Google is Not the Benchmark for Thrift

IP & Democracy has a post responding to Mark Cuban’s latest YouTube slam.  Here’s the part of IP & Democracy’s post I found interesting:

Mark Cuban is obsessed with dumping on the idea that YouTube might be worth billions of dollars. He publicly labeled any serious prospective buyer of the site a “moron,” but then along came word that Google, founded by two certified geniuses, is interested in paying $1.6 billion for the video sharing supernova.

While I won’t quarrel that the Google guys are geniuses, at least in hindsight, anyone who has followed Google lately would be hard pressed to argue that Google is the gold standard of spending money wisely.

In fact, Google has been throwing money in all corners looking for the next big thing.  So far, we’re still waiting.

It’s no wonder that Google may be considering making a big play to buy YouTube and its vast advertising space.  While I’m still waiting for a YouTube business plan that makes long-term sense, Google has either decided to become or been relegated to an advertising agency.

Given that happy or sad fact (depending on your perspective), a YouTube acquisition is not surprising.  Note that I said it was not surprising- I did not say it makes sense.

Whether it makes sense or not depends on whether you believe the entire universe can subsist on ad dollars.  Anyone who has read this blog for more than a day or two knows that I do not believe that it can.

But if I’m wrong, it could be a good acquisition for Google.

I just hope it isn’t a short-term plan to ride the ad hype for a few more quarters while Google waits anxiously for more lightning, bottle in hand.

If I were a Google shareholder, that’s what I’d be worried about.

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Pay Per Post – The New Spam?

payperpostStowe notes that Jason Calacanis didn’t ask him for his opinion on the ridiculous pay per post business and then gives his opinion anyway.  Good for Stowe, as he has a long track record of (mostly) finding the right side of an argument.

Jason didn’t ask me either, but like Stowe, I’m always interested in adding my two cents, and here it is.  All you need to know about this pay per post nonsense.

When someone is engaging you solely in the hopes of making money, then the entire basis for a meaningful exchange of information is nullified.  No one trusts people who are trying to sell them something, and no one should.  There is an irreconcilable conflict of motives.

When you walk into a store, you, in effect, are inviting the people who work there to try to sell you something.

But when your so-called friends try to leverage off of your friendship to sell you tupperware or Mary Kay or whatever, you have not invited that selling opportunity.

When you fire up your email and some dumbass somewhere has sent you spam, you have not invited that selling opportunity.

When a blogger you read posts about something for pay, you have not invited that selling opportunity.  It’s even worse when the payment is not diclosed.

This pay per post business is the worst of both worlds.  It’s using a preexisting relationship to make money off of you, without even telling you.

Even the friend hawking tupperware has to eventually show his hand.  It seems that the pay per post folks can hide their motives- thereby disguising commerce as journalism.

So ask yourself…

So what do you want the blogosphere to be, a place for the open exchange of ideas and information where no one is secretly trying to make money off of you, or an online free-for-all where anonymous people are paid to write bullshit they may or may not believe in exchange for a buck?

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Morning Reading: 10/8/06

Dave Rogers has thoughts on the season premiere of Battlestar Gallactia.  It is the best show on television, but, like Dave, I wasn’t completely satisfied with the season premiere.

The U.S. government becomes the RIAA’s puppet and demands that Russia shut down AllofMP3.  The result is a ton of free publicity that increases AllofMP3’s business.  That’s good stuff.

Here’s a collection of Weird Al Yankovic videos.  He is a very clever guy.  Numbers 9, 7 and 2 are particularly funny.

Ever wondered what the inside of a hard drive looks like when its working?  This is cool.

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The Gospel According to Fred

I have been consistent in my criticism of the combination of the traditional VC mindset and the Web 2.0 developer.  The traditional VC mindset has been furiously trying to stuff Web 2.0 into the framework of the 1990s.  These Web 2.0 developers, most of whom are not MBA types by training, are all too happy to have someone try to turn their glorified high school science projects into a billion or so dollars.  It’s hard to blame them for dreaming.

The problem, of course, is that those billion or so dollars have to come from someplace.  And one of the likely places is our pockets via IPOs that should never happen.

The result is that you have some old school VCs trying to find a billion dollar exit strategy where one doesn’t exist.  Their efforts are, in turn, supported by a bunch of nincompoop bloggers, many of whom have skin in the game, talking about how many billions of dollars this site or that is worth, in the hopes that enough people will start believing their bullshit to cause Google to stupidly throw away more of its money and buy it.  The fallback plan of course being to toss an IPO out there in the hopes that you and I, or more likely the people who manage our investments, will bail them out and make them richer and us poorer.  That plan worked in the 1990s, when the average investor got caught up in the greed and hype of Bubble 1.0.  Now, however, we have realized that the internet is not quite the evolutionary force we thought it was going to be, and that everything that touches the internet is not necessarily gold.

In sum, it is a system that may have worked in the 90s, but thankfully doesn’t work now.  It’s a greater fool game without scale.

Today, Fred Wilson has a post about the future of the VC business.  He asks “is the traditional VC model broken?”

His conclusion is that the VC model of the past will not work in the future.  The business model is not broken he says, but it certainly needs to be modified in light of the changing technology business.

Fred understands that part of the problem was caused by the VC industry during Bubble 1.0:

The IPO market certainly isn’t what it used to be, because of Sarbanes Oxley, because of the really bad companies we in the VC industry foisted on the public markets in the late 90s and the long memories of institutional investors.

Part of what’s needed, according to Fred, is a little scale.  Something I have typed about until my fingers hurt.  Fred says:

Maybe they can’t get us the valuations “that venture investors expect”, but that is the venture industry’s fault because we’ve overfunded our companies to the point where we need a half billion dollar exit to produce a decent return.

Fred suggests a few tweaks, including that the VC industry figure out how to make great returns on $100 million to $250 million exits and limit IPOs to the very best companies.

All of that sounds like inspired gospel to me, even though I still think $100 million to $250 million is too rich for 98% of Web 2.0.  Still, I wish I read more stuff like this in the blogosphere and less psychobabble about how valuable the latest YouTube clone or MySpace wannabe is.

The ironic thing is that the cheerleaders and con men who keep spouting off about billions and zillions and YouTube and MySpace and all that nonsense are doing the Web 2.0 space a lot more damage than good.

Good is smart and logical and reasonable.  With a plan that actually makes sense.

That’s what Fred is talking about.  And to that I say amen.

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Congrats to Mark Evans

Mark Evans has announced that he is leaving his job at the National Post to jump into the blogosphere full time by becoming vice president of operations at b5media.  Congratulations to Mark and I wish him well.

b5media, despite the irritating non-capitalization problem that someone a few years ago incorrectly decided was techy and cool, seems like a pretty solid network.  I read and enjoy quite a few of its blogs.

I have never been involved in a blog network, but I’ve been a part of several other internet-related networks, and I suspect the challenges are largely the same.

On the one hand, a consolidated group of people can often accomplish more together than the individuals could do alone.  Ad sales, sponsorships, cross-selling and recruiting new members are among the many benefits of such an association.

On the other hand, I suspect there are some common problems that have to be managed (I know nothing about b5media’s structure; these are just my thoughts based on some of the networks I have been involved with).  One is the fact that the people at the top of the hierarchy generally make some of their money, directly or indirectly, off of the efforts of those below them.  There’s nothing wrong with this- it’s the same sort of pyramid that applies at law firms, accounting firms and many other businesses.  And like those businesses, I suspect blog networks will have trouble keeping their up and coming bloggers happy. When there is a pyramid of any sort and a limited supply of money to pass out, there is always an unhappy camper in the next tent.  Someone always thinks they’re getting too little or the other guy is getting too much.

Another problem is the structure that comes with being a part of a network.  Some networks have a lot of it, and some have only a little of it, but a blogger who has been his own boss with nothing but his whims to direct him may chafe at the structure of a network.  Not all bloggers will find the addition of a little structure problematic, but some will.  And others may find that what seemed like useful structure at the time starts later to feel a bit oppressive.

Don’t get me wrong- I’m not anti-blog network.  I just think they will face a lot of challenges as they- and the blogosphere- mature.  Some of the challenges are common with other businesses, and some will be specific to the young and evolving blogosphere- and the effort to monetize the same.

I think Mark is a great addition for b5media, and I’m looking forward to following his, and its, progress.

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The ROI of Conversational Blogging

roiThere were some interesting posts today about the return on investment of blogging. Like always, far too much of the focus (being, in this case, all of it) was placed on blogging as a way to separate readers from their money.

This never ending effort to treat blogging as some new age business plan continues to read to me like someone furiously trying to stuff a round peg into a square hole. But sometimes you take the conversation where and as you find it, so let’s take a look.

First, about blogging as an extension of a business (note the words “an extension of” between the words “as” and “a business”).

I’ve said many times that a blog is a natural extension of just about any business that otherwise spends time and money taking its message to current and/or potential customers. A blog is to a company’s marketing what a web page with mp3s is to a musician’s creative endeavors- a way to take your message directly to the ultimate consumer. By cutting out some of the middle, you create a more direct, less expensive, real time and somewhat interactive method of distribution of both your product and information about that product.

If you do it right, your blog becomes more than just a living marketing brochure- it becomes a portal for marketing, customer service and personalization. It becomes a public relations home run.

That’s good.

But what about the rate of return for blogs that aren’t about making money? Certainly, the best measure of that rate of return is the satisfaction you get from the blogging experience. But just because a blogger isn’t trying to separate his readers from some of their cash doen’t mean than merely sending a post out into the vast blogosphere is the be all end all of blogging.

Almost all bloggers are looking for something in return from their blogging. Let’s think about this some more.

In her article, Charlene Li talks about measuring the benefits of blogs by looking at certain factors like conversion rates, traffic, etc. She is trying to couch something very subjective in more objective terms, and I’m not sure she convinced me of anything common sense wouldn’t already dictate.

But let’s talk bout some of her factors, from a conversational blogger’s perspective:

Consumer self-education: From a conversational blogging perspective, this would translate to reader participation. Are your comments and trackback numbers increasing over time? If so, then you have attracted readers who want to engage in conversation about the topics at hand. If not, then even if you have a lot of traffic, you are not advancing your conversational goal.

Greater visibility in search results: While I get a ton of traffic via search results, I have no ads to click. So traffic for the sake of traffic only benefits my conversational purpose if that traffic expands the conversation onto other blogs. The only way to measure cross blog conversation is by measuring the links that are a part of cross-blog conversations. If you become visible via search engines, but no one engages you in conversation, then, once again, you have not advanced the conversational goal.

As an aside, I believe this is why some of the bloggers who look to profit from their blogs focus so much on traffic (and say links are of less importance), while so many conversational bloggers focus more on links (and the interaction which they, at least to some extent, measure).

Lower the cost of public relations: I believe this translates to lowering the geographical obstacles to conversation. One of my primary blogging goals is to find people who are interested in interests (tech, music, etc.) not generally shared by my real world friends. I largely measure my return on blogging by the number of people I “talk” to regularly about those topics.

If you are eliminating the geographical obstacles to conversation, you are getting a good return on your conversational blogging.

Reach an enthusiast community: While not as clean a translation, I would measure this by how sustainable your cross-blog conversations are. Are there are other bloggers who regularly reply to your posts? Do you do the same for them? Is that group growing at a satisfactory rate? The larger and more interesting that group becomes, the more likely it is to thrive over time.

Building a sustainable community is the second step to the process of eliminating the geographical obstacles to conversation I described above.

Address criticisms on other blogs/news stories:
Improve employee innovation and productivity:
Improved stock price:

I don’t see any real correlation with conversational blogging here.

But there are other areas in which conversational blogging can generate a return.

Tapping collective knowledge:

How many times have you turned to the blogosphere in search of hard to find information? I do it all the time.

Via blogging (and here is at least one good use for tags) you can tap the collective knowledge of a great many people. Even better, the blog posts create a record that can and will be found by others seeking the same information.

Want to see proof. Search Google for these song lyrics: “I wish I’d killed John Wayne.”

Be tutored by the world:

I am learning photography. By reading the right blogs, asking question via comments and surfing through the photo feeds of talented photographers, I have learned more faster than I could have by taking classes or by trial and error.

There are blogs about any topic that can provide similar learning materials.

Finding a relaxing place in a hectic world:

Life is so hectic, there really isn’t time to devote to finding user groups and other enthusiasts to share interests with. Conversational blogging allows you to find a group and interact with it in a turn-based manner, in your own way and at your own pace.

It’s a way to belong to something important, with a significantly reduced time commitment.

There are lots of other ways to measure the return on investment for conversational blogging.

The main point, at least for me, is that the benefits are not measured in dollar bills.

Sometime they are measured in something even more important.

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Morning Reading: 10/2/06

Here’s a primer on sushi etiquette.

CB radio insult escalates into a shooting. (via Obscure)

12 ways to make your mark in the blogosphere.

TV Squad has a summary of where to find network TV shows online.  Handy for when your TIVO forgets to record a season pass- which has happened to me recently.

I have been thinking and talking a lot about the Monty Hall Paradox.  I don’t know if that’s a good thing or a bad thing.

Mark Cuban has more thoughts on YouTube.  Yes, the internet is a cockroach farm, but YouTube was not the first video sharing site- and it has a ton of mindshare that will be hard to displace.  Think eBay.

And finally, Harrah’s might be worth as much as YouTube (irony intended).

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Video Photos

The thing I like best about watching Scoble‘s new videocast is the way his fancy new video camera lets him take video shots that are so incredible they look like photos.

During the 3rd installment of his Thomas Hawk series, Scoble took a video shot of the Golden Gate Bridge, at night.  I was only half way paying attention at that point, and when I looked at the feed, I saw what I assumed was one of Thomas’s photos of the bridge- until I noticed that one flashing light.

Very cool.

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The Finkelstein Paradox

Seth is a buddy of mine, but even he will have to admit this is funny.

Seth argues logically and genuinely that he shouldn’t be in Wikipedia.  The Guardian and many bloggers pick up the story.

As a result, Seth becomes even more famous, thereby damaging his argument that he isn’t notable enough to be included.

Rogers wonderfully dubs this the Finkelstein Paradox.

It’s Sunday morning, so let me quote some applicable scripture:

Brian: I’m not the Messiah! Will you please listen? I am not the Messiah, do you understand? Honestly!
Girl: Only the true Messiah denies His divinity.
Brian: What? Well, what sort of chance does that give me? All right! I am the Messiah!
Followers: He is! He is the Messiah!

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YouTube Haters or Bubble Watchers?

Fred Wilson calls for everyone to stop hating YouTube.

I’m certainly not a YouTube hater- it won my Web 2.0 Wars series.  And I agree with Fred that the neatest stuff on YouTube is not the “pirated” stuff that maybe shouldn’t be there.  It’s the user-created stuff.

But, but, but…

I think the absurd valuations that all of these bubble blowers are trying to associate with YouTube depends in large part on its ability to serve a lot of “pirated” content.

And…

I think we have to make a distinction between people who dislike YouTube in and of itself and people, like me, who only dislike the wildly overinflated valuations that the circus barkers yell at us from inside the greater-fool tent.

YouTube would be a great site, community and service if it didn’t have one clip of pirated content.

But it does.  The ironic thing is that most of the content producers weren’t really complaining.

Until some dumbass started squawking about how many billions of dollars YouTube is worth.

Why not just sit back and let YouTube try to come up with some revenue streams and then ask them how much money they make?

The answer, of course, is impatience, greed and the complete lack of scale.

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