Category: models

Eternal transitions

Market transitions in digital media can be absolutely fascinating both as a bystander and as a participant.

I’ve been on both the frontfoot and the backfoot as part of media businesses trying to lead, fast-follow, steer away from or kill different technologies and services that come and go.

Transitioning seems to be part of being in this business, something you’re always doing, not the end game.

There are a few patterns I’ve observed, but i’m hoping some clever business model historian will do some research and really nail down how it works.

There are job training issues that people face. Remember all those Lotus Notes specialists? Organizational issues. How about when the tech teams finally let editors control the web site home page? Leadership issues. It wasn’t until about 2003 before media CEOs started talking openly aout the day when their Internet businesses would overtake their traditional businesses. Technology strategies. Investing in template-driven web sites was once a major decision. Etc.

The mobile wave we’re in right now shares all the same issues for people who are in the business of running web sites. Re-educate your developers or hire new ones? Should mobile be a separate business; should it be added to the queue for the tech team; should the editors or product managers manage it? Is mobile-first a subset of digital-first or does it mean something more profound than that? Responsive, native, both? What’s the mobile pureplay for what you already do?

Media organizations have become so diverse over the last several years that they can easily get caught thinking that you can do all of the above – a hedge-your-bets strategy by investing lightly in all aspects of the transition. While that strategy has drawbacks it is definitely better than the hide-and-hope or cut-til-you-profit strategy.

The most interesting part of this story is about the anomolies, those moments of clarity that signal to the rest of us what is happening.

For example, everyone who disregarded the Newton and then the PalmPilot for failing missed the point. These were anomolies in a world dominated by Microsoft and the PC. They understood computing was going to be in people’s pockets, and they were right to execute on that idea.

What they failed to get right was timing of the market transition, and timing is everything.

(Harry McCracken’s retrospective review of the Newton is a fun read.)

So, when is an anomoly worth noticing? And when is the right time to execute on the new model?

Google has been a great example of both in many ways. They cracked one of the key business models native to the Internet at just the right time…they weren’t first or even best, but they got it right when it mattered. Android is another example.

But social has been one challenge after another. They ignored the anomoly that was Twitter and Facebook (and Orkut!) and then executed poorly over and over again.

They don’t want to be behind the curve ever again and are deploying some market tests around the ubiquitous, wearable network – Google Glass.

But if they are leading on this vision of the new way, how do they know, and, importantly, how do other established businesses know that this is the moment the market shifts?

I’m not convinced we’ve achieved enough critical mass around the mobile transition to see the ubiquitous network as a serious place to operate.

The pureplay revenue models in the mobile space are incomplete. The levels of investment being made in mobile products and services are growing too fast. The biggest catalysts of commercial opportunity are not yet powerful enough to warrant total reinterpretations of legacy models.

The mobile market is at its high growth stage. That needs to play out before the next wave will get broader support.

The ubiquitous network is coming, but the fast train to success aka ‘mobile’ has arrived and left the station and everyone’s onboard.

Is Google Glass this era’s Newton? Too early? Dorky rather than geeky-cool? Feature-rich yet brilliant at nothing in particular? Too big?

They’ve done a brilliant job transitioning to the mobile era. And you have to give them props for trying to lead on the next big market shift.

Even if Google gets it wrong with Google Glass (See Wired’s commentary) they are becoming very good at being in transition. If that is the lesson they learned from their shortcomings in ‘social’ then they may have actually gained more by doing poorly then if they had succeeded.

Mobilising the web of feeds

I wrote this piece for the Guardian’s Media Network on the role that RSS could play now that the social platforms are becoming more difficult to work with. GeoRSS, in particular, has a lot of potential given the mobile device explosion. I’m not suggesting necessarily that RSS is the answer, but it is something that a lot of people already understand and could help unify the discussion around sharing geotagged information feeds.

Powered by Guardian.co.ukThis article titled “Mobilising the web of feeds” was written by Matt McAlister, for theguardian.com on Monday 10th September 2012 16.43 UTC

While the news that Twitter will no longer support RSS was not really surprising, it was a bit annoying. It served as yet another reminder that the Twitter-as-open-message-utility idea that many early adopters of the service loved was in fact going away.

There are already several projects intending to disrupt Twitter, mostly focused on the idea of a distributed, federated messaging standard and/or platform. But we already have such a service: an open standard adopted by millions of sources; a federated network of all kinds of interesting, useful and entertaining data feeds published in real-time. It’s called RSS.

There was a time when nearly every website was RSS-enabled, and a cacophony of Silicon Valley startups fought to own pieces of this new landscape, hoping to find dotcom gold. But RSS didn’t lead to gold, and most people stopped doing anything with it.

Nobody found an effective advertising or service model (except, ironically, Dick Costolo, CEO of Twitter, who sold Feedburner to Google). The end-user market for RSS reading never took off. Media organisations didn’t fully buy into it, and the standard took a backseat to more robust technologies.

Twitter is still very open in many ways and encourages technology partners to use the Twitter API. That model gives the company much more control over who is able to use tweets outside of the Twitter owned apps, and it’s a more obvious commercial strategy that many have been asking Twitter to work on for a long time now.

But I think we’ve all made a mistake in the media world by turning our backs on RSS. It’s understandable why it happened. But hopefully those who rejected RSS in the past will see the signals demonstrating that an open feed network is a sensible thing to embrace today.

Let’s zoom out for context first. Looking at the macro trends in the internet’s evolution, we can see one or two clear winners as more information and more people appeared on the network in waves over the last 15 years.

Following the initial explosion of new domains, Yahoo! solved the need to surface only the websites that mattered through browsing. The Yahoo! directory became saturated, so Google then surfaced pages that mattered within those websites through searches. Google became saturated, so Facebook and Twitter surfaced things that mattered that live on the webpages within those web sites through connecting with people.

Now that the social filter is saturated, what will be used next to surface things that matter out of all the noise? The answer is location. It is well understood technically. The software-hardware-service stack is done. The user experience is great. We’re already there, right?

No – most media organisations still haven’t caught up yet. There’s a ton of information not yet optimised for this new view of the world and much more yet to be created. This is just the beginning.

Do we want a single platform to be created that catalyses the location filter of the internet and mediates who sees what and when? Or do we want to secure forever a neutral environment where all can participate openly and equally?

If the first option happens, as historically has been the case, then I hope that position is taken by a force that exists because of and reliant on the second option.

What can a media company do to help make that happen? The answer is to mobilise your feeds. As a publisher, being part of the wider network used to mean having a website on a domain that Yahoo! could categorise. Then it meant having webpages on that website optimised for search terms people were using to find things via Google. And more recently it has meant providing sharing hooks that can spread things from those pages on that site from person to person.

Being part of the wider network today suddenly means all of those things above, and, additionally, being location-enabled for location-aware services.

It doesn’t just mean offering a location-specific version of your brand, though that is certainly an important thing to do as well. The major dotcoms use this strategy increasingly across their portfolios, and I’m surprised more publishers don’t do this.

More importantly, though, and this is where it matters in the long run, it means offering location-enabled feeds that everyone can use in order to be relevant in all mobile clients, applications and utilities.

Entrepreneurs are all over this space already. Pure-play location-based apps can be interesting, but many feel very shallow without useful information. The iTunes store is full of travel apps, reference apps, news, sports, utilities and so on that are location-aware, but they are missing some of the depth that you can get on blogs and larger publishers’ sites. They need your feeds.

Some folks have been experimenting in some very interesting ways that demonstrate what is possible with location-enabled feeds. Several mobile services, such as FlipBoard, Pulse and now Prismatic, have really nice and very popular mobile reading apps that all pull RSS feeds, and they are well placed to turn those into location-based news services.

Perhaps a more instructive example of the potential is the augmented reality app hypARlocal at Talk About Local. They are getting location-aware content out of geoRSS feeds published by hyperlocal bloggers around the UK and the citizen journalism platform n0tice.com.

But it’s not just the entrepreneurs that want your location-enabled feeds. Google Now for Android notifies you of local weather and sports scores along with bus times and other local data, and Google Glasses will be dependent on quality location-specific data as well.

Of course, the innovations come with new revenue models that could get big for media organisations. They include direct, advertising, and syndication models, to name a few, but have a look at some of the startups in the rather dense ‘location‘ category on Crunchbase to find commercial innovations too.

Again, this isn’t a new space. Not only has the location stack been well formed, but there are also a number of bloggers who have been evangelising location feeds for years. They already use WordPress, which automatically pumps out RSS. And many of them also geotag their posts today using one of the many useful WordPress mapping plugins.

It would take very little to reinvigorate a movement around open location-based feeds. I wouldn’t be surprised to see Google prioritising geotagged posts in search results, for example. That would probably make Google’s search on mobile devices much more compelling, anyhow.

Many publishers and app developers, large and small, have complained that the social platforms are breaking their promises and closing down access, becoming enemies of the open internet and being difficult to work with. The federated messaging network is being killed off, they say. Maybe it’s just now being born.

Media organisations need to look again at RSS, open APIs, geotagging, open licensing, and better ways of collaborating. You may have abandoned it in the past, but RSS would have you back in a heartbeat. And if RSS is insufficient then any location-aware API standard could be the meeting place where we rebuild the open internet together.

It won’t solve all your problems, but it could certainly solve a few, including new revenue streams. And it’s conceivable that critical mass around open location-based feeds would mean that the internet becomes a stronger force for us all, protected from nascent platforms whose their future selves may not share the same vision that got them off the ground in the first place.

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Calling your web site a ‘property’ deprives it of something bigger

BBC offered another history of London documentary the other night, a sort of people’s perspective on how the character of the city has changed over time, obviously inspired by Danny Boyle’s Opening Ceremony at the Olympics.

Some of the sequences were interesting to me particularly as a foreigner – the gentrification of Islington, the anarchist squatters in Camden, the urbanization of the Docklands, etc.  – a running theme of haves vs have-nots.

It’s one of a collection of things inspiring me recently including a book called ‘The Return of the Public‘ by Dan Hind, a sort of extension to the Dewey v Lippman debates, what’s going on with n0tice, such as Sarah Hartley’s adaptation for it called Protest Near You and the dispatch-o-rama hack, and, of course, the Olympics.

I’m becoming reinvigorated and more bullish on where collective action can take us.

At a more macro level these things remind me of the need to challenge the many human constructs and institutions that are reflections of the natural desire to claim things and own them.

Why is it so difficult to embrace a more ‘share and share alike’ attitude?  This is as true for children and their toys as it is for governments and their policies.

The bigger concern for me, of course, is the future of the Internet and how media and journalism thrive and evolve there.

Despite attempts by its founders to shape the Internet so it can’t be owned and controlled, there are many who have tried to change that both intentionally and unwittingly, occasionally with considerable success.

How does this happen?

We’re all complicit.  We buy a domain. We then own it and build a web site on it. That “property” then becomes a thing we use to make money.  We fight to get people there and sell them things when they arrive.  It’s the Internet-as-retailer or Internet-as-distributor view of the world.

That’s how business on the Internet works…or is it?

While many have made that model work for them, it’s my belief that the property model is never going to be as important or meaningful or possibly as lucrative as the platform or service model over time. More specifically, I’m talking about generative media networks.

Here are a few different ways of visualizing this shift in perspective (more):

Even if it works commercially, the property model is always going to be in conflict with the Internet-as-public-utility view of the world.

Much like Britain’s privately owned public spaces issue, many worry that the Internet-as-public-utility will be ruined or, worse, taken from us over time by commercial and government interests.

Playing a zero sum game like that turns everyone and everything into a threat.  Companies can be very effective at fighting and defending their interests even if the people within those companies mean well.

I’m an optimist in this regard.  There may be a pendulum that swings between “own” and “share”, and there are always going to be fights to secure public spaces.  But you can’t put the Internet genie back in the bottle.  And even if you could it would appear somewhere else in another form just as quickly…in some ways it already has.

The smart money, in my mind, is where many interests are joined up regardless of their individual goals, embracing the existence of each other in order to benefit from each other’s successes.

The answer is about cooperation, co-dependency, mutualisation, openness, etc.

We think about this a lot at the Guardian. I recently wrote about how it applies to the recent Twitter issues here. And this presentation by Chris Thorpe below from back in 2009 on how to apply it to the news business is wonderful:

Of course, Alan Rusbridger’s description of a mutualised newspaper in this video is still one of the strongest visions I’ve heard for a collaborative approach to media.

The possibility of collective action at such an incredible scale is what makes the Internet so great.  If we can focus on making collective activities more fruitful for everyone then our problems will become less about haves and have-nots and more about ensuring that everyone participates.

That won’t be an easy thing to tackle, but it would be a great problem to have.

The Internet’s secret sauce: surfacing coincidence

What is it that makes my favorite online services so compelling? I’m talking about the whole family of services that includes Dopplr, Wesabe, Twitter, Flickr, and del.icio.us among others.

I find it interesting that people don’t generally refer to any of these as “web sites”. They are “services”.

I was fortunate enough to spend some time with Dopplr’s Matt Biddulph and Matt Jones last week while in London where they described the architecture of what they’ve built in terms of connected data keys. The job of Dopplr, Mr. Jones said, was to “surface coincidence”.

I think that term slipped out accidentally, but I love it. What does it mean to “surface coincidence”?

It starts by enabling people to manufacture the circumstances by which coincidence becomes at least meaningful if not actually useful. Or, as Jon Udell put it years ago now when comparing Internet data signals to cellular biology:

“It looks like serendipity, and in a way it is, but it’s manufactured serendipity.”

All these services allow me to manage fragments of my life without requiring burdensome tasks. They all let me take my data wherever I want. They all enhance my data by connecting it to more data. They all make my data relevant in the context of a larger community.

When my life fragments are managed by an intelligent service, then that service can make observations about my data on my behalf.

Dopplr can show me when a distant friend will be near and vice versa. Twitter can show me what my friends are doing right now. Wesabe can show me what others have learned about saving money at the places where I spend my money. Among many other things Flickr can show me how to look differently at the things I see when I take photos. And del.icio.us can show me things that my friends are reading every day.

There are many many behaviors both implicit and explicit that could be managed using this formula or what is starting to look like a successful formula, anyhow. Someone could capture, manage and enhance the things that I find funny, the things I hate, the things at home I’m trying to get rid of, the things I accomplished at work today, the political issues I support, etc.

But just collecting, managing and enhancing my life fragments isn’t enough. And I think what Matt Jones said is a really important part of how you make data come to life.

You can make information accessible and even fun. You can make the vast pool feel manageable and usable. You can make people feel connected.

And when you can create meaning in people’s lives, you create deep loyalty. That loyalty can be the foundation of larger businesses powered by advertising or subscriptions or affiliate networks or whatever.

The result of surfacing coincidence is a meaningful action. And those actions are where business value is created.

Wikipedia defines coincidence as follows:

“Coincidence is the noteworthy alignment of two or more events or circumstances without obvious causal connection.”

This is, of course, similar and related to the definition of serendipity:

“Serendipity is the effect by which one accidentally discovers something fortunate, especially while looking for something else entirely.”

You might say that this is a criteria against which any new online service should be measured. Though it’s probably so core to getting things right that every other consideration in building a new online service needs to support it.

It’s probably THE criteria.

The business of network effects

The Internet platform business has some unique challenges. It’s very tempting to adopt known models to make sense of it, like the PC business, for example, and think of the Internet platform like an operating system.

The similarities are hard to deny, and who wouldn’t want to control the operating system of the Internet?

In 2005, Jason Kottke proposed a vision for the “WebOS” where users could control their experience with tools that leveraged a combination of local storage and a local server, networked services and rich clients.

“Applications developed for this hypothetical platform have some powerful advantages. Because they run in a Web browser, these applications are cross platform, just like Web apps such as Gmail, Basecamp, and Salesforce.com. You don’t need to be on a specific machine with a specific OS…you just need a browser + local Web server to access your favorite data and apps.”

Prior to that post, Nick Carr offered a view on the role of the browser that surely resonated with the OS perspective for the Internet:

“Forget the traditional user interface. The looming battle in the information technology business is over control of the utility interface…Control over the utility interface will provide an IT vendor with the kind of power that Microsoft has long held through its control of the PC user interface.”

He also responded later to Kottke’s vision saying that the reliance on local web and storage services on a user’s PC may be unnecessary:

“Your personal desktop, residing entirely on a distant server, will be easily accessible from any device wherever you go. Personal computing will have broken free of the personal computer.”

But the client layer is merely a piece of the much larger puzzle, in my opinon.

Dare Obasanjo more recently broke down the different ideas of what “Cloud OS” might mean:

“I think it is a good idea for people to have a clear idea of what they are talking about when they throw around terms like “cloud OS” or “cloud platform” so we don’t end up with another useless term like SOA which means a different thing to each person who talks about it. Below are the three main ideas people often identify as a “Web OS”, “cloud OS” or “cloud platform” and examples of companies executing on that vision.”

He defines them as follows:

  1. WIMP Desktop Environment Implemented as a Rich Internet Application (The YouOS Strategy)
  2. Platform for Building Web-based Applications (The Amazon Strategy)
  3. Web-based Applications and APIs for Integrating with Them (The Google Strategy)

The OS metaphor has lots of powerful implications for business models, as we’ve seen on the PC. The operating system in a PC controls all the connections from the application user experience through the filesystem down through the computer hardware itself out to the interaction with peripheral services. Being the omniscient hub makes the operating system a very effective taxman for every service in the stack. And from there, the revenue streams become very easy to enable and enforce.

But the OS metaphor implies a command-and-control dynamic that doesn’t really work in a global network controlled only by protocols.

Internet software and media businesses don’t have an equivilent choke point. There’s no single processor or function or service that controls the Internet experience. There’s no one technology or one company that owns distribution.

There are lots of stacks that do have choke points on the Internet. And there are choke points that have tremendous value and leverage. Some are built purely and intentionally on top of a distribution point such as the iPod on iTunes, for example.

But no single distribution center touches all the points in any stack. The Internet business is fundamentally made of data vectors, not operational stacks.

Jeremy Zawodny shed light on this concept for me using building construction analogies.

He noted that my building contractor doesn’t exclusively buy Makita or DeWalt or Ryobi tools, though some tools make more sense in bundles. He buys the tool that is best for the job and what he needs.

My contractor doesn’t employ plumbers, roofers and electricians himself. Rather he maintains a network of favorite providers who will serve different needs on different jobs.

He provides value to me as an experienced distribution and aggregation point, but I am not exclusively tied to using him for everything I want to do with my house, either.

Similarly, the Internet market is a network of services. The trick to understanding what the business model looks like is figuring out how to open and connect services in ways that add value to the business.

In a precient viewpoint from 2002 about the Internet platform business, Tim O’Reilly explained why a company that has a large and valuable data store should open it up to the wider network:

“If they don’t ride the horse in the direction it’s going, it will run away from them. The companies that “grasp the nettle firmly” (as my English mother likes to say) will reap the benefits of greater control over their future than those who simply wait for events to overtake them.

There are a number of ways for a company to get benefits out of providing data to remote programmers:

Revenue. The brute force approach imposes costs both on the company whose data is being spidered and on the company doing the spidering. A simple API that makes the operation faster and more efficient is worth money. What’s more, it opens up whole new markets. Amazon-powered library catalogs anyone?

Branding. A company that provides data to remote programmers can request branding as a condition of the service.

Platform lock in. As Microsoft has demonstrated time and time again, a platform strategy beats an application strategy every time. Once you become part of the platform that other applications rely on, you are a key part of the computing infrastructure, and very difficult to dislodge. The companies that knowingly take their data assets and make them indispensable to developers will cement their role as a key part of the computing infrastructure.

Goodwill. Especially in the fast-moving high-tech industry, the “coolness” factor can make a huge difference both in attracting customers and in attracting the best staff.”

That doesn’t clearly translate into traditional business models necessarily, but if you look at key business breakthroughs in the past, the picture today becomes more clear.

  1. The first breakthrough business model was based around page views. The domain created an Apple-like controlled container. Exposure to eyeballs was sold by the thousands per domain. All the software and content was owned and operated by the domain owner, except the user’s browser. All you needed was to get and keep eyeballs on your domain.
  2. The second breakthrough business model emerged out of innovations in distribution. By building a powerful distribution center and direct connections with the user experience, advertising could be sold both where people began their online experiences and at the various independent domain stacks where they landed. Inventory beget spending beget redistribution beget inventory…it started to look a lot like network effects as it matured.
  3. The third breakthrough business model seems to be a riff on its predecessors and looks less and less like an operating system. The next breakthrough is network effects.

Network EffectsNetwork effects happen when the value of the entire network increases with each node added to the network. The telephone is the classic example, where every telephone becomes more valuable with each new phone in the network.

This is in contrast to TVs which don’t care or even notice if more TVs plug in.

Recommendation engines are the ultimate network effect lubricator. The more people shop at Amazon, the better their recommendation engine gets…which, in turn, helps people buy more stuff at Amazon.

Network effects are built around unique and useful nodes with transparent and highly accessible connection points. Social networks are a good example because they use a person’s profile as a node and a person’s email address as a connection point.

Network effects can be built around other things like keyword-tagged URLs (del.icio.us), shared photos (flickr), songs played (last.fm), news items about locations (outside.in).

The contribution of each data point wherever that may happen makes the aggregate pool more valuable. And as long as there are obvious and open ways for those data points to talk to each other and other systems, then network effects are enabled.

Launching successful network effect businesses is no easy task. The value a participant can extract from the network must be higher than the cost of adding a node in the network. The network’s purpose and its output must be indespensible to the node creators.

Massively distributed network effects require some unique characteristics to form. Value not only has to build with each new node, but the value of each node needs to increase as it gets leveraged in other ways in the network.

For example, my email address has become an enabler around the Internet. Every site that requires a login is going to capture my email address. And as I build a relationship with those sites, my email address becomes increasingly important to me. Not only is having an email address adding value to the entire network of email addresses, but the value of my email address increases for me with each service that is able to leverage my investment in my email address.

Then the core services built around my email address start to increase in value, too.

For example, when I turned on my iPhone and discovered that my Yahoo! Address Book was automatically cooked right in without any manual importing, I suddenly realized that my Yahoo! Address Book has been a constant in my life ever since I got my first Yahoo! email address back in the ’90’s. I haven’t kept it current, but it has followed me from job to job in a way that Outlook has never been able to do.

My Yahoo! Address Book is becoming more and more valuable to me. And my iPhone is more compelling because of my investment in my email address and my address book.

Now, if the network was an operating system, there would be taxes to pay. Apple would have to pay a tax for accessing my address book, and I would have to pay a tax to keep my address book at Yahoo!. Nobody wins in that scenario.

User data needs to be open and accessible in meaningful ways, and revenue needs to be built as a result of the effects of having open data rather than as a margin-based cost-control business.

But Dare Obasanjo insightfully exposes the flaw in reducing openness around identity to individual control alone:

“One of the bitter truths about “Web 2.0” is that your data isn’t all that interesting, our data on the other hand is very interesting…A lot of “Web 2.0″ websites provide value to their users via wisdom of the crowds appproaches such as tagging or recommendations which are simply not possible with a single user’s data set or with a small set of users.”

Clearly, one of the most successful revenue-driving opportunities in the networked economy is advertising. It makes sense that it would be since so many of the most powerful network effects are built on people’s profiles and their relationships with other people. No wonder advertisers can’t spend enough money online to reach their targets.

It will be interesting to see how some of the clever startups leveraging network effects such as Wesabe think about advertising.

Wesabe have built network effects around people’s spending behavior. As you track your finances and pull in your personal banking data, Wesabe makes loose connections between your transactions and other people who have made similar transactions. Each new person and each new transaction creates more value in the aggregate pool. You then discover other people who have advice about spending in ways that are highly relevant to you.

I’ve been a fan of Netflix for a long time now, but when Wesabe showed me that lots of Netflix customers were switching to Blockbuster, I had to investigate and before long decided to switch, too. Wesabe knew to advise me based on my purchasing behavior which is a much stronger indicator of my interests than my reading behavior.

Advertisers should be drooling at the prospects of reaching people on Wesabe. No doubt Netflix should encourage their loyal subscribers to use Wesabe, too.

The many explicit clues about my interests I leave around the Internet — my listening behavior at last.fm, my information needs I express in del.icio.us, my address book relationships, my purchasing behavior in Wesabe — are all incredibly fruitful data points that advertisers want access to.

And with managed distribution, a powerful ad platform could form around these explicit behaviors that can be loosely connected everywhere I go.

Netflix could automatically find me while I’m reading a movie review on a friend’s blog or even at The New York Times and offer me a discount to re-subscribe. I’m sure they would love to pay lots of money for an ad that was so precisely targeted.

That blogger and The New York Times would be happy share revenue back to the ad platform provider who enabled such precise targeting that resulted in higher payouts overall.

And I might actually come back to Netflix if I saw that ad. Who knows, I might even start paying more attention to ads if they started to find me rather than interrupt me.

This is why the Internet looks less and less like an operating system to me. Network effects look different to me in the way people participate in them and extract value from them, the way data and technologies connect to them, and the way markets and revenue streams build off of them.

Operating systems are about command-and-control distribution points, whereas network effects are about joining vectors to create leverage.

I know little about the mathematical nuances of chaos theory, but it offers some relevant philosophical approaches to understanding what network effects are about. Wikipedia addresses how chaos theory affects organizational development:

“Most of the focus on chaos theory is primarily rooted in the underlying patterns found in an otherwise chaotic enviornment, more specifically, concepts such as self-organization, bifurcation and self-similarity…

Self-organization, as opposed to natural or social selection, is a dynamic change within the organization where system changes are made by recalculating, re-inventing and modifying its structure in order to adapt, survive, grow and develop. Self-organization is the result of re-invention and creative adaptation due to the introduction of, or being in a constant state of, perturbed equilibrium.”

Yes, my PC is often in a state of ‘perturbed equilibrium’ but not because it wants to be.

Thinking about media as a platform

Back in my InfoWorld days (2004-ish?) I somehow woke up to the idea that media could be a platform.1 Whereas my professional media experience prior to that was all about creating user experiences that resulted in better page views and conversions, something changed in the way I perceived how online media was supposed to work.

I didn’t have language to use for it at the time (still working on it, actually), but I knew it wasn’t inspired by the “openness” and “walled garden” metaphors so much. Neither concept reflected the opportunity for me. Once I saw the opportunity, though, the shift happening in online media seemed much much bigger.

In a presentation at the Bioneers conference back in August 2000 (below), architect William McDonough talked about designing systems that leverage nature’s strengths for mutually beneficial growth rather than for conservation or merely sustainability.

He tells us to design with positive results in mind instead of using less bad materials,

Similarly, the implications around the “openness” and “walled garden” concepts get clouded by the tactical impressions those words draw for someone who has unique assets in the media business.

It’s not about stopping bad behavior or even embracing good behavior. It’s about investing in an architecture that promotes growth for an entire ecosystem. If you do it right, you will watch network effects take hold naturally. And then everyone wins.

When you look around the Internet media landscape today you see a lot of successful companies that either consciously or subconsciously understand how to make media work as a platform. MySpace created a fantastic expression platform, though perhaps unwittingly. Wikipedia evolved quickly into a massive research platform. Flickr and del.icio.us, of course, get the network effects inherent in sharing information…photos and links, respectively. Washingtonpost and BBC Backstage are moving toward national political information platforms. Last.fm is a very succssful music listening platform if not one of the most interesting platforms among them all.

All of these share a common approach. At a simple level, the brand gets stronger the further their data and services reach outside of their domain and into the wider market.

But the most successful media platforms are the ones that give their users the power to impact the experience for themselves and to improve the total experience for everyone as they use it.

My commitment to flickr, del.icio.us and last.fm gets deeper and deeper the more I’m able to apply them in my online lifestyle wherever that may be. We have a tangible relationship. And I have a role in the wider community, even if only a small part, and that community has a role in my experience, too.

The lesson is that it’s not about the destination — it’s about the relationship. Or, if you like the Cluetrain language, it’s about the conversation, though somehow “relationship” seems more meaningful than “conversation” to me. Ask any salesperson whether they’d prefer to have a relationship or a conversation with a potential customer.

Ok, so user engagement can extend outside a domain. Where’s the opportunity in that?

Very few media platforms know how to leverage their relationships to connect buyers and sellers and vice versa. They typically just post banner ads or text links on their sites and hope people click on them. Creating a fluid and active marketplace that can grow is about more than relevant advertising links.

Amazon created an incredibly powerful marketplace platform, but they are essentially just a pure play in this space. They are about buying and selling first and foremost. Relationships on their platforms are transactional.

Media knows how to be more than that.

eBay and Craigslist get closer to colliding the buying/selling marketplace with deeper media experiences. People build relationships in micromarkets, but again it’s all about a handshake and then good riddance on eBay and Craigslist.

Again, media knows how to be more than that.

The big opportunity in my mind is in applying the transactional platform concept within a relationship-building environment.

A more tangible example, please…?


Washingtonpost.com is an interesting case, as they have been more aggressive than most traditional media companies in terms of “openness”. They have data feeds for all of their content. And they have an amazing resource in the U.S. Congress Votes Database, a feed of legislative voting records sliced in several different ways. For example, you can watch what legislation Nancy Pelosi votes on and how she votes.

Unfortunately, everything Washingtonpost.com offers is read-only. You can pull information from Washingtonpost.com, but you can’t contribute to it. You can’t serve the wider Washingtonpost.com community with your additions or edits. You can’t engage with other Washingtonpost.com community members in meaningful ways.

Washingtonpost.com thinks of their relationship with you in a one-to-many way. They are one, and you are one of many.

Instead, they should think of themselves as the government data platform. Every citizen in the US should be able to feed data about their local government into the system, and the wider community should be able to help edit and clean community-contributed data (or UGC for you bizdev folks).

For example, I recently spent some time investigating crime data and how that gets shared or not shared in various local communities. Local citizens could provide a very powerful resource if they were empowered to report crime in meaningful ways on the Internet.

Washingtonpost.com is as well suited as anyone to provide that platform.

Now, imagine the opportunity for Washingtonpost.com if people around the US were reporting, editing and analyzing local crime data from Washingtonpost’s platform. They would become a critical source of national information and news across the country. Washintonpost.com would be well poised to be the primary source of any type of government-related information.

The money would soon follow.

As a result of becoming essential in the ecosystem of local and national citizen data, they would expand their advertising possibilities exponentially. They could create an ad platform (or partner with one) that is tuned particularly for their ecosystem. Then any number of services could start forming around the combination of their data platform and their ad platform.


You can imagine legal services, security, counseling and financing services wanting to reach directly into my local Potrero Hill crimewatch community. The marketplace would probably be very fluid where people are recommending services and providers are helping the community as a whole as a way to build relationships.

Washingtonpost could sit behind all these services, powering the data and taking a cut of all the advertising.

Again, it’s not just about being “open” or taking down the “walled garden”.

The “openness” and “walled garden” concepts which often turn into accusations feel more like objectives than strategic directions. If “openness” was the goal, then offering everything as RSS would be the game.

No, RSS is just step one. The media platform game is much more than that.

It’s about both being a part of the larger Internet ecosystem and understanding how to grow and design a future that benefits lots of different constituents. You can be a source in someone else’s platform, a vehicle within a wider networked platform and a hub at the center of your own ecosystem all at the same time.

I would never claim this stuff is easy, as I certainly failed to make that happen while at InfoWorld. The first place to start, in my opinion, is to stop worrying about “openness” and “walled gardens”. Those are scary ideas that don’t necessarioly inspire people to build or participate in growing ecosystems.

Instead, it’s important to understand “network effects” and “platforms“. Once you understand how media can be a platform, the world of opportunity will hopefully start to look a lot bigger, as big as the Internet itself, if not even bigger than that.

It’s at that point that you may wonder why you would pursue anything else.

1 It shouldn’t be surprising that my thinking changed while surrounded by thinkers like Jon Udell, Steve Gillmor, and Steve Fox to name a few who all waved the web services flag and sang the software-as-a-service song before many of the leading IT efforts at some of the most innovative companies knew how to put those words into coherent sentences. Those concepts can apply to lots of markets, media among them.

Media As A Service

Much like print and tv are becoming marketing vehicles to drive people online, the domain name for an online media service is becoming sort of an abstract utility or maybe just a brand address for media services rather than the real estate upon which the core activity occurs. The service a media vehicle provides matters more than the vehicle itself.

And this isn’t only happening in the content space. Every aspect of the media business is pointing to a services model. Here’s what the key pieces look like, in my mind:

  1. Data is infinitely distributable. All data…not just editorialized words. The RSS standard opened the doors for vast distribution networks, and services like Yahoo! Pipes and Feedburner figured out how to make the distribution methods meaningful. There’s an endless supply of microchunks flying around the Internet, most of them unattached to any domain or URL except as a handy reference point.
  2. Data can be visualized in meaningful ways. AJAX and the many freely available widget kits and javascript libraries such as YUI are rendering these microchunks in the right place at the right time in the right way for people which, again, is not always on a web site. The Internet user experience is no longer held back by the limitations of HTML and the packaging a site owner predefines for their media.
  3. Media is created by everyone. Whether written in long form by a reporter or researcher, captured as video by a mobile phone owner, or simply clicked by a casual web site visitor, expressions of interest are shared, measured and interpreted in many different ways. This results in a seemingly neverending stream of media flowing in and out of every corner of the digital universe.
  4. Distribution technologies are increasingly efficient and inexpensive. Personal media services like instant messaging, blog tools, podcasting and collaborative media services like Wikipedia, del.icio.us, Flickr, etc. are easy to use and often free. Web services and open source software enable people and companies to scale distribution and production functionality for large audiences or groups of users with negligeable costs. Most importantly, these tools enable people to be influential without ever owning a domain.
  5. The distance between buyer and seller is shrinking. There are more and more ways for buyers to find sellers and sellers to find buyers from search engines to recommendation tools to coupon rss feeds, etc. Distributed ad markets like Right Media are enabling marketers and service providers to negotiate both the methods and the value of a marketing message. Advertising can operate as a service, too.

After re-reading this description myself, it looks like I’ve just echoed much of the whole Web 2.0 thing yet again. That makes me think I didn’t articulate the concept properly, as I believe there’s a very different way to visualize how data get created, packaged, distributed and remixed and how the various parts of a media business can be coupled both within the organization and across the wider network. Maybe that’s Web 2.0. Maybe it’s edge economics. SOA. Whatever.

The important thing is to think of how your media business can create for yourself or leverage how others offer Marketing As A Service, Sales As A Service, Operations As A Service, in addition to your editorial and community building efforts. Here’s a quick chart of how a media business might look that hopefully gets the point across:

Staffing Model Source Data Coopted Data Distribution Services
EDITORIAL Reporters, Community Managers, Assemblers (formerly known as ‘Producers’) Original News, Analysis, Columns News Wires, Paid Data Feeds, Free RSS Feeds, Links, Comments, Votes, Ratings, Clicks RSS Feeds, Content API (Read and Write)
MARKETING Customer Service, Evangelists, Event Organizers SEO, SEM, Paid Inclusion, Sponsorships, Staff Blogs Partner Promotion, Customer Evangelist Blogs Customer Help, Usage Policies, SLAs, Traffic/Referrals to favored partners
SALES Sales Engineers, Business Development Customer Data, On-site Inventory Partner Inventory, OEM Partner Services Ad Service API (Read and Write)

We’ve seen Journalism As A Service evolve with a little more clarity, particularly recently. Mark Glaser provides a step-by-step guide on how to structure a community-driven news organization:

“Reach out to the community for bloggers, muckrakers and go-to experts. Each topic area would require more than just reacting to news. The Topic Chief would be sure to enlist as many experts as possible not only to be sources but to also be contributors, commenters, and word-of-mouth marketers. Anyone who possesses the skills that go beyond basic participation can be hired on as freelancers or even full-time staff.”

Similarly, Doc Searls’ “How To Save Newspapers” post also lays out what needs to happen on the editorial side. Here’s step #5 in his list:

“Start looking toward the best of those bloggers as potential stringers. Or at least as partners in shared job of informing the community about What’s Going On and What Matters Around Here. The blogosphere is thick with obsessives who write (often with more authority than anybody inside the paper) on topics like water quality, politics, road improvement, historical preservation, performing artisty and a zillion other topics. These people, these writers, are potentially huge resources for you. They are not competitors. The whole “bloggers vs. journalism” thing is a red herring, and a rotten one at that. There’s a symbiosis that needs to happen, and it’s barely beginning. Get in front of it, and everybody will benefit.”

There is lots of guidance for the newsroom, but all parts of a media business can become services.

For example, the ultimate in Marketing As A Service is the customer evangelist. It’s not about branded banners, as Valleywag points out,

“When paid-for banner ads lead to another site that’s supported by banner ads, you know that something’s wrong. Anyone who relies on that circular spending is asking for trouble.”

Marketing should be about enabling customer evangelists whether your customer is simply promoting your stuff for you or actually distributing and reselling it. Fred Wilson thinks of this in terms of “Superdistribution“:

“Superdistribution means turning every consumer into a distribution partner. Every person who buys a record, a movie, reads a newspaper, a book, every person who buys a Sonos or a Vespa becomes a retailer of that item. It’s word of mouth marketing, referral marketing, but with one important difference. The consumer is the retailer.”

None of this needs to happen on a single domain. The domain chain in any of these actions probably should be invisible to people, anyhow, except maybe to ground the events in trusted relationships.

Now, there are many domains that can create wonderfully useful and valuable destinations once they reach a certain critical mass. Invoking another over-used dotcom jargon word, this is what happens at the head of the long tail. And there are obviously lots of nice advantages of being in that position.

Most media companies want to be in that position and fight tooth and nail for it even if it just means being at the head of a niche curve. But instead of or maybe in addition to competing for position on the curve, most media companies need to think about how they provide relevant services outside of their domains that do something useful or valuable in meaningful ways across the entire spectrum.

Posting articles on your domain isn’t good enough any more. The constant fight for page views should be positive proof of that. There’s a bigger, deeper, longer term position out there as a critical part of a network. Sun Microsystems’ mantra “The Network is the Computer” is still meaningful in this context. What is your role if “The Network is the Media”?

Similarly, is Marshall Mcluhan’s widely adopted view that “The Medium Is The Message” still true? Or, like many have asked about the IT market, does the medium matter anymore?

If we are moving to an intention economy, then those who best enable and capture intention will win. And that doesn’t have to happen on a domain any more.

Is attention finite?

John Hagel explores the economics of attention and describes the issues for today’s business leaders:

“Attention economics starts with the observation that, as products and information proliferate, attention becomes the scarce resource … we each have only 24 hours in the day. Where we choose to allocate this attention will increasingly determine who creates economic value and who destroys economic value.”

He provides some insightful advice for an executive in the attention economy:

“The attention economy is surfacing around us today … it is not some distant future. As with most economic trends, those who spot them and act on them early are most likely to create significant value. Here are some early action items:

1) Explore the implications of attention scarcity for firm structure … I view attention scarcity as a key catalyst driving the unbundling and rebundling of firms that is occurring on a global scale
2) Master the management techniques required to increase return on attention, not only for customers but for employees and business partners as well
3) Create mechanisms to help customers and employees attract the attention they need to become more successful in their endeavors, especially in terms of their talent development.”

Hagel’s arguments are valid, but this view sounds a too narrowminded to me. He’s proposing a way to make tomorrow’s new business models backwards compatible with today’s business models.

The problem with discussing attention in economic terms, in my opinion, which is, by the way, completely uninformed by any kind of economic education, is this notion that attention is finite.

It’s true that time limits how many words I can read on a page, how many links I can click on in a browser, and how many billboards I will see in a day. In addition to time, the language, user interface and art of design as we know it limits what I can take in and digest.

But the fluidity of attention is limited more by the medium and the information therein than it is by the brain’s ability to absorb, interpret and output ideas. The brain has an amazing ability to abstract things, to alter viewpoints and understand them both on macro and micro levels. Depending on your perspective, ‘time’ can be as literal as the movement of shadows on the ground or as abstract as evolution of species.

Imagine describing to someone 100 years ago the idea that you could play hours and hours of new and interesting music from a personalized stream of songs produced by pros and amateurs alike from around the world that never repeats itself. Imagine describing to a teen as recently as 1990 that she could build a nearly infinite network of friends and interesting strangers and stay in touch with all of them almost all the time.

It’s as if attention is expanding because of better production methods, easier distribution mechanisms and deeper meaning in the information that gets produced and distributed. While discussing this with Cameron Marlow on the train this morning, he came up with the term “attention inflation” to describe this phenomenon. I like that.

Hagel is right about the most obvious approach to making money in this world. There will always be opportunities in the inefficiencies (or “friction” as edge economists say) in the way information is communicated.

We see this now in the way media properties charge advertisers a fee for the cost of reaching valuable eyeballs. But advertisers are forever chasing people to get their attention. They are always paying for the inefficiencies in the market. And media properties are motivated to retain inefficiencies in order to capitalize on that friction. This business model locks companies on both sides into the status quo.

The opportunity, on the other hand, is vast for those who are able to alter our viewpoints and abstract the way we understand information. It’s about offering new methods to communicate and taking advantage of the methods that are already infinitely fluid. The supply of attention can be limitless when the barriers are removed and the right lubricant is applied.

I guess all I’m testing out here is the idea that the attention economy is not so much a supply and demand issue as much as it is an issue of abstraction. New markets form when people can expand their attention rather than allocate it. And the early movers to find abstract solutions to communication and information problems enjoy enormous benefits down the road when everyone else wants to hop on the ride.

Top 5 new business ideas

The month of lists has begun, so I decided to rank the business ideas from the last year that could or should be a big deal in the next year. Most of these ideas and companies have actually been around longer than 12 months, but they either reached a certain critical mass or captured my imagination in a new way recently.

1) Scrobbling
All my listening behavior are belong to Last.fm. They figured out how to not only capture what I listen to but also to incentivize me to keep my behavior data with them. Since my listening data is open for other services to use, I am willingly giving Last.fm the power to broker that data with other providers on behalf. That’s a very strong position to be in.

2) Meta ad networks
Feedburner and Right Media figured out that ad networks can be networked into meta networks. Right Media went the extra step and opened up their APIs so that someone can build a white label ad exchange of their own using the Right Media tools. All you need are advertisers and publishers, and you’ve suddenly got a media market of your own. I can’t help but wonder if these guys have stepped into the big leagues with the next really important revenue model.

3) Pay-as-you-go storage, computing, whatever
Amazon impresses me on so many levels even if they don’t know exactly what they’re doing. They are making it happen just by doing smart things with the resources already in their arsenal. Similarly, Flickr understands that the APIs you use to build your web site are the same APIs you want to open up as a service, and it’s paying off handsomely for them. The formula here is one part optimizing resources and two parts confidence that your business won’t crash if you share your core assets with other people. Stir constantly.

4) People-powered knowledge
I really like the Yahoo! Answers experience. I also really like the concept behind MechanicalTurk where knowledge can be distributed as a service. Machines are at their best, in my opinion, when they make humans capable of doing things they couldn’t otherwise do, not least of which is making the universe of human knowledge more accessible.

5) Widget-mania
It wasn’t until I heard about the big revenues GlitterMaker was earning that I realized just how powerful this idea has become the last year or so. Beck’s customizable CD cover reinforced the idea that everything is a tattoo or a tattooable thing if you look at it that way…and many people do. If only I could run AdSense on my forehead.

Idealizing media business models

Jon Udell notes that WSJ’s landlocked articles may in fact help them drive revenue but at what expense:

“PaidContent.org reminded me that WSJ.com is considered a major success not only in the realm of paid online circulation, but also in comparison to newspapers…This may be a successful model of publishing, but it seems to me a curious definition of success.”


Photo: niznoz

How do you measure the opportunity cost of gating your content? The most obvious way is to estimate the number of page views an article would get outside a gated wall and then extrapolate revenue off CPMs.

However, this equation has a fundamental flaw that is not so easy to calculate. It’s the core question of every media company. How do you measure success? Do you exist to make money or do you exist to connect people?

It’s easy to say that media companies have to be both. But which powerpoint slide are you going to show your board of directors first? One of those will ultimately drive every decision at the company.

But even those two metrics fail to measure success in media as I’d like to see it. I’d like to see media brands measuring success based on the quality of the relationships they are able to catalyze. And I don’t see why that’s not possible…it might be hard, but it should be doable.

For example, it’s not how many people read an article that matters, necessarily. It’s how deeply did a story help a person. It’s not how many ad impressions were served, nor is it how many clicks or even the number of sales that result from an ad on a media property. It’s about the types of ways the media property improved the relationship between a vendor and that vendor’s customers.

Imagine how much easier strategic decisions would be if you could look at a report each morning that showed how many of your site visitors were getting promoted in their jobs or referring their friends to particular vendors that advertise on your site.

Imagine going into the board room each quarter and showing that as a direct result of the activity at your web site the average visitor income level increased or productivity in the industry improved or something more substantial like the number of homicides in the area decreased or more people voted in the last election.


Photo: infomaniac

Imagine telling an advertiser that working with your media brand meant that their customer retention metrics would improve or that people would be talking about their products more or even that they could drive up shareholder value. Imagine the rates they would pay to work with you for those benefits.

And imagine the types of people that would want to work at this kind of company and the amazing products that would come out of it as a result of these measures of success.

Yeah, pipe dream, I know. At the end of the day, most of us just want to get paid for their work and live a simple life. There’s nothing wrong with that, and I certainly fit in that camp a lot of the time.

The question in my mind is: Are qualitative success metrics like these measurable and attainable? If they’re not, why not? And if they are, why would you pursue anything else?