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Rebuilding Hollywood in Silicon Valley’s image

Last week I posted a rather pointed polemic titled “Suicide by strike” in which I argued that the big entertainment companies were acting suicidally in picking a fight with the writers at precisely the wrong time.

In this post, I more dispassionately outline my theory of why that’s the case, and what I think may happen next.

The writers’ strike, and the studios’ response to the strike, may radically accelerate a structural shift in the media industry — a shift of power from studios and conglomerates towards creators and talent.

First, some context. In Hollywood, the talent — actors, directors, writers — is unionized, and those unions engage in old-fashioned collective bargaining with the studios, also known as “the Man”. That collective bargaining establishes the economic framework by which most of the talent gets paid.

Last week, the writers’ union — technically unions, but I’ll use the singular form for simplicity — went on strike for the first time since 1988 after an acrimonious breakdown in negotiations with the studios over a new deal.

Significantly, the actors’ and directors’ unions are due to renegotiate their deals with the studios soon as well; some people in Hollywood believe that the studios are being deliberately hostile to the writers in order to send a signal to the actors and directors to not expect much.

The writers are on strike primarily over the terms by which they get paid “residuals”, or ongoing payments, for various forms of distribution of television shows and movies. In a simplified nutshell:

     

  • Due to amazing historical circumstances around the birth of the VCR in the early 1980’s, television and movie writers are currently paid approximately 4 cents for each DVD sold — bearing in mind that the average sale price for a DVD is over $10, and the cost of manufacturing a DVD is less than 50 cents. The writers want that residual rate doubled to 8 cents per DVD, and the studios are refusing.
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  • Currently, writers are not paid for Internet downloads via online video stores like iTunes and Amazon Unbox. The studios want to extend the current 4-cent DVD residual formula to Internet downloads; the writers are holding out for more.
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  • The studios are refusing to pay residuals on Internet streaming of television shows and movies — even when that streaming comes from their very own web sites and contains revenue-bearing commercials. The studios call all such streaming “promotional”. The writers are howling with outrage that if the studios themselves are streaming complete TV shows containing commercials, that’s clearly not just “promotional”. The writers have a good point.
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Taken on their own, these issues are most likely negotiable and solvable. However, trust between the two sides seems nearly nonexistent; the writers feel like they have been repeatedly burned by the studios over the last few decades; and the studios may well have a vested interest in beating up the writers in order to motivate the actors and directors to not push too hard in their upcoming negotiations.

And so, the writers are on strike.

How long will the strike last?

Nobody knows. The strike of ’88 lasted for up to five months. Some people in Hollywood think this strike could last until June 2008 or beyond. Or perhaps it gets settled tomorrow.

What happens if the strike continues for months?

Movie production will apparently be largely unaffected for quite a while; the movie studios have stockpiled scripts and are continuing to shoot new films.

Television, however, is a very different picture.

Scripted television production is already all but shut down. Most late-night talk shows are shut down. Most remarkably, many comedy and drama series are either already shut down or will be within the next several weeks. Why? Two reasons: first, television shows often don’t have scripts in hand for more than a few weeks of filming at any given time. Yes, Virginia, the writers of “24” really don’t know how it’s going to end when they start filming a new season. Second, many television shows are run by so-called showrunners who serve as both writers and producers; many showrunners are now refusing to work altogether — and the studios are already threatening to sue them for refusing to honor their producing contracts, further fraying relations.

If the strike continues into next spring, you won’t see new episodes of most scripted TV shows past Christmas — you’ll see reruns, and reality TV. Some people on Hollywood think this could permanently kill many of the shows currently on network TV — i.e. they may never start back up. (MTV’s “A Shot At Love with Tila Tequila” will, however, be unaffected.)

If the strike continues too far into next spring, it will also disrupt the production of pilots, which will mean that there won’t be any new shows for the fall 2008 TV season, which means you might not see new TV programming other than reality shows until 2009. 2008 may be, quite literally, a dead year for TV.

OK, now let’s get into my theory of how this may play out…

What are the probable long-term consequences of an extended strike?

First, ongoing alienation of a new generation of TV viewers.

The music industry’s war on digital distribution over the last 10 years, starting with their assault on Napster and continuing to all the present-day RIAA fiascos, has permanently alienated an entire generation of consumers, who are now voting with their wallets and not buying music. They’re still going to concerts, buying artist merchandise, buying video games that contain lots of music, even voluntarily paying Radiohead directly for free album downloads — but mainstream recorded music revenue is dropping like an anvil in a Bugs Bunny cartoon, with virtually no hope of recovery.

The TV and movie industry has already been conducting their equivalent war on digital distribution; as a result, most of the new consumers — kids, college students, young professionals — view iTunes and Amazon Unbox downloads as “too little, too late” when it comes to giving them the ability to watch what they want, when they want, on whatever device they want.

I think the TV and movie industry is at a turning point where things could go either way — they could repeat the critical error of the music industry and permanently alienate their customer base; or they could get it together and create viable models for the future that make consumers happy and make money.

The situation already wasn’t looking too good, but the one even more effective way to alienate viewers than attacking their viewing options is to actually kill the programs they are watching.

Which is what an extended strike will do.

Second, driving consumers even faster to the new range of activities they can engage in.

We all know the list: the Internet, social networking, user-generated content, blogging, video games, mobile phones, you name it. All the activities that consumers have discovered and adopted since the last writers’ strike in 1988, that they just love, and that have already been siphoning away time, attention, and money from TV and movies even without a strike.

Obviously, the less scripted television and film content that’s being produced, the more alienated consumers will shift over to all the new activities — and the less likely they will ever go back.

Third, and most significantly: catalyzing faster development of new business models for entertainment media.

Here’s where things get really dramatic.

The Internet has already been forcing a rethink of the structure of the media industry, particularly for entertainment. The strike is kicking that rethink into high gear. Here’s why:

The classic Hollywood economic model is built around the existence of a few very large companies — studios — that dominate production, marketing, and distribution.This has been the economic model since the birth of the entertainment industry, for fundamental reasons.

     

  • Historically, marketing and distribution of entertainment properties has been extremely expensive. Running big nationwide ad campaigns and getting distribution into TV networks or movie theater chains is expensive. And production has also been very expensive. Only a small number of very large companies can afford to be in the business.
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  • Because of that, those few very large companies — studios — have been bottlenecks. If you are talent — writers, actors, directors — you have to deal with the studios because otherwise you can never bring anything to market.
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  • The studios have rationally exploited their bottleneck status to demand ownership of the creative product. Writers, actors, and directors don’t own their output; the studios do.
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  • As a consequence, talent gets paid like hired guns, not owners.
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  • As a consequence of that, talent bands together to form unions — actors’, directors’, and writers’ unions — and engage in adversarial collective bargaining to try to extract a share of the ongoing economics of their output. Hence the residual system that’s in dispute today: 4 cents per DVD.
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Let’s contrast all of that to the Silicon Valley model.

In Silicon Valley, there are many companies, large and small, that create, market, and distribute products — and more such companies all the time. In fact, there is a whole industry — the venture capital industry — devoted to creating as many new such companies as possible, as rapidly as possible.

     

  • In Silicon Valley, creation, marketing, and distribution of a compelling new product is not very expensive. And with the Internet, marketing and distribution costs drop nearly to zero. Most successful Internet companies, large and small, use free viral marketing techniques and never run ads. And the whole concept of distribution costs goes away when everything is digital — the next set of bits costs nothing to manufacture.
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  • Therefore, there are no bottlenecks. Many companies, large and small, can afford to be in business — can afford to develop new products and bring them to market, market them and distribute them. And nobody can really block you.
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  • In Silicon Valley, the creators of the product — the talent — are owners: owners of their product, and owners of their company. In fact, the entities that finance the companies — venture capitalists, private equity funds, the public stock market — want the creators to be owners: in a world where there can be many companies, the best creative talent will be drawn to the situations in which they will be owners, and will be compensated as owners.
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  • Because of that, in technology, creators get paid like owners.
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  • Therefore, there are no unions. There is no reason for the creators to unionize — they would be negotiating with themselves. The concept of residuals does not exist — they’d be paying themselves. And alignment of interests between creators and financiers is near-perfect.
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I believe the entertainment industry is in the early stages of being rebuilt in the image of Silicon Valley.

What would a new entertainment media company, producing original content, look like in the age of the Internet?

     

  • Starting from the end of the process: you know distribution is now nearly free. Put it up on the Internet and let people stream or download it.
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  • Marketing is also free, due to virality. Let people email your content to their friends; let people embed your content in their blogs and on their social networking pages; let your content be searchable via Google; let your content be easily surfaced using social crawlers like Digg. All free.
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  • Production is very cheap. Handheld high-definition video cameras cost nearly nothing. You can do almost every aspect of production and post-production on any Mac. Hell, you can even score an entire movie for free — there are hundreds of thousands of bands on the Internet who would love to have their music embedded in a new entertainment property as promotion for the bands’ concerts and merchandise.
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  • The creators of the content are the owners of the company. The writers, actors, directors — they are the owners. They have a direct, equity-based economic stake in the company’s success. They get paid like owners, and they act like owners.
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  • Financing is straightforward: venture capital, just like a high-tech startup. We live in a world in which financing a high-quality startup is simply not difficult — not for a high-quality technology startup, and increasingly not for a high-quality media startup. Modern financiers love being co-owners of a new company with the talent that will make the company successful — and that’s how it will happen here.
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This is not a difficult thing to envision. And in fact, it’s already happening. Will Ferrell’s Funny Or Die, in which I am a minority investor, is one early existence proof of this model. And there are a ton of other such new companies either already underway, or currently being incubated, or currently being negotiated.

And in fact, there are a lot of historical precedents even in the media industry for the model of talent as owners, going all the way back to the original United Artists in 1919. Some of those precedents worked great — George Lucas, for example. Some flamed out. Of course, they were all up against the bottlenecks.

But here we are, living in a world in which the bottlenecks have suddenly become irrelevant.

I don’t think there’s any question that this is the logical model to pursue in the age of the Internet — the age of free distribution and marketing.

Suppose the writers’ strike continues for months to come — and even beyond that, suppose the actors or the directors also go on strike. In such a scenario, it is hard to see how many companies based on this new model won’t be created extremely quickly — after all, if you really can’t work for the Man, why not start your own company, if you can?

And if you are a primary creator in Hollywood, the model for starting your own company is suddenly becoming very clear.

Which brings me full circle to why I’m even writing about this topic in the first place.

As consumers — even alienated consumers — it would be sad to see the TV shows and movies we love not get made during a protracted strike. And certainly many people throughout the extended ecosystem of the entertainment industry — most of them not rich and not famous — will suffer financially.

However, in the event of a long-term strike, out of the ashes of the traditional model would — I believe — come the birth of certainly dozens, maybe hundreds, and possibly even thousands of new media companies, rising phoenix-like into the global entertainment market, financed by venture capital, creating amazing new properties, employing large numbers of people, and rewarding their creators as owners.

As an entertainment consumer, I’m ready for it, and I suspect you are too.

Hollywood, rebuilt in Silicon Valley’s image.

Building a state-of-the-art Emergency Room for Silicon Valley

Today I’m extremely excited to tell you about a philanthropic gift that my wife Laura and I are making:

We are giving $27.5 million to Stanford Hospital, for two purposes:

First, to significantly enhance and upgrade Stanford Hospital’s current Emergency Department.

And second, to fund the creation of a new state-of-the-art emergency facility in the new hospital that Stanford will build — assuming it is approved by the city of Palo Alto — over the next several years.

As you can imagine, Laura and I are unbelievably excited by the opportunity to make this gift. In fact, we are so excited that I am going to tell you all about it at some length in this blog post!

For us, this gift is a great fit between a clear immediate need, and the prospect of helping to change the way the system that serves the need operates.

And we think the impact on Silicon Valley can be tremendous.

Why?

Stanford Hospital’s Emergency Department is the core emergency room for Silicon Valley. For example, the Stanford ER is the only Level 1 trauma center between San Francisco and San Jose. Most people who live in Silicon Valley have either been to the Stanford emergency room or have a close friend or family member who has — it’s the great equalizer; you go in at 2AM and you need it to be there, and you need the care to be outstanding. In short, the Stanford Emergency Department is an absolutely essential community resource — and while it has historically been underfunded, we hope that this gift will fix that.

But it’s not just an emergency room. In the last couple of decades, emergency services has also become a research field — and the doctors in the Emergency Department at Stanford are some of the leading researchers and teachers in that field. As you’d expect from a hospital tied to a major research university, new emergency medicine techniques and technologies can be invented and then directly translated into medical practice at Stanford, and then shared with the rest of the world. And so we also hope our gift will help boost the research and teaching efforts in Stanford’s Emergency Department and help improve emergency medicine throughout the US and worldwide.

Specifically, our gift will help the current Stanford Emergency Department do the following:

     

  • Renovate the current ER and upgrade a broad range of critical technologies, including digital X-rays, ultrasound machines, cardiac monitors, and communication and tracking systems.
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  • Staff for improved efficiency and customer service. We are adding patient advocates and a nurse call-back/followup program, plus more residency positions to increase the number of doctors in the ER and to train more world-class emergency medicine experts who can go on to great careers and lead similar programs throughout the world.
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  • Expand research programs in areas such as wound care, heart attack and stroke, and bioterrorism and disaster preparedness. We are among other things endowing a Medical Director position for Disaster Preparedness.
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Beyond that, Stanford has announced its intention to build a brand new hospital over the next several years, potentially opening in 2015, assuming approval by the city of Palo Alto. Our gift will fund the creation of a new Emergency Department facility and ER within the new hospital.

We think this is a very big deal for several reasons:

     

  • The current emergency room was built in 1974 and designed to serve approximately 24,000 patients per year. It is currently serving more than twice that number. It can’t be moved due to the need to be integrated into the rest of the hospital. The new emergency room, however, will be more than twice as large, and able to handle many more patients without the current overcrowding and extended wait times.
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  • The new Emergency Department will be designed to be state of the art from the ground up, and will incorporate all of the latest cutting-edge technologies. This is a huge opportunity for Silicon Valley — one of the most technologically advanced places on the planet — to have an emergency facility that is similarly technologically advanced, and we plan to seize that opportunity.
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  • The new Emergency Department in the new hospital will be an even more effective focal point of innovation, research, and teaching, looking out to 2015 and beyond. There’s no doubt that emergency medicine 20 years from now will be much different than emergency medicine today, and Stanford can lead the way.
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Finally, it is a perhaps sad fact of our current medical system that in any American community, the emergency room is also the backstop for people who either don’t have health insurance or cannot gain prompt access into a convoluted primary care system. The Stanford ER serves that purpose in Silicon Valley, and we think as long as our health care system works the way it does, that is a purpose that is clearly worth supporting.

Our motivations for the gift are straightforward: Silicon Valley has been unbelievably good to both of us. There is no way my career would even exist without Silicon Valley, and Laura was born and raised here, has lived here her whole life, and has built her career here. This is the most direct way we can think of to help make the community of Silicon Valley a better place. And, due to the research and teaching element of what we are doing, we think that there will also be leverage way beyond our community.

Let me close by thanking some people:

     

  • Thanks to the amazing team of doctors, nurses, and staff in the Stanford Emergency Department, led by Bob Norris and Paul Auerbach. Obviously everything I have described is only possible due to your amazing work and dedication. I look forward to working with you in the years to come to ensure that your environment is fully worthy of your efforts.
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  • Thanks to the outstanding management team of the hospital, as well as the board (on which I am also honored to serve) — particularly Martha Marsh, Phil Pizzo, Denise O’Leary, and Mariann Byerwalter. You are leading a renaissance in health care in Silicon Valley, and the results of your work are going to be wonderful to see over the next decade and beyond.
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  • And — if you don’t mind some mushiness at the end — let me thank my brilliant and lovely wife, Laura. I’m lucky enough to be married to one of the foremost philanthropy scholars and practitioners in the country — Laura teaches philanthropy at Stanford and Stanford business school, is the founder of her own highly successful venture philanthropy organization (SV2, the Silicon Valley Social Venture Fund), and is writing an amazing book called Transformational Philanthropy (and she lets me read the drafts!). Without her love, support, inspiration, and teaching, this gift would not be happening — and it is ours together. My fondest hope is that this is the first of many such gifts we will be able to make in the future.

Suicide by strike

From the New York Times:

A strike by Hollywood writers began in New York just after midnight Monday…

[M]ore than 12,000 screenwriters represented by the Writer Guild of America West and the Writers Guild of America East in the early morning hours in New York began the first industry-wide strike since writers walked out in 1988. That strike lasted five months…

Throughout the weekend, guild leaders held orientation meetings for strike captains, who would supervise picketing teams, and otherwise prepared for an effort to shut down as much movie and television production as possible…

The sides have been at odds over, among other things, writers’ demands for a large increase in pay for movies and television shows released on DVD, and for a bigger share of the revenue from such work delivered over the Internet.

So imagine you’re a major media mogul, a captain of the film and television business, a shaper of global culture, one of the anointed few who can green-light major entertainment projects.

You’re faced with a massive, once-in-a-lifetime shift in mainstream consumer behavior from traditional mass media, including film and television, to new activities that you do not control: the Internet, social networking, user-generated content, mobile services, video games. It’s been snowballing since the mid 90’s, for like 12 years — 12 years of denial and obfuscation — but it’s really rolling fast now.

Many of your current lifeblood properties are not growing anymore or are in outright decline, and you don’t own enough of the vital new properties to offset that, nor are you certain how you would make money with the new properties even if you did own them. And the consumers you rely upon for revenue are so frustrated with your company’s inability to supply them with what they want, when they want it, that digital piracy of your content has become mainstream and socially acceptable behavior practically overnight, and all of your efforts to stop it seem to only make it worse.

And your company’s culture is not prepared to deal with the shift. Your company was founded 50 or 80 or 100 or 150 years ago by different people in a different time, and the overwhelming majority of your people now — smart and well-meaning managers and bureaucrats, but still managers and bureaucrats — have to be retrained and reoriented toward entrepreneurial thinking in a viciously dynamic and startlingly fast-changing world not of your, or their, creation.

Is this really the right time to pick a fight with the writers over royalties from DVD and Internet sales, leading to an industry-wide shutdown and massive economic pain for all sides in the world of traditional scripted film and television content?

Really?

If you’re a mogul, the key question has to be, what would the founders of my industry have done in this situation? Really, what would they have done? Thomas Edison, Darryl Zanuck, Jack Warner, Irving Thalberg, Adolph Zukor, David Selznick, Louis Mayer, David Sarnoff, Bill Paley, Walt Disney… presented with such a period of profound change and global market expansion, would they have declared war on the writers of all people or blamed Apple of all companies for their problems, or would they be charging ahead and developing new businesses, new forms of entertainment, new markets, and new sources of revenue?

In a nutshell, would they have crawled into a hole of protecting the status quo or would they be forging a new, exciting, optimistic future through force of will and creativity?

Why aren’t you doing what they would be doing?

If you, like me, are just a normal and normally happy consumer of TV shows and movies — at least when you’re not equally happily playing video games, surfing the Internet, networking socially, blogging, or kicking it with your IPod — then one day your grandchildren are likely to ask you, “Hey, old man, I learned in school today that there used to be these companies called ‘studios’, and they would actually spend tens or hundreds of millions of dollars making scripted entertainment, and you would actually sit still, in a chair, and watch it — whatever happened to that?”

And you’ll get to say, “Well, it’s complicated, but let me tell you a little story about the writers’ strike of 2007…”

Ning is now live with Open Social

[For background on Open Social, please see these three prior posts: Open Social overviewscreenshots and screencast; and a report from the Open Social launch.]

Ning has gone live with full Open Social beta support as of this afternoon.

First, a warning and disclaimer: as I’ve previously mentioned, the Open Social API is not yet stabilized and will still change. The API is officially on version 0.5 and I expect it to go through at least a few more revs before it goes to 1.0, although that should presumably happen pretty quickly. So everything I’m describing here, and everything we’re doing with Open Social live on Ning, should be considered very beta/sandbox-y — and not just “oh yeah, all this Web 2.0 stuff is beta” kind of beta, but real good-old-fashioned will-probably-break kind of beta!

How is Open Social live on Ning?

We have added Open Social functionality to all social networks on Ning, except for those that have modified their underlying source code. Which is to say, if you have gone to Ning and created a social network in the past, or if you go to Ning right now and create a new social network, you now have the option of turning on Open Social in your network. So, most of the 115,000+ networks on Ning today have the option of turning on Open Social.

Turning on Open Social is a decision that each Network Creator gets to make. By default it’s turned off — so if you just go to Ning and look at a network and the Network Creator hasn’t turned on Open Social, you won’t see anything different. But if a Network Creator goes into the management UI and turns on Open Social, then bingo, it’ll be on.

This gives each Network Creator the option of either experimenting with Open Social today, or not. In time, as the API stabilizes, we will turn it on across the board, and also provide Network Creators with even more control over how it applies to their individual networks.

So what happens when a Network Creator chooses to turn on Open Social for her social network on Ning?

First, the Network Creator — the person who created and/or owns the network — can add Open Social gadgets/apps to the network’s home page. All users will see and interact with those gadgets/apps.

Second, each member of the network can go to her personal profile page within the network and add Open Social gadgets/apps to her profile page. All other users will see and interact with those Open Social gadgets/apps when they visit that profile page.

How should this be used today?

Not to sound like a broken record, but the main way this should be used today is to experiment with the Open Social API and with Open Social gadgets/apps. In fact, we that recommend anyone who is running a network today and wants to play with Open Social should create a new demo network for that purpose.

That said, if you want to turn on Open Social on your production network, go crazy — but expect the underlying Open Social API to continue to change and for gadgets/apps that run today to possibly not run in the future!

What about a directory of Open Social gadgets that I can play with?

Just click here for a gallery of Open Social gadgets/apps that you can start playing with.

If you have an Open Social gadget/app that you’d like us to add to our gallery, please read this.

How about a screencast?

Sure!

 

How about screenshots?

Here’s a personal profile page with an embedded Open Social gadget/app (in this case, iLike):

Here’s how a Network Creator adds Open Social capability to her network:

Here’s the gallery of Open Social gadgets/apps:

Here’s what happens, for the moment, when a user says she wants to add a gadget/app — this will get better:

Documentation?

Early developer documentation for creating Open Social gadgets and using them on Ning is here.

Also of course see the main Google documentation for the Open Social API.

More information?

See here for the official Ning blog post announcing this support.

How do I send feedback?

We’d love to hear what you think and learn about how you want to use Open Social on Ning and elsewhere — just go here.

Also, if you do something cool, send me email at pmarcablog (at) gmail (dot) com!

Have fun!

Report from the front: Tonight’s launch of Open Social

Tonight, a small group of entrepreneurs, technologists, executives, bloggers, press, and professional campfire tenders gathered in Mountain View below the official Google tyrannosaurus rex and formally launched Open Social into the world.

As I write this, Google is about half an hour away from officially putting the Open Social spec and code on the Internet for general consumption. At that same time, the video from the launch event should be going live. Keep hitting this currently nonworking link until you get satisfaction! [Correction — the official site is up at that location! Also, here’s the video of the launch event with all the demos.]

 

So how’d it go?

Great! In addition to speakers from Google, the launch event included demos from a wide swath of the “coalition of the willing” assembled in support of Open Social — including the newest member and Open Social supporter, MySpace.

All of the demos were — to my knowledge — live running code. And they worked.

The T rex not only did not eat us, but did not fall over on us.

They had smores.

What’s not to like?

So what else happened today?

Well, I may have mentioned that MySpace joined the OpenSocial coalition! Along with Six Apart, Bebo, and most likely a few other new partners whose names I’m forgetting in my post-smore sugar haze.

The total aggregate user base of the Open Social partners is now in excess of 200 million people.

What a world we live in. Developers of Open Social apps will have distribution to 200 million users. I’m sorry, I know I’m supposed to be cynical about this stuff, but that’s astonishing.

What’s the smartest thing anyone has said today about Open Social?

That would have to be Anil Dash:

In 1995, Microsoft believed that its proprietary development tool, codenamed “Blackbird”, would be the dominant platform for creating rich online experiences. While it would eventually evolve into a tool that created reasonably standard HTML, Blackbird’s ability to make attractive and pleasing aesthetic experiences for MSN was considered a no-brainer to replace regular HTML for anything that needed to seem polished. It wasn’t an unreasonable assumption at a time when most browsers were showing ugly text on a plain grey background with almost no advanced layout or design.

In 1999, AOL believed that its proprietary development tool, called RAINMAN (Remote Automated INformation MANager) would be the dominant platform for creating rich online experiences. While it would eventually be replaced by tools that created reasonably standard HTML, Rainman’s ability to make attractive and pleasing aesthetic experiences that integrated seamlessly into the AOL client was an effective replacement for HTML for tens of millions of users who wanted a polished and social first experience on the Net in the late 90s as they first got online. This wasn’t an unreasonable constraint to impose on the experience at a time when having a rich interactive experience meant downloading complicated browser plugins for video, or configuring temperamental client software just to read email.

AOL was always secretive about Rainman, and remains so to this day, even though Rainman has been largely retired in favor of standard HTML, which has let AOL open up much of its proprietary content to the public web. But Microsoft really wanted to get the word out about Blackbird. There were even conferences for developers, to promote Blackbird for their applications…

It’s not true to say that Facebook is the new AOL, and it’s oversimplification to say that Facebook’s API is the new Blackbird, or the new Rainman. But Facebook is part of the web. Think of the web, of the Internet itself, as water. Proprietary platforms based on the web are ice cubes. They can, for a time, suspend themselves above the web at large. But over time, they only ever melt into the water. And maybe they make it better when they do.

As Anil said, comparing Facebook to AOL is not an accurate analogy — for one thing, Facebook was a web site from day one and AOL was not; for another thing, Facebook has opened up a platform, even if it is proprietary, and AOL never opened up any kind of platform.

However, there is a larger point that I’d like to make based on this history. And it is this:

Freedom wins, and openness wins. You can hold it back for some period of time, but in the long run, freedom always wins because freedom and openness let people all over the world be fully creative and innovative in every way they want. And the creativity and innovation that freedom and openness enable will always swamp anyone’s attempt to wall off a proprietary world with tight controls and sharp limitations.

In the mid-1990’s, people told me all the time, “AOL has all the users; why would you think this web thing is ever going to amount to anything?” And it was true — AOLdid have all the users. In the beginning, AOL had tens of millions of users when the Internet had low single digit millions at best. Everyone was scrambling to do deals with AOL to get access to that huge user base, and every media company we met with (there were no Internet companies yet) laughed at the idea of regular people ever using the web.

We saw how that turned out. It turned out that people — regular people, normal people — embraced the web at flank speed precisely because it gave them the ability to create, and to experience, millions of web sites that reflected their interests, desires, and identities. Now, as that happened, AOL also became hugely successful by being one of the easiest on-ramps to the Internet — but once broadband hit and consumers no longer needed a dialup ISP to get on the Internet, AOL went into a tailspin from which it has never recovered, swamped by the power of the decentralized, open, free web.

The world is filled with people who have great ideas — big and small — and the approach that lets the most people express their ideas tends to win.

I am not predicting the death of Facebook. I think the Facebook people are brilliant and are going to do very well over the next several years, have an excellent chance of building a huge and enduring franchise, and have an enormous amount to gain by all of this, including Open Social. But the idea that you hear from time to time that “all the users are on Facebook” and “the game is over; the Facebook platform has won” is silly, as you can see every time you use a web site that doesn’t end in “aol.com”.

And remember! One of the great things about Open Social is that it’s not an either/or choice for app developers. It’s quite easy to develop for both Open Social and Facebook, and in practice that’s what I’ll bet most serious app developers will be doing for the next few years, at least.

What’s the dumbest thing anyone has said today about Open Social?

Obviously:

“I think [Open Social is] pie in the sky,” said Ray Valdes, an analyst at Gartner.

And to think that some people wonder how it is that Gartner still has any clients!

What’s next for Open Social?

All of the partners finalizing and releasing all of the initial OpenSocial container and application implementations, of course. I know frenzied work is happening at all companies involved right now. Everyone can just smell the opportunity, and people are going to drive to ship as quickly as possible.

There may even be some surprises coming on this front…

The other thing that needs to happen, of course, is formalization of the process by which Open Social gets maintained and evolved. The obvious thing is some kind of lightweight working group and standards process, perhaps similar to the IETF working group model. Keep your eyes peeled for progress on that front as well!

What happens after Open Social?

Why, the great social advertising network wars of 2008, of course. More on that soon!

 

Join the Ning team!

We at Ning are on a mission to build the ultimate platform for people to create their own social networks and social experiences on the Internet for anything — to unlock all of the great ideas of people all over the world for using this amazing medium in their lives.

At this point the underlying platform is built and we are scaling rapidly — now over 115,000 user-created networks, and approximately 10% weekly page view growth. We are well funded, we have one of the most amazing teams I have ever worked with, and we are actively participating in critical industry initiatives like Open Social. And we have a full load of really interesting new features and technical projects in the pipeline.

We are actively looking for great engineers and designers to join the team — both on the application side (DHTML, Javascript, Ajax, PHP, web services) and the platform side (Java, Oracle, clustering, scaling). Our Jobs page has full information on open positions. Please take a look and if you think you have what it takes, drop us a note at jobs (at) ning (dot) com.

Open Social: screencast and screenshots

In yesterday’s post, I described the new Open Social API, sponsored by Google and supported by a wide range of Internet companies including my company Ning.

In this post, I present a screencast and a series of screenshots that show Open Social in action.

First, the screencast:

 

Next, the screenshots:

As you are probably aware, Ning is a system that lets you create your own social network for anything — your family, your school, your church, your sports team, your business, your nonprofit, whatever you want.

To illustrate Open Social in action, our screenshots are based on three networks out of the 113,000+ networks currently running on Ning: Dub Pages, a network of car customization enthusiasts; Tu Diabetes, a network of people touched by diabetes; and Ask A Ninja, a network of fans of the popular online video series Ask A Ninja.

Because Open Social is not quite ready for production launch, the screenshots below show modified versions of these networks that we have used internally to develop and demonstrate Ning’s support of Open Social. Thanks to these network creators for letting us play with their networks like this!

These examples feature the use of the Open Social API to embed applications from two other Internet companies: iLike, an online music sharing service; and Flixster, an online social movie ranking and rating service — both of whom have announced support for Open Social. These examples are all based on the idea of embedding either iLike or Flixster applications within the three Ning social networks via Open Social.

To start, here’s the home page of the Dub Pages network with the embedded iLike application:

You can see in that screenshot that the iLike application is completely integrated into this network’s home page. The musical selections within the iLike application are chosen by the network creator/owner; everyone who comes to the network gets to see them and listen to them.

If you’re a member of the Dub Pages social network, you have your own personal profile page; here’s what that page looks like, including the iLike application embedded via Open Social:

Since that’s your page, you get to control the music selections within the iLike app; you can choose whatever music you want, and next time you come back to your profile page, that’s the music you’ll see — the Open Social API includes a storage API that lets apps store arbitrary information across sessions.

Here’s another screenshot of your personal profile page, this time showing the iLike app in action — here the user is displaying more information about the song “The way I are” by Timbaland; the information has opened up right inside the iLike app right there in the profile page:

Embedded Open Social apps can resize themselves whenever they want to incorporate whatever functionality the user triggers — so as an app creator, you get a lot of power to let users do things right inside their personal pages.

Shifting from iLike to Flixster as the embedded application, here’s the home page of the Tu Diabetes social network with the embedded Flixster app:

Same concept — the owner of the network gets to determine what movies show up within the Flixster app on the network home page.

Here’s the profile page for an individual user:

Just like a Facebook app, an Open Social app can allow the user to click on a link within the embedded version of the app and expand into a “canvas page” that lets the embedded app show much more information in the page, but still inside the social network. Here the user on Tu Diabetes has clicked on a link in her profile page; this is the resulting canvas page that the Flixster app gets to control:

And here the user has clicked on a link on that first canvas page, which generates a second canvas page:

Finally, to prove the point, let’s see that same Flixster app embedded in a different network — the Ask A Ninja network:

And a profile page within Ask A Ninja:

And a canvas page within Ask A Ninja:

You’ll notice in those Ask A Ninja examples that the Flixster app is not as visually integrated as in the other examples. In a real production system, the Flixster app will pick up the styles of the parent page. We left it the way you see it in these examples so you can clearly see the difference between the embedded app and the rest of the page in each example.

One more note: these examples are a little light on social functionality — they don’t do a lot yet with the user’s friends information, or the user’s activities feed, etc. The Open Social API supports a lot of those capabilities, and the app developers are now busy at work developing the full version of their Open Social apps that will do a lot more social stuff. I will post more screenshots over the next few weeks/months as those apps get more and more socially sophisticated.

And then one final note: these screenshots were not Photoshopped; this is all live running code!

Open Social: a new universe of social applications all over the web

My company, Ning, is participating in this week’s launch of a new open web APIcalled Open Social, which is being spearheaded by Google and joined by a wide range of partners including Google’s own Orkut, LinkedIn, Hi5, Friendster, Salesforce.com, Oracle, iLike, Flixster, RockYou, and Slide.

In a nutshell, Open Social is an open web API that can be supported by two kinds of developers:

     

  • “Containers” — social networking systems like Ning, Orkut, LinkedIn, Hi5, and Friendster, and…
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  • “Apps” — applications that want to be embedded within containers — for example, the kinds of applications built by iLike, Flixster, Rockyou, and Slide.
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This is the exact same concept as the Facebook platform, with two huge differences:

     

  • With the Facebook platform, only Facebook itself can be a “container” — “apps” can only run within Facebook itself. In contrast, with Open Social, anysocial network can be an Open Social container and allow Open Social apps to run within it.
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  • With the Facebook platform, app developers build to Facebook-proprietary languages and APIs such as FBML (Facebook Markup Language) and FQL (Facebook Query Language) — those languages and APIs don’t work anywhere other than Facebook — and then the apps can only run within Facebook. In contrast, with Open Social, app developers can build tostandard HTML and Javascript, and their apps can then run in any Open Social container.
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If you recall how I previously described the Facebook platform as “a dramatic leap forward for the Internet industry”, you’ll understand why I think Open Social is thenext big leap forward!

Open Social takes the Facebook platform concept and provides an open standard approach that can be used by the entire web. Open Social is an open way for everyone to do what Facebook has done…

…including Facebook itself, potentially — more on that below.

Technically, Open Social is implemented as what I call a “plug-in API”, or a “Level 2 platform”. In other words, it’s not a web services API — rather, it’s a way for external applications to “plug into” a host environment (or “container”). And then, in addition to literally showing up inside the pages of a container, the external app can make Javascript calls to retrieve all kinds of useful information from the container and perform all kinds of useful functions within the container, such as “give me a list of all of this user’s friends” or “inject this event into this user’s activity feed”.

Open Social basically standardizes the concept of a plug-in API in such a way that neither host social networking environments (containers) nor external applications will ever have to invent another plug-in API, or have to choose between multiple competing proprietary plug-in APIs.

Open Social’s API is based entirely on Javascript. If you know HTML and Javascript today, you will be able to immediately use Open Social to turn your web applications and web sites into Open Social apps. You can also use standard web development tools to build Open Social apps. This is obviously a much better way to operate than having to learn a proprietary marketup language or query language.

Finally, although Open Social provides standard API calls to do many of the things you’ll want to do as an Open Social app, nothing will prevent containers from implementing additional Javascript or web services APIs to provide additional functionality to developers. Open Social app developers can therefore choose to stay “onroad” and have their apps run in any Open Social container, or go “offroad”for one or more specific containers to do special things. Open Social standardizes common functionality but doesn’t prohibit innovation. More on that below.

Open Social is very practical. Many standards die an early death because they are too complicated and hard to implement. Open Social is what you want in a standard — it’s expansive enough to do useful things, but limited enough to be very easy to implement, both for containers and for apps.

At this Thursday’s launch event, you will see Open Social already running in a variety of containers, including Ning, Orkut, Hi5, and LinkedIn, and across a variety of apps, including iLike, Flixster, and Slide. I’m talking about working code. At Ning, it took us only a few days for us to add support for Open Social as a container — because we already had all the necessarily underlying APIs and mostly just had to map to them — and the app developers in the launch created Open Social versions of their apps even more quickly. We also have live running examples, such as iLike, of the same app running in multiple containers — Ning, Orkut, and Hi5 — proving the interoperability that the Open Social specification promises.

Now, all that said, Open Social is not quite ready to go live on Ning and the other partners. The API has to stabilize a bit, and containers have to finish testing and validating their implementations. But public production systems aren’t far off — Ning, for one, will go live as soon as we possibly can, probably just as soon as Google finalizes the API.

What does this mean for today’s Facebook app developers?

Today’s Facebook app developers just got very good news — they will be able to take all of the work they did to build their Facebook apps and create Open Social versions of their apps very easily… and by so doing, get access to a huge new pool of users — as many as 100 million users just via the initial Open Social partners, more than twice as many users as Facebook has today.

As an app developer, there’s no real reason to choose between Facebook and Open Social. It’s easy to do both. You’ve already put in most of the effort — creating a new set of front-end HTML and Javascript pages is almost trivial, and that’s all you need to do to have your app “port” to Open Social and work within Open Social containers like Ning, Orkut, Hi5, and LinkedIn.

What does this mean to web sites that aren’t Facebook apps?

If you have a web site today, and you want to turn your web site into an Open Social app, that’s perhaps even easier than “porting” a Facebook app. Just take your current HTML and Javascript front-end pages and create a version of those pages that use the Open Social API. QED.

Are people really going to maintain multiple sets of front-end pages for their web sites for Facebook, Open Social, etc.?

I think so, yes. I think any web site going forward that wants maximum distribution across the largest number of users will have a single back-end, and then multiple sets of front-end pages:

     

  • One set of standard HTML and Javascript pages for consumption by normal web browser.
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  • Another set of HTML and Javascript pages that use the Open Social API’s Javascript calls for consumption with Open Social containers/social networks.
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  • A third set of pages in FBML (Facebook Markup Language) that use Facebook’s proprietary APIs for consumption within Facebook as a Facebook app.
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  • Perhaps a fourth set of pages adapted for the Apple iPhone and/or other mobile devices.
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The overwhelming good news here is that these pages can all be served and serviced by the same back end code — and of course, 95%+ (and usually 99%+) of the effort involved in building any web app consists of building the back end. Having already built the back end, it’s a very small amount of effort to create any of these front end pages.

What does this mean for Facebook?

Well, to venture a few opinions…

Facebook did an absolutely outstanding job kick-starting this whole approach with their proprietary Facebook platform. That plus their very large walled garden user base generated a rush of app development and adoption on Facebook that has performed very well for them over the last five months.

Open Social — by making this exact same kind of opportunity available to any other social network or container and every app developer and site on the web, in an open and compatible way — will prevent Facebook from having any kind of long-term proprietary developer lock-in. Developers will easily write to both Facebook and Open Social, and have every reason to do so — in fact, 100+ million reasons to do so.

If you’re Facebook, you’d probably prefer to have that proprietary lock-in, and so this announcement may not make you that happy. However, all is not bad for Facebook, because a big part of what’s happening today is market expansion, and Open Social will definitely help fuel market expansion, which is in everyone’s interest, including Facebook’s.

Look at it this way: most users on the Internet (1.3+ billion, with 100 million joining every year) are not yet using any social networking service. The more compelling social networking becomes, the more users who will discover and start using social networking, and the bigger the pie gets for everyone, including Facebook.

Meanwhile, most software developers in the world are not yet building apps for social networks — Facebook or otherwise. The more developers who build social networking apps — Facebook or otherwise — the more apps there will be on social networks, and the bigger the pie gets for everyone, including Facebook.

It’s hard to see Facebook losing in a world of a billion or more social network users, and hundreds of thousands or millions of social network apps. And it’s also easy to see how a lot of other people — containers, and app developers — will win, as well.

In fact, if rumors of a Facebook web-wide ad network are true, then this could be great for Facebook in another way — such a Facebook-run ad network could be an outstanding ad network for all of these new Open Social web applications!

Finally, note that Facebook can easily support Open Social any time they want. They probably won’t do so right away, but in the long run, it will probably be a no-brainer for them, because then they will pick up whatever Open Social app developers who aren’t also Facebook developers.

Is this good for the web?

This is very, very good for the web. Open Social is the kind of standard that web developers love, and can easily use. I think it will become a standard part of many developers’ toolkits. It builds on HTML and Javascript, many people can support it, and it will be interoperable — I know that because it already is interoperable for the partners in this week’s launch. It’s all good.

How will Ning support Open Social?

We will aggressively support Open Social in every conceivable way, including but not limited to:

     

  • Being an outstanding container. Open Social apps will be able to run easily and reliably inside Ning social networks — all 113,000+ of them. Ning Network Creators will be able to quickly and easily add Open Social apps to their networks, and Ning users will be able to quickly and easily add Open Social apps to their profile pages.
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  • Being an app publisher. Ning already automatically produces Facebook apps for every Ning network — specifically, video, photo, and music players — using the Facebook proprietary platform approach. We will do the exact same thing for Open Social — we will automatically produce Open Social apps for every Ning network.
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  • Being an outstanding environment within which you can build new Open Social apps. More on that a bit later!
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Where’s MySpace?

Beats me.

Where’s Yahoo?

Beats me.

You mentioned that Open Social containers can implement additional Javascript or web services APIs — won’t that break compatibility?

No, I don’t think so. Think of it this way. As an app developer, you have three options:

     

  • You can write purely to the Open Social API. If you do this cleanly enough, your app will run unchanged in any compliant Open Social container. (Google is actually not making this claim — they’re calling Open Social “learn once, write anywhere”, which is not the same as “write once, run anywhere”. But in practice, the API is simple enough that “write once, run anywhere” should work just fine.)
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  • You can write an app that is specific to one container. For example, there may be some apps that make sense only in LinkedIn — business-related apps, say. There may be other apps that make sense only in Ning — apps that presume that users are creating their own social networks, say. And there may be yet other apps that only make sense in Salesforce.com, which will also be an Open Social container. In those cases, you are targeting your app to one specific container, and so using whatever additional APIs that particular container provides, in addition to the Open Social APIs, is a no-brainer.
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  • Finally, you can write an app that behaves differently depending on which of several containers it’s running in. Your app just discovers which container it’s running in, and then does whatever it wants on a per-container basis.
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No standard can possibly anticipate all of the different use cases and scenarios people will think up. Standards that try to anticipate all of the different use cases fail, because they are too complex and generally impossible to implement.Standards that standardize behavior that is clearly standard, while leaving open the ability to innovate on top, succeed. The history of this kind of thing is quite clear, and Open Social is on the right side.

Closing thought?

Congratulations to Google — the crew at Google has been outstanding in conceiving of, implementing, and evangelizing Open Social to the initial set of partners — and now, to the world. Thanks!

Silicon Valley Social Ventures

The San Jose Business Journal just ran a great story on the nonprofit organization my wife started almost 10 years ago: Silicon Valley Social Ventures, or SV2.

Over the last 10 years, SV2 — which applies many of the concepts used to run for-profit venture capital firms to philanthropy — has helped fund and develop many wonderful nonprofit organizations in the Silicon Valley region, and has also helped scores of area enterpreneurs and executives become active in philanthropy for the first time.

And on to the story!

It’s the typical venture capital story: A great idea is born in a coffee shop, a long incubation period ensues and eventually, with a lot of nurturing from well-heeled supporters, the endeavor takes flight. Only this time, the product is not technology, it’s philanthropy — Silicon Valley Social Venture Fund (SV2), formed in 1998 by Stanford graduate student Laura Arrillaga-Andreessen at the age of 28.

After a decade in incubation as a donor advised fund at Community Foundation Silicon Valley, SV2 will become its own separate entity under a new organization called the Individual Philanthropy Institute.

SV2 has evolved into partnership of investors, many of them lawyers, doctors, technology entrepreneurs, professors, stay-at-home parents and others who are willing to contribute a minimum of $3,000 a year as well as their time, passion and expertise to help nonprofits learn and thrive. And those partners expand their own philanthropic horizons. SV2 became a donor-advised fund housed at what was then called the Community Foundation Silicon Valley. It has grown to 140 donor partners and awarded more than $2.5 million in grants.

It will now become a program of a new organization called the Individual Philanthropy Institute. But that organization is still very young and is being developed, says Arrillaga-Andreessen. It is awaiting its 501(c)3 status form the Internal Revenue Service and when that’s granted, the institute should be more developed.

But SV2’s model will remain the same, she assures. Two types of grants are made: One is strength grants, which in 2007 began focusing on education. Organizations get $150,000 over three years and SV2 partners work with the organization to deploy the money.

Then there are affinity groups consisting of at least five SV2 partners who have chosen a focus area to learn more about, share their knowledge of and work on in the community. These groups get authority to distribute $50,000 annually.

Peter Hero, former president of Community Foundation Silicon Valley, was also in that coffee shop when SV2 was born. Hero says the Community Foundation had been looking at how to tap into business networking as a tool for increasing philanthropic giving but it was Arrillaga-Andreessen who came up with the model.

He says the idea has spread nationally and has inspired about a dozen others around the country.

He recalls that local philanthropist Jeff Skoll called SV2 “training wheels for donors.” That’s true, Hero chuckles, but he adds that SV2 is also a good mix of veterans and new donors who are learning from each other.

“People bring to it their own experience, what’s worked, what hasn’t worked. It’s very Silicon Valley,” he says.

“I would say it’s exceeded all of my expectations, which were high to begin with,” says Hero, who will join the board of SV2.

It’s a natural progression, says Arrillaga-Andreessen.

“When I brought this vision to Peter Hero I was still a graduate student with no track record in the field of philanthropy and it was Peter’s belief in me and my vision and the support he gave me through community foundation that made SV2 initially possible,” she says.

 

If any of this piques your curiosity, please feel free to contact SV2 — or me, at pmarcablog (at) gmail (dot) com — for more information.

As a side note, all revenue generated by this blog (to date, primarily Amazon affiliate fees!) is being donated to SV2.