I asked Chris what he thought of Google's preemptive performance warning the other day, and he said this was bound to happen:
"The additional knobs they had to turn in the past to outperform are largely gone. They already have 3 ads on the top, they already have taken all the marketshare they’re gonna take, and the auction effect has already taken its upward toll on CPCs."
As a result, spending patterns are changing, too. The combination of available terms, query volume, ad placement, user clicks, and affordable CPC's is starting to balance out into a more sensible ecosystem. Advertisers are closing in on the upper limits of their market and understand how to get what they want out of a buy.
Despite a flattening effect on average, spending should still increase in higher value areas as marketers get more clever with their tracking. The value differential between a relevant and an irrelevant keyword will start to matter more. Brand will start to matter more, too:
"As well-known brands come in, they’ll get higher CTR’s than www.unknownmortgagelender.com. CPC’s by themselves don’t matter. What matters is CPC times CTR."
The trick for all the ad networks is to help advertisers reach all the way across the funnel. They need to help advertisers track and analyze performance from impression to click to purchase. There's huge potential in behavioral targeting. And there's a lot of work to be done in lead capture.
"Advertisers are converting at 2.3% right now, yet good advertisers convert at 4-6%. As advertisers get higher conversion rates, they churn it back into the channel. Behavioral targeting should add much value to search inventory as well, but Google isn’t in as good a position as Yahoo or MSN to get that data."
Chris backed up what we keep hearing from John Battelle about toolbar and desktop downloads. That's how Google is going to make behavioral targeting happen.
The broader upside is that Internet advertising reached over $12B in 2005, according to IAB, an increase of 30% over 2004. Internet advertising outspent radio for the first time, and that trend probably won't reverse for a long time. Google and Yahoo! will obviously capture most of that revenue, but the opportunities are growing across the board. Unlike the crash after the last bubble, a burst now could have a soft landing as revenues begin to spread out across the market.
I've been very dubious of offline market opportunities for Google, but Chris was very bullish on this opportunity:
"Google is kicking ass because they have a huge user base and a better auction system that nets 30-40% better monetization than Yahoo. When RFID readers and tags are cheap, in cell phones and offline media (5-10 years out), and sync’d with PCs, an advertiser will know if a user saw a billboard prior to making an online purchase and thus will be able to re-value the billboard ad on the fly -- leading publisher to auction billboard/print/TV/radio inventory in real-time, probably with Google, Yahoo, MSN’s systems at the middle of things."
Hmmm, I dunno. Maybe I'm not close enough to what's happening to understand how that unfolds, but I don't think Google, Yahoo or MSN are capable of delivering on that vision any time soon.
It sounds like business is booming for Efficient Frontier. It makes sense that it would. SEM is getting more and more complicated and simultaneously more and more critical. I might revise my investment wishlist to include a play in this space, too.
Digg
CommentThursday, March 2
Feedburner's publisher deals are getting interesting
I
see that Feedburner worked out a deal with the IDG publications (except
InfoWorld, strangely). We're seeing Feedburner conduct a systematic
conquest of publishers' RSS feeds with IDG, Reuters and USA Today all
formally committed. If they can get CMP or Ziff, then we'll see the
rest of tech publishing jump on board, I'm sure. Then they'll have a beach head.
IndustryBrains, now owned by Marchex, similarly hit the publishing
market this way, quietly eroding Google's ability to play in tech
publishing. They have a really interesting model that may give some
insight into what will happen with Feedburner.
IndustryBrains serves the Sponsored Links you see at the bottom of all the pages on just about any major tech publishing web site and several finance and travel sites. Advertisers bid for placement amongst several high level categories specified by the publisher.
Why does IndustryBrains own tech publishing? It's not only because their CEO Erik Matlick calls up all his customers on a regular basis to see how they're doing. It's not only because they report exactly how much each advertiser is spending and who the advertiser contact is.
IndustryBrains owns that market because tech publishers make more money with IndustryBrains than with Google.
IndustryBrains was particularly clever with their model. When an advertiser buys a Sponsored Link on a site, they are bidding for placement specifically with that brand. A telecom services provider knows that they should pay more for the "Wireless" category on WiFi Weekly than the "Wireless" category on Big Tech Monthly and nothing at all on Kids Gaming Quarterly.
The advertiser can choose where their ads appear. They get more qualified clicks that convert better. They can afford to spend more per click. Therefore, the publisher's take home from the spend is higher. And users are seeing ads that are relevant to them. It works in all directions.
Feedburner is starting to look a lot like IndustryBrains with their commitment to serving publishers, though they've yet to land on a clear advertising model. They've certainly staked out a bigger pie than IndustryBrains has. Unlike IndustryBrains, Feedburner's product scales up and down the tail very easily with its self-serve offering. Soon it's going to be very hard for another ad service provider to talk to publishers about RSS opportunities without going through Feedburner.
I suppose the key question for Feedburner is about how advertising and RSS fit together. Or maybe RSS is just the trojan horse for taking over all those publishers' web pages.
IndustryBrains, now owned by Marchex, similarly hit the publishing
market this way, quietly eroding Google's ability to play in tech
publishing. They have a really interesting model that may give some
insight into what will happen with Feedburner.IndustryBrains serves the Sponsored Links you see at the bottom of all the pages on just about any major tech publishing web site and several finance and travel sites. Advertisers bid for placement amongst several high level categories specified by the publisher.
Why does IndustryBrains own tech publishing? It's not only because their CEO Erik Matlick calls up all his customers on a regular basis to see how they're doing. It's not only because they report exactly how much each advertiser is spending and who the advertiser contact is.
IndustryBrains owns that market because tech publishers make more money with IndustryBrains than with Google.
IndustryBrains was particularly clever with their model. When an advertiser buys a Sponsored Link on a site, they are bidding for placement specifically with that brand. A telecom services provider knows that they should pay more for the "Wireless" category on WiFi Weekly than the "Wireless" category on Big Tech Monthly and nothing at all on Kids Gaming Quarterly.
The advertiser can choose where their ads appear. They get more qualified clicks that convert better. They can afford to spend more per click. Therefore, the publisher's take home from the spend is higher. And users are seeing ads that are relevant to them. It works in all directions.
Feedburner is starting to look a lot like IndustryBrains with their commitment to serving publishers, though they've yet to land on a clear advertising model. They've certainly staked out a bigger pie than IndustryBrains has. Unlike IndustryBrains, Feedburner's product scales up and down the tail very easily with its self-serve offering. Soon it's going to be very hard for another ad service provider to talk to publishers about RSS opportunities without going through Feedburner.
I suppose the key question for Feedburner is about how advertising and RSS fit together. Or maybe RSS is just the trojan horse for taking over all those publishers' web pages.
Wednesday, March 1
How would you spend VC money if you could?
A friend of mine who spent the last several years running some Old Media companies asked me a funny question:
If understanding valuations wasn't important and the risk of losing it all was on someone else's shoulders, then I'd spend some money in one of these areas:
1) Publisher services. In the late '90's, I thought the music business had the most to gain by the dotcom explosion. Today, I think the publishers do. Understanding content and communities is the name of the game. Publishers have this in their DNA. They just need services that help them transition their businesses from tired media vehicles to the dotcom world.
2) Social search. There are lots of opportunities for companies to figure out how to help information find people. I don't know whether that comes in the form of recommendations, sharing things, subscribing to things, a combination or something else. But this is a big space with lots of room for newcomers.
3) Web services. I don't have clear insight into where exactly the best opportunity is in this space, but technologies that move data in and out of databases across the web is probably the single most important aspect of today's online world. I'd bank on companies that are making RSS the core technology behind their products.
4) Video on the web. Big media is moving quickly to move their programming to the web. The user experience for consuming video is clunky, but the pieces are all there. A new hit product is going to appear here, or an old product is going to look new again, I'm sure.
Top 5 products in these spaces, regardless of ownership? Hmmm. Personally, I like:
1) Feedburner
2) Last.fm
3) Del.icio.us
4) YouTube (and there's something very interesting about Democracy TV)
5) I can't come up with a definitive 5th, but I like SixApart, JotSpot and the 43 Things stuff.
Again, I have no idea about valuations and all that, but that's my answer to the question. Funny enough, I was writing this on the train last night, and then this piece titled, The Next Net 25 came out today on CNNMoney and Business 2.0 from Erick Schonfeld, Om Malik, and Michael V. Copeland. It's a much more thorough look at what's going on out there.
Also, Fred Wilson is a great source of insight on this type of question for those who aren't aware of him already.
"If you were able to spend a somewhat large sum of money in the Internet space now, what would you do with it?"
If understanding valuations wasn't important and the risk of losing it all was on someone else's shoulders, then I'd spend some money in one of these areas:
1) Publisher services. In the late '90's, I thought the music business had the most to gain by the dotcom explosion. Today, I think the publishers do. Understanding content and communities is the name of the game. Publishers have this in their DNA. They just need services that help them transition their businesses from tired media vehicles to the dotcom world.
2) Social search. There are lots of opportunities for companies to figure out how to help information find people. I don't know whether that comes in the form of recommendations, sharing things, subscribing to things, a combination or something else. But this is a big space with lots of room for newcomers.
3) Web services. I don't have clear insight into where exactly the best opportunity is in this space, but technologies that move data in and out of databases across the web is probably the single most important aspect of today's online world. I'd bank on companies that are making RSS the core technology behind their products.
4) Video on the web. Big media is moving quickly to move their programming to the web. The user experience for consuming video is clunky, but the pieces are all there. A new hit product is going to appear here, or an old product is going to look new again, I'm sure.
Top 5 products in these spaces, regardless of ownership? Hmmm. Personally, I like:
1) Feedburner
2) Last.fm
3) Del.icio.us
4) YouTube (and there's something very interesting about Democracy TV)
5) I can't come up with a definitive 5th, but I like SixApart, JotSpot and the 43 Things stuff.
Again, I have no idea about valuations and all that, but that's my answer to the question. Funny enough, I was writing this on the train last night, and then this piece titled, The Next Net 25 came out today on CNNMoney and Business 2.0 from Erick Schonfeld, Om Malik, and Michael V. Copeland. It's a much more thorough look at what's going on out there.
Also, Fred Wilson is a great source of insight on this type of question for those who aren't aware of him already.
Tuesday, February 28
Press Release: Washingtonpost.com Launches Del.icio.us Tags
The official announcement went on the wire today. This button and several others like it are available for publishers and bloggers here: http://publisher.yahoo.com/social_media_tools/
Welcome Lloyd Shepherd
I've had the pleasure of meeting Lloyd (former Deputy Director of Digital Publishing at Guardian Unlimited), and we're lucky to have such a smart and driven guy making Yahoo! Europe a better place to be:
"To say that I’m excited would be an understatement. From March 13th I’m
back in the Y! fold after a five-year absence, responsible for the
News, Finance and Sport platforms across Europe."
People are not marketing buckets
My oldest brother Mike said something a few months ago that really surprised me:
It wasn't the idea that surprised me. A lot of people are probably tired of the way marketers treat them. I was surprised that a high school teacher and Zen Buddhist community leader with no professional media background would use those terms in that way. He may actually have been reflecting the views of his teenage students.
I was reminded of Mike's comments after reading Scott Karp's reflections that audiences are not equal:
Scott then carries this line of thinking further:
Part of the difficulty in crossing from Old Media to New Media is language itself. Calling your readers "audiences" creates a distance that really should be reduced instead. "Targeting" advertising is going to make people feel like they're being hunted. And assuming that you can identify and rank the intelligence and talents of your readers is a dangerous, tenuous and potentially offensive position to take. (Doc Searls has some interesting ideas on language in new media.)
Old Media is freaking out because marketers have learned how to mix search advertising into the media buy. Why? Because marketers can offer the right product to the right person at the right time through search. And the performance metrics, ROI and margins look pretty tasty next to a $15k full page ad in a magazine that may or may not hit much less get noticed by that "audience" they were targeting.
Digg is a community of people, not a marketing bucket. The people in the community are valuable. The participants are both intelligent and talented. Whether or not the Digg environment is efficient for both the buyer and seller to negotiate attention is the issue. The value of the people in the community is undeniable.
"I don't want to be targeted with advertising. I don't fit in a marketing bucket."
It wasn't the idea that surprised me. A lot of people are probably tired of the way marketers treat them. I was surprised that a high school teacher and Zen Buddhist community leader with no professional media background would use those terms in that way. He may actually have been reflecting the views of his teenage students.
I was reminded of Mike's comments after reading Scott Karp's reflections that audiences are not equal:
"Some audiences are more valuable than others, depending on what you’re selling, what your message is, or what your objective is."
Scott then carries this line of thinking further:
"There are many types of intelligence, knowledge, and talent, but some people have more than others."
Part of the difficulty in crossing from Old Media to New Media is language itself. Calling your readers "audiences" creates a distance that really should be reduced instead. "Targeting" advertising is going to make people feel like they're being hunted. And assuming that you can identify and rank the intelligence and talents of your readers is a dangerous, tenuous and potentially offensive position to take. (Doc Searls has some interesting ideas on language in new media.)
Old Media is freaking out because marketers have learned how to mix search advertising into the media buy. Why? Because marketers can offer the right product to the right person at the right time through search. And the performance metrics, ROI and margins look pretty tasty next to a $15k full page ad in a magazine that may or may not hit much less get noticed by that "audience" they were targeting.
Digg is a community of people, not a marketing bucket. The people in the community are valuable. The participants are both intelligent and talented. Whether or not the Digg environment is efficient for both the buyer and seller to negotiate attention is the issue. The value of the people in the community is undeniable.
Wednesday, February 22
Washingtonpost.com and CJRDaily first major publishers to add del.icio.us button
Washingtonpost.com and CJRDaily both added "Bookmark with del.icio.us" buttons on their article templates today. At the bottom of every article is a link that spawns a popup for users to save this article with del.icio.us and to add tags to help them find this article later. These are the first major media properties that I'm aware of to adopt the bookmark button. (Are there others?)
I think it's critical for publishers to think about ways to enable their users to utilize content in more ways. This bookmark button is one of the lightweight user actions that will expose content in new ways to mashups, RSS feeds, recommendations sytems, and all the other new discovery tools that people are using more and more in addition to search engines. Even if only a small percentage of a site's users act on content in social ways, there will be positive effects that emerge from those actions.
Anybody can add the del.icio.us button to their site. There are instructions for doing that here, and the bizdev contact at Yahoo! who can help is John Klem (jklem@yahoo-inc.com).
I think it's critical for publishers to think about ways to enable their users to utilize content in more ways. This bookmark button is one of the lightweight user actions that will expose content in new ways to mashups, RSS feeds, recommendations sytems, and all the other new discovery tools that people are using more and more in addition to search engines. Even if only a small percentage of a site's users act on content in social ways, there will be positive effects that emerge from those actions.
Anybody can add the del.icio.us button to their site. There are instructions for doing that here, and the bizdev contact at Yahoo! who can help is John Klem (jklem@yahoo-inc.com).
Podcasting solves the click-wait problem
Dave Winer spoke at the Yahoo! campus last week with Chad Dickerson's guest speaker series to offer his advice. He dropped one nugget, in particular, that I thought was interesting. Dave talked about video on the Internet and the user interface problems with streaming and downloading.
A lot of people have struggled with video's heavy data issues and the low adoption rates for years. Now, it seems, there's just an assumption that video needs to be online and that people are going to get it there.
What happened? Did broadband adoption hit critical mass? Did TiVo inspire a time-shifting media revolution? Did the price of personal electronics (PCs, digital cameras, etc.) subvert the strangelhold on content production?
Or was it, as Dave thinks, the combination of RSS subscriptions with enclosures that created the perfect storm and turned the Internet into a viable multimedia distribution platform?
"Podcasting works because it solved the click-wait problem."
A lot of people have struggled with video's heavy data issues and the low adoption rates for years. Now, it seems, there's just an assumption that video needs to be online and that people are going to get it there.
What happened? Did broadband adoption hit critical mass? Did TiVo inspire a time-shifting media revolution? Did the price of personal electronics (PCs, digital cameras, etc.) subvert the strangelhold on content production?
Or was it, as Dave thinks, the combination of RSS subscriptions with enclosures that created the perfect storm and turned the Internet into a viable multimedia distribution platform?
Friday, February 17
Allowing users to add value to advertising
Steve Outing reminds me that people should also be able to add value to advertising through their participation:
I can only imagine how much more useful advertising would get if something like "hot deals in my local area that people like me rated with 5 stars", for example, was filtered through a good recommendation engine.
"Count me as an advocate of media sites allowing public comments to be
added to content -- and I mean all content, including ads...An example of what's possible comes from the Muncie Free Press, a citizen-journalism website covering Muncie, Indiana..."
I can only imagine how much more useful advertising would get if something like "hot deals in my local area that people like me rated with 5 stars", for example, was filtered through a good recommendation engine.
The actions of a few impact discovery for many
The key flaw in the arguments about user actions driving better search discovery is that not everybody is willing to contribute an action. A click on a link is enough to create some interesting discovery effects, but much better than that is qualitative effects of ratings, tags, comments, blog posts, etc. As Steve Goldstein and Clare Hart noted, "People are busy."
I've been waiting for someone to put some kind of number out there that helps clarify why a segment of a community can influence the perspective of the whole in important and relevant ways through their participation. Finally, a model emerges from Yahoo!'s Bradley Horowitz with his second post on his new blog.
He explains how this ecosystem defines the community and creates the opportunities that drive better discovery:
This is what drives the ability to bubble up tail content in meaningful ways. It's all about user actions.
I've been waiting for someone to put some kind of number out there that helps clarify why a segment of a community can influence the perspective of the whole in important and relevant ways through their participation. Finally, a model emerges from Yahoo!'s Bradley Horowitz with his second post on his new blog.
He explains how this ecosystem defines the community and creates the opportunities that drive better discovery:
"There are a couple of interesting points worth noting. The first is that we don’t need to convert 100% of the audience into “active” participants to have a thriving product that benefits tens of millions of users. In fact, there are many reasons why you wouldn’t want to do this. The hurdles that users cross as they transition from lurkers to synthesizers to creators are also filters that can eliminate noise from signal."
This is what drives the ability to bubble up tail content in meaningful ways. It's all about user actions.
Thursday, February 16
Portals see lead conversions between 4% and 6%
I can hear publishers celebrating today as research shows that their lead generation programs look healthy still compared to the big kids:
Those numbers don't match up to the conversions and cost-per-lead numbers of more focused sites. Now, if niche publishers could just figure out how to drive better volumes. I would certainly start considering new distribution methods and revenue models if I were still playing that game.
I'd also keep close watch of TechTarget who reported revenues of $70 million for 2005, which is up from $48 million in 2004...their whole business model is driven by the lead gen model. (Alan Meckler is jealous, I'm sure.)
"For the month of January, AOL Search generated the best conversion rate
at business-to consumer e-commerce sites (6.17 percent), followed by
MSN (6.03 percent), Yahoo (4.07 percent) and Google (3.83 percent)..."
Those numbers don't match up to the conversions and cost-per-lead numbers of more focused sites. Now, if niche publishers could just figure out how to drive better volumes. I would certainly start considering new distribution methods and revenue models if I were still playing that game.
I'd also keep close watch of TechTarget who reported revenues of $70 million for 2005, which is up from $48 million in 2004...their whole business model is driven by the lead gen model. (Alan Meckler is jealous, I'm sure.)
What will be the next PageRank?
John Battelle defined PageRank in his book as the key factor that differentiated Google's technology and forever altered the search landscape. PageRank gave currency to the hyperlink and mapped the online world using that pivot point and all its inherent values.
A lot of people seem to be asking themselves, "What will happen next?"
The PageRank concept was very clever and very simple. It made finding things a hell of a lot more efficient than browsing a hierarchy, the PageRank predecessor. But the haystack is just too big to find ever smaller needles, and the ratio of useless to useful information out there is getting really ugly:
The hyperlink was a vote in the search-driven Internet. Now I'm dependent on a new currency - human action. The click is much more potent than the existence of a link. Even more potent than clicks are tags, ratings, comments and emailed URLs. A hyperlink is still a vote, but seeing some form of human action gives me much more confidence that a source has value.
So, the trick now is for content creators to figure out how to get users to act on their stuff. How do you get people to add that extra bit of value to your content that validates and then qualifies the value for other people? And then how do you expose the user-contributed value so that the right things get picked up from the right tools at the right time to reach the right people?
I won't predict I have the solution to this problem, nor do I have the answer to what's the next PageRank. I think encouraging people to tag, send, rate, blog about and comment on your stuff and then exposing the results of those actions is crucial in this next phase of the Internet's evolution. I also think understanding how the new crop of recommendation systems works may make or break a publisher who sits anywhere under the head of the long tail.
It makes sense when you look back historically on the Internet's evolution that there will be a new method for finding valuable information on the Internet soon if it doesn't already exist. Again, I wouldn't predict what that is, but you can be sure that you will need your users' help to cross that chasm when it's more obvious what it looks like.
A lot of people seem to be asking themselves, "What will happen next?"
The PageRank concept was very clever and very simple. It made finding things a hell of a lot more efficient than browsing a hierarchy, the PageRank predecessor. But the haystack is just too big to find ever smaller needles, and the ratio of useless to useful information out there is getting really ugly:
The hyperlink was a vote in the search-driven Internet. Now I'm dependent on a new currency - human action. The click is much more potent than the existence of a link. Even more potent than clicks are tags, ratings, comments and emailed URLs. A hyperlink is still a vote, but seeing some form of human action gives me much more confidence that a source has value.
So, the trick now is for content creators to figure out how to get users to act on their stuff. How do you get people to add that extra bit of value to your content that validates and then qualifies the value for other people? And then how do you expose the user-contributed value so that the right things get picked up from the right tools at the right time to reach the right people?
I won't predict I have the solution to this problem, nor do I have the answer to what's the next PageRank. I think encouraging people to tag, send, rate, blog about and comment on your stuff and then exposing the results of those actions is crucial in this next phase of the Internet's evolution. I also think understanding how the new crop of recommendation systems works may make or break a publisher who sits anywhere under the head of the long tail.
It makes sense when you look back historically on the Internet's evolution that there will be a new method for finding valuable information on the Internet soon if it doesn't already exist. Again, I wouldn't predict what that is, but you can be sure that you will need your users' help to cross that chasm when it's more obvious what it looks like.
Wednesday, February 15
Viewing the world through other people's subscription lists
The discussions around sharing lists have felt a bit empty to me, generally, mostly because I don't understand it. Even something more tangible like sharing playlists doesn't quite get to what I want as a consumer despite the idea's unmistakeable coolness factor.
What starts to get interesting to me, though, is seeing the effects of people's subscriptions rather than the subscriptions themselves. I've been fascinated with memeorandum ever since I heard that the tech channel was seeded with Scoble's blog roll (is it true?). So, it's logical to consider an interesting lens might be yourboss.memeorandum.com and yourmusicobssessedfriend.memorandum.com.
Then I started seeing referrals from megite.com in my logs a week or so ago. And this week Alex Barnett posted about megite showing that he now has, essentially, alexbarnett.memeorandum. Doc Searls' blog is a bit of a pain to read, but I like his views and what he's all about. Luckily, I can now see the Doc Searls lens on the world rather than read all his posts.
Megite is the Being John Malkevich RSS Reader. Here's the view through my head (Apparently, I'm a gay AJAX programmer. My wife will be surprised to hear this, as will my boss).
UPDATE: Nick Cubrilovic challenges both the accuracy and utility of a service like Megite:
What starts to get interesting to me, though, is seeing the effects of people's subscriptions rather than the subscriptions themselves. I've been fascinated with memeorandum ever since I heard that the tech channel was seeded with Scoble's blog roll (is it true?). So, it's logical to consider an interesting lens might be yourboss.memeorandum.com and yourmusicobssessedfriend.memorandum.com. Then I started seeing referrals from megite.com in my logs a week or so ago. And this week Alex Barnett posted about megite showing that he now has, essentially, alexbarnett.memeorandum. Doc Searls' blog is a bit of a pain to read, but I like his views and what he's all about. Luckily, I can now see the Doc Searls lens on the world rather than read all his posts.
Megite is the Being John Malkevich RSS Reader. Here's the view through my head (Apparently, I'm a gay AJAX programmer. My wife will be surprised to hear this, as will my boss).
UPDATE: Nick Cubrilovic challenges both the accuracy and utility of a service like Megite:
"The more memetrackers that commit themselves to the personalized path
the less people we have working on the real problem of prioritizing
content and finding the smaller stories that everybody would be
interested in knowing about. Getting the first part right would be far
more interesting not just for me but for most people out there who are
interested in the long tail of news."
Tuesday, February 14
Clearly focused products unseat generalist products
The 37 Signals guys have a really interesting perspective on product development. They commit to small chunks and singular functionality. They aim to make the one thing that a product does the very best at that one thing.
This same philosophy is what made Pat McGovern of IDG the 321st richest man in the world. When he founded Computerworld magazine in the late 1960's, he realized that the specific will always drive out the general in the media business. He proceeded to build a portfolio of computer magazine properties around the globe on this basis.
What these guys all share is a clear vision of how their products help the consumer. McGovern understood intuitively what his readers wanted and kept cutting new properties from the same mold based on a live, working, successful product. 37 Signals is following a similar strategy with online productivity tools.
The strategy wins, though, not just because of the focus. It wins because these guys understand their users.
This model works for lots of things, including platforms that have a slightly different dynamic than consumer-facing products. Platform products not only need to know what the software tool needs that it serves, it also needs to understand what end-users want.
Take the neverending CMS project behind every media site. The CMS platform's primary customer is not the editor. The CMS must serve the site visitor first. How many major media sites are now using MovableType, Drupal or WordPress as functional CMS's on one level or another? How many have actually considered replacing their expensive CMS with one of these cheaper, easier-to-use tools?
The reason Vignette didn't end up dominating today's CMS market was not only because of technology issues but also because they lost touch with the real customer of the product...the site visitor. MovableType, Drupal and WordPress all make it very easy to make web sites that people like. Users like the site. Site owners are happy. The platform is doing it's job.
Platforms need to be clearly focused. But, more importantly, if a platform product doesn't understand the end-user, they will suffer the same fate of the consumer-facing products that don't know their users...they will get replaced by better, more clearly defined and focused products.
This same philosophy is what made Pat McGovern of IDG the 321st richest man in the world. When he founded Computerworld magazine in the late 1960's, he realized that the specific will always drive out the general in the media business. He proceeded to build a portfolio of computer magazine properties around the globe on this basis.
What these guys all share is a clear vision of how their products help the consumer. McGovern understood intuitively what his readers wanted and kept cutting new properties from the same mold based on a live, working, successful product. 37 Signals is following a similar strategy with online productivity tools.
The strategy wins, though, not just because of the focus. It wins because these guys understand their users.
This model works for lots of things, including platforms that have a slightly different dynamic than consumer-facing products. Platform products not only need to know what the software tool needs that it serves, it also needs to understand what end-users want.
Take the neverending CMS project behind every media site. The CMS platform's primary customer is not the editor. The CMS must serve the site visitor first. How many major media sites are now using MovableType, Drupal or WordPress as functional CMS's on one level or another? How many have actually considered replacing their expensive CMS with one of these cheaper, easier-to-use tools?
The reason Vignette didn't end up dominating today's CMS market was not only because of technology issues but also because they lost touch with the real customer of the product...the site visitor. MovableType, Drupal and WordPress all make it very easy to make web sites that people like. Users like the site. Site owners are happy. The platform is doing it's job.
Platforms need to be clearly focused. But, more importantly, if a platform product doesn't understand the end-user, they will suffer the same fate of the consumer-facing products that don't know their users...they will get replaced by better, more clearly defined and focused products.
Friday, February 10
Making your web site weigh less
Like most people, I've made the mistake of overdesigning a web site a few times. It's easy to do. You can get excited about the possibilities and forget that most people who come to your site really don't care what you're up to. They're just trying to find something.
How do you make it dead simple to give people what they want as fast as they want? And then how do you help them do more at that crucial moment when they are highly engaged with your content?
I think the first question is harder than the second, but there are some new answers to the problem. Jon Udell might be on to something with his Metadata Explorer UI. When I saw how simple it was to dive into topics and then surface back out with just simple intuitive clicks, I started wondering why you wouldn't just make your home page more like that. We've all learned that publisher's search engines always suck. Exploring through data this way makes much more sense.
Then once you've helped someone find what they want, how can you incentivize them to add value to your content, to share it with others, to find more things like it, to come back again? The little action buttons like the ones on my blog here are helpful to people. (...more info on Yahoo!'s buttons here: http://publisher.yahoo.com/socialmediatools.) Giving people related stuff to click on is smart, but there's an art to that. There's an interesting method for using del.icio.us to create related links at InfoWorld. And Feedburner has added a new FeedFlare API that allows publishers to add lightweight interfaces within items of their RSS feeds.
People have learned how to use more complicated user interfaces on the Internet, but I find it fascinating that people still gravitate toward the simplest interactions. I like the idea behind CNet's cluster cloud with each article, but I never click on it...it's too heavy.
Publishers are always thinking about their next redesign. Maybe instead of adding functionality, your next redesign will have less functionality.
How do you make it dead simple to give people what they want as fast as they want? And then how do you help them do more at that crucial moment when they are highly engaged with your content?
I think the first question is harder than the second, but there are some new answers to the problem. Jon Udell might be on to something with his Metadata Explorer UI. When I saw how simple it was to dive into topics and then surface back out with just simple intuitive clicks, I started wondering why you wouldn't just make your home page more like that. We've all learned that publisher's search engines always suck. Exploring through data this way makes much more sense.
Then once you've helped someone find what they want, how can you incentivize them to add value to your content, to share it with others, to find more things like it, to come back again? The little action buttons like the ones on my blog here are helpful to people. (...more info on Yahoo!'s buttons here: http://publisher.yahoo.com/socialmediatools.) Giving people related stuff to click on is smart, but there's an art to that. There's an interesting method for using del.icio.us to create related links at InfoWorld. And Feedburner has added a new FeedFlare API that allows publishers to add lightweight interfaces within items of their RSS feeds.People have learned how to use more complicated user interfaces on the Internet, but I find it fascinating that people still gravitate toward the simplest interactions. I like the idea behind CNet's cluster cloud with each article, but I never click on it...it's too heavy.
Publishers are always thinking about their next redesign. Maybe instead of adding functionality, your next redesign will have less functionality.
Wednesday, February 8
Why is RSS taking so long to reach big time mainstream adoption?
A lot of blame can be placed on the tools providers. The business models have some headroom before RSS is required in the publishing mix. And the format itself has some inherent awkwardness.
These are obvious to those of us watching the evolution of RSS every day, but I think there are some other important issues that must be addressed somehow:
These are obvious to those of us watching the evolution of RSS every day, but I think there are some other important issues that must be addressed somehow:
- Maybe the user has too much control. What kind of people want to take responsibility for managing high volumes of incoming data? I like seeing new mail in my inbox because someone wants to contact me. I don't like seeing unread items, though, because that feels like work.
- More better filters, please. Where's the PageRank equivilent for ranking items of interest from the RSS cloud?
- The data isn't pretty. RSS can be about so much more than headlines.
- Its social power isn't obvious yet. Email, IM, SMS and blogging all have specific and tangible social implications. How will I explain to my mother that RSS can help her connect with people in new ways?
Friday, February 3
The "Come to Me Web" school of design
I really like Thomas Vander Wal's "Come to me Web" post where he contrasts that with the "I go get Web". He talks about web design being about usability, not information reading.
We're seeing the online user experience evolve into a more complicated space that's less about request/receive behavior to one that streams and flows based on triggers and loose couplings. I also like the idea of information searching for me which I was exploring in a few posts last fall:
"Many of us as designers and developers have embraced "user-centered" or "user experience" design as part of our practice. These mantras place the focus on the people using our tools and information as we have moved to making what we produce "usable". The "use" in "usable" goes beyond the person just reading the information and to meeting peoples desires and needs for reusing information."
We're seeing the online user experience evolve into a more complicated space that's less about request/receive behavior to one that streams and flows based on triggers and loose couplings. I also like the idea of information searching for me which I was exploring in a few posts last fall:
"We are telling the
creators of information that we want filters, we want flow control, and we want
those controls in our own hands. It’s
the era of syndication and subscriptions.
I’ll tell you what information I want, and then you come find me with
the right data in the right place at the right time."
Media Economics: The hyperdeflation of Media 1.0 and opportunities in Media 2.0
Umair Haque's Media Economics presentation (ppt) from April 2005 makes some fascinating statements about the mix of forces in the media ecology and where it is going in a Media 2.0 world. A bunch of people have been referencing it recently which you can track at Technorati if you don't want to read it yourself.
It starts with an analysis of Media 1.0 economics and how supply meets demand. And then he shows where this model breaks down and finally how to take advantage of the new market.
There's a lot in here, much of which I can't get my head around yet, but one piece I like is the supposition that production costs don't efficiently capture attention at certain levels...at big media levels. In other words, expensive high quality content does not pay off. It's more efficient to spend money on ways to capture attention directly than it is to use high production value content as the bait.
This isn't true on smaller scales where media microchunks are both produced and disseminated cheaply. He explains that the fixed economies of mass media get hijacked by consumers who are able and willing to consume lots of content through convenient channels at low cost. The consequence is that production values stay low and quality gets fragmented and harder to find.
Mass media really feels the heat when micro media takes away the ability to franchise content. Soundtrack sales, video rental, syndication and other tie-ins enabled high production cost economics to scale. Micro media erodes those revenue streams and kills production-driven models.
But there's still hope.
He defines the effect of Media 2.0 on Media 1.0 as "hyperdeflation". Effective margins can't be found in average content (a boring article, a crappy film, a stupid song). But by leveraging the strengths of the new systems, margins can come back.
He goes on about Snowball Economics and defining how the 3 key types of players (Smart Aggregators, Microplatforms and Reconstructors) are going to serve the market most efficiently. But I loved this abstract description of the interplay between Media 2.0 and its consumers...
This presentation is a must read for people in Media 1.0, but it also puts some really powerful perspective on what those in Media 2.0 are doing whether they know it or not.
It starts with an analysis of Media 1.0 economics and how supply meets demand. And then he shows where this model breaks down and finally how to take advantage of the new market.
There's a lot in here, much of which I can't get my head around yet, but one piece I like is the supposition that production costs don't efficiently capture attention at certain levels...at big media levels. In other words, expensive high quality content does not pay off. It's more efficient to spend money on ways to capture attention directly than it is to use high production value content as the bait.
"Blockbuster strategies emerge due to the natural economics of mass media: production is costlier than attention, so the dominant strategy is to invest in attention (marketing cost wars), and economize on production (quality erosion). The result is a smaller and smaller number of concentrated players, who are forced to invest more and more heavily in marketing as attention becomes scarcer."
This isn't true on smaller scales where media microchunks are both produced and disseminated cheaply. He explains that the fixed economies of mass media get hijacked by consumers who are able and willing to consume lots of content through convenient channels at low cost. The consequence is that production values stay low and quality gets fragmented and harder to find.
"Value shift: in a Media 2.0 world, producers realize production economies of scale and scope in production, and marketing diseconomies of scale and scope. Attention becomes more expensive than production, because technology vaporizes production (distribution, and retail) costs, exploding media supply (relative to a mass media world, where media supply is fixed), which creates intense rivalry for attention."
Mass media really feels the heat when micro media takes away the ability to franchise content. Soundtrack sales, video rental, syndication and other tie-ins enabled high production cost economics to scale. Micro media erodes those revenue streams and kills production-driven models.
But there's still hope.
He defines the effect of Media 2.0 on Media 1.0 as "hyperdeflation". Effective margins can't be found in average content (a boring article, a crappy film, a stupid song). But by leveraging the strengths of the new systems, margins can come back.
He goes on about Snowball Economics and defining how the 3 key types of players (Smart Aggregators, Microplatforms and Reconstructors) are going to serve the market most efficiently. But I loved this abstract description of the interplay between Media 2.0 and its consumers...
- DJ plays a selection of tracks
- Audience reveals preferences, expectations, and satisfaction with their feet: private info is made public
- Consumption externality: your dancing reduces my search and transaction costs
- Tracks which maximize aggregate utility are efficiently revealed, and value creation is maximized...
- ...across multiple niches/different genres of club music
- Music listeners are a connected network ... DJs realized it, the music industry didn’t...
- ...Now, dance music is the fastest growing segment of the music industry and the segment which most regularly produces snowballs
This presentation is a must read for people in Media 1.0, but it also puts some really powerful perspective on what those in Media 2.0 are doing whether they know it or not.
Thursday, February 2
Using China censorship to attack Google
Though the issue at hand is very serious and the implications of this
have far reaching consequences, I find the timing of the Old Media attacks on Google to be very convenient for another battle taking place.
We're watching the media go to battle with it's future self. Editors who use their deep analytical processing capabilities and expensive liberal arts educations are lashing out at the man-made machines built by their antisocial computer science adversaries.
They couldn't win the battle on cost. They couldn't win the battle on efficiency. They've even been losing the battle on relevance. But now they found a place where the editorial voice cannot be replaced...ethics. But to be sure it wasn't the machines who made the decision to cooperate with Chinese policy. It was the stockholders and two young billionaires who might be getting in over their heads.
Michael Malone articulates the big picture challenge for expanding Silicon Valley companies nicely:
The threat to media is not the machines. The threat to media is money. The current economic models of Old Media are not going to survive.
Now that Google is starting to look a little more like one of them, it's a lot easier to know where to aim the gun. But I would spend more time looking at how to recapture the trust, imagination, creativity, curiosity and thirst for human connection that people want. The money will come back. And then editors can wrestle with their own bosses over how to handle increasing demands from stockholders to show growth while huge opportunities in places that don't respect the same cultural priorities beckon them with cash rewards.
We're watching the media go to battle with it's future self. Editors who use their deep analytical processing capabilities and expensive liberal arts educations are lashing out at the man-made machines built by their antisocial computer science adversaries.They couldn't win the battle on cost. They couldn't win the battle on efficiency. They've even been losing the battle on relevance. But now they found a place where the editorial voice cannot be replaced...ethics. But to be sure it wasn't the machines who made the decision to cooperate with Chinese policy. It was the stockholders and two young billionaires who might be getting in over their heads.
Michael Malone articulates the big picture challenge for expanding Silicon Valley companies nicely:
"Small, fast-moving companies typically don't have to worry about the
larger cultural and geopolitical impact of their decisions, and when
they do, they can actually incorporate ethical analysis into the
process. Large corporations rarely do this, partly because the new
product or business decision-making is pushed down through the
organization and is rarely touched by senior management, and partly
because the goal stops being that of changing the world and becomes
that of hitting revenue targets."
The threat to media is not the machines. The threat to media is money. The current economic models of Old Media are not going to survive.
Now that Google is starting to look a little more like one of them, it's a lot easier to know where to aim the gun. But I would spend more time looking at how to recapture the trust, imagination, creativity, curiosity and thirst for human connection that people want. The money will come back. And then editors can wrestle with their own bosses over how to handle increasing demands from stockholders to show growth while huge opportunities in places that don't respect the same cultural priorities beckon them with cash rewards.
Wednesday, February 1
A camel is a horse designed by committee
There was a really funny exchange between Ricky Gervais and his idiot sidekick Karl Pilkington on his podcast the other day. They started talking about Chinese proverbs and quickly devolved the conversation into Noah's poor decision to let similar animals onto the Ark.
This is paraphrasing, but you get the idea...
Not sure if I captured the humor there, but, regardless, I like the premise of the initial statement. Design-by-committee is bound to produce suboptimal results. I think the Internet business is very good at rolling out visionary products invented by passionate people. But how do you institutionalize that drive as the company evolves? How do you formulate a process for initiating vision and committing to its delivery?
I can point to a few Yahoo! products that suffer from camel-ness, but out of respect to my colleagues, I'll pick on other people instead. Here are some of the industry's worst design-by-committee products (mind you that doesn't preclude success):
This issue is everywhere. It's the classic Marketing 101 mistake at big car manufacturing companies where they take the concept of giving customers what they want a little too far. On more than one occasion Detroit has designed cars entirely by feedback from people who were asked what features they wanted in the ideal car. Of course, the result is always a variation on the minivan.
This is paraphrasing, but you get the idea...
Ricky: "One of my favorites is, 'A camel is a horse designed by committee.'"
Stephen: "Carl's already wondering who's on that committee."
Karl: "I was just thinking why would you request the hump bit, cause that's just gonna get in the way, innit?"
Ricky: "Ok, Karl. I'll give you an animal, and you tell me where it has gone wrong. The Octopus."
Karl: "It should have some bones. I never understood why it would like to get in a jar anyway."
Ricky: "A Giraffe."
Karl: "Noah should have seen some of the animals coming in and said, 'Hold on. Just saw one like you.' and then throw it out."
Stephen: "Carl's already wondering who's on that committee."
Karl: "I was just thinking why would you request the hump bit, cause that's just gonna get in the way, innit?"
Ricky: "Ok, Karl. I'll give you an animal, and you tell me where it has gone wrong. The Octopus."
Karl: "It should have some bones. I never understood why it would like to get in a jar anyway."
Ricky: "A Giraffe."
Karl: "Noah should have seen some of the animals coming in and said, 'Hold on. Just saw one like you.' and then throw it out."
Not sure if I captured the humor there, but, regardless, I like the premise of the initial statement. Design-by-committee is bound to produce suboptimal results. I think the Internet business is very good at rolling out visionary products invented by passionate people. But how do you institutionalize that drive as the company evolves? How do you formulate a process for initiating vision and committing to its delivery?
I can point to a few Yahoo! products that suffer from camel-ness, but out of respect to my colleagues, I'll pick on other people instead. Here are some of the industry's worst design-by-committee products (mind you that doesn't preclude success):
- Google Video Search and Google Reader
- The new IE browser and Live.com
- Amazon's left-hand site navigation
- iTunes Music Store
- Every home page on the Internet
This issue is everywhere. It's the classic Marketing 101 mistake at big car manufacturing companies where they take the concept of giving customers what they want a little too far. On more than one occasion Detroit has designed cars entirely by feedback from people who were asked what features they wanted in the ideal car. Of course, the result is always a variation on the minivan.
Tuesday, January 31
Tags as social constraints
I found an interesting post about the social implications of tagging by Nathan Lovejoy at swarmingmedia.com in response to my post, "Lightweight social interactions in a loosely coupled offline world." He questions whether a future data pool of tags on people could create social shackles of sorts.
The beauty of tagging, in my mind, is very different. Tagging brings about more diverse meanings to things not fewer categorical meanings. I characterize my relationships with people and the things that I know about them in many congruous ways, not by hierarchical, deterministic structures.
My friend Hunter, for example, is a great guy to have in my Netflix Friends list for his unusual film taste, but he does me no good in discussions about RSS. He is also a close friend from years back. A Foucaultian structure to that relationship would mean that "friend" would come before "film recommender" based on some hierarchical meaning to my relationship with him.
I prefer the deconstruction approach to explain the multitude of relationships and tags I can apply to Hunter for what they really mean to me. Each relationship has unique and undeniable truth in my interpretation of their value. The tag itself is a symbolic and perhaps even temporary representation of value. Tags are both subjective and independent. One doesn't come before the other.
They are also additive data. I would never tag Hunter as "-RSS", yet he very well could be insightful about RSS to other people who might, in turn, tag him with "RSS".
There may be cases where building meaning from collections of tags will give institutions dependent on structuralism some kind of new insight that could be used for power or for classifying people into buckets or something. But those are just fears that should never be used to stop progress.
Tags are a key ingredient to a larger world view rather than existential markers that institutions could use to box me in.
"The ability to freely tag individuals (I'm imagining a sort of del.icio.us for people) takes Foucault's concept of disciplinary individuality through institutional labelling and observance to a new extreme. An extreme that makes the swarm-the collective action of society-an all-encompassing disciplinary institution. Individuals would become their tags, become as they have been tagged, as they tag themselves."
The beauty of tagging, in my mind, is very different. Tagging brings about more diverse meanings to things not fewer categorical meanings. I characterize my relationships with people and the things that I know about them in many congruous ways, not by hierarchical, deterministic structures.
My friend Hunter, for example, is a great guy to have in my Netflix Friends list for his unusual film taste, but he does me no good in discussions about RSS. He is also a close friend from years back. A Foucaultian structure to that relationship would mean that "friend" would come before "film recommender" based on some hierarchical meaning to my relationship with him.
I prefer the deconstruction approach to explain the multitude of relationships and tags I can apply to Hunter for what they really mean to me. Each relationship has unique and undeniable truth in my interpretation of their value. The tag itself is a symbolic and perhaps even temporary representation of value. Tags are both subjective and independent. One doesn't come before the other.
They are also additive data. I would never tag Hunter as "-RSS", yet he very well could be insightful about RSS to other people who might, in turn, tag him with "RSS".
There may be cases where building meaning from collections of tags will give institutions dependent on structuralism some kind of new insight that could be used for power or for classifying people into buckets or something. But those are just fears that should never be used to stop progress.
Tags are a key ingredient to a larger world view rather than existential markers that institutions could use to box me in.