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Jakob Nielsen, Holiday Mixer

By - December 17, 2003

If you’ve ever driven down I-880 coming from points North toward San Jose, noticed the line of homes etched into the Eastern hills above Fremont, and wondered – “Who lives up there?” – the answer is Jakob Nielsen. Nielsen is a reknown user interface expert who’s written numerous books and articles on web design, and who was an early Google advisory board member. I drove up to see him yesterday on my way down to the Google holiday party (well, the Google holiday party for members of the press, anyway). Jakob’s house affords a sweeping view of the bay area from a more southern perspective, which is a bit disconcerting for someone who is used to seeing the bay from Mt. Tam or UC Berkeley.
Jakob has plenty to say about the state of search and design on the web. When I asked what was next in search, he said “Solving your problem, as opposed to finding you the best site.” An interesting insight. He believes search is a critical thinking skill that should be taught in the elementary school system, and I agree. It’s amazing how much smarter you can be online if you know a few basic search skills – use of quotes, and/or operators, a few basic syntax elements.
After Jakob I drove across the Valley to Google’s new building, this time for a holiday media mixer. Just about everyone who’s ever covered Google was there, from Dan Gillmor (SJMerc) to Fred Vogelstein (Fortune) to Kara Swisher (WSJ) to Stephanie Olsen (Cnet). And senior Google folks turned out in force, though some were obviously uncomfortable with being in a room teeming with journalists. I saw about ten folks I have interviewed for the book, it was good to reconnect. All in all a nice affair, and I had some interesting conversations with Craig Silverstein (employee #1), Krishna Bharat (created Google News and is now going to India to help start that project), Shona Brown (new at Google, running biz operations, wrote a good book back in the early bubble that may as well be a blueprint for Google right now), and many others. Larry, Sergey and Eric were there as well, they were predictably mobbed. I said hello and moved on. I hear Cory was in the house, though I didn’t see him, but Joi Ito was there, looking younger than when I first met him at Wired in 1993. How the hell did he do that?

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It's Official: Time Weighs In

By - December 16, 2003

While at Wired, we used to joke that we’d know our time was up with Time Magazine did a major feature on us (they did, and it was, sort of – it marked a passing of our hype-driven era). Louis used to say he knew the hippy movement was through when it made the cover of Time.

Well Saddam made sure that Google wouldn’t make the cover this week, but the magazine nonetheless managed a pretty comprehensive piece of its own. While much of it is retread, I have to give the author credit – it’s one of the first, besides a nice piece in Wired last Feb, which gets to some of the JAM (joints after midnight) issues surrounding search. To wit:

“But for a minute forget about the big numbers, the millions of customers and the billions of dollars. Think about what’s at stake culturally and socially in the search wars, and all those zeros start looking pretty paltry by comparison. The Internet is swiftly becoming the primary repository of the bulk of human information. Search is the way we get at that information, and companies like Google wield enormous power. They reflect our common interests and shape how we learn about the world with their rapid-fire search results. This isn’t just about dotcom juggernauts duking it out for stock options and bragging rights. Whoever wins the search wars owns the keys to the kingdom of knowledge. That’s a big responsibility. Are search engines up to it?

This is one of the bigger questions of my book (not only specific to Google, but to the database of intentions…).

Nonetheless, the media virus that has consumed nearly every outlet w/r/t Google may be played out, now that Time has had its say. Until the IPO, of course….

The "Creeping Googlization" Meme

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Alex Salkever of Businessweek gives Google an interesting business model once over, leading with a scenario in 2006 where Google runs just about everything web-related. He introduces the term “Googlization” – which I take means the creeping (his word) dominance of Google over nearly all forms of informational commerce on the web.

Salkever points out that all the new features Google is adding end up stealing traffic and revenue from other companies, starting with the example of Google’s new ability to track FedEx packages:

“Perhaps more important, Google is providing this new shipment tracking service even though it doesn’t have a partnership with FedEx. Rather, Google engineers have reprogrammed it to query FedEx directly with the information a user enters and provide the hyperlink direct to the customer’s information.
No doubt, this is an ingenious way to keep people at Google longer. By extension, the search giant can create more online real estate to sell ads on. But with every new service, Google takes a slice of someone else’s pie. Its ability to find pizza places within any given Zip code ultimately eliminates the use of YellowPages. Using it to find word definitions diminishes the business proposition of online dictionaries.”

What’s interesting here are the assumptions regarding Google’s motivations – that the company is entirely motivated by the desire to garner more “real estate” against which it can sell ads. A reasonable assumption for a business magazine to make – that a company is being driven by the motivation to make more money. But that’s quite distinct from what folks at Google state they are doing – leveraging searchable data to make a consumer’s life easier. “Can’t the two co-exist?” I can almost hear them asking. “Doesn’t one (profits) follow from the other (helping consumers with a great service)?”

Well, yes, and with AdWords, certainly that was the case. But Salkever further paints an interesting scenario in which Google decides to add a feature where users type in “movies” and their zip code, then get Moviefone.com’s results. He concludes:

“Google wouldn’t really need to ask MovieFone’s permission because the service is publicly available and easy to program into Google in the same manner as the FedEx service.
Yes, such a Google service would probably mean extra traffic for MovieFone.com. And that would be good for MovieFone, right? Perhaps not. The interaction takes from MovieFone at least one prime advertising asset, the usual initial visit to MovieFone’s home page, and instead awards that impression to Google. That’s because the movie-listing seeker will skip right to the MovieFone hyperlink with their Zip-code-specific information. And as more traffic arrives from Google, that would give it more leverage to ask MovieFone for a referral fee. That’s not hard to envision if Google become a public company with a responsibility to, above all, boost profits.”

But as seductive as the reasoning is, I don’t think Google will sell referrals. Google will think twice, and maybe more than twice, about implementing such a business practice. That would make them a player in the buying and selling of pure intent – as opposed to the paid intent they so assiduously separate from their natural search results. Therein lies a significant conflict. Imagine if they did try to sell those referrals to Moviefone, and Moviefone told them to pound sand. Now what would they do – cancel the service? Keep the service but route the traffic to a different movie service, one that was willing to pay them (or pay them more)? Remember, this is within their pure, untainted-by-commerce natural search results. Maybe MSN would cut a deal like that, but such a scenario feels distinctly “unGoogly” to me. Google’s entire reputation is staked on the purity of their search results.

I also don’t buy into the idea that Google, or any portal, will become a consumer’s sole point of entry and/or query to the web. First of all, there’s too much context loss. Consumers like to have context surrounding their interactions with specific services. Second, there’s syntax overload. It’s amazing how powerful Google and other engines are, but more than 95% of all searches never take advantage of advanced search features. I don’t want to have to remember the right syntax to get movies for my zip code, or to type in a particular syntax to get my Fed Ex package. Dedicated sites do this for me in an intuitive way with immediate options in case I get confused. Third, as a competitive differentiator, it’s relatively easy to copy – Yahoo, MSN, and anyone else could add these features quickly if they started to gain traction. And lastly, if Google does become a standard referrer, Moviefone and others would simply have to adapt – it’s not the first time content sites have depended on portals for referrals, and fought with them about who is delivering the true value to the consumer. It’s AOL in 1994, Netscape in 1996, and Yahoo in 1998 all over again. The web will endure.

Don Logan Speaks

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An interesting interview in Ad Age with Don Logan, Chairman of Time Warner’s Media and Communications Group (he runs the Time Inc. and AOL businesses, among others). He’s an old Time Inc. guy, and that company has been running out of steam of late, reporting its first ever quarter without profit growth. So he’s got two “troubled” units. He speaks about a number of issues, including putting Time Inc. content behind the wall at AOL, launching new magazines, and whether or not AOL should be sold (not if it remains a “sustainable business,” hmmm…). (link via Rafat Ali, thanks).

Go Toast Bought

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One of the most talked about companies in the paid search analytics business is Go Toast, which makes a business of helping companies optimize and analyze their paid search campaigns. I always expected they would be in line for acquisition, perhaps by a large agency like IPG or Omnicom. Instead, Go Toast has been purchased by Atlas DMT, a unit of aQuantive (AQNT), which is a public roll up of several online agencies and services, including longtime survivor Avenue A.

#9: Springtime in Geekland

By - December 15, 2003

Foo was fun, and it also showed that optimism was back in the geek inner circle.

THE MESSAGE
The Geeks Are All Right
What happens when 200 hackers and visionaries camp out in the hills of Northern California? If you have a stake in the future of business, you’ll want to find out.

By John Battelle, December 2003 Issue

Stashed away in the rolling hills north of San Francisco, the town of Sebastopol, Calif., used to be remarkable for two things: Gravenstein apples (it was once the world’s largest producer) and the Russian River appellation (excellent zinfandels). You can now add a third important growth industry whose roots are there: Foo Camp, a new breed of geek gathering organized (somewhat) by O’Reilly & Associates, a thriving technology publishing business.

This year’s Foo Camp, held in early October, was extraordinary for many reasons, but perhaps mostly for its structure — or lack thereof. Tim O’Reilly, Foo’s founder, made sure that basics like food, showers, and meeting space were available, but then quickly turned over the weekend’s agenda to the geeks (literally — there was no agenda until Friday night, when the attendees made one up on the fly). The idea: Get 200 or so smart folks with a lot in common together in one place at one time, let them pitch tents, toss in a Wi-Fi network, and see what happens. Turns out, quite a lot. (more via link below)

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#8: Intent over Content, Fish with Feet

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I do believe there is a huge market to be made in adapting video to weblike channels…

THE MESSAGE
Gone in 30 Seconds
The classic TV spot can’t dominate advertising much longer. Microsoft’s new MSN Video is bringing Web-based commercials to a computer monitor near you.

By John Battelle, November 2003 Issue

NOTE: This has been updated from the version published in the November 2003 issue of Business 2.0

Let’s consider a few fun stats. First, broadband has reached nearly 39 percent of all Internet-connected households and is expected to be in 79 percent in five years. Next, research firm In-Stat/MDR predicts that corporate spending on broadband content-delivery services, essential to high-quality video streaming on the Web, will almost triple by 2007. Third, the vast majority (72 percent) of work connections are high-speed. Throw in the forecast that TiVo-like devices will be in 20 percent of American homes (and certainly a higher percentage of wealthy ones) by 2007. And finally, 99 percent of homes with incomes over $100,000 have Net access, and it’s a safe bet that most of those have broadband connections.

Add it all together and here’s what it means: A massive broadband marketing opportunity is upon us — and, as a recent Yankee Group report concludes, the 30-second TV ad will soon lose top billing as our most valuable marketing vehicle. What will replace it? Web-based video advertising. (more via link below)

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#7: MSFT and Search

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A longer piece on MSFT which came out of the news that Yahoo bought Overture.

THE MESSAGE
Mr. Gates and the Hunt for Search
Yahoo’s grab for Overture seemed to outflank Microsoft. But wait: Bill’s search-engine strategy is not what everyone thinks.

By John Battelle, September 2003 Issue

Like TV broadcasting and the automobile business before it, the Internet media industry has now resolved to the Rule of Three. Of the scores of companies that battled for dominance in the 1990s, only Yahoo (YHOO), Microsoft (MSFT), and Google remain serious contenders. They, along with AOL (AOL), own the lion’s share of Internet advertising and worldwide English-language traffic. Yahoo’s recent acquisition of Overture (OVER) reaffirms, if the idea needed reaffirming, that Internet media obeys the same urge to consolidate as every other industry.

It proves something else, too, about this phase of the Internet’s evolution. The key driver is no longer content, but intent. The business is no longer about selling advertisers the eyeballs you’ve caught with news, images, games, and the like. It’s about selling users at the moment they make their online desires known through their search queries. In plain terms, the engine of Internet media is once again search. (That, by the way, is why I’m leaving AOL out of this discussion. Preoccupied with many other problems, the dial-up giant — a corporate sibling of this magazine — is leaving its search functions to Google.)

Search will account for more than $2 billion in advertising sales this year. It’s predicted to grow at 35 percent annually, to nearly $7 billion by 2007, according to U.S. Bancorp Piper Jaffray. Beyond the numbers, search has become the most important commercial application on the Web. Not only is it the defining task of any portal, but it’s also the preferred doorway into e-tailers like Amazon (AMZN), as well as auto, home, and dating sites. An online consumer business can no longer afford to have poor search capabilities.

By the middle of last year, both MSN and Yahoo had realized that they needed to rethink their search strategies. To profit from search, a company needs three elements, all of which Google already had. First, you must have high-quality “algorithmic” search, which attempts to match users perfectly with what they’re seeking. For years MSN and Yahoo have outsourced algorithmic search to companies such as Inktomi and Google. Second, you need a paid search network, which allows you to display links to paying advertisers alongside your editorial results. Both MSN and Yahoo had outsourced this to Overture. And third, you need your own distribution. In other words, you must own the site where the consumer makes his or her query and the results are displayed. Until recently this was the only element that either Yahoo or MSN truly owned.

By buying Inktomi last December and then Overture in July, Yahoo has taken control of the two missing elements, which arguably leaves MSN in the worst position of the Big Three. Besides having the only site of the three that is consistently unprofitable, it is outsourcing both its algorithmic and its paid search technology to a major competitor. Not exactly an ideal situation.

But aside from Netscape’s early investors, not many people have ever gotten rich by underestimating Microsoft. (more via link below)

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#6: A Growing Early Lockdown Threat: Super DMCAs

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Think you control your own entertainment system? Think again.

THE MESSAGE
Don’t Stifle Progress
A number of states are trying to do what the federal government couldn’t: Kill innovation on the broadband Internet.

By John Battelle, August 2003 Issue

What if it were illegal to connect your computer to the Internet without asking permission? It seems unthinkable, but an ongoing legislative imbroglio has brought that very question to the fore.

The fight pits the cable industry and (surprise!) the Motion Picture Association of America against a battery of consumer and civil liberties groups. It revolves around a set of bills that opponents have labeled “Super DMCAs” — state-level legislation modeled on the much-reviled federal Digital Millennium Copyright Act of 1998.

During the past 36 months, these bills have been passed in the legislatures of seven states, including Michigan and Pennsylvania, with nine more waiting in the wings. In each case, the legislation is cloaked in the seemingly benign language of preventing cable signal theft and has been quietly fed to a somnambulating legislative body. But all of these bills also contain extraordinary language that gives the access industry (cable, satellite, and phone) complete control over what devices you can connect to their broadband networks. They also make many things we take for granted — such as anonymity, firewalls, even instant messaging — potentially illegal.

In other words, these bills could create “early lockdown” of the broadband Internet, meaning that every aspect of how the network is used could be dictated by the access provider. And when the rules governing a robust system prevent innovation and favor one set of players above all others, the system withers. Even the Internet.
(more via link below)

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#5: Nutch Presages a New Kind of Search Engine

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Open source search – in an age where innovation is increasingly silo’d in large companies, this is a good idea whose time has come. I didn’t like the “watch out” angle, but…it gets a reader’s interest.

THE MESSAGE
Watch Out, Google
Nutch could rewrite the rules of search development — especially with an impressive roster of Internet luminaries now lining up behind it.

By John Battelle, August 08, 2003 (Web Special)

Ask anyone in Silicon Valley what the hottest application on the Internet is today and you can bet their answer will be search. The dealmaking has been nothing short of torrid. Only a year ago there were at least half a dozen major players. Now there are just three: Yahoo (YHOO), which last month bought search giant Overture (OVER) in a $1.6 billion deal; Google, the undisputed king of search; and Microsoft (MSFT), which is busy building a search platform of its own. They’re all fighting to dominate the huge and ballooning market, already worth $2 billion and expected to generate between $6 billion and $8 billion in revenues by 2007.

Search is a game of intellectual property, innovation, and market position. The three combatants all keep jealous watch over their patents (Yahoo, for one, has more than 60), engineering talent (hundreds of Ph.D. holders work at Google), and market advantages (Microsoft — need we say more?). Indeed, search is such a complicated and expensive undertaking that analysts have pegged the cost of market entry at well over $100 million.

All that could change this fall, when a new player strides onto the field.
(more via link below)

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