Category Archives: companies

Blogs are killing journalism? So what’s the bad news?

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Wow, talk about missing the point and the future.

Kent has a post about the running “blogs vs mainstream journalism” debates which seem to be heating up again lately, but he suggests that bloggers have their place and it isn’t an honored place as citizen journalists.
>>> It will be the same journalists who get paid for doing it now <<<

I think he’s really missing the key blogging advantages. Most importantly, this is not about ONE journalist vs ONE blogger, it’s about ONE journalist vs TEN THOUSAND bloggers.

Even the most virtuous journalist:

1) Needs to sleep. Expert bloggers are collectively around 24/7/365

2) Makes far more than is needed to get quality informed commentary from bloggers, who work for … hmmm, let me go check … oh, that would be ZERO dollars per hour.

3) Does not live in the affected areas and can’t get there the instant news happens. . This personalization and localization is a key reason blogs are already replacing mainstream, and rapidly.

4) Is not even remotely as good as people like Kent suggest. My god, try spending 15 minutes watching the jingoist FOX babes or even the very competent CNN world reporters. They cannot possibly match thousands of citizens who speak the language and are smack in the middle of the line of news fire (and gunfire).

Sure, I’d take an Ed Murrow in New York City over Joe Sixpack in New York City, but not when reporting on Hawaii earthquakes, or Peoria, or Berlin, or Kabul, or Tashkent, or Baghdad, or …

Time Warner to Google: We spell your merger “SueTube”. Battelle to TW: Lookout!

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John Battelle thinks Time Warner is mistaken to attack Google on copyright, writing over at Searchblog:

a shot across the bow may bring a broadside from the other side

I usually agree with John Battelle but I don’t really follow his logic here. I agree with him and Bob Dylan that “The Times They are a Changin”“, and that we need a new song to show how the old media empires don’t get the internet. I’d call that song “The Time Warner’s .. They Aren’t a Changin’ “.

However, I don’t see how bringing out the big legal beasts will hurt Time Warner. Frankly, I think they just want Google to throw money at them. As the Napster buyout proved all this has little to do with “rights”, it’s a money grab, sung as usual to the tune of that great O’Jay’s tune of years and years ago “The Love of Money” :
Money money money money ….. money!
The HUGE winners in this are the clever YouTube founders who really just created a very clever distribution system at an opportune time. The user community, and then the GoogleBucks, followed. One thing that irks me about all these mega deals – including Google itself – is that they are built on the backs of the swelling supply of (mostly) user generated content and in the case of YouTube a lot of illegally obtained copyrighted stuff. There will be little or no compensation to the *key components* of the YouTube environment other than a distribution vehicle. Now, one might argue that that exposure is enough compensation for an average YouTube uploader but it still seems…”wrong” to me.

I’d agree that those who create and then monetize these efforts should make a lot, but it’s unfortunate that people, like sheep, choose not to aggressively explore all our online alternatives. I think if we did do more exploring and innovative thinking we’d have a stronger ecosystem of companies rather than a few big players and a plethora of “also rans” standing around drooling at the prospect of a Google or Yahoo buyout.

$1,600,000,000 + 100,000,000 videos = lawsuit!

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Mark Cuban must be snickering “I told you” even though he’s already posted a note suggesting the initial lawsuits will be against small video players to set precedent for an attack on Google.

However Time Warner  is already threatening to sue over videos at YouTube. Presumably Google knew all this was coming and I’m guessing they think they can sweeten the advertising revenue pot enough to keep all the copyright hounds at bay. As the best monetizer of online content I think Google will be able to buy their way out of almost all the lawsuits simply by offering to either 1) remove the offending videos, which are currently making nothing or 2) monetize the content and give the copyright holder 70% of the revenues. In most cases Google’s 70% is going to be more than 100% of what the producer could get with their own efforts.

That said, many producers are going to see this as a great legal way to shoot for Google’s deep, deep pockets. They’ll have no interest in small payouts per download or ads or anything related to their own content, though they’ll disguise that in the complaints.

I’d be very interested to know how the Google team factored this cost into the YouTube equation.

Prediction: Google will buy Facebook for about 1.1 billion

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Irrational exuberance in the dot com shopping aisles?

No, it’s a chess game and Google’s winning….again.

I’m really starting to understand what seems like irrational exuberance on the part of Google and the major players. A Google aquisition of Facebook would be consistent with what Robert Scoble suggested is happening: Google is building a moat around it’s advertising business.

Steve Ballmer also suggested this notion in his recent BusinessWeek interview, ironically fretting that Google could monopolize the media business. Yikes, Steve would really run out of chairs then?

I can almost hear Ballmer to Schmidt:
“Hey Cowboy, there’s only enough room in this here internet for ONE monopoly you, you, you dirty monopolistic sonofabitch BASTARDS!”

Schmidt to Ballmer:
“HEY! DROP that chair and step AWAY from the Vista Browser!”

Google, with tons of cash to burn and a staggering market cap, has far less to lose in the high stakes internet poker game than Yahoo, Ebay, or even Microsoft. Microsoft is bigger than Google and theoretically richer, but unlike Google Microsoft has yet to figure out good ways to monetize their (improving) search services and (not improving) content services.

Ballmer’s juggling how to preserve his big ticket MS Office and Vista projects. Yahoo’s worried about plunging valuations and people leaving and the fact that a billion represents a lot more to them than it does to Google.   This is almost certainly complicating the Yahoo Facebook negotiations right now.  Ebay’s pretty fat and happy where they are. Meanwhile, Google can focus in laser-like fashion on keeping Google in the driver’s seat with it’s superb contextual advertising monetization.

The best defense is a good offense, so they are buying up properties to increase their control over the advertising space and keep those hundreds of millions of eyeballs out of the hands of MS and Yahoo.

Will this work? I say probably not for similar reasons it was stupid for Yahoo to buy Broadcast.com years ago. Video is junky and won’t monetize well. It’ll be more of an encumbrance to Google’s core competencies than an asset. But … things change, and in the meantime it’s fun to watch this high stakes game of chess unfold.

It’s a show you won’t see on YouTube.

Zenrob: Can Youtube win 11 Superbowls?

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I’m mangling his point a bit in that title, but Zenrob  has a great new post that does some math to ponder Robert Scoble’s question to me today:

“Tell me, is the $3 million for a minute of Superbowl ad time worth it? If so, why wouldn’t it be worth doing video advertising on YouTube?”

I said over there that I think it’s all about the math and the prospective math of these deals.  Robert’s great but I think he’s seeing this through his channel9/podtech video-enhanced glasses that make video seem more viable as a commercial medium than it really is.

To answer Zenrob’s excellent math question:
Else > 2*Youtubes > 10*11Superbowls

Facebook worth more than YouTube? Don says “yes”

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Don Dodge over at Microsoft has a great little thumbnail analysis of the business prospects of YouTube and Facebook, and concludes both are way overpriced at current valuations and Facebook is more valuable at 700 million. He cites Scoble’s latest thinking on the topic as well though it seems to me Robert seems too supportive of buying anything that even smells like Web 2.0 and is still feeling a bit hostile toward his ex employer.   I don’t blame him for that since he was way ahead on the new web and blogging and Microsoft’s failure to “get it” must have been really frustrating.

He’s not doing an extensive analysis but this is the best actual math I’ve seen regarding these deals, which as Don indicates with his little summary, appear to be valued more like Granny’s china than businesses. Given the uncertainties I think he’s generous to go 20x expected earnings. The landscape is changing daily and it’s not clear people will stick to favorite sites the way they stick to favorite brands (I predict we the people will not show much in the way of online brand loyalty, and this will shake it all up a lot in the coming years).

Ballmer on YouTube Google “transferring the wealth out of the hands of rights holders into Google”

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This is a great interview by Business Week of Microsoft’s CEO Steve Ballmer on Web 2.0 valuations and the competitive landscape up at the top of the heap, where Ballmer suggests only companies like MS, Google, Yahoo, and EBAY can even afford to think about doing the billion dollar deals. It’s a key point often lost on those who like to see valuations based more on financials and profits. Ballmer is noting that the competitive landscape can change these values.

But most interesting is this assertion:

The truth is what Google is doing now is transferring the wealth out of the hands of rights holders into Google. So media companies around the world are all threatened by Google. Why? Because basically Google is telling you how much of your ad revenue you get to keep.They better get some competition. Us. Yahoo!. Somebody better break through or you can short all media stocks right now. As long as there are two, you can hold onto media stocks. Google understands that. And that’s one reason why they’re willing to lose money up front.

Fascinating. He’s saying that Google’s trying to *monopolize* the media market. I certainly think there is some truth to this though we are way past the good old days where barriers to entry could let a big, rich, clever company – let’s say Microsoft – really do a good monopoly play on things everybody needed to use with computers. Part of the Google advantage he’s leaving out is that they really do intend to share most of the revenues with the producers and they have become so good at monetizing that, Google could argue reasonably, you’ll make more sharing revenues with Google than building your own advertising networks. My experiences comparing adsense returns to “roll your own ads” are fairly extensive and I can say that it’s very hard to beat adsense returns by creating your own advertising streams *even excluding the potentially huge cost of a sales staff*.

I think the main exception to Adsense as the best choice is what we see at super targeted niche sites like TechCrunch.com where they can charge about 10k monthly for a modest sized graphical advertisment.    Battelle’s Federated Media is hoping to bring this targeting advantage to a broader network of sites but I remain guarded in my optimism that Google’s highly automated and calibrated approaches won’t do a better job than humans do in most advertising spaces.

So, I think Ballmer’s right that competition will help publishers, but Yahoo and MSN sure better strap on the thinking caps and get their contextual advertising networks working much better than they currently work at providing revenue to all of us hard working internet small time publishing people out here.

Also, and this advice to MS and Yahoo is free and will knock Google out of the driver’s seat in a few months:  Launch your contextual ad networks with a 100% revenue share as an incentive for publishers to switch over.    At 43% of Google’s revenue Adsense is a huge factor at Google.

Got a few *billion* lying around? Buy an internet company!

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Here’s a nice list of internet purchases over the past few years. I’m starting to come to grips with the fact that even if you create a great company the payout is not that spectacular unless it’s the one in a hundred deal like a YouTube, Skype, Broadcast.com, etc. As one of the VC’s down at Mashup Camp pointed out those are the exceptional exceptions to the normal rule of deals worth millions, not billions. Even in those deals only a handful of people make more than a few million.

In a 20 million deal once you’ve paid off the VCs and generously dealt with other key employees I wonder what the average “founder payout” would be?   The average VC funded buyout is about 47 million.   This sounds high, but there are many, many VC fundings that end up dying.    Thus the ‘average value’ of a VC funded company would be way below the average buyout price if I read that number correctly.
As my old pal Rick likes to say “A million dollars isn’t what it used to be!”

Mark Cuban to Google – you are crazy! JoeDuck to Google – just show me some money!

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Mark Cuban, no stranger to online video having made about a billion in that field, challenges Google’s sanity in the YouTube deal here.

It seems to me Cuban’s been the most insightful of those reviewing this deal and my first reaction is “brilliant stuff from an insider”, but I also respect how clever Google is and will continue to be at re-railing the online train.

Big producers will do big deals with Google as they are right now.   The growing community of small time content producers (e.g me) is a lot more willing to share and forget about copyright encumbrances *as long as you cut me in on the action*.

If Google can monetize my stuff better or close to as much as I can then more power to Google.   I’m rooting for Yahoo! winning the monetizing battle though because …. I like them better and have stock.   But there’s room for both, and I think we’ll see in the coming years that the rising tide of online ads will lift most of the ships.

I’m confident I’m speaking for 80%, and probably 98%, of the long tail when I say that the long tail, especially in video, is going to attach to the entity that can best monetize their work be it professional full length movies or stupid cat trick clips.

Can the other 2% of content people sue them?  Sure, but not painfully enough to stop the online video train o’ progress, a train that’s sure to bring us the most garish, irrelevant, superficial, and poorly produced video yet seen on earth and then find a way to turn a few bucks on showing it off to people.    God bless America!

Web 2.0 Metrics? Aren’t we still trying to figure out Web 0.1 metrics?

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Jeremy often asks the questions people will be asking next year. Here, Zawodny notes the difficulties as Web 2.0 brings a lot more than pageviews to the browser table and cites this article about how pageviews are problematic as a measure of online success.

There are challenges galore as we move to Web 2.0 analysis. The YouTube deal alone showcases how irrelevant a ‘page view’ may become to full analysis. There, advertisers will probably want a small clip inserted before the video as well as pay per click or aquistion modes of advertising – at least until all advertisers start demanding cost per sale terms.

I think commercial metrics will (must) trend towards firmly establishing costs per sale and/or customer aquisition. At the point where that gets good the advertiser really does not need more detail. Much of the current advertising mis-analysis industry is based on analysis of things that only indirectly lead to sales.

In many cases I’ve been floored by how mathematically unsound so called “objective” conversion studies can be. In Travel and economic development this relates to the fact that those sponsoring the studies typically benefit from high ROI numbers so a cottage industry of “impact inflation” studies and firms has developed that serves the vested interests rather than the taxpayers.

Non commercially focused website metrics are even more complex than commercial, since many bloggers would probably rather be read by a handful of movers and shakers who provide thoughtful commentary than by legions of regular Joes.

A blog read by all G8 world leaders would be about 1000x more influential in terms of changing history than one read by American Idol fans, but would probably have limited commercial value. How do you measure that? Perhaps Yahoo or Google need a “BigWhig Rank” that pulls in personal data and assigns importance to the … person?

Hmmm – they already have been nabbing your search streams so maybe next they’ll take your … soul! I think that is OK with me as long as it’s …. measurable!