The Financial Times has graciously invited me to contribute to their Digital Business podcast. My first commentary, included in the new installment of the podcast, looks at whether Web 2.0 tools like wikis will help automate the management of knowledge in companies. Also featured in the podcast is a debate on whether IT matters strategically. You can listen here.

As if replying to Eric Schmidt’s prediction of the imminent demise of desktop software, Microsoft’s Antoine Leblond pooh-poohs the threat in a new Reuters interview:

Leblond, who became co-leader of the Office group in June, said Google was the latest in a long line of challengers to the Office software suite … “The simple argument that ‘this is good enough for 90 percent of what we do’ has fallen on its face over and over and over again,” Leblond told Reuters in an interview on Tuesday. “When it comes to mission critical things and key pieces of how people run their businesses, the threshold is higher.”

Leblond continues with his defense of what he terms “old school” applications:

“Free software has an appealing ring to it, but free software has been around for a while now and it turns out free doesn’t trump the software doing what people need it to do,” said Leblond, a 17-year veteran of the Office team. Microsoft’s new Office Live is an example of its “software plus services” approach. It lets small businesses set up Web sites, company-branded e-mail and Web applications to allow project management and collaboration. It works with Office but the programs are largely different from those familiar to desktop PC users.

The lines are drawn. It’s Old School versus New School in Office War 2007.

Google CEO Eric Schmidt has been coy in discussing his company’s ambition to create an online alternative to Microsoft Office. Just a few days ago, at the Web 2.0 Summit, Schmidt “played the semantic game” in discussing office suites, reported Dan Farber. Schmidt claimed “that Google is developing applications for just ‘casual’ use. ‘We don’t call it an office suite. It’s not targeted at the [Microsoft] Office – we never made that claim.'”

But a very different, and much more aggressive, Eric Schmidt appears in the Economist’s new “World in 2007” issue. Schmidt contributes an article titled “Don’t bet against the Internet,” in which he makes a striking prediction. Next year, he writes, “we’ll witness the increasing dominance of open internet standards.” These standards “will sweep aside the proprietary protocols promoted by individual companies striving for technical monopoly. Today’s desktop software will be overtaken by internet-based services that enable users to choose the document formats, search tools and editing capability that best suit their needs.”

Suddenly, a seemingly modest goal of promoting the “casual” use of online office applications has become a tsunami that is about to “sweep aside” the proprietary protocals and formats “promoted by individual companies striving for technical monopoly.” (Yes, he’s talking about Microsoft.)

This marks a revealing rhetorical shift for Schmidt, who’s been careful (and, I think, wise) in avoiding a head-on attack on Office. Google Spreadsheets, for instance, was introduced mainly as a complement rather than a competitor to Excel, one that could extend the functions of the Microsoft product by maintaining compatibility with Microsoft’s proprietary protocols and formats. Google was avoiding Netscape’s failed strategy of confronting the Colossus of Redmond directly. Instead, it appeared content to try to eat away at the Microsoft franchise from within, to play, at least temporarily, by Redmond’s rules.

That pretense has been abandoned with the Economist article. Now, Schmidt is making it clear that the goal is to topple Office – and soon: “Today we live in the clouds … Simplicity is triumphing over complexity. Accessibility is beating exclusivity.” 2007, apparently, will be the year that Google takes off the gloves in the fight for the future of personal business applications. Not coincidentally, it’s the same year that Microsoft will be pushing customers to upgrade to a new version of its traditional Office suite.

Schmidt includes Microsoft Live at the tail end of a list of the kinds of new Web-based services that he says are redefining computing. But that’s just to twist the knife. The new world, he says, is built on open-source software (the Linux-based “LAMP” stack), and in it Microsoft is just another company, if not an also-ran:

Sophisticated browsers and technologies like LAMP or AJAX … are critical in this new world. They are the kind of technologies that transform audio, video, text and digital data into intuitive, easy-to-use services. They make Google, MySpace, YouTube, Gmail, Yahoo! and Microsoft Live possible, and they haven’t even entered adolescence.

Schmidt’s right about the future of computing. We are, as he says, seeing “a profound technological shift in computer science” that will end the dominance of the “client-server computing architecture.” (It’s what I’ve termed the shift from the second to the third age of computing.) The question is, is he right about the timing? Is 2007 the tipping point – the year Office begins to implode – or has Schmidt allowed confidence to become overconfidence? The answer to that question may well determine who becomes the dominant supplier of basic business applications.

Competition is intensifying, Schmidt writes, and that “ensures that products improve faster and become cheaper. If they don’t, users go to a new entrant offering free or better versions.” That’s not a promise; it’s a threat.

Push has come to shove. The world’s biggest record company, Universal Music Group, has filed a massive copyright infringement lawsuit against the world’s biggest social network, MySpace, and its owner, News Corp., charging them with complicity in the widespread “theft” of songs and videos, according to reports by MarketWatch and Hollywood Reporter. The suit accuses MySpace of operating a “vast virtual warehouse” of “user-stolen” content and asks for damages of up to $150,000 for each song and video.

In a statement, MySpace dismissed the suit as “unnecessary and meritless” and said it has “no doubt we will prevail in court.” It claims that it is protected under the Digital Millennium Copyright Act, which shields Internet service providers from certain copyright violations committed by their users.

Universal, however, appears set to argue that the DMCA protections do not apply in this case for two reasons: MySpace reformats files uploaded by its members, and it runs ads tailored to the user-uploaded songs and videos. For these reasons, it alleges, MySpace is not a passive network operator but rather is complicit in the copyright infringement and profits from it. Should the case go to trial, it could produce a landmark ruling with far-reaching implications for Internet media sites that rely on so-called user-generated content.

Cynthia Brumfield, of IP & Democracy, says the lawsuit “is probably a good thing. With two giants duking it out in the federal courts, the likelihood is good that some kind of legal precedent will be set. Maybe video file sharing sites (and other video-enabled Internet businesses) can finally get definitive legal ground rules, whatever they may be, providing a higher degree of certainty so that the industry can move forward.”

That may be true, but it’s cold comfort to MySpace, which now finds itself in a dicey situation. Losing a trial could be disastrous, but if it makes a big payment to Universal to settle the suit, it will have many other copyright owners knocking at its door looking for similar payoffs. Although it’s unlikely that either party desires a long and costly trial, MySpace may well be following Grokster to the Supreme Court.

We’re a little late with this one, but the good news is that you can probably pick up a pumpkin pretty cheap at this point. So if you’re looking for something to do this weekend, Wikipedia’s Jimmy Wales offers these nifty step-by-step instructions for carving a Creative Commons Jack-o-Lantern.

Disclaimer: You use a pencil on your liquid crystal display at your own risk.

Wade Roush has been covering the rise of social networking for Technology Review for a couple of years now. But, as he explains in the latest issue, his enthusiasm for the phenomenon is turning to disdain, thanks to what he says is the devolution of MySpace “from a friends’ network into a marketing madhouse.” Roush writes:

I had higher hopes for the technology. To me, the popularity of MySpace and other social-networking sites signals a demand for new, more democratic ways to communicate – a demand that’s likely to remake business, politics, and the arts as today’s young Web users enter the adult world and bring their new communications preferences with them. The problem is that MySpace’s choice of business strategy threatens to divert this populist energy and trap its users in the old, familiar world of big-media commercialism.

Roush worries that MySpace “is undermining the ‘social’ in social networking” by encouraging companies to establish their products as MySpace “members” which can become “friends” with other (human) members: “The company interprets the idea of a ‘profile’ so broadly that real people end up on the same footing as products, movies, promotional campaigns, and fictional characters – not exactly the conditions for a new flowering of authentic personal expression.” In earlier social networks, like Friendster, sham profiles, including those set up for commercial purposes, were scorned as “fakesters.” But MySpace, says Roush, “has been hospitable to fakesters from the beginning – so much so that it’s now perfectly kosher for a company (or one of its fans) to create a profile for a fast-food chain, a brand of soda, or an electronics product.”

Far from being liberating, MySpace “tends to herd its users into niches created for them by the mass market,” writes Roush.

In fact, MySpace can be viewed as one huge platform for “personal product placement” – one different from big-media-style product placement only in that MySpace members aren’t paid for their services. There’s nothing new, of course, about word-of-mouth marketing. What’s sad about MySpace, though, is that the large supply of fake ‘friends,’ together with the cornucopia of ready-made songs, videos, and other marketing materials that can be directly embedded in profiles, encourages members to define themselves and their relationships almost solely in terms of media and consumption.

I’ve been reading From Counterculture of Cyberculture, Fred Turner’s masterly history of how the communalist ideology of the hippies morphed into digital utopianism. As the Internet emerged into the public consciousness in the early 1990s, a loose confederation of countercultural and New Age thinkers associated with Whole Earth Catalog founder Stewart Brand, including John Perry Barlow, Kevin Kelly, Esther Dyson, and Howard Rheingold, came to see the network as a great emancipator. For them, the networked computer, writes Turner, “offered men and women the chance to enter a world of authentic identity and communal collaboration … a world in which hierarchy and bureaucracy had been replaced by the collective pursuit of enlightened self-interest.”

One of the assumptions underlying this belief was that the Net would flatten society’s existing power structure, putting individuals on the same footing as big companies. Turner describes, for instance, how Esther Dyson, in her 1997 book Release 2.0: A Design for Living in the Digital Age,

argued that the Internet would soon dissolve the bureaucracies of the marketplace by stripping away the material bodies of individuals and corporations. Within the electronic confines of the digital marketplace, she claimed, both person and firm would be reduced to packages of information. At the same time, digital technologies would render information about products and markets ubiquitous. Together these features would allow individuals and corporations to negotiate with one another from positions of equality.

Dyson was right, in many ways. We do see evidence of this flattening effect all around us today. And yet what MySpace shows us is that the ultimate consequence may be very different from that imagined by the digital utopianists. Putting individuals and corporations on “an equal footing” cuts both ways, as Roush shows. The big story may not be that the Net gives individuals the power of corporations, but that it gives corporations the power of individuals. What is the marketer’s dream but to have a product speak to each of us intimately, as a friend? In being “reduced to packages of information,” are we simply making ourselves easier to parse and to control? Are we the ones who are being flattened?

An uneasy calm hangs over Second Life this morning after two days of protests over the appearance of the CopyBot replicator. Yesterday, as many as 600 shopkeepers closed their stores in protest, demanding that the online world’s owner, Linden Lab, take action to protect the integrity of their virtual property. The striking merchants, according to Information Week, waved signs scrawled with slogans like “Stop Buying. Stop Selling. Start Protesting” and “Linden Lab once again did hurt our world.”

Meanwhile, outside agitator Cory Doctorow, of Boing Boing, raised the specter of an outright revolution in which residents would seize control of Second Life from Linden Lab. “Second Life’s management is doing an exemplary job of coping with this,” wrote Doctorow, “but benevolent dictatorships aren’t the same thing as democracies. If a game is going to declare that its players are citizens who own property, can the company go on ‘owning’ the game?”

Raph Koster, too, sees the CopyBot dispute as signaling a larger struggle: “what’s happening is a small-scale social crisis that brings into sharp relief the split between the hacker-ethic-libertarian-info-must-be-free ethos that underpins much of the technology of virtual worlds, and the rampant commercialism that has actually enabled its embodiment. What we have here is a case of bone fighting blood.” He concludes, darkly:

As long as Second Life creators are relying on creating content like textures and models … they will continue to face the same dilemmas as any other content industry. They will be copied. They will be ripped off. They will find their market prices falling. They will agitate for DRM. They will form lobbies with the analogue to a government, and argue that they are in fact the primary cultural contributors in the system. They will, in the end, come to embody everything about the broader, commercial Web that they fled to Second Life in order to escape.

But the arrival in Second Life of the CopyBot replicator hasn’t just produced a commercial and a political crisis. It’s brought an existential crisis as well. Because CopyBot can clone entire avatars as well as their possessions, people fear losing their virtual selves. Their sense of what I’ve termed “avatar anxiety” is deepening. Writes resident Harle Armistice in a comment on the official Second Life blog:

I’m sorry, but this isn’t just about sales … I have a unique av that I made for myself. It’s me, it’s my work, it’s part of my persona. I’ve been wearing it for ages and I will be wearing it likely until the day SL either goes down or I can’t log in anymore. Or I would be, under normal circumstances … I am terrified to wear my own content because there’s a script out there that any random user can run to steal my stuff if I do.

Business Week is reporting that “savvy CEOs” are beginning to “hang out in Second Life,” “orienting themselves around what could emerge as the corporate environment of the future.” IBM chief Sam Palmisano, for instance, proudly declares, “I have my own avatar.” In fact, the magazine notes, Palmisano has two Second Life avatars, “a casual Sam and a buttoned-down one.”

What’s going to happen, one wonders, when a CopyBot-armed anarchist comes up to one of the “real” fake Sams and replicates him? It may be a dream of CEOs to be able to clone themselves for posterity, but would they be happy about being cloned by someone else, someone who might then inhabit their virtual identity and use it to spread mischief and confusion? I can’t imagine a captain of industry being sanguine about seeing a copy of himself flying through the air wearing only a g-string or emerging from a virtual sex shop bearing a mammoth Steely Dan. I would recommend that, until the situation becomes clearer, any CEO entering Second Life bring along bodyguard avatars to fend off any possible replicator attack. No company wants to find itself saying, “An imposter avatar did hurt our world.”