2013-12-18



This is Jonathan Goodman. Welcome to another episode of The World of Internet Marketing. It’s great to have you with us. For those of you who follow this podcast on a weekly basis, you know that we’d planned to have the audio from the presentation I’m doing at Dragon Search in Kingston, New York. However, due to the weather last weekend, that has been postponed. Hopefully, the weather this weekend will cooperate and I’ll be up there on Monday. The Dragon Search presentation is essentially a wrap-up of 2013 from the technology side. Instead of that presentation, I thought I’d provide a wrap-up of 2013 news for today’s podcast. The podcast is divided into three segments. We’ll talk about Amazon, NSA and Silk Road. I also talked about Edward Snowden and other hacking cases this year, but there doesn’t seem to be much progress on either of those two fronts. So we’ll just stick with these three segments and have a little bit of fun.

Amazon Prime Air

In a brilliant marketing move, Jeff Bezos and Amazon came up with a press release the day before Cyber Monday talking about their drone called Amazon Prime Air. This was nothing but a marketing ploy to keep people fixated on Amazon during Cyber Monday and there were a couple of very interesting articles about it. An article on Huffington Post was titled “Amazon’s Drone Plan is Essentially One Giant Commercial.” If you weren’t able to spot that a million miles away, you’re not doing your marketing homework and you’re making impulse buys at the checkout. According to the Huffington Post article, speculation has been drawn over why Amazon chose to release the information about future Amazon Prime Air Service. Many people believe they scheduled the announcement to be right before Cyber Monday. Here is a direct quote from the article: “It’s certainly no accident that it came the day before Cyber Monday, which of course is the day that everyone’s attention is focused on online retail,” said Noah Elkin, a principal analyst at eMarketer, a market research firm. The video Amazon released of the test flight drone has over 4 million YouTube hits.

Image via CrunchBase

According to an article titled “Amazon Drone Delivery Promo Would Be Illegal in the US” from businessinsider.com, the video wasn’t actually shot in the United States. The article states that the famous drone preview video for Amazon’s new Prime Air service had to be shot overseas. FAA restrictions prevented Amazon from shooting it inside the United States. The video shows a drone, which Amazon calls an octocopter, carrying a small plastic box. Items ordered from the website will be securely placed inside the box. So that video you saw was actually shot outside the United States.

Another article from the Huffington Post titled “eBay CEO Calls Amazon Drones a Long-Term Fantasy” states that John Donahue, CEO of eBay, called Amazon’s plans to use drones for delivery a “long-term fantasy”’ Here is a direct quote from Alexis Kleinman: “When asked if eBay had anything like delivery drones in the works, Donahue responded, ‘We’re not really focusing on long-term fantasies. We’re focusing on things that will change consumer experiences today.’” Currently eBay has a service called eBay Now, in which items are delivered from local stores to your doorstep in about an hour for a flat $5 fee.

I read the following article with some skepticism. An article from the Voice America News, voa.com, titled “Drones Already Work in Amazon’s Warehouses,” states the following: Inside the huge Amazon warehouse in Seattle, Washington, dozens of drones move across the gigantic space, lifting and carrying items from shelf to shelf. Now, this doesn’t mean aero drones. The article is talking about robots that are crawling along. Here is a direct quote from the article: “About one foot high, battery-powered orange boxes, the size of a lawn mower, with hidden wheels that can drive them in all directions and turn in place, crisscross the smooth floor of the warehouse, lifting and shuttling shelves with different kinds of merchandise.” The article goes on to state that Amazon uses about 1,400 total robots in at least three of its warehouses. Companies like Staples and Zappos employ similar devices. The article means that these are more of the kind of robots that go alongside shelves, take various items and move them to the correct locations. That’s a little bit different than aerodrones or octocopters, as Amazon is calling them.

I would be interested in knowing whether their press release made a significant difference to Amazon’s sales that day. I think we’ll see that the idea and premise behind Cyber Monday and Black Friday were fads instead of trends. The numbers have already come back from Black Friday and the numbers are not good. There are no clear winners in this year’s Black Friday and there are certainly a lot of losers. We saw fighting for small discounts on products that the people fighting couldn’t afford anyway. I did Black Friday once. I didn’t get crazy. I went a couple of hours after the stores opened, but still pretty early in the morning. This was back when they didn’t open the stores up the night before.

I predict that in 2014 we’ll see an amazing pushback from employees to get recognition by the owners and executives of these companies. We’re already seeing it with fast-food workers requesting a change in the pay scale. People are under the crunch. Their livelihoods are at risk. I don’t want to get political, but I understand that Obamacare is going to cost some people more than if they’d had regular insurance. They weren’t able to afford their own insurance originally and now they’re being pushed to purchase insurance. I have a friend who got a notification from his insurance company that he was being dropped. If he wanted to stay with his insurance company, it would have cost twice as much as it did previously with half the service level. So he’s forced to sign up for Obamacare and it’s going to be a huge expense for him.

I think we’re seeing a crunch by the middle class. More people are falling into poverty. More people are falling out of the middle class. And very few people are making it to the stability of the wealthy. So all the people doing the hourly wage jobs aren’t able to have the same type of Christmas that the wealthy can have. I’m not calling it an uprising, but since there is no middle class, there’s going to be a significant concern on part of large businesses to understand the plight of all their employees, from the person who answers the phones to the person who cleans the bathroom stalls. Everyone is entitled to an honest living wage. Previously, I wasn’t really for a wage increase. But now I see the impact of it. All it takes is for you to be personally affected by it is to understand why things need to change.

I run my own business and I’m not an hourly employee, but I understand that when I pay somebody a livable wage in New Jersey, it’s much harder than if I were paying them a livable wage in Kansas or Oklahoma. There it is much easier to survive on an hourly wage of $7.25 an hour or whatever the minimum wage is and to at least work your way up to $10 per hour or whatever. It’s difficult to be in Manhattan, which is the central focus of the fast food industry along with Chicago and other major centers of commerce, when you have hourly workers that are being paid minimum wage and they’re being pushed by their rent, food prices, supplies, children’s expenses and higher taxes. I can understand that it’s getting very hard to live on a minimum wage or even an hourly salary.

Back to Amazon, they definitely know how to market and how to attract attention. I think that’s fantastic for them. I’m curious to see whether or not it made a difference. We’ll probably know in the next quarter where Amazon and all the other companies stand as far as Black Friday and Cyber Monday.

NSA

Let’s talk about the NSA, one of my favorite topics. It’s always such a disaster to talk about the NSA. What’s really amazing is that the things I try to talk about on this podcast aren’t necessarily being talking about in the mainstream media. There can be articles and small snippets, but when you don’t dedicate the time to talking about the NSA, you can’t give it the coverage it deserves. Television new shows, such as the ones on MSNBC, CNN and FOX, don’t do real in-depth reporting on the NSA story, so I’m trying to present to you a compilation of the article information that is out there.

Warcraft Fan, back tattoo (Photo credit: Wikipedia)

The first item I want to talk about is an article from propublica.org titled “World of Spycraft: NSA and CIA Spied in Online Games.” Not only did the NSA spy on various e-mail and social media accounts, they also tapped into World of Warcraft and Second Life. The spies, who believe terrorists communicate through the online games, created personas in both games to try and contact suspicious characters. Here is a direct quote from Justin Elliot, ProPublica, and Mark Mazzetti: “It is not clear exactly how the agencies got access to gamers’ data or communications, how many players may have been monitored or whether Americans’ communications or activities were captured.”

Another article from the Huffington Post titled “NSA Staffers Feeling Neglected by Obama, Would Very Much Like Him to Stop By,” states that after months of being criticized for the Edward Snowden case, employees at the NSA are ready for Obama to speak with them. Staffers are frustrated and tired of being blamed for the issue and would like to talk one-on-one with the President. However, he has yet to stop by their offices. You know, sometimes I wonder about some of these articles. You have to assume that this article has been vetted since it ran on the Huffington Post, but it sounds like a joke. Are they all a bunch of babies sitting around complaining that the president hasn’t stopped by? That just doesn’t seem right.

One of the most amazing things that came out of the news about the NSA is the fact that upper management knew on certain occasions the NSA was spying on boyfriends and girlfriends they had or potential boyfriends and girlfriends they had. That is a true violation of the rights of Americans. The idea that they are on World of Warcraft and Second Life almost sounds like it’s a joke. What are these guys doing? Were they playing these online games in the ‘80s and ‘90s? Would they have been on Doom? Is this what we’re paying NSA staffers to do? What kind of conversation are you going to have on Second Life that a court of law is going to deem as valid? If I’m playing a character on Second Life or if I’m on World of Warcraft and I say “Go bomb the clan or the Second Life island over there,” is that a terroristic threat? Is that somewhere labeling me a terrorist? I don’t understand the barriers that the NSA has in being involved in some of these online games.

Here is another article from the Huffington Post titled “Apple, Google and Others to NSA: ‘It’s Time for a Change.” The article states that companies like Goggle, Facebook and Twitter have sent an open letter to president Obama asking him to change the way the government spies on the American people. The letter, also signed by Apple, LinkedIn, Yahoo, Microsoft and AOL, calls for better restrictions on the way governments have been collecting data on citizens.

The Huffington Post also posted an article titled “Microsoft Says It’s Upping Fight Against NSA.” Microsoft has vowed to never hand over consumer data to the government, even at the risk of court order. The company has never given data to the Obama Administration, even in the midst of the Edward Snowden revelations. The company plans to securely encrypt the user data it stores.

What will be very interesting to see is if Google, Microsoft, AOL, Safari, Firefox, Internet Explorer and Chrome all universally decide to go the way of DuckDuckGo and not keep any data. That will significantly hurt their advertising sales, but at the same time, I believe DuckDuckGo does have advertising. I don’t think they have as much advertising as Google does, but would Google be willing to take a hit on the billions of dollars that they make in advertising to lock out the NSA? They certainly have to be at a point of complete frustration when the NSA basically has a back door key to all the data that’s being absorbed by these major corporations.

The Washington Post ran an article titled “NSA Uses Google Cookies to Pinpoint Targets for Hacking.” According to documents provided by Edward Snowden, the NSA uses the same technology as advertisers when it comes to Internet tracking. Online advertisers use cookies to track consumer interest and market based on their interests. Here is a direct quote from Ashkan Soltani, Andrea Peterson, and Barton Gellman: “The intelligence agencies have found particular use for a part of the Google-specified tracking mechanism known as the “PREF” cookie. These cookies typically don’t contain personal information, such as someone’s name or e-mail address, but they do contain numeric codes that enable Web sites to uniquely identify a person’s browser.”

I was in London in a couple of weeks ago, and prior to my trip, I was looking at British sites. I noticed that all of them had a pop-up or a header that said “This website uses cookies. You must acknowledge its use and accept that if you wish to use this website.” I think that is a little extreme, but from the European viewpoint, they want you to understand there is a cookie being put on your computer when you go to a website. I think you should just assume that anyway. That’s should just be common knowledge, but I guess England has that message to anyone who is going to use a website. I know because I was looking at a lot of websites when I was in England. They have that notice in accordance with British law.

In 2014, my hope is that NSA is front and center in the news so that we can really get an understanding about what is being documented about us. I honestly think that you should have access to your NSA file if there is a file regardless of whether the NSA has looked at it. If there is a file on me and data being obtained on me, there should be a company that creates something like what credit bureaus do that monitor your credit score. There should be a company like Equifax that works with the NSA and provides all significant data directly to you that is being obtained about you. That’s only fair. If the NSA, which is not supposed to collect data about Americans on U.S. soil, have actually done this, then the flip side is that there should be an agency created within the government that allows me to purchase a report or a file (just like Equifax about my credit score) about what NSA has collected on me. It should come from the FBI. It should come from the Secret Service. It should come from the NSA. I should be able to get one giant report about me, whether monthly or quarterly or yearly. I’d be willing to pay to see that file, whether it be $100 or whatever. Paying $100 sounds like a fair deal. You’re going to tell me everything that the NSA knows about me? Great idea. I would sign up for that and I would pay for that service. I wonder if that would help the U.S. budget.

Silk Road

I think we need an update on Silk Road and the Dread Pirate Roberts because a lot has been going on. Really crazy stuff. Now let me say off the bat that there is a lot of crazy information in the articles I’m going to talk about. I would take all of this with a grain of salt. I don’t know what is true and what is not true. I have some doubts and I have speculation.

Forbes ran an article titled “New Silk Road Drug Market Backed Up to ‘500 Locations in 17 Countries’ To Resist Another Takedown.” The article states that Silk Road, the large, online drug marketplace recently busted by the FBI, is back open for business and this time, the new Dread Pirate Roberts (not Ross Ulbricht), has enlisted bigger and better security.

Of course, Dread Pirate Roberts is from Princess Bride. The way Dread Pirate Roberts worked, which is interesting when compared to this, is that when the old Dread Pirate Roberts wanted to retire, he brought on a new person and called that person Dread Pirate Roberts. He then became the second mate and trained the new Dread Pirate Roberts on everything to do with running the pirate ship. Then at the last protocol, he would go off the ship and retire.

Science Fiction section of Glen Park Library where Ross Ulbricht aka Dread Pirate Robert arrested allegedly for running the Silk Road website (Photo credit: Steve Rhodes)

Continuing with the article, here is a direct from Andy Greenberg. “…he’s now distributed encrypted portions of the Silk Road’s source code as well as portions of the cryptographic keys to decrypt those pieces to 500 locations in 17 countries around the world.” Nobody would have access to the source code, unless the feds take over the site again. Plans are also in place to have a successor to the current Dread Pirate Roberts if the site is shut down. Some speculation has been made about whether or not the new site managers are actually FBI agents in disguise, aimed at collecting user data and information.

Let me debunk a couple of things in this article. Ross Ulbricht wasn’t smart enough to hide his identity well enough so that he wasn’t caught. So I doubt that he was smart enough to somehow create an algorithm that activated upon his arrest that then created multiple versions of the Silk Road software so that somebody immediately knew how to become the next Dread Pirate Roberts. It sounds very fishy. I can’t imagine that somebody who is currently locked up in jail under suspicion of being the Dread Pirate Roberts would risk his incarceration or any hope of a fair trial by doing something that would continue his involvement. So this is sketchy if that is the case. I just don’t think he’s smart enough to have known how to do that – to set it up 30 days in advance so that if he doesn’t log in with a user name and password it would act almost like a virus. You install malware and if the right person doesn’t log in or the right code isn’t given, the malware then acts and otherwise it lays dormant. So he would have had to create a rather significant malware that then copied and distributed Silk Road software and the keys to these 500 locations.

What is more likely, although there is a pause with this concept too, is that the FBI is running the Silk Road site now and the FBI is going to try to use it to capture terrorists, hit men, drug dealers and people who are getting drugs shipped to them. That seems to be a better case scenario because now Silk Road has all this free marketing publicity and, as we’ll see later, other people are trying to do exactly the same thing. I don’t know why a criminal would attempt to replicate something that another criminal was caught for. That has always seemed kind of odd to me. This person didn’t do it successfully, he got caught, and now you’re going to try to do it without changing it that much in the hope of making money and not getting caught? That sounds bazaar to me.

An article from USA Today titled “Two Delaware Doctors Tangled in Silk Road Legal Mess” states that a pair of young Delaware doctors were among the many drug dealers who dealt with the online marketplace. Olivia Bolles and Alexandra Gold were both arrested in November. Bolles is charged with illegal distribution of controlled substances, like Ocycodone and mixed amphetamine salts. She did not have license to distribute controlled substances. Gold admitted to helping Bolles pack and ship the packages of drugs inside of candy containers. A special agent from the Orlando FBI office went online to Silk Road, purchased a mixed bag of drugs from Bolles, tracked the address back to a post office box and obtained security footage which identified Bolles as the owner. A review of Bolles’s financial accounts also revealed several transactions for Bitcoin purchases, the only currency accepted on Silk Road.

Let me say a few things about Bitcoin as well. Every once in a while, someone comes up to me and says “Should I invest in Bitcoin?” Here is my answer: No. If you want to risk your money, buy Kenyan currency because it is almost as volatile as Bitcoin. There are so many factors with Bitcoin that anyone who came into it a year ago is bound to lose money. In fact, there was just a situation where somebody bought a Tesla car for $100,000 using Bitcoins and within a week, the value of the Bitcoins had decreased by something like 30% or 40%. So clearly, some guy walked away with a Tesla and the seller lost almost $30,000 from the valuation of the Bitcoins. It’s a very risky business. It’s unknown who actually created the BitCoins business. There are lies about the individual who created this whole process. The way to make money with Bitcoins is weird and odd. When Bitcoin started, it was very easy math. But now it’s become very complicated math. Sure, if you got in at the beginning and you held onto 100 Bitcoins that are now worth $3,000 Bitcoins a piece, you’ve made yourself a ton of money. But there is so much stealing of Bitcoins. There’s so much criminal activity centered around Bitcoins, it’s just not worth it. Don’t get involved. I have a friend who called me and said that he wanted to get involved with it and I told him not to do it. I said, “You don’t understand the mechanics behind the currency exchange and you don’t have the ability to manage this. Just stick with what you know and go back to contract work.”

Let me say one more thing about the Delaware doctors, doctors aren’t the ones who are suffering in this economy. There might be a little kickback from Obamacare where they might not make the six figure salaries that they were making previously, but they’re still making really good money. They have a lot of insurance that they have to pay for. There is a lot of school that they had to go through. But the idea that they would all of a sudden start selling drugs seems strange. Why go through all it takes to become a doctor to just sell drugs on the street like through Silk Road when you could have just been selling drugs on the street anyway?

Another article ran on Mashable titled “As Major Silk Road Competitor Shutters, $100M in Bitcoin Vanishes.” This is what I was talking about. The article states that Sheep Marketplace, a major Silk Road Competitor, was robbed by one of its own vendors. Over $100 million may have been taken. The site was immediately removed, but a Reddit user posted the announcement of the shutdown, which was made on the website. Several Sheep Marketplace users believe the robbery was either a scam or was done by the administrator of the site. Reddit users are trying to track down the thief on their own by monitoring Bitcoin transfers online.

As I was doing this research, I came across the Free Ross Ulbricht website. It’s at http://www.freeross.org. It is seeking to collect donations of up to $500,000 for a legal defense fund to help Ross Ulbricht. I invite you to check this website out and watch the YouTube video. It is weird. I feel like I could have put the website together and never have had anything to do with Ross Ulbricht. This is just another part of the scam. First of all, I don’t really know who is giving money to this fund. I certainly advise you not to give money to this fund. It really seems very sketchy. They’ve taken a couple of photos and put them up there. They have voiceovers of the photos that may or may not be relatives and friends. I don’t know who can legitimately say that Ross Ulbricht is a great guy after knowing what he’s done. I mean, was he somehow framed?

You can go online and see the photos that the FBI has put up of his takedown in the library. You can see photos of his laptop and the user name he used for his laptop immediately before the FBI captured him. They had his bank account and all of this information. It’s a serious, direct tie to him. I understand that everybody in America is entitled to a fair trial, but to invite people in to fund this is a little scam-like. The site doesn’t look great. It looks like it was put together by a high school student. So this website is very suspect. The whole story is suspect.

Outro

Those are the main news topics. We didn’t talk about Chelsea Manning because there really is no update. There’s nothing more to be said. We’re never going to hear from him again. What was upsetting was that we didn’t see the video of Aaron Swartz. I don’t know if you’ve had a chance to look at the surveillance video released by MIT of Aaron Swartz breaking into the computer area and basically absorbing all the data in the hard drives.

Picture of Aaron Swartz (Photo credit: Wikipedia)

It’s heartbreaking because on one hand, this kid killed himself because of the stress. But on the other hand, originally we were made to think that he was sitting in the library and just downloading files, when that wasn’t the case. He very clearly broke into this room that was holding the servers and spent a lot of time in there dragging all the data onto his hard drive. It’s a sad story all around. It’s hard to define Chelsea Manning, Aaron Swartz and Edward Snowden. Are they heroes? Are they villains? Are they people who got caught up in the idea of documenting the wrongdoings of the United States? Or were they doing it for the glory? These people will go down in the history books. It’s hard to tell where we’ll eventually see them as history unfolds.

2014 is going to be exciting. I spent a lot of time in 2013 going out and speaking at a lot of conferences. That will not be the case for 2014. I have decided to stay here and focus on the business. Maybe toward the second half of 2014, I may write another one of the books that I plan to write. So I’ll really focus on clients and gaining clients. Our numbers have significantly changed for the better and I appreciate everyone who has been involved in helping to grow the business. I’m thankful for the business I have. The business continues to grow and I continue to add people to the staff. I wish all of you a Happy Holiday and a Happy New Year.

Again, this is Jonathan Goodman. Thank you all for listening to another episode of The World of Internet Marketing. You can follow me @HalyardConsult on Twitter. New episodes of the World of Internet Marketing can be heard every Friday. You can access the archives of my previous shows on Spreaker.com – user name Jonathan Goodman. The podcast is also available with transcription at halyardconsulting.com and geekcast.fm one week after the episode airs. Don’t forget to pick up my book The World of Internet Marketing on Amazon, and if you like this podcast please share it with your network of friends and family.

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