Bambi Francisco

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.