Month: October 2006

My blogging friend Tony Hung pointed me towards a new wrinkle in the ongoing saga of Edelman and Wal-Mart: a story in MediaPost describes how the PR company has essentially come out of the closet on its involvement with two other Wal-Mart blogs — the Working Families for Wal-Mart blog and the PaidCritics blog.

Rather than being anonymous, as they were before, posts on both blogs are now credited to individuals, whose names (first names only) are hyperlinked to bios that clearly say they work for Edelman. There is no mention of who Edelman is, however, or that the PR firm represents Wal-Mart, and there is no link to the Edelman website — and on the “About Us” page there is no mention that Edelman was involved in creating either site, or that both are financed by Wal-Mart.

Of course, as more than one commenter has pointed out, pretty much anyone with a functioning brainstem would assume that anything called Working Families for Wal-Mart was obviously being paid for by Wal-Mart, and that any site trying to out and/or bash critics of Wal-Mart was also a paid shill. Which in raises the question that the MediaPost article gets into near the end, and that Tony also mentions:

If you’re being totally transparent, doesn’t that kind of defeat the whole purpose of having such a blog? Feel free to let fly in my comments. BL Ochman says Edelman should be thrown out of the Word of Mouth Marketing Association, and Shel Holtz says he thinks even the disclosure of ties doesn’t make the blogs any better. Freelance copywriter Carson has some thoughts here.

Update:

Steve Rubel says Edelman is listening to all comments and wants to do better, and Richard Edelman outlines some of the ways the firm is trying to do that. And Suw Charman has an excellent post on the topic at her Corante blog — she says the Wal-Mart blogs show that “too many people at Edelman think the old school way, about control and being on-message and spin” (Richard Edelman has posted a comment there in which he disagrees with her). My friend Rob Hyndman also has some thoughts about the “atomization of media” that are worth a read.

I sure hope the record industry has got two separate teams of staffers working on the p2p file-sharing thing, because if it’s just one group doing everything then they’re going to be suffering from whiplash and/or split personality disorder. According to a recent piece in the Wall Street Journal, the industry has started seeding file-swapping networks with marketing pitches disguised as popular music files. Why? Because “they are the active music audience,” says one exec.

But aren’t these the same music fans that the industry has been busy suing the crap out of for years? Er, yes. But apparently they’ve also realized that those file-swappers are also their biggest fans, and opinion leaders. So even as they’re trying to get them to stop trading files, they want to take advantage of that trading wherever they can. Says the WSJ story:

By inserting promotional material into the decoy files, and then planting those files prominently on file-sharing sites, record labels and other marketers can turn what is now an antipiracy tool into an advertising medium.

The story quotes one industry insider as saying that the Grokster ruling helped pave the way for this kind of move. “Before the ruling, record labels worried that they might undercut their legal arguments if they used peer-to-peer sites for their own purposes, says the WSJ.

Reaction to the move has been, well… mixed. P2PNet calls it a “A scabby and deeply cynical practise employed by spammers hired by the Big Four Organized Music cartel.” James Robertson calls it a “blinding attack of the obvious.”

Well, all the nervous hand-wringing about Yahoo’s poor results and what they might mean for Google turns out to be unnecessary. The search behemoth turned in a stellar quarter that thrashed analysts’ estimates fairly soundly, and there was no mention of any weakness in advertising (which Yahoo blamed for its 37-per-cent drop in profits). In fact, Google not only didn’t feel the same pain as Yahoo — it helped dish some out, by continuing to take market share away from Yahoo in ad-related search.

Thanks to Google, people are probably getting used to the idea of a company with almost 10,000 employees and revenue of more than $8-billion doubling its profit and boosting its sales by 70 per cent in a year — even though that is almost unheard of. I think Microsoft in its heyday was probably the only company that grew like that and managed to keep it up for any length of time. In any case, it is so unusual as to be almost freakish.

Another thing that sort of jumped out at me as I looked through the numbers: Google went from having 7,900 or so employees last quarter to 9,450 or so this quarter — meaning it hired about 1,500 people in three months. That’s an average of 500 people a month, or about 25 people every working day. That is mind-boggling. For better or worse, there is nothing like this company out there right now, anywhere.

Update:

Blogging Stocks live-blogged the conference call. And even my friend Paul Kedrosky — not an easy audience — thought Google’s results were pretty darn good.

This is a column I wrote that ran in the Technology section of the Globe on Thursday, and on globetechnology.com

The exclamation mark in their company’s name must really bug people at Yahoo! sometimes — like when the CEO announces that Yahoo’s profit fell almost 40 per cent in the most recent quarter, as he did Tuesday. That’s not exactly something to get excited about (unless you sold the stock short six months ago, of course, in which case you’d have every reason to celebrate).

Why is Yahoo doing so poorly? The company says on-line advertising growth is slowing, and that profit margins on those ads are also slipping. That isn’t just bad news for Yahoo and its shareholders, it’s potentially bad news for all sorts of people, including those who work at other on-line advertising-dependent companies (such as Google and MSN), and those who own shares in such companies.

Just a few years ago, people were debating whether on-line advertising would ever take off and become a real force in the market. Take off it did, thanks in large part to Google. Unfortunately, however, it became such a hot property that everyone jumped into it with both feet, counting on continued growth in on-line ad spending to provide them with a business model.

There are signs emerging — and Yahoo’s announcement is one of them — that this may have caused an on-line ad glut, exacerbated by a slowdown in spending on the part of financially strapped car makers and other prominent ad buyers. That in turn has had a fairly predictable effect on prices. All of which is great if you’re buying ads, but not so great if you’re selling them.

Continue reading “Is it just Yahoo or is there an ad glut?”

According to a story in Thursday’s New York Times (I love the fact that we can read NYT stories the night before the paper comes out), the major music labels that signed deals with YouTube to allow users to mashup music and videos got ownership stakes in the company as part of those deals, as some speculated even at the time.

The Times story says that Universal — the one that was threatening the loudest about suing YouTube before the deal was done — as well as Sony BMG and Warner Music all received a stake that is now worth about $50-million as a result of the Google acquisition. Only EMI has not done a deal with YouTube (at least not yet). Edgar Bronfman Jr.’s Warner was reportedly the first one to approach the company about taking a stake.

That looks pretty darn smart right now. That $50-million stake could pay for an awful lot of artists’ fees, or lawyers’ fees, or encouragement for new artists — or country club memberships for record executives. Whatever.

Apple managed to beat expectations with its latest financial results, boosting its profit by 27 per cent and setting a new record for Mac sales. Everyone seems pretty excited about the whole thing, and happy to talk about how great the iPod and iTunes are, etc. If they mention it at all, most news stories mention the whole options backdating problem way at the bottom as a kind of throwaway. Most blogs don’t mention it at all.

In fact, the options-backdating issue might as well not even exist as far as most coverage of Apple is concerned — and that goes for much of the mainstream media as well as the blogosphere, where Apple fandom reigns supreme. Blogging Stocks is about the only place that has consistently written about the issue in depth (and Soxfirst), instead of just worrying about whether some bad official will make Steve Jobs go away and kill the golden goose.

Can you imagine what kind of stink there would be if Microsoft was involved in something like this? People would be burning Steve Ballmer in effigy (ok, they already do that, but you get my point). But because it’s Apple, the assumption is — if anyone even bothers to think about it — that it’s some kind of misunderstanding, a book-keeping irregularity that Steve couldn’t possibly have known anything about.

Is that the case? No. Apple has said that Steve knew about it, but didn’t benefit from it. Is that really supposed to make it all go away? We’re not talking about Enron-style arcane book-keeping tricks here — we’re talking about pricing stock options just before blockbuster quarterly results are issued, so that they instantly soar in value, and back-dating them in other cases to ensure a big payout.

Sure, everyone else was doing it too, but that doesn’t make it right. Apple has been getting a free ride on the whole issue, as far as I’m concerned. I guess the legendary Steve Jobs’ “reality distortion field” extends pretty far.

I’ve been thinking about Edelman and the “Walmarting Across America” blog again, in part because the topic came up — not surprisingly — at the Third Tuesday PR blogger event I was at last night (more info here) and also because I came across a post at John Koetsier’s blog BizHack in which he went over the entire chain of events and said how he felt dissatisfied with Edelman’s response.

As John notes, many people seem to feel the same way, judging by the comments on my previous post as well as those on Richard Edelman’s post and Steve Rubel’s post. And I must admit that I share some of that frustration, as highly as I think of Edelman. So I wanted to kind of summarize my thoughts on it, in part because that’s what I tried to do last night but I’m not sure I got them all across in the right way.

Here’s my position in a nutshell:

• Edelman screwed up, big time. Not just because of the blog and the lack of full disclosure — which may have happened because Wal-Mart ignored their advice, or didn’t ask for it — but because of their lack of response, and the relative inadequacy of that response when it did come.
• Edelman is being held to a somewhat higher standard than another run-of-the-mill PR shop might be in a similar situation, but that is only fitting because they have put themselves out front on the blog transparency and “being part of the conversation” issue and they failed to uphold those commitments.
• Richard and Steve have done an admirable job of responding not just to comments but to emails and other requests, and they should be congratulated for that. But as BizHack and others point out, we still haven’t gotten anything close to an explanation of how they dropped the ball and how they plan to ensure it won’t happen again.
• The fact that neither Steve nor Richard has discussed the matter since they posted their extremely brief comments only makes the inadequacy of those comments even more obvious. Like it or not, being part of the blogosphere in such a public manner means you have to take the good with the bad.
• My sense is that Edelman’s failure in this case — and at least one other case involving Wal-Mart, as John points out — has done a lot to make people even more pessimistic about the ability of PR companies to be transparent at all, at least in any meaningful way, and that is a shame.

On that last point, check out this post from PaidContent on the whole fiasco.

There’s been lots written about “citizen journalism” or “networked journalism” or “open-source journalism,” an idea that Jay Rosen is trying to turn into a business of sorts with NewAssignment.net, but it’s difficult to come up with concrete examples of it. Tom Evslin at Fractals of Change has a good one though.

As Tom mentions, “the subject wasn’t earth-shattering; no mighty will be toppled by these revelations; no regimes will change; but the process was interesting.” It involved a story by David Pogue at the New York Times about a company called Future Phone, which offers free calls to landline numbers in over 50 countries with no obvious revenue model.

David didn’t really look into how this was possible, so readers and bloggers did it for him. One of those bloggers was Tom Evslin (a fomer telecom exec who founded AT&T WorldNet), who posted some of the results of his investigation. Alec Saunders of iotum in Ottawa also wrote about it on his blog.

They, along with several commenters on their blogs with knowledge of the telecom business, confirmed that the service used an Iowa number, and that lots of free phone services do the same because telephone companies get paid abnormally high “termination fees” for calls into the state, much higher than the charges they pay for calls out of the state to overseas numbers. Therein lies a business.

Again — not an earth-shattering development, but interesting nonetheless. A newspaper columnist started the story, and bloggers and knowledgeable commenters advanced it. That’s networked journalism.

Update:

David Pogue updates his column, taking note of Alec Saunders’ blog and some of the speculation. Doesn’t mention Tom Evslin at all, surprisingly.

Just a quick note to say thanks to Ed Lee and David Jones of Fleishman-Hillard, and Joe Thornley of Thornley Fallis, for inviting me to speak at Third Tuesday — the PR/blogger meetup thing in Toronto that is loosely based on the Third Thursday get-togethers in San Francisco (more info here).

We had a great crowd out at the Spoke Club, and lots of interesting questions about bloggers vs. journalists and how to deal with them, how to convince companies that they should have (or at least pay attention to) blogs, and how Edelman dropped the ball with its recent abortive Wal-Mart blogging campaign.

It was a great example of the real-world version of the thing we all keep talking about online: that is, a conversation. I could have stuck around talking for even longer with some of the people who dropped by, but my knees were giving out. Oh, and I hope someone eventually settled the bill 🙂

Update:

Ed has some thoughts on the evening here, and is glad I didn’t single him out as giving a bad pitch when that question came up (now you owe me, Ed). Joe has a nice summary here and the inimitable Michael O’Connor Clarke has also written about some of his impressions of the evening.

I guess I have money on the brain (see my previous post about Craigslist as a cash machine). Courtesy of I Want Media, I came across a story from Marketwatch about how Google could wind up with more than one-quarter of all the online ad spending in the United States this year.

According to the story, eMarketer estimates Google will wind up with revenue of $4-billion this year, which would be 25 per cent of the estimated $16-billion online ad market. That would also represent a revenue jump of about 65 per cent. Not bad. Another interesting point in the report is how Google continues to pull away from Yahoo in the online ad race:

In 2005, Yahoo and Google had virtually the same amount of U.S. ad revenues. Yet by the end of 2006, Google is expected to pocket almost twice the amount of U.S. ad revenues as Yahoo, according to the new eMarketer report.

Yahoo will see revenue growth of just 17.5 per cent, according to the eMarketer analysis, which is here. Of course, Google already has about 50 per cent of the paid search advertising market, while Yahoo’s share has been slipping.

Thinking about how much money Craigslist could potentially make — if it wanted to — still boggles the mind. I came across a little item from Bloomberg about Craigslist adding fees in four more major cities: $25 for professional job listings in Boston, San Diego, Seattle and Washington. And what is that expected to do to revenues at the company? Um, let’s see… would you believe it could boost them to $50-million next year, or double what they were last year?

Consider this: Adding those four cities makes for just eight cities out of the 57 or so that Craigslist currently operates in (although some of those are relatively small). And those fees are only for professional job and (in New York) real estate listings. In fact, Craig has said his major impetus in adding fees is simply to cut down on the amount of listing spam. Adding fees for jobs in a few more cities, or for real estate in a few more cities, could theoretically boost Craigslist’s revenue by another $50-million or so.

And those are fees that are $10 or $25, which is drastically cheaper than existing outlets. Bump up a fee here or there, add one here or there — just for professionals of course — and it doesn’t take long before it’s pulling in revenue of $200-million or so, without even trying. Some think it could get significantly larger than that. Oh yes, and one more thing: This company has a staff of just 14 22 people, and costs that are probably in the $5-million range at the outside.

Is it any wonder Craig’s main job right now is fighting off venture capitalists? Too bad he isn’t interested in money. And as Haydn points out in a comment here, pushing the money thing too far would no doubt wreck much of what makes Craigslist unique. PaidContent has some more on Craigslist revenues here.

At last, a response has come from both Steve Rubel of Micropersuasion and Richard Edelman, head of the firm Steve works for, on the Wal-Mart blogger dustup (for some background, see my previous posts here and here).

On his blog, Steve says that he couldn’t blog about it because he wasn’t involved in the file, and “there is a process in place that I had to let proceed through its course.” Knowing how large PR firms work, I have no doubt that that is the case, and knowing Steve a little bit I have no doubt that he was dying to respond to the calls for comment.

Meanwhile, to his credit, Richard Edelman doesn’t try to weasel out of the controversy, or provide any kind of lame, tangled rationale for what happened. He says simply that:

I want to acknowledge our error in failing to be transparent about the identity of the two bloggers from the outset. This is 100% our responsibility and our error; not the client’s.

Richard also says that he reiterates Edelman’s support for the WOMMA guidelines on transparency “which we helped to write. Our commitment is to openness and engagement because trust is not negotiable and we are working to be sure that commitment is delivered in all our programs.”

A little later than some might have liked — and perhaps a little falling-on-sword is being engaged in, to prevent further damage to Wal-Mart’s reputation — but a straightforward and forthright apology. Very classy, I think.

Update:

There is still quite a bit of disagreement over whether Edelman’s apology is honest and/or valid, as you can see from Dominic’s points in the comments here, and on other blogs such as Dave Taylor’s and at PR-Squared. Scott Karp says that Edelman is still trying to control the conversation too much, and that’s why they waited so long. I’ll give Scott one thing for sure: This stuff is hard. Anyone who says differently is full of it.

I wonder if Richard Edelman — or someone at the PR firm — is regretting that they ever decided to take Wal-Mart on as a client. It wasn’t that long ago that the company started a blogosphere flame war because it provided PR material to bloggers as part of a campaign to win the hearts and minds of America, material that some bloggers used without saying where it came from. Should they have disclosed that? Yes. Was it Edelman’s fault they didn’t? That’s a tougher one to answer. I would argue that it isn’t, but others disagree.

Now, the firm is under fire again for a “fake” blog about how great it is to drive your RV around and park overnight in Wal-Mart parking lots, something I wrote about here and many others have covered as well, including Shel Holtz, Scott Karp and Tony Hung at Deep Jive Interests. So far, no response from either Edelman or its most famous blogger, Steve Rubel. Is the war room on full alert? I would expect so. But one wishes someone would come out and say something — anything.

There’s been a lot written about this, but it’s worth focusing on what exactly the point is. It’s not to beat up on Edelman, which I think is a fine company that does a lot of good work, and seems to want to do the right thing as far as the “conversation” is concerned. And I would argue that it’s not obvious the blog was a “fake” blog — from what I can tell, the people who wrote it really wanted to do such a trip, thought it was genuinely great, and simply got paid by Wal-Mart to do it.

But the disclosure was almost completely lacking — lacking to such an extent that one of the bloggers’ employers wasn’t even clear that there was sponsorship involved. Did Wal-Mart dictate what could be said about the blog? In all likelihood they did. And Edelman probably acquiesced at some point, when they shouldn’t have. If you’re going to try and have a genuine conversation — something Jeremy Wagstaff isn’t even sure is really possible when a PR company is involved — you’re going to have to try a lot harder than that.

Update:

Richard Edelman and Steve Rubel have both responded. See my updated post here.

I know it hasn’t been that long since I took a few roundhouse swings at Andrew Keen, the sometime entrepreneur and “social critic,” who wrote about the Google-YouTube deal and how it was like two thieves uniting. But I just came across a post promoting his new book, entitled “The Cult of the Amateur: How Blogs, Wikis, Social Networking, and the Digital World are Assaulting our Economy, Culture and Values,” and it just sounds so mind-bogglingly stupid I couldn’t help myself. This makes Nicholas Carr sound sane.

The cover of the book has an hourglass (the kind that you see when your computer is busy) because, Andrew explains:

There’s not much time left, that symbolic hourglass suggests, until our whole culture is swept away by the dire consequences of Web 2.0 egalitarianism.

and then he adds:

We are teering on the edge of catastrophe. Blogs, wikis and social networking are, indeed, assaulting our economy, our culture and our values. Web 2.0 is pushing us back into the Dark Ages.

In other places, Andrew has held forth this apocalyptic view as well, saying:

Web 2.0 undermines conventional expertise and moral authority in favor of the authenticity of the ordinary blogger, digital photographer or musician. But the truth of this “authenticity” is the cacophonous din of ephemera: The self-authored content on the contemporary Internet is either irreverent, narcissistic or pornographic.

Boy. Thank God there’s someone like Andrew standing up for the movie studios and record companies and society in general. We wouldn’t want to encourage people to express themselves, or (God forbid) be irreverent. For more samples of what I would loosely refer to as Andrew’s “thinking” on this subject, check out an interview/debate he took part in with Chris “Long Tail” Anderson, organized by the SF Gate.

Update:

My M-list pal Kent Newsome calls Andrew a classic example of what basketball players call a “self-check.”

I’m a little late to this particular party, but I wanted to wade into the debate over whether compensating journalists based on how many hits they get is a good thing to do or not, which Business 2.0 editor Josh Quittner started. Being a journalist and a blogger, this is something I’ve thought a little bit about — in fact, I remember when we first got a really good page-view tracking tool at globeandmail.com, and I was joking with my editor about getting paid on a pay-per-click model.

He seemed taken with the idea (in part, I suspect, because he knew how few clicks I was getting :-)). And I also remember a couple of years ago how a newspaper in Chile called Las Ultimas Noticias decided to shake things up by putting the Web stories that got the most clicks on its front page — and also paying its reporters based on who got the most clicks. In one of the first reports I read about what happened next, many of the front-page stories seemed to involve explosions or swimsuit models.

Is that surprising? Not really. Tabloids already do pretty much the same thing, because they know what will draw readers. Even regular newspapers choose pictures and headlines based on what will get people to buy a paper, or (hopefully) read it. Tracking the actual clicks a story or blog gets just gives you an even more granular view of how many people read — or don’t read — what you’ve written.

That can be a very humbling thing for a journalist, I assure you. We all want to believe that every single reader our paper has is poring over our every word, when in fact they flip past us to get to the crossword. Dan Shanoff at Huffington’s Eat The Press is concerned that paying people based on traffic will corrupt them, but as Jeff Jarvis points out — and James Robertson notes as well — newspapers already hire, fire and otherwise reward writers based on how well they are read.

Should writers and reporters be motivated solely by a desire for filthy lucre? Obviously not. But it is already part of the equation. Josh is just proposing that we make it a little more obvious.