Last week, Google launched a customizable map product that many said would put the kybosh on competing services that used Google’s map API.
Now…
The lesson, everyone said, was “don’t rely on another company’s technology platform because if you grow, they will shut you down.” Alexaholic, if you can call it a company, was another recent high profile example (that’s not a knock, I mean it was a service or tool, and not a company per se).
Today, MySpace added Photobucket to the list of companies whose widgets it was blocking off of its massive social network, joining a plethora of companies ranging from Vidilife to Revver. Rupert Murdoch gets a bad rep, some of it deserved frankly, but this made total sense. It is, after all, a business he paid $580M for, he invested to help it triple in size, seeing any other company build a business in MySpace’s back is simply unacceptable.
As the debate raged on the blogosphere as to whether MySpace was right or wrong to do this, a few things became apparent. Om Malik does a good job of recapping five lessons from this fiasco, the main theme being, much the same way you cannot build your service on another site’s API and expect to make it into a viable, long term business, you cannot expect to build your distribution on another company’s traffic.
What Web 2.0 was also all about, in addition to mixing/mashing and sharing, was user generated content. What we are seeing in 2007 is that user generated content is not the holy grail. I’ve written about this countless of times, but while advertisers will embrace user-generated content, they will use it on their own terms. That’s a very big difference. This applied to comments, something that boosts user time someone spends on a site but that does little directly to get traction with advertisers; no one really advertises on a message board, my old employer could not give that real estate away. Point is: don’t look solely outside for content either. Do not get me wrong: MySpace, YouTube and Facebook have all built valuable enterprises thanks to user generated media, but their success had a lot to do with broader macro level trends and not user generated content alone. Each one is the leader in their respective segment. It was not, in other words, like every single web company that parlayed user generated content was a winner. There’s roadkill in every segment.
Then…
Back in 1994-2000, content, distribution and technology were obtained either by in-house resources or through partnerships. Trust me, many partnerships, like Esquire reportedly paying a quarterly $300,000 slotting fee to AOL for traffic was unwise; my old company got the distribution from AOL - and MSN - pro bono in exchange for content. But the fact remains, those were business development partnerships that took - sit down folks, get ready and brace yourself - time and effort to close. To be fair, I saw a commenter (Peter Caputa) on Om’s article mention “business development is back” which got me thinking more and more about this. I am stating this not only to give credit where credit is due, but also to showcase that some elements - like in this case comments - are great… but taken to the extreme they become double-edged swords.
And, like comments, other web 2.0 traits, tools and features such as user-generated content, APIs, talk of disaggregation is plain misguided. Of course, it’s misguided in hindsight…
The sixth lesson, perhaps then, is business fundamentals do not change over time.
Technology
It was clear to me, in Fall of 2005, that we could not continue to build a search business MetaMojo.com on Yahoo!’s API, so we dropped that for an open source search engine software to develop our own index and crawler. The smart guys in the room told me it was a mistake, but the flip side is that I do not have to wake up every day and ask myself, did Yahoo! drop us?
Content
Furthermore, when we launched our online TV station WatchMojo.com in January 2006 because of the huge opportunity in video, we knew user generated would not win in the end… right now, a year after launching, everyone and their grandma thinks we’re onto something. Great, I’m glad you thought of it.
Distribution
Last but not least, we have a pretty simple distribution strategy: we develop the WatchMojo.com media property to build an audience, generate advertising revenue and showcase our skills to other partners and clients. But that’s just half of the equation: we have also signed up distribution deals with YouTube, NBBC, GoFish, Roo, etc. We are also on the verge of naming a couple more soon.
The point is: we do not rule out either startegy, not do we count on any single partner. If we did, we’d be out of business. Moreover, while we’re big on viral video and what not, we also realize that while current “business development” deals consist mainly of “email me your RSS feed.”
Last year, Richard Parsons told the media world that Time Warner was looking for more video, both from TWX properties and partnerships, so I emailed AOL Video. Their answer: “send us your RSS feed.” That won’t make video develop into its potential. Dave Winer, please don’t kill us for saying that, we’re big fans of RSS.
Slowly but surely, good old fashion dealmaking that makes sense from both a common sense and dollars and cents perspective is making a return. I can’t divulge the details, but we are seeing that with YouTube.
The web was built by humans, technology alone is never sufficient.
Sales
Lastly, this raises the point of sales. VCs all denigrate companies that rely only on Google Ad Sense but the truth is so many of these companies get venture funding that makes me scratch my head. Much the same way that a publisher needs to be in control - either via in house development or actual partnerships - of technology, content and distribution, they also need to be in control of their advertising revenue. Remember one thing: ad networks don’t make money for publishers, they make money for ad networks.
The good thing, frankly, is that unlike the Web bubble exploding, this reality check won’t lead us into a nuclear winter of inaction. It’s a soft landing that eliminates the bad business models.
In fact, every day, there’s an opportunity to separate the men from the boys and start building profitable, sustainable and valuable companies based on good old fashion business fundamentals. Remember those?
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WatchMojo NewsletterMySpace’s Alexa Ranking: 5
YouTube’s Alexa Ranking: 4
“We probably should have stopped YouTube,” Michael Barrett, chief revenue officer for Fox Interactive Media, a part of the News Corporation, said in an interview in late February. “YouTube wouldn’t exist if it wasn’t for MySpace. We’ve created companies on our back.”
‘Nuff said.
Interesting story on CNET, found via Valleywag, on worst bosses. This is somewhat irrelevant to the story, but interesting nonetheless: the second page of the CNET article has a picture of one Craig Benson. That’s not so odd, but what is odd is that the copyright source of the image is listed as Wikipedia.org, when Wikipedia itself lists this site as the owner.
Is CNET lazy, or do they just not know how Wikipedia works. Or maybe, the joke’s on me (again) and Wikipedia actually acquires copyright when someone posts something to it… We’re kidding.
Anyway, back to the actual story, the doghead reference at Seagate is hilarious… and speaking of Seagate, here’s our customer disservice experience with them. I recall some heated exchanges the management team would have at my old company.
This would be an ideal opening, one would think, for me to lash into my old boss… but you know what, it’s all good. Water under the freaking bridge now (at least until Feb 2008. I think, anyway). Here’s a largely unrelated skit we did on a crazy boss at WatchMojo.com, by the way.
I was reading Don Dodge’s comments on the MySpace/Photobucket non-issue (to me, anyway) , and something caught my eye: “Microsoft has 260 million Hotmail consumer users and over 500 million Outlook business users.”
Really? Surely those 500M Outlook users have webmail, be it from Hotmail, Gmail, Yahoo! or AOL. But if MSFT is always looking for ways to strengthen its web position, why not leverage those 500 million accounts? I guess that’s at the core of the entire bundling debate… and I am sure it does, to some extent, but I don’t even use Outlook anymore, only webmail… something that has pros and cons, admittedly. Just a thought for Redmond.
I rarely attend conferences; I prefer actually working at the office or meeting clients. Of course, the flip side to that is you need to get out there and meet folks. The challenge is finding conferences that offer a lot of value…
I must say, frankly, that I am somewhat baffled by the sheer quality and quantity of top level people that Rafat Ali and his team at Paid Content/ContentNext Media has managed to line up at their upcoming Conference on the Economics of Social Media. The shindig is taking place April 26th, 2007, and as luck would have it, I am on the West Coast around that date so I will be attending. If you’d like to meet up, hit me up at ash@mojosupreme.com.
Looking at the speakers list, and seeing a couple of names:
- Ross Levinsohn, former President of Fox Interactive Media
- Richard Rosenblatt, Co-founder, Chairman, and CEO, Demand Media
Can you imagine if former Intermix CEO Brad Greenspan would crash the party? Now that be wild! Mr. Rosenblatt, of course, sold MySpace parent Intermix to Mr. Levinsohn’s News Corp., much to the chagrin of Mr. Greenspan.
I guess you can call it a high stakers Baby Shower epidode, where George crashed a baby shower hosted by Elaine to confront an ex-girlfriend who threw Bosco his red shirt during a performance. Only difference, of course, being that it’s not a dispute over a $30 shirt, but a few billion dollars.
I came across a post on why Apple’s customer base is so loyal and enthusiastic. As summarized by others, it’s because Apple users are “just very satisfied customers.” Great. I’m not in that category sadly. And it’s a shame.
Let me tell you that I have found this out first hand, for better or worst.
Funny, sad, but true story:
Last week I posted something on this blog about an experience I had with Apple. It was not a good one. Ultimately, I called them, spoke to six people, and thought the matter was resolved: they were going to send me an email with a shipping label. Unbeknownst to me, the post was picked up by MacSurfer. The initial feedback, while generally highly critical of me, was fair in the sense that I was writing about my bad experience, and others were pointing out their positive experiences. Of course, with comments, you get nasty ones, that’s just “part of the Web.”
Then Seeking Alpha picked up the post… which in turn meant that Yahoo! Finance picked it up. By then, I had not only offended loyal Apple users/consumers, I had offended Apple shareholders. That, was inexcusable, I learned.
Throughout the day, I began to say: “shareholders or users notwithstanding, if Apple has such a loyal base, then maybe it’s just me.”
So I called Apple back to see how come I never got the promised email from Apple support employee #6. Turns out that the six people I spoke to never actually documented anything, and to add insult to injury, my name was not Ashkan Karbasfrooshan, but Bob Smith. How did I find this out? When I called yesterday and gave them the case number, the agent called me Bob.
“Who’s Bob?” I asked.
“Sorry, I mean Mr. Smith…” was his answer.
“Who’s Bob Smith?” I thought, that’s when the big joke was on me. Even the reps yesterday acknowledged this. Mind you, it’s been nearly 24 hours and still no email, also checked my spam folder, nada.
I am not going to comment on Apple users, its loyal customer base, the quality of its product or whether its stock will go up or down, but I know arrogance when I see it. You cannot, after all, make this up. As I frequently do, I actually contacted a number of Apple PR folks last night, and in all fairness to some Apple user/shareholders, a few actually emailed Investor Relations… this morning Apple Canada’s Executive Relations team called me. They acknowledged that this was not exactly company protocol, and they did confirm that my name on the file was Ash Smith. I gave them my first name yesterday but no longer had the patience to go through everything, tell them the story, give them my last name, having done it at least 8 times already. At the same time, Apple’s IR team sent the email to its US Executive Relations team.
Suffice to say, most people have lives and would not go through all of this, they would simply accept it and become frustrated, in silence. That’s not me.
In business, this shows two things (independent of the company)
- Service is more important than innovation in so many ways, when I called Apple last Thursday, I was not even sure if I wanted a replacement or a refund.
- Arrogance will catch up to any company. A few years ago, Michael Dell was asked what he’d do if he ran Apple, he said “I’d give shareholders back their money and shut down the company,” today Apple is worth more than Dell. To me, and me only, Apple is arrogant now. Unless they change, it will catch up with them. I also think Google is arrogant. But that’s another post, on another day.
With regards to the Web, this proved one thing to me:
- comments are great but they are also the Web’s (or a website or blog’s) downfall. Go through, if you wish, the comments on my original post or those on Seeking Alpha. I have a thick skin and can handle myself, I even enjoy it. But folks, what’s that saying?
Right: Arguing online is like the Special Olympics, Even if you win you’re still retarded.
Besides, the remotely intelligent feedback and constructive criticism gets drowned out by sheer, utter nonsense. One commenter accused me of having an agenda. An agenda? We are talking about a $200 piece of hardware, right?
Comments, while the epitome of Web 2.0 is also its downfall. Sometimes, it’s good for feedback. My former employer added comments to their sites recently, and they are getting long-overdue comments as per how lame their articles are. Had they been privy to such comments, they could have improved the quality of their content.
But generally speaking, comments tend to represent a slippery slope. Digg is a victim of that today.
On this blog, I approve all comments, and once we upgrade to a more powerful anti-comment spam solution we might automate them as well, because blogs and comments go hand in hand, but on general websites, I think it’s a cheap publisher tool to get average time spent on a site to go up. But, like the Google arrogance topic, is a post for another day.
News Corp.’s Fox Interactive Media decided to stop users from posting Photobucket videos onto their profiles. MySpace, it should be noted, curses the day they allowed YouTube to grow their business on MySpace’s back. That’s coming from Michael Barrett, Chief Revenue Officer at FIM.
Photobucket made this announcement on their blog, and we appreciate where they’re coming from, but they are misguided when they say this: “We believe that by limiting your ability to personalize your pages with content from any source, MySpace is contradicting the very belief of personal and social media.” Anyone on the blogosphere that says FIM is the bad guy here is with all due respect forgetting the fact that Rupert Murdoch paid $580M for Intermix for MySpace, as I wrote previously, it’s not your space, it’s his space. If you are unhappy, leave MySpace and make him pay. If you choose to continue to live on MySpace, then yes, you have to play by his rules.
Don’t get me wrong, limiting the ability to personalize one’s page on a social network might indeed restrict the value of the social media to others, but it only makes sense for FIM to do this, because they helped YouTube grow, cash out, and now they have to play catchup with MySpace Videos. As such, why on earth would they let another YouTube materialize?
I wonder what, if anything, this does to Photbucket’s price tag in a sale, which I think, like Metacafe, won’t materialize. At least not at the $100M+ range it’s aiming for (their investment bankers wanted $400M - good luck).
Of course, a somewhat unrelated but interesting denouement: former FIM COO Mark Jung, who helped build IGN and sold it to News Corp. for $650M and then saw MySpace get all of the internal and media love, is now an investor and chairman of Clearspring, a widget management tool… which some people are rightfully/wrongfully arguing might become obsolete if sites like MySpace block. Say what you want about the murky reasons as to Mark Jung left FIM, but could Mr. Murdoch be giving the old shaft to Mr. Jung without even realizing it? Or does he realize it aplenty… who knows?
Disclosure: Mr. Jung was my indirect boss while I was employed by News Corp., and while I have nothing but respect and admiration for Misters Murdoch and Jung, I just can’t say it’s mutual…
UPDATE: Statement from FIM, found via GigaOm:
“MySpace allows its users to embed video, slide shows, and other features from third parties so long as they comply with our terms of service. Photobucket recently began running an ad-sponsored slideshow and encouraged users to post these ads in bulletins and profiles throughout the community. We spoke to the company about their actions, but they refused to respect our community’s terms and we had no choice but to disable their service. MySpace does not block third party embeds or services that abide by our terms of use. We support the freedom of expression and creativity of our community and must continue to protect the experience expected by our users.”
Again, FIM is actually reasonable here. Revver tried the same thing.
