Month: November 2006

If you’ve never come across Startup Review before, it’s a blog written by Nisan Gabbay, who until recently was an analyst with the venture capital group Sierra Ventures. Instead of short posts or gossip about startups, he does an in-depth case study of a company such as Craigslist every week or two, based on interviews and research. Since many of these companies are pretty well known, there aren’t that many earth-shattering insights, but they are very useful nonetheless.

His latest is on Facebook, which is reportedly looking at acquisition offers from Yahoo and others in the $1-billion range, and has already reportedly turned down an offer in the $750-million range. Nisan gives us a good overview of how Facebook capitalized on a pre-existing, real-world community in order to grow quickly:

Facebook created a high utility online service for enabling pre-existing social behaviors within an offline community. This makes for an interesting lesson learned: it’s easier to piggyback off a pre-existing community with offline behaviors that drive online service usage.

He also notes that Facebook created the conditions for such an online community to grow in a relatively sheltered and secure environment, since the site was restricted to college students and others with a .edu address. The company has since lifted that restriction, which has drawn some criticism from those who thought it should have stuck to its original plan, but has also increased the popularity of the site.

If anyone is going to be around the York University’s Schulich School of Business on Wednesday night, and wants to hear a rousing debate (hopefully) on the future of media and the Web, it just so happens that I’m part of a panel discussion on that very topic.

The panel has been organized by my friend and former Globe colleague Richard Bloom, who is finishing up his MBA at Schulich with a focus on arts and media managment. The donnybrook discussion starts at 5:30 and runs until 7:00 and my co-panelists are former National Post writer Mark Evans (now vice-president of operations with b5media) and Tomer Strolight, who runs Torstar Digital.

So CBS wants to find and buy the next YouTube before it gets big. Gee, I wonder why no one else has thought of that? Way to go, CBS. And so they’ve hired a guy who at the age of 35 is described as a “veteran” of the industry, and of the takeover game. Why — because he helped advise Viacom to buy Neopets? Wow. That’s rocket surgery for sure.

What Quincy Smith seems to have picked up during his time on The Street is the ability to say a whole bunch of really great sounding phrases that actually mean diddly-squat. Here’s a great one that PaidContent highlighted:

The important thing is that we get confidence internally on a set interactive strategy that will immediately change and be organic as we grow. From there we can think about how we can execute on this as a team.

Did you get that? In other words, it’s important to get confident — internally, of course, as opposed to externally — and to set a strategy. Wouldn’t it be better to get confident after deciding on a strategy? Never mind. Because that strategy is going to “immediately change” anyway. And, it’s going to be organic, which as we all know is the best kind of strategy to have.

And then, of course, after getting confident and having the strategy (the organic one that immediately changes) then it’s time to think about how to execute. Not actually execute — which is a fancy word Wall Street types use when they really mean “do” — but just think about it for awhile.

In other words *we don’t have a clue what we’re doing.” Or phrased differently: “I’d better come up with something good, or it’s back to hedge-fund land.”

As with any self-respecting blogger, I hate to say anything positive about Microsoft because they are synonymous with evil (just kidding!), but I must admit that the latest update to Virtual Earth — or whatever we’re supposed to be calling it nowadays, which is probably Windows Live Web Search Satellite Virtual 3-D Planet — is pretty damn cool.

I read about it over at Search Engine Watch and had to download it and check it out, based on the pics that Danny Sullivan put up, with full 3-D rendering — in better than Half-Life 2 detail — of downtown San Francisco and a bunch of other major cities. Microsoft even tipped its Stetson towards the Great White North by putting up a few buildings in Calgary and Vancouver, although apart from three or four major office towers, everything else is 2-D.

Best of all, cyberspace wouldn’t be cyberspace without advertising, right? So there are virtual billboards hovering here and there over office buildings and stadiums and whatnot, large enough that if they were in real life they would block out the sun. Is anyone going to want to advertise inside Virtual Earth? I would bet they are falling over themselves to do so. What if you’re checking out the city you’re moving to? There’s an ad for a real estate broker.

All we need now are those floating billboards with video commercials on them from Blade Runner (video is coming soon, Microsoft says). Oh, and maybe an add-on pack that would let you race cars (but not like this stupid thing Microsoft tried to pull) or hunt virtual bad guys down the streets of your favourite city. I can see it now: Grand Theft Auto — Vancouver.

(cross-posted from my media blog)

CNet has reported that Topix, the local-media network controlled by some of the major U.S. newspaper chains, has raised another $15-million in financing. According to the story, Gannett and Tribune each own 33.7 per cent, and McClatchy (which was bought by Knight Ridder last year) owns 11.9 per cent. Together, the newspaper companies own about 80 per cent of the company.

Topix says that it will use the money to add more staff and put some more cash into marketing, something that it definitely needs to do. Although it has climbed in the rankings, it really needs to get its name more known as the source for local news — and promote some of its unique tools, such as the ability to comment on stories, links to blogs that are mixed in with the news feeds and a great search engine.

Unfortunately, the site is going up against Google News and Yahoo News on the one hand and sites like Digg on the other, and even its new funding might not be enough to turn the tide. As PaidContent points out, the site hasn’t exactly been able to integrate its tools and content with its newspaper owners so far, at least not in any meaningful way, and time is quickly running out.

I’m just throwing this out there — not because I know anything (because I don’t), and not because I have any ulterior motives (I don’t even have any posterior motives), but just because it occurred to me, and the more I thought about it the more it seemed to make sense. I guess I’m posting it here because I want to see if anyone agrees with me. Even if you don’t, feel free to let me know.

I think Mike Arrington should merge his burgeoning global TechCrunch empire with Om Malik’s growing gigaom.com network. Why? Well, the benefits would be obvious, I think — more sites and more readers equals a bigger player when it comes to advertising space, and that’s the name of the game when you’re trying to build what amounts to an online magazine business.

I guess what got me started thinking about it was when I noticed that Mike’s blogs, including TechCrunch and MobileCrunch, linked to Om’s blog when he had a post about something, and Om has done the same thing with Mike — which makes sense, since they cover things that overlap a lot of the time, and they also know each other and are friends. Mike has even given a boost to Om’s Widgets Live conference.

And then I got thinking about how little overlap there really is between the two: Mike does Web 2.0 services and gadgets and that kind of thing, while Om concentrates on telecom and broadband stuff and some mobile coverage. Why not join forces and have something that covers all of those things better than anyone? Then Mike could get closer to his recently-stated wish of having more page views that CNet.

In newspaper boardrooms across the United States, the news that Google wants to get into the print advertising business is probably causing a mix of emotions — a combination of those old favourites, fear and greed. Fear because newspapers are afraid that Google might somehow make it even less profitable to run a paper than it already is, and greed because Google is so ridiculously successful that it’s natural to wonder whether some of that might spill over.

Forgotten by many in their excitement to board the Google party train, however (typical newspaper guy: “Does this mean we all get Segways and free candy?”) is the fact that the search behemoth has already tried this particular strategy once, and more or less… well, failed. Google ran a trial project involving a couple of dozen high-profile magazines, and before too long it became obvious that it just wasn’t working. Google said it was just an experiment, and that it learned a lot.

Why didn’t it work? Mike Masnick at Techdirt had a few clues: For one thing, Google doesn’t really bring any kind of competitive edge to the print advertising game the way it does to Internet search-related advertising, where its giant algorithm machine spins a web that drags Internet surfers in like flies and practically forces them to click on ads whether they want to or not. In magazines (and newspapers), there’s no algorithm-powered search, and no search-related ads.

If nothing else, meanwhile, Google’s desire to move into newspaper ads — which it apparently thinks are a better fit than magazines — is yet another signal of its unquenchable thirst for ad inventory of any kind, so that it can keep growing at those triple-digit rates the stock market is so enamoured with. And let’s face it: the newspaper business needs all the help it can get. Although Scott Karp of Publishing 2.0 points out that one of the unintended consequences of the Google experiment could be that it only reinforces how disconnected and hard to measure print advertising really is.

To me, one of the most important developments of the past few years from a Web 2.0 perspective was RSS, the “really simple syndication” format that allowed any blogger and in fact any website period to become their own newswire, just like Associated Press or Canada News Wire. Sure, it’s plumbing, but it’s important plumbing. Which is why it’s important that we decide what people are allowed to do with RSS feeds and what they’re not.

For example, taking all of someone’s feed and putting it on a website and then selling ads around it is clearly wrong, it seems to me. This is called “scraping,” and it is flat-out stealing. Then there’s taking someone’s full feed and putting it on a site but not selling ads around it, and pointing people to the originating blog, which is kind of what Top Ten Sources got in trouble for awhile back (more on that here). That’s in kind of a grey area.

Then there’s what Robert Scoble is doing, which is using the “share” feature in Google’s Reader (which I also use) to highlight certain items in the feeds that he reads. Google gives you what amounts to an instant blog, or at least a distinct URL, where all your shared items show up (mine is here) and they are the full items from anyone who has a full-text feed.

That got someone named Andy Beard — whose website says he is involved in keyword research and affiliate marketing — kind of upset, because he said RSS is meant to be private and therefore Scoble was helping to ruin RSS. This makes no sense whatsover, of course, since RSS is by its nature a syndication mechanism. But in the comments on Scoble’s post, it became clear that others, including Duncan Riley of b5 media, think what he is doing is stealing.

To Scoble, however (and to me as well), it seems more like helping — since a link to a post in Scoble’s shared items is almost certain to drive people to the blog in question. Is that not a good thing? And there are no ads in the reader blog, so he can’t be accused of making money from it. And it isn’t a full feed, although it is full-text posts.

As Techdirt has written before, this seems like someone complaining because someone else made their content more valuable (be sure to check the back and forth between Mike Masnick of Techdirt and Jason Calacanis of Netscape in the comments on the Techdirt post). And Fred Von Lohmann of the EFF and others have pointed out that publishing an RSS feed implies a license to reuse that content.

(cross-posted from my media blog)

Muhammad Saleem, who writes a blog I recently came across called The Mu Life, has an interesting interview with Matt Sparkes, who works for New Scientist magazine and is in charge of managing the relationship between the magazine and social media, including blogs and “social bookmarking” sites such as Digg.com.

Matt talks about how the rise of blogs and distributed media of various kinds makes it hard to track things back to their original source. And if you work for a magazine (or newspaper) that is trying to keep its head above water online, that’s the kind of thing that makes a big difference — i.e., blogs or bookmarking sites giving you the credit you deserve for a story or post.

Content just falls into peoples laps now. Whereas 5 years ago the legwork of finding great content was replicated by every reader, it’s now centralized. That’s great for users, but if you’re a content producer you need to start worrying.

As Matt points out, a magazine with a large staff and relatively high costs is obviously looking at ways of monetizing its online content, and one of the ways to do that is through page views — but if someone posts something to Digg or Reddit.com or Netscape and links to a secondary source like another blog, then the original creator of the content usually gets bupkis.

The overheads required to produce that content are huge, and we obviously rely on traffic to recoup that cost… When another blog covers that story and links to that first blog, the percentage of readers to reach us lowers significantly. In the same way, if an aggregator such as Reddit links to a blog post about one of our stories, it is not particularly useful at driving traffic.

Journalists are trained to go back to the original source, bloggers and social media users are not.

As Sparkes also makes clear in his interview, social media is simultaneously a threat and a great opportunity. The challenge for traditional media is to find a way of balancing those two things.

It seems that Kevin Rose is in the news again — the blogosphere news, at any rate — and this time not for being on the cover of Business Week. It appears that Digg has been doing some more algorithm-tweaking, and has pissed off a bunch of its top contributors, because the filters it is using are preventing them from getting on the front page with as much frequency. Two top contributors write:

Why then, we wonder, does Digg continue to snub its most prolific community members, rather than reward or even encourage them? With the latest change in Digg’s promotion algorithm, it seems that the message you are sending to the site’s most active users is that its time for them to quit.

My first response to this complaint, I have to admit, was something along the lines of “So quit, already. Who needs you? Go submit stories somewhere else if your poor little ego is bruised.” As Markus Frind of PlentyOfFish points out, the top contributors to just about any public forum or site often become egotistical maniacs and troublemakers. And what does being a top Digger consist of? Being the first to post links to things you found online. Not exactly rocket surgery.

My friend Tony Hung at Deep Jive Interests makes a good point, however, which is that Kevin can be criticized for more than just tweaking an algorithm to deny top Diggers their moment in the sun — apart from a blog post during the last algorithm crisis, one which came long after the fire had started, there has been little or no response from the Digg gang to any of the concerns raised by their most frequent submitters, and little or no consultation with them.

As Scott Karp notes at Publishing 2.0, this whole “social media” thing is a delicate dance, not to mention something that we are all pretty much having to make up as we go, and it requires more than just sticking a “Web 2.0” or bloggy label on something. As Edelman has found with the Wal-Mart fiasco, it is not enough to talk the talk — you have to be prepared to walk the walk. If Kevin Rose wants Digg to be social media, he had better start getting social.

Update:

BloodJunkie, a Canadian who is in the top 10 Digg submitters, says in the comments on the Mu Life post: “The change they made to the algo was so obvious (and drastic) that I expected to read a blog post about it on digg’s blog all week. But that never happened. At the very least, they should explain what they have done and how it makes digg better.” And Drums ‘n Whistles points out that Flickr is also taking flak for changing its algorithms.

Update 2:

Kevin Rose has posted a very brief comment on the changes to the algorithm — one which isn’t likely to soothe any ruffled feathers in the Digg-osphere.

(cross-posted from my media blog)

There have been plenty of announcements over the past few months of newspapers merging their print and online operations (like the London Telegraph) or pushing their staff to do other things such as multimedia, blogs, etc. (like Business 2.0 magazine requiring all of its writers to start blogging). Now Gannett has said that its newsrooms will now become “information centers.”

What does Gannett mean by that? Although the term is sure to be the subject of much derision from newsroom veterans — and it definitely has a kind of 1984-ish feel to it — the idea seems to be to get away from the newsroom as the place where news is created (which has never really been the case) to looking at it as a place where reporters and editors filter all kinds of information that readers/viewers/listeners might want, including information that comes from “the people formerly known as the audience,” as Jay Rosen likes to call them.

This latter concept was dubbed “crowdsourcing” by Wired magazine (which has a story about Gannett’s move here), and involves being open to contributions from non-journalists, whether those contributions are stories, pictures, contacts or just opinions. This is the kind of thing that many outlets, including the BBC, dabble in from time to time. But Gannett wants to make it a staple of its news-gathering process, and has already seen the benefits.

According to the Gannett memo announcing the initiative, pilot projects in a number of locations have seen positive feedback in a number of ways:

What they found is remarkable: Breaking news on the Web and updating for the newspaper draws more people to both those media. Asking the community for help, gets it – and delivers the newspaper into the heart of community conversations once again.

As Doug Fisher describes it in his excellent post: “The palpable arrogance in too many modern newsrooms — that somehow we are above it all and are indispensible to our readers/viewers/users/customers — has got to go. We aren’t, and they could care less. We squandered much of that public support long ago. We continue to do so.” Gannett is trying to find a different way, and they should get some props for doing so.

Update:

Jeff Howe, who wrote the piece for Wired on Gannett’s move to crowdsource news, has more details on his blog about crowdsourcing. Hat tip to PaidContent for the link. And Tim at eBiquity says (quite rightly) that this kind of initiative is great, provided it isn’t just an excuse for getting by with fewer journalists. Greg Yardley wonders whether such a system wouldn’t be open to “gaming,” and my friend Rob Hyndman notes that in some cases he would rather have Pulitzer Prize winners on the ground reporting a story rather than “pyjamas media.” And Drums ‘n Whistles says there are risks to crowdsourcing too.

If you spend a lot of time cruising around the Interweb, you may have come across a site called PhilTube.com, which — apart from looking an awful lot like YouTube, to the point where the trademark lawyers are probably salivating — hosts a bunch of videos featuring a guy named (you guessed it) Phil, doing things like sitting at his desk in a non-descript office somewhere, asking people to hold his calls because he’s busy blogging, or telling his staff to film ordinary objects around the office and upload the clips to YouTube, which they do.

Kudos to the gang over at Huffington Post’s great Eat The Press site, who tracked down the back story (or meta-story) behind PhilTube. As it turns out, the site was created by Hart+Larsson, a New York ad agency that is represented by PGM Artists. And the CEO of PGM Artists just happens to be a guy named Phil McIntyre — yes, that Phil. Phil apparently asked the agency to put together a parody site with some clips for a big commercial advertising summit.

In that inside-out way that things in New York and Hollywood sometimes turn out, Eat The Press says there have already been feelers put out about getting PGM to produce content for some sort of Web TV venture. First it’s a joke, then it’s reality.

Note: Eat The Press correspondent Rachel Sklar (a Canadian) has a great feature piece on Saturday Night Live in the latest issue of Village Voice magazine.

frantic: (adj.) excessively agitated; transported with rage or other violent emotion

Like my friend Paul Kedrosky, I find myself somewhat bemused by the recent story from the Financial Times, in which Google is described as being engaged in a “frantic” round of negotiations with content providers for licensing rights. Paul notes that in another story, Google’s quest is described as a “slog,” which leads him to wonder whether it’s even possible to be in a frantic slog (and then to suggest that “frantic slog” would be a great band name, which it definitely would).

This is one of those cases where the choice of a single word can twist the perception of a story almost irrevocably, especially when it appears in the lead paragraph. The folks at the pink paper, as some Brits calls it, aren’t normally known for cranking up the rhetoric the way some of the tabloids do, but I think this time they let their enthusiasm get the better of them. The rest of the story is a relatively straight-forward look at what Google is trying to do, but the word “frantic” is all out of proportion and that ultimately hurts the story.

As the ever-perceptive Cynthia Brumfield notes at IPDemocracy, sometimes it’s just more exciting to think of a gigantic multibillion-dollar behemoth like Google getting “frantic” about something, or facing a “potentially crippling” round of lawsuits, in the same way that financial reporters like to talk about an earnings “bloodbath” or how a company is “hemorrhaging” money. It makes it sound more interesting. Unfortunately, it’s also hyperbole.

Here’s a Web 2.0 story for you: I got an email pitch from a guy named Kevin the other day, letting me know about the Web-based classified ad service that he and his buddy Chad put together in their spare time. Called Listifieds.com, it’s based in the thriving metropolis of Bowling Green, Kentucky (which I remember primarily because it’s where John Prine says his grandmother taught school in the great old song Grampaw was a Carpenter).

Kevin says he and Chad at first planned to focus their service on Bowling Green exclusively, but then they got lots of positive feedback and decided to take it national. Of course, the first thing that came into my mind was how crowded the national classifieds market is, what with newspapers fighting to stay competitive, Craigslist dominating in dozens of major cities and newer entries such as Edgeio.com going after the Web business aggressively.

Is Kevin worried about any of this? Nope. He says “we realize it’s a crowded market but believe we can stand out with our combination of clean design, usability and feature list. We’re not looking to get rich off of it.” He figures they will sell featured listing spots and maybe banner ads to local businesses. In other words, putting together the site — in relative terms — probably didn’t take that long or cost that much, and scaling it larger probably won’t either (here’s a tip, Kevin: check out Amazon’s S3 and EC2 services if you start to get a lot bigger).

I asked Kevin in an email about Craigslist and eBay and Edgeio and others, and here is what he said (some sections clipped for space):

Clearly we don’t have the brand awareness, the marketing resources, or the money that these other sites have. But I also think the market is fragmented and in transition right now.

I think craigslist isn’t that well known outside of the big cities it operates in. I think eBay is almost always associated with auctions, which some people don’t like… I don’t put Edgeio in the same category as the other sites because I believe it has an identity crisis, isn’t that well known beyond the web 2.0 crowd, and in my personal opinion, it is confounding to use.

In my opinion, we have the cleanest, clearest, easiest to use interface; We aren’t limited to big cities like craigslist; We have longer listing run times — up to 180 days for certain listing types; We offer plenty of photos and ways to describe your listing; We offer some nice tools… rss feeds, listing alerts, saved listings, recently viewed listings, website widget.

We think we have something good to offer, so we intend to give it a try and have fun doing it. If nothing else, we can say “our service is free too, why not list with us also?”

If I were being brutally honest, I would say Kevin and Chad’s service doesn’t have a snowball’s chance in hell of becoming a major force in classifieds nationwide. However, it could probably become a pretty good little business in some smaller regional markets, and there is nothing wrong with that at all — and Kevin and his friend should be congratulated for giving it a shot. What do they have to lose? That’s Web 2.0 in a nutshell.

Am I the only one who is slightly gob-smacked at the amount of money that mobile television company MobiTV has collected in its recent round of financing? (Looks like Down The Avenue shares my amazement). Just months after getting a whopping $70-million — which already seemed a little excessive — the company has been handed another $30-million. Is MobiTV really that great, or is there just so much money sloshing around in the Valley that people can’t get rid of it fast enough?

I expect it’s probably a little bit of both. As more than one person has noted, Web 2.0 companies (or whatever you want to call them) in many cases require a whole lot less financing than traditional technology companies, and that combined with a conspicuous lack of IPOs has left VCs with truckloads of cash backing up and effectively going to waste. And there’s no question that MobiTV is cool — or rather, still cool, since it’s been around since 1999 — although I question how big the market for watching TV on a cellphone really is.

In any case, $100-million is a gigantic pile of money. I just hope that MobiTV can find something worthwhile to do with it. Greg Sterling wonders if MobiTV is becoming the next Webvan. Let’s put it this way: If they start having rooftop parties with free drinks and performances by hot bands, look out. Rafat Ali at PaidContent is also bearish.