Bambi Francisco

In the Internet era...

In the Internet era, it’s not about getting millions to read articles from a few paid experts. It’s about making millions of people volunteer experts. It’s not about getting millions to watch one program with a few stars. It’s about getting a few people to watch millions of programs with millions of stars.
Moreover, it’s not just about getting users to express themselves, but providing the means to let users connect with each other.

(This is an excerpt from a Net Sense column I wrote. Often times we forget what we had written in the past. A blogger had picked this up from my column, said it was interesting. So, I thought I'd take note of it again and share it.)

Mobile social networks

If you want to see where your kids will be spending their time in the future, take a look at Gemini Mobile’s platform that lets carriers offer their subscribers a social networking community on their phones. Essentially, the service is a mobile community – a MySpace on the go, but for more virtual reality. The platform is called eXplo, and it powers SoftBank Mobile’s S! Town. S! Town is pretty neat. A subscriber can have an avatar that walks around this virtual world. In the demo I was given, Michael Tao, Gemini Mobile’s CTO, had a black anime as his avatar. His avatar strolled through S!Town’s virtual town center, which was quite deserted, given that it was 4 am in the morning in Japan, where this service is available. At first, it seemed pretty silly and useless to be walking around this deserted town. But then Michael bumped into several females (or at least one might think they were female because their avatars were female). Michael tried to befriend them, while at the same time clicking onto a user profile to find out more about this person. All members have profiles that can be made public to the community. All community members can roam around this virtual town and meet other members. Watching this interaction was a bit frightening, especially when Michael could – with just a click of a button -- find out more about the person whom he was interacting with. When I was a little girl, I played tea with some dolls around a mini table. My future little girl will likely be playing tea on her mobile phone with (hopefully) other little girls. So, what's the business model? Consumers don't pay for the service. Rather they can buy content in the town. There are also advertisements on billboards in the virtual town. In 2007, the service is expected to be deployed with U.S. and European carriers.

The Web 2.0 cost - less control

Facebook is going to open up to the masses. Some rabble-rouser Facebook members are upset. But Facebook has no choice.  Even though it has 9.5 million members, that pales in comparison to the 100-plus million members that News Corp's MySpace has.  But here's the silver lining... well sort of.

Facebook founder and  CEO Mark  Zuckerber is likely learning a lessson. And, other Internet startups can learn from him as well. In the Web 2.0 world, control has been shifted over to the audience, or "community." Web 2.0 companies enjoy the fruits of that community labor. Web 2.0 companies haven't paid for the content created either. 

But everything comes at a cost. And, the cost in the Web 2.0 world may be less control.

For my full column, blog, video commentary and interview with Zuckerberg, go to:
My blog on MarketWatch

Google pays up for next generation

Google's $900 million deal with Fox shows that the search giant is willing to pay a hefty amount for the next generation of Internet addicts who tend to socialize as much as they search.

It's been no secret that News Corp been seeking a search partner for the inquisitive MySpace members, who'd been wont to search on Google after socializing on the virtual site. But as the popular social networking sites' traffic surged, so did its ability to leverage its audience. MySpace generated 23 billion pageviews from 45.7 million unique visitors in June, according to Nielsen//NetRatings. sk.com to see who'd offer up, among other things, the highest guaranteed upfront revenue for the MySpace and Fox digital properties' traffic. News Corp set last Friday as the deadline for bids. No one matched Google's offer, though MSN's was competitive.

Obviously, it turns out Google was the most aggressive and willing to capture this exploding network on the Web.

Here are the takeaways. It's great news for News Corp because it's leveraging its online traffic and, if it meets certain thresholds, will definitely beat advertising forecasts set for its digital properties in '07 and the following years. Also, MySpace gets to keep its members on its site searching, because apparently a good portion of them left to search elsewhere.

It's probably good news for Google, since it won't have to pay that revenue unless certain search and traffic. ich had been providing search queries for MySpace, which recently topped the search engine as the most visited site on the Web, based on pageviews. Obviously, MySpace users like to search. According to HitWise, about 10% of MySpace users left the social network and went to Google to search. That's search traffic that Yahoo, MSN or Ask could have had.

It's terrible news for MSN, which is trying to bolster its ad-search business with AdCenter. What was it thinking? To me, the fact that MySpace chose Google isn't that surprising, since I've been writing about this possibility for some time. Whatwill be pretty intriguing to watch from now until the deal is over, is the extent to which Google personalizes the searches on MySpace personal pages and group pages. Now, personal information and search information may actually merge.

Read the rest of my column on MarketWatch.

Paying up for MySpace

You have to wonder what Microsoft's (msn), Yahoo (yhoo) and InterActiveCorp's (iaci) Ask.com were thinking by letting MySpace go to Google. MSN has enough money and it's trying to validate its own search advertising platform. Yet it wouldn't pay up for MySpace traffic, which tend to go to Google to search.

MySpace had 45 million unique visitors in June, according to Nielsen//NetRatings.  And, about 10% of MySpace traffic leaves MySpace to go to Google, according to HitWise. Clearly, there was an opportunity for the other search engines to capture that search traffic. They let it slip away. Too bad for MSN, Yahoo and Ask.com. Also, Bill Tancer noted a while back that when MySpace had an outage, a lot of its users went to Google. Read Tancer's take.

Btw, if you were reading my MarketWatch blog today, you would have known the MySpace/Google deal was coming. It was posted before the close of the trading day.

Blogs.MarketWatch.com/bambi

Also, watch for my Net Sense column, in which I'll comment about the Google/MySpace and Google/MTV deal. Also, go to MarketWatch Tuesday for my video interview with FIM's Ross Levinsohn.
Watch out for my commentary tomorrow.
   

NBC embraces YouTube

YouTube - the online-video sharing service that exploded in popularity after showcasing unlicensed NBC content - managed to ink a marketing deal with the network.  As part of the deal, NBC will make a "small advertising buy" on YouTube's site. The deal runs for a season and includes a cross-marketing and a user-generated video component.   

It's not surprising. YouTube, along with every other emerging video channel or video-sharing service, has been trying to strike such marketing deals with major studios. Guba.com signed with Warner Bros. earlier this week. (Watch my video with Guba.com founder and CEO in my earlier post.)  But Google inked a deal with CBS earlier this year. And, that's not exactly working out so well. Who watches CBS shows on Google? That said, NBC is only putting promotions on YouTube, and not entire  programs.

To read more, go on my official MarketWatch blog at Bambi's blog on MarketWatch

Meanwhile, Guba.com also inked a deal with Warner Bros. earlier this week.

Watch my interview with Guba founder/CEO Tom McInerney

One-off moments in time

Compared with whimsical one-off moments in time captured on video, big media productions just don't seem to matter online. Take a quick scan at the top 100 most popular clips viewed on Google Video, and you'll note that a large majority are far from professionally produced. The No. 1 video, at this juncture, is a 13-second clip, titled "Girl caught cheating." Of all video sharing sites out there, one would think that Google's would be a place where branded productions could get attention. Yet without promotion on Google, CBS content apparently is getting lost in a sea of colorful photo thumbnails, seemingly far more popular if only because they ask little of our time. Consider another example.  The most recent Apple data shows that 30 million videos -- music videos as well as episodes of popular shows, like Desperate Housewives -- have been sold since October 2005, when Apple's store began to offer video. YouTube, the fast-growing video phenomenon, claims that 50 million videos are viewed each day on its site. Put another way, more than 2 million videos are viewed per hour on YouTube vs. 5,000 videos purchased per hour on iTunes, arguably the most successful distribution platform for digital content.

To be sure, statistics barely exist for video streaming and downloading. We rely on companies, like YouTube, to give us their internal numbers without really knowing what they're counting exactly. So, for now, we have to settle for video viewing stats that are decent at best, or entirely inaccurate at worst. The result: misguided conclusions.  For instance, MSN Video was the No. 1 video site ranked by unique visitors, followed by Video@AOL, YouTube and then Google Video. According to comScore, MSN Video had 14.9 million unique visitors in January 2006, or 5 times more than YouTube, with 2.7 million visitors. Yet over at Nielsen//NetRatings,

YouTube's audience figures were nearly twice as high, and MSN Video was doing worse. YouTube had 4.9 million unique visitors in January while MSN Video had 9.6 million, according to Nielsen//NetRatings. For those watching traffic data over the decade-long commercial life of the Internet, it's not a surprise that the numbers vary since the methodology at the research companies is different.The point remains that the imperfect data likely misstates the real activity of these self-produced, non-copyrighted videos.

While it's hard to be sure, I'd say there is a lot of overstating of true demand going on. That's because at least some of the activity at these video-sharing services can be attributed to spying (hundreds of rivals trying to find out just how video services are working), experimenting, pirating and double counting (the same video sent around and viewed on multiple sites or platforms). This is not the kind of activity one should extrapolate from; the Internet bust taught me that.

Read Net Sense on MarketWatch

Life is a stage

Pretty soon, our entire life will be a movie. Creating our own slide show and mini-movie just keeps getting easier. Next-generation photo/video-sharing services like One True Media  should help mainstream America move beyond static photo sharing to storytelling through video montages. I tested One True Media by uploading photos of my nieces and nephew, and a video of a friend and his son (see my examples to the left).  It took me about 20 minutes to navigate through the site, figure out which videos were compatible, select videos and photos, create a music video montage and  upload to my blog. Now that's quick.  The service is fairly straightforward. There's music to choose from to accompany your video montage, and you can upload with one-click. Another feature that's useful is that you can mail all your old video tapes - beta or VHS - and have OTM transfer them into a DVD. We've come a long way from the early days of photo sharing. One True Media's business model is subscription, the sale of hard goods, and soon it'll begin testing out advertising as well.

Wiki world

If you haven't noticed, Silicon Valley giants, like Google and Yahoo, and a host of two-man shops are attempting to fuse and apply the user-generated Wiki-model, the expert-driven About.com model and the social-networking News Corp's MySpace blog model. Whether all of this turns out to be the next growth engine for online advertising remains to be seen, but the end results are beginning to remind me of that most prosaic advertising vehicle, the brochure.

In some ways the collaboration involved in these efforts recalls the efforts needed to compile any reference work. In particular, it reminds me of Simon Winchester's two books: "The Professor

and the Madman: A Tale of Murder, Insanity, and the Making of the Oxford English Dictionary" and "The Meaning of Everything: The Story of the Oxford English Dictionary." I'm reminded of these books because in them we learn that it took hundreds of volunteers (including J.R.R. Tolkien) to contribute their knowledge to create this Bible for grammarians. In like vein, the Web services in development today - Google Co-op, Yahoo MyWeb (and other social media services), ShopWiki, Squidoo, JetEye, Plum, Kaboodle, WikiOutdoords, Wikia, WikiHow, WikiTravel, World66, to name a fraction of the ones that exist or are in the making -- expect contribution from passionate people who will share knowledge simply for the sake of sharing. But unlike that massive undertaking to publish one universal reference for words, today's Web efforts aren't a comprehensive dictionary so much as a tapestry of, well, online brochures.

Admittedly, the creation of brochures sounds absolutely boring. And any contribution to such promotional material seems far less noble than submissions to the next edition of the Oxford English Dictionary. But it doesn't make these brochures less useful. They're big money generators too, though did you know that a 20-volume OED edition costs $1,600 a pop? Last year,

$31 billion was spent in direct marketing (which includes pamphlets, postcards and brochures), according to the Direct Marketing Association.

Read Net Sense on MarketWatch

 

Google's video exchange ambitions

Google is trying to get everyone -- and I mean everyone -- to create video advertisements.In fact, if you're a job candidate seeking to get hired by Google, you might consider creating a video ad about yourself and bid against other marketers to place your smiling face on those gazillion blogs and publications that write about Google. This idea was first mentioned to me by Ryan Money, who started HireVue.com. But Google's Gokul Rajaram seems to think the video resume idea will work on Google as well. My money is on HireVue.com since I believe Google will be too distracted to provide the contextual environment job seekers need. Plus, I don't believe job seekers will want to pay for everyone watching their video resume.

But I think there is a place for such pay-per-click video ads, partly because the inventory for news and entertaining video (where these ads typically are placed) is scarce. Advertisers are clamoring to place ads on rich media. I know since I've been creating online videos for MarketWatch since 1999. Google is creating liquidity for advertisers (with video ads) by giving them a cheap alternative ($5 to $12 per CMP) across the blogosphere, where there is inventory. And, when the supply of entertaining video increases, Google will have already amassed the inventory of video ads.

Publishers won't mind these video ads as long as the ads are relevant. And, I believe they have the potential to be relevant and entertaining. The possibilities of what video advertising will look like tomorrow, and who will be advertising are scary, exciting, on the verge of ridiculous, potentially profound, and almost limitless. 

Google's ad video project has had mixed reviews across the Web, with many skeptical about the viability of pay-to-click video commercials. For those who have any doubt about how much video advertising will be created and viewed, think again. Videos will come from people and places unimaginable.  Will Swedish nannies start creating ads about their services and target blogs that only attracts readers who can afford such luxuries? If the potential salary covers the cost of their ad spend for those clicks, which it might, why not? If I had property in Lake Tahoe, I might take my relatively cheap video camera and create a video to showcase the property and upload it onto Google and target lifestyle blogs. 

My Net Sense column - which includes the rest of my observations -- received a lot of responses. I hope those who responded to my column also post their observations here for others to read.

Read my Net Sense on MarketWatch

Newspapers vs. News search engines

In 1846, as the new technology of the telegraph system was catching on, newspapers pooled their resources to create a more efficient news distribution system. Jim Kennedy, vice president of strategic planning at the Associated Press, which was born out of those efforts, says newspapers are facing a similar challenge today. "Fast forward 168 years later," Kennedy told attendees at a recent Las Vegas gathering, "that's the situation we face today." Translation: It's time for newspapermen to stop fighting among themselves and cooperate if they want to survive in the era of splintering audiences, and search-engine news gateways, such a P's Kennedy was spoke Friday alongside Tom Mohr, President of Knight Ridder Digital and Colby Atwood, vice president at Borrell Associates, a consulting firm specializing in local media. The panel was part of the Interactive Media Conference, hosted by Editor & Publisher and Mediaweek. 

The panel was titled "5-year forecast: See the Future Today," but from the comments made on stage, it might as well have been "The final days of newspapers." For offline newspapers, the writing is on the Web. Email delivery of national and niche news on our computers or on our BlackBerry devices has made it less of a priority to pick up a printed newspaper, especially when traveling. Why bother with the added weight? In 1949, newspapers accounted for 37% of the advertising market in the U.S., according to Atwood. Today, they account for 17% to 18%.

Given the choices people make on the Web, newspapers -- try as they might -- likely never will come close to having the same market share online that they once had in the offline world.

Atwood said that, surprisingly, newspapers still account for 35.8% of the online local ad marketplace, which he estimates to have been $2.4 billion in 2005. About 90% of advertisements in newspapers are local. Increasingly, those offline dollars are seriously at risk.

"There's a big race to go after local ad dollars," said Atwood. "I'd say newspapers will likely lose their share," he said. "They're not as well organized as the large dot-coms." Read rest of column on MarketWatch

Embracing MySpace

MySpace is speaking with Google and Microsoft about a search deal, according to the FT.  Such a deal shouldn't surprise anyone watching the evolution of social networks and search engines. What's surprising is that Yahoo is "less interested," according to the report. Yahoo already powers MySpace's search results.

Who will MySpace choose? I know Google is very interested.

On May 11, Google CEO Eric Schmidt told me emphatically that social networks don't make money, but that Google would like to help them make money. I asked Schmidt how that would work and whether Google would have to partner with social networks, like MySpace.  Schmidt smiled and said, "You can figure it out." Thus my conclusion in my Net Sense column two weeks ago. Google has moved into community-based searching. Communities are formed in social networks like MySpace. MySpace is seeking to build its own search engine or partner. Is there a partnership between Google and MySpace? Read Net Sense, May 11

And, is MySpace worth it? Yes. Read Net Sense, May 9: MySpace-engine.

Google's community search

Google's analyst day thoughts. 1) Google is testing out community-based searches along the lines of the companies I've been writing about, such as PreFound (Tuesday's Net Sense), Plum, Jeteye and Kaboodle. Google's Co-op product (in beta of course) is a way for thought-leaders, guides, experts to share their searches. Essentially, anyone can sign up by going to Google.com/coop and create a page of things they've searched for and assign or label it with a topic that can be searched by someone else. Similar to the other aforementioned services I had written about, I can create a topic, say "Hawaii" and put all the information I searched about into that page. Others can collaborate on that topic as well. That page is public for others to search on. As an expert on that topic Hawaii, I become a guide of sorts. It's the About model reborn. The difference is that these guides are found in a search paradigm. With Google's co-op program, the search giant can create verticals rich with information created by people. I think it's a great idea because communities do add a layer of relevance above and beyond what machines can do.
2) Google's Schmidt said that social networks are great, but they don't make any money. He was elaborating on a question I asked about whether MySpace having its own search engine would be a concern to Google. He said that he'd like to get involved with social networks by helping them make money. I asked if he had to partner with these communities, like MySpace. He just smiled, suggesting that I could probably figure out whether Google would want to or not.  3) I asked if Google is building AdWords for video, and whether he thought AdWords for video would work. He said that if someone invents AdWords for Google, he'd check it out. 4) I was testing out my Logitech Webcam to do video interviews. It worked fine when I interviewed Esther Dyson, but unfortunately, by the time I tried to interview Google executives, it didn't work. Oh well. Technology isn't perfect. For instance, all day Google's WiFi network failed to work.

Myspace-engine

If MySpace had a search engine, wouldn't that ruffle the feathers at Google, MSN and Yahoo? It's a question worth contemplating at a time when the online search industry's Big Three are spending billions to supply better search results, and in the process get marketers to spend more ad bucks on those search pages. Additionally, paid search -- estimated to be a $7 billion market this year -- could be the No. 1 revenue source for MySpace. You can bet that MySpace, the leading social networking site on the Web, will be making inroads into search soon. Rupert Murdoch is no dummy. Why else would his News pend nearly $600 million on MySpace and not go after the most lucrative and biggest part of the online ad pie?

As I pointed out in a recent column, MySpace is a whole new distribution platform that is changing the face of the Net. In March, MySpace recorded 19.4 billion page views vs. 13.7 billion at Google, according to Nielsen/NetRatings.   With MySpace's traffic so significant, I had a hunch that major sites like Google and Yahoo might also receive a lot of benefit from that traffic. That hunch was right. Google received 8.2% of its traffic partly from its search tools that appear on pages within MySpace, making the social network the No. 1 source of traffic to Google, according to Bill Tancer of online research firm Hitwise, who retrieved the data for me.

Read Net Sense column on MarketWatch

War of ideas

Do you see napkins flying around?

Watching the emergence of startups in Silicon Valley reminds me of 1999, when a plethora of two-person shops -- that got funding with just a business plan scribbled on napkins -- competed for the same mindshare and dollar. To some extent, the same frenzied environment is shaping up today: Competition is cutthroat for the same eyeball and the same buck.

Venture capitalists -- seeking to fund their own winner -- are investing in similar companies that essentially are doing the same thing. Look no further than video-sharing sites. Blue-chip venture firm Kleiner Perkins has Akimbo, which hosts more than 10,000 shows. Sequoia Capital has YouTube, whose most popular video was watched 9-plus million times. Every VC will have their own Internet TV startup, I’m sure. RipeTV.com -- the Web version of SpikeTV -- is expected to announce a round of VC funding soon, I hear.

VCs are filling the pipeline because they know traditional companies fear their extinction in the new media age and are hungry for ideas. And, while venture investors’ raison d’etre is to disrupt the status quo, in a twisted way, they’re competing with the startups they embraced only a few years back. Google, which was funded by Kleiner and Sequoia back in 1999, is trying to win in the video-sharing world with Google Video. 

The cash is plentiful on both sides. Last year, venture capitalists raised $24.2 billion, which was spread across 199 new funds, according to Dow Jones VentureOne. It’s the highest dollar amount raised since 2001.

Google has $8.43 billion in cash and cash equivalents. Yahoo has $3.8 billion in cash and cash equivalents, is also considering launching its own user-generated video service. Microsoft , which owns MSN and has $34.8 billion in cash and short-term investments, plans to launch its own video sharing service, code-named “Warhol,” that will integrate with its MSN Video and MSN Spaces services. At the same time this user-gen world is cluttering the media landscape, there's another kind of digital content being created as well. This time, it's from people who are already creating content for a living. They are those who have ties with traditional publishers and agents, but are now creating new content that can give them a greater piece of the pie. I call them free agents. IAmplify just got out of stealth mode about 3 months ago. This Manhattan-based company is helping these free agents. Read about iAmplify's business model on MarketWatch.

Read Net Sense on MarketWatch

Read NYTimes on Google/MSFT arms race

Read SJ Mercury News on eBay/Google strained relationship

Check out Yahoo's rival to CNet - Yahoo Tech channel

 

Facebook funding

Facebook received $25 million in funding for a $525 million pre-money valuation.

Nice work for Mark Zuckerberg, who in February 2004  started Facebook in his college dorm. Back then, he paid $85 a month for three months to get his startup going. Zuckerberg -- who turns all of 22 next month - told me once that if his idea failed, there's always Harvard, a fallback notion that Microsoft Bill Gates turned on its ear in 2004, on a visit to Cambridge, Mass. "I encourage you guys to take time off and do something... 'If Microsoft ever falls through, I'm going back to Harvard,'" Zuckerberg recalled hearing Gates say. Looks like Zuckerberg isn't going back for a while.  No wonder 50% of China's undergraduates received degrees in natural science or engineering vs. 15% in the U.S. (according to Lockheed Martin CEO Robert Stevens' opinion piece in WSJ). All the college students here quit before they get their degrees. For the record, Zuckerberg was a psychology major.

Read my Net Sense column on MarketWatch

What would you do? 1) Take the $750 million from Viacom, and work on your tan? 2) Take the $25 million for a $550 million valuation from Greylock, and work on building the business to create even more value to either sell at a higher price down the road, or... dare I say, go public!?!? (If you want to watch Mark, click onto startup interviews.)

Video explosion

Michael Eisner just invested in Veoh Networks - one of the many Internet video channels populating the Web. If  you haven't noticed, there's been an explosion of video channels, to meet our most idiosyncratic interests, exploding on the Web.  Want to know about Zardoz, the 1974 science-fiction film? Go onto Revver.com, and you'll find 321 videos that were tagged with the label "Zardoz." Theoretically, those videos should have some relation to Zardoz. If those videos were streamed one after another, so an Internet viewer could watch the videos passively, those video streams would be akin to a channel purely devoted to Zardoz. For those with a broader with a broader scope of interest, say, soccer, there is a channel for that too. Nike on Monday unveiled a television channel for soccer-crazed kids. It's an online channel through which Nike will try to use entertaining content to subtly sell its brand and products. It's a form of "marketing entertainment," says Hilmi Ozguc, founder of Maven Networks, a four-year-old startup creating the Internet channel for Nike.

What are the implications of such diverse creative bottoms-up endeavors? Oh, where do I begin? There are a lot.  Go to MarketWatch to read my Net Sense column.

Meat-market cleanup

One of my 10 Internet predictions for 2006 was a "meat-market cleanup" or "social-network crackdown." When I wrote this list on Dec. 28, 2005, I received a number of responses from those who disagreed. Well, looks like that prediction is coming true. Earlier this week, News Corp hired a security officer - Hemanshu Nigam - to police the largest social network on the Web, MySpace.

This is what I wrote last year: "Because of rising concerns that social-networking sites allow people to disguise themselves, and potentially harm unsuspecting members, there will be a social-network crackdown. As part of this, there will be new attempts to monitor members and to make sure that children don't gain access to these virtual meat markets."

MySpace undoubtedly needs a watchdog. It's inevitable that something unfortunate will happen in the virtual world. Earlier this week, I wrote about how far more public we've become because of the benefits received from sharing information. Someone will take advantage of that information, I'm sure. Until that perceived threat of danger becomes a reality, people will continue to share freely and abundantly.

Read my Net Sense on MarketWatch: Our privacy in exchange for...

 

The transparent society

Back in 2003 I gave a presentation to investors who wanted to know about Internet trends.  Truth be told, they cared less about trends and more about stock tickers. My last slide for that presentation was a picture of Tadao Ando's Modern Art Museum in Fort Worth, Texas.  Essentially, I ended the presentation by admitting that I was terrible at predicting trends. But what I felt strongly about was that we would become more transparent. Whatever the consequence of that would be, I didn't know. Based on their blank stares, they didn't know either. Nor did they quite understand why I was talking about transparent societies. If they could invest in such an idea, however, I'm sure they would have been all ears. Nonetheless, I left it up to them to decide what transparency means to them, and how transparency would change consumer behavior, and create demand for certain products developed by companies they may one day want to invest in. It's been a long time since that presentation. I finally got the chance to use that "Transparent Society" title in a recent column on MarketWatch.

Read my Net Sense column on MarketWatch

Once again, I wondered what the consequence of such a society would be. I think it's that we all get to know who we truly are at the core. And, I'm pretty sure it won't look all that pleasant.  Consider this, would you really want to see those photos of you during your bacchanalian days?  David Sifry - CEO and founder of Technorati - predicts that in 40 years, we won't be asking about whether the presidential candidates inhaled. Rather, we'll be asking: "What does his Facebook profile say about him?" Sifry thinks that transparency will make us all tolerant of one another. I agree. After all, we won't be able to hide from anyone. 

VC investing in search hits record

In 1999, a tiny unknown company received venture capital funding. Back then, 32 search startups received funding. It was the most active year for venture investing in the search space.

That was of course, until the last two years. Last year saw a record number of search startups get funded.In 2005, 47 search startups received an aggregate of $262.9 million in venture funding, according to VentureOne, a unit of Dow Jones. The dollar volume last year was the highest since 2000, when nearly $280 million was invested into 18 search startups. All told, $916 million has been invested in 130 search-related startups in the last five years, with 82 of those deals done in 2004 and 2005.

Last year's recipients include Feedster -- for blog, podcasts and news searches, X1 Technologies -- for desktop search, Onmeta -- a search engine focused on entertainment, and 4Info -- for mobile search, to name a few. 

Why are VCs pouring money back into search startups? Why not? As they say, "Let 1,000 flowers bloom."  Oh, and that tiny unknown search engine that received funding in 1999 was Google.

Read Net Sense on MarketWatch.

Let me know of any search companies you think I should review.

Jajah founder

Jahah, which received several million from Sequoia back in October, is getting traction these days. Co-founder Roman Scharf says his voIP service is as easy as searching on Google.
 

McClatchy's Triangle

Take a look at some of the local sites that McClatchy is starting to roll out and essentially you'll see that they're a Craigslist meets CitySearch-like service, behind a Google-like façade. To illustrate Christian Hendricks' localized Internet strategy, have a look at the first search site McClatchy launched last quarter. It's called Triangle.com and it focuses on communities served by McClatchy papers in North Carolina. As Greg Sterling, an expert on local advertising, said to me in an email: "McClatchy seems to 'get it' more than others."

Read Net Sense on MarketWatch

Mark Zuckerberg, founder of Facebook

Can't read what Mark's shirt says? It says: "My mom thinks I'm cool." This is an interview at the MarketWatch offices in the fall of 2005. Facebook has come a long way from its $100 million valuation back then. Viacom offered $750 million for the startup earlier this year, according to someone close to the situation.

YouTube raising VC funds?

Rumor has it that YouTube -- the popular, Napster-like, video-sharing startup -- is raising funds. I typically wouldn't write about such a rumor, but since YouTube co-founder Chad Hurley has twice cancelled a video interview with me in the last week, it sure seems that something is in the works.

It's not surprising that YouTube would be seeking funds given the traffic this site is receiving.  If activity accelerates, it'll be no time before YouTube burns through its $3.5 million in venture financing. To be sure, YouTube may not be spending as much as some think. Mike Gordon, co-founder of LimeLight, a smaller version of Akamai, says that because YouTube streams short clips, it may be spending between $50,000 and $200,000 to deliver its video. How does Gordon know? LimeLight helps to stream YouTube's video. Media companies would be interested in owning YouTube, but Sequoia Capital's venture partner Mike Moritz won't sell for less than a few billion, so I heard.

Some bloggers have said that Facebook should have taken the $750 million offer. ( I heard from someone very close to the deal that the offer was from Viacom.) Compared to what iVillage went for, it does seem that the prices are getting out of hand. But Facebook is a trusted source, with a very targeted pool of users in specific areas - colleges. That makes Facebook an easy sell to advertisers. 

More video interviews

A year ago or so, I said that Google's index of 8 billion pages was nothing compared to what would be created if tools were given to the people on the Web. Organizing this digital mess would present a big opportunity. And, it has. There are a number of companies trying to help us organize, including Plum. It's an invite-only service that will launch April 1. It's actually a great service, in my opinion. I asked Hans Peter how he plans to differentiate his company from the pack.
Watch interview with Hans Peter of Plum

Of all the media and Internet companies out there, I'd say Yahoo, Fox and CBS are the ones I'd consider aggressively trying to define the new media landscape. I asked Neil Budde of Yahoo news what his plans are for the service.
Watch interview with Neil Budde, head of Yahoo news

Google's $10 billion

Who's doing who a favor? Google is issuing 5.3 million shares in a secondary offering, resulting in $2 billion in fresh cash. Google said in its SEC filing that the shares are being offered "primarily"  to index fund managers, who will have to buy Google shares for their portfolios when Google becomes part of the S&P 500.  I'll buy that, sort of. Shares of Google had gone from sub-$340 to nearly $400 over the course of a few days, following the news that it would be included. A few traders said that momentum traders (those pesky guys) were likely pushing up the stock in hopes of cashing out when the index funds are forced to buy Google shares. But is it Google's job to provide some liquidity for the index funds? No. Is Google going to do something "big" with that cash? Probably down the road. But one thing Google can certainly do now is take advantage of Wall Street for handing the cash-rich search giant the gift of free money.  Google has $8 billion in cash already. Now, it'll have $10 billion. 

Is Google looking to do something with its cash? There is speculation it is. But there was so much speculation last year that Google would buy something with the $4 billion raised in September. And, yet all Google did was drop $1 billion for a 5% stake in AOL. I don't know what Google is going to do with that cash. Maybe Google will decide to replace the buses -- that transport the couple thousand employees from San Francisco to the Google complex -- with jets; maybe Google can offer  its employees college tuition for their children. Or, maybe Google will just let the money sit in the bank and earn 4%.

My media portals

In stealth mode for now, San Francisco-based  Plum is an easy-to-use service that lets you mash up -- to use the au courant term -- what's on your desktop and what's on the Web, putting all of it on one Web page that's not only for your own use but for the perusal of family members, friends and acquaintances, and other potentially interested parties. That is to say: the entire world. Plum definitely exploits the user-centric mindset that's swept the Web in recent months and years.  Read about Plum on MarketWatch.

Engineers have busily been writing code to create tools with a "social" aspect, like Plum, ever since Friendster showed that social networks -- or people just being people -- can attract big crowds in the new-media world. From social networks sprang other services hoping to capitalize on modern society's navel-gazing desire to create (on their own time and dime) and to share.

At times, of course, these media neophytes attach their self-indulgence to promotional skills on par with those of Dick Grasso in his NYSE heyday. Thus, while their output itself may range from brilliant to innovative to pointless to silly, it does tend to command disproportionate attention.

Hence the emergence of social bookmarking sites like  del.icio.us; social photo sites, such Flickr; social content sites, like Rojo.com; social search sites, like Rollyo; social Web organizers, like Kaboodle; and video sharing sites, like Grouper.com, YouTube and Google's Video, just to name a few. On the upside: such services help to solve the latest media conundrum: How to drive up page views by providing the audience with low-cost tools to sell themselves, or their alter egos, or their own creative content? The downside: We're now truly entering  The Al Franken decade, only now everyone gets to replace the comic, author, radio host and presumptive Senate candidate's name with his or her own. Another key difference: Franken was joking.

The emergence of these social services, if you will, reminds me of the days when retailing on the Web seemed like the greatest idea. Back then, the thought was that it would be cheap and easy to put up a virtual shingle and set up shop because there would be no expensive real-estate costs or inventory concerns. But what e-tailers were later faced with were rising costs in marketing, technology and shipping. In like vein, if anyone thinks they can create the next hot-media portal

tossing these tools out to the people, he or she would be wise to prepare for unforeseen costs and consequences. I'm not sure what the fallout will be, but a trail of useless tools is one possible outcome. Another observation: Most people grow tired of creating, or they'll need far more incentive to create. They'll start projects without finishing, resulting in half-baked Web pages and would-be news sites that ultimately are nothing more than one-off snapshots in time. Like the many cardboard folders I've created and then shoved in my desk or into storage boxes. At some point, they lose their value, and we end up with a bunch of useless Web pages or dead blogs just taking up space and clogging up searches. But, hey, each is an individual user's media portal, and users can do -- or fail utterly to do -- whatever they want.

Google's vertical move

Thumbs down for Google Finance? That's what some hedge fund managers (who are likely short Google, or likely still upset about missing the boat) said to me after they reviewed the new service this morning. That said, I have to agree to some extent. Why? Just because it's a service from Google, and I expect a lot more. Google's Finance site - which just launched Tuesday -- is not that impressive, partly because it looks so much like other finance sites, like Yahoo Finance, which launched years ago. Perhaps we shouldn't be surprised, actually, given that Katie Stanton, a former Yahoo Finance employee, is running Google's new vertical.

Besides an interactive chart that shows when stories published (to give investors a sense of what moved the stock), there is nothing innovative or spectacular about the service. OK. I really do like the interactive charts - those are very useful! - and, I like the pop-up window with information about the executive team.  I also like the prominent placement of the blogs. But where's the related video? Where are the open APIs, so smart geeks can mash-up stuff Google hasn't thought of?  I thought Google believes in "The Wisdom of Crowds."

To be sure, Google doesn't need  bells and whistles to be good. It just needs to be relevant.  And, these days, blogs are relevant.

Type in "Google" on Google News, and you get 37,000 results. Type in "Google" on Google Finance, and go to the blog posts section, and you'll see that there are 5.9 million results.  Want to know who's blogging about Google Finance? Besides yours truly, there's Bill Bishop -- a dear friend and former colleague at MarketWatch, and Henry Blodget, former Internet analyst.

Why is Google doing such a move? For starters, it's likely a number of people went to Google News and typed in "goog" or "aapl" - or other stock quotes, or names of publicly-held companies to get the latest news from 4,500 sources.  I know I did. Moreover, traffic to finance sites has grown faster than traffic to Internet sites overa. Traffic to financial news and information sites grew 10% in February, according to Nielsen//NetRatings. That compares to 3% traffic growth to overall Internet sites. Advertisers also love finance sites. In 2005, 35% of the $418 million in ad dollars managed by Aquantive's Avenue A/Razorfish went into verticals vs. 31% that went into search. Advertisers also more than doubled their ad dollars going into finance verticals, despite the 20% increase in ad prices, according to the Internet advertising company.

Read Net Sense on MarketWatch

Read MarketWatch story

CBS's smart bet

Starting Thursday, CBS will make available the NCAA tournaments live and for free on the Web. First of all, I have to say, "It's about time a major media network went for it!" As I wrote in my Net Sense column on MarketWatch, CBS's decision is aggressive - perhaps risky - but definitely clever, and akin to an uncontested layup. There are more rewards than risks, that I see. To this end, boldness is of greater value than preparedness. The only real cost is the outlay for technology to support at least 200,000 simultaneous users. So, how much is this costing CBS to air online? It depends on the quality of the streams (256kbits or 512kbits)  and average per meg cost of bandwidth. By using an estimate of 200,000 users and 256kbits, one very smart techie came up with a cost of $2 million.  He said it's an expensive bet, but a good test of the market. What's your best guess?

Read Net Sense on MarketWatch

Six Apart buys SplashBlog

It's yet to be announced, but I just heard that Six Apart, which operates Typepad, just snapped up SplashBlog, which started a year ago.  SplashBlog adds a visual and mobile component to Typepad's blogging service. For instance, I've taken a number of photos on my Treo 650 and have uploaded them onto SplashBlog blog at SplashBlog.com/Bambi/. So far, there is very little integration between SplashBlog and Typepad, or other Six Apart divisions. The announcement is expected next week.

True colors

It is profound what being a public company can do to the core values of a young company. It was less than two years ago that Google Inc. co-founders Larry Page and Sergey Brin thumbed their noses at the U.S. investment banking community with an auction-based IPO and their pledge not to cave in to the short-term demands of Wall Street.

Their mantra was "do no evil," and the company's mission statement still says Google's goal is to "organize the world's information and make it universally accessible and useful." Even with one of the largest market valuations of any U.S. company, Google (GOOG: news, chart, profile) tries to set itself apart from its rivals -- Yahoo (YHOO: news, chart, profile) , Microsoft's (MSFT: news, chart, profile) MSN and Time Warner's (TWX: news, chart, profile) AOL -- by underscoring its high-minded philosophical goal to "resist the temptation to make small sacrifices to increase shareholder value."

It passionately claims that, "Google has steadfastly refused to make any change that does not offer a benefit to the users who come to the site."

Yet Google's announcement Tuesday that it will comply with China's repressive laws by doctoring its search results in that country makes a mockery of those values.

Google is making a sacrifice, and a big one at that, risking its democratic image for more access in a country that will contribute very little business in the near future. Right move for shareholders? Possibly. Ironic move? Yes. Noble move? Hardly. Maybe China's riches are worth it. I don't think so. But when you've tasted billions -- like Brin and Page -- I guess you can hire a boatload of attorneys to justify any choices you make.

A successful serial entrepreneur friend once said that when starting a business, one has to know whether they're doing it because they want to change the world in a good way, or because they want to make money. It's one or the other, not both. He is right. We often have lofty goals. We often remind ourselves of them, as Google does of its own. But more often than not we fail to achieve them. The world changes us far more than we can change it.

Watch my interview with Kurt Opsahl, an attorney at EFF

Read Net Sense on MarketWatch

Google expanding into radio

Why is Google pushing into radio? Why not? It's an advertising company, after all. And, radio is not dead. It'll be consumed on the Web eventually, and ad dollars will support it. For now, advertisers still like radio - and they really like local. Marketers are on track to place about $15.6 billion into local radio vs. $3.4 billion in national radio in 2005, according to the figures from the Radio Advertising Bureau. See RAB site

Google's purchase of dMarc Technologies, a company that automates the process between advertisers and radio stations, will at least give the search engine the technology and relationships with radio stations. Ryan Steelberg, president of dMarc Technologies, told me that his company has 100 employees and several thousand radio-station customers. There are about 13,000 radio stations across the country. Oh, and Google paid $102 million in cash, with a maximum amount of $1.136 billion over the next three years. Is that expensive? It depends on the financials. Steelberg won't disclose them, nor would he say how much venture financing the company took since its inception in 2002.

Speaking of radio, check out Pandora.

Google News on Slide

Images often do a better job telling a story or capturing our attention. In this case, Google News is delivered to me via images. This feed was created by a member of Slide, a new photo-sharing service where you can share your photos or images from across the Web. What I like about Slide is that I can get my favorite images pushed to me. In this example of Slide, someone created an RSS feed of Google News. Click on the images and you'll land on the story that goes with the image. I'm not sure if it's my preferred way of receiving news, but so far I like it. What I'd really like is a slide of The New Yorker cartoons.

Google vs. Apple

Google is set to announce on Friday that it will be offering CBS content to its users to purchase. It's not surprising that Google would finally get one media giant to test out Google as a distribution platform. It's been trying for months. And, it'll likely be that Google will be able to secure content from other media giants as well. After all, media companies need to get their content everywhere, and Google is one of the biggest distribution platforms on the Web. The question is whether CBS agreed to a 99-cent rental model or a $1.99-purchase model. Since CBS has already struck a deal with Comcast to offer certain video for rent, it's my guess that the model will be mostly rental.

Internet trends 2006

• In keeping with the tradition of offering up some sort of list for the new year, here are some of my forecasts about the Internet in 2006. Please accept my mea culpa now since my outlook will undoubtedly turn out to be off the mark, like most predictions. For instance, I wouldn't have prognosticated at the end of 2004 that the most-searched word on Merriam-Webster's site in 2005 would be "integrity." Nor would I have guessed that Google  would top $100 billion in valuation, and take a 5% stake in Time Warner's AOL, or that engineers would be better at advertising than professional marketers.

But here are some:

At least one Apple product will be in each room of our homes.  Apple's my top pick for Internet-related stocks in 2006. EBay goes head to head with Comcast, but eBay wins. The gap between Microsoft's market cap and Google's will narrow. But it doesn't mean that Google's market cap will have to double.  A media giant will take technology seriously and buy a video search company. Amateur or user-generated video will emerge as entertaining content to be used in commercials. A big media giant or an Internet giant -- Google, Yahoo or Microsoft's MSN -- will automate licensing and copyright protection for new undiscovered talent. We'll socialize online in ways we can't even imagine. I will take this blog seriously, and write more often.

For more on my predictions, go to MarketWatch.

Read Net Sense on MarketWatch

Happy New Year!

More Net trend video interviews

What does it mean when public investors are willing to buy an unprofitable e-tailer? For that I spoke with CSFB investment banker Zach Maurus. Maurus handled the Google IPO for CFSB.

Watch interview with CSFB's Zach Maurus

Comparison shopping sites continue to be in demand. Experian bought PriceGrabber for $485 million this week. What are the strategies behind Yahoo's comparison-shopping service and eBay's Shopping.com? Watch the interviews.

Watch interview with Rob Solomon about Yahoo's shoposphere

Watch interview with Lorrie Norrington, CEO of Shopping.com

Search trends

How many people go to the library or bookstore and are motivated to go on a shopping spree? It's likely that those environments aren't the places that inspire anyone to shop, and that's the challenge for Answers.com, which is a site that serves the purpose of an online dictionary and encyclopedia. I'm a big Answers.com fan, but, I don't necessarily find myself prompted to shop when I'm searching for the definition of, say, sabellianism. What's more, Answers.com relies on Google for less than 20% of its audience. It's not the majority of its traffic, but a big chunk nonetheless.

See Answers.com Rosenschein on search outlook

Google appears to be increasing its lead in the search-engine wars. Google currently has 39% of search query market share, according to a comScore report on search traffic in October. But Google doesn't have a clustering search technology that many people find useful. That clustering technology can be viewed by going to www.Clusty.com.

See Clusty CEO on where to take his company next 

Giving Thanks to, um, Google

It is Thanksgiving week. So, let's give thanks.

As Americans prepare to sit down and enjoy the celebration on Thursday, it's time to be thankful for so many blessings - our family and friends, the roof over our heads, the food on the table, our health, the day off, the cheap prices on the Web, and the extra-large turkey because of, umm, yes, Google. I can hear the silent acknowledgements now: "Thank you Google for being the stock in my portfolio that's made me look like a rock star trading stud this year, and for being the reason I can be very generous this Christmas."

If you're not echoing these thoughts, don't worry. You might have a chance to thank Google by the time Christmas comes around. By the time of this writing in my Net Sense column on MarketWatch, Google shares traded just above $400. On Monday, Ben Schachter, an analyst at UBS upped his 12-month price target on Google to $500 from $430. Some of my readers are already expecting Google to close the gap to $500 well before the end of this month.

In a Net Sense vote conducted in early November on where Google would finish the month, 46% of the 2,511 votes cast bet that Google would end the month between $400 and $450. More than 15% said that Google would end the month above $450. Some readers e-mailed me and said $500 was more like it. All this bullishness is enough to make us all think back to the 1999-2000 timeframe when, throwing darts at round numbers was the popular sport. 

I know. I know. My readers are likely saying: "2005 is very different from 1999. When it's feeling kind of frothy in the market, why do we always resort to that 1999 feeling?" First of all, I agree. In 1999, it was Internet mania. Today, it's Google mania.

And, why do I want to recall the crazy days of 1999? Well, it's Thanksgiving, and I'm thankful for the memories, especially since I've been awash in them after rummaging through my collection of Henry Blodget, David Readerman d.i.r.t. reports on Internet research trends, and Mary Meeker's "The Global Internet Primer" reports from the Bubble days as part of the process of moving my office here at MarketWatch.

But my stash of reports is filled with some rich Internet history that's a good reminder of how far we've come, how somewhat off we were, and how often directionally right about consumer Internet fundamentals we were - but just plain wrong as to who the winners would be. Importantly, my Internet history collection, which spans the pre-bubble to post-bubble years, shows our tendency to want to put all our optimistic expectations into the few stocks we know.

Back in 1999 and 2000, we didn't know Google. Today, it feels as though Google is the only stock we know.

See Net Sense column on MarketWatch

Yahoo maps takes the lead

If you haven't checked out Yahoo's new maps, you should. I had a preview on Wednesday, and it offers a utility that other maps don't. For instance, you can choose multiple locations and get directions to those places. Plus there is a search box clearly on the page where you can search for other places or services, say ATM machines, between those two locations. The ATM locations appear on the map, and then you can drag the most convenient ATM location between the search boxes with the two location points. Yahoo maps automatically gives you directions to the ATM and then to your final destination. There are also developer tools so you can easily incorporate or mix other content onto the maps.

Even a non-techie like me can do it. For instance, Yahoo maps and Flickr are combined on this site: Check out the site and Yahoo maps in beta

Watch interview with head of Yahoo Local, Paul Levine

Google Runaway

On another note, my recent column on Google is getting a lot of responses. First of all, I'm not calling for a top, like some readers might think I'm doing. From the initial e-mails I've received, it seems there are a number of Google fans. Apparently, my readers believe Google is going to $500. Read column on MarketWatch.com, and if you have any responses, please post them here. My bet - Google ends the year above $400.

See Net Sense column on MarketWatch

Google's supply/demand view

Here are more snapshots of the classifieds/listings business that Google is testing, courtesy of Scot Wingo, of ChannelAdvisor. Based on the screenshots, Google appears to be testing out about 12 categories, such as recipes, housing, jobs, dates, etc., according to Wingo. This means that Google is going to compete with everyone with a listings business model, not just eBay. Google is going up against Monster, Bizrate, and even online dating sites, like Match. Google's potential advantage over other listing sites is that it has a huge buyer base that any seller would want to be in front of. Additionally, it will have knowledge of demand and supply.  While the user-generated listings will give Google a picture of supply, its knowledge of what marketers are paying for keywords will Google a picture of demand. With that information, they'll know how to target a market and make it robust, Wingo suggested.

Google Base for recipes, includes payment link & maps

Recipes, shows 'post your item here'

Customer management screen

See Wingo's blog

Google's pursuit: knowledge

To answer a question recently posed to me by CNBC host Ron Insana, Google's ultimate goal is to have a wire into our brains in order to have complete knowledge of who we are.  Of course, I don't believe that Google's growing stable of scientists -- however brilliant and talented they are -- will ever succeed in having complete, or perfect, knowledge and information about the world even if every piece of information is broken down into quantifiable and measurable bits (but that's a philosophical story).  Nonetheless, knowledge is Google's goal or passion, if academic reports published on Google is any hint. Here's one I like, authored by Monika Henzinger, Google Research Director, and titled: "Extracting knowledge from the World Wide Web."

For now, Google derives a lot of its knowledge from the queries typed into its search engine. Today, typed in queries, tomorrow, spoken queries, and the day after tomorrow, our thoughts. Will machines know us better than we know ourselves?

Read Net Sense on MarketWatch

Additionally, there is speculation that Google is expected to unveil its own payment and classifieds business at Google Zeitgeist this week, according to Scot Wingo, chief executive of ChannelAdvisor.  In a statement, Google said it is working on a service that allows users to post their own content onto Google, but the company has no plans to make any announcements. Regardless if Google announces a classified business or not, it's a business I've always thought made a lot of sense. I wrote about it back in June.

Read Net Sense (6/21/05): Google listings, now that hurts

Read Google testing 'Google Base' on MarketWatch

Finally, why is AOL suddenly relevant? AOL's advertising sales are growing faster than the industry and AOL accounts for 10% of online ads in the first six months of this year. Additionally, it has a declining dial-up subscriber base. These dial-up subs are ripe for picking if you're a broadband provider.  AOL has 49 million IM subscribers - a good platform for emerging communications portals.  I can't list all the reasons here, but read Net Sense on MarketWatch for the rest of the story.

Read Net Sense (10/17/05): Suddenly relevant

Suddenly relevant

Since 1993, Shelby Bonnie has dreamed of creating a 24-hour cable channel. More than a decade later, the combination of the Internet, and CNet, the company he co-founded, has helped him to get closer to that reality. Well, sort of.

"Where Web sites are going is what cable networks should become," the boyish-looking Bonnie said to me recently. He's not alone, of course. Most people -- well most people I associate with -- believe that the billions of URL pages are just the extension of those hundreds of cable channels. Bonnie predicts that in three to five years, the Internet will look a lot like TV, or vice versa.  Of course, Web TV will be a more robust, potentially cacophonous, and undoubtedly on-demand, experience as the consumer participates in the creation of the content he or she is consuming.

It's that control by the masses -- whereby a person is both consumer and creator -- that's making it interesting to see how and which content sites become relevant to major marketers.

Years ago, cable companies had to reach 40 million homes before they could become a priority for marketers, said Bonnie, one of the few Internet founders remaining at the helm of an Internet company.  They reached this "mainstream" threshold and became "suddenly relevant" to advertisers, he said. What does it take to be relevant today?

Read column on MarketWatch