Bebos, billions, and why Yahoo is starting to piss me off.

Yahoo may buy Bebo, the British “Myspace”, for a billion dollars. That is a LOT of money – about 3% of Yahoo’s market cap. Presumably this, like Yahoo’s unsuccessful Facebook aquisition attempt, is Yahoo’s approach to recapturing the market dominance it enjoyed back in the day. Dominance through the aquisition of a social network rather than developing their own.

They should know better than to trust their existing criteria for decisions about aquisitions. Yahoo is the company that aquired Overture’s pay per click technology years ago, and then managed to cede dominance in that area to Google. Ever heard of Google? Yahoo probably could have *owned* Google, but it seems higher management didn’t think search had the monetization potential of … which was purchased for billions.

Isn’t it time for top management at Yahoo to let innovation, not aquisitions, rule the day? This approach has worked very well for Google, who’s main mistakes now appear to be in aquiring things like YouTube which in my opinion is unlikely to recover YouTube’s 1.6 billion price tag and will certainly pester Google with big money lawsuits for decades. Yahoo’s still got a LOT of great technical people, especially in the developer and new business divisions. More importantly, the world is producing hundreds of thousands of new, brilliant innovators every year, most of whom are chomping at the bit to bring new and exciting innovation to the hungry online world. Why not devote the billions to this rather than purchasing companies with marginal revenues and long term prospects that are more hope and prayer than reality?

With the latest flurry of high priced aquistions it almost seems like, to the big players, the billion dollar deal is the new million dollar deal. I remain skeptical that deals of this size pay off in the long run – certainly very, very few of the early pre-bubble ones did not pay off for companies. I’d suggest that the smaller deals (e.g. Flickr) do have potential, but that Yahoo’s top management is looking for a killer deal that simply does exist while the innovation approach (ie much, MUCH more support to the core values and teams at Yahoo) is starting them in the face. Traffic? Yahoo’s got plenty of it. Modest changes can send millions of Yahoo users to any new idea, so why not do this *a lot more* and test *a lot more ideas*.

Edison suggested that there is always a better way, and it’s time for Yahoo to ….. find it.

More Bebo-logy from Techmeme:

Yahoo may net Bebo owners $1bn



Bebo/YHOO: My Rumor’s Bigger Than Yours

Yahoo May Be Bidding For Social Network Bebo: Report

Yahoo: When You Can’t Buy Facebook, You Buy Bebo

Bebo is not for sale

Myspace is better than sex

Bob at Tech Consumer is noting the recent article in the Economist suggesting that Social Networks are about to dethrone “sex” as the top item of internet interest. The interesting graph notes that where sex stuff is becoming a smaller fraction of the total internet searches, social networking items are moving higher and higher.

In one sense this is a bit misleading. One of the key drivers of social networking is “dating” and meeting people, so it’s fair to say that what we might call “primal urges” are still the top search theme online. But it’s probably encouraging that the porn economy is growing *less fast* than the social online economy, which continues to explode. (Porn segment is growing but not as fast as the social economy segment of online traffic – and also probably economic – activity).

What’s going on with this? It’s really not surprising at all that socializing online is a very powerful part of the online experience. The internet is about people more than it’s about technology, and people tend to be very interested in …. other people.

Myspace News Launches … almost invisibly.

Myspace has become such a dominant player that the launch of Myspace News was a big story in the blogosphere. Ironically you could hardly find it at Myspace and it just took me a few minutes and Pete Cashmore’s links to find the darn thing. I agree with Pete that it currently is not very inspired, but has simply enormous potential to dethrone DIGG as the key hip news site.

Myspace is probably rolling this out slowly so they can manage the new traffic routing and bandwidth issues that will come up.   I remember at MIX06 where the Myspace CTO showed some slides indicating CPU usage on their server farm.    When they implemented the more efficient (Microsoft?!) architecture the CPU usage dropped dramatically.    The key point though was how for a huge site things like power, bandwidth, and CPU use become a big deal with every change.

I remain concerned that most of the news stories that are ranked and generated socially primarily appeal to prurient, adolescent, and technology interests rather than the deep and provocative intellectual stuff you’d get on, say, Charlie Rose. But it’s our free wheeling superficiality that makes America great (or at least makes us more fun than Finland), right?

The Day … the Music Sales … died

NYT reports that music sales declined very substantially and that this fact may portend serious problems for the music industry.    Makes sense to me.   For some time there have been many silly suggestions from music download enthusiasts that downloading was not going to cut into profits and that revenue alternatives to traditional music sales would present themselves eventually.    Of course they won’t, but it’s all good.   The music industry is driven by superficial mass appeal and good riddance to it.   Thanks to abundant downloading venues, cheap production, and the rise of online promotion tools like Myspace we’ll hopefully see people democratically decide who are the best bands and which deserve their support.   Let the people drive music consumerism for a change rather than media moguls.

Why Myspace News will fail dramatically. It’s an ADD vs PhD thing.

Today reports are coming in that Myspace will launch a news network. I suppose it has some potential as a giant gossip column/American Idol board, but as a true news outlet Myspace is destined to fail big time. Seems to me that Myspace users and well-informed, thoughtful and analytical news junkies don’t match up well.

Although some of the small networks like Newsvine are good, and the USA Today project has potential, existing social news networks like DIGG and Netscape are pretty bad for all but tech and quirky news because they generally fail to analyze or treat significant stories with much if any respect. The focus is on stories for those with ADD more than those with PhDs. I get more relevant information from watching a Charlie Rose interview than spending comparable time at DIGG, and the average DIGG user is much sharper than the average Myspacer.

Global community spirit

Over at Techmeme I’m struck by three stories that nicely showcase the importance of *community* to dot commers and to the expanding online universe.

The most interesting is that Yahoo Answers is going social, offering social networking as part of the answers concept.  I was bullish on Yahoo Answers a year ago and it appears they’ve done a great job at growing this project.   Incredibly the number of answers users is comparable to the number of Myspace people. This is not entirely apples to apples comparison because I’m guessing the Myspacers spend a lot more time online at Myspace, but if Answers can get the community ball rolling there is huge potential to become something of a “thinking persons” (or at least a “questioning person’s”?) Myspace.

The second item is Kevin Rose reporting that Digg has a *million* users. That is quite a milestone (though a long way from the approximately 60-100 million users claimed by Yahoo Answers and Myspace. I’ve never really understood the appeal of Digg as more than a superficial way to identify oddball news, feeling that dedicated diggers tend to prefer goofy stories rather than substantive ones, but the concept is brilliant and provocative.

Third, and perhaps most significant, is SONY’s Playstation 3 virtual world that launches this spring. Critics are raving about SONY’s brave new world, some suggesting it’s superior to the top virtual world “Second Life” which suffers from technical complexity, a steep learning curve, and a lot of skeptics who think second lifers are just escaping their first lives. It seems to me the Playstation world could become the “Myspace” of virtual worlds and captivate the teen crowd that already is practically living online ( WI or XBOX could also get smart super fast and get their own virtual world going. Both appear to be on the road for more widespread adoption as gaming systems than Sony’s PS3, though this can all change quickly).

Social networks = people, not technologies

The New York Times reports that Cisco has acquired Tribe Networks in what appears to be an effort to become a player in the social networking space.     The article quotes Marc Andreeson of NING, another social network facilitator, suggesting that the social networking biz is harder than it looks and Cisco will have problems.    I agree Cisco will probably fail to do much with this but not for the same reason, but for the opposite.   As with most internet stuff the technology difficulties are much less of a challenge than the social barriers to success.

Even Yahoo and Google – now brilliant masterpieces of technological sophistication – did not start out that way.     Rather they began as fairly modest “websites” with a handful of programming routines  that grew in usefulness, traffic, and complexity to become the internet behemoths they are today.   Sure there’s a lot of amazing technology behind these companies, but I still think there is a sort of “techno bias” that remains pervasive both inside and outside the industy that is both fooling and manipulating people into thinking that success is mostly a function of your technology when it should be clear to all that it’s a function of the way your online environments relate to people, and that in turn is art not science.    Is expensive, complex technology required to create a hugely popular, high traffic website?   Of course NOT.   Myspace and Facebook now use slick stuff, but they didn’t start out that way., a hugely popular dating site, still uses a *single* server and very basic technology despite the fact that it competes with big players working on platforms that probably cost 100x that of PlentyofFish’s.

I think the future will be like the past – successful sites will cater to the needs of people and bend the technologies as needed.   Cisco, Ning, and other social networking technology platforms are great but they won’t define things.   People will do that.   People are, after all, what social networking is all about.

Mark Cuban, the sage of internet video?

I think Mark Cuban  has more valid points than Cory does on the controversies swirling around copyright and takedown notices delivered by Viacom.     Cory is right that it’s annoying and obnoxious to send takedowns to people who obviously are not infringing, but that’ll shake out soon enough.  What isn’t shaking out soon enough is what I’ve discussed at length before – YouTube and Myspace and other big players are making hundreds of millions by purposing user generated content to their commercial needs.   I’d even concede that commercialism is not the bottom line on these big player/user interactions, and also concede that users like me are agreeing to provide content that in turn gets searched at Google and generates money for them and *sometimes* for me.

However as Mark correctly notes it’s significant to ask within the copyright, content, and user community issue this question:  Who gets the lion’s share of the revenues created by copyright holders or community participants?    I’d like to see more of that cash flow to the community and less to the big players.   But maybe that’s just because I’m a community guy?

Go Mavs!

Time’s Person of the year … is YOU!

 Time Magazine 2006 Person of the Year

Time gets it right naming you, me, and everybody else in the exploding online community the person of the year.   The power of the community internet aka “Web 2.0” is the big story now and for many years to come as millions more flock online every week to surf, buy, blog, meet, marry, and much more.

Unlike the initial thrust that brought millions of ‘techno centric’ folks to the digital water coolers and watering holes of the early web the “new web” has almost no barriers to entry, a far more robust broadband infrastructure, a global reach, and will soon capture all but the most stubborn luddites.

Online community isn’t just big news, it’s great news.

More Tech Memes

James Kim Search Discussion – Click here

Yikes – I leave town for a few days and can hardly keep up with all the interesting tech news items. In addition to the fun Jeremy v. Matt copycat debate we’ve got:

Jason on Digg Rigging This is just a tiny part of the HUGE number of upcoming stories which will showcase how complex the relationships are between SEO, social networking sites, and …. money.   I actually contacted the Digger Jason is effectively accusing of abuse and it does not appear to me he’s taken any money at any time.   Here’s a great summary of that “Digg Ban” case.   But his innocence does not suggest to me that there is not a huge and growing issue with Social media SEO uses and abuses.  At PubCon many were discussing how powerfully social networking can help with organic optimization as well as straight traffic generation to a site that gets “dugg” or creates a compelling (including stupid but popular) YouTube video.

Jim at Microsoft apologizing in a very web 2.0 way. Scoble would be proud of this “naked conversations” approach to corporate blogging. Too bad Microsoft didn’t see how making Robert the semi-official corporate blogmeister with the huge salary increase he deserved for “getting Web 2.0” before the suits did (most MS suits don’t even get it now) would have returned 100x on the investment.

… and speaking of “getting Web 2.0”. Yahoo does but can’t seem to get the mileage they deserve for retooling the corporation as a community internet extravaganza. This set of leaked Yahoo internal documents about the potential Facebook aquisition provides a fascinating glimpse into how big deals are analyzed. As a Yahoo shareholder I think they should save the billion and just get their stupid ass in gear with the excellent social network stuff they already own like Flickr (which should be the template for other social applications, (OVERHAUL the INTERFACE and yes, you can rename this URL monstrosity! ), Yahoo Video, Yahoo 360, Answers, groups, etc, etc. As I’ve noted before Yahoo suffers from giving people so many options they tire of the decision making and go to Google’s simple interfaces, search, and simpler suite of choices. Google expects us to act like the sheep we are. Yahoo expects us to do too much mental work choosing how we relate to the internet.