition than others, but it is not uncommon for arts groups located in the same city to be competing to secure patronage and trustees from among the same (narrow) demographic of upper middle class well educated arts-goers and funds from one or two government agencies and a small number of private foundations and corporations.

Many arts people take the stance that we should “let 1,000 flowers bloom.” While one might theoretically argue that there is no such thing as ‘too much art in the world,’ the same cannot be said of arts organizations: to the degree that resources are not growing at the same rate as organizations (and they are not according to the most recent National Arts Index report), every new firm that enters the sector reduces the chances of every other to secure sufficient resources to operate.

If a commercial firm experiences losses year after year—unless it can successfully develop a new market for its product, or change its product to better serve existing markets, or restructure its business to reduce expenses, or find economies of scale through expansion or merger, or achieve revenues over expenses via other strategies—it will most likely shut down. Or it might be taken over by others who believe they can do a better job of running it. If an entire industry is in decline and there is insufficient demand for the current suppliers to cover their costs then one would expect to see firms exit the industry until equilibrium is achieved. There are exceptions—but generally speaking, this is what one would expect because commercial firms exist to make profits.

It’s more complicated for nonprofits because while they must have sufficient cash to operate, they exist (as Andrew Taylor has succinctly put it) to ‘maximize mission’ not profits.  Nonprofit organizations do not (in theory) exist to benefit themselves (i.e., to keep arts administrators gainfully employed); they have an educational and charitable mission and exist to benefit society (e.g., to support the development of artists and people’s relationship to the arts). One cannot assume that an organization that is balancing its budget is achieving its mission and providing cultural and social value to society; nor can one assume the opposite.

If there are nonprofit arts organizations that are not providing ‘sufficient’ value to society relative to the current investments in them by the government, private foundations, and other donors, and if they do not appear to be able or willing to adapt to fix this situation, then it is logical to assert that other more deserving nonprofit organizations (arts or otherwise) that are currently competing with them for resources would be better off if those ‘mission-failing’ organizations would close (or be re-organized).

However, even if we were able to identify ‘mission-failing’ organizations (sometimes it’s obvious, often it’s not), we do not have a clear method for dealing with the ‘dead weight’ in the sector. We don’t have a ministry of culture and large government subsidies. If we did, failing organizations could be de-funded and might adapt or close their doors as a result. The plurality of the U.S. nonprofit model is both a strength and a weakness. Government agencies, private foundations, corporations, and major donors give more than just their money: they give endorsements that serve as signals to board members, leaders of organizations, and other donors. Renewed support from the state arts council or one well known family foundation to a failing organization can be all that’s needed to encourage other donors to re-up and for the board and staff to persist on the wrong course for another year (despite good sense telling all of them to do otherwise).

Many organizations were started with the belief that they should exist as permanent institutions and have fought for their survival at all costs. Some of our dead weight is in historically leading ‘tall trees’ that have been preserved for far too long. Those that are the largest or that have already existed the longest are often assumed to be the most valuable. This is why many arts organizations get nervous when the cutting supply conversation happens; they assume (and with good reason) that funders and government agencies will sooner turn off the sprinklers that are misting the grass, the small bushes, and the saplings than shift the hose from one tall tree. (I’d like to see some funders prove them wrong on this.)

We lack a sound mechanism for communities to identify and deal with mission-failing organizations—those that refuse to adapt or close despite a preponderance of evidence that it would be better for society if they were to do so. There is no easy solution to this but there are opportunity costs to ignoring the problem: again, resources going to failing organizations are resources that cannot be utilized by those providing greater cultural and social value.

The reality is that organizations will close. Some already have, some are closing as I write this, and some will die in the coming months or years. And they will either be the right organizations to close or the wrong organizations to close. Why is it better to shut our eyes, wring our hands, and hope for the best?

Of course, dealing with  failing organizations is only part of the strategy. We still have the issue of declining participation rates. Many took offense at Rocco’s comment that ‘demand is not going to increase’; but according to a report put out by his own agency, arts participation rates have been trending downward, more or less, for more than two decades. I don’t perceive Rocco to be a pessimist as much as a realist.

Optimistically, I believe that there is ‘pent up demand’ (read: need) for the arts that is not being realized because of financial, geographic, cultural, educational, social, logistical, programmatic, and other barriers to participation. Pessimistically, I do not see many nonprofit arts organizations radically adapting their institutions to address these barriers. I hope I am proven wrong on this.

To be clear, I’m not suggesting that every organization needs to serve its entire community (it would be unwise for all but the largest flagship institutions to even try to do so); but if a given community has 100 arts organizations, neither should 80 of them be serving the same small segment of society. Perhaps arts organizations should spend less time stewing about the ‘decreasing supply’ comment made by Rocco Landesman and more time pondering why participation rates have been declining and why the arts and culture sector is securing a declining portion of philanthropic dollars. This may be the other elephant in the room that merits some earnest discussion. And (please) this is not a call for greater investments in marketing and fundraising; it is a call for more relevant institutions.

It turns out that a similar dynamic appears to be at work in philanthropy. But while the crowding out theory in macroeconomics is controversial and the magnitude may not be large, a new report suggests that government grants to nonprofits end up crowding out a stunningly large amount of private philanthropy.

In a paper by James Andreoni and Abigail Payne of the National Bureau of Economic Research (hat tip: John MacIntosh of SeaChange Capital Partners), the authors find that for every $1,000 of government grants given to a nonprofit, private donations fall by $757. This means that while the government is trying to supply the nonprofit with $1,000 in additional financial resources, in practice the nonprofit only receives an additional $243 due to the drop in private donations.

But fascinatingly, it appears that the drop in private donations is mostly self-inflicted. For every $1,000 in government grants, nonprofits reduce fundraising expenditures by $141, causing private donations to fall. Netting together the reduced fundraising expenses and the additional revenue, the nonprofit ends up about $385 better off financially for every $1,000 in government grants.

There are a lot of interesting ways to think about the implications of this data. The authors of the report reflect to some extent on the lack of a revenue maximizing approach to fundraising – bringing to mind some of Dan Pallotta’s critiques – and seem to suggest that nonprofits should just choose to not slow fundraising when they receive a grant.

But the report reminds me of a story my friend George Overholser tells about the ramifications of the nonprofit sector booking all grants as revenue without any accounting for equity (growth capital). George used to be a venture capitalist and work with a venture philanthropy organization. He relates a story about how in the morning he presided over a meeting where the venture philanthropy group made a large grant to a nonprofit. Everyone was very excited and it was high fives all around with the nonprofit executives leading the cheers. The excited executive director happily pointed out that the grant met their entire fundraising budget for the year and so now they could focus on their programs.

That afternoon, George presided over a meeting where the venture capital group made a large investment in a for-profit. Again it was high fives and excitement, except this time only the venture capitalists were cheering. Looking over at the for-profit executive team, George noticed they all seemed nervous. When he asked what was wrong, the CEO said, “well, now that we have the growth capital, the pressure is on to generate revenue!”

To the nonprofit executive director, it didn’t matter if the venture philanthropy donors called their grant an “investment”. The only accounting treatment for money coming into a nonprofit is revenue. But for the for-profit, the venture capital money really was an investment. It would be booked as equity, not as revenue, and from here on out their success in generating revenue would be measured against the amount of equity they had deployed to build their business.

I’ve written before about the importance of philanthropic equity, a concept that George pioneered, in the past. But I’ve never really thought about the way that the lack of appropriate nonprofit accounting actually creates a vicious crowding out effect.

I’ve always thought that the catchphrase “accounting is destiny!” that Clara Miller and George would throw around when they ran the Nonprofit Finance Fund was a little… nerdy. But it sure seems to me that our simplistic nonprofit accounting standards, paired with our moralistic views around spending money on fundraising, is a major culprit of our undercapitalized nonprofit sector.

If accounting is destiny, the nonprofit sector will not see the emergence of a significant number of high growth organizations until growth capital is officially recognized in nonprofit accounting.

Salman Khan has taken a simple idea, YouTube videos that explain math, and transformed it into the future of education.

I’m just going to come out and say it: the Khan Academy is the best thing that has happened to education since Socrates. The brainchild of Salman Khan, the Khan Academy became famous by teaching simple math lessons for free through over 2000 YouTube videos. Now, after millions in donations and an expansion of the company, the academy is so much more. The website for the Khan Academy already had exercises you could use to test your understanding of the videos you just watched, but in the past few weeks the website has exploded with wonderful new features. You can create a profile for the site simply by logging in through Google or Facebook. You can track your progress with some wonderful metrics. Teachers (or ‘coaches’) can monitor student progress in groups. Students can earn badges to keep them interested. The list goes on and on and it’s all free. Free, I tell you! In true Khan Academy fashion, Sal explains these new features in the video below. As they continue to expand beyond math, and increase the sophistication of their platform, I am left with little doubt that the Khan Academy represents the future of education. And it’s already here.

Sal Khan does a very thorough job of explaining the ways in which the Khan Academy website takes its 2000 videos and expands them into a complete set of lessons, test exercises, and evaluations. If I could just highlight a few moments, however, I would point to the incredibly detailed blow by blow analysis that KA keeps of a student’s progress. Teachers can see the results of each and every problem the student attempted (6:20). Everything these guys are doing is amazing:

The impact that the Khan Academy could have on the classroom is enormous. As Sal discusses in the video (8:10) they are already performing trials to see how teachers can use the KA platform to improve the way they track and help their students. With the Khan Academy, teachers would “intervene only when a student is stuck.” In other words, the KA is supplementing the education paradigm in such a way that teachers are only needed as corrective influences. They’ll be tutors more than lecturers.

Imagine that shift occurring across the board, not just in math. The Khan Academy already has great videos on history, the sciences, finances, even venture capital! They are still expanding their exercises, and we should eventually see them outside of math as well. If there’s an objective way to present or evaluate a concept, chances are that Khan Academy could include it. All the lessons of traditional school, maybe even those that involve writing, could be there one day.

Yet such an expanded role of the Khan Academy would be so much more than just a movement of school to the internet. It would also allow for a profound transformation. Students can pause videos, rewind, replay, and research hard to understand concepts with the Khan Academy in ways they could never do with a human lecture. The KA software can generate nearly infinite number of exercises to test a student’s skills. It can track their every success or failure in ways that human teachers never could hope with 30+ students in their classrooms.

As I mentioned before in previous discussions on digital education, the biggest difference is that this sort of online platform puts the pace and path of learning firmly in the hands of the student. Work at your own level, learn concepts in the order that makes the most sense to you. Learn when you want to learn, how you want to learn.

And do it all for free.

Free! How frakkin’ beautiful is that? Students all over the world, young and old, can learn anything for the cost of internet access. It’s a beautiful time, people.

The Khan Academy's new metrics are available once you create a profile. Tracking students is easy, and students are encouraged to learn more by earning badges.

And we’re only getting started. You can tell from all this expansion that the Khan Academy is making good use of the $2 million that Google donated to the site, and the untold contributions from the Gates Foundation. Their lead designer, Jason Rosoff, is doing great work with the interface and the presentation of the analytics. Ditto for developer Ben Kamens. Judging from comments made by Khan, Rosoff, and Kamens, the Academy is only going to get bigger, better, and more refined from here on out.

Let’s not forget that the Khan Academy isn’t alone in this digital education revolution, either. We’ve seen other another math site, Mathletics, that has many of the same features as the KA software but that adds in global competition to the formula. Maybe KA will adapt that as well? Hopefully so. There are dozens of other online learning sites (many require a subscription fee, but not all) and the genre is getting stronger and more diverse everyday. There are real chances here that the Khan Academy, and others who follow their example, will push education into an era that is more flexible, reactive to students’ needs, and open to everyone.

That’s not to say that everyone is taking advantage of the opportunity. Although the Khan Academy has million of views, and thousands of users of its software, it and its peers have a long way to go before reaching a statistically significant percentage of the global student population. But, you know, they are gaining ground fast. I love going to Chartbeat and watching the KA statistics in real time. The great thing about this academy and its platform is that it can spread almost as fast as the internet itself.

There are no guarantees, of course. As with any new venture, digital education has its hurdles to clear. Security is paramount with any service used by young children. The KA, Mathletics, and other sites already do a good job with insulating their users, but undoubtedly they will be tested as their populations expand. Funding for the Khan Academy is excellent at the moment, but growing into the sort of universal online education system that they could become will require more than a few million dollars. There are huge areas of education, especially writing based skills, that will prove very difficult to automate. Not impossible, considering the progress we’ve already seen with AI writing, but a major challenge to be sure. This is all assuming, clearly, that the Khan Academy will want to expand in such a way.

If they don’t, though, someone else probably will. I think the Khan Academy’s example will prove powerful enough to attract other entrepreneurs and philanthropists to the cause of free global digital education. With enough visionaries, it could happen. If/when it does, the world will never be the same. In fact, I’m almost certain it will be considerably better.

My secret hope is that by the time I have children, and they are ready for school, they will be among the first generation raised in the new paradigm of digital education.

Godspeed Khan Academy. You have a few years, but keep up the hustle.

[image credits: Khan Academy via Facebook, ShiporDie]
[video credits: Khan Academy]
[sources:Khan Academy]

Read more of this story at Slashdot.

That is not to say entrepreneurs don't have goals, only that those goals are broad and—like luggage—may shift during flight. Rather than meticulously segment customers according to potential return, they itch to get to market as quickly and cheaply as possible, a principle Sarasvathy calls affordable loss. Repeatedly, the entrepreneurs in her study expressed impatience with anything that smacked of extensive planning, particularly traditional market research. (Inc.'s own research backs this up. One survey of Inc. 500 CEOs found that 60 percent had not written business plans before launching their companies. Just 12 percent had done market research.)

...Sarasvathy explains that entrepreneurs' aversion to market research is symptomatic of a larger lesson they have learned: They do not believe in prediction of any kind. "If you give them data that has to do with the future, they just dismiss it," she says. "They don't believe the future is predictable...or they don't want to be in a space that is very predictable."

The article is interesting throughout and hat tip goes to The Browser.

Newspapers and other traditional media outlets get a lot of flak for not being more forward-thinking when it comes to what they do on the web or on mobile devices. And it’s true that many are stuck in the past — happy to continue plastering their websites with content shoveled from their print or offline operations. But even those who would like to be more creative often don’t have the resources to do so, since they usually have few (if any) staff with the programming and technology chops. Now the Knight Foundation and the Mozilla Foundation have joined forces to try and give media outlets some help in that area, by creating a fellowship program that will “embed” data and web-oriented journalists and developers in newsrooms as a way of sparking some creativity.

The program, known as the Knight-Mozilla News Technology Partnership, is starting off with an “innovation challenge,” which is aimed at bringing in creative technology developers and journalists with interesting ideas for helping media online. The challenge winners will then get the chance to take part in a prototype-building event, and following that, 15 news-technology Fellows will be embedded in a number of different newsrooms “to help solve digital challenges,” the two foundations said. Mozilla will be directing the program with $2.5 million in funding from the Knight Foundation, and the first news organizations to get the embedded technologists are the Boston Globe, the BBC, The Guardian and Germany’s Zeit Online.

The Knight Foundation is well known for its journalism efforts — created by the family trust of the Knight family, which founded what became the Knight-Ridder chain of newspapers, it provides scholarships and grants related to media and journalism, and has been involved in funding some interesting startups, including EveryBlock. Founded by programmer and Washington Post staffer Adrian Holovaty as a way of aggregating data about a neighborhood from a variety of sources such as government databases, EveryBlock was eventually bought by MSNBC in 2009, although the original code for the service remains open source (as required by the terms of the Knight Foundation grants).

Mozilla, however, is not normally associated with journalism or media online. According to a statement from executive director Mark Surman, the foundation was interested in helping with the Knight project because “news and the web are intertwined” and “both are critical to keeping our economies and our communities strong.” The project is part of the foundation’s Mozilla Drumbeat initiative, which is aimed at fostering support for the open web.

Whatever the rationale for the project, the reality is that many newspapers and other media need all the help they can get. While the New York Times and a few other outlets are well known for the innovative data-focused and web-related experiments they create — such as The Guardian’s blockbuster “crowdsourcing” project, which saw 20,000 people pore over thousands of documents related to MPs expenses in 2009 — others are hard pressed to do much more than post their stories (many of which don’t even have hyperlinks). For every Cincinnati Enquirer, which created its own Foursquare-style app called Porkappolis so that readers could check-in at local hotspots and get news and reviews from the paper, there are dozens of news outlets that barely know the web exists.

One potential flaw in the current announcement, as noted by Tom Foremski of Silicon Valley Watcher, is that the news organizations the Knight and Mozilla project are starting with are fairly large entities with plenty of resources, who likely don’t need as much help as some other outlets in taking advantage of the web. But the two foundations say that they are open to helping as many newspapers and organizations as they can with the project, and are taking applications from anyone who is interested.

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