Monday, March 31, 2008

Corporate Social Networking

A recent WSJ blog post discussed the use of social networking technology within large corporations. While the system was initially established in order for employees to share new ideas and allow information to flow freely throughout a company, the potential for misuse is very real.

Blue Shirt Nation allows Best Buy’s so-called Blue Shirts to swap ideas and problem-solve together. But that sometimes comes at the expense of their company. When the company tried to trim its employee discount, the Blue Shirts mounted a Blue Shirt Nation revolt that forced Best Buy to cancel its plans.

Despite having the best intentions, it's necessary for management to be aware of all the potential consequences that can result from embracing new web based technologies, especially when the flow of information is involved. While censorship of a internal social networking site would most likely make employees resent upper level management, there needs to be some sort of monitoring system in place in order to maintain a level of order within the organization.


http://blogs.wsj.com/biztech/2008/03/28/the-social-network-inside-your-company/?mod=WSJBlog

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Google Promises More Revenue with Fewer Clicks

A BusinessWeek article entitled, "Google's Gamble" (http://www.businessweek.com/technology/content/mar2008/tc20080328_837834.htm?chan=search), describes Google's reaction to a comScore report demonstrating a diminishing number of clicks on its search-related ads early this year. The report, which led to much speculation about the value of Google stock, left Google banking on the potential of each click to result in sales for advertisers. In keeping with its efforts to act as a "partner" to search-related advertisers (including the vast array of options to gauge the success of ads before business-owners commit to an advertising spend), Google is working to increase the quality of clicks. By focusing on the potential of its ads to drive sales with fewer clicks, Google is essentially taking on more of the risk in the publisher-advertiser partnership in order to maintain its stake among business owners like Ross Twiddy, who comments, "What we care about is not just traffic but that it translates into vacation rentals." Google is backing its plan by making changes to its ad layout to minimize the effects of accidental clicks. If its efforts to adjust the gauge by which advertisers often measure the effectiveness of a campaign from the number of clicks to their quality, the company will be able to charge a higher premium for placing search-related ads:

"The idea is that, as marketers and small business owners such as Twiddy see more clicks translating into paying customers, they will value clicks more and ultimately increase the amount they bid per click to offset the reduced volume of clicks. Indeed, Google has reported that the price per click on most keywords has steadily increased as it has improved the quality of those clicks."


Exercising its considerable power in the search-related ad space, Google's endeavor to magnify the role of the publisher in ensuring revenue to the advertiser may initiate a shift in the value proposition of competitors. If nothing else, it draws attention to the innovative efforts of the company to maintain its profitability in the face of the recent economic slowdown.


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Sunday, March 30, 2008

"Phones Will Soon Tell Where You Are"

An article that came out Friday in the WSJ discusses Sprint Nextel Corp's decision to provide a service to customers that lets them know where their friends or family are.  It employs GPS tracking system, which many cell phones already have installed for map search purposes.  Verizon Wireless is planning to implement a similar application.  Privacy and safety issues are a concern for this feature.  The question arises on where should the line be drawn in terms of the tradeoffs between privacy and information?  This debate is central to the technology revolution.  This is also related to cell phones people-tracking in order to advertise, say for example whenever they walk by a Starbucks.  It seems that the sales and marketing potential for this feature is too great to be passed up, so people have to accept privacy invasions for some service benefits.  Though if we compare ourselves to London, there are cameras everywhere and the government can track people at any time anywhere.  Of course this is different from making the potential for people-tracking abuse widespread.  

A side that the article presents is that because of social networking websites young people are comfortable with sharing lots of personal information.  This is true and dangerous.  We will never again be able to achieve the same degree of privacy our parents had.  So it seems that people should get comfortable being who they are because it is very difficult to hide anything.  

I heard that by law, GPS technology is supposed to have built-in inaccuracies as a terrorist precaution.  So, very often the GPS cell phone devices will be off by about two blocks.  The article does not really address this at all, though I suppose these systems are much more accurate, than they are inaccurate.  

As I said in my last post, I love technology, but I think I'll pass on big brother people-tracking.

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Image Recognition Problem Finally Solved: Let’s Pay People To Tag Photos

An article posted on techcrunch.com discusses a photo website called TagCow that "magically" tags photographs for people.  This categorizes the photos and makes them searchable.  The site does not describe the process by which these photos are tagged.  The automated claim is probably untrue, seeing as audio and visual recognition is one of the most prominent technology barriers currently facing the Internet. It is probably done by human taggers - raising questions about privacy and other disclosure issues with the site.  Under the site's Privacy Policy and Terms of Use it laughably says "TBD."  

One thing that I find interesting about this company is that they offer the service for free, but definitely have to pay people to tag.  My guess is that the company will eventually profit from collecting a database of searchable images, which can be profitably sold at a later time.  Though I'm sure there will be other methods for the company to make money. 

The other interesting component is the issue of audio and visual recognition, which we have been discussing in class.  It could be said that this problem dates back to the 1950's when Alan Turing wrote a paper about artificial intelligence.  The Turing Test is when "a human judge engages in a natural language conversation with one human and one machine, each of which try to appear human; if the judge cannot reliably tell which is which, then the machine is said to pass the test."  This applies to instances where people have to prove their humanity online, like when ordering from ticketmaster and people have to type in the masked word that they see.  I think that we will eventually have very precise image and audio recognition; we already have vocal recognition programs, though they usually need to be trained to pick up an individual's vocal patterns (which isn't much different from when a human being has to adopt to listen to a person he or she just met - my Cognitive professor called this "fundamental frequency").   In any event, there would be tradeoffs to this sort of technology.  Do we really want a world where we are entirely unable to distinguish humans from computers?  I love technology, but I fear competition from artificial intelligence.  Naturally, it is a cost-benefit analysis and we may be far from developing the technology. Or we may already have it.

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The Long Tail and Crowd Finance

I've been doing some research into the power of crowd finance and have come across some cool ways in which people who are geographically separated can come together to finance projects that otherwise might be funded by traditional means or not at all.

An example is http://www.myfootballclub.co.uk/, through which investors put up £35 and get a share in Ebbsfleet Football Club: "own the club, pick the team". Also http://www.slicethepie.com/ which lets fans vote on and finance the creation of albums by unsigned music artists. Or how about http://www.projectnvohk.com/, "an eco-clothing company managed by the people who wear it" which is seeking 5,000+ people to contribute $50 and become a decision maker in the company.

I'm looking into putting a similar structure in place for a theatre production in England and would love to discuss this with anyone from the class who is interested in the arts. Any thoughts?

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Approaching crossroads in media ad networks...

To follow up on Oliver's post below re: Forbes' planned ad network, paidcontent published a story earlier this week about ESPN dropping plans for their own network (and possibly Tuner doing the same): http://www.paidcontent.org/entry/419-espn-pulls-the-plug-on-ad-network-and-encourages-others-to-do-the-same. One reason cited was a possible dilution of ESPN's brand equity in the eyes of advertisers, due to being bundled with so many other sites. Much like the popularly-held notion that user-generated content will never attract sufficient attention from advertisers due to the unpredictability of the content, to me all of this speaks to corporate America's arms-distance flirting with the Long Tail: everybody wants to harnass the sheer volumes of eyeballs and niche markets, but nobody wants to bear the risk of exacty what's out there at the tail-end. ESPN would love to sell Nike inventory across hundreds of sites attracting "ESPN-like" audiences, but oh wait, site #230 gets a little risque at times so let's keep tabs on them. This sounds like the exception rather than the norm (MTV/Viacom recently announced launching an ad network as well), so we'll have to adopt a wait-and-see attitude with this one.

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Friday, March 28, 2008

Google's online ad clicks slowing down

Today's WSJ (http://online.wsj.com/article/SB120665517932869745.html?mod=hpp_us_whats_news) pointed to a research report showing that Google, the current king of online paid search advertising, suffered from a 3% decline in the number ad clicks it generated in the month of February, marking the second consecutive month of weakness for the firm. Considering that this business is the company's main cash cow, investors have reacted by putting downward pressure on the stock price.

Could this be an indication of a broader downtrend in online advertising? The cause(s) for the decline is still in debate, but there are two likely possibilities. First, we are witnessing some clearly difficult economic times and lower click rates could be an obvious indicator that consumers are less inclined to spend their discretionary income (we've already learned in class that research shows people who click on the paid advertising links tend to be buyers rather than just "window shoppers" or researchers). A second reason could be that declines in ad clicks are a direct result of the company's improvements in its advertisement measuring system. For example, the firm recently took measures to help prevent errant or inadvertent ad clicks by web surfers, which have contributed to overstated measures and statistics.

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Thursday, March 27, 2008

Helping Local Businesses to Quit the Yellow Pages

As more people opt for the internet for gathering information about local businesses rather than reaching for the yellow pages, a number of business models are moving in to help local businesses get found.

One particular method that seems to be attracting a good deal of attention (and money) is the development of Search Engine Marketing firms geared toward specifically toward the local business, like Yodle and Reach Local. While distinctions between these two business do exist, the idea behind them is to help take some of the mystery out of search engine advertising for the small business by offering a user-friendly interface that helps everyone from a limousine company to a nail salon start a search engine marketing campaign across all the major search engines for a fee of a few thousand dollars a mo

nth (media included). Yodle goes so far as to create a series of page templates for the business that are optimized to generate calls. The VC community has responded positively to these efforts, with Yodle picking up $12M in funding in late 2007 and ReachLocal picking up $55M a month earlier, valuing the company at a hefty $305M.

Another way in which business are reaching out to the community is by letting the community do the work for them. Yelp.com is a citysearch on steroids, allowing (and encouraging) users to rate note only their favorite restaurant and watering hole, but also their dry cleaner, hardware store and virtually every other category of business available. Personally, i've used it to find a good tailor. Yelp is free to the user and to the business, with display advertising seeming to make up the revenue stream for the site.

And of course Google is on the act as well, using an army of door-to-door salespeople to sign up local businesses in its 'Local Business Referral Program." While definitely has the advantage in this effort due it size and reach, it appears that the ingenuity of the start-ups may make it a fight. And besides, Yelp uses Google maps, and Yodle/ReachLocal direct businesses to buy ads on Google, so they are making money regardless.

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New Dash Express Offers Internet Connectivity, Ad Potential

New competition for Garmin and TomTom hit the GPS market today in the form of the Dash Express. While the Dash offers many, if not most of the features of the offerings from Garmin and TomTom it also bring some new features to the market that will interest both drivers as well as advertisers.

For the driver, the Dash brings the advantage of real time traffic updates. While previous GPS units have largely been unable to recognize traffic jams on your route, the Dash aims to correct this by using internet connections built into the units to build a network of traffic monitors that can relay traffic information real time to other Dash units. So, if the route you want to take shows up as red, then other Dash units are stuck in a traffic jam there, making it easier to find an alternate route.

This internet connectivity also presents a unique opportunity for advertisers to present locally targeted ads, based on their drivers routes. While local businesses have presumably been able to buy listings on the software pre-loaded in non-connected devices, the connectivity now presents the opportunity for advertisers to customize their ads based on seasonality, product availability, time of day, and potentially even the demographic information on the registrant of the unit.

While the Dash service now derives its revenue on the sale of the unit and a monthly subscription, with unit data relayed to the network anonymously, one can only wonder how long it takes for someone (i.e. Google) to begin offering a free ad-based service for those willing to forego personal information for cheaper gas or discount slim-jims on their next road trip.

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New Site "Hulu" Allows Viewing of TV Shows & Films Online for Free

I read an interesting article in Entertainment Weekly online about a new streaming video site that went live this month, called Hulu (www.hulu.com). It's a joint venture owned by NBC Universal and Fox (and it also received $100 million from a private equity firm called Providence Equity Partners). Hulu allows you to watch full-length episodes of current TV shows, old TV shows, films, and sports games (as well as clips) for free. It's different from YouTube in that its content is provided by studios rather than users, and it has very high resolution and quality. Unlike iTunes, it doesn't require a download service. Although the content is free, it's ad-supported, and a half hour TV show will probably have two 15 second ads and a 30 second commercial.
http://www.ew.com/ew/article/0,,20185419,00.html

I had to take a look at Hulu myself, and I liked it. The TV content was interesting, because there was a cross-section of genres and eras. I found current shows such as The Office, 30 Rock, and Saturday Night Live, as well as shows from the 60's, 70's, and 80's such as Dragnet, The Mary Tyler Moore Show, I Dream of Jeannie, The Partridge Family, and Miami Vice. Hulu is appealing to the long tail with shows like this, and I think its popularity will continue to grow as it adds more long-tail oriented content - it might even have a negative effect on NetFlix eventually (Hulu only has episodes of about 250 shows right now, and only has 1 or 2 seasons available). Hulu also has community-based Web 2.0 characteristics, because it allows people to make comments about the shows they've watched (similar to people reviewing books on Amazon), and also displays which shows are the highest rated and the most popular. I spent more time on Hulu than I had intended - once I started searching for and watching old TV shows, I couldn't stop. I suppose that's exactly what they're counting on!

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phising scam notice on facebook

Speaking of facebook, I just saw a phising scam notice on facebook on techcrunch. Although I'm not an avid user of facebook, I thought people should be careful. Since it leads to a link exactly like facebook you might get tricked! It is scary what these people can do.


This is part of the posting:

. . .

The scam involves a notice appearing on the wall of user profiles as a message from a friend, saying “Hey, I got a new facebook account. Im going to delete this one, so add my new profile” then with a link that appears to be a link to the new profile. The actual link goes to a URL on view-facebookprofiles.com, a domain registered (and whois protected) on Namecheap and hosted at Softlayer that looks identical to the Facebook login page:

itsatrap.jpg

Users fooled into resubmitting their Facebook details on this page then have their Facebook accounts hijacked and all of their contacts receive a similar message, propagating the phishing scam.

. . .

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Wednesday, March 26, 2008

New Social Networking Site Targets Young Athletes

Facebook, MySpace, Friendster, Twitter – social networking is clearly ubiquitous on the web. What is interesting is the increasing fractionalization of this phenomenon as various industries attempt to carve out their specific niche. Many of the now formidable social networking sites started out organically, but WePlay.com is attempting to break that proven mold. A joint venture between talent agency C.A.A. and the hedge fund Pequot Capital, it uses sports stars—always a key marketing commodity—as entrée into this crowded online universe.

The New York Times article, “Social Site’s New Friends Are Athletes,” published today, details the new online website. WePlay is described as a “Facebook for young athletes.” On it, users will be able to create profiles, post pictures, communicate with friends and share videos of games. But this is not just for children. According to the article, “Parents will be able to get practice schedules, coordinate car pools and find out which equipment to purchase. Coaches will be able to communicate with their players and parents, as well as learn about strategy and other skills.”

Sport stars, including Derek Jeter, Tony Parker and LeBron James, will also be involved with the venture and provide special video and photo content for the site. Per Rachel King's post from earlier this week regarding the web’s gender divide, especially among teenage girls and boys, it will be interesting to see if this site skews one way or the other. It should be noted that no female athletes were mentioned in the article.

Though the article indicates that the last major Internet venture to have gained considerable support amongst star athletes—MVP.com—failed in 1999, I suspect that this site will have wide appeal (after all, 1999 is a long time ago in Internet years). And if it does take hold, the possibilities for sponsorship crossover are endless. Perhaps WePlay.com will be able to successful monetize its site from the get-go because the sports industry is such an important advertising outlet (clearly Pequot’s investors hope so). If sneaker and soft drink companies have an additional method of getting the attention of sports-playing youth, one can only assume that they will jump at the opportunity. But as a late entrée to the social-networking game, it will be interesting to follow whether WePlay.com has any difficulty persuading young athletes to take the time to invest in yet another site, especially one that their parents and coaches are on.

http://www.nytimes.com/2008/03/26/technology/26caa.html?pagewanted=1&_r=1&ref=technology

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Wikipedia's Soul

One has to wonder when the lexicographers at Merriam-Webster will decide to include "Wikipedia" as a word. They list Google as a transitive verb in their dictionary; “to use the Google search engine to obtain information about (as a person) on the World Wide Web.” Wikipedia, surprisingly, returns no results on merriam-webster.com though it’s clearly entered our lexicon.

Wikipedia, as The Economist noted earlier this month, is the biggest encyclopedia in history and the most successful example of user-generated content on the Internet. However, the site faces an identity crisis as two competing blocs struggle to drive content. “Inclusionists” believe Wikipedia should include every aspect of human knowledge. They argue that applying stringent editorial criteria will douse enthusiasm. “Deletionists” would have the site adopt such editorial control. They counter that Wikipedia ought to be more cautious, more selective.

www.economist.com/printedition/displaystory.cfm?story_id=10789354

The article prompted me to read more about this oft-used site. I Wikipediaed Wikipedia to refresh my memory about the controversy that arose when a user wrote an article about journalist John Seigenthaler Sr. that contained defamatory content. The errors went undetected for four months until Seigenthaler contacted the editors. He later wrote an Op-Ed piece in which he called Wikipedia “a flawed and irresponsible research tool." Certainly, the Deletionists must have referenced the Seigenthaler entry more than once.

I rely on Wikipedia, perhaps too much for a former journalist. Recent searches – which may betray something, I’m not sure what – include Alexis Glick, Brian Greene, Comcast, Dani Rodrik, Heroes TV, La Vie en Rose, Molly Ivins, Super Endaka, Tom Wilkinson, and The Wire Season 4. Still, I have to believe I would fall on the Deletionist side if I were an editor.

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Health and Marketing

On Wednesday March 12th, TechCrunch's Erick Schonfeld broke a story about the health website Healthline and it's new announced partnership with Aetna (a health insurance company, that covers Columbia students as well). Putting health information online for users to access and share with others is not a news concept. Both Microsoft and Google have launched in the past year health platforms. The difference is while Microsoft and Google launched by partnering with providers (Microsoft with NY Presbyterian and Google with the Cleveland Clinic), Healthline is partnering with a payer. While Microsoft and Google will need to collect information from the providers and get permission from each patients to be part of the new system, Healthline already will have access to all of Aetna's online medical information (as long as it follows the restrictions set out by HIPPA). However, no matter how they get the information the real questions is how are they going to make a profit from it? And the answer, should be, marketing.

On February 28th, the Associated Press quoted Google's CEO Eirc Schmidt saying that "Google will not use advertising to support its new internet health services,". If that is the case, how are they going to make any profit. I would much more prefer them to advertise to me then for Google to find another way to exploit my personal information. We should be used to it already. Google's computers read every email I send and receive by Gmail and then advertise relative information on the side. Google looks at every search I do and gives me a few "recommended" sites I should check out as well. Facebook's computers look through my profile and adversities things I might be interested in. So what is so different with health information? We already put our lives on line for all to see through facebook, MySpace, youtube and blogs, why should I care that a computer is reading my health files as well and suggesting certain content based on that. The only real privacy concern I can see is the giving out of information to third parties, and under HIPPA it makes it complicated. But marketing by a computer based on my health file I say go ahead.


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Tuesday, March 25, 2008

Marketing during a Recession

An adage.com article (http://adage.com/article?article_id=125878) focuses on how companies should consider altering their messages during a recession. If people are in "fear mode," then a company's sales and image could suffer if it sticks with optimistic or aspirational messages. Instead, reassurance, empowerment and value should be emphasized. For example, the opportunity for consumers to go find information themselves (say, online! i.e. empowerment) are highlighted as potentially successful tactics.

Three interesting issues come to mind. Should all companies change their tactics? How prepared should those that do be to change their message again when the recession is an acknowledged reality? Finally, how will a recession affect online ad spend?

First, it will be interesting to see how companies that often use humor (e.g. Bud) respond to the economic downturn. Will people not be in the mood to laugh? Or is that just what they're looking for? Second, it seems likely that companies will have to keep a very close watch on the mood of the consumer and respond to the stages of recession denial, acceptance etc. And perhaps, online marketing will benefit from the recession. Perhaps more targeted, and maybe less expensive, marketing will be appealing to advertisers. TBD...

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Monday, March 24, 2008

New Tool from Google


The front section of Business Day in the New York Times today featured an article on Google’s new search-within-search tool. The tool allows users to search within a specified webpage for a certain item. In the example given by the NYTimes, a user would go to Google, type in “New York Times” and a secondary search window would pop up, allowing the user to make the search more specific, say by adding “jobs” or “real estate”. While it initially seems pretty harmless to companies and beneficial to consumers, Google is monetizing the tool by showing related advertisements to these directed searches. In the example above, the user would be directed to the NYTimes Jobs site, but would also see related ads for CareerBuilder.com or Monster.com.

I found this move by Google fascinating as it, yet again, changes the game for companies and for advertisers. Now, even when a user searches for your company by name, Google will place you head-to-head with your competition for that user’s attention. The move, of course, benefits Google as it is able to sell more ad space and consumers who are able to sift through information at a faster pace. However, it may also benefit smaller companies going up against bigger names as it gives them the ability to capitalize on a big company’s brand. Obviously, many big companies will be upset by this move, purely because of the increased competition for its consumers. However, I wonder how much of an effect it will actually have on sales. In my opinion, while consumers may be temporarily distracted, they will probably come back to the original site purchasing or consuming the information they had originally intended. I think only time will tell, but I imagine that the biggest impact will be on smaller companies who can now achieve exposure in concentrated markets which was not possible previously. And of course, Google will rake in the advertising revenue, yet again.


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Traditional media companies continue web attack

An article in today's WSJ (http://online.wsj.com/article/SB120632926897458805.html) reported that Forbes, one of the largest traditional media companies with significant business in print magazines (Forbes, ForbesLife, American Heritage), is pursuing the development of its own network for online advertising. It's first impact will be felt among 400 financial blogs, but will likely expand dramatically in order to compete with Google, Yahoo, Microsoft, and Time Warner.

This article reminded me of comments made by Time Warner CFO John Martin who, upon visiting Columbia Business School last month, discussed the firm's plans to transition its AOL unit from a subscriber-based business model to a more lucrative and growth-oriented online advertising platform model.

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Below is an article from eMarketer on 3/24. It discusses the presence of women v. men on the Internet. I found it very interesting when thinking about marketing on tthe Interne, we need to remember WHO is actually using the Internet. According to the article Women are on the internet much more than men, and this will increase in the next few years. Furthermore, teenage girls are driving this divide" 35% of online teen girls write blogs, compared with just 20% of online teen boys. Teen girls are also more likely to use social network sites. Overall, 55% of teen online content creators are girls" Something to consider when developing online marketing . Just an interesting article to check out:

Men, You're Outnumbered Online

MARCH 24, 2008


Debra Aho Williamson, Senior Analyst

The US Internet population remains firmly skewed toward females.

In 2008, 100.4 million females and 93.5 million males will go online at least once a month, according to eMarketer's latest estimates. In 2012 females will outnumber males online by more than 8 million.

US Internet Users, by Gender, 2007-2012 (millions)

Females will make up 51.8% of all US Internet users in 2008.

US Internet Users, by Gender, 2008 (% of total Internet users 3+ and millions)

One reason for the difference is that there are more females than males in the US population: 154.5 million in 2008 compared with 149.4 million males, according to the US Census Bureau.

In fact, teenage girls are the driving force behind increased female Internet usage in the US. In the adult population, females are slightly less likely to go online than males: eMarketer projects that 68% of adult females will do so in 2008, compared with 70% of adult males.

In 2008, 68% of all females ages 3+ and 65% of males 3+ will go online at least once a month.

US Internet User Penetration, by Gender, 2007-2012 (% of population 3+)

Young women are prolific Internet users. According to data from the Pew Internet & American Life Project cited in a recent article in The New York Times, 35% of online teen girls write blogs, compared with just 20% of online teen boys. Teen girls are also more likely to use social network sites. Overall, 55% of teen online content creators are girls, Pew found.


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Sunday, March 23, 2008

QuadrantOne Network Grows

This past week, the online ad network QuadrantOne, formed by the Gannett, Tribune, Hearst and The New York Times Co's drew more online news publishers into its fold and grew its pool of ad inventory that the company intents to be able to offer advertisers through its network (http://online.wsj.com/article/SB120536817760332065.html?mod=loomia&loomia_ss=t0:a19:g2:r2:c0.0374071). For those of you who haven't been following the launch of QuadrantOne (which was formed only last month), it represents an effort by major US newspapers to offer advertisers a centralized hub through which to place advertising buys. The hope, it seems, is that the conglomerate will offer an extended national reach and targeting that will encourage larger national advertisers to start buying ads through the consortium of newspapers. It should also give the newspapers more flexibility in selling remnant inventory as well as allow advertisers to leverage a larger ad network offering greater reach and targeting.

I think that QuadrantOne is smart move by newspapers to leverage the value of their content online. Print media specifically has been hurting as it hasn't been able to figure out how best to monetize its digital content. That said, such a consortium of news publishers will allow advertisers to reach a very local audience across the US and allow its publishers to charge more for such access. But I think that QuadrantOne also illustrates the old world thinking of print media and its hesitancy to commit online.

Instead of just seeing the internet as another broadcast channel, why not use it to collect online reader data? QuadrantOne, to me, illustrates that newspapers see their value online as simply their ability to reach readers in the online arena and sell that access to advertisers. However, I think that if newspapers began to collect more user data and track their users online that they would be able to better monetize their content, better tailor their products to their users and offer more targeted and customized advertising products to their advertisers. Why not, for example, force users to register online to access news content? If registration were free, fast and painless it would allow newspapers to know exactly which readers were accessing their content online, what they were reading, for how long etc. allowing them far greater insight into their online readership as well as the basis for building a superior online reader experience.

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Billy Bragg Thinks Musicians Deserve a Cut of Lucrative Bebo.com Deal

Musician Billy Bragg wrote an Op-Ed in the New York Times on Saturday sparked by the recent $850 million sale of Bebo.com to AOL; in it he argues that musicians who posted their original work on the site are entitled to a cut of that astronomic sum, since their work contributed to the site's high traffic. For those unfamiliar, Bebo.com is a social networking website akin to MySpace whose primary membership is in Great Britain. Bragg is an outspoken British musician and political activist, who in 2006 publicly shamed the creators of MySpace into revising their terms and conditions in order to clarify their previously cloudy policy regarding proprietary rights to the music posted on their site. While I tend to agree with Bragg’s politics, and applaud his efforts on behalf of MySpace musicians, I’m not sure that I can get behind him on this issue. While his ideals are in the right place, he fails to address the important structural changes that would necessarily unfold from the introduction of royalty payments to musicians.

Fundamental to any successful networking site is the symbiotic relationship that exists between member and website. The website provides a space where members can post and view information, and in some cases, media; in return the information that the user makes available to fellow members attracts new members and site visitors. Bragg’s suggestion that the sites should pay their members for their contribution would surely upset this give-and-take in multiple ways. Not only would it inevitably lead to the sites being forced to charge for memberships, it would also necessitate the formulation of a “pay-per-click” system by which those musicians whose pages had the most visitors were paid the most money. But how do you determine what, besides music, is worthy of financial reward? Would those members who poured hours of their time into witty and artfully written personal profiles also demand the same recompense?

Furthermore, Bragg’s suggested revisions to the structure of these sites fails to thoroughly address the fact that musicians, and artists of every medium, have almost always needed the help of an intermediary, whether it be a manager, a gallerist, or a PR firm, to achieve commercial success. In order to access the type of exposure and platform that sites like Bebo and MySpace offer free of charge, musicians have traditionally paid large fees to major record labels. Bragg briefly touches on this argument and denies its veracity:

The claim that sites such as MySpace and Bebo are doing us a favor by promoting our work is disingenuous. Radio stations also promote our work, but they pay us a royalty that
recognizes our contribution to their business. Why should that not apply to the Internet too?

Bragg fails to note an important difference between radio stations and networking sites, and that is selectivity. Not every song makes it on the radio. Only the songs that would seem to have the most commercial viability are selected, otherwise radio stations wouldn’t pay for them. If Bebo instated a policy whereby musicians who post their work received compensation, then they would most certainly be forced to become more selective about what music they allowed to be posted. Musicians whose songs were deemed less appealing to the masses would likely be unable to post their music. This quickly eliminates the concept of universal access within these forums, a destruction of the very foundation upon which these sites have prospered.

The internet has turned the music industry on its head, and the major record labels have suffered the most; they failed to see it coming, and they continue to fail to address it in progressive ways. As Bragg notes, most musicians are also still trying to figure out how best to navigate the new possibilities of distribution and marketing that have been opened up by the internet. While I wholeheartedly support Bragg’s efforts to promote an open discourse about these issues, I don’t know that introducing a fee structure to social networking sites is necessarily the best solution.

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Thursday, March 20, 2008

Online Business Model Under Attack

After yesterday's discussion about how online publishers and ad networks rely on tracking our activity so they can optimally target ads to us, I read the following article in the New York Times ("A Push to Limit the Tracking of Web Surfers’ Clicks") about New York State legislators trying to limit the practice. As Professor Kagan mentioned, and this article reaffirms, the wealth of free online content and services that we take for granted rely on the ability of publishers to use all tools at their disposal to effectively target ads for the companies that are paying their bills. If a bill emerges that undercuts this business model, consumers are likely to see a lot of companies they love disappear.

The most interesting thing about this issue is the fact that this new legislation is being proposed in New York State but may become a national requirement since it would be too difficult to employ different tracking and targeting standards for users in different states. Of course, I'm certain that the legislators and privacy advocates will find some reasonable compromise with the online ad community. Nobody wants to kill the golden goose of online advertising just as it's starting to lay bigger eggs.

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