The Praized Blog

To finish this week’s series on business models atomization, I’d like to address the situation where media has been completely atomized. I think that happens when individuals start becoming media themselves, broadcasting “news” through their blogs, Twitter tweets or their Facebook status updates. That concept, explored last summer in my famous “I am Media” blog post really resonated through the blogosphere. What I missed at the time was the corollary:

If I am Media, I am also Advertising.

I remember being very annoyed by the first Facebook Beacon implementations. I gave them a good scolding and wasn’t happy with the way I was depicted, becoming a “Blockbuster spokesperson”. My friend Perry challenged us to think further about these experiments. In my blog post comments, he said: “In order for them to win, urgently, they need to push the envelope on new ad product models. I think the model of stepping “meaningfully” over the line and then back gets them more forward motion.” He was right but I’m not sure the Facebook folks have learned anything yet…

Facebook Beacon is an amazing idea but it’s really badly executed. In a world where individuals can become media, Beacon could be the “AdSense for People” but it needs to be completely reversed.

Facebook should:

1. Give user control over which ad appears in their newsfeed (i.e. which brand/service you’re endorsing) and when it appears.
2. Share revenues with the user using a performance-based model.

There are obviously a couple of massive challenges with this model. The first one is Facebook does not yet have the inventory of word-of-mouth ads to make it really interesting for users. The second one is “spwom”, individuals “selling out” to brands they don’t believe in, which would be the equivalent of spam for word-of-mouth recommendations. But I believe there might come a time when recommenders get rewarded for talking about their favorite products or places…

Continuing our series on the atomization of content and business models, today I look at the newspaper industry.

First, from the user point of view: online (vs. the print version), it’s much more difficult to find the glue that will make your news container (your URL) stick together. if you have a strong brand (the New York Times, for example), people will navigate directly to your site but readers can now access your content via RSS readers, blog posts and news aggregators like Google News. These have been flourishing, reorganizing newspapers’ articles (the new content atoms), into flexible reading formats. For newspapers, it’s a catch-22. You want to be indexed by news aggregators to drive traffic back to your site but you wonder if you’re losing brand equity at the same time. Efforts at trying to get readers to register to newspapers’ sites (to generate potentially valuable socio-demographics information) have been a major failure. Clearly, the only strategy now is building a strong brand online while allowing readers to access your atomized content via a variety of vehicles but that creates problems from a monetization point of view.

Traditionally, the newspaper business model has been found in these three revenue categories: reader subscriptions, traditional display advertising and classifieds. Except for a few exceptions (the Wall Street Journal comes to mind), experiments in paid online user subscriptions have been failures as digital content is much more difficult to sell as an aggregate than print content. Classified revenues are being nuked by free sites like Craigslist or Kijiji, or aggregators like Oodle. Newspapers have been also forced to offer free classifieds, managing to generate some priority placement /enhanced content revenues but not to the previous print level. Online display advertising is working but it does not monetize as well as print advertising.

To better monetize their destination site, newspapers have been looking at various new solutions. One is in-line text ads (double-underlined sponsored keyword ads appearing directly in the article text) delivered by companies like Vibrant Media but, as I mentioned yesterday, the blurring of the line between editorial and advertising content has created ethical issues within news organizations. Already in 2006, in an article called “Is It News…or Is It an Ad?”, the Wall Street Journal exposed the various issues around the product:

“This type of online advertising within the text of an article, known as in-text advertising, has been around for a while. But it used to be relegated to niche sites like the videogamers’ haven IGN.com and ScienceDaily.com. Now it is appearing on some mainstream journalistic Web sites, like those of News Corp.’s Fox News, Cox Enterprises Inc.’s Atlanta Journal-Constitution and Hearst Corp.’s Popular Mechanics magazine. That marks a departure from a long-observed tradition in the print medium of keeping editorial content separate from advertising. “Journalism ethics counselors decry the trend. “It’s ethically problematic at the least and potentially quite corrosive of journalistic quality and credibility,” says Bob Steele, the senior ethics faculty member at the Poynter Institute, a journalism school in St. Petersburg, Fla.”

More recently, Tim McGuire from the Walter Cronkite School of Journalism in Arizona wrote about its use in the Arizona Central web site:

Michael Coleman, Vice-President of Digital Media for AzCentral, told me late Friday that the site has been using Vibrant Media for “two or three weeks.” Coleman described the relationship as a test and said this is not a “Gannett roll-out” of the concept even though some Gannet papers are using the system. “We’ve got a pretty non-committal contract with them, Coleman said. “The publisher made the call, and we decided to try it and see what happened.” Coleman said the experimental aspect of the deal explains why nobody has announced this deal.

Business Week wrote about the phenomenon in December:

Many journalists believe that selling the words in a story blurs the line between editorial and ad content. Some worry it creates an incentive to insert ad-linked words or order up certain types of stories. Forbes’ online arm caused a ruckus in 2004 when it rolled out in-text ads. After an outcry among the editorial staff and negative media coverage, Forbes ended the practice. (…)

Publishers are paid by Vibrant and other marketing companies based on how many times readers scroll over a word. Advertisers only pay Vibrant for how many times a reader actually clicks on an ad. In-text ads draw a higher response than traditional Web ads: About 0.2% of Web users click on posterlike ads known as banners; Vibrant CEO Douglas Stevenson says 3% to 10% scroll over and click on in-text ads, depending on the category.

I think the use of in-line text ads might be problematic thus far because newspapers have been using the technology to better monetize their destination site. I would suggest that the better use of this new ad vehicle would be to monetize a smaller atom of content, i.e. the news article, decentralized from the destination site. Embedding in-line text ads within RSS feeds or other distribution mechanisms might be a small price to pay to allow readers to access news article outside of the newspaper’s site. Another option would be to have RSS ads, like the Feedburner Ad Network.

I think the general takeaway here is that newspapers shouldn’t look at the same business models to monetize centralized and atomized content.

Update: The Kelsey Group discusses “Newspaper Next 2.0, a “progress report” by the American Press Institute on the evolution of newspaper companies beyond the print edition.” I took a quick glance at it (it’s a 110-page document) but it does not seem to address many of the business model issues that newspapers are facing. As my friend Peter K. says in the post, “The report has a better fix on consumer-oriented solutions than business solutions. But that’s not surprising for a newspaper industry (i.e. editorial-driven) product. If the Yellow Pages Association commissioned similar research, it would probably be the other way around.”

Yesterday morning, I had the opportunity to moderate a social media panel at the Infopresse conference on social networking. Sitting on my panel was Guillaume Bouchard from NVI, a Montreal-based SEO/SMO firm. He explained to the crowd of more than 280 people how, by using social media tools, he manages to generate brand awareness and increase the online street cred of Canpages, a Canadian directory company competing against Yellow Pages Group in Canada.

It starts with the creation of original and quirky content in the Canpages blog. His team then seeds that content in the various social news sites like Digg and Reddit. Working with a large network of friends and contacts, he’s able to catch the eye of online influencers who might (or might not) promote that piece of original content.

His best success so far with Canpages has been this blog post about “Weird Canadian Restaurants”. It was submitted to Digg and generated 676 diggs and 101 comments. It was promoted to the first page of the site and generated good traffic (he did not disclose how much) for the Canpages blog. It was also favorited by people in StumbleUpon, another social tool that has the reputation of driving a lot of traffic. The post was well enough crafted to be picked up by Dan Mitchell from the New York Times, which generated some more traffic to the Canpages blog.

What it means: a great use (and a great understanding) of social media tools and sites to build a new directory brand and make it more exciting for “cool kids”. This is also a great strategy to build new incoming links to your domain, thereby increasing your page rank in Google. You’ve got to wonder though if there are long-lasting positive effects from both a brand equity and online directory site usage but I don’t think it hurts given the runner-up position they occupy in the market.

During the first edition of StartupCamp Montreal on Wednesday night, keynote speaker Graham Hill of TreeHugger.com fame offered 9 lessons web entrepreneurs should take heed of.

1. The best predictor of future behavior is past behavior. Humans don’t really change. If something feels wrong, it probably is.
2. Incentives drive the world. For employees, for business development, etc.
3. Truth is told at cash registers and not in focus groups. Look to the data and test a product by selling it.
4. Listen to Fred Wilson.
5. The network is the computer. It has to be open and all about online applications. Think Gmail, Last.fm, Mint.com.
6. Think product first, marketing later. This new connected world takes care of a good portion of marketing if you have a great product.
7. Barely enough money is a good thing. It keeps you hungry and makes you focussed. Helps you find what’s the core of your business.
8. Companies are bought not sold. It might be a cliché but it’s true. Play hard to get.
9. Good guys win in a connected world. Media has been democratized and spin control does not exist anymore.

“Gizmodo’s poor judgement amazes me. Not only do they give bloggers in general a black eye. But they are gadget guys and this is the biggest show of the year for them.”

Shel Israel commenting on the Gizmodo team CES prank. The Gizmodo editors went around the Consumer Electronic Show floor shutting down TV screens with a remote control during demo presentations. Many conference organizations already think that bloggers shouldn’t be considered “journalists” and be invited to cover paid events. As such, we should not be giving them more reasons to think that. In any traditional media, these guys would be gone in an instant. There’s a reason we call it pro-blogging…

During the Holidays, I met with my friends and family multiple times and one topic of conversation that came up very often was Facebook. “What’s Facebook?” my mom would ask. “Why are people so fascinated with it” my brother-in-law would add. “It’s useless” or “it’s a waste of time” would also come up very often. The proof of the whole uselessness was the “poking” and the “sending my friends a virtual beer” examples. I tried explaining Facebook the way I’ve explained it many times in this blog but I quickly realized I was getting nowhere. My friends and family members that thought Facebook was useless wouldn’t change opinion even after I explained my big social media theories. “I am Media” did not fly as well in the offline world as in the blogosphere.

What was I doing wrong??? And then it hit me…

Facebook is just a game. That’s it, that’s all.

Yes, it’s a game. Out of the 60M+ monthly active users, most of them are there to have fun, hang out with their friends and reconnect with old ones. Only a few thousands (like Scoble and me) are using it as a broadcasting platform, sharing interesting links, discovering new ways to market products, services and ideas.

So if it’s a game, it must be a complete waste of time, no? No.

Why? People are learning while they’re playing. Remember my blog post showing the speeding up between the introduction of new communication tools? This generation will have to learn two, possibly three new communication tools in their lifetime. E-mail was definitely one of them in the ’90s. And now the next phase of learning is happening right before our eyes and we don’t realize it. Facebook users are discovering social media’s opportunities and pitfalls. They’re learning to blog and micro-blog, post pictures and videos online, They’re learning the proper etiquette in a social media environment. And it’s beautiful to watch.

So, is Facebook relevant today? Yes, like training wheels when you start riding your bike. Will it be relevant in the future? Maybe, maybe not, but that’s not important. The key is that a whole cohort of web users will be ready for the next evolution, the social web.

Pew Internet just released a fascinating study called “Teens and Social Media”. Teens are clearly embracing the conversational aspect of the web and are precursors to the way we will use the Internet in the future.

Highlights & data points:

• 64% of online teens ages 12-17 have participated in one or more among a wide range of content-creating activities on the internet.
• 39% of online teens share their own artistic creations online, such as artwork, photos, stories, or videos.
• 33% create or work on webpages or blogs for others, including those for groups they belong to, friends, or school assignments.
• 28% have created their own online journal or blog.
• 27% maintain their own personal webpage.
• 26% remix content they find online into their own creations.
• 55% of online teens ages 12-17 have created a profile on a social networking site.
• 47% of online teens have uploaded photos where others can see them.
• 14% of online teens have posted videos online.

Additional insights:

• In the midst of the digital media mix, the landline is still a lifeline for teen social life. Multi-channel teens layer each new communications opportunity on top of pre-existing channels.
• Email continues to lose its luster among teens as texting, instant messaging, and social networking sites facilitate more frequent contact with friends.
• Posting images and video often starts a virtual conversation. Most teens receive some feedback on the content they post online.

For more information, here’s the full report (.pdf).

What it means: more crystal-ball gazing. This net-native generation will completely change the web. Embrace these trends to be ahead of the curve.

In business blogs everywhere, it’s that time of the year again, when we start looking back at the year that was and we start to forecast what 2008 will look like. In this post, I look back at 2007 and discuss the most significant local and social media news of the year.

1) Facebook

Clearly, Facebook was the number one news of 2007. By allowing anyone to open up an account in the Fall of 2006 (at about the same time they introduced their newsfeed function), Facebook paved the way for the arrival of tech enthusiasts and early adopters/influencers. Silicon Valley got very excited in the Spring and the launch of the F8 platform in May, allowing third-party developers to build applications, brought more excitement. I believe early adopters’ interest in Facebook has peaked (and has even started to decline) but the job is done. More than 55M active users of all ages access the site every month. The social network had a couple of setbacks around the end of the year with the beacon fracas and the launch of OpenSocial by Google but I believe it does not tarnish their luster. Facebook retaliated by opening up their infrastructure. The biggest benefit to the Web in general: Facebook is introducing people to the social web (micro-blogging, blogging, pictures uploading, “friending”), people who will eventually graduate to more complex social applications.

2) The opening up of the social web

Symbolized by the publication of the OpenSocial standard, the web is becoming more social and more open. Additionnally, the announcement by Six Apart that Movable Type, their leading blogging software, is going open source and the launch of the DiSo initiative to create open source implementations of distributed social networking are also important projects. Social will be part of the fabric of the web.

3) The launch of the iPhone and the unveiling of Android

Apple created quite a stir in June by launching the iPhone, a beautiful device that changes the way we see mobile web access. It’s not a perfect machine by any mean (still very closed) but it’s a game changer. The Android mobile platform by Google is also potentially very disruptive and paves the way to an interesting 2008 in that field. Local mobile search, the famous holy grail of local search, is on the verge of becoming reality.

4) The acquisition of Ingenio by AT&T/YellowPages.com

This purchase is a critical move for YellowPages.com and it clearly signals to the rest of the directory industry that call-tracking/pay-per-call will be the unifying standard in local product bundling, allowing a single sales force to sell multiple media formats. In the same vein, Marchex acquired Voicestar earlier this year.

5) The Radiohead “pay what you want” experiment

Even though it wasn’t as radical as industry watchers wanted it to be (Radiohead is still going to release a CD version of InRainbows), this trial by one of the most preeminent alt-rock group generated a lot of discussions in the blogosphere. Consumers were allowed to pay whatever they wanted to pay for the download including not paying at all. ComScore released some disheartening information about the percentage of people who paid for the album but that was quickly shot down by Radiohead’s management. In any case, the music industry needs more bleeding edge experiments like this one to find their future business model(s).

6) Reality check in the local search industry

The last two Kelsey conferences offered a sobering and realistic look at the realities of local search. Local is tough, hasn’t been cracked yet but offers tremendous opportunities. Stakeholders are realizing that partnerships will be needed to succeed. Two senior executives from the print directory industry talked openly about the opportunities and challenges of being a traditional media publisher and it was the first time that we heard that kind of discourse publicly. Google, Yahoo and Microsoft are all courting traditional local media companies that possess large sales forces to help them increase local revenues. I think we’re getting close to the “acceptance” stage of the Internet grief cycle and we should see a lot of action next year on the local search front.

I’d love to get your feedback on 2007 events. Anything important I forgot?

According to Keller Fay Group (via the Center for Media Research), there are 3.5 billion brand-related conversations per day in the U.S. 8% (280MM) of those are happening online. Let’s speculate for an instant. If 25% of those online conversations are local in nature, that means an impressive 70 million local conversations are happening online every day in the US in e-mails, instant messenging, blogs, forums, social networks and other online communities.

Let’s equate these conversations to local searches and compare them with ComScore “IYP” searches. According to this article from SearchEngineLand, these totaled 808MM in the US in Q1 2007. In a three-month period, 6.3 billion local conversations are potentially happening online. That’s 7 times the total “IYP” searches universe! And a whopping 35 times the total of the current leader, Yahoo!

What it means: for anyone who doubted that local search was very fragmented online, I think these numbers speak for themselves. In addition, the ability to deploy a social media strategy for anyone operating in that space is key.

Chris Anderson, editor-in-chief of Wired Magazine, created quite a stir this week by announcing he will be blocking the e-mail address of anyone who sends him any non-relevant releases and messages. He added oil to the fire by publishing on his blog the e-mail addresses of more than 100 people who did that in the last 30 days (he says he receives 300 e-mails a day). To make himself clearly understood, he added “So fair warning: I only want two kinds of email: those from people I know, and those from people who have taken the time to find out what I’m interested in and composed a note meant to appeal to that (I love those emails; indeed, that’s why my email address is public).”

David Meerman Scott, a well-known online marketing strategist and writer, says he gets “several hundred unsolicited press releases and PR pitches every week. Well over 99% of them are not targeted to me, instead they are sent to me because I am on various PR people’s lists because of this blog, because of my books, and because I am a contributing editor to EContent Magazine and have written for a bunch of other publications. I’m getting the identical piece of spam email as hundreds of other poor journalists.”. He adds “most PR people are spammers”

Flickr photo by Freezelight.

At the same time, Google pre-launches its OpenSocial initiative via influential bloggers who were involved in the project. New-York VC Fred Wilson says: “Google’s launch of open social is interesting. They pre-launched it in the blogs and are getting top bloggers who are also their partners, like Marc Andreessen, to do some of the work for them. It’s smart. Marc’s company Ning is one of the leading partners for open social and I think Ning will benefit greatly from it. So he’s going to promote it because of pure self interest. Which is fine, in fact it’s preferable in my book.”

What it means: you have in this blog post two extreme examples of what to do and what not to do PR-wise. Will Chris Anderson’s reaction create a snowball effect? This could be the beginning of something very ugly which would lead to a major reform of how online PR works. At the same time, this seems like a great business opportunity to build an online marketplace to properly match releases/news with appropriate editors/journalists/bloggers. Anyone interested?