Tag Archives: Internet

Collecting online sales taxes

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With so many governments struggling to make ends meet, more states are looking at how to collect more sales tax revenue from online purchases. While Internet users may not like this, it seems like this is primarily being held up by complications about how to collect the money:

Under a 1992 Supreme Court ruling, businesses are responsible for collecting sales taxes on every sale they make in a state where they have a “physical nexus.” In other words, if the business has a store, an office or even a single sales rep in your state, it’s supposed to tack the state’s sales tax onto your bill.

Online retailers like Amazon.com typically don’t add the tax, except in the states where they’re based or where they have physical facilities like warehouses or distribution centers. Amazon, for example, collects sales taxes only in Washington (its home state), Kansas, Kentucky, North Dakota and New York.

The tax is still supposed to be paid, however. And if the seller’s not responsible, then you, the buyer, are. In general, you’re supposed to voluntarily file your own report and pay the standard tax on your out-of-state online purchases. (The appropriate forms are available on state tax agency websites, revenue officials are happy to remind you.)

But it turns out that the vast majority of Americans are completely unaware of those rules, so the forms don’t get filed and the taxes don’t get paid — to the tune of $8.6 billion in 2010 alone, the National Conference of State Legislatures estimates.

Two quick thoughts:

1. Why have states waited so long to get on this? Perhaps they didn’t want to look like the bad guys while things were relatively good.

2. If more of these taxes are paid, what effects would this have on Internet commerce? There would still be benefits to Internet purchases: no need to go out to a store, often a lot more options, delivery to your doorstep. At the same time, would this help traditional retailers?

Quick Review: The Facebook Effect

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Facebook, which went online in early 2004, is now old enough to be the subject of retrospectives. There is a new movie about the company, The Social Network, coming out this fall. There is also a recent book, The Facebook Effect: The Inside Story of the Company That is Connecting the World by David Kirkpatrick. I recently finished this book and have a few thoughts about the story of Facebook:

1. The idealism of Facebook comes throughout the story. Even from its early days, the founder Mark Zuckerberg was more interested connecting people than in just making money. This has driven many of the decisions made by the company and created friction between Zuckerberg and his coworkers as some wanted a greater emphasis on profits. At the end of the book, Kirkpatrick elicits some interesting thoughts from Zuckerberg regarding the differences between Google and Facebook. Zuckerberg describes Google as a passive company that tries to categorize the information that is already out there. In contrast, Facebook is a company that helps people express themselves and divulge information.

2. The growth in terms of number of users is remarkable. Kirkpatrick mentions several times seven or eight countries where 30% or more of the residents are on Facebook (not just 30% of Internet users).

3. The potential for profits comes from Facebook’s unique user database. With users voluntarily uploading information about themselves, advertisers can then target messages to particular groups. While most advertising is aimed at vague categories or misses its mark altogether, Facebook offers the opportunity to really reach certain segments.

4. While Facebook might have a unique mission, the story of its early history sounds similar to other tech companies. The founder has an idea that builds upon his previous work, he finds others to help him out, some of the key people drop out of college to focus on the company, and for years the company operates more like a frat house than a legitimate business.

5. Kirkpatrick recognizes that Facebook has had its issues and he points out when he disagrees with the company. However, several times he suggests that users ability to protest Facebook’s actions (like when privacy settings have been changed) is only made possible because of Facebook’s genius.

6. The main founders were from Harvard. There is little discussion in the book about how the advantages the founders had (generally wealthy families, exemplary educations, the connections one can make at a place like Harvard) could help make Facebook possible compared to starting a company like this elsewhere.

7. The big question that comes after reading about Facebook: how exactly does this or will this change the world? Does it improve the world? Kirkpatrick seems to buy into the big ideas of Zuckerberg: the book opens with the story of how a single man in Columbia was able to kick-off a nation-wide protest against the existing government through Facebook.

I am more skeptical. While this online world does seem to represent something new (people voluntarily giving up their privacy and forming communities), I don’t think it has yet translated into much real-world action. Does being open online (even though openness really is more often sculpting an idealizing image of oneself) necessarily lead to being more open in the real world? Perhaps greater results will be seen when younger generations who are always used to having Facebook around grow up.

In summary, this is an intriguing look at how Facebook has developed and about the ideals that motivate its founder.

The quest to tweak search results to lead readers to news stories

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Howard Kurtz of the Washington Post provides a behind-the-scenes look at how newspapers attempt to position themselves in search engines in order to draw more readers. While these are news organizations with often serious intentions, they have to compete with other popular web topics. Here is what Kurtz suggests this looks like:

If you appease the Google gods with the right keywords, you are blessed with more readers. So carried to a hypothetical extreme, an ideal headline would be, “Sarah Palin rips non-Muslim Obama over mosque while Lady Gaga remains silent.”…

On a recent Wednesday morning, some Post editors were frustrated that the primary election results weren’t garnering many hits — despite the fact that John McCain had just won his party’s nomination and Lisa Murkowski was on the verge of losing hers. What was hot, the traffic directors said, was Elin Nordegren telling People that her life had been “hell” since her husband’s sex scandal, a photo of an alligator in the Chicago River, and a video posted on Gawker of a British woman throwing a feral cat into a dumpster…

Zaleski says such trend research is used mainly to tweak headlines and search terms. But, she adds, “what we’re realizing is that we can’t live in a vacuum, where we decide what people want to read.”

The quest for online eyeballs is one that all online sites are competing in and those who are interested in providing or discussing more serious topics do not seem to be winning the day.

h/t Instapundit

Combining quantative and qualitative data collection on the Internet

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I’ve quickly seen some recent mentions of a new project out of Princeton called All Our Ideas. Here is how the creators describe the project:

All Our Ideas is a research project to develop a new form of social data collection that combines the best features of quantitative and qualitative methods. Using the power of the web, we are creating a data collection tool that has the scale, speed, and quantification of a survey while still allowing for new information to “bubble up” from respondents as happens in interviews, participant observation, and focus groups.

Of course, one of the problems with surveys is that they force respondents to fit their responses to the questions that are asked. If you ask bad questions, you get bad results or if you don’t provide the options respondents want, you don’t really get the kind of data you want. Qualitative data, on the other hand, tends to be limited to a smaller sample because it takes more time to interview people or conduct focus groups.

I will be very curious to see what emerges out of this website.

Digital input and downtime for the brain

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Americans are inundated with information from digital devices: computers, phones, televisions, and more. According to the New York Times, research suggests all this digital usage could leave the brain with a lack of downtime and this has consequences:

The technology makes the tiniest windows of time entertaining, and potentially productive. But scientists point to an unanticipated side effect: when people keep their brains busy with digital input, they are forfeiting downtime that could allow them to better learn and remember information, or come up with new ideas.

This has some interesting implications for the future if these findings are replicated:

1. We could have a lot more breadth than depth.

2. We could be better synthesizers of information (having an ability to pull a lot of things together) but have less creativity. Or perhaps the general definition of creativity will simply change from the ability to generate new ideas to an ability to put together ideas together.

Bill Gates suggests a change is coming in higher education

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Bill Gates made a prediction about the future of higher education at a conference last Friday. The Chronicle of Higher Education reports on Gates’ comments:

“Five years from now on the Web for free you’ll be able to find the best lectures in the world. It will be better than any single university,” he argued at the Techonomy conference in Lake Tahoe, Calif. “College, except for the parties, needs to be less place-based.”

Gates went on to argue for a need to lower higher education costs and make such education more widely available. Also at the conference, Nicholas Negroponte claimed e-books will replace printed books  in five years.

There are clearly benefits to having class in-person but the rising cost of higher education will put pressure on schools to offer more Internet based classes.

Plagiarism in the Internet age

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The New York Times reports on how getting information from the Internet has changed students’ perceptions about plagiarism:

It is a disconnect that is growing in the Internet age as concepts of intellectual property, copyright and originality are under assault in the unbridled exchange of online information, say educators who study plagiarism.

Digital technology makes copying and pasting easy, of course. But that is the least of it. The Internet may also be redefining how students — who came of age with music file-sharing, Wikipedia and Web-linking — understand the concept of authorship and the singularity of any text or image.

Anthropologist Susan D. Blum studied students at the University of Notre Dame and came to this conclusion regarding attitudes toward authorship:

She contends that undergraduates are less interested in cultivating a unique and authentic identity — as their 1960s counterparts were — than in trying on many different personas, which the Web enables with social networking.

If so, this is an interesting change. It suggests the concept of individualism is changing from one where a person develops unique ideas to one where individuals are creative with existing material.

Perhaps this generation tends to think information on the Internet (and other creative material) is common knowledge. One traditional rule about avoiding plagiarism has to do with common knowledge; if it is widely known, then no citation is needed. What is being confused then is the ease in which the information can be obtained versus whether it has an author. It is true that it is often easy to do an Internet search and find something out. That does not mean that the information is known to all – easy access does not equal common knowledge.

It seems like the best course would be for students to cite all external sources, even if a student thinks it is common knowledge.

Making money online by tracking consumers

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The Wall Street Journal starts a series on what companies are doing to track consumers to make money online. Some of the common tactics:

The study found that the nation’s 50 top websites on average installed 64 pieces of tracking technology onto the computers of visitors, usually with no warning. A dozen sites each installed more than a hundred. The nonprofit Wikipedia installed none.

Tracking technology is getting smarter and more intrusive. Monitoring used to be limited mainly to “cookie” files that record websites people visit. But the Journal found new tools that scan in real time what people are doing on a Web page, then instantly assess location, income, shopping interests and even medical conditions. Some tools surreptitiously re-spawn themselves even after users try to delete them.

These profiles of individuals, constantly refreshed, are bought and sold on stock-market-like exchanges that have sprung up in the past 18 months.

If you are using the Internet, expect that people are “watching” you and trying to figure out how to make money off of you.

Ongoing issue of measuring online audiences

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If you were examining Hulu.com’s online audience figures from the last few months, you would find some fluctuation: 43.5 million viewers in May and then 24 million viewers in June. What happened? Did something radically change with the website? Are people abandoning the practice of watching television online?

No, the main change is that ComScore changed its methodology for measuring who used the website. According to the Los Angeles Times:

The three dominant measurement firms — ComScore, Nielsen and Quantcast — have been working since 2007 with an independent media auditing group to make improvements so the Web data they report don’t have a fun-house quality, in which the same site’s traffic can look emaciated or bulging, depending on the viewer’s angle.

These firms have used different measurements over time including panels of users (like Nielsen uses for television and radio) and embedded tags in videos and websites to track viewership. These numbers matter more than ever for advertisers as they will spend around $25 billion in online advertising in the United States in 2010.

As in many cases, knowing the means of measurement matters tremendously for interpreting statistics.