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There is a good short article on the NYT Business page today about the ways in which Microsoft and Google have made network effects work to their advantage. A network effect is simply a situation in which having more people use your product makes it more valuable for other people to use it too, causing its popularity to snowball. Bill Gates is credited as the master of network effects, having built the Microsoft empire on the foundation of Microsoft’s operating system. Google has no such single control point, goes the argument, because of the Internet’s open standards, but has nonetheless been quite successful at exploiting “softer” network effects.

As I was cleaning up some old files I ran across a compelling example of the way network effects have changed the personal computer industry. In early 1984, as personal computers were becoming common at Harvard, I did a campuswide survey to find out what machines students had. 54 students said they owned personal computers and 32 of those said they had them at Harvard. These numbers are surely underestimates; the survey was unscientific and there was no reward for participating. But the distribution is fascinating:

8 Apple; 10 IBM; 4 Tandy; 4 Commodore; 5 Atari; 1 Zenith; 4 TI; 3 DEC; 2 Osborne; 4 Kaypro; one each HP, Sinclair, Brothers, Actrix, Corona, Ohio Scientific, Sol20, Timex, and NEC. I remember preparing the report itself on a Heathkit Z80 machine I built at home.

Now that was a Cambrian period in the evolution of the industry. This was 9 years after Microsoft had been founded, and there was still plenty of competition. But the incompatibilities made fertile ground for de facto standards to emerge, and Gates’ company tilled that earth with amazing skill.

I spent the last week on Harvard business on the west coast, and managed to work in talks about Blown to Bits at Google, Microsoft, and Amazon. Hal joined me at Google, and at Amazon I proudly showed off page 180, where we asked the question, “Does Amazon even have a physical location?” (This is part of the explanation of why public key cryptography is so important, as it enables strangers to agree on an encryption key without meeting.)

I then headed for the hills of northwest Montana to hide from it all. I stopped at a market to pick up the local paper, which usually leads with a story about bears or shootings or the water level on the lake. Wouldn’t you know it, this week it’s a bits story.

“Virtual High School closer to reality at BHS,” goes the headline. Bigfork High tends to lose top students to the bigger district in Kalispell, where they can take more advanced courses. This year they are going to pilot¬†Virtual High School, a Maynard, Massachusetts-based initiative. (If they can get past the various teacher and curriculum certification hurdles.)

Educational technology has had so many failures over the years, starting with educational TV in my youth, that skeptics about Internet-based education should be forgiven. But good for Bigfork for giving this a shot. It may well prove to be the equalizer that rural school districts need, a germ of Internet-enabled enlightenment — and with gasoline more than $4/gallon, a smart way to deliver information to the people rather than transporting people to the information.

As we wrote Blown to Bits, we came to recognize that many of the stories in the news were “bits stories.” Sometimes it’s a bit of stretch, other times far less so. Consider world hunger.

The price of rice has been rising. A story last month in the New York Times reported that rice producing coountries were cutting back on exports, civil unrest was rising, and a crisis loomed. For populations that spend a large portion of their income on food, populations where rice is often a staple of their diet, these increases can be devastating. It is a complex problem with potentially dire consequences.

But how is it a bits story?

The University of Washington’s “Nutritious Rice for the World” project is seeking to mitigate world hunger by analyzing rice proteins. The goal is to make it possible for farmers to grow rice strains with higher yields, greater resistance to disease, and even improved nutrition. It’s a noble cause, and a difficult scientific and technical problem. The computational needs of the project are enormous. Using conventional computing approaches the time to complete the analysis could well be measured in centuries.

We could just wait for computing power to increase. With computers doubling their performance approximately every year (close enough for this calculation), in a a decade, they will be 1000X faster. A task that would take 200 years using todays’ computers should take 73 days then. Wait another decade, and they will be 1,000,000 times faster and our protein analysis will take less than 2 hours. But the rice crisis won’t wait that long.

The team at the University of Washington had a better solution – harness the aggregate computing capacity of thousands and thousands of otherwise idle computers – your computer and mine (if you choose to participate). They joined the World Computing Grid project.

A computing grid is a loose collection of computers that work cooperatively, each doing a small portion of a large computing task. It’s similar to the way Google works – dividing the processing of your query across lots and lots of computers so that the response is fast. This particular grid joins technology and social involvement, allowing individuals to “contribute” unused computer time. In addition to analyzing rice proteins, WCG now has active programs for cancer research, AIDS, protein folding, denque fever, and more. The WCG harnesses the computing power of over 1,000,000 computers from more than 380,000 participants.

This is one more example of the transformative power of the digital revolution. Not only is it possible to do complex protein structure analysis, but also we can share the task across thousands, even millions of computer linked through the Internet, computers that belong to ordinary citizens of the world, with a shared purpose, part of a community that has been made possible only by virtue of the social connectivity that the Web engenders and supports.

Even world hunger is a bits story.

Writing in the April 17 New England Journal of Medicine, Pamela Hartzband and Jerome Groopman throw cold water on the way the electronic medical record is being “touted as a panacea for nearly all the ills of modern medicine.” Among the touters they mention are George Bush, Michael Bloomberg, the presidential candidates, insurance companies, Google, and Microsoft. Electronic records are now in wide use, especially in leading teaching hospitals. But in actual practice, they observe, the record is sometimes simply “clinical plagiarism,” in which “physicians have clearly cut and pasted large blocks of text, or even complete notes, from other physicians.” It is now so easy to drop in a patient’s lab results in their entirety, that finding the wheat in the bushels of chaff is “like ‘Where’s Waldo?’,” according to one of the authors’ colleagues. Cutting and pasting for completeness replicates garbage and gold indifferently, making the electronic record “a powerful vehicle for perpetuating erroneous information.” “The worst kind of electronic medical record,” they write, “requires filling in boxes with little room for free text.” In a brief clinic visit, physicians may spend most of their time pointing and clicking rather than talking to the patient. I am reminded of the state automobile inspection process, at the end of which the driver is handed a printout of the dozens of details the inspector “checked” on the screen but not on the vehicle.

In the summer of 1971, KSL needed a programmer for his pioneering startup company, Computer Systems for Medicine, Inc. The company’s systems would take medical histories from patients. The system was a DEC PDP-8 computer and a teletype machine. HRL was starting graduate school and needed to earn a few bucks over the summer. He did the coding. He managed to wedge the entire program into 4K of 12-bit PDP-8 words. The working system was operationally a marvel; the branching logic was much more efficient at homing in on problems than the old fill-it-all-out paper history forms, and as Weizenbaum had discovered five years earlier with ELIZA, people would tell the computer things they did not feel comfortable telling a living, breathing human being.

That was 37 years ago. The engineers have been much more successful at increasing the storage capacity of computing devices than than society has been at figuring out how to make good use of all those bits that are now captured, reproduced blindly, and, very often, never examined critically.

The New York Times reports this morning that When the Ex Blogs, the Dirtiest Laundry Is Aired. Divorced people are using their personal blogs to let the world know what creeps their former spouses are.

There is nothing really surprising about this. For years people have been worried about the mean, nasty stuff young people say about each other on Facebook, in MySpace, and on blogs. Adults are just catching up to youth culture. It’s also true that teenagers were walking around with MP3 players and earbuds a few years before middle-aged men with briefcases were doing it. One of the women quoted isn’t worried about the impact on her children for exactly that reason. As the Times reports, “It is a generational issue …. We think it will be a big deal, but it won’t be to them. By the time they are old enough to read it, they will have spent their entire life online. It will be like, ‘Oh yeah, I expected that.’ ”

Yet I find the article interesting in several ways, beyond the head-shaking instinct. Why is it apparently mostly women doing this? Is it really a healthy form of catharsis, as a number of those posting comments have suggested?But perhaps most surprising is the statement that 10% of adult Internet users have created their own blogs. I tracked down that number, and it is understated: The actual percentage, from this table, is 12%. Is that level sustainable? The same report says that only 39% of adult Internet users read other people’s blogs! One imagines a strange world in which millions of people are writing blogs about intimate personal matters, and almost no one is reading most of them.

One sign of a maturing industry is the development of aftermarkets. First there were cars, then there were used car dealers. And first there were bits, and then there were … used bits dealers? Some used bits transactions are legit, if possibly annoying. You give Sam’s Health Foods your email address so Sam can confirm your order for organic bean sprouts, and the next thing you know, you are receiving emails from Mary’s Gardening Tools. Sam decided to share his email address files with Mary, and Mary thinks that bean-sprout-eaters are more likely than other people to be gardeners. Of course, this is the kind of “sharing” that puts a few bucks in Sam’s pocket.

Other used bits dealers are like the people who steal catalytic converters and fancy headlamps from late-model cars and then sell them on the black market. There is a robust underground economy in bank account numbers, credit card numbers, eBay accounts, and even full identities. According to Symantec Global Internet Security Threat Report (downloadable free here), the going rate for bank account numbers is $10-$1000, while credit card numbers are $0.40-$20.00 each (but are usually sold in bulk). Bank account numbers cost more, because getting money from a bank account is quicker and, if properly done, leaves fewer fingerprints than converting a credit card number to cash. Identities go for $1-$15, but EU identities cost more than US identities, perhaps because of rising demand.

It’s a fascinating report. Symantec is in the security business, but many of the trends and recommendations are of general interest, unrelated to Symantec’s products. For example, the robust market in bank account and credit card numbers has made services like Paypal increasingly popular. Such electronic payment systems are guaranteed against misuse and they do not require revealing any financial information to the online store.