John Battelle's Search Blog

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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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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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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