I’m intrigued by the various ways people view ‘value’. There seem to be 2 camps: 1) people who view the world in terms of competition for finite resources and 2) people who see ways to create new forms of value and to grow the entire pie.

Umair Haque talks about choices companies make that push them into one of those 2 camps. He often argues that the market needs more builders than winners. He clarifies his position in his post The Economics of Evil:

“When you’re evil, your ability to co-create value implodes: because you make moves which are focused on shifting costs and extracting value, rather than creating it. …when you’re evil, the only game you want to - or can play - is domination.”

I really like the idea that the future of the media business is in the way we build value for all constituencies rather than the way we extract value from various parts of a system. It’s not about how you secure marketshare, control distribution, mitigate risk or reduce costs. It’s about how you enable the creation of value for all.

He goes on to explain how media companies often make the mistake of focusing on data ownership:

“Data isn’t the value. In fact, data’s a commodity…What is valuable are the things that create data: markets, networks, and communities.

Google isn’t revolutionizing media because it “owns the data”. Rather, it’s because Google uses markets and networks to massively amplify the flow of data relative to competitors.”

I would add that it’s not just the creation of valuable data that matters but also in the way people interface with existing data. Scott Karp’s excellent post on the guidelines for transforming media companies shares a similar view:

“The most successful media companies will be those that learn to how build networks and harness network effects. This requires a mindset that completely contradicts traditional media business practices. Remember, Google doesn’t own the web. It doesn’t control the web. Google harnesses the power of the web by analyzing how websites link to each other.”

I spent yesterday at the Right Media Open event in Half Moon Bay at the Ritz Carlton Hotel.

Right Media assembled an impressive list of executives and innovators including John Battelle of Federated Media, David Rosenblatt of DoubleClick, Scott Howe of Microsoft, entrepreneur Steve Jenkins, Jonathan Shapiro of MediaWhiz, Ellen Siminoff of Efficient Frontiers, and Yahoo!’s own Bill Wise and the Right Media team including Pat McCarthy to name a few.

It was an intimate gathering of maybe 120 people.

Much of the dialog at the event revolved around ad exchange market dynamics and how ad networks differ from exchanges. DoubleClick’s Roseblatt described the 2 as analagous to stock exchanges and hedge funds…there are a few large exchanges where everyone can participate and then there are many specialized networks that serve a particular market or customer segment. That seemed to resonate with people.

The day opened with a very candid dialog between Jerry Yang and IAB President Randall Rothenberg where Jerry talked about his approach to refocusing the company and his experiences at Yahoo! to date.

Battelle’s panel later in the afternoon was very engaging, as well. The respective leaders of the ad technology divisions at Yahoo! (Mike Walrath of Right Media), Miscrosoft (Scott Howe of Drivepm and Atlas) and Google (David Rosenblatt of DoubleClick) shared the stage and took questions from John who, as usual, didn’t hold back.

The panelists seemed to have similar approaches to the exchange market, though it seems clear that Right Media has a more mature approach, ironically due in large part to the company’s youth. Microsoft was touting its technology “arsenal”. And DoubleClick wasn’t afraid to admit that they were still testing the waters.

I also learned about an interesting market of middlemen that I didn’t know existed. For example, I spoke with a guy from a company called exeLate that serves as a user behavior data provider between a publisher and an exchange.

There were also ad services providers like Text Link Ads and publishers like Jim Mansfield’s PhoneZoo all discussing the tricky aspects of managing the mixture of inventory, rates and yield, relationships with ad networks, and the advantages of using exchanges.

I’ve been mostly out of touch with the ad technology world for too long.

Our advanced advertising technology experiments at InfoWorld such as behavioral targeting with Tacoda, O & O contextual targeting services like CheckM8, our own RSS advertising, lead generation and rich media experiences were under development about 3 years ago now.

This event was a great way to reacquaint myself with what’s going on out in the market starting at the top from the strategic business perspective. I knew ad exchanges were going to be hot when I learned about Right Media a year ago, but I’m even more bullish on the concept now.

Time business columnist Justin Fox questioned the success of the new media methods in a recent post “The reign of the enthusiasts“.

He suggests the algorithms that proudly surface the deep dark corners of the Internet are actually just self-referential popularity contests. When searching for his name Justin found that the articles he’s written that are likely most influential in the real world fail to rank higher than the articles he’s written which attracted the most link love from media-obsessed blogger types, like myself.

“There are web2topians out there–Battelle and my friend Matt McAlister immediately spring to mind–who are convinced that the Googles (and Diggs and del.icio.uses and Amazons and Last.fms) of the future will do a vastly better job of steering people to what they want, such a good job that most of the gatekeepers of the current media universe will prove wholly extraneous.”

This isn’t the first time someone has accused me of being a Web 2.0 blogger. Coincidentally, the same day Justin posted this, I was mocked by a local construction worker waiting for the bus with his buddies as I passed on my way to the office. He shouted to nobody in particular,

“Man, you know what I hate? Dotcommers.” He watched me walk by stonefaced and waited for a response. The guys standing around him turned to look. Unsure still, he blurted out, “Architects, too. Hate all of them.” He got the laugh he was looking for.

Jeez, am I that boring? Or that obvious and annoying? (Please don’t say anything. I think I know the answer.)

Anyhow, Justin’s question is top-of-mind for a lot of people in the media business. Where I disagree with him and the wisdom of the media industry crowd is on the notion of “gatekeepers” or rather the need for them at all.

Perhaps the most important part of being successful in media is distribution, and the reason we’re asking what the role of the gatekeeper is today is because the Internet has disintermediated the media distribution models that helped them become gatekeepers in the first place.

Online search changed the way people access relevant information, and those who once thought of themselves as gatekeepers suddenly found themselves at the mercy of the link police, the new gatekeepers, the search engines.

Yet, Justin’s explanation of the weakness of Google’s algorithm is exactly what I think many people who get mocked for their trendy glasses, old man sport coats, carefully orchestrated facial hair events, designer shoes and man purses (I don’t have a man purse) all see improving with the introduction of explicit and implicit human data into the media distribution model. The act of hyperlinking to a web page is not a strong enough currency to hold together a market of information as big as the Internet has become in recent years. It’s a false economy.

But the link currency opened the door to the idea of using behavior to help people find things. I love Last.fm not just for the music it recommends to me but because it proves this to be true. The Internet is made of people, people with a wide range of knowledge, tastes, and interests.

Now, there will always be a role for experts, and there are many cases where being an expert is not just subjective. Experts are hugely influential on the Internet as they are in other media. But I don’t see that a gatekeeper is an expert by definition.

There will also always be a role for enablers. Good enablers are often community builders who understand the rhythms of human psychology and emotion. Henry Luce was such a man, and I think he might have been a very successful web2topian today.

If those who call themselves “gatekeepers” want to share their expertise in valuable ways, then they will need to understand how the role of human data helps with distribution of that expertise. If those who aim to be enablers of communities want to be relevant, they will find ways to do that in many of the social technologies that have proven successful in this new world.

Similarly, if the people Justin affectionately refers to as web2topians appear smug, glib or arrogant when talking about media, then they are only doing themselves and everyone in the business a disservice. Gatekeepers know better than anyone that expertise does not by definition make you important. That’s a lesson the Internet generation will learn the hard way when someday they become irrelevant, too, I’m sure.

Any successful business model is going to have imitators.  Google knows this as well as anybody.   But now the stranglehold on the distributed ad model is feeling weaker than ever with new competitors every day.

The magic formula = isolate revenue collection system into a platform + make it available to other web sites - share earnings back to transaction/click source.

Yahoo! rolled out a similar offering about a year ago with YPN.  eBay launched their own version recently.  Amazon has had their affiliate program for years.  Kanoodle, IndustryBrains, Feedburner and a host of others all know this solution with their own twist on it.  Media networks such as IDG smartened up to the opportunity, as well.

The magic formula is showing cracks, though.  Click fraud is not being measured effectively by independent audits nor is payment being adjusted to compensate for it.  And Google has no short term incentive to solve the problem just as Microsoft once had no incentive to fix Windows security threats.

Linux gave Microsoft reason to change.  I wonder who will push Google into panic mode.  They may just sleepwalk into the death trap as long as their search market share remains strong.

Though have no doubt that Google can change.  At some point Schmidt’s insistence that Google is a technology company may actually trickle down and create some revenue opportunities that are more service based.  If they can scale their office products for mass adoption and perhaps create a browser optimized for those products, then they will finally have a potential revenue model to match the rhetoric.

The question is whether the market share losses surely in AdSense’s near future will fracture Wall Street’s love affair with the company before they can not only diversify but also stabilize on a mix of technology service revenue streams.

I can’t even imagine the complexity of the cultural war that will wage internally when/if the “technology” part of the business actually becomes a real slice of Google’s revenue pie.  Manufacturing consent will probably work while Google continues to grow.  I’d still hate to be on a “technology” product team at a company where 99% of the revenue comes from media products…wait…from one media product.

The Google Phd’s are probably predicting the copycats, the corporate positioning conflicts and internal competitive challenges as I write this, but are they smart enough to get their Product Managers and Biz Dev guys to help them actually figure out how to solve the problems, or do they just write papers and send long emails with subject lines in all caps?

“CORPORATE STRATEGY RESEARCH STUDY: IMPACT OF ‘TECHNOLOGY’ MARKET POSITION IN THE FACE OF MULTI-FRONT WAR ON ONLY REVENUE STREAM MAY CAUSE INTERNAL STRIFE”

Maybe Microsoft’s MSN team has some advice for Google’s technology product teams about operating in the shadow of the cash cow.