~synthesis~

necessity and invention

I've been reading a lot about increased funding and expanded budgets for "innovation" in education lately. America spends a lot of money (among the highest) per student on public education; most people are unsatisfied with the results, and yet the prevailing strategy to improve things is to throw more money at the same system.

The Numbers:

According to the National Center for Education Statistics, in the 2005-2006 (the most complete data I could find) school year for public K-12 schools:

1. Total number of students: 49,113,000
2. Total number of teachers: 3,143,000
3. Spending per pupil: $9,154
4. Total operating budget: $449.6billion
   • Instruction $274.2billion - 60.98%
   • Support Services $157.1billion - 34.95%
   • Food $17.3billion - 3.84%
   • Enterprise Operations $1.0billion - 0.23%
5. Total budget: $528.7billion (#4 + $7.4b other current expenses, $57.4b capital outlays, $14.4b interest on loans)

ASIDE: According to the US Census Bureau's Public Education Finances report, of the $274.2b for Instruction, 89.8% or $246.2b goes towards teacher salaries and benefits ($78,334 per teacher). That's a pretty good wage these days, but as I've said before, I believe that teachers should be better-paid, and respected as peers to doctors, lawyers and engineers. Regarding this last point, I wonder then if it's time for teachers to secede from their unions? Most lawyers, doctors, engineers, etc. are not union members; I wonder if being union members creates the impression of not being on an equal footing with those professions, and actually diminishes teachers?

I'm not judging whether the level of funding above is too much or too little for America. Let's say it's just right. Now combine this with the graph to the left, and it's pretty clear that the budget is big, and has and continues to grow very rapidly.

I don't know enough about the public sector, but in business when growth like this occurs, it is likely that bad habits form. People get lazy, money is not spent wisely, and consultants get hired to do what employees should be doing, or to provide management with a CYA safety net. Management gets in the rut of preserving the status quo/gravy train. Most organizations that survive past the rapid growth phase have to go back to the drawing board and rethink their whole business. They must develop a strategy re-defining success, specifying new resource allocation models, and advocating entirely new business processes and approaches in order to achieve their goals.

With the kind of funding growth education has enjoyed, I wonder if the administrators have simply been adding more $$ to existing line items - taking the easy way out?

Have they taken the time to form a strategy that establishes where the puck will be, enumerates and prioritizes their current resources, and defines a plan for how to get there? If the current budget won't get to the puck, they should first look inward, make trade-offs, and then demonstrate exactly how additional funding results in specific outcomes that other stakeholders want and would fund.

I've written before about how organizations can get waylaid by their own success, and the effect of size on performance. While both blogs were about commercial companies, I wonder if some of the same principles might apply to education?

At one time, the American education system was among the best in the world, and it appears that the formula from that era remains in force today despite many changes to the world around us. Why is that? Despite all the lip service paid to edu-evolution, except for very small pockets, the system appears to be just the same as it was two or three generations ago. It feels like Education is trying as hard as it can to live up to this Peter Drucker quote.

Can education achieve innovation when increased funding is not a part of the picture? If necessity is the mother of invention, is it possible that the constant increases in funding have resulted in precisely the wrong (zero-innovation) outcome?

Humans tend to think most creatively when their backs are against the wall, and they have to adapt or die. If put in that situation, would the American education system find a completely new and innovative way to achieve its goals? I think it's possible.

It takes leadership to achieve this, but I don't see the present administration (President Obama or Secretary Duncan) taking this on. We remain in desperate need of an education sensei to lead us.

erudite

I don't normally post blogs like this, but I was just now surfing the Opinion section of the NY Times and came across this piece by Dick Cavett. It is the first interview between Cavett and Richard Burton. [You have to click on the link or the images to get to the article and then scroll down to view the recording - it is brilliant.]

I haven't really been exposed to a lot of Burton's work (or Cavett's TV show for that matter), so this was a bit of a first - it was recorded in July of 1980, four short years before he died. 

It is a powerful lesson: one generation ago, a talk show consisted of some simple opening and closing music, a stage and two chairs. The host and the guest sat very close to each other and talked. They talked (in this case) for just under 30 minutes, without interruption, and yet at the end you felt like it had just begun.

In comparison, our conversations today are shamefully vacuous; our talk shows even worse; and I struggle to come up with more than one or two entertainers (actors, musicians, athletes, etc.) who could even come close to the presence and wit and strength and impact of Burton. He was something special indeed.

We would do well to hearken back to the day when one had to deliver in such a simple medium, and those that were proficient could do it with such ease, but create such powerful tours de force.

You can say the same thing about business, education, and politics today - so much of it is small and mundane, and so many of their "stars" pale in comparison.

I wonder if this is just a matter of the pendulum swinging, and that at some point in the very near future, we will swing back to where we demand and expect this level of performance not just from our players, but from everyone, no matter their role? I hope that is the case, right now, I'm going to look for the other three shows, and watch them often.

Bravo

focus and discipline

There are two aspects of American politics that I find painful - length and complexity. The former is the interminable process from Primary to General that ought to be shrunk dramatically. I proposed an approach to reducing the time and cost of elections a while back - I still think it's applicable. In the same post I also talked about a simpler and less cumbersome voting process; it and the vote counting part seem complex as hell.

In my last post about a third party, d.eris' blog and the post he pointed me to (whose numeric analysis of the recent election is very interesting), we're all talking about a 3rd party in American politics.

I wonder if the biggest obstacle for a 3rd party is the agony of the primary/general election and then the horrible voting process - who in their right mind would want to run there?

According to most pundits, the recent general election had a strong turnout, which equated to a mere 51% of the electorate actually voting! So President Obama's 52% popular vote equates to only 26% of the electorate vs. the 25% that Senator McCain received. Of those that voted and those that didn't, I imagine it broke down like this:

1. I'm a member of the D or R party and I always vote for our candidate
2. I love the R or D candidate and am voting for him
3. I hate the R or D candidate and will vote the other way so he doesn't win
4. Neither candidate is great, I'll vote for the one I perceive to be least bad
5. Neither candidate is great, but D or R stands for XXX and I will support him because of that issue
6. I'd really like to vote but it's a real pain and/or I'm tired of this process and can't wait 'til it's over and won't vote
7. My vote won't make a difference either way/don't really care, won't vote

In all of this, we know for sure that the 1-5 basically split their vote between the two parties, and if 6-7 had voted for a separate party, that 3rd party would have won a landslide victory with half again as many votes as either D or R. #3-7 might have gone elsewhere if there had been a compelling alternative and the act of voting was easier.

Compelling Alternative

What if a prospective candidate's platform were ethics-based (per the Jacksonian Party post) and they committed to only one term? In other words - vote for me, here are my ethics, and I won't run again, which means if I win, I don't need to raise money for reelection or campaign - my decisions will be based on my ethics platform, and I will not be influenced by lobbies.

I think a candidate like this has a good chance to create a stir and even win, if their platform is compelling to at least #s 3-5 & 7.

Voting Simplified

Now imagine if all citizens were able to vote from home (or from their mobile phones), and imagine that like Australia, people were required by law to vote. These two things will never happen per the comments to this post - incumbent politicians will NOT allow voting to be made easier or require all voters to vote. They like it as difficult as it is, and only want the voters that voted for them to vote.

If by some miracle voting became simpler and all voters were required to vote, then the election process would be cheap, cheap, cheap, and much easier. A significant percentage of a candidate's budget goes towards building massive local machines to get the vote out. Combine not having to spend that because voting is mandatory with social networks and the internet and the media to directly reach your audience, and you have a whole new ballgame.

Back to Reality

Let's face it - this aint going to happen in America. So what's possible? d.eris suggested we must first build confidence in, and a perception of viability for a 3rd party. I'm not sure that's needed - you're not trying to win people who vote. At a minimum, it feels like #4 & 7 would be inclined to vote for a separate candidate, and some of #5 might join the party as well. Additional momentum can be built based on a compelling voice, and the strategy I outlined above (a commitment to only run once) might achieve that, especially when combined with an ethics-based platform. The critical success factor though is being ULTRA-precise about the target audience (if it's just #4, 5 & 7, then focus ONLY on those people); do not fall into the R/D trap of trying to win everyone. Commit to and engage your audience ONLY - if you happen to get votes from others, that's their problem, not yours.

One thing that pervades the electorate is the feeling that politicians can't be trusted. If it is possible to be the trustworthy candidate, by admitting your motivation and your strategy, this might be a winner. Here are the promises I'd make (in no particular order):

• Will only serve ONE term
• Will not spend more than $X on this campaign - most of the outreach will be done electronically at very low cost, there will be no advertising
• Will NOT accept any donations once the campaign is over - no way to be bribed while in office
• Will make no more than three program (ex. change education in XXX way) commitments, because that's all you can do in one term
• Will clearly describe leadership style integrity, transparency, accountability
• Will never spin

Net

With a commitment to Ethics, a precisely targeted campaign, and a clearly articulated platform, it is possible for a 3rd party to coalesce, and achieve critical mass. It will only work with discipline and a strict, rigid adherence to the strategy.

risk shmisk

Accenture recently conducted a risk management survey of 260 CFOs from large companies in 21 nations that has (didn't think this was possible) increased my disappointment in corporations around the world. 85% of those surveyed said they are ineffective at considering risk, return and capital issues when making decisions. The same number said there is a lack of alignment between their company's strategy and appetite for risk, and 93% said it was really hard (whine, whimper) to align strategy to effective risk management.

C-Sense

How can you be a C-level officer, leading your corporation and yet be unable to effectively factor risk into decision-making? In good times, risk failures were compensated for by strong earnings, but now that either or both revenue and margins are shrinking, it's more difficult to hide or write off errors in judgment.

Theoretically, an executive achieves C-level status by being smarter than the average bear, having more foresight, vision and leadership skills than his or her peers, and the ability to skate to where the puck will be, and not where it is. If true, they should have recognized the following:

1. Good times creates bad habits
2. We're in the midst of a communication revolution
3. Tough times require focused investment

#1 - In good times, mistakes are forgiven/ignored because things are going so well that bad judgment is overlooked. But most critically, organizations forsake discipline in favor of expediency. Then when things change, the bad habits of the organization, which were compensated for with excess spending and often excess hiring, now surface unhidden, result in severe changes or layoffs, and are harder to fix because they're well, habits.

#2 - The stress caused by #1 creates internal and external disaffection/disloyalty, which makes people much more inclined to blog/Twitter/whatever their views and experiences. Malfeasance becomes very rapidly visible to the public, giving the company little or no time to sense, develop a strategy, and respond. In can we talk?, I wrote about transparency and immediacy being the offshoots of the communication revolution. This is either a huge risk or opportunity for most companies - the C-level "risk" executive leadership must account for this. Most don't.

#3 - If you have the means, the best time to invest is when times are tough. Whether that's acquisitions, new investments, or increased staffing, you are sure to get good (if not great) value for money, and be much more primed for growth when the market does turn. Choosing the best place to invest requires clarity of purpose - if the company's strategy is not clear, it's ability to evaluate and mitigate risk not solid, and it's leadership not focused, the resulting investments will likely accelerate poor performance and lead the company down.

C-Accountability

Chief X Officers (whether X = Executive, Financial, Marketing, Operations, etc.) get paid really well, this is because the expectations are commensurately high, and performance is expected and required. In addition to being a great sales tool for their services, the Accenture survey above is a confession by these C-levels that they don't know how to cope with change, or how to lead in these changing times.

At this level, they must own their actions, take responsibility for both their failures and those of everyone who works for them (the whole company). Shouldn't the 85% who said they didn't know what they were doing resign, so those who do can lead?

C-Response

From my can we talk? post: The industrial revolution created mechanical speed, the information revolution changed space (specifically, the distance between points in space), and the communication revolution changed time (sense and response time).

Thriving in this world requires discipline. If all C-executives in a company can't clearly (so that a 12-year-old can understand it) and consistently state:

1. Why they are in business
2. What makes their company special or unique
3. How they succeed
4. Where the company is heading

Then how likely is it that their employees are being guided properly? How likely is it that any management discipline exists, that the company's behavior and performance are predictable?

Ensuring this is step one for the CEO. Step two is to establish a discipline of two-way information flow so that all levels of the company know; and step three is to ensure that decisions get made, and are executed predictably and with accountability. Seems like management 101?

Think of Apple during Steve Jobs' current tenure. They don't always build the best product, not all of their products succeed, not all their customers are loyal and happy. But in the main, their business runs brilliantly; most customers are rabidly loyal; every employee has (from the outside anyway) a clear, consistent view of the all that is Apple; and you'd be hard-pressed to find an organization that had a better grasp of where the puck will be than Apple - both economically and product-wise.

If you took the 221 (of 260) companies representing the 85% of executives who admitted their inability to manage risk and created a fund that shorted their stocks, I wonder how it might do in the next 12-24 months vs. say Apple?

tinkering

My good friend Larry pointed me to a fantastic presentation by John Seely Brown on tinkering. The ten minutes you invest in listening to John is well worth it.

Where to begin. First - I think back to times I'd spend with my father, fixing his car, or an appliance, or building something (he is a tinkerer:-)), and how I osmotically learned about machinery or design, and most importantly, how I learned to decompose a problem and then solve it bit by bit until it was complete.

This approach also taught me to be bold. I can't overstate this - when you are working on a problem beside someone whom you trust and who knows more, you are more likely to try things because you know s/he is there to help/rescue/fix you if something goes wrong. When you're learning alone or in a typical classroom setting this type of "support" might not be available for two reasons - creativity and exploration is generally discouraged (a crime IMO), and often the teacher or tutor is dealing with too many students to actually be there at the precise time the one child is at the point of trying something.

As I've gotten older, I'm emboldened (because I learned how to "fix on the fly") to the point where I can now explore, experiment and create, and actually enjoy it! This is how we will build the leaders of tomorrow, by giving them the ability and confidence to do things, to try things, and to seek the joy of learning, and sharing.

"Playing with Knowledge"

I love this phrase. The idea of create, reflect and share is very familiar. About a month ago, this same "Larry" and I had breakfast together and talked about many things, including the failure of standards in learning. During that conversation, he described his view of learning - observation, reflection, documentation, exhibition. I know that Larry and John are two peas in a pod on this:)! The share/exhibition aspect can't be overlooked, whether it is in a gallery, a school hallway, or teaching another student (as John suggests), learning is cemented during this process - yet, the education system today rarely offers students this opportunity, favoring regurgitation instead (another crime IMO).

This process of continuous learning and teaching is crucial. When Einstein (thanks Larry:)) spoke these words, he was talking about discovery, which I see as implicit and tied into the learning process above, and brought to life through exhibition.

Exhibition has another aspect - it requires creation - often physical and tangible creation. The creation process enables us to evolve to not just a way of learning and teaching, but also a way of improving. When work in progress is shared (as my father did with me), we were both able to improve it, I as the observer might have had an idea that my father as constructor didn't and after some discussion and experimentation, who knows, maybe together, we created something better, just because we shared.

But we did more than share, we critiqued each others efforts as well, not maliciously or judgmentally, but productively. Building the skill to do that and having the strength to accept it is so fundamental in school, because let's face it, it's certainly there (positive and negative) in real life.

I wish our public school system were bold enough to embrace this approach. The possibilities for its graduates would be limitless.

This blog is one way in which I tinker - it results from my observations of the world; how I reflect (and synthesize) what I see; an articulation; and then my favorite part - the exhibition, where when shared, I have the pleasure of learning from others (you) through their (your) willingness to share.

Thank you.

thirds

First, sorry for the lapse in writing - I've been in Japan since just after the fourth, and in Kyoto for the first time - what a wonderful city!

It is election season in Japan, and I learned some interesting things about their process. First, the election laws in Japan are old and quite arcane - according to the BBC and Newsweek, once an election starts, you may not create new websites or update existing ones; you can only distribute so many posters or leaflets to a very small percentage (less than 5%) of your constituency; there are many others. Second, there is no interest on the part of the politicians to change the system! The politicians (I should say incumbent politicians) want to make it as difficult as possible, to impede opponents/upstarts from gaining ground.

This surprised me: only 95% of Japanese in their 20s surf the web, and only a third of them vote. The Japanese think that makes sense: "Young people shouldn't be involved, ...because they're not serious enough or they don't have the education." What's more, most of the politicians are in their 70s like Senator McCain, and recognize that their online savvy isn't comparable to their grand children's. Again the incumbent party (LDP) is old, entrenched and knows that 79% of Internet users in Japan would vote for the DPJ, so they've impeded it.

We've had a great conversation on this blog about the viability of a third party in the American political system. There's a lot of theoretical argument against it, d.eris (here and on his blog) and Dale Shelton have both mentioned Duverger's Law, and the nature of the American politic which impedes a multi-party system.

But in Canada they've shown that multi-party systems can survive, often beginning regionally (for example the Bloc Québécois is a totally regional party, but still a national force, while the New Democratic Party began in Western Canada, but is now a fully-national party). Canada, like the US has a system where only one party or candidate can win in a given district, and yet critical mass can and has occurred; multiple parties are flourishing.

I think the American system has the same "mentality" as the Japanese LDP. It believes it's OK to disenfranchise whomever it wants to as long as the incumbents prevail (can you say "redistricting"?). Perhaps American politicians will take a lesson from the citizens of Iran, who have demonstrated that when they're pushed far enough, they will rise up and insist that their voices are heard.

Further to what I wrote in threeway anyone? - this is the first time in history that it is possibly to directly reach practically every voter in the United States - all you need is their mobile phone number. Moreover, because of the technology proficiency gap between the contemporaries of most of today's politicians and the 18-29 year-old demographic, it is fair to assume that the 18-29 year-olds are actually more reachable and more interconnected than any other demographic in history.

This convinces me that it is possible to organize a national party or at a minimum a strong regional party (both coasts + cities like Chicago, Austin, other university towns, etc.) that would dramatically alter the political landscape and balance of power in Congress. I don't think it'll take something as dramatic as recent events in Iran to create a groundswell, it might be much simpler - perhaps the next mortgage-the-future spending proposal by the President or Congress?

233

Eleven score and thirteen years ago, a document was signed - it demanded greatness from a people and a place. The principles were simple - we must honor and respect everyone, and celebrate each person's right and opportunity to achieve their best. It set the stage for incredible achievements on so many fronts.

A tradition of success can be fraught - generations grow up expecting results, expecting preeminence, and expecting the ride to be easy. The mindset of being owed outcomes creates complacency. The reality of sure and steady economic growth creates a sense of entitlement. When this happens, I think beginnings and ends are most overlooked - beginnings = education, ends = retirement - because people are most focused on the middle. A good social safety net also gets ignored because prosperity seems so attainable for anyone.

But when times do get tough as they are now, these three are most tested. Today we recognize that each has much room for improvement. In the spirit of America's history, we need revolutions in education, retirement and social safety nets to reach or restore greatness.

Revolutions are of course not a foreign concept in America, nor is heroism, creativity or leadership. Two months ago, I wrote something about a path towards peace that I felt was worth repeating:

Last week I wrote about a new diplomatic approach to the Middle East that began with an apology; achieving this won't be easy - people have emailed me saying that this is too high a price to pay, and too difficult a task for America to achieve. But today I was watching part 2 of the 20 Hours in America episode of the West Wing, and President Bartlet's speech that closes with a reference to a terrorist incident at a school.

...restoring abundance amid an economic shortfall, securing peace in a time of global conflict, sustaining hope in this winter of anxiety and fear. More than any time in recent history, America's destiny is not of our own choosing. We did not seek nor did we provoke an assault on our freedom and our way of life. We did not expect nor did we invite a confrontation with evil. Yet the true measure of a people's strength is how they rise to master that moment when it does arrive. 44 people were killed a couple of hours ago at Kennison State University. Three swimmers from the men's team were killed and two others are in critical condition. When, after having heard the explosion from their practice facility, they ran into the fire to help get people out. Ran into the fire. The streets of heaven are too crowded with angels tonight. They're our students and our teachers and our parents and our friends. The streets of heaven are too crowded with angels, but every time we think we have measured our capacity to meet a challenge, we look up and we're reminded that that capacity may well be limitless. this is a time for American heroes. We will do what is hard We will achieve what is great. This is a time for American heroes and we reach for the stars. God bless their memory, God bless you and God bless the United State of America. Thank you. Source.

The emphasis above is mine. I am not American but I live in the United States. Living with, working with, and knowing the people who live where I now do, I am convinced that even if the people in that practice facility were known to be Middle Eastern Muslims, the swimmers from the men's team would have run into the fire without a second thought.

This speech always touches me, it fills me with pride and purpose, and it brings a tear to my eye. It convinces me that I'm right to be optimistic, despite sorry being the hardest word.

Education, Retirement and a Social Safety Net are difficult, difficult problems, but if America opens its mind to new ideas and creates a sense of urgency, I know it can spark the revolution that will create greatness.

Happy 233rd.

free at last?

Chris Anderson has sparked quite the debate with his latest book, Free (MSRP: $26.99(!)). Malcolm Gladwell wrote Priced to Sell, expressing skepticism about the book, Seth Godin responded with Malcolm is wrong, and Marc Cuban went on to draw the distinction between Free vs. Freely Distributed.

Chris, Malcolm, Seth and Marc are all brilliant and accomplished; as Seth pointed out, it's an amazing expression of "free" that we're able to read their words for free (except the actual book:-). We must celebrate that people like C, M, S & M freely share their ideas and more than that, actively engage in debate. This is a testament to one kind of free.

Evolving Business Models

Free (truly free) is rare. Unlike commoditization which is altogether common. For me, it centers on the business model. In high-tech it began with IBM - their model was superior customer service and sales. They prioritized the customer (mostly big, big organizations), were fully intimate with their priorities, industry, politics and people. There was truth in the statement "you never get fired for buying IBM." They always stood with you. They priced hardware steeply, but wrapped it in a cushion of service and support that was unequaled and highly valued.

Then came Microsoft - they prioritized the product and the channel. The built a partner community like no other, paid attention to independent application developers, who understood their end customer and built great applications that dragged Microsoft's "platform" technology along. Microsoft commoditized hardware - their platform software ran on a bunch of different gear, which meant that the customer could shop around for the best price, knowing that the "value" lay above the hardware in the software. This forced IBM to change its business model from hardware-biased to service focused.

Now we have Google - they turned the game on its ear brilliantly. Why make the customer pay at all? Let's make the end user the product, and sell access to it. Google's advertising approach turned both hardware and software into commodities (doesn't matter what kind of computer or browser or whatever is "underneath"). This is powerful, and why many hardware and traditional application or platform software companies are struggling.

It's ironic that success (to be pervasive and set the standard) leads to others copying you, the bar rising, a loss of differentiation, and a new addition to the ranks of commodity.

The big question is - what will commoditize Google?? In its heyday no-one believed IBM would be usurped. Similarly for Microsoft. It's not clear what follows Google - but you'd better believe someone will, yet again changing the game. IBM's model lasted for a couple of generations, Microsoft's for barely a generation; the pace is accelerating.

Mired in Paradigms

Sadly, each organization is/was so entrenched in their model that they dismissed the new entrant as spurious. Even when the new model had taken hold, the incumbents persisted in staying the course to extract every last drop of milk out of their cash cow. Despite being repeatedly kicked in the head, they still believed they were right and should not abandon what got them there.

What will threaten Google? Is it possible to commoditize or replace the ad-clicking consumer? Is there a new kind of channel? Will Google buck the trend and be the author of the change that out-modes their current model?

According to yesterday's Harvard's Daily Stat, the "Internet" (US numbers only) employs 1.2m people = $118 billion in wages and it drives $175 billion in direct transactions ($20b advertising + $85b retail txns + $70b to Internet service providers). 11% of the Internet business is advertising, a full 40% is for Internet access, and the balance (about half) is web-fronted purchases. While big, advertising is not #1. The massive majority (89%) is the consumer buying things.

The Next Model

Google's genius was finding a way to transfer the direct payment obligation away from the end consumer and putting it in the hands of the advertiser (consumers do pay for advertising, it's just hidden). What would happen if people stopped clicking on ads? What would happen if advertisers found the ROI of web-based ads to be lower than alternate channels? Would that be the end of "free"??

I will pay for something I value. I might take it if it's free, but it has "free value" vs. real value to me. If I had to pay, I probably wouldn't take it.

In his article, Gladwell referenced consumers choosing a 15cent chocolate vs. the 1cent alternative; when they lowered both prices by a penny, they chose the now free chocolate. Is that more about convenience than value? Since you have to open your wallet anyway, the price becomes less of an issue, and you may as well get what you really want, provided you think it's worth it. Could this be the crux of the "next" thing? Making buying easy?

Apple, Amazon and others make this somewhat possible with iTunes/AppStore/One-Click-Shopping, or Starbucks charging your credit card with no need to sign - just swipe and done. I think people increasingly expect to get knowledge and insight (news, books, articles, etc.) for free; but outside of that, I'm not sure that free is mandatory. Take music or movies, while some people will download for free via a Torrent or something else, most do pay. In fact, artists that offer "pay what you want" downloads of music on their sites, often make more than the 99cents that iTunes charges.

Will it be this simple? Frictionless transactions or a new, more effective advertising medium? Or is there something else out there that is fundamentally shape-changing? I suspect the latter...