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The New York Times has a story that looks at something I’ve been bothered by ever since I started this blog a little over a year ago: the paradoxical fact that even as Web 2.0 and ubiquitous Internet access makes it easier for people and companies to be located just about anywhere on the planet, physical location seems to still be so important. In fact, one of my first posts on this blog was about all the bloggers I read who had just run into each other at one of Mike Arrington’s parties, or bumped into some legendary tech guru at the diner down the street, and so on.

As the Times describes, some of this is dictated by venture capitalists, who have what is informally called the “20-minute” rule — that is, startups they are involved in can’t be any further away than 20 minutes. Does that sound like a modern industry that has embraced the Internet? Hardly. And yet, there is an intangible benefit that arises from being able to meet with people in person, something that was reinforced for me at our mesh conference back in May. E-mailing with someone like Scott Karp or Paul Kedrosky is one thing, but meeting them changes things immensely.

Is that just human nature? Possibly. But there’s no question it has an effect, even on Web-based startups. StumbleUpon.com, which was based in Calgary, moved to Silicon Valley in part because they raised financing there. One of the co-founders told me in an interview that they were looking to move anyway, and that it wasn’t really a big deal to go to San Francisco or wherever, but it still sort of rankles that a Web-based company has to pick up and move somewhere just to get financing.

Does that make it harder for Canadian (or Australian, or Danish, or whatever) companies to get noticed? Undoubtedly. Although VC blogger Fred Wilson of Union Square takes issue with that assumption, Kent Newsome says proximity will always matter (Rex Hammock disagrees and so does Fred from We Break Stuff — who should know, since he moved from the Valley back to Portugal to start his company). Anne Zelenka has some thoughts about where we work versus where we are, and so does Down the Avenue. Don Dodge says Silicon Valley occurred because success attracts success.

Like several other bloggers, I got an email from Scrybe co-founder Shehryar Hydri pointing me to his company’s website, where there is a video demo of the Web 2.0 organizing tool, which is in beta. But I decided not to write about it, and I wanted to say why (obviously I know that I’m writing about it anyway, but bear with me).

Like many others, including Alec Saunders and Jason Clarke at Download Squad, I think Scrybe looks great — especially the online/offline synchronization, which could come in very handy. And the option to print things out on easily foldable cards is also kind of cool for a Web app.

At the same time though, I’m leery of giving too much attention to a startup that only has a video clip to go by. Without having laid hands on it myself and played around with it (Shehryar said beta accounts would be coming soon), it sounds a little hype-ish to be saying how great this new tool is. Could it be great? Sure. But I’d rather see it in person before I start salivating.

At the risk of overusing the “M” word (hint: it rhymes with “boron”), I feel compelled to take note of a recent column from Charles Cooper, who apparently is the executive editor of Cnet News. All I can say is that if he’s in charge of the Cnet News operation, then God help us all. Although he doesn’t mention Andrew Keen, Charles is definitely of the same mind as the “social critic” who believes Web 2.0 is ruining society as we know it (more about that here).

Mr. Cooper’s piece of “analysis” is entitled “Web 2.0 as a metaphor for ‘rip-off’,” which should give you a pretty good clue as to where he’s going. He refers to “the Web 2.0 assumption that it’s perfectly all right to profit from another company’s content without permission and without payment,” and says that it’s a good thing European courts (such as the one in Belgium that has blocked Google News) are standing up for the cause of truth and justice.

As Mike Masnick at Techdirt has pointed out, this is a load of bollocks. Cooper even trots out the old saw about how Napster and YouTube “flourished because of theft,” and how it’s just the same as walking into a store and walking out with an armload of books or CDs without paying. Memo to Charles: copyright infringement is not theft. Period. Look it up. The Supreme Court said so.

Cooper links to the U.S. Copyright Code, but obviously hasn’t thought about how it applies to Google News, or Google Print or any of the other things he lumps in with Napster. Fair use principles allow the use of snippets of text provided they are not for commercial use, and one consideration is how such use affects the market for the published work. So what if Google’s indexing actually makes a work more valuable, as appears to be the case? Does that still count as theft and immoral activity Charles?

What a maroon.

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.