Here is why Google was so eager to buy the ad-server company DoubleClick : their combined market share reaches 69% of unique visitors, according to Attributor, a start-up specialized in tracking monetization on the web (January numbers). The split gives 35% for Google itself and 34% for DoubleClick. And, if we measure by domains (instead of Unqiue Visitors), it’s even better — or worse, depending on your free market beliefs: Google contros 77% of the market and DoubleClick less than 6%. Basically, as Attributor puts it, DoubleClick owns the head of the market, Google owns the tail, as shows the table below : audience*……<100kUV…………..100-1m UV…………….>1m UV DCLK……………… 9.1 %……………… 29.9%………………48.0% Google ………….. 71.4% ………………41.6%………………15.9% …………………………………………………………………………………… * in Unique Visitors per month In comparison, on a global UV basis, Yahoo has a market share of 11.5%, MSN 10%, AOL 5%. To measure this, Attributor crawled 68 million domains and 25 billion pages instead of using the traditional panel. Attributor plans to release such data on a monthky basis.
Here’s the BFD: TV programs come as IP packets, just like any other Internet content. The results? Advertisers target me with unprecedented precision, TV finally becomes interactive, huge profits on the horizon. Is this another Web 3.0 pitch? No, your honor, let me explain. For this I start with a small epiphany. Two years ago, I buy one of the first Intel Mac Minis. This is a BYO deal, I find a no name keyboard and mouse in a closet and decide to use my brand new Sharp “Full HD” TV for the monitor. All I need is a DVI ti HDMI adapter in the back of the Mac and a HDMI cable to the TV. The Mac boots and sets itself up automagically to the TV’s resolution, 1920 by 1080. [I can proudly report it’s also “possible” in Windows, this Mac also runs it, I did it and I have the new hair on my chest to prove it.] So what? Well, the Mac Mini is now on the Internet, I watch YouTube, Joost and others. With the browser in Full Screen mode, how do I know I’m watching the Net vs. cable TV? This is the future, the Internet devours TV.
With real IPTV in theory, the broadcaster knows my IP address, my ZIP code, my credit card number, what I was watching 10 mins ago or last night. Toyota sees Palo Alto proudly features the highest concentration of Prius on the planet, we’re the epicenter of the (caviar) Left Coast. The automaker also knows I owned two generations of Prii. As a result, the next isn’t for the humongous Tundra pickup truck. Instead, I get a very personalized offer to trade my German VC-mobile (they know, they have my DMV record) for the new high-end green-guilt (hybrid) Lexus 600h. Other exercises featuring teenagers or bored seniors are left to the reader’s imagination. One set-top box maker even floated the idea of adding a camera to their device, a “good” way to know who’s actually watching…
This is the advertiser’s green (money, not melting Greenland) dream. TV on IP protocols, as opposed to today’s airwaves or cable, gives a gold mine of information to the advertiser. And, for the viewer, we have more choices. It is now easy to respond to an offer, one click of the mouse/remote. Voting, menus of choices, candidates or pizza toppings, impulse purchases, multiple windows for the ADD-afflicted or the sports addict…
I wrote “in theory” above. Cable networks aren’t there yet but companies such as Comcast are furiously working with huge Cisco routers to deploy their own high-speed IP network. Today, they get no share of Internet advertising revenue. Tomorrow, their IPTV network gives them high-resolution user information and toll booths to convert it into a share of advertising spending. This is the end of the era of “dumb pipes” a France Telecom executive decried when he saw the Internet killing their obscenely (in more ways than one, they once were the largest pornographer in the Western world) profitable Minitel. And, speaking of phone companies: Will they compete with their own fiber network, or will they let the cable companies provide everything, VoIP, IPTV, Internet access. Actually, with an ultrafast IP network, there is no more “triple play”: Telephone, TV, Internet, it’s all IP packets. Still on theory: We The People better wake up and kick our bought and paid for legislators in the rear. Our private data are in play, we can’t let our solons sell us down the river again. At least, get us more “free” channels… — JLG
BFD: In VC parlance, Big Fundable Deal. You may replace Fundable with other F words.
BYO: Bring Your Own. As in BYOB, Bring Your Own Booze. Here it’s Bring Your Own keyboard, mouse and monitor.
IPTV: Television delivered with Internet Protocols (or Packets).
VoIP: Voice Over IP, voice, telephone connection, delivered with Internet Protocols (or Packets).
There is a comical side to the P2P controversy. The ISP philanthropists are whining, music and movie publishers are suing, users cry foul, The Electronic Frontier Foundation (EFF ) jumps to the defense of the oppressed and raises money, pundits gravely contemplate the future of the Net and, of course, smelling a photo (or Web) opportunity, politicians strike poses.
What’s the story here, do we have a dog in that fight?
A quick reminder: P2P stands for Peer To Peer communication, as opposed to the classical client (my PC) server (amazon.com, hotmail.com) configuration. With P2P, users, peers, share files without central server. Using software such as LimeWire on your PC, you share what you have and get what you want. As usual, Wikipedia provides a robust explanation of the ins and outs of P2P. Let’s just say the magic of IP packets makes it work well, much too well.
The first to complain are the owners/publishers of content: for them, P2P is a way to propagate stolen property, it stands for Pirate-To-Pirate. The highs and lows of fights between the RIAA or the MPAA are well documented: google (it’s now a verb) “RIAA lawsuit” or “MPAA lawsuit” for more. How the “majors” think they prevail in the end remains a mystery. They should read Jonathan Swift, it’s free, in the public domain.
Next, we have the ISP. Yes, the potential for P2P was right there in the Internet basic technology, but nobody saw it coming. There are times where P2P consumes 90% of all Internet traffic. Design a finely calibrated business model for your All You Can buffet and, suddenly, a bus full of sumo wrestlers pulls in your parking lot. Comcast and others tried to choke P2P traffic. The result? More of an already bad reputation for gaming their customers and more politicians rooting for an exploit. As recent tests have established, the very sophistication of IP protocols that makes P2P possible also makes it very hard to distinguish a “bad” P2P transmission from a “good” exchange with schibsted.com.
But there is another side to P2P, one that saves money. Consider CDN, Content Delivery Networks. One example is Akamai, $630M in sales, 15% profit margin. One customer is Apple, the company “pushes” more than 100 megabytes of software updates per month, per user as well as large servings of content such as video tutorials or Steve’s much consumed keynotes. All free. Instead of owning and operating servers for that task, Apple offloads it to Akamai. That company, in turn, maintains a network of strategically located and finely tuned servers, hence the CDN moniker. Bandwidth is expensive, before being saved by Google late 2006, YouTube spent about $1M a month feeding free videos.
This is where the “good” P2P comes in. Invented in computer science labs at Stanford, variations of P2P automatically distribute content to users who, in turn, propagate it to others on request. “All it needs”, an admittedly dangerous phrase, is cooperating software on PC and a directory that keeps track of the propagating content. The CDN is hierarchical. By contrast, this modified P2P is a mesh network, one where bandwidth is shared between users. One important addition: with P2P, fragments of content come from multiple simultaneous connections, software re-assembles the load on my machine.
This matters to publishers and advertisers. A video on my site gains sudden popularity, Hillary says something true, my servers get “hammered”, I lose advertising revenue, or I have to pay a hefty CDN bill. If I want to deliver movie trailers, a form of advertising, or slick video eye candy to sell cars in Spring, or Summer fashion, or Greek islands vacations, the bandwidth expense hurts my business.
That’s the dog we, users, content designers and publishers, advertisers have in that fight. With a browser plug-in, my computer becomes part of a mesh CDN. Pay for my participation with goodies, discounts, freebies and we’re in business. As for the ISP, it won’t change the amount of traffic they carry and I trust them to invent some freemium variant.
The rest is, as engineers like to joke, a mere matter of implementation.
Three years after its launch by candidate-activist Arianna Huffington (bio here ), The Huffington Post is undoubtedly a success in the struggling editorial web world. With its 46 full-time staff and legion of bloggers, the site is poised to break even using only advertising revenue. In terms of audience, it is more popular than all but eight newspaper sites.
> the New Yorker explores the recipe of the Huffington Post, a mixture of strongly opinionated pieces and good basic journalism.
Let’s try a simple explanation: when you land on a web page, your attention is captured by a particular section of the page, a subject, a sub-story. Problem: the ad embedded in the page (on which you are extremely unlikely to click, let’s face it) is automatically served to you on the basis of the URL and of the general content. Google’s new patent refines this by adding a vast array of behavior components. Some sound realistic: cursor dwell time or volume up in an audio segment. Others are more futuristic: viewer eye direction, or even facial expression. But it gives an idea where Google is heading: very far.
> read the article by tech pundit Nicholas Carr
> and if you want to go to the bottom of it, you can always attack the original document filled on the US Patent Office
Mixing genomics and social networking.That’s the pitch of 23andMe, a Silicon Valley startup. The company proposes a system where people compare their genomes. We can already foresee the conversations: “Hey, you have a predisposition to colorectal cancer? Great! Me too!”. “Oh, according to our respective genomes, we might develop Alzheimer together at the same age, isn’t it fantaaastic?!”. Meetic, Match.com will love it. Of course, mapping your 600,000 genetic variations for $999 also helps you to trace your ancestors. For the short-term, we have all the obvious business applications derivatives: from deciphering the genes to actually interpreting the results. Later, we’ll enjoy an endless stream of predictive medicine applications — hypochondria will finally become fact based. Companies like Navigenics are already on it. But there is also a darker outcome : gene-based social networking will also become the dream tool of eugenics.
> story in the MIT Technology Review
Ever heard of services called GyPSii in Europe, or Loopt in the US? Well, chances are your kids will. Unlike their parents, teenagers are less sensitive to the notion of privacy protection. Hence the success of social networks where 150m young people are putting their life online. The logical next step was to make the system mobile. This could be another killer app for cell phones: Loopt, calls itself “Your Social Compass”. For the moment, carriers are still struggling with regulatory issues: receiving unsolicited email can be an annoyance, broadcasting your exact location to others is quite something else. For now, geolocation can be made available to a group of friends — a rather extensive notion when social network become part of the formula. In the meantime, marketers salivate: imagine local advertising, mobile and dynamically pushed.
> story in the Wall Street Journal
At least someone believes in newspapers. Harbinger Capital Partners grabbed two seats at The New York Times Company’s board as it increased its ownership, now close to 20%. The stake is currently valued at $520m. Pressure on the Times management for decisive changes will keep mounting.
> story in Reuters
2007 was the worst year in terms of print ad revenue for American newspapers since record keeping began in 1950. Here are the main facts & figures to bear in mind from the Newspaper Association of America’s last report (tables here )
– Print advertising plunged 9.4% to $42.2bn from $46.6bn in 2006
– Losses are greater in the classified (-16.5%) than in any other area
– Internet revenue are jumping by 19% to $3.17bn
– In advertising dollars, the online gain (+$0.5bn) is peanuts compared to the total loss in print (-$4.4bn), classified loss (-$2.8bn) or the combination of national + retail ad (-$1.6bn).
– Cost cutting initiatives (in newsroom for example) won’t offset the ad and classified erosion.
Overall : for all indicators, the decline is worst than expected 18 months ago.Deterioration will continue this year (Bloomberg is mentioning a 20% drop in ads for McClatchy’s two biggest markets, California and Florida). Even if we remove the effect of the looming recession, transfers to the Internet are nothing compared to the deterioration of print. This is mostly due to poor per-reader monetization. The S&P Publishing Index reflects the situation: it lost 44% from its peak in June 2007 . And debt figures won’t help. Publishing-related bonds are falling sharply as explains Alan Mutter on his blog.
> read also David Carr’s column in the New York Times on the displeasure of newspapers owners.
The Guardian Media Group (GMG) will invest GBP 100m (EUR128m or $198m) in a fund dedicated to ensuring the future of the company by reducing its dependency on the advertising market. At stake is finding other sources of cash since the two flagship newspapers, The Guardian and The Observer, are losing money. > story in The Times of London and the interview with GMG’s CEO Carolyn McCall.