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Announcing Web 2 Summit 2011: The Data Frame

By - April 25, 2011

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If you’ve been reading my musings these past few months, you may have noticed an increasing fascination with data. Who owns it (the creator, the service, both? Who has access to it – ISPs? Device makers? Marketers? The government? And how are we as an industry leveraging data to create entirely new classes of services?

Well, expect a lot more musing here, because (finally!) we’re ready to announce the theme for the Web 2 Summit, 2011, and it’s this: The Data Frame. From my overview, just posted on the site:

For Summit 2010, we noted that the Web ecosystem had shifted into something of a battlefield, with both major players and upstarts jockeying for lead positions around key “Points of Control.” Looking back at our theme one year later, it’s clear the game is still in its early phases – most of the major players have held their ground and continue to press into new territory. Meanwhile, the cycle of startup creation has intensified and compressed.

Given all this, we’re tempted to simply declare 2011 “Points of Control, The Sequel.” But we’ve noticed a constant uniting nearly all the battles around these strategic regions. That constant? How companies (and their customers) leverage data.

In our original Web 2.0 opening talk, as well as in Tim’s subsequent paper “What is Web 2.0,” we outlined our short list of key elements defining the emergent web economy. Smack in the middle of that list is this statement: “Data Is the Next Intel Inside.” At the time, most of us only vaguely understood the importance of this concept. Three years ago we noted the role of data when “Web Meets World,” and two years ago, we enlarged upon it with “WebSquared.”

This year, data has taken center stage in the networked economy. We live in a world clothed in data, and as we interact with it, we create more – data is not only the web’s core resource, it is at once both renewable and infinite. No longer tethered to the PC, each of us bathes in a continuous stream of data, in real time, nearly everywhere we go.

In the decade since search redefined how we consume information, we have learned to make the world a game and the game our world, to ask and answer “what’s happening,” “what’s on your mind,” and “where are you?” Each purchase, search, status update, and check-in layers our world with data. Billions of times each day, we pattern a world collectively created by Twitter, Zynga, Facebook, Tencent, Foursquare, Google, Tumblr, Baidu, and thousands of other services. The Database of Intentions is scaling to nearly incomprehensible size and power.

Of course, this fact raises serious issues of consumer privacy, corporate trust, and our governments’ approach to balancing the two. As we learn to leverage this ever-shifting platform called the Internet, we are at once renegotiating our social, economic, and cultural relationships – and we’re doing it in real time. How we interact with each other, how we engage with our government, how we conduct business, and even how we understand our place in the world – all has changed in the short two decades since the dawn of the commercial Internet. And all of this is described through a matrix of data, the power of which our culture is only beginning to recognize.

At the Web 2 Summit 2011, we’ll use data as a framing device to understand the state of the web. We know that those who best leverage data will win. So who’s winning, and how? Who’s behind? In each of our key points of control such as location, mobile platforms, gaming, content, social – who is innovating, and where are the opportunities? What new classes of services and platforms are emerging, and what difficult policy questions loom? And what of the consumer – will users become their own “point of control,” and start to understand the power of their own data?

These are some of the questions we’ll be asking and answering at the 8th annual Web 2 Summit. We look forward to exploring them together.

Web 2 Summit 2011

The Palace Hotel San Francisco

Oct. 17-19, 2011

Registration is now open, and an early line up of speakers will be announced shortly (we already have ten amazing names, but I’m holding off till we have at least a baker’s dozen). Stay tuned, and join the conversation.

* And yes, we’ll be updating our “Points of Control” Map with a new layer – the Data layer, naturally.

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A Report Card on Web 2 and the App Economy

By - March 18, 2011

As I noted earlier in the week, I had the opportunity to speak at a GM conference today. I was asked to peer into the future of the “app world,” and deliver any divinations I might discover.

I like a challenge like this, as it forces me to weave any number of slender threads of my current thinking into a more robust and compact narrative.

Below is an updated version of a slide I presented today. As I thought through why I have a negative gut reaction to the world of apps as they currently stand, I realized it’s because they violate most of the original principles of what makes the web so great. And when I thought about what those principles are, I realized that a list already existed – in the opening presentation Tim O’Reilly and I gave at the first ever Web 2 Summit, in 2004.

Tim codified those principles in his seminal paper “What Is Web 2,” first published in 2005. For my GM speech, I extracted the core values which comprise the underpinnings of Web 2, then graded them in two categories: The Web, and The App Economy. For each I have a check or an X, depending on progress made since we originally outlined those principles seven years ago. A check means that, in essence, our industry has solidified its commitment to the principle, in particular as it relates to the most important party: The person using the web or the app. An X means we’re not there yet (and perhaps we won’t ever get there).

I think the results speak for themselves. After the image (and a quick break), I’ll offer some thoughts on each.   

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* The Web Is A Platform. There is no doubt that this is true on the open web (by this I mean the legacy HTML web). Anyone can put up a site, without approval by anyone else. This is simply not true in the Apple app world, though it’s more true for Android. I could write further pages on what it means to be a platform – certainly iOS and Android are platforms – but what we meant by “The Web Is A Platform” went deeper than the idea of a closed ecosystem controlled by one company. The beauty of the Web was that anyone could innovate on top of it, without permission. This is simply not true in the App World, for now.

* You Control Your Own Data. I have a very long post in me about this, and I spoke about it at length today at GM. But suffice to say, I don’t think either the web or app world have checked this box. But I see it as coming, very soon, projects like The Locker Project and others are hastening it. It’s my belief that soon consumers will demand value from their data, and that the web will be a place where that demand is met. Apps? I’m not so sure they’ll lead here. But they will have to follow.

* Harness Collective Intelligence. I believe the web has delivered on this concept, in spades. But I believe App World creates islands of disconnected experiences, most of which fail to share APIs, data structures, or insights.

* Data Is the New Intel Inside. I agree with this concept, which is truly Tim’s innovation. But I don’t believe either the Web or App World have delivered this power to us as consumers. As with “You Control Your Own Data”, I think the Web will lead, and Apps will follow.

* End of the Software Release Cycle. The Web has totally checked this box – when was the last you checked what version of Google you were using? Meanwhile, we still have to update our apps….

* Lightweight Programming. The web has excelled here. Apps, not so much. I have a lot of hope for Telehash, however.

* Software Above Level of A Single Device. When was the last time you wondered whether the web worked on a particular device? Oh yeah, when you tried to use Flash on an Apple product….enough said.

* Rich User Experiences. This is where apps kick the Web’s ass. And man, it’s a compelling ass kicking, so compelling we may be willing to give up all the other principles of Web 2 just to have a great experience. But I believe, in the end, we don’t have to compromise. We can have our App chocolate, and get our Web peanut butter to boot.

What do you think?

Pandora's Facebook Box

By - March 16, 2011

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(image) I flew to Detroit today, and thankfully Delta had wifi. Since I’ll be speaking at a GM conference later in the week, and the fine folks from Pandora will be there, among others, I went and checked in on the site, which I’ll admit I haven’t visited in some time (I still consume music the old fashioned way – I buy CDs and rip them to iTunes). Now, the theme of GM’s internal conference is all about “the app economy” and fortunately, lately I’ve found myself thinking a lot about this samesaid phenomenon. Given that, allow me to digress. As usual, I have no idea where this is going, but at least I know where it’s going to start: With my first visit to Pandora in some time.

Here’s what happened. Pandora has done a “deep integration” with Facebook since my last visit (yeah it’s been a while), meaning that when I showed up (and was logged into Facebook already), Pandora went ahead and filled out my profile using Facebook data. To the site’s credit (and I hope based on some terms of service from Facebook), the service notified me of this, and asked me if using my Facebook profile was OK.

Now, you may recall the kitty-with-a-ball-of-yarn that is my Facebook account. In short, it’s a tangled mess, and I’m at a loss around what to do about it. Short version: I said yes to the first 5000 folks who asked to be my “friend” and found myself with a pretty useless “social graph.” I’ve tried a few times to remedy the situation, but Facebook ain’t making it easy. The service wants you to be who you already are, not who you might want to become, that much is obvious. And who I already am on Facebook is a not-so-hot mess.

So…now I’m faced with importing this samesaid mess into Pandora, a place I was hoping to craft in the image of my own musical tastes. Do I click “OK”, or do I do the sensible thing, ditch the Facebook integration, and start from scratch? I mean, I have no idea how Pandora was *actually* going to use the data it got from Facebook, did I? Obviously the sensible thing was to be cautious, and click No F’in Way.

Of course I clicked Go Ahead, Use the Mess. Because, in the end, all I wanted to do was get to the music, consequences be dammed. Sure, I had no idea how or what Pandora was really going to do with my Facebook data, but honestly, I kind of didn’t care. I figured if it sucked, I’d find a way out. Right? (Actually, yes, you can undo the connection in settings.)

But connecting to Facebook got me thinking. First off, I wondered if Pandora even knew what do to with my “social graph” – given it has no rhyme or reason, and with 5000 or so connections, should Pandora really want to Go Deep, it’d probably melt a few CPUs down at the Music Genome project. And second, it made me wonder whether, had I chosen instead to do the work at Pandora, building my own profile from scratch…well had I done that, I’ll tell you this: I’d sure as hell like to import THAT profile into Facebook, and make THAT profile who I am up in ZuckerLand. Because it sure would reflect my identity a heckuva lot better than Facebook does at the current moment.

Hmmm. Now there’s an idea. What if I could take all that declaration of who I am that I do out on the “rest of the web”, and somehow drive that back INTO Facebook, in such a way as to shift Facebook’s understanding of who I am in a way that I controlled? And what if I could do that over and over, creating all sorts of different identities, ones I could mix and match on a whim, or a mood, or a social instance? Wouldn’t that be cool? I mean, if I could start all over, from scratch, I think I’d like to start at a place like Pandora, build a profile of who I am, and then import that profile (sort of like a piece of digital clothing) into a place like Facebook. Starting at Facebook, in a way, seems backassward. I’m not who I say I am, or who I say my friends are, one time on one platform built just for declaring my identity.

I’m what I do, in context, and that context shifts based on any number of axes – who I’m sharing with, social frame (professional? personal? familial? commercial? intimate? public? etc.), hell, it even shifts with my mood. And it sure as heck shifts over time. (I think this is what Eric was referring to when he joked that we should all have the right to get a new identity after college).

Increasingly, I’m frustrated with a world that wants me to be one thing – one profile, one easily structured dataset, one ring to rule them all. This just ain’t the way the real world works. It’s what I was getting at when I penned “Identity and the Independent Web” last year, and it’s a piece of yarn I’ll continue to pull at, mess be dammed. I want to be able to push data back into Facebook, such that Facebook changes who it thinks I am, and I want to be in control of that process.

In other words, I’d love to be able to tell Facebook, I’m feeling Pandorish right about now…show me what you got for me now?

And I predict that day will come. If not with Facebook, then with a platform that understands me better, one I’ll be more than happy to inhabit.

Am I crazy, or just too early? Tell me what you think.

Signal and SXSW: What Should I Ask WordPress Founder Matt Mullenweg?

By - March 08, 2011

Screen shot 2011-03-08 at 6.34.10 PM.pngOn Thursday at Signal Austin, and then again on Friday at SXSWi, I’ll be having an onstage conversation with WordPress founder Matt Mullenweg, who continues to be the driver of the WordPress community. WordPress is a unique platform – Matt works for Automattic, a for profit company that owns the rights to the hosted version of WordPress, at wordpress.com. There’s also WordPress.org, which is an open source, not-for-profit foundation that boasts a vibrant community of developers and hackers who merrily create hacks, plugins, and any number of patches to the WordPress code.

When WordPress.com was split off into the for-profit company, many were concerned it would quickly become clogged with ads, but Mullenweg and his partners have been extremely careful in how they’ve introduced marketing into the community. Experiments include FoodPress, EcoPressed, and others in partnership with my company, Federated Media, as well as one-off sponsorships with Microsoft around IE9, and some clever use of Google’s AdWords and other ad networks. Clearly media is a business WordPress will get into more, especially with the traffic and uniques it attracts (see chart at bottom).

Instead of advertising, so far WordPress has focused on tools – including a “freemium” model for key plug ins such as backup, polling, and spam protection. But as the platform has grown, it has taken a considerable amount of investment capital, and those investors will at some point demand a significant return. Furthermore, WordPress has earned the dubious honor of being large enough to become a target for hackers with less than honorable intentions (not to mention ongoing battles with black hat spammers).

I could go on and on – I am fascinated by WordPress, as well as by the publishing platform space it inhabits. The same habitat is populated by a clutch of super interesting companies, including Tumblr, which recently surpassed WordPress in pure number of pageviews (though not engaged uniques) and of course Twitter. It’s my sense these three companies are due to run into each other in the marketplace over time, in particular as the independent web matures into a real media play (more on that another time).

But rather than have me ramble on about WordPress and Automattic, instead let me put the question to you: What would you have me ask Matt at Signal and SXSW? Please leave your questions in comments, or tweet them to me at @johnbattelle with the tag #FMSignal or #SXSW. Thanks!   

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File Under: Metaservices, The Rise Of

By - February 04, 2011

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I’m beta testing a new service called Memolane, which collects the breadcrumbs we drop around the web (from Foursquare, Twitter, Facebook, Flickr, RSS, etc) and visualizes them as a timeline. It’s not fair for me to review the service at this point – I’ll save that for later. Rather, I’m interested in what it augurs: The rise of metaservices.

The problem/opportunity addressed by metaservices has been worked to death by folks far smarter than I – in particular by well-intentioned developers looking to create better standards for services to share data. But so far solutions have failed to address the market opportunity. I think this is going to change, in the main, because we’ll demand it does.

Let me step back and describe the problem. In short, heavy users of the web depend on scores – sometimes hundreds – of services, all of which work wonderfully for their particular purpose (eBay for auctions, Google for search, OpenTable for restaurant reservations, etc). But these services simply don’t communicate with each other, nor collaborate in a fashion that creates a robust or evolving ecosystem.

The rise of the app economy exacerbates the problem – most apps live in their own closed world, sharing data sparingly, if at all. And while many have suggested that Facebook’s open social graph can help untangle the problem, in fact it only makes it worse, as Fred put it in a recent post (which sparked this Thinking Out Loud session for me):

The people I want to follow on Etsy are not the same people I want to follow on Twitter. The people I want to follow on Svpply are not my Facebook friends. I don’t want to sharemy Foursquare checkins with everyone on Twitter and Facebook.

Like nearly all of us, Fred’s got a social graph instrumentation problem and a service data-sharing problem. Here’s what he suggests:

I would like to be able to run these people through all my social graphs on other services (not just Facebook and Twitter) and also my phone contacts and my emails to help me filter them and quickly add those people if I think they would make the social experience on the specific service useful to me.

When you break it down, what Fred is asking is this:

1. That each service he uses will make the data that he creates available to any other service with which he wishes to share.

2. That each service he uses be capable of leveraging that data.

For that to happen, every app, every site, and every service needs to be more than just an application or a content directory. It needs to be a platform, capable of negotiating ongoing relationships with other platforms on behalf of its customers in real time. This, of course, is what Facebook does already. Soon, I believe, every single service of scale will work in a similar fashion.

When you think about a world in which this idea comes true, all sorts of new services become possible: Metaservices, services which couldn’t exist unless they had the oxygen of other services’ datastreams to consume. At present, I can’t really think of any such services that are currently at scale. (I can think of some promising stuff in early stages – Memolane and Percolate come to mind.)

Sure, tons of services use Facebook connect to leverage our social graph. But that’s a half step. So is authorizing or logging into a site via Twitter. Solves a simple problem, but doesn’t add much value beyond that.

But I’ve noticed a trend of late. While a year ago I’d only see a “service connection” happen between an app and Facebook or Twitter, lately I’ve noticed such connections happening all over the place – with LinkedIn, Google, Foursquare, and many others. I think it’s only a matter of time – and not much of it – before we have a “metaservice” hit on our hands – an entirely new and delightful service that curates our digital lives and adds value above the level of a single site.

Perhaps it’s already out there. What have you seen that qualifies as a metaservice today?   

Remember Googlezon?

By - January 25, 2011

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Lately I’ve become a bit obsessed with predicting the future. Not the present future, as in one year from now – I do that every year, after all. But the long-ish future, as in ten to twenty years out. That kind of a time horizon is tantalizing, because it’s within the reach of our reason – if only we play the right trends out, and anticipate new ones that could defensibly emerge.

I’ve often found that predicting the future is a waste of time, but reporting the future is a worthy endeavor. More on that in another post, but I learned this distinction from my mentors an co-founders at Wired back in the early 1990s.

Late last year the Economist asked me to predict what the world might be like in 2036. When they asked, I of course said yes, because heck, it’s very rare for anyone to get a byline in the Economist (most pieces run without credit). I think my predictions were OK, but I have to say I can’t defend them with any kind of rigorous framework.

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Over the past week or so, however, an idea has grown inside my mind, and I can’t shake it. I spend a lot of time thinking about where this Internet Economy is going, and I’ve grown tired of the short view. I’m itching for a wider vista, for a time frame that spans years, if not decades. Most of the blogs, news outlets, and pundits I read day-to-day are stuck in the short now. I want to think more about the long future.

So I’ve started looking for predictions that spanned at least a decade. And of course the first one that came to mind was EPIC 2014. I remember covering this short film in 2004, when it first came out. It caused quite a stir back then, because the scenario it painted seemed so…possible. And given that it was predicting events an entire decade later, it had a certain whiff of science fiction to it. We want to believe in science fiction – after all, it’s nothing more than proof that the future is already here, just unevenly distributed.

EPIC 2014 focused on one thread of our ever-changing Internet Economy – our relationship to media. Some six-plus years of heady change later, I wondered, how does it hold up? And what can we learn from watching it now, just a few years from its predictive date of 2014?

Well, depending on how you grade it, it’s either an utter failure, or pretty smart, given the constraints of the time.

Remember, after all, that in late 2004, Facebook didn’t really exist. Certainly the idea of the “social graph” was years from cultural currency. Twitter was utterly foreign. EPIC 2014 is interesting for the assumptions it makes, and what it got right, and what it got wrong. Here are few choice ones:

- The New York Times “goes offline.” This seemed vaguely possible only a year ago. Now, the Times seems quite a bit more healthy, and it’s certainly not going anywhere soon. In fact, most news outlets look to the Times as forging a new model for news, one that just might work.

- Google buys Tivo. Nope, but damn, I bet many wish they had. This assumes Google wants to be a really good interface to TV. Apparently, no one at Google got that memo, yet. Because all I have heard about Google TV is that the interface is way, way too hard to understand.

- Microsoft responds to Google by buying Friendster and creating “social news.” If only! That might have saved Friendster, if only for a year or two. But the thinking that social news would be really important was prescient. Microsoft would create this social news service by 2007, EPIC predicted. Well, the company did a major deal with Digg in early 08. How did *that* work out, eh?!

- Google will create a service called “Google Grid” – a smart prediction of cloud computing; with “subscriptions” to “editors” who add value to the grid. This presages Twitter and Tumblr, or the rise of social editors and supernodes, as I’ve written previously.

- Google and Amazon would join forces, with Amazon lending its recommendation smarts, and Google lending its grid computing. Oddly, Amazon is now the leader in cloud, with Google a close second. And so far, Google and Amazon haven’t become real partners, in fact, if anything they are poised to be mortal enemies given the fight over media distribution coming with Kindle, Android, Google TV, and Amazon’s streaming media ambitions.

Overall, what I find fascinating about EPIC is how it got the overarching trends right, in the main, but the timeline and the details, while supporting a compelling narrative, were utterly wrong. Yes, the cloud is coming, but man, it ain’t gonna take over the world in a mere five or six years! Yes, social news and social editing will be critical, but NO, the winners of the current day – Google, Amazon, and Microsoft – would NOT rule that world. Totally new and unpredictable startups – Facebook, Twitter, Tumblr – own that space now. And in the meantime, a shooting star – Digg – came, flamed, and went!

All in all, I love EPIC 2014 just for the fact that it was made. Here and below is a link, again, to the video, this time on YouTube, which, of course, didn’t exist when EPIC was made.

I love the Internet.

The InterDependent Web

By - January 23, 2011

When I wrote Identity and The Independent Web last Fall, I was sketching out the beginnings of what I sense was an important distinction in how we consume the web. This distinction turned on one simple concept: Dependency.

Of course, the post itself was nearly 2500 words in length and wandered into all sorts of poorly lit alleys, so one could be forgiven for not easily drawing that conclusion. But since that Thinking Out Loud session, I’ve continued to ponder this distinction, and I’ve found it’s become a quite useful framing tool for understanding the web.

So here’s another attempt at defining one corner of the “Independent Web,” as distinct from the “Dependent Web.” In my original piece, I state:

The Dependent Web is dominated by companies that deliver services, content and advertising based on who that service believes you to be: What you see on these sites “depends” on their proprietary model of your identity, including what you’ve done in the past, what you’re doing right now, what “cohorts” you might fall into based on third- or first-party data and algorithms, and any number of other robust signals.

The Independent Web, for the most part, does not shift its content or services based on who you are.

Yahoo, for example, will show you one of a possible 38,000 home pages, depending on who Yahoo believes you to be. Yahoo Mail (or any other mail, for that matter), is an utterly dependent service: it will only show you your mail (we hope). Facebook, of course, creates an entirely different experience for you than it does for me, because what Facebook shows us depends on who Facebook thinks we are. And search, in general, is a dependent service – what you see as results depends both on what you input as a query, as well as who the search service believes you are (personalized search).

And while I believe this idea of a dependent service being defined as “one that changes depending on its profile of you” is important, this isn’t the only feature that distinguishes Independent sites from Dependent ones.

Another way to understand the distinction is that Dependent sites tend to be ones we, well, depend on for some basic service in our lives. You might depend on Yahoo or Google for mail. We depend on Facebook for our social graph, and Twitter for our “interest graph.” Of course we depend on Google (or Bing) for search. And I’m starting to depend on StumbleUpon to surface sites I might like.

In fact, most of us “depend” on Dependent-web services to discover independent sites – a fact we may as well call “the interdependence of the independent and dependent web.”

Whew. We employ both kinds of sites, and each type depends on the other for value. What would Google be without the billion points of independent light out the rest of the web?

Not much, to my mind, and I think that’s essentially the point of both Fred’s call out today (see his piece on The Independent Web) as well as his partner Albert’s advice to Larry Page.

The funny thing is, Dependent web sites crave the dollars that big marketers spend on branding, but their services don’t complement brands, in the main. Yet up until recently, brands haven’t have many other places to spend their dollars online (brands love scale), so they’ve spent them at large dependent web services, and, in the main, bemoaned their comparative weakness to television. Yahoo Mail is a famously terrible place to put brand advertising. Google is a direct marketing machine, but it’s not a great environment for brands. Brands love Twitter and Facebook, but are still trying to figure out how to leverage those services at scale – Facebook’s “engagement ads” are not exactly brand friendly, though they can serve as great distribution for a branded story somewhere else (same for Twitter’s promoted services).

So where does that brand story live? My answer: On the Independent web.

Consider the sub-category of “content” on the web. It’s a very large part of what makes the web, the web – millions of “content sites,” ranging from the smallest blog to ESPN.com. Most of these sites don’t change what they show us depending on who they think we are. So does the “independent/dependent/interdependent” framework help us distinguish anything interesting here?

I think it does. To me, an independent content site is one driven by a sense of shared passion around a subject or a voice, one that a consumer independently chooses to visit and engage with.

Publishers pay close attention to what visitors choose to do independently on our sites – we covet “repeat visitors,” “high engagement,” and “low bounce rates.” Do visitors come back independently, or do we, as publishers, depend on acquiring one-time traffic from SEO, SMO, or other “tricks”? Once visitors come via a dependent service like search or social or StumbleUpon, do they independently elect to consume more than just the one page they’ve landed on?

When it comes to “engagement”, dependent sites tend to have more of it, at least if you are measuring in user minutes. Folks stay on Facebook for a long, long time. Twitter users go back over and over again, especially power users. The average Google user goes back again and again. Most of Yahoo’s engagement is in mail – take mail out of Yahoo, and Yahoo would lose a huge chunk of its user minutes.

But there’s a big difference between engagement on a dependent site, and engagement on an independent site. And in a word, that difference is what makes a brand.

When we engage with content, we engage with a shared narrative – a new story is told, an old story is retold or re-interpreted. And that shared narrative shifts what we believe and how we see the world. We are in the space of shared symbols – brands – and it is in this space that marketers can tell their stories and shift our perceptions.

I’m fascinated by how brands can leverage Dependent services in conjunction with the Independent web, and if there’s one conclusion I’ve come to, it’s this: Brands must be robust actors in the Independent web, underwriting its ecosystem and participating in its ongoing creation and curation. It’s not enough to “have a presence in Facebook” or “do an upfront with Yahoo and Google.” Brands must also engage where ideas and narratives are born and shaped – and learn to join the Independent web.

Sure, that idea is self-serving – FM’s tagline is “powering the best of the Independent web, at scale.” But that doesn’t mean we don’t love us some Dependent web services. We’ve been pioneers in working with all kinds of great services, from Digg in 2006 to Facebook Platform in 2007; Twitter in 2008 to Foursquare in 2010. If you’re going to succeed as a publisher or a brand on the web, you need to work with both. They’re interdependent, and wonderfully so.

Some might argue that you never need to leave a particular service or domain – that you can “get all you need” in one place. I certainly hope not. That sounds like a movie we’ve seen before, and don’t need to watch again.

Make My Baby – Is The Baby Facebook? Updated: No, It's Myspace…

By - January 18, 2011

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Over the weekend, as I pondered an eMarketer report estimating Facebook’s advertising revenue at $1.86 billion (seems low), I wondered to myself: When will Facebook start to drive the kind of widespread graymarket activity which proved Google’s immense worth? Or will it ever?

Allow me to explain. Back in the days when Google and its rival Overture were on the rise (this would be pre-IPO for Google, so around 2002-3), an army of small time arbitragers were gathering, leveraging Adwords (and in 2003, Adsense) to make money in any number of ways. But the basics were pretty easy to grok: Say you could purchase a click on Adwords for the term “cute kitty” for fifty cents. And say further that when someone clicked on your Adword, they’d show up at a third-party site, and 10 percent of the time, they’d follow instructions to fill out a mortgage application. And say that further, you could sell that filled-out application to a lender for $15.

If you do the math – ten clicks costs you $5 on Adwords, but you make $15 for selling that lead, which converts one in ten times – it explains why a huge business sprang up around Adwords and Adsense. If you are paying attention, redirecting attention from cute kitties to mortgage brokers will pay extremely well. The same proved true for all manners of lead generation, from cel phone plans to life insurance to automobiles.

It’s legal, but it leaves a kind of queasy feeling in your stomach, don’t it?

Now, just that feeling has risen up around Facebook advertising in the past (in particular around social gaming), but I was waiting for it to break out full blown into the “real world” outside of Internet ponziland. When would Facebook become a hotbed of affiliate arbitrage across the board? To me, that would be a sign that Facebook was breaking out just like Google did in 2003.

So it’s funny how this story from RWW breaks just this weekend. And funnier still how it’s all about Google’s competitor, Bing, which has changed the economics of the Internet advertising ecosystem by pricing conversions well above previous floors. It’s all just too rich. Literally. (Google’s Matt Cutts points this out in his own way right here).

The details: RWW found the fact that a random website called “Make-My-Baby.com” was the third largest advertiser on Facebook in Q3 2010. Turns out, it’s an affiliate play driven by Microsoft Bing bounty money. In short, Microsoft offers a certain amount of money, per user, to anyone who can convert that user into a Bing customer. The company behind Make My Baby, Zugo, seems to be a vintage arbitrageur. In fact, Zugo hasn’t even updated its terms and conditions, which date back to 2009 and seem cut and pasted from a program they ran in England doing for Ask.com that they are now doing for Bing.

Clearly, Zugo has found that buying ads on Facebook pays well. The question remains, however, whether that is true for a whole new class of arbitrageur.

Ah, me loves me some Interwebs.

Update: Bing has terminated its relationship with Zugo, SEL reports. And Zugo was using MySpace inventory, NOT Facebook….

No, In Fact, We Haven't Seen This Movie Before

By - January 13, 2011

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Thanks to monster private financings from Groupon and Facebook, as well as the promise of major IPOs from Demand, LinkedIn, Zynga and others, the predictable “watch out, here we go again” buzz is rising up in the press. This article from Ad Age, subtitled “With Billion-Dollar Dot-com Valuations Back in a Big Way, It’s Time for Alarm Bells to Start Ringing,” is typical of the bunch. With a “we’ve seen this movie before” tone, it points out that most of the successful companies of today had models that were tried ten years ago, and in the main they failed.

But I’d like to point out a couple pretty obvious differences between the dot com busts of a decade ago, and the companies that are now earning billion dollar valuations. To wit:

- Each of the companies earning these valuations have revenues in the hundreds of millions or more, and operating profits in the tens of millions, if not more. Most also have operating histories of many years, and/or executives and boards who have extensive histories operating in the Internet economy.

- The markets overall have changed dramatically, on many different fronts. First of all, nearly every consumer in the developed world is comfortable spending money using the web. Second, the web is firmly a mobile medium, enabling business models that were mere dreams a decade ago. And third, the markets have been mostly closed to public investment in the “Internet thesis” for most of the past ten years, so there is a very strong pent up demand to invest in what many see as the future of how business will be done.

Combine these factors and you have what I view as a pretty solid environment: a strong demand for quality companies, and quality companies to fulfill that demand. Is $50 billion too high for Facebook, or $5billion too high for Groupon? Well, we’ll see. As the initial surge of IPO demand abates, newly public companies will prove their value in the long term by delivering growth. At least they have strong platforms of revenues and profits, as well as extraordinary market positions, from which to start. Remember, Google went public in 2004 at under $100, and nearly everyone thought the company was overvalued.

Back in the dot com era, most retail Internet investors were buying on the come, on promises that the hand waving and affirmations of Web 1.0 entrepreneurs would magically come true. Almost none of the companies that went public back then could boast the metrics today’s private winners do. Truth be told, the promises of the Internet hand wavers are coming true, but for investors in the 1990s, it’s a decade too late.

We’re in an entirely different place, as an industry, than we were ten years ago. I very much doubt we’ll see the same mistakes made again. If money losing companies with nothing but an idea and some VC backers manage to go public, I’ll be the first to write a post about our collective amnesia.

And this is not to say that marginal companies won’t attempt to go public in coming years, or that there won’t be flameouts and losers over time. There always are. But compared to the late 1990s, the companies lining up to offer themselves to the public look healthy, well positioned, and very, very real.

Predictions 2011

By - January 03, 2011

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InnostraD-tm-3-tm-tm-tm.jpg the eighth version of my annual predictions, I’ll try to stay focused and clear, the better to score myself a year from now. And while I used the past two weeks of relatively fallow holiday time as a sort of marination period, the truth is I pretty much just sat down and banged these predictions out in one go, just as I have the past seven years. It works for me, and I hope you agree, or at least find them worth your time. So here we go:

1. We’ll see the rise of a meme which I’ll call “The Web Reborn” – a response to the idea that mobile and apps have killed the web as we know it. In fact, we’ll come to realize that the web is the foundation of nearly everything we do, and we’ll start to expect, as consumers, that all our service providers honor and build in basic principles of “web friendliness” – data portability and user-controlled identity most important among them. Call it a return to the original principles of “Web 2.0″.

2. Voice will become a critical interface for computing (especially mobile apps). This is just not true now, but in a year’s time, there will be a handful of very popular apps that are driven by voice, and in particular, by weaving together voice, text, and identity.

3. DSPs (Demand Side Platforms) will fade into the fabric of larger marketing platforms. In the end, DSPs are the handle by which we understand the concept of technology-driven ad networks. And those have been with us for over a decade. Exchanges, DSPs, SSPs, etc. are all important, but in the end, what matters is that advertisers have scale and efficiency, and consumers have control.

4. Related, MediaBank will emerge as a major independent player in the marketing world, playing off its cross channel reach (outside of digital) and providing an alternative to the conflicted digital platforms at Facebook, Microsoft, Google, and Yahoo. I could imagine a major tech or telco player trying to buy MediaBank as the world realizes that marketing is, in essence, a massive IT business (among many other things).

5. The Mac App Store will be a big hit, at least among Mac users, and may well propel Mac sales beyond expectations.

6. Related, Apple will attempt to get better at social networking, fail, and cut a deal with Facebook.

7. Also related, Apple will begin to show signs of the same problems that plagued Microsoft in the mid 90s, and Google in the past few years: Getting too big, too full of themselves, and too focused on their own prior success.

8. Microsoft will have a major change in leadership. I am not predicting Ballmer will leave, but I think he and the company will most likely bring in very senior new talent to open new markets or shift direction in important current markets like media/marketing/social.

9. The public markets will be surprisingly open to major new Internet deals, despite the current rise of “private IPOs” and the growing belief that the IPO process is broken. In the end, there’s just too many good reasons for public companies to be, well, public. (See Gurley).

10. The tablet market will have a year of incoherence. Apple will dominate with the iPad due to a lack of an alternative touchstone. Google will focus on providing a clear, consistent experience through Android for tablets and mobile, but it will take a third party to unify the experience. I don’t see that happening this year.

11. “Social deals” will morph to become a standard marketing outlet for all business, and by year’s end be seen as a standard part of any marketer’s media mix. Groupon will lead here, but nearly every major player will have an offering, often by partnering with leaders. I’m tempted to say Facebook will abandon its own Deals offering for a deal with Groupon, but I’m not sure that will unfold in one year.

12. Related, Groupon will fend off an acquisition by a major carrier, probably AT&T or Verizon. It’s possible they’ll sell, but I doubt it.

13. Facebook will decline as a force in the Internet world, as measured by buzz. The company will continue to be seen as Big Brother in the press, and struggle with internal issues related to growth. Also, it will lose some attention/share to upstarts. However, its share of marketing dollars and reach will increase.

14. Related, we’ll see major privacy related legislation in the US brought to the floor of Congress, and then fail for lack of consensus. But that will drive a significant shift in how our culture understands its relationship to the world our industry is building, and that’s a good thing.

I’d love to keep going, but I think those are the major ones, at least from my vantage point. Thanks for reading, it was a great year. I’m not going to make predictions about my own work this year, as I’ve got too much inside knowledge on that topic! Let me know your thoughts in comments, and have a great 2011!

Related:


Predictions 2010

2010 How I Did

2009 Predictions

2009 How I Did

2008 Predictions

2008 How I Did

2007 Predictions