Twidiots of the World, Unite!


Twitter, as the latest social networking fad brilliant microblogging innovation, is attracting a huge following.    The appeal of Twitter is hard to explain until you’ve actively participated for some time, but I’m finding it’s a very enjoyable distraction from more pressing concerns.     Not only can you eavesdrop on usually intelligent tiny written conversations going on all over the world, through the “following” and “followers” features you can filter those conversations and control what you see and send to others.    Arguably the most important feature is that you can link out to blog posts or other URLs of interest, making Twitter a way to filter the increasingly overwhelming stream of data a bit more coherently than otherwise.    Twitter’s most practical application is probably simply “keeping in touch” with others both when they are distant and when you find common ground (e.g. at a  conference).   Tweetups are real life meetings where people who gather online get together for real – usually at a conference or in a city such as the one scheduled for CES 2009 in Las Vegas.

Loic LeMeur, the very popular Seesmic Founder, LeWeb Conference Organizer, and Twitter guy suggested improvements to Twitter search that would rank the material by the *authority* of the person writing, and this sparked a nice debate about how to assign value to the massive and constant stream of human commentary at Twitter.     I didn’t like that idea:

NO.   I’m OK with Scoble’s approach but I think the search by “authority” will deliver the same problems we have now with blogging – the best posts about a topic are not generally surfaced by authority measures. Instead, we get the most algorithmically appealing posts which are usually either a product of old A list bloggers sticking together and linking very opportunistically or overly SEO’d posts that suck but do a great job fooling the algos. Mostly ranking is now a combination of those two factors (old stuff and SEO measures).

One of the *great* things about Twitter is that it limits exposure fairly democratically. Authority search will help the twitter “rich” get richer, but I hardly think that’s a noble objective – it’s the same problem we have now where early adopters with a superficial voice are elevated above quality journalists.

Unless I’m missing something it sounds like you and Mike want to make sure Twitter does not threaten the status quo with more democratic ranking. I think it’s a great idea. In fact I think it would be interesting to *reverse* the algo you suggest – I’d rather hear from some Grandmas in Peoria about their iPhone experiences than from Jason Calacanis about [groan] the wonders of Mahalo.


Mike at TechCrunch
had a somewhat opportunistic take on the situation saying this was a fine idea.   I didn’t agree with him either:

Mike my beef with the idea is the notion that popularity or even authority *in any form* is something we should work hard to protect and promote. I’m tiring of a mostly regurgitated news stream and increasingly I want to know what Peoria is thinking as much as what Mountain View thinks.

Even though Peoria is rarely as interesting or well articulated or technologically sophisticated, it’s far more *representative* and if I’m looking for business ideas or social trends…I’d like to hear from Grandma as much as from you and Loic.

The game as it stands mostly retains the status quo and limits the debate. There’s a much better way and, collectively, I think we’ll find it soon.

Scoble was getting closer but still missed the key point here that we need to work *away* from the elitist “my speech is more valuable than your speech” nonsense that somewhat ironically now drives many of the Web 2.0 debates:

Robert I appreciate the fact you are arguing against something that would benefit you far more than others. However my beef with Loic is the idea that popularity or even authority *in any form* is something we should work hard to protect and promote. Call me a digital anarchist, but I’m tired of TechCrunch’s often regurgitated news stream. I find that increasingly I want to know what Peoria is thinking as much as what Mountain View thinks. Even though Peoria is rarely as interesting or well articulated or technologically sophisticated, it’s far more *representative* and if I’m looking for business ideas or social trends…I’d like to know that.

Death of the Media Mogul: Digital Diaspora means …. less for everybody.


As podcasters and webcasters and such try to turn a buck they come up against fixed ad revenues.

Ad model is a problem

(Note several comments came in based on those two sentences before I finished this post)

The main point I’m trying to make here is that the internet has created a remarkably cheap and effective content distribution mechanism – a global soapbox for anybody who cares to make a point online.    The cost to publish online is now essentially zero for all but very  large scale online publishing efforts.    Although eventually the number of publishers will level off as everybody who wants to be online gets online and the dropping out folks balance the new arrivals, I think we are still early enough in that process that there’s a lot of new website and blogging action ahead of us.

This suggests that it may be increasingly hard to become a  *Media Mogul* even in fairly specific niches.      We’ve seen the rise of mini moguls like Arriana Huffington in the Political space,  Mike Arrington in Technology at TechCrunch, Jason Calacanis , and Nick Denton of the Gawker Yellow Journalism and Celebrity Blog Empire,  but I think the success of early blogs is more a transitional thing than a trend that’s going to stick.     Few blogs make much if any money and that’s not likely to change a lot although I suspect we’ll see lots of hard working good writers find comfortable niches of expertise managing to make a living providing online content – at least until the machines start to slice and dice and repackage online information so effectively nobody can tell if it’s organic or artificially intelligent organization.

Now, contrast this trend towards many publishers with the fact that online advertising total spending may actually decline in 2009, and more importantly can only grow so much.    Now, it’s true that the online spend is currently low enough that we may see online advertising grow enough to support the growth of online content for some time, but my guess is that content is growing many, many times faster than online advertising it needs to be profitably supported.   Luckily for users the content is not going to go away and will keep flowing online, but unluckily for online publishers they are going to have to produce more and more to make the same amount.   We’re already seeing this trend with sites like TechCrunch which often spin out dozens of articles daily.

As an online publisher myself I’m not really sure how to address this challenge.    Certainly I tend to favor keeping expenses under control and not making the mistakes we did earlier in the travel empire by spending too much to improve websites that were always under the gun of Google’s somewhat algorithmically arbitrary content policies.   Better I think to use small amounts of capital to seed a lot of project and then fund the winners and let the losers whither on the vine.     I’ve written a lot about this process which I think is somewhat analogous to biological evolution where smart businesses actually are usually working away from failure more than towards success.    I know a many successful business folks (and perhaps even *more* biz wannabes) would bristle at the notion that serendipity plays as much a role in success as careful, reasoned strategy but the more I see of success and of failure the less convinced I am that formulas play much of a role.    Sure it helps to work hard, have a general idea of what you want to do, etc, but like evolution I don’t think a whole lot of planning is the recipe for most success stories.  On the contrary you find engaging people engaged in things they enjoy and are very good at doing, and you find lucky breaks or circumstances that propelled thos particular people to fame.    Music and sports are a great example of this – for every thousand excellent singers or sportspeople there are only a handful of superstars, and the road to that stardom is often littered with personal tragedy as well as the failures of the other 999 folks who didn’t make it.    I think the reason we tend to think there are success “formulas” is that we examine success too much and failure … too little.

OK, I got too far afield  – must be the turkey talking.   Hmmmm …. where is that leftover stuffing anyway?

DIGG Losing Money Despite Huge Traffic


I was floored to see that DIGG, a key darling of Silicon Valley and arguably one of the key forces that has shaped online social media, is losing a lot of money on abysmal revenues.

These numbers are from Silicon Alley Insider quoting a BusinessWeek article:

  • Last year the company lost $2.8 million on $4.8 million of revenue
  • In the first three quarters of 2008, Digg lost $4 million on $6.4 million of revenue.
  • Digg wanted to sell for $300 million last year, but took funding this fall to set its valuation at $167 million

All this when DIGG sees about 23 million unique visits per month according to QuantCast and some 30 million according to DIGG.       Silicon Alley reports that DIGG’s expenses are some 14 million annually and wonders where all that goes.    Me too because unlike, say, YouTube I do not think DIGG’s hosting infrastructure would have to be all that massive, and with content from users one has to wonder where the big money goes at DIGG.

More interesting however is that modest revenue number.   $4.8 million in revenue on some 250-360 million visits.   If we assume only 2.0 page views per visit  and 250 million visits over the year DIGG is making about 5 million total on 500 million page views, or just about a penny per page view or $10 CPM.

This is probably overly generous (DIGG says they have 30 million uniques and they probably have more than 2 pageviews per unique).   However if true that’s actually a fantastic CPM given that the DIGG audience trends very young and presumably is not the key demographic for most advertisers.   Although many prestigious and highly targeted websites tend to charge $30 CPM and up I’m confident that number will decline as advertisers realize how unlikely they are to have positive ROI at that CPM.     DIGG appears to be doing better than other youth focused gaming sites where advertising can often run below $1 CPM, in some cases even challenging sites to even break even on server and bandwidth costs.

Related:  November 2006  – Owen Byrne of DIGG

PepCom “Digital Experience” won’t allow many bloggers – this is Pepcom’s idea of promoting technology?


<begin whining rant>

Along with CNET’s David Berlind, I am not impressed at all with PepCom and felt compelled to write a bit about why I don’t think they are doing a good job promoting technology at their events which work by capturing attending press folks from  CES  Las Vegas and other technology events.

First, this is not a criticism of CES.  On the contrary if you a technology enthusiast heading to Las Vegas for CES 2009 I can say from my  experiences last year that you are going to have a wonderful time, especially if you are a tech blogger and thus qualify for the many fun parties and events where bloggers and other press folks are generally welcome.

Last year at CES 2008 the Consumer Electronics Association and sponsors did a wonderful job hosting blogger lounges, lunches, parties, and full access to conference sessions. Despite some prankish BS by the folks at Gizmodo I think most bloggers were happy with the arrangements.

PepCom’s Digital Experience on the other hand is not so blogger friendly, effectively refusing admission to all but full time press and reporters. Sure, they have a right to run their own show. However I have a right to call them for poor strategy and annoying rules. Why keep *any* technology bloggers out of a “Digital Experience” which is designed to generate positive buzz and reporting about their technology sponsors, who pay something like $8,000 and up for a table and a few hours of exposure to press folks?

Adding injury from last year to this year’s insult, I’d actually been invited last year by one of PepCom’s sponsors to the party but was turned away at the door along with many others who I think were in the same boat of having an invitation that was not approved by PepCom.    Aside from feeling insulted not to “qualify” for the event, it’s no small thing  in Las Vegas where you walk very long distances to get to places.   Given the confusion they’d helped cause with the problematic invitations they should have fixed this simply and quickly by offering admission.   But no.    I should have realized then that the PepCom Digital Experience was going to be a bad experience, but I decided to jump through their silly hoops this year and fax in my business card and blog information, especially because this year we’re really planning some extensive coverage at Technology-Report.com with two reporters, a lot of pictures, and even some video.    But no.   We did not meet some of PepCom’s stringent press standards of full time reporters and/or mainstream press.

Again, that’s OK – it’s their party and they can run it how they see fit, but ….

Who ARE these PepCommers anyway?   Certainly they are not folks who understand how technology gets reported and promoted.

<end whining rant>

Twitter? Priceless. Dell makes a million on Twitter? Meaningless.


As usual there is an *extraordinary* failure in the blogosphere to apply even the simplest reasonable business metrics to a minor event, in this case Dell’s million dollar Twitter “success”.

I’m a big fan of Twitter and think it’s great, but can’t abide the absurd valuation metric du jour which is hyping Twitter’s value based on Dell reporting that they had a million in revenue from activity via their Twitter presence.     Excuse me, but this is *trivial* news, suggesting if anything that Twitter is probably *not* a good base for  transactional economies.

Why the contrarian conclusion here?

People too often view revenue numbers as if they were profit.   Revenue is easy.  Profit is hard.   A million in revenues for a company that does many billions in revenue each quarter is not very significant – that million probably represents something like $50,000 in profit even if we assume the cost of the social media campaign was *zero*, when in fact it was likely … more than the profit from it.   Even if the ROI was positive companies like Dell can’t mess around with many new technologies if they only make Dell a few thousand extra in profit.

Even more importantly this silly “Twitter Revenue” metric is almost completely bogus.    This appears to be a count of sales that came in via Twitter rather than sales that were the result of some extra advertising activity at Twitter.   By this type of metric we’d value email infrastructures like Gmail, Yahoo Mail, Hotmail in the hundreds of billions or even trillions since so many economic decisions and transactions happen via email.  When GW Bush emails Henry Paulson to say “Hank,  throw 15 billion at the Auto Makers” do we chalk 15 billion up to the “email economy”.  Of course not.

Communication paradigms are very important but their economic implications are not to be exaggerated or conflated with real monetization programs – few of which have proven even modestly successul in the social media world.

Partly it’s simply because I’m being honest and not trying to hype the value of microblogging to advertisers.   I’m just calling this analytically which leads us to wonder how they could have done so poorly when Dell’s demographic matches Twitter’s suberbly. Dell’s volume is huge.  Dell’s got  a huge number of  Twitter Followers.  They are preaching and selling to a choir filled with existing and potential customers.

It appears the usually-insightful-but-in-this-case-opportunistic Fred Wilson has been trying to bump this “Twitters Millions” article around, perhaps because … he owns part of Twitter.    But I think Fred knows better  – if anything this is such a trivial sum it implies that Twitter – like most social media operations – is probably already overvalued by the Silicon Valley hype machine that you might remember suggested huge valuations for hundreds of companies that are now … gone and worthless.

Twitter’s here to stay and certainly has great value, but I’m skeptical they’ll find a great monetization model for the same reason Facebook is failing to find one – social media is almost exclusively about socializing where search media has a very large component that is very advertising friendly.    If you are shopping for cameras you are likely to go to Google to find out more information and you *want* to find camera ads in your search event.     This fact cannot be underestimated and forms the basis for most successful forms of internet monetization.   Perhaps a holy advertising grail will be found that’ll work for social media and/or video media but I continue to be as skeptical as I have been for years.

Disclaimer:  I sometimes write for Dell at the TechDirt Insight Community.