Connected world: the consumer technology revolution

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Table of Contents
Table of Contents 4 2

INTRODUCTION ....................................................................................................5 DISRUPTING DIGITAL MUSIC BY DAVID CARD...............................................7 Current trends...................................................................................................7 Outlook: key disruption vectors in digital music.................................................9
Methodology Anywhere access Discovery Rent/buy Subsidization Listening The role of labels 10 11 12 13 14 15 16

Companies to watch........................................................................................17 Upsetting the status quo..................................................................................19 THE FUTURE OF CONNECTED HEALTH: ANYTIME, ANYPLACE BY JODY RANCK, DRPH.....................................................................................................20 Aging global population and rising health expenses .......................................20 Where technological and social change meet: opportunities in connected health...............................................................................................................22 Who to watch in the future ..............................................................................24
Health 2.0
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Gamification of health MHealth Medical devices Sensors and the Internet of things

26 28 30 31

Key issues for the future..................................................................................31 CLEANTECH, MEET CONNECTIVITY: A NEW ERA OF ENERGY EFFICIENCY BY ADAM LESSER ...........................................................................................39 Car sharing......................................................................................................40 Connecting the home......................................................................................42 The smart grid.................................................................................................44 The ideas that survive.....................................................................................45 AN E-BOOK MARKET ANALYSIS AND FORECAST BY MICHAEL WOLF....47 Disruption vectors in the e-book market, 20112016.......................................50
Methodology Distribution/storefront Hardware platform Social/discovery Multiplatform/cloud access Publisher relationships Customer base 50 52 53 54 55 56 57

An e-book market forecast .............................................................................58 Rapid change..................................................................................................62 DISSECTING THE DATA: 5 ISSUES ABOUT OUR DIGITAL FUTURE BY DERRICK HARRIS...............................................................................................64 1. Legislation designed with the web in mind..................................................65 2. Making privacy understandable...................................................................68 3. What to do with mobile data........................................................................70 4. Making connected data real........................................................................72

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5. Empowering consumers..............................................................................75 CONNECTED CONSUMER..................................................................................82 ABOUT THE AUTHORS.......................................................................................78 About David Card............................................................................................78 About Derrick Harris........................................................................................78 About Adam Lesser.........................................................................................79 Jody Ranck, DrPH...........................................................................................79 About Michael Wolf..........................................................................................80 FURTHER READING............................................................................................81

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Introduction
Connectivity changes everything. That's the credo driving this year's GigaOM RoadMap conference, not to mention just about every corner of our day-to-day lives. As human beings, were now connected to one another through not just our social networks but our cars, the books we read, the albums we download and even our own health and wellness habits (to name just a few areas). With that in mind, GigaOM Pro has singled out certain areas in the technology industry where we see this shift to constant connectivity taking place most drastically. Digital music, for example, has been in perpetual stagnation the better part of this century until recently, that is. But thanks to services like Pandora and Spotify, the space is changing. Research director David Card tunes in to find out why were hearing noise again lots of it. Vice president of research, Michael Wolf, meanwhile, turns his eye towards the ebooks industry to find out which of its sectors the big publishers, the hardware, the cloud or social media will be the biggest disruptor. He also forecasts the markets growth for the next few years. Connectivity isn't just about consumer media, though. As Adam Lesser explains, the trend of being constantly connected is as much a part of monitoring ones use of energy at home as it is about sharing a song. Here he profiles the home energy management and collaborative consumption spaces, sectors of the cleantech industry where connectivity is driving the biggest change. Pro analyst Jody Ranck, meanwhile, explores the trends and technologies driving a new level of connectedness in the health care space, where electronic health records and mobile apps will eventually replace the papers and file folders that store our wellness information.

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Its not a conversation about connectedness without bringing up data and how we use it. Debates (not to mention numerous lawsuits) around privacy and ownership of that data are well documented. Pro analyst and GigaOM reporter Derrick Harris examines five issues that must be solved to regulate data and empower the consumer in this new era of connectivity. -- Jenn Marston, Editor, GigaOM Pro

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Disrupting digital music by David Card

The music industry has been the canary in the coalmine ever since media and entertainment businesses moved online and began digitizing. It was the dire harbinger of bad things to come, and, like that poisoned canary, it nearly died. Lately, though, the sick bird is showing renewed signs of life. After too many years of fretting over piracy, the industry is innovating with new consumer products and business models. In this piece, we identify six key areas of disruption in digital music and those companies that will do the disrupting.

Current trends
U.S. sales of recorded music reached their peak in 1999, at $14.6 billion. They have been declining steadily since then. In 2010, GigaOM Pro estimated that sales totaled about $5.9 billion, with 41 percent made up by digital downloads and subscription services. (Ringtones would theoretically add another several hundred million dollars, but their sales are tanking.) The industry is well on its way to a full digital transition, but that hasnt restored it to growth, let alone returned it to its glory years. At the same time, radio advertising is slow, and even concert ticket sales are down. What happened? The music industry is too quick to blame Napster which launched in 1999 and file sharing or piracy in general. While those no doubt had an effect on music sales, the whole industry had grown unnaturally big, driven by the baby boom generation and the rise of the CD. Music is the soundtrack of everybodys life, but the boomers and rock music arrived together at a unique cultural moment. Music both drove and reflected the counterculture of the 1960s and 1970s. At the same time, rock was moving away from singles arguably the natural medium for popular music toward albums. Boomers replaced their LP collections first with cassettes and then with CDs, and CDs were priced relatively higher than their vinyl counterparts. This combination of factors
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drove music toward 3 percent of consumer entertainment spending, according to the Bureau of Labor Statistics, a full percentage point above its historical norm. Meanwhile, in late 2001, shortly after Napster was shut down by lawsuits, Apple energized digital music with the iPod. The device wouldnt have been a success if no one had existing digital music collections to rip from CDs or download from peer-topeer file-sharing networks like Napster, Kazaa and LimeWire (Apples legitimate iTunes Music Store didnt arrive till 2003 with its legally licensed 99-cent singles and $10 albums). Apples potent combination of iPods and now iPhones and iTunes has led to its dominance of digital music sales. Apple sells something like 6070 percent of downloads today, though most of its top singles cost $1.29 and many top albums are priced at $14 or $15. Now that singles are easily available again, they dominate overall digital sales. Amazons MP3 store is a distant No. 2, and Wal-Mart, the leading physical music retailer, gave up trying to sell digital songs against Apple and exited the market in Aug. 2011. Downloads make up over 90 percent of digital sales, and they have only been growing at low single-digit rates lately. At the same time, the music subscription services market has generated less than $200 million in sales pretty much since it started. Back in 2001, Listen.com launched Rhapsody, an on-demand music streaming service, one of the forerunners of the proverbial celestial jukebox that the digital music industry has been talking about for years. For $10$15 per month, that vision delivered unlimited access to millions of songs. Rhapsody is still around as an independent company spun off from RealNetworks and Viacoms MTV Networks. Companies like AOL and Yahoo and a now-legitimate Napster have all exited the market or been acquired by Rhapsody, though theyve been joined by MOG, Rdio and, most recently, Spotify. But subscription services, whether for on-demand streaming or for personalized radio from Pandora or Slacker, have never attracted more than a million or so paying subscribers in the U.S. Ten dollars a month is a great deal for serious music fans with eclectic tastes, but its far more than mainstream music listeners have historically spent. Everybody listens to music, but a good portion of Americans traditionally

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stopped buying music once they got out of their teens and early twenties. The majority of the remaining buyers have typically bought a CD or two per year. So there we were in 2010: A fairly sluggish $2 billion digital downloading market and a stagnant $200 million market for subscriptions. Pandora made most of its money from advertising. Artists complained about a lack of digital royalties and were still suing labels and publishers over which types of royalties apply to different formats. Insiders told me Google paid more royalties to rights holders than the subscription services, but that was because YouTube showed so many music videos. Digital music seemed stale and going nowhere. Now all of that is changing.

Outlook: key disruption vectors in digital music

Ask executives in the industry whats different about digital music in 2011 than in 2005 and they will say mobile. And quickly thereafter they will add social. Pandora had a successful IPO in June, showing that there is a real business in personalized radio, and CTO Tom Conrad told the audience at GigaOMs Mobilize conference last month that 70 percent of Pandora listening was done on smartphones. All the streaming services are available as mobile apps, and companies like Apple, Amazon and Google are building anywhere-accessible cloud-based music lockers and synchronization services. Om got the scoop on social network Facebooks digital music dashboard strategy before it launched, and MOG says its audience has grown 246 percent due to Facebook social media integration. After taking literally years to sign licensing deals with the major labels, Spotify came into the U.S. from Sweden with aggressively priced subscriptions and ad-supported free, on-demand streaming. Facebook highlighted Spotify at its f8 developer conference, giving Spotify founder Daniel Ek time onstage to show off its social media integration. And a handful of startups, led by Turntable.fm,

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are defining the next era of social music: immersive creation and curation. Even a slightly beleaguered phone company is onto these trends. In November Research In Motion launched its BBM Music service, a $5 per month digital songsharing scheme for BlackBerry phones that uses its popular messaging system. Critics harp on the relatively small 50-song collection that a user has available on his phone, but lots of mainstream users should find that adequate for their high-rotation listening.

Methodology
For this analysis, we have identified six competitive areas or vectors where the key players will position themselves to varying degrees in the digital music marketplace in coming years. These disruption vectors are areas in which large-scale market shifts are taking place. Disruption in a market along certain vectors like business model, discovery, customer experience usually determines a winner over the long term. Because of this, we have decide to break down these vectors and analyze how the players will leverage or drive the shifts within the vectors to advance their competitive position on the road map toward winning in digital music. Below is a visualization of the relative importance of each of the key disruption vectors that GigaOM Pro has identified for the digital music marketplace. These are the areas in which companies will play off the disruptive shifts over time to achieve sustained growth in market share and revenue.

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Figure 1: Digital music disruption vectors

*Distance from center indicates relative importance

Source: GigaOm Pro

The graph above shows each of the six disruption vectors ranked by their relative importance. Over time the relative importance of a disruption vector may change, but currently we believe that anywhere access is the most important. The companies that best deliver music services to listeners and buyers wherever they might be on the move, in their car, in their living room will gain share. Close behind anywhere access are two business model shifts (rent/buy, subsidization) and consumer experience (discovery). We expect that the role of labels and consumer listening patterns will evolve as well, but they will present fewer opportunities for companies to gain significant market share.

Anywhere access
MP3 devices drove the first wave of digital music, but mobile phones are a different story entirely. While MP3 player ownership seems to have peaked at under 50 percent, mobile phones are ubiquitous, and one-third of U.S. adults already have smartphones. AT&T customers could get Pandora on some feature phones as far back as 2007, but all the momentum these days seems to be with smartphones and their app stores.
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Even more important, most Americans listen to music in cars. Users can plug in smartphones and MP3 players to their car stereos, but in-dash integration would make digital music usage explode and truly challenge radio. Sirius XM satellite radio is a $2 billion business with 20 million subscribers 10 times the size of subscription digital music. And Sirius XM gets most of its users from its 45-percent-plus conversion rate of users who get free trials in their new cars. Getting any new, third-party technology built into cars is challenging: Auto product-design cycles are long, and relationships are difficult to craft. Among digital music companies, Pandora is furthest along in working with auto brands like BMW, Mini, Toyota, Lincoln, Ford and GMC to get its mobile app to integrate with their audio systems and dashboard displays. Likewise, Pandora is widely available on home audio devices, Blu-ray players and on some advanced TV sets. Record label executives tell me that most home listening is done through home theater systems these days. As more TVs become Internet connected and app friendly, it will be easier for any digital music service to get into living rooms without having to do special deals with hardware manufacturers. Home Wi-fi proliferations ease connection hassles, too. Over-the-air music streaming to smartphones doesnt require 4G connection speeds to deliver a good listening experience, which alleviates some complexity for mobile subscription music services. Subscription services have tried to solve access problems with digital rights management (DRM): Protected songs are synched and stored locally on devices. That has been one of the few examples of using DRM to deliver innovative new services rather than using it to lock down outmoded business models. But moving between towers is painful, and underground access is problematic. He who synchs best may win.

Discovery
Im going to cheat a little with the definition of discovery. In a music context, discovery usually refers to how listeners find new songs and artists. There will be disruption there but also in how users get exposed to and adopt new digital music

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services. This is where social media comes into play. Surveys show that terrestrial radio is the No. 1 way fans find new music, followed by recommendations from friends. The influence an individuals friends have over his music discoveries intensifies for younger audiences. For the past several years, services like Pandora and Rhapsody and retailers like Apple and Amazon have made recommendations or created programming based on pattern-matching technologies derived from collaborative filtering (customers who liked this also liked that) and, in Pandoras case, human analysis of the musical characteristics of songs. Myspace was the first social network that made music one of its central offerings, but Facebook has taken social music listening to a higher level, while Apples efforts to socialize iTunes with Ping have been lackluster. Via Facebooks latest platform upgrade, users who listen online with apps like Spotify, Rhapsody and MOG, even outside the Facebook site, can opt to have their listening choices broadcasted to their friends as an automatic stream of results. If they want to listen to a song a friend has heard, they can click through to add free digital music apps. Facebook has a dedicated music channel that gathers up that info for on-demand as well as real-time viewing and for music app promotion. In many cases, they could already Like songs through Facebook Connect or share GetGlue check-ins on Facebook and Twitter. Companies that harness these new social discovery tools, make off-PC sharing and recommending easy, and integrate those tools with other recommendation and search tools will gain competitive advantages for their digital music services.

Rent/buy
It is oversimplified to describe music on a rental versus purchase basis, but I suspect that is the way many consumers will view on-demand subscription services. While lockers can deliver access to a music fans collection, that collection doesnt disappear when he stops paying a monthly fee, assuming he retains his CDs or digital copies on a local hard drive. But the on-demand streaming services often pitch their wares as an

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alternative to downloads or CD purchases. It is a wrenching change for consumers and suppliers to transition back and forth from a primarily purchase-oriented business to one that depends on subscription fees or rentals. Those models coexist in publishing and video, and video has even gone through major shifts in emphasis: first to DVD rental, then purchase and now back again to streaming rental or subscription. Unlike most non-kids movies and TV shows, music listening occurs over and over. Traditionally, music consumption economics have favored ownership or free, adsupported radio listening. Suppliers like subscriptions because they deliver predictable revenue streams and can be priced to make money off breakage (i.e., less than maximum use, la health club memberships). Plus its easier to renew a subscriber than to find a new customer. As noted, converting music listeners from occasional CD purchasers to subscribers would result in overall higher consumer spending. Thats the dream of rights holders and service providers alike. In a metered subscription world, artists and rights holders could be paid by usage rather than gear up for big album releases that arent so big anymore. Payouts based on listening would be more fair and more recurring than releasing strings of singles. But artists will miss their advances, and they have always complained about entertainment industry accounting and payment. Royalties and rights remain contentious. Taken all together, you can see why changing consumer attitudes toward ownership, dramatically shifting business models and solving royalty schemes could be hugely disruptive. The providers that figure out this morass profitably will be big winners.

Subsidization
In the U.S., over-the-air analog radio historically paid little royalties to music rights holders. Radio was viewed as a promotional vehicle for music purchases, and radio
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stations made money by offering free listening and mostly local advertising sales. Thats not the case with satellite or Internet radio. Those services pay much higher fees many set by compulsory licensing rules established by copyright laws to labels, publishers and rights organizations, who, in turn, pass on royalties to artists and composers. On-demand streaming commands even higher fees, as much as three times the cost of Internet radio. So subsidizing the cost of music rights through advertising is poised for major disruptions in terms of who sells the ads and who gets revenue from them. The ondemand subscription services operate freemium businesses. Spotify seems to be the only one that is trying to make money off ads; the others use advertising to subsidize what amounts to free trials that they hope to convert to paid subscriptions. As noted above, Pandora makes most of its money off advertising, but it isnt consistently profitable and its rights payments are going up. And subsidization doesnt necessarily have to depend on advertising. BBM Musics price is likely due to the licensing costs associated with its fairly limited sharing ability. BBM Music would seem much more innovative if it were a free service geared to Blackberry customer retention. Nokias Comes with Music program hid the cost of songs it let users keep but tied ownership to the handset. It didnt catch on. Telcos and cable companies are focused on increasing revenue per subscriber, and they usually add digital music services for additional fees on the bill. In France, an on-demand music service from Deezer has had some success by being bundled into a premium tier of services from mobile carrier Orange that partially hides its cost from users.

Listening
Americans are used to well-established listening experiences: radio, album-oriented on-demand listening and live events. Personalized radio and on-demand streaming from playlists have been available for 10 years. YouTube has had searchable music videos since day one of its existence.

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So what might disrupt music listening? Turntable.fm has attracted attention for its easy online you are the DJ experience that features some game mechanics and encourages dialogue and trash talk. This can be lots of fun, and listeners that dont want to engage in lean-forward, visual participation can always just log on and run the music stream in the background. But such active music participation including creating and sharing playlists as well as composing, remixing or otherwise curating or creating songs likely will be too much for mainstream users. They will be cool features for a minority of users, while services that gracefully blend or shift between multiple modes of listening will be the norm. Consumers have no problem moving between radio, on-demand and social music experiences delivered by different applications or services today.

The role of labels

In the U.S. and Western Europe, the big four record labels (Universal Music Group, Sony Music Entertainment, Warner Music Group and EMI Group) have historically accounted for 70 to 80 percent of music sales, with independent labels making up the difference. The A&R (artists and repertoire) departments of labels act like venture capitalists, discovering and funding new artists. Labels do the bulk of music marketing, which in the past was mostly about getting airplay on radio. Labels manage a portfolio of artists, and big hits help subsidize artist development. Besides consolidation EMI is always for sale, and indies usually get bought when they get big the business of record labels is ripe for disruption. Artist relations are always contentious, and the labels duel with artist management companies over socalled 360 degree deals for concert revenues, sponsorships and licensing. The labels are more likely to be disrupted than to do the disrupting. One can imagine retailers like Apple, or, more likely, Amazon, getting into the label business, just as Amazon has created imprints and self-publishing tools for book authors. But the fundamental roles of talent development, funding and marketing remain necessary. Social media hasnt made any superstar-scale artists yet, and bands can only make money selling themselves after they have had hits. Social media data analysis and viral marketing

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remain to be exploited effectively.

Companies to watch
A handful of companies seem to be well aligned with the digital music market disruption vectors illustrated above. They include: Spotify. The Swedish on-demand service gained clout in Europe and finally entered the U.S. market this year. It is the darling of the pundits, due to its newness and aggressiveness. Its features, mobile capabilities, catalog and social media integration arent particularly differentiated from Rhapsody, MOG or Rdio, but Spotify is making the most noise and attracting the most attention. It also seems to be the only subscription service that is aggressively using advertising for more than just limited trials. However, Spotify reportedly had to make big up-front payment and performance promises to the labels to secure music rights, even though each of them has a small share of the company. And its contracts may be short-term. We will have to see if it can maintain its high conversion rates to premium subscriptions and make and share enough revenues to build a lasting business. Pandora. Pandora is well along the anywhere-access path, with heavy mobile usage and integration into automobiles and home devices. Its new HTML5 website design will enable it to experiment and iterate on new features including social media integration before rolling them out to its apps. Pandora executives like to say that Pandora is the future of radio while Spotify is the future of the record store. Pandora may have the easier path in competing with Sirius XM rather than changing consumer behavior. However, it faces challenges in building out its advertising business. Historically radio is a collection of local ad markets, and selling locally could be expensive: Small businesses arent very digitally savvy and require hand-holding. Pandora needs to

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develop a national audio ads market, because most listening isnt done with the users eyes on the screen, watching display or video ads. MOG. MOG only recently started experimenting with free on-demand music, and it has added some interesting gaming mechanics for users to fill up their tank with tracks and to promote viral distribution. Even with a network of 1,500 affiliated music blogs, MOG uses advertising mainly to subsidize trials it hopes to convert to premium subscriptions. MOG is on a lot of smart-TV hardware, including Roku, Sonos, LG, Samsung, Vizio and Boxee, and it is working with car companies like Mini and its parent, BMW. But it thinks automobile integration will take three to five years to leverage plugged-in smartphones first before theyre built in to the auto hardware. Rhapsody. Rhapsody hates it when I call subscription services a rental business, because its not about onetime listens. Rhapsody thinks it has proved that the subscription model can be successful for an at-work audience, and adoption will grow next on mobile, with the car and home stereo to follow. Apples shift to the appscentric iPhone and iPod touch made life a lot easier for Rhapsody, which used to reverse-engineer Apple technologies to enable iPod support for its downloaded songs. In 2009, the last time it reported revenues publicly, Rhapsody made more on sales of downloads ($20 million) than in advertising ($12 million), and the two together were a quarter of the size of its subscription business ($129 million). Rhapsody bought out the customer bases of Yahoo and Napster, but even a partnership with MTV never got it much over 1 million subscribers. Facebook. Facebook is enabling music services to jump-start its user base with its powerful viral promotion and sharing platform. But it will be a long time before music is a billion-dollar business for the social network giant. Right now, it doesnt sell audio advertising, nor does it charge apps companies to be a part of its network. It will happily sell music company ads to promote themselves, but its social sharing may be all they need. Facebook makes a fortune off social gaming apps that sell virtual goods by making them use its Credits system and taking a 30 percent cut. But premium

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subscription services I talked to said they couldnt survive sharing that much of their fees, and so far Facebook isnt making them use Credits. Unlike Apples mobile apps store, Facebook encourages music companies to monetize off its site. And Facebook is working on HTML5-based mobile content and network syndication techniques that might offer apps companies an end run around Apples restrictive policies.

Upsetting the status quo

By our analysis, most of the companies poised to disrupt digital music are offering premium subscription services, even if that is not Pandoras main revenue stream. Each of them, and Facebook as well, are helping make digital music available wherever a listener might desire access. They are also using social media for music discovery, sharing, promotion and to deliver new listening and purchasing experiences. A company like Turntable.fm might be disruptive, but until it discovers a business model, its impact is likely to be only along one or two of the six disruption vectors we have identified. Companies like Apple, Amazon and Google also appear to be innovating more narrowly than the disruptive companies we have called out. As the single-most-important driving force in the first wave of digital music, Apple is in a good position to prosper from digital music. But does it have the motivation to disrupt its own current market leadership? Apple has faced the classic innovators dilemma before, and it did far more than simply adapt gracefully. Just as it once established the graphical user interface, then launched the gesture-based interface, Apple is entirely capable of upsetting the status quo in digital music.

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The future of connected health: anytime, anyplace by Jody Ranck, DrPH

The health technology space is now undergoing a potentially disruptive shift, not only in how health care is delivered but also in how we think about the physician-patient relationship and even our own bodies. Much of this change is due to the growth of connected devices, from Web 2.0 platforms for knowledge sharing and the ubiquity of cell phones to new sensors and medical devices capable of remotely monitoring vital signs. The range of applications in connected health covers the entire gamut of issues having to do with care: wellness and prevention, chronic disease management, acute care and aging. In the following pages, we will examine these factors, as well as what is driving the evolution of the health care space. We will also discuss some of the companies, services and organizations to watch in the coming years.

Aging global population and rising health expenses

A recent UN study called The Global Economic Burden of Non-communicable Diseases (PDF) estimated that the five most common chronic diseases will cost the world over $47 trillion by 2030. Those chronic diseases are heart disease, chronic respiratory diseases, cancer, diabetes and mental health issues. In the U.S., over 67 percent of baby boomers have one or more chronic diseases,1 and nearly 75 percent of all health spending is linked to chronic heart failure, chronic obstructive pulmonary disorder and diabetes approximately $1.7 trillion in spending per year.2 This trend is intensified by current global demographics, in which the number of aging persons worldwide has tripled in the past 50 years.3
2010 Survey of Health Consumers: Key findings, strategic implications. Deloitte Center for Health Solutions, May 2010. 2 Stachura, M. and Khasanshina, E. (2007). Telehomecare and Remote Monitoring: An Outcomes Review (AdvaMed 2007). 3 World Assembly on Ageing, World Population Ageing, 19502050.
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The U.S. medical care system is also weak when it comes to keeping those with chronic diseases out of the hospital. Once released from the hospital, alarming numbers of patients are readmitted, though most of these cases could be prevented by appropriate technologies that enable remote monitoring. The result in most OECD countries is that health expenditures per capita are rising at a time of significant belt-tightening. Indeed, health care costs are increasingly viewed as limiting national competitiveness in countries like the U.S., where health care expenditures may soon reach 20 percent of GDP. These statistics point to tremendous unmet needs that the technology sector can potentially address, which would ideally result in significant savings. The exact amount of savings is still to be seen, given that most connected health technologies are in the early stages of development, but it would be wise for technologists and investors to proceed with some caution. Dysfunctional health systems, where the costs of services are not transparent at the time of receiving care, for example, can eat the dreams of technology startups alive if one does not truly grasp the nonsystem that is health care. That nonsystem involves a complex network of perverse incentives, barriers to entry and cautious technology adoption, given the past history of failures. And technology failures in the health system are nothing to sneeze at: A typical health IT engagement can take three to five years to implement and runs in the tens of millions of dollars, as well as requires a complex regulatory environment. Health care is a space that has struggled with the challenge of behavioral change for decades. The macro trends described above intersect with a fascinating mix of sociotechnological trends that are creating a ripe environment for disruptive approaches and fresh thinking to the health care space. The innovation barriers in health care often arise from a system that has evolved from what is typically described as a sickness economy, which rewards health providers and services for treating patients after they are already ill. Quite simply, prevention doesnt pay in health care. However, there are some early signs of potential systemic change down the road. The

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Affordable Care Act of 2010 places incentives more in the direction of improving health outcomes and quality of care. In January 2012, the Accountable Care Organization (ACO) Initiative will be officially launched, and these organizations of hospitals and physicians will be jointly accountable for managing and coordinating care for better outcomes. Technologies that can facilitate connectedness in a manner that produces better outcomes and quality of care will be particularly useful. More importantly, if the health system and technology innovation can be married appropriately, there will be many opportunities in this sector for the foreseeable future.

Where technological and social change meet: opportunities in connected health

The Edelman Health Barometer 2011, a survey that polls over 15,000 individuals worldwide on their health needs and perspectives, revealed that increasingly, individuals think about health in terms beyond disease. They link it to concepts and descriptors such as action, social and opportunity. With that, a more prominent role for mental and emotional health, as well as lifestyle, is growing as a key influencer in the health landscape. Connections to family and friends are viewed as playing a major role that is sometimes as important as the role of health providers themselves. The traditional top-down approach to medical sciences is being chipped away by the sheer computing power that connected health puts in the hands of citizens and the ability of platforms to scale and share data. This will undoubtedly have a cultural impact on how we think about privacy and the creation of new medical knowledge in the future. Health 2.0, or the use of social media in health and health care, is also a growing piece of the health enterprise ecosystem, despite its rather mixed history of successful business models. In May 2011 we saw a first in the health arena when patients utilizing the platform PatientsLikeMe.com published the first social networkbased, peer-

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reviewed biomedical journal article. It analyzed ALS sufferers own health outcomes from off-label use of the drug lithium.4 This was remarkable in that it demonstrated connected healths power to change the boundaries of legitimate knowledge production. The result was that clinical data became available to patients in a much more expedient manner than it would have otherwise been through traditional clinical research protocols. Phenomena like PatientsLikeMe, as well as new types of patient groups, highlight a trend that is often overlooked by investors and technologists in the health space: citizens engaging with technologies through shared biological experience. This is animating new ways of thinking about networks and the body, and it is creating new opportunities for collaborative and participatory research as well as crowdsourcing in some areas of health sciences research. Luciano Floridi notes that we are becoming information organisms, or inforgs. Part of this shift means that the body is shareable, at least in terms of information and data. Anthropologists refer to this as biological citizenship, and social networking platforms enable even those individuals with rare
disorders, such as Crohns disease or Huntingtons disease, to reach out across the

world and find others who share their conditions. They can then aggregate data and knowledge and even start new companies for orphan drugs. And these patients are demanding new cures and therapies and access to new technologies. The quantified self movement is another social signal of change. Here, individuals are using devices and platforms to track their symptoms and bodily changes and to share their insights via the web. These so-called citizen scientists can use mobile devices, games and social media to report on or study a multitude of health phenomena, sometimes posing a risk to firms that play fast and loose with facts or evidence. The concept of the health footprint, meanwhile, captures the idea that when we do something constructive about our health, it can influence those around us. The more impact or influence we have, the greater our footprint.5 Companies are viewed as
Wicks, P. et al. (2011). Accelerated clinical discovery using self-reported patient data collected online and a patient matching algorithm. Nature Biotechnology 29, 411414.
4 5

Anthem, part of the Blue Cross/Blue Shield system, has created its own health footprint score in an attempt to take

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influencers of health footprints, and they can no longer afford to be viewed as not playing an active role in the production of health and wellness. Rather, they stand to gain in brand reputation by making an active contribution to health outcomes and healthier societies. What these insights support is the notion that new opportunities are arising out of the changing meaning of health. Succeeding in this space will require those involved to understand the qualitative and quantitative dimensions of connectedness and the dynamics of behavioral change. Our ability to collect real-time data via mobiles and sensors will undoubtedly deepen our insights here. Better tools are needed for stronger engagement with behavioral change modalities and more insights into how social networks can influence health outcomes. Companies that can demonstrate value creation in the connected health universe also accrue more trust and social capital, which impacts brands. Biocitizens are by nature connected, and they are looking for resources that can help them manage their health and wellness footprints better, particularly when it impacts the bottom line. Furthermore, the more-engaged often want to play a more active role in the development of programs and technologies.

Who to watch in the future

The connected health landscape is in its early days, but there are still a number of sectors and companies to watch. As mentioned earlier, investors would be wise to think of this space as a truly global marketplace with plenty of opportunities for the successful players at the base of the pyramid to enter the U.S. and European markets and play a disruptive role. The goal of these systems is to extend care within tight budgetary constraints, and the tight innovation sandbox at the base of the pyramid where purchasing power is low will increasingly be an excellent proving ground for health IT players, who will need to prove the cost savings of their programs. In the developing world we are focusing on innovations that can deskill tasks and extend the
advantage of the impact of social networks on health.

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reach of limited health and medical human resources. In the OECD contexts we can find opportunities to disintermediate expensive health resources through technologies that can offer quality and precision care in some cases, at a lower price point. This is also a matter of providing more than episodic care during acute situations and finding affordable pervasive monitoring approaches that can prevent expensive care in tertiary institutions such as hospitals. Remember also that the market for devices and services is growing dramatically for chronic diseases such as diabetes, cardiovascular disease and even cancer in many middle-income markets.

Health 2.0
The use of social media and social networking in health has been growing over the past several years. Aetna and many health plans in general are moving more quickly into the health IT space. In fact, Aetna has been quoted stating that it is a health IT company now with an insurance business.6 A recent challenge award sponsored by Aetna illustrates the range of health 2.0 issues. A $6 billion IT investment by Aetna included consumer- and physician-focused applications that expand the capacity to grow in this area. The Aetna Foundation has also sponsored challenges around the problem of obesity and how to make the data on obesity more accessible to researchers and policy makers. The desired goal was to develop a browser app that would enable data visualization, predictive monitoring, comparative research, social networking, bookmarking and collaborative research. As the field matures and the evidence base demonstrates some success stories, we may see more companies remaking themselves as connected health providers along these lines. There are plenty of examples of lateral moves in this space: the Blue Cross and Blue Shields of the arena; South Africas leading health care success story, the Discovery Group, a pioneer in successful incentive programs for behavioral change; and Virgins HealthMiles program, to name a few. Given the current innovation drought in the drug pipeline, big pharma is looking for ways to shake up the disease management and drug adherence ecosystem. We are
6

Health 2.0 2011 Conference, Sept. 2011.

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likely to see firms such as Novartis and Pfizer making a play across the health 2.0 to mHealth spectrum and other connected health services. For the connected physician the major social networks to watch are Sermo and Ozmosis.org. In contrast to many in this space, Sermos business model is not advertising-dependent and relies primarily on selling access to anonymized content on the site to health institutions. Ozmosis is more targeted toward health care professionals, not exclusively physicians, and provides a platform for collaboration and knowledge sharing in an environment that is not anonymous. On the patient-facing side there is rapid growth. From the more established players such as Organized Wisdom and PatientsLikeMe, there are platforms that cover the range of needs, from knowledge on self-care and support to transparency in the marketplace. They include some of the following as potentially important players, given current levels of venture capital interest: Careticker (care management and planning), Skimble (fitness apps), Medting (health and medical information), Genomera (platform for consumer-managed open health studies), Health in Reach (transparency and providers) and Omada Health (diabetes, sharing data from connected devices). Then there are other nonprofit platforms such as TuDiabetes. These are vibrant communities of diabetics who constantly experiment with new technologies and social media experiments to engage diabetics in monitoring their conditions effectively and sharing insights about what works.7 It will be interesting to see which platforms will be capable of creating both a sustainable business model and impacting health outcomes or actual efficiencies in the system. The field is ripe for a rigorous analysis along these metrics. Despite our being several years into the health 2.0 growth trajectory, robust, sustainable business models are still emerging to show us how much staying power this trend has. More metrics on outcomes and impact would definitely improve the possibilities in this sector.

Gamification of health
7

Disclaimer: Jody Ranck, the author of this report, is an advisory board member of the Diabetes Hands Foundation, which sponsors TuDiabetes and EsTuDiabetes.

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The use of mobile and online games to change behaviors that can produce better outcomes is commonly referred to as the gamification of health. Since the early-mid2000s, organizations such as HopeLab have pioneered the use of games to improve outcomes for pediatric chemotherapy patients, for example. As the mobile platform has become more pervasive the use of gaming technologies in the form of incentives and social supports (or peer pressure) has become more popular. Keas has rolled out its power of play program, which uses gaming to incentivize the adoption of healthy behavioral change modules with employers groups. The system uses teams within organizations and peer support via competitions to incentivize wellness program engagement. In contrast to some other incentive programs, Keas utilizes a social gaming approach. This is an area with a growing audience, and the willingness to experiment gets at some of the drivers of behavioral change that are often the most challenging part of doing health care. Once again, the proof will be in the results, which we will need to see soon for this to be more than a passing fad. Fortunately, there have been some early success stories with games, such as HopeLabs Re-Mission, for children with cancer; the HopeLab obesity game called Zamzee; the use of the Wii platform for elder exercise; and Fitocracys use of gaming rewards. The more-connected games for health might provide ways to do social supports and peer pressure to increase engagement rates and, ultimately, outcomes. Humana has made a play in this space via Humanaville, a gaming environment that helps seniors find health and wellness information, with the idea that the intimidating task of navigating health can become more entertaining via a gaming format. Zenbucks, a startup focusing on creating a health care currency, will be game-platform-agnostic and will offer a currency that enables discounts on insurance premiums for adopting healthy behaviors and lifestyles. USCs Center for Body Computing aims to bring together wearables and implanted devices with games, entertainment and health statistics via a wide range of private-sector partnerships to change the health care delivery and prevention paradigm. Aetnas Mindbloom is focusing on bringing new insights on behavioral change together with social games, new media and persuasive technologies in its Life Game, a platform that encourages healthy lifestyle changes. Kairos Labs has

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produced Livn.it, a social game platform to change habits and addictions. Bayer has entered the gaming space through the acquisition of Didget; Didget is a glucose meter that plugs directly into a Nintendo DS that is loaded with the game Knock Em Downs: World Fair, where points are earned for adhering to the prescribed testing regimen.8 The gamification-of-everything trend is currently at the apex of the political economy of the cycle of hope and hype. Nevertheless, there are some areas here where we will likely see potentially high-impact games that do improve health outcomes.

MHealth
The mHealth space is evolving rapidly, with most estimates stating growth at over 20 percent per annum over the next three to five years. On a global scale, most mobile network operators have launched significant mHealth divisions, including Verizon, ATT, Vodafone, Bharti, MTN and Orange, in their respective markets. In the South Asian market the major players include Apollo Hospitals investment in telemedicine, mDhil (a major provider of health education information), E Health Points (a major social enterprise offering safe drinking water and primary health care via telehealth that looks to be scaling rapidly) and eyeNetra (a mobile device platform developed at MIT). Many of these could have applications appropriate for OECD contexts in the coming years. In the African market we see groups such as the Praekelt Foundation (South Africa), Voxiva (an early mHealth player with global reach, including the U.S. already) and Geomed (a South African customized-solution platform provider for clinical support). Global platforms for counterfeit drug detection such as Sproxil and Pharmasecure are also growing (in much of the developing world, 2070 percent of drugs on the market can be counterfeit, resulting in significant losses for companies and life-threatening health consequences). An interesting intersection to watch will be applications concerning mobile money and mHealth. This is because of the inefficiencies in health financing and the possibility that the applications will not only save costs but also catalyze new markets for microinsurance. Kenyas Changamka and Univicitys programs in the Philippines and Haiti
8

See BusinessWeek, http://www.businessweek.com/magazine/content/10_16/b4174062706997.htm

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are worth watching, due to the maturity of both mobile money systems and health systems that are putting universal coverage schemes into place. These schemes recognize the powerful role that the intersection of mHealth and mFinance can play in the underlying business model of universal coverage, which can extend access to insurance via administrative efficiencies. In the U.S. one of the most successful programs in terms of having evaluation results already is AT&Ts WellDoc solution for diabetes management. WellDoc has been proven to play a positive role in maintaining blood glucose levels in users. Ginger.io is also an interesting addition to the mHealth ecosystem; it brings analytics and mobiles together to drive behavioral change. Sensing and machine learning, a growing area in the connected heath infosphere, are used with actionable reports that compose part of a personal health informatics platform. Epocrates is another physician-oriented solution that has seen impressive growth over the past several years. The market for apps, as mentioned previously, is quite large, but few players have shown sustainable business models. A list of some of the interesting applications that demonstrate some of the unique advantages of mHealth in the ecosystem might include those that combine location-based services with health data such as iTriage, My Place History, Spiroscout, Allergy Alert and Sickweather.9 Other application areas include improving convenience for patients via ZocDoc (an appointment-booking platform) and Walgreens app for prescription refills. There are a growing number of radiological and medical imaging apps available for the iPad and even the iPhone, given the improvements in screen resolution. The list of apps currently available includes Osirix, eFilm Mobile, DermoMap, Surgical Radiology, Mobile MIM and Resolution MD, to name a few. One should also note that many of the mobile applications that use medical imagery will fall under the FDAs new regulatory regime for mHealth, provided the draft guidance issued in July is ultimately approved.

See MobiHealthNews for a good overview of these applications: http://mobihealthnews.com/13755/leveraging-location-inconsumer-health-apps/

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Medical devices
Consumer electronics are merging with the medical device area for more user-friendly connected devices to manage health and wellness. GE Healthcare is one of the biggest players in the connected health and medical device segment, with products such as Vscan. The Vscan is an ultrasound device developed for the Chinese market that has brought down the price point for ultrasound devices from the six-figure range to under $10,000. GEs Vscan competes with another low-cost ultrasound device from Mobisante that recently received FDA approval. Another leader in this area is Withings, the developer of connected scales that can connect to a data collection platform as well as to ones social networks. Philips has a number of connected devices, ranging from the fitness and wellness device DirectLife to Lifeline, a medical home and aging technology that provides medical alerts and detects falls as well as offers remote pill dispensers. Continua Health Alliances partners include over 250 companies and have a vast array of devices that can connect via Bluetooth. The remote-monitoring capabilities of many devices are enabling the creation of medical homes, a dream of the health technology world that has been long sought after but difficult to realize. GE and Intel have a major collaboration around the medical home and telehealth applications that can manage aging and chronic disease issues. This partnership highlights the belief that the home health care market could exceed well over $7 billion by 2012.10 Further evidence of this market is the Carlos Slim Foundations investment in CasaSalud, a Mexican chronic disease telehealth venture. The consumer technology market for devices is growing particularly fast. Fitbit and Nike, mentioned earlier, are joined by Jawbones UP and a slew of new devices that utilize tracking and occasionally a social networking component. Devices that track sleeping patterns along with fitness and activity levels are popular, given the role that lack of sleep plays in predicting poor health outcomes for some individuals. Some of the technologies to watch include: Basis, Inc.; MyZeo for tracking sleep stages; Switch2Health, a wearable that offers an incentive program via gaming; Striiv, a gamified pedometer; and BodyMedia. These join a growing list of applications on the consumer electronics side that offer connected devices for wellness and fitness.
10

http://www.fiercemobilehealthcare.com/story/ge-intel-collaboration-clears-final-regulatory-hurdles/2011-01-04

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Sensors and the Internet of things

As the price point of sensors decreases, we are seeing growth in the market for sensors that can be attached to things or the body and used to record vital signs, exercise intensity and environmental information and send this information to the web. Startup Green Goose has developed a number of sensors with RF and accelerometers that can be attached to a wide range of devices and a small base station that records activity levels. The idea is to use these sensors to track healthy behaviors in a gaming environment that will offer rewards. It has an API to encourage other developers to create applications for the sensors. There are other examples, such as the use of sensors in pill caps to monitor drug adherence regimens (Vitalitys GlowCaps) or Pachubes use of sensors to record environmental contaminants. There is an entire ecosystem of sensors and wireless devices that can be deployed for environmental health and vital signs monitoring of patients in the hospital and at home, as well as applications for the food chain and animal health, a major global market. The regulatory and sociocultural dimensions of the Internet of things still need to be worked out to realize the potential of the technologies. But we can expect to see some potentially disruptive business models emerge, given the vast realm of use cases and strongly felt need for more efficient systems and more real-time vs. episodic monitoring of chronic diseases. Philips, Microsoft and the government of China are major investors in the emerging Internet of things; health is one of the important areas for growth, with goals of creating digital hospitals and more possibilities for aging in place, for example. As this area expands we may see radically different business models built around new health and data services that these technologies can create.

Key issues for the future

The overall opportunities for connected health technologies are growing rapidly. MHealth is the subsector with the greatest growth potential, but one should remember that the areas outlined in this report are often overlapping and in some contexts artificial. Health 2.0 and social networking are increasingly mobile, and many

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mHealth applications rely on cloud computing. For example, the Internet of things has sensors that communicate to the cloud or a mobile device. As Jane Sarasohn-Kahn argues,11 were likely to see more of what Pramod Gaur of United Healthcare calls telehealth as a service, or TaaS. Due to bandwidth issues, physicians do not want to be the primary recipients of health data from remote monitoring technologies, nor do they desire to manage the technology infrastructure involved in telehealth. Consequently, there is an opportunity for other service providers to offer cloud-based services to fill the gap. TaaS fits at the nexus of patients, providers, payers and caregivers, or the community. This is a clear indicator of what John Zysman refers to as the algorithmic revolution that is coming to health care: Health is increasingly becoming an IT service where the boundaries between product and service are blurred. This offers new opportunities for value-added services and new disruptive business models in the connected health space. The mobile is increasingly viewed as one of the central devices that peripherals can be tethered to for clinical applications as well as some self-care technologies. The iPhone 4S has the new Bluetooth 4.0 embedded and will enable a greater range of sensors and wireless monitoring technology to be used. This will rid clinical settings of a great number of wires. The Health Device Profile of Bluetooth 4.0 allows for greater interoperability and data transfer, with some predicting that this will dramatically advance the promise of body area networks in the near future.12 The Internet of things is adding to this ecosystem via sensors and remote monitoring devices that can connect to the Internet and mobile devices as well. For the past several years there has been a great deal of discussion in the mHealth space about the lack of robust business models for mHealth to scale, given the policy lag in providing reimbursement mechanisms and the manner in which many global health mHealth applications appeared to be stuck in the pilot phase. We are now beginning to see more programs scale, and quite a number of evaluations are being conducted that can help build the evidence base for policy makers. The key barrier in the U.S. context, however, is still the incentives structures, which favor acute care over prevention. This is different in closed health systems such as the Veterans Administrations and Kaiser Permanentes,
11

The Connected Patient: Charting the Vital Signs of Remote Health Monitoring. California HealthCare Foundation, Feb. 2011. 12 http://www.imedicalapps.com/2011/10/apple-iphone-4s-consumer-smartphone-offer-bluetooth-40/#more-18270

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where the need to contain costs and provide incentives are more closely aligned. One major policy change that gives some hope for a shift in reimbursement policies is the Affordable Care Act and the Center for Medicare and Medicaid Innovation. The center has been created to drive innovation in new delivery models that can improve the quality of care and allow lower expenditures. With $10 billion in funding from 20112019 and a mandate to support accountable care organizations virtual networks of providers who are jointly accountable for outcomes this could provide the proving grounds for a great many connected health enterprises and could contribute to the evidence-base development that will be critical in expanding the market. Another key issue is the globalization of connected health. Michael Porter13 noted several years ago that health sector is moving beyond local and regional markets, their traditional focus. One can argue that connected health acts as an important accelerant of this change for some of the technologies in this space, since many of the breakthroughs are coming from emerging markets. In many ways the bleeding edge for mHealth and eHealth could be argued to exist in places like South Africa, the Philippines and India, where experimentation in a tighter innovation sandbox may produce innovations capable of scaling and considerable cost savings in the U.S. One recent example in the eHealth space is the partnership between U.S.-based XeoHealth and South African eHealth player MediKredit Integrated Healthcare Solutions. MediKredit has been one of the most successful South African software firms producing real-time adjudicated claims software (i.e., the ability to know what a health service costs at the point of consumption, which borders on the almost-fantasy level in the U.S. context). It has adapted its product to the U.S. context with some very early promising results.14 A central facet of this relationship and XeoHealths success on the U.S. front is the strategy to combine deep health care experience with the ability to cultivate trust with health system players. This is a lesson that startups will need to embrace to survive in the current health care
13 14

http://hbswk.hbs.edu/item/4255.html Interview with XeoHealth CIO Lisa Miller and Etienne Dreyer of MediKredit (Oct. 14, 2011).

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context: It is never just a technology or engineering solution, and underinvesting in health system expertise in the early stages may limit ones options down the road. In my experience, the testing grounds of some emerging markets make more healthsystem-savvy startups than what we commonly find in the U.S. In addition to GE Healthcares Vscan, another sign of the growing role of emerging markets is the decision by CardioCity.org, run by McLaren F1 Racing executive Dr. Chris Crockford, to target China as the initial market for the development of his low-cost ECG technology Rhythm Pad. This decision is due to the regulatory hurdles and the perceived ability of his technology to scale in China first, during which he will build the evidence to introduce the platform to the NHS in the UK. We have also highlighted some of the sociocultural obstacles and opportunities from the growth of the biocitizenship phenomenon that capture the way that social networks and new understandings and experiences of the body and biology are driving the creation of new types of communities and demands for access to technology and data. An area of intense study in social science circles, this has been poorly understood by the commercial sector and will likely play a growing role in terms of engagement (both the mechanics and user experience side of the equation). But it can also play a disruptive role, as we saw with global movements around access to antiretroviral drugs in the 1990s. The growth of data and understandings of biology and health outcomes are likely to change the politics of technology in unexpected ways. Privacy, for example, means different things for different types of patient-citizens in the health care arena. Sharing a cancer diagnosis in 2011 in the U.S. is quite a different matter from sharing ones STI status. The struggle over the meanings of privacy and security in the connected health ecosystem where more devices are collecting more information and security standards for many medical devices remain subpar compared to your credit card, for example demonstrates the potential for volatility in the market. This could mean tremendous opportunities for those who have the interpretive tools to make sense of this in the context of anytime and anyplace health. At the end of the day, a big part of health is the story of data, and the technology is the tool serving the goal of better use of data. How the data value chain expands to become

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more inclusive could become a central driver in the engagement of citizen-consumers and the foundation for new markets and services as well as public policy and regulatory environments. The latest report from IBM on the future of connected health provides some insights into the various market segments for connected health technologies in the near future.

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Market segments for future connected health technologies

Source: IBM

The IBM report emphasizes that the trend is toward more prevention and care management of chronic conditions. Even in low-income markets there is growing recognition of the burden of noncommunicable diseases. However, the donor community is still largely funding traditional infectious disease programs. The trick here will be to develop the platforms that can be used across infectious and chronic diseases and to avoid technology policies and frameworks that continue to build siloed approaches that inhibit scale and maturation of the market. In the context of the global market, where growth rates look promising, one barrier that could foreclose opportunities is the slow pace of enterprise architecture developments. A major global movement for eHealth was launched in 2008 to catalyze leapfrogging of eHealth efforts in emerging markets. To date, front-end deployments have outpaced the back-end systems that could bring down the costs of scaling and interoperability and bring the dream of ICTs for health into fruition. The enterprise

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architecture section is a substantial piece of work and could use an approach that draws upon innovative public-private partnerships capable of playing the role of the innovation commons for this space. Analogous situations exist in the OECD contexts where the evidence base, standards and even architectural approaches as espoused by Ida Sims and Deborah Estrin could use greater support. The supply of professionals trained in health informatics who have the ability to manage big data projects also lags, and this is a global problem. Connected healths rationale often rests on the fact that we face a shortage of health professionals to meet the demand of an aging world. Because we lack those professionals, the capacity of health systems to manage these projects needs greater government and corporate support. All of these issues lead to the need for a concerted effort to innovate on the policy front, from reimbursement policies to capacity building and broader technology policy approaches that offer privacy and security protections but are also capable of driving innovation. This is critically important for the health of the worlds population as well as our economic future. The overall picture is one of tremendous opportunities. However, a number of important barriers currently prevent the market from becoming what it could be. Moving forward may require some creative and imaginative use of cooperation and a concerted effort to build a collaborative market where competitors work closely around some of the structural barriers (reimbursement policies, standards, architectures, privacy and security frameworks, capital markets, etc.) and can still compete fiercely. Successful connected health ventures require the ability to assemble complex ecosystems of stakeholders where incentives may not always be clearly in alignment. Cooperation will become an essential aspect of the organizational capacity of connected health companies dealing with a system where organizational interoperability is at least as important as technological interoperability. One of the hidden challenges of the cloud is that the technology may greatly enhance the ability to share data, but many health organizations will still behave in analog ways rather than work as networked organizations. This will continue until trust and new ways of thinking about organizational form and change emerge.

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We are likely to see more commons-based, or cooperative, solutions in terms of innovative public-private partnerships; the use of service design in the complex ecosystems of devices and organizations; and more-patient forms of capital, given the issues of trust and complex systems that need to be worked out for technology implementations to succeed in the long term. One of the critical issues getting in the way of this, at least in the U.S. context, is the current political discourse around health policy that remains locked within an antiquated ideological discourse that is lightyears removed from the context of existing health issues and systems. For a sector that will shortly consume $1 out of every $5 of GDP, this is a rather dangerous situation with high stakes. John Zysman cautions that in the context of what he calls the algorithmic revolution with ICT-enabled transformation of services, investment in social services is critical to enabling a more experimental and flexible workforce. Zysman points to Denmark as a case study of an effective way to offer protections and enough flexibility to foster innovation.15 The current politics of austerity combined with the slow pace of overall social policy reform in the U.S. could mean that other markets will become more interesting in the long run for investing in connected health if current political trajectories are played out on the U.S. domestic front. On top of this, as connected health science will increasingly demonstrate over the coming decades, health is intimately connected to other sectors of the economy. Building the right technology infrastructure today that can move us closer to a rational system will weigh heavily on tomorrows economic competitiveness.

15

John Zysman, et al (2010). Services with Everything: The ICT-Enabled Digital Transformation of Services. BRIE Working Paper 187a.

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Cleantech, meet connectivity: a new era of energy efficiency by Adam Lesser

When people think of cleantech, they typically think about solar panels or wind turbines or labs trying to convert biomass to oil. But the momentum right now in cleantech is as much about connectivity and how it can drive energy efficiency as it is about advancing sources of renewable energy. While perhaps overblown as a verdict on the success of all renewable energy companies, Solyndras collapse has confirmed a broader trend in cleantech VC: There is less patience for companies that require major debt capital and are trying to beat the utilities at their game. Rather, investment will fund companies that reduce consumers and businesses energy footprint, often with the use of software and mobile devices. Connectivity is at the heart of this broad trend in cleantech. If you want to revolutionize how a commercial building uses lighting and HVAC to reduce energy consumption, you have to find a remote way to easily get data on temperature and light from various parts of the building and feed it back to a network. Siemens is doing just that with its Apogee system, which introduces the use of wireless sensors to improve the data available to building automation systems (BAS). If you want to reduce vehicle ownership, you will need an easy way to find and unlock a rental car. Car-sharing companies Getaround and Zipcar both let you do this on an iPhone. And if you want to track and change how users on an electrical grid consume electricity, you will need a way to connect customers energy use to the network. Silver Spring Networks, which filed for an IPO over the summer, does that by providing IP-based networking between customers and utilities. It envisions an iPhone app as a key tool to giving customers granular data on their energy use. So if cleantech had once been thought of as just the energy-generating technology that could move the economy off fossil fuels, the evolving concept of cleantech is about altering consumer behavior. This is done by accelerating the data that various systems have about those very consumers and using it to reduce consumption. Sunil Paul, the founder of venture capital firm Spring Ventures, has gone as far as introducing the

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term cleanweb, which he defines as a category of clean technology that leverages the capability of the Internet, social media and mobile technologies to address resource constraints. The Spring Ventures founder hosted the Cleanweb Hackathon in San Francisco in September, an event where developers competed to produce an application that would reduce resource consumption. The winner was a Google Chrome browser extension that showed online shoppers the total cost of ownership of a given product, including its lifetime energy use, as they shopped for it online. Imagine buying a toaster and knowing exactly how much energy it would cost you over the next three years, making the true cost of the product, along with its energy footprint, clear. As the web and mobile connectivity change our consumer experiences, ranging from renting cars to consuming electricity to shopping online, the opportunities to redefine cleantech are rich, and they are already happening.

Car sharing
One of the most innovative new approaches to using technology to create a cleaner and more sustainable world is the emerging business model centered on a share economy. At the heart of the share economy is a strategy that says the combination of software and connectivity can create tools to unlock sustainability by allowing people to share resources. There is probably no better example of the importance of connectivity and location information in cleantech than the car-sharing industry. The ability of a mobile device to know where the driver is, where the rental car is and then have the ability to unlock the car is a powerful mix that makes the prospect of giving up a car that much easier. A recent paper from the University of Californias Transportation Center showed that car sharing does reduce vehicle ownership, with car-sharing families owning 0.24 vehicles per household versus 0.47 vehicles per non-car-sharing household. Car-sharing leader Zipcar swung to profitability for the first time this past quarter, a promising sign for other share-economy companies like Loosecubes and thredUP,

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which are trying to disrupt the commercial office space and childrens clothing sectors, respectively. Zipcars iPhone app made Times 50 best apps of 2011 list and is part of the larger Zipcar strategy to target a young, urban demographic that is highly connected. Its app leverages the GPS on a mobile device to locate a vehicle and then unlock the car from the app. Zipcar has pursued college students, who ordinarily have limited access to car rentals due to age restrictions. Younger customers expect to transact on mobile devices, and allowing them to transact on a smartphone only makes Zipcars services more attractive. Automakers are increasingly keen to get into the carsharing game so that they can gain access to new customers; Zipcar lead director Bill Helman joined Fords board in September amid an agreement for Ford to provide 1,000 Ford Focuses to 250 college campuses as part of Zipcars fleet. The emerging alternative to car sharing is peer-to-peer car sharing, in which anyone with a car can utilize the services of leading startups Getaround and Relayrides to rent their cars to anyone in their community. Relayrides now has 150 cars and 3,000 customers. Both companies have nabbed additional capital over the past six months, with Getaround taking in $3.4 million from a group that included Netflix founder Marc Rudolph as well as Michael Arringtons CrunchFund. Relayrides has had the support of the likes of Google Ventures and August Capital, closing $5 million earlier this year. Both companies are scouting new cities for expansion. The other area where innovation is occurring surrounding car use comes from how electric vehicle drivers will interact with their vehicles that are completely batterypowered. While still a small market expected to grow to 2.9 million in annual sales by 2017 (a drop in the bucket compared to the roughly 70 million cars sold each year), the influence of the electric car will likely go beyond the electric vehicle (EV) itself. The 2012 all-electric Nissan Leaf comes with a mobile app that allows a driver to check the state of the battery charge, turn charging on and control the climate system. GMs mobile app for the Chevy Volt lets drivers unlock their car from their phone and schedule charging around off-peak grid pricing. While EV buyers may be dubbed early adopters, empowering drivers to control functions of their vehicle, be it battery charging or the air conditioner, with a mobile phone changes all drivers expectations

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of how they can control the functions of their car. With electric vehicle sales moving slowly, it is still difficult to assess what drivers think of the new mobile experience. Relayrides inked a recent deal with GM that allows Relayrides members to open any OnStar-equipped cars with a mobile phone, essentially making those cars ready for car sharing. All companies involved clearly see enough value in changing the driving experience to continue investing resources.

Connecting the home

The home is an area of significant energy consumption, but beyond the warnings not to leave the lights and air-conditioning on while out, there have been few truly successful attempts at changing how dwellers think about and consume energy. The home energy management (HEM) industry is a nascent industry that is trying to change that. With offerings that monitor and control energy use, from lighting to thermostats to security, estimates are that the market will be worth $3 billion by 2015 and include 28.1 million users, with web-based dashboards occupying over 11 million users and another 2.6 million accessing data via mobile phones. I suspect the split between mobile and web-based users will shift further, with mobile devices eventually overtaking web-based interfaces as market penetration for tablets and smartphones continues. One of the key challenges for the industry has been figuring out an effective control device that consumers would find easy to use and also get excited about. The introduction of the iPad in 2010 has offered new hope, since suddenly HEM companies can focus on developing great software (apps) rather than be saddled with trying to develop stand-alone control devices to an audience that is accustomed to top-level hardware design of companies like Apple and Samsung. GE killed off its high-end $1,500 dashboard recently and decided to build a wireless gateway called the Nucleus that runs about $200. It then turned around and built a smartphone app that functioned as the control device on an iPad and an iPhone. The one notable exception to the general criticism of the hardware created by
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companies in the home energy market has been the smart thermostat startup Nest. Founded by Tony Fadell, the former chief architect who led the development of the iPod and the first three generations of the iPhone at Apple, Nest has a sleek design. The thermostat itself carries five sensors humidity, temperature, light and two activity sensors. The activity sensors alert the thermostat to when people are or are not in the home and can adjust accordingly. It ships with Zigbee and Wi-Fi chips, making integration with the smart grid possible down the road. It could also enable utilities to address demand response by controlling home thermostats. Also important, Nest attempts to learn the users behavioral patterns and makes recommendations to increase home efficiency based on those patterns. Reports in early November indicated that Nest was already sold out through 2012. One of the challenges that the HEM industry has faced is figuring out channel partners through which to sell its products, partially because installing a new thermostat or a total home energy management kit is not always that easy. And if there is one thing retail hates, its products being returned. But there are signs that mainstream retailers are going to take the plunge, as Best Buy decided in September to begin offering HEM products in three U.S. cities, San Francisco, Chicago and Houston. GEs Nucleus product is expected to be part of the trial, and Nest is currently available on its website (my colleague Earth2Tech editor Katie Fehrenbacher has ordered one for Christmas). Best Buy appears open to the HEM market and has said its customers are interested in products that let them remotely control lighting, thermostats and appliances. The other channel partners that have been considered for the HEM market are the telcos or wireless providers. The trick is to get the energy-management equipment into the home, and cable companies have a lot of experience doing just that. Add to the equation the fact that utilities will need to be able to remotely control consumer energy use as part of smart grid initiatives, and theres some thought to the possibility that an emerging relationship among a home energy management system, a telco and a utility could hold value for all parties. In 2010 Motorola bought home energy management startup 4Home, which has run trials with Verizon in New Jersey centered on a suite of applications that include a smart thermostat and an energy-

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reading device. There are a lot of players involved with trying to get inside a home to control energy use and enable a communications link between a utility and an HEM system, which is why I think this part of the HEM industry will move slowly. This past summer was discouraging, as both Microsoft and Google shut down their respective HEM products, Googles Powermeter and Microsofts Hohm. Both struggled to find a market, and there were indications that working with utilities was less than easy. That said, if a killer device like Nest becomes the new toy that saves people money and that everyone wants, the market could move more quickly.

The smart grid

Many Americans have a vague understanding of what the smart grid is, but after the 2003 Northeast blackout, coupled with concerns about electricity costs, an efficient and cost-effective electrical grid is looking more enticing. President Barack Obama has called for the installation of 40 million smart meters, and the goal is to have a grid where wireless sensor networks, software analytics working on smart meter data and renewable energy sources converge to manage demand, cut consumption and maximize access to clean power. Its an ideal, but with projections that show that in the next 50 years energy demand will double from 14 terawatts to 28 terawatts, we will need a new 1,000-megawatt power plant every day to meet that demand. Countries like India, where growth is far outstripping supply in terms of energy demand, are accustomed to frequent power outages. But the Western world is not. To maintain our standard of living, a more efficient grid may be a necessity and not a choice. This year has seen a lively debate about what type of connectivity is best to link smart meters with utilities. Duke Energy has decided to go with public cellular networks, while PG&E is building a private network with the help of Silver Spring Networks. The debate highlights how reliable networks that connect machines, so-called M2M uses,

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are a key piece of energy conservation, since they are the doorway to data. Whichever strategy prevails, utilities are investing in pipelines and devices that will leave them with a tsunami of data about customers energy use. Data from the Federal Energy Regulatory Commission shows that if 140 million smart meters are installed over the next ten years, they will produce 100 petabytes of data. One petabyte translates into 13.3 years of HD video. Pike Research puts the cumulative market for smart grid analytics between 2011 and 2015 at $11.3 billion. Traditional IT companies like Oracle and Microsoft have entered this space with software products to help utilities crunch all of this data, and so have newer entrants like Opower, which analyzes property, weather, demographic and utility data and then delivers reports via text message, web and snail mail. Data analysis allows utilities to have baseline historical data and then monitor the data coming from smart meters and other machines on the grid in order to identify failures early and take corrective action. One of the key aspects of smart grid data is that it is in real time. A good analytics program would allow a utility to automate decisions to meet demand response and avoid outages as they occur. Rather than a monthly meter reading, customers will get their energy use reported every 15 minutes, and it will be available on mobile devices. Consumers will be able to see how their energy use fluctuates throughout the day (and why electricity is priced accordingly) and how it relates to the big home energy hogs like heating and cooling. A much closer relationship between utilities and customers opens the door to influencing those customers behavior around energy consumption. The smart grid will redefine what a utility is. The new access to data and software presents the possibility that a utility could begin providing value-added software services to those customers, like helping to schedule an electrical vehicle charge or controlling a thermostat in order to reduce customers energy bills.

The ideas that survive

In the end, the cleantech companies that survive will be those that dont just fulfill an ideal of a more sustainable and energy-independent economy but those that create

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compelling value for consumers. A world of connected things, from thermostats to smart meters to rental cars, has opened a window for cleantech that makes it easier for entrepreneurs to get to customers to show them that it can be relatively easy and in their interest to give up car ownership or manage their thermostat to lower their bills. If the renewable-energy-generation side of cleantech, which is largely reliant on government subsides to compete, has learned anything, it is that ideals about sustainability are helpful but not nearly as helpful as lowering the costs of energy generation, be it solar or wind or geothermal. Connectivity is just the first step.

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An e-book market analysis and forecast by Michael Wolf

Over the past 40 years, the e-book market has gone from being the dream of a few pioneers to a mass-market technology used by tens of millions of consumers worldwide (soon to be hundreds of millions). How did it grow from there to here? At first very slowly. Then very quickly. But lets be clear: It wasnt e-book technology and innovation that were in a seeming state of stasis for the first 35 years of the four-decade stretch after Michael S. Hart created the first e-book and launched what would eventually become Project Gutenberg. No, instead it was actual consumer adoption. Consumer adoption had been limited to extreme early adopters willing to experiment on e-reading despite the limited options in technology and platforms, lack of clear market leader, clunky user experiences and higher prices. All of that changed when, in 2007, the big bang for the e-reading market occurred with the release of Amazons Kindle e-reader. With that release, Amazon created not just an e-reader device but also a complete package that was part storefront and part distribution platform and that provided a seamless end-user experience. The company also added some completely new concepts to the e-reader experience, such as the subsidized, contract-less wireless downloading of Whispersync that made getting new e-books anywhere and at any time possible. Still, while Amazon clearly saw an opportunity to put all the pieces together, it certainly was not the first nor will it be the last to innovate in the e-book market. Just three years later, Apple raised awareness of the market even further (and turned the world of personal computing on its head) with the iPad. While so much more than simply an e-reader, the devices highly intuitive user interface, 10-inch touchscreen and integration with the newly launched iBookstore created a viable competitor to the Kindle in the e-book marketplace. It also spurred others like Barnes & Noble and

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Google to quickly look into releasing their own tablet competitors. The leading physical book retailer, Barnes & Noble, maximized its retail footprint to sell its new line of Nook e-readers. By sacrificing prime promotional real estate for printed books as B&N did when it started promoting the Nook on display shelves in the front of its brick-and-mortar stores the company has admitted that its future is as an online book retailer. At the same time as the e-reader platform wars were fully joined, enormous changes began to take place in the business of publishing as large established players wrestled with the emerging world of e-publishing. At first, the big publishers watched helplessly as Amazon set e-book prices at levels that many in the publishing industry felt were creating a permanently low bar for digital books. Along with Apple, they fired back in 2010 by agreeing (some would argue colluding) to use the agency model for pricing that allowed the book publisher to set the price of the e-book. Amazon first resisted this move to the agency model, but it eventually relented as large publishers such as Macmillan forced its hand by demanding Amazon charge more for their titles. This show of force by big publishing was evidence that while Amazon has been able to disrupt the e-book marketplace in significant ways, the stronghold on power that big publishing has on the market will continue for some time. However, while big publishing has not completely seen its pricing power dissipate, there are other ways in which its business is under attack. Authors such as Bob Mayer have begun to shun the traditional publishing route, seeing the opportunity to establish a more direct relationship with readers through self-publishing on popular ebook platforms. Others are establishing relationships with newer e-book publishers like Open Road to publish new work or to republish their backlist titles, where they own the rights (Carl Hiassen has done this with his early work). Some authors, such as Barry Eisler and J.A. Konrath, have also begun to align with one of the many Amazon

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imprints to publish their work. But the newfound popularity of the e-book is, in many cases, raising questions over what exactly the e-book will look like in the future. While content put into new formats is often simply a repurposing of an older format, many authors and artists are realizing that the digital book creates entirely new opportunities to express themselves, through what some call transmedia storytelling or enhanced e-books. With digital formats, creation can happen in ways that go much further than what was possible on the printed page, creating social, interactive and continuously evolving experiences that may include not only text but also audio, video or even a combination of all three, such as the Angel Punk project. And while we certainly expect the boundaries of what a book is to be pushed by emerging artists, J.K. Rowling has showed with the announcement of Pottermore that even some of the most established artists see an opportunity to innovate around the idea of what a book, and its extensions, could become. No doubt, the 40 years of e-book innovation cant be summed up in a few pages. And the pace of change in e-books and digital publishing is expected to continue at an even faster rate. See our graphic below for a visualization of the past 40 years of the e-book marketplace.

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Figure 1: an e-book timeline from 1971 to 2011: The disruption accelerates

Source: GigaOM Pro

Disruption vectors in the e-book market, 2011 2016

Methodology
For our analysis, we have identified six competitive areas or vectors where the key players will position themselves to varying degrees in the e-book marketplace in the coming years. These disruption vectors are, essentially, areas in which large-scale market shifts are taking place. Disruption in a market along certain vectors like discovery, distribution, customer experience usually determines a market winner over the long term. Because of this, we have broken down these vectors and analyzed how the players will leverage (or drive) the big-scale shifts within the vectors to

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advance their competitive position on the road map toward winning in the overall ebook market. Below is a visualization of the relative importance of each of the key disruption forces that GigaOM Pro has identified for the e-book marketplace. These vectors are, in short, the areas in which companies will successfully (or unsuccessfully) leverage large-scale disruptive shifts over time to help them gain market success in the form of sustained growth in market share and revenue.
Figure 2: e-book disruption forces

*Distance from center indicates relative importance

Source: GigaOM Pro

The graphic shows each of the six disruption vectors ranked by their relative importance. The distance from the center is a visual indication of each vectors relative importance and weighting. As can be seen by the graphic, we have weighted control of distribution/storefront and a hardware platform for e-books as the most important disruption vectors. This means that, in a practical sense, by excelling in these areas as Amazon, Apple and, to a lesser extent, Barnes & Noble have done (we will discuss each later in this section) a company can effectively carve a significant amount of

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market share for itself. It should be stated that while certain vectors are ranked higher in terms of importance, over time the relative weighting and importance of a disruption vector can change. An example is social/discovery. There is no doubt that giving consumers a new way to discover and find new books could be a game changer. We think that no company has really won the social discovery and recommendations aspect of e-book discovery, and that is why we think a company such as Facebook can effectively be a player in the e-book business. Below are descriptions of the key disruption vectors we see determining the winners and losers in the e-book marketplace over the next five to six years.

Distribution/storefront
In the physical book world, retail point of sale was somewhat decoupled from distribution, where companies like Ingram have dominated over the past decades as the biggest wholesale distributors of physical books to retail, education, library and other markets. Ingram and its ilk historically owned distribution, while Barnes & Noble, Borders and others owned the point of sale for consumer book sales. In digital book sales, these two areas are collapsing into one, as companies like Amazon, Barnes & Noble, Google and Apple expand into owning not only the storefront but also the actual distribution channel. In some cases they are even pushing into actual publishing services by creating their own imprints and signing authors to publishing contracts directly (and also acting as a self-publishing platform for many authors). In our opinion, owning the consumer-facing storefront is perhaps the most important, since it is natural to think that if you own the customer you can ultimately own the distribution of e-books.

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We think that Amazon, Apple and, to a certain extent, Barnes & Noble each has its own unique competitive differentiators in this disruption vector. Amazon is leveraging its early-leader advantage with Kindle, and it is also focusing on its strong brand in the online book market. Apple will leverage the trust it has developed in the broader digital media distribution and commerce space with its iTunesApp store juggernaut by continuing to push consumers toward buying books through its iBookstore. B&N will blend its physical store presence and its brand equity among physical book buyers to hopefully push them into becoming B&N digital bookstore customers on the Nook platform. Each company will compete strongly in this competitive vector, leveraging control of the distribution and consumer-facing storefronts to a large degree in their battle to amass market share in e-book consumers.

Hardware platform
Another important disruption vector in the e-book market is in hardware. In 2007 Amazon showed that a low-cost, well-done e-reading device closely integrated with an e-book storefront would prove popular with consumers. A few years later, Apple launched the iPad and demonstrated how tablet computing is the future of general consumer multipurpose computing. With the launch of its iBookstore it was also able to attract a significant percentage of the new e-reading consumers that are rapidly entering the market. Barnes & Noble has also been innovative; it is the first company to successfully offer high- and low-end product SKUs; that includes both a dedicated ereader and a light tablet device with its Nook Color. Overall, the big-scale shift in this vector has been toward connected hardware devices that are well-integrated with consumer purchase and consumption platforms. That has become the winning formula of the day across the consumer electronics device landscape in general. The big players here who have established themselves early have distinct advantages within this vector that will be hard to erode.

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At the same time, because of the importance of the hardware as a key disruptor and competitive weapon in e-books, many companies have tried to enter the space in recent years, only to fail. Companies such as Interead and Irex Technologies went bankrupt, while others such as Copia canceled e-reader devices as it became apparent that the e-reader hardware business is an extremely difficult one to play in against the big guys, who have larger resources and more-familiar brand names.

Social/discovery
In general, the way in which consumers discover content is shifting in a large and disruptive way: We are moving from a world where large, centralized tastemakers (newspapers, magazines, TV shows) have been the predominant way in which consumers learned about new forms of content to a world where social recommendations is fast becoming the recommendations guide of the future. Algorithmic-based search started this disruption and will continue to be a big force overall in content discovery. Linear, programmed recommendations be it for a TV show, movie on demand or a book is also quickly becoming an artifact as search, algorithmic recommendations and, more recently, social media are becoming our guides to entertainment and culture. In the past decade in the world of online bookselling (and more recently in e-books) and discovery has been revolutionized not only by algorithmic search but also by algorithmic recommendations. Bookselling sites like Amazon have made rankings and recommendations a critical part of the way consumers discover books. In e-books, we expect that this will continue to be important as the crowd, assisted by algorithmic understanding of a readers tastes and past purchase history, will continue to help steer a lot of folks to books. Additionally, over time, the crowd becomes as much about peer-to-peer recommendations as it does about algorithmic sales rankings and recommendations. This is how outsiders to the book world today like Facebook could effectively enter the world of e-books. The company, which is increasingly becoming an
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entertainment operating system, could begin to partner with e-book storefronts and platforms to develop hooks into their sites so that consumer e-book-reading behavior is broadcast on Facebook (much as it is done today with the Washington Post social reader app). By making reading a socially shared behavior, purchase behavior could be driven to enable Facebook to take a cut of e-book revenues from its partners.

Multiplatform/cloud access
One of the most important considerations in consumer media today is getting content onto as many popular platforms as possible. This is done by leveraging a cloud presence with hooks into popular consumer hardware platforms via an app model or another easily accessible discovery-and-access method. Netflix has shown how this can be effective in the world of online video, where it didnt own the underlying platform but simply integrated well with it. This is a win-win combination: Consumers can get access to your content, and the underlying consumer device is made more valuable in the process. In the e-book world, Amazon has done this as well by creating applications that work on popular tablet and smartphone platforms such as iOS and Android. This allows the company to benefit from the rising tide that is a fast-growing hardware platform while not having to do the hard work of actually developing or selling the hardware. At the core of Amazons strategy is the realization that consumers want anywhereanytime access to their media and that no one end-user platform be it Kindle, iOS, Nook, Android will gain 100 percent market share. In this disruption vector, making the transition between the platforms as frictionless as possible is key. Other cloudcentric platforms like Google and Facebook could leverage this large-scale trend toward cloud-centric content and anywhere access into market share gains down the road.

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Publisher relationships
While the traditional publishers are rapidly seeing their existing hold on the business start to slip away as more of the publishing business becomes e-books, there is no doubt that these companies will continue to have a significant amount of market power for some time. With their large libraries of content and long-term author relationships (and contracts), the biggest source of resistance for the big e-book players will continue to be from publishers who want to dictate the terms of the relationship. This was exemplified best in 2010, when, as we mentioned above, five of the big-six publishers forced Amazon to accept the agency model. While these publishers are currently under investigation for price collusion (alongside Apple), the concession they won from Amazon is a sign that even the big and disruptive players have to bend to the will of those who own the content. In many cases, those are the publishers. Barnes & Noble has an advantage here, as the company is on much better terms with publishers than Amazon and Google. Also, any new player with exceptionally strong publisher relationships (such as a cooperative among publishers, like Hulu was for online video) could be seen as a potentially disruptive new entrant. Ultimately, publishers need to be given credit for moving faster than their peers in music a decade ago and the video industry more recently. Many are fully aware that their business is going to go digital rapidly, and while there is some effort to protect and delay the transition to digital, many are actively trying to figure out how to compete with large players such as Amazon. And they are increasingly willing to change the economic relationships with authors to give them a bigger split of the economic proceeds than they were willing to do in the physical book world. Because publishers will continue to remain important (albeit less important over time) and they are, as stated above, trying to adapt in a fast-changing world, there is a chance that a company that actively courts their partnership (such as B&N) or a new player (such as a Hulu-like cooperative) could be an effective competitor here.
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Customer base
One of the ways that big and established players in certain markets can move vertically into new markets is by tapping their existing customer bases. When Barnes & Noble launched the Nook, it was natural that many of its existing customers would want to use their trusted physical book retailer as their primary digital book retailer. The same goes for Amazon. This is also another reason why companies like Facebook are seen as potentially strong new entrants in the e-book marketplace. Any company with 800 million users could be a potent player if it decides to invest significant resources toward e-books.

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An e-book market forecast

Figure 3: U.S. e-book-reading consumers (in thousands)

Source: GigaOM Pro

The above chart shows the number of U.S. consumers who own or have access to an ereading device and who also use the device for reading books. The second qualification is important because, while we consider in this calculation those who use tablets and other multipurpose computing devices, we also understand that a large percentage of these devices may not actually be used for reading books. It is also important to note that the above forecast is one of e-reading consumers, not devices, as we are careful to avoid double-counting of consumers who have multiple devices that could act as an e-reader, whether they are dedicated e-readers or tablet devices. As illustrated in the chart above, total e-reading consumers in the U.S. will jump from 2.9 million in 2009 to 28 million in 2011, driven in large part by the surge in low-cost e-reader devices such as those under $200 from both Amazon and Barnes & Noble, as well as the strong growth of tablet devices such as the iPad. By the time 2016 rolls
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around, that number will jump to 114.5 million, which accounts for 34 percent of the total U.S. population and 45 percent of the adult population. Our forecast of e-reading consumers, it should be noted, includes both consumers under 18 as well as adults. The growth in these devices is fueled by more than their low cost, however. The first few years of growth in e-reader adoption is being driven also by heavy demand for ebooks by readers across all age groups. Many of these readers have been exposed to the availability of e-books through heavy promotion by all of the big e-book players. Amazon and Barnes & Noble, in particular, have made the promotion of their platforms perhaps the biggest priority through their main marketing channels. This exposure has created strong mind share of the e-book as an alternative to paper books. The adoption of previous technologies was often hindered by significant generational hurdles presented, due to older consumers discomfort with moremodern alternatives. An example of this is web-based video, which has seen much stronger adoption among younger consumers. E-reading, on the other hand, has been adopted by older demographics much more quickly: As of June, Pew noted that 13 percent of those aged 5064 owned an e-reader in the U.S., as compared with 10 percent of those aged 1829. This is likely, in part, at least, due to the ease of use of the e-readers, as well as strong promotion through traditional purchasing channels such as online (Amazon, Apple and B&N) and physical bookstores (B&N). As discussed in our disruption forces section, owning the platform as well as being able to tap into existing customer bases is critical in this phase of the market, and Amazon, B&N and Apple all have significant wind at their backs in this regard. All have tens of millions of reliable consumers of their products who trust them with their credit card and as a source of content. By providing fully developed ecosystems for device, purchase and consumption in the realm of e-books, these big three are in the process of winning the first early phase of this marketplace. Consequently, they have driven significant demand for both devices as well as content to be consumed on these devices.

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It is interesting to pause and reflect on how this growth in e-reading consumers sits within the broader reading public. In 2009, the National Endowment for the Arts estimated that there were approximately 119 million adult readers in the U.S. Given population growth and that our forecast is both of adults and youth readers, it is hard to estimate what the exact percentage of e-reading consumers will be in five years. However, there is no doubt that our forecast of 114 million total e-reading consumers represents a percentage well in excess of 50 percent of total readers, as we believe that this market is expanding rapidly and that low-cost (and perhaps free) e-readers will be put in the hands of many adults and children in coming years. We also expect there will be a reading resurgence among consumers with the arrival of digital formats. Some consumers will once again join the ranks of readers as they start to use a format that is potentially more user-friendly than that of the traditional book consumption model, which in the U.S. numbered 119 million adults in 2009.

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Figure 4: Total U.S. paid e-book revenue (in thousands)

Source: GigaOM Pro

When you look at the strong growth in e-reading consumers, it is perhaps not surprising to see a strong growth overall in paid e-books over the forecast period. A paid e-book is defined as an e-book that a consumer pays for to have access to and read. Because there are a large number of free e-books available to consumers on most major e-reader platforms, it is important to distinguish the difference. So, just how strong will the growth of e-book revenues be in coming years? Very. From a compound annual growth rate perspective, e-book revenues will grow 28 percent year over year from 2010 to 2016. In absolute percentage terms, the revenue for ebooks will grow 462 percent in the same period. Much of the early demand for e-books will be driven almost exclusively from heavy readers, which GigaOM Pro defines as those who read 20 or more books per year. However, by the end of the forecast period, less than half of those who use an e-reader will be in this category, as e-readers become fairly prevalent even among casual and moderate readers. That said, it should be noted that though heavy readers will represent less than half of the e-reading public (46 percent) in 2016, the majority of ebooks will still be purchased by these consumers, since they read much more per
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capita than casual and moderate readers.

Figure 5: Total U.S. e-books downloaded, free and paid (in thousands)

Source: GigaOM Pro

As with e-book-reading consumers and e-book revenues, units will also see explosive growth throughout the forecast period, jumping from 170 million total e-books in 2010 to over 1.3 billion by the end of the forecast period. Other sources such as the Association of American Publishers have put the total number of e-book units at 114 million net sales in 2010, but this number does not include free e-book and public domain e-book units as well as self-published e-books. We believe our number accurately represents the total number of e-books downloaded by consumers.

Rapid change
The e-book market which includes e-reader hardware, e-book storefronts, distribution and all the associated businesses involved with bringing content to a consumer is changing rapidly. Amazon, Apple, Barnes & Noble and others are jockeying for defendable market positions by continuing to disrupt in certain market vectors with unique strategies that utilize their own companys unique strengths. Others, such as traditional book publishers, watch as the ways in which they have done
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business for the past century are getting completely revamped. Some of the traditional players are adjusting rapidly or as rapidly as an industry with lots of legacy infrastructure and costs will allow while others stick their head in the sand. In the end, all of this rapid change will mean that in just four to five years down the road, what a book is and what publishing is will to many mean something radically different than it does today. The economics, formats and process of creating books will continue to evolve, and they will be driven by artists and businesspeople looking to pioneer this space. Perhaps those with the most to gain are the authors themselves, at least those who are entrepreneurial enough to actively leverage new platforms. The big question mark is whether early e-book author pioneers will become the exception rather than the norm, as differentiation through using new formats becomes more difficult due to the maturing of technology life cycles. However, savvy authors who understand how to best traverse a more direct relationship with readers in a disintermediated publishing world may stand the best chance of being the best-selling authors of the future.

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Dissecting the data: 5 issues about our digital future by Derrick Harris
Data is the currency of the web, where we trade it in exchange for access to sites, services and platforms. But although its a system rife with promise, its far from perfect. The promise of data is easy to see if one has a little imagination. As algorithms improve and data connects with more data, the online experience will be optimized well beyond what we know today. Competition among service providers of all types will force web companies to deliver personalized experiences that do more than serve questionably relevant targeted ads. Everything the display, the content and, yes, the ads will be unique to each user, and the process of delivering all of this will take place in milliseconds. Going beyond our web-surfing habits, data will help optimize the rest of our lives, too. Imagine calling customer service and having an actually productive experience, because the representative on the other end is viewing a dashboard full of charts that display your preferences, history and buying habits. Only, as you speak, the representative is typing what youre saying and the system is reassessing based on your current sentiment. Depending on how angry you are about poor service or how excited you are about a new feature, the system will generate the offers it thinks are best for you. In any analytics system, datas utility is amplified when it is connected to other data, and the same holds true as we go about our digital lives. For truly optimized experiences, the data we generate will follow us as we traverse the web, feeding each new system it encounters with everything it needs to know. Assuming big data knowhow on the part of web companies, they will be able to deliver personalized experiences without requiring visitors to actively share preferences or sign in to a user account.

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Pulling off such a vision will not be as simple as investing in a bigger, smarter analytics infrastructure, however. It also will require entirely new approaches to consumer privacy, beginning at the policy level and ending with products and practices. The current state of affairs has privacy advocates and many consumers up in arms, and a future involving even more data collection and a more expansive use of it will only fuel that outrage. Rightfully so, which is why it is so important that we get privacy right. It doesnt have to be the one-sided affair it is today, in which companies have all the data and all the rights, and we shouldnt have to be afraid of whos doing what with our information. With laws, products, practices and education, data can become a far more valuable currency than cash ever was. With that in mind, lets examine five issues that must be addressed by policymakers and entrepreneurs so that they can deliver on our data-driven digital future.

1. Legislation designed with the web in mind

Antiquated federal legislation is one of the biggest problems facing any company looking to do new things with data. We have already seen this issue rear its ugly head on numerous occasions, with numerous culprits at play. The Electronic Communications Privacy Act, for example, underpins many requests for user data from companies such as Google, Facebook and Twitter, often without a search warrant required. In the six months ending June 30, 2011, Google had received from U.S. officials 5,950 requests targeting 11,057 users, and Google partially or fully complied with 93 percent of them. Elsewhere, the Video Privacy Protection Act recently emerged from its dark corner to stymie data-sharing efforts between Facebook and Netflix that are in place elsewhere in the world. We discuss this in more detail later in the piece. Underlying all of these issues and countless others are two principle issues: 1) existing legislation doesnt take into account that consumers actually want to share data; and

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2) existing legislation doesnt take into account that platforms for storing and sharing data evolve rapidly on the web. If the government wants to bolster business in this one area of the U.S. economy that is shining, the web needs new or amended laws that take these realities into account. Life moves fast on the software-based web, and companies cant be saddled down by laws that either dont let them evolve at their natural pace or that force them to serve as a tool of law enforcement every time the data-storage medium changes. However, the government cannot give companies free will to do whatever they please with whatever consumer data they please, which is why regulation of the web industry is also necessary. Already, the Federal Trade Commission and the Department of Commerce have weighed in with their own plans for how to regulate privacy on the web. Between the two proposals, they call for everything from clearly written privacy policies to do not track buttons to audits of providers systems and practices to ensure compliance with their stated data usage. But much like the congresspersons who write the legislation granting federal agencies the authority to regulate, agency officials crafting privacy regulations must also be careful to balance consumer rights and industry concerns. Too strict a regulatory scheme could seriously stifle innovation among web companies hesitant to experiment with new products or features that might run afoul of agency guidelines. Consider for a moment the amount of data the web companies already have and will continue to amass. Facebook, for example, famously maintains a 30-petabyte data warehouse stored within Hadoop. The companys platforms and services are based around personalization and/or sharing data, and the constant evolution that users demand requires using some of that data in new ways. For competitive reasons, it might not be feasible to obtain user consent for these new uses while new features are being built, although the proposed Department of Commerce guidelines, at least, would require such consent.

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Yes, there should be fundamental rules in place about how and when companies can use certain types of data, such as personally identifiable information (PII), but flexibility has to be the word in most situations. The great thing about the web is that many new features can be easily rolled back without any real damage being done in the meantime between complaints arising and the conclusion of the adjudication process. The same cannot be said about potential problems in other federally regulated industries such as nuclear energy or banking. Additionally, when considering the proper balance between consumer rights and fostering growth in an important sector of our economy, lawmakers might acknowledge the amount of greater IT good that has come from companies that try to make the most of their stockpiles of data, such as Google, Yahoo and Facebook. We can credit the creation and popularity of tools such as MapReduce, Hadoop, Cassandra and myriad other big data tools, many of which are now starting to become commonplace within businesses of all types, to those efforts. Thats not to mention the general-purpose web-development tools that this same group of companies has created and open-sourced, such as Facebooks HipHop, Googles V8 and Yahoos Traffic Server. Web companies are always honing the cutting edge of our increasingly web-centric world, both in terms of technology and how we communicate, but they rely on access to and analysis of data to exist. How much can we take away and still reap the rewards of their computing prowess?

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2. Making privacy understandable

This issue is very much related to the previous one; in fact, it appears certain that any federal privacy regulations will include rules about how privacy policies are written and displayed. But this issue is also important on its own. Before any regulations come into play that either put data control directly into the hands of consumers or purport to act on their behalf, consumers need to know all sides of the privacy story. According to an early-2011 survey by USA Today and Gallup, seven out of 10 Facebook members surveyed and 52% of Google users say they are either somewhat or very concerned about their privacy. Yet social media usage is only growing, with Facebooks now claiming more than 800 million active users worldwide, leading a growth charge that also includes Twitter, Foursquare and other data-hungry services. Web analytics service StatCounter regularly finds that Facebook drives around 40 percent of all traffic to U.S. websites. There is a dichotomy between consumers words and their actions, but it is actually relatively easy to explain: Although they are uncomfortable with sites policies regarding user data, many consumers would rather grin and bear any perceived policy slights than not use the services. There isnt any room for negotiation in web user agreements, after all. Its also arguable that much of the concern around consumer privacy is actually based on Facebooks snafus in rolling out new features without telling users more so than that the concerns are based on actually citable nefarious data practices. Additionally, some privacy concerns are no doubt based around Fourth Amendment issues (i.e., government access to user data without a search warrant) or security issues (i.e., someone stealing personal information from a site with which it was willingly shared). These are very different concerns than actually suggesting that Facebook, Google or other sites are using consumer data in unscrupulous ways. It is debatable whether web companies not to be confused with the authorities that often demand their users

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data care so much about users on a personal level as much as they do about automatically putting particular content in front of a particular IP address or other numeric identifier (i.e., no one has a policy of poring through individual users messages or emails). Some sites certainly have violated trust, including Facebook a time or two, but punishing these occasional variances from the straight and narrow are exactly why regulations should exist. Essentially, privacy policies are similar to contracts between consumers and websites. The most important part is that both parties agree the terms are fair; privacy regulations just give consumers some avenue of recompense in case a provider breaches. However, the FTC also wants to enact rules requiring both a mandatory do not track button that will prevent websites from collecting certain user data and clearly written, conspicuously displayed privacy policies. It is arguable that the latter should predate the former and, in fact, most governmentally imposed privacy rules in practice so that consumers have a chance to learn what is actually being done with their data. In the USA Today article detailing its survey results, Ryan Calo, the director of the Consumer Privacy Project at the Stanford University Center for Internet and Society, is quoted as saying, Consumers generally do not understand who's getting access to their data and for what purpose. Once they know, perhaps they wont be so afraid of the privacy bogeyman, the fear of the unknown. Already, companies like Google and Dropbox are trying to get ahead of this issue by writing their privacy policies in plain English and, in the case of Google, launching an educational campaign that actually explains fairly thoroughly how it uses your data, right down to what a search log looks like. It is also now including links with AdWords ads that explain to users why theyre being shown the ads theyre being shown. Critics can say what they will about Googles spinning the issues to suit its own purposes its probably a fair criticism but the company is at least trying to jump-

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start a discussion that is desperately needed. Consumers need to know how and why websites use their data, and they need to understand the trade-offs inherent in a system of free services funded by advertising revenue. They also need to understand that data is what makes so many services valuable to consumers, too: Recommendations engines, social sharing and certain special offers all need more data to function optimally. Maybe there wont be so much outrage once consumers understand whats personally identifiable, whats not and how little companies actually care about personal information such as names and addresses. Maybe there will be more. But Congress and its agency counterparts should not enact potentially overburdensome legislation and regulations in the name of consumers until consumers know the score and have the ability to weigh in with informed opinions.

3. What to do with mobile data

Data generated by mobile devices especially location data represents a potentially more-complex situation. It is potentially very valuable, yet it is also governed by a different set of rules than the online data that makes up such a large portion of our digital profiles. Kind of. Despite the easy comparison with landline telephones, mobile phones werent considered when the Electronic Communications Privacy Act (ECPA) was enacted more than 20 years ago, and in that regard access to the data they generate is still relatively without Fourth Amendment protection. However, unlike our web data, which tracks our movements through the digital universe relatively anonymously, location data from cell phones whether from cell towers or GPS satellites tracks our movement through the physical world in a much more personal manner. This makes it valuable, including to law enforcement, which has taken advantage of the relative freedom it has in obtaining location data. Recently, however, one federal judge in New York started what might grow into a

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trend by ruling that a search warrant is necessary before requiring Verizon to turn over months of location data on a user. Similarly actually very similarly, given the prevalence of GPS capabilities on mobile phones the Supreme Court is set to hear a case involving the warrantless attachment of a GPS device to a suspects car to track his movements. Both the judge in the New York case and the judge in the D.C. circuit appellate case that preceded the forthcoming Supreme Court hearing made similar observations on the immense value of location data when viewed on a large scale. From the district circuit: It is one thing for a passerby to observe or even to follow someone during a single journey as he goes to the market or returns home from work. It is another thing entirely for that stranger to pick up the scent again the next day and the day after that, week in and week out, dogging his prey until he has identified all the places, people, amusements, and chores that make up that person's hitherto private routine. Some might sleep more easily if the Supreme Court decides that a warrant is necessary for officials to access large chunks of mobile location data. But that data will still be available with a warrant, and wireless providers will keep collecting. In some cases, for cell-tower data, they will store it for up to two years. Why? Because it is incredibly valuable. Jeff Jonas, the head of IBMs entity analytics division, calls geo-location data analytic super-food. In a 2009 blog post he lays out what is already being done with our location data and what is possible in the future. By knowing where we go, when we go and who is typically around us when we are there, wireless providers and their partners can figure out a lot about our lives. They can use that data to better target advertising, sure, but in a hypercompetitive landscape, they also can use it to provide services that help us optimize our lives by predicting, for example, where we are going next and formulating the best route based on real-time traffic conditions.

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And with an estimated 322.9 million wireless subscriber connections in the United States as of June 2011 (thats more than the population), there are a lot of broad trends to uncover if companies start their data and the results of their analyses. It sounds great in theory, but recent history has to make one wonder how comfortable consumers really are with sharing such information. Google and Apple recently caught flak and actually were called to testify before Congress because of location tracking on Android and iOS phones, respectively. Now, at least, both companies make sharing location information with the OS optional (although its required for many apps), and the data they collect is anonymous, used primarily for determining large-scale trends such as cellular reception maps and traffic patterns. App providers are collecting location data, too, and, according to Nexage, they are making 3.8 times more money on impressions containing that data from advertisers eager to target consumers with local ads. However, as Jonas explains, wireless providers have much more data and much more personal data than do OS providers. One has to wonder how much longer it is until we start hearing a real outcry against wireless providers data collection and analysis practices, which include sharing some of it with third parties. Because of datas potential as a means for highly detailed personal tracking, lawmakers, wireless companies and consumers might have to make some serious decisions about how much risk is acceptable to achieve potentially life-altering rewards.

4. Making connected data real

Ultimately, the goal of any company dealing in data has to be connecting as much of it as possible to as many other sources as possible. This is how one begins to see the real advantages of living in a hyperconnected world, assuming consumers actually want technology to optimize their lives. Connectedness is not just about having Internet access; it should also be about connectivity among our various digital channels.

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Take, for instance, the earlier example of Facebooks connecting with Netflix to display joint users Netflix rental histories on their Facebook profiles if they so please (a capability currently prohibited in the United States by an antiquated law). Displaying the information is just the first step. In order to truly benefit consumers, Netflix should be able to access Facebook data in order to better hone its own recommendation engine. But thats still just a data exchange between two sites, both of which require logging in before any real data is generated. Taking it a step further, Netflix could capture our browsing history at Amazon.com and other sites to fine-tune its recommendation algorithms even more. Amazon, in return, could improve upon the accuracy of its recommendation engine by using data from Facebook and Netflix. Its an endless cycle of data feeding data across the web to create a personalized experience wherever a consumer travels; if there is dynamic content to display, sites will know (to the degree their algorithms are accurate) what will most interest a given visitor. There will of course be analytical issues around determining what users actually like and what they might be looking at out of curiosity, but smart data scientists can solve these problems. As they say in the analytics world, more data trumps smarter algorithms, because the more there is to work with, the easier it is to detect broad patterns and anomalies and find the actual truth. We are generating lots of it: According to IDC and EMC, we will create and replicate 1.8 zettabytes of data in 2011, which is a 50 percent increase from 2010. Seventy-five percent of that is created by individuals. Connected data doesnt have to begin and end with the web, though. Although it will require more direct partnerships among web service and physical device providers, there is a lot of opportunity in connecting our data from the web and data from the myriad sensors we will have in place in order to optimize our physical worlds. Smart grids, smart appliances and personal-health monitors all provide valuable information that extends beyond their immediate uses. If their manufacturers provide APIs (see, for example, the Tendril Connect platform for home energy management) to access

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certain data, these sensors could feed partner web services with even more data to personalize our experiences. Bringing in mobile data, particularly geo-location data, there are even more possibilities. An easy example would be smart appliances noticing that we are out of town and suggesting that we adjust the thermostat, power down televisions or take other steps to conserve energy. There are already mobile apps for controlling certain parts of our homes remotely, but it will be a big leap forward when its a two-way discussion and our appliances can speak to us proactively. Of course, this world of connected data must be an opt-in lifestyle, with rules about what types of data can be shared, laid out clearly in privacy regulations. Not everyone will want to or will feel comfortable with leaving a digital trail that follows them across the web and even into the physical realm, and thats fine. Regardless of how anonymous online tracking might be, there is nothing more anonymous than not being tracked at all. Or maybe web users just dont want certain activity (pornography viewing, for example) being tracked. It is in the scenario of hyperconnected data that a do not track button (or perhaps a do not connect button) becomes so important. It allows users to determine, to some degree at least, what sites are components of their digital universes and which ones are just diversions. Although regulation will be necessary to keep excessive and nonconsensual data sharing in check, any rules probably should be focused on the actual data rather than on the methods of sharing. Focusing on methods of sharing, as has been discussed earlier with regard to platforms for storing data, is subject to obsolescence as sharing moves beyond existing cookie, log and API technologies. Focusing on the data will have a longer-lasting effect, because the types of information name, IP address, physical address, clickstream, etc. wont be changing anytime soon. Assuming consumers, websites and the government agree that sharing PII without

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consent is out of bounds, the biggest problem for regulators will be trying to keep up with whats actually PII. As the FTC notes in its privacy framework, new analytic technologies are making it easier to discern identity even from data not traditionally viewed as PII. However, that would require companies actually caring to put names to digital profiles. There definitely could be penalties in place for doing so if the goal of the practice is to bypass rules against sharing PII.

5. Empowering consumers
Perhaps the biggest opportunity for both policymakers and entrepreneurs is figuring out a way to empower consumers as active participants in the great data exchange. This means more than just letting them keep some sites in check with a do not track button or keeping them solely in the role of technology beneficiary if they choose to participate in the connected world. What would be truly powerful is giving consumers the opportunity to be active participants in the process of sharing data, to have some negotiation power. It has been suggested that data ownership does not matter and that only the power to analyze it matters, but analysis is not possible without ownership or at least some sort of license. If consumers own the data they generate, it opens the door for bargaining between websites and their users. In the United States, at least, this will require some legal changes in the way data is defined. We generally treat data as property, and most often it is the companies or websites who gather data that own the property. This isnt spelled out in any statutory collections, but it is the reality. Perhaps it is because everyone who accesses any website agrees to terms of service that grant the site the right to collect and use their data. Regardless, this is the reason so many discussions about data including this piece revolve around the limits of what companies can do with data, not whether they can do it at all.

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But imagine if someone were to turn this arrangement on its head by giving consumers ownership of the trail of data they create by clicking and typing their way through the web. Even if it is just constructive ownership (who would actually want logs of their online activity?), the results could be revolutionary. This could be Congress, a court or some other legal institution; a forward-thinking company trying to capitalize on privacy concerns; or a third party acting as something of an insurance company for web users and trying to use its client base to effect policy changes. A change or clarification in the law would be meaningful, but it would still require progressive companies to act on it. Otherwise, the status quo of the terms of service conveying all rights to the data would remain in place. It is far too early to tell what a consumer-friendly business model would look like, but perhaps it would be a social platform la Facebook that dickers with the notion of a free service. As they were signing up, users would have to select what data they were willing to let the site collect and analyze; the more they shared, the less they would have to pay. Although the company would set the terms, consumers would always maintain the power not to use a service, which should keep prices in check. Or perhaps data freedom could come from a third party, similar to an insurance company or a union representing consumers. With a large-enough membership, such an organization (funded by privacy advocates and donations, lets assume) could pressure web companies into changing their data policies. The biggest question with this approach, though, would be about size: How many members would need to threaten to take their business elsewhere for a company such as Facebook or Google to bend? Fifty million? A hundred million? A billion? It is very early days when it comes to this approach to privacy and data ownership, but it has promise. There is a balancing act that needs to take place between consumers rights and the data that companies need to keep their businesses running. Some data analysis is actually beneficial to consumers, because it improves the service so greatly. Why not leave the determination of that balance up to consumers and companies? Only to do that, consumers need more options than just take it, leave it or do not

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track.

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About the authors About David Card

David Card has been following the intersection of technology, media and consumer behavior for over 20 years at GigaOM Pro, Jupiter Research, IDC and Forrester. At Jupiter, Card headed up digital media and marketing research, and acted as VP, research development. At Forrester he worked with marketing leaders to refine their interactive strategies, and at IDC he was lead Microsoft and consumer Internet analyst. Aside from GigaOM events, and Forrester and Jupiter Forums, Card has spoken at major industry events such as E3, the Newspaper Association of Americas new media conference, the PBS/NPR new media forum, Texas Universitys Online Journalism Symposium, Digital Music Forum East, Digital Hollywood, the Inverge conference, and Software Marketing Perspectives. He is frequently quoted in the traditional and online press and has appeared on ABC World News Tonight, ESPN, and NPR. Contact David: http://pro.gigaom.com/members/derrickharris/profile

About Derrick Harris

Derrick Harris has covered the on-demand computing space since 2003, when he started with the seminal grid computing publication GRIDtoday. He led the publication through the evolution from grid to virtualization to cloud computing, ultimately spearheading the rebranding of GRIDtoday into On-Demand Enterprise. His writing includes countless features and commentaries on cloud computing and related technologies, and he has spoken with numerous vendors, thought leaders and users. He holds a degree in print journalism and currently moonlights as a law student at the University of Nevada, Las Vegas. Contact Derrick: http://pro.gigaom.com/members/derrickharris/profile

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About Adam Lesser

Adam Lesser is a reporter and analyst for Blueshift Research, a San Francisco based investment research firm dedicated to public markets. He focuses on emerging trends in technology as well as the relationship between hardware development and energy usage. His career began as an assignment editor for NBC News in New York where he worked on both the foreign and domestic desks. In his time at NBC, he covered numerous stories, including the Columbia shuttle disaster, the DC sniper, and the 2004 Democratic Convention. He won the GE Recognition Award for his work the night of Saddam Husseins capture. Between his time at NBC News and Blueshift, Adam spent two years studying biochemistry and working for the Weiss Lab at UCLA, which studies protein folding and its implications for diseases like Alzheimers and Cystic Fibrosis. Contact Adam: http://pro.gigaom.com/members/adamlesser/profile

Jody Ranck, DrPH

Jody Ranck has a career in health, development and innovation that spans over 20 years. His current work has emphasized global health, innovation and social media in public health. He is currently on the executive team of the mHealth Alliance at the UN Foundation and consults with a number of organizations such as IntraHealth, Cisco, the UN Economic Commission for Africa, GigaOM, the Qatar Foundation International and the Public Health Institute. He was also involved as a convener of the Rockefeller Foundations work in eHealth and mobile health through the 2008 Bellagio Summit. His previous accomplishments have included working in post-genocide Rwanda, investigating risk and new biotechnologies at the Rockefeller Foundation, working at the Grameen Bank in Bangladesh, and leading the global health practice and Health Horizons at the Institute for the Future in Palo Alto, Calif. He has a doctorate in Health Policy and Administration from UC Berkeley; an MA in International Relations and Economics from Johns Hopkins University, SAIS; and a BA in biology from Ithaca
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College. Some of his honors have included a Fulbright Fellowship in Bangladesh and serving as a Rotary Fellow in Tunisia. Contact Jody: http://pro.gigaom.com/members/jodyranck/profile

About Michael Wolf

Michael Wolf is the founding Vice President of Research at GigaOM, where he helped create and launch the next-generation research product in GigaOM Pro. Responsibilities include writing about consumer technology for GigaOM Pro and GigaOM, oversight of editorial roadmap for all syndicated research verticals, analyst recruitment. Wolf also created and now helps manage GigaOM Pros popular thought leadership and marketing services programs (webinars, underwritten research). Before GigaOM, Wolf was responsible for all consumer and content research at ABI Research. Prior to ABI, created In-Stat's consumer media and connectivity research practices. He also worked for Avnet, a Fortune 500 semiconductor distributor, where he worked in mergers & acquisitions for the office of the CEO. Quoted in New York Times, Time Magazine, Wall Street Journal and Business Week, Wolf has also served as commentator for such outlets as CNBC and Bloomberg TV on technology market trends, and is a former columnist for Network World and the author of a book for Pearson on consumer technology. Wolf is also the founder of BSTSLLR.com, a new e-book imprint publishing original mystery fiction by well-known writers taking the leap into the world of digital books. Contact Michael: http://pro.gigaom.com/members/michaelwolf/profile

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Further Reading
New e-book monetization models set to finally grow While theres been explosive growth in e-books, e-readers and pretty much anything to do with digital publishing this year, the entire category still falls significantly short of other forms of content when it comes to making money. However, subscription-based e-book offerings show that digital books may be evolving, emulating other content businesses in finding new ways to monetize. The economics of peer-to-peer car sharing While its still very early for the peer-to-peer car-sharing industry (the largest networks have just a few thousand members), the key to this concept taking off one day will be that the economics pan out for the companies, the car owners and the drivers. There are four important things that the companies, drivers and car owners need to pay attention to, to make the economics of peer-to-peer car sharing work. The future of mobile health, 2011 - 2016 Mobile health the use of wireless devices to manage health conditions, collect health data, monitor vital signs, provide clinical decision support and access health information is in its relatively early stages. Nonetheless, the field has witnessed accelerating growth since 2010 in the U.S. and has become a truly global marketplace. Rising health care costs, the proliferation of mobile devices, affordable sensor technologies and regulatory issues are all factors driving this growth. This research note examines each of those in detail and provides an outlook of the mobile health space over the next five years, including services and players to watch.

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Want more information? Contact the authors of this report, or any of the other experts at GigaOM Pro. Discuss this report online. Suggest a research topic.

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