Throwing a lifeline to an endangered species, print?

CEO Eric Schmidt spoke in San Francisco, at an event hosted in San Francisco by Syracuse University’s Newhouse School of Public Communications. There, he addressed the collapse of advertising revenue in print media: “It’s a huge moral imperative to help here”. Schmidt didn’t provide any detail on how the search company could throw a lifeline to the newspaper industry, but he hinted that DoubleClick, the ad server firm Google acquired, could generate “significant” revenue online for newspapers. But he acknowledged that it wouldn’t be enough to restore the profit margins that newspaper publishers historically have enjoyed from print advertising. “What we don’t know and we have not yet solved, is how to come up with digital products that will monetize at the same rate as the print ones. Once we’ll have done that — and we are on it — most of the concerns will go away”.

Let’s read between the lines: Schmidt is very concerned Google appears to be the main cause of the upheaval in the advertising sector. Google cuts off most of the lucrative links in food chain and it has no rivals for targeted advertising. To deal with such negatives, Schmidt’s idea appears to be to apply Google’s knowledge and power to funnel ad money into newspapers. But like everyone else, Schmidt also worries about the huge ad revenue gap between a print media consumer and a digital one. (To make matters worse, the gap is widening as the inventory of web pages available for ads grows faster that the number of page viewes by the users.)

In this talk, Eric Schmidt addressed other issues: – the monetization of unprofitable Google properties such as Google Maps, YouTube – the delicate situation of being a member of Apple’s board of directors and developing the competing mobile platform Android — he hinted that the two firms where far from being absolute rivals in this field – the next two big things for Google: language translation, geopositionning and related applications – his biggest worry for Google: the scalability of its culture as the company expands. This 56 minutes video of this Q&A session is definitively worth the click.

Barack Obama is our man

From a distance, it must be hard to comprehend Silicon’s Valley position on the 2008 presidential election. Isn’t Stanford University, the heart of the region, a private, capitalistic university? Aren’t all rich investors and entrepreneurs siding with the party of money, Republicans? This is the capital of capital, the world-center of free enterprise, how can we support Tax & Spend Big Government Liberals? There are many answers to that, suspiciously too many, perhaps.

Let’s start with the Caviar Left posture: now that we’ve made our money, we tell others to make sacrifices. See Al Gore pontificating about carbon footprints while traveling by private jet and living in a huge energy-hungry mansion. A note in passing: Al is a partner in a Kleiner Perkins venture capital fund. John Doerr, one of Kleiner’s lead VC is a hyperactive fund raiser for Democrats. And while we note things in passing, see Colin Powell on the masthead as a Strategic Limited Partner.

A year ago, we were all for Hillary. Out with Bush and the litany of Iraq War, frightening deficit, torture, domestic spying, healthcare, education, infrastructure neglect. Not that we were in love with Hillary but, based on her and Bill’s track record, we knew she could be bought, we could do business with her. In a not so perverse way, we like Obama for the exact opposite reason: he can’t be bought. Hillary took money from big donors, from the lobbies our elected officials sold us to. Barack, on the other hand, handily outraised Hillary by an almost two to one margin, getting money from small donors, mostly on the Web. This gets us in what I think is the real reason we like Obama: He’s one of us. I’m not saying this because he’s been spotted using an iPhone. No, what we see is someone who connects with the connected generation. We see someone like us, venture investors and entrepreneurs, who holds an optimistic and meritocratic picture of the future. The latter adjective, meritocratic, got him in trouble. Used without enough discretion at a San Francisco meeting, it upset the more pessimistic market segment, the white lower middle class with a justifiably gloomy view of their prospects.

Then, while Hillary banked on her inevitability, Barack out-strategized, outraised, out-organized and outspoke her. And as inevitability switched sides, so did we. The really real reason came into play: visionary sheep that we are, we flocked to the winner. Hillary tried every dirty trick in the Clinton playbook to try and stop him. From raising prospects of Kennedy and Martin Luther King-like assassinations to bad-faith answers to questions about Obama’s own faith. What do you think of rumors that Obama is a Moslem? Instead of saying such libel had no place in a campaign for the highest office of the land, she replied she took him “at his own word he is a Christian”. The interviewer insisted: Come on, you know these rumors are false. “I take him at his own word.” Hillary had one more opportunity to rise above the gutter, to look presidential. Instead, the highly visible low blow, this was on 60 Minutes, strengthened her reputation for being Bill’s even less principled half.

I was half-kidding when I wrote above we back Obama because we like to back the winner. To us, he looks like a mestizo of JFK and MLK, minus the women and the pharmacy. To us, he looks like he will return the US to a position of exporting hope instead of exporting fear. That’s why we allow ourselves to hope we’ll make history together. In the end, how could we support the Clintons in their re-conquest of the White House, they don’t email, they don’t use Blackberries… Seriously, the BFD (Big Fundable Deal, in VC parlance) this coming week is the iPhone Applications Developers Conference in SFO. Watch this space next week. — JLG

When the amateurs join the fray

Ever heard of Mayhill Fowler? Well, if you are following the US presidential campaign, you should have. At 61, the “citizen journalist” of the Huffington Post was last week most talked about people in the media circus. What she did was simply ask Bill Clinton for a comment a rather harsh story in the July issue of Vanity Fair

Todd Purdum’s article in VF is not exactly cozy journalism. It describes a post-presidency frenzy of private-jetting, skirt-chasing, and media outbursts that bruised Hillary bid for democrat nomination. Asked by the self-assumed amateur-journalist Mayhill Fowler, Bill Clinton erupted in a tirade against the VF reporter, calling him “dishonest”, “sleazy”, “a scumbag”, etc. Mrs. Fowler dutifully recorded the outburst and filed both an audio and a transcript to her blog on the Huffington Post. Bam!

The fun part of it is the debate that erupted in the traditional media elite. Mayhill Fowler was even profiled in the Los Angeles Times. The Fowler scoop is not an isolated piece of luck. She was the one who surfaced Barack Obama’s appreciation on the economically frustrated Pennsylvanians who, he said, ” get bitter, they cling to guns or religion.” An off-the-record remark that reverberates worldwide.

This weekend’s New York Times analysis was the perfect display of the embarrassment of the media elite facing some sort of disorganized, spontaneous, grass-rooted journalism, that didn’t even “wear its credential badges around the neck” (a major transgression), and whose work is propagating at light-speed thanks the blogs and YouTube. This sequence of events and reactions are really with the clicks to understand the new challenges of modern journalism.

Yahoo under intense Icahn pressure

Jerry Yang is going to have a lousy summer. Carl Icahn, the New York-based corporate raider is willing to force the sale of the company before its annual meeting on August 1. In a stern letter sent June 6 to Yahoo chairman Roy Bostock, Icahn outlined his plan in pretty clear terms:

“– First, I would work to have the board replace your “poison pill” severance plan with an acceptable alternative. [Carl Icahn is referring to a severance plan for employees leaving or fired in the wake of the merger, that raises substantially the price of the transaction, among other things] – Second, I intend to ask our new board to hire a talented and experienced CEO (attempting to replicate Google’s success with Eric Schmidt) to replace Jerry Yang and return Jerry to his role as “Chief Yahoo”. Indeed, it was much speculated that Jerry would serve in the CEO role temporarily until a permanent CEO was hired after the board asked Terry Semel to resign.
– Third, I intend to ask our new board to inform Microsoft that unless any alternative transaction can insure a $33 or higher stock price (of which I am skeptical) all talks of alternative transactions are over.
– Fourth, I will ask our new board to offer publicly to sell Yahoo! to Microsoft in a friendly and cooperative transaction.
– Fifth, to the extent Microsoft does not want to make a proposal, I will ask our new board do a deal on search with Google, but only if it contains termination provisions that would in no way impede a subsequent acquisition by Microsoft.”

Carl Icahn is urging Yahoo to sell itself to Microsoft for $49.5bn, about $2bn more that Microsoft last, proposal.

Steve Ballmer sees the end of media paper within 10 years

Asked about his outlook for the future of media by the Washington Post, Microsoft CEO Steve Ballmer answered this: “In the next 10 years, the whole world of media, communications and advertising are going to be turned upside down — my opinion. Here are the premises I have. Number one, there will be no media consumption left in 10 years that is not delivered over an IP network. There will be no newspapers, no magazines that are delivered in paper form. Everything gets delivered in an electronic form.”

Well, this take is actually pretty reassuring considering the litany of things where Microsoft was dead wrong. Bill Gates was right in two instances (big ones for sure): Windows and Office. On all the rest, it essentially missed the boat: most of the Internet positions — both PC and mobile based — were left to other players. And today, what remains of Microsoft domination is seriously challenged by “cloud” hosted applications. Guess who has the biggest chances to be gone within ten years? By the way, hearing the cling-clung noise of forks and knifes, this semi-amateurish video of Ballmer was taken by a Washington Post staffer. Actually, 185 of them have been trained to use the medium, as explains Chet Rhodes, Assistant Managing Editor for News Video at the Post on Beet.tv.

The rise of the nomadic web browsing

“Welcome to the Weekend Web”, said Business Week. Internet browsing differs from weekdays to weekends. In this story, Google Mobile’s chief says that the biggest part of traffic on the search giant’s mobile sites occurs Saturdays and Sundays. The weekend’s mobile web promenade involves mostly classified and local sites. Among them (on the US market), Craigslist, both a huge classifieds site and a local destination. According to M:Metrics (now part of ComScore) mobile browsing has surged 89% last year and mobile page views are up by 127%. No doubt than within few years, the mobile Web will be bigger than current PC Web… but also harder to monetize.

Here are the top 10 sites viewed on mobile phones (figures are in minutes per user and per month) Craigslist_____99 mn

Ebay_________86 mn

MySpace______85 mn

Facebook_____84mn

Go.com(1)____67 mn

Google_______63 mn

Yahoo________53 mn

AOL__________41mn

Live.com(2)___37 mn

CNN.com_____10mn

(1) Disney portal gives access to ESPN

(2) Microsoft portal

Actually, The New York Times is also quite bullish about mobile browsing. In this video interview on Beet.tv, Michael Zimbalist, head of R&D at the Times, confirms the growth of mobile pages and explains the relationship the Times is developing between mobile and print content.

Honesty at the D6 Schmooze fest

A word (or two, or three) of explanation is in order. D6 is a conference organized by the Walt Mossberg, the personal technology guru of the Wall Street Journal. Over the years, Walt’s finely tuned columns earned him the position of high tech kingmaker. From there, a conference was born for his subjects to meet once a year near San Diego, California.

Second, “schmooze” , evolved from its Yiddish origin to designate an social networking activity. Sorry, for our younger readers, we’re referring to the BFB (Before Facebook) version of networking. There, we smell each other’s pheromones, make small talk, pin decorations on each other’s chest, discreetly but feverishly check we’re not missing the next Big Idea or slipping down the pecking order.

Third, Honesty. At such an event? With speakers ranging from Bill Gates and Steve Ballmer to Michael Dell, Jeff Bewkes (TimeWarner’s CEO) and Kevin Martin (Chairman of the FCC), there risk of honesty is infinitesimal. And that’s part of the fun. In the audience you have entrepreneurs, corpocrats, journalists, bloggers, investment bankers and venture capitalists. On stage, Walt Mossberg and Kara Swisher, his associate, pretend to interview the magnate of the moment. The fun is trained bullshit artists in the audience watching fellow artists prevaricating on stage. We admire the high wire act or lament the lame obvious “misstatement”.

The Gates & Ballmer show was highly professional, a testament to their experience, focus and preparation. We were first treated to the mollifying bit of schmaltz, how the love story between the two of them started at Harvard. Thus supposedly oiled, we got into more scabrous topics: Vista and Yahoo! No problem, we sold a lot of Vista, it’s been massively well received and, as always, we look forward to make our product even better. And, you know what, here is a quick taste of the even more wonderful Windows 7, available in 18 months or so, with our new invention: Multi-touch. And the coda: We avoid monopolies, we love to compete. The connoisseurs in the room nodded their appreciation: impeccable, first-class chutzpah, not a single hairline crack in the dam. Moving to Yahoo! things got a little less polished, a whiteboard was brought out and Ballmer did his Scale number: We need Scale in advertising, we’re still talking to Yahoo! about ways to gain Scale while not buying the company. But we’ll gain Scale by ourselves anyway because we never give up, we keep coming back, and coming back and coming back. The pros thought this was protesting a little too much.

But, Yahoo’s Jerry Yang and Sue Decker, the next day, made the Micro-couple look like the consummate fabulists that they are. Jerry Yang went through a “he said – she said” recount of the aborted deal and was caught flat-footed when asked to define Yahoo’s business. His minder, Sued Decker, regurgitated the party line but the damage was done, we were looking at a future has-been.

Jeff Bezos, his usual happy smart self unfortunately couldn’t resist bullshitting the bullshitters and danced clumsily around his refusal to release Kindle statistics. Too bad because the rest of his act was pitch perfect. He is loved and respected for all the right reasons: vision, execution and culture of the great Amazon.

Mark Zuckerberg brought his new adult guardian with him, the terrifying Sheryl Sandberg. Terrifying? See here quasi-Hillary résumé here. Unfortunately, her professional supervision didn’t spare us a dozen Zuckerberg robotic repetitions of the We help people share information and share themselves. Possibly a good company but definitely bad BS.

I saved the best for last. There was one straight shooter: Rupert Murdoch, the head of News Corp, owner of MySpace, a flock of TV and newspaper properties such as the Times of London, the tabloid New York Post and… the Wall Street Journal. Walt and Kara were interviewing their new master. Everyone in the room was paying attention, wondering who was on the high wire, Murdoch or his hosts. The boss doesn’t miss a beat, didn’t worry about admitting misfires or slow progress in places like MySpace, changing his mind a bit about the strategy – not the goal, depose the New York Times – for the WSJ. The man was speaking honestly, holding forth about media, newspapers – not the news – in trouble, the economy, in recession. And then came the moment: Who caused his New York Post to endorse Obama? Me. What? You support Obama? Well, I need to meet him but if he his the way he looks like, I might. Not a word of Clinton. We knew we were in the presence of a 78 years-old man who had reached a position of power without fear. No wonder the next day 23andMe, the personal genomics company (co-founded by Ann Wojcicki, Sergey Brin’s wife) asked for a sample of Rupert… More artful use of the American-English language here. –JLG

Facebook’s maturity problem

Like many startups, Facebook is confronted with a growth problem. Its outstanding traffic (30-35m unique visitors a month) is no longer growing; newcomers tend not to stay with the service as much as the early adopters still do; the Google-induced OpenSocial protocol is a threat and advertising has not taken off as promised. Recently, the investors in Facebook imposed teenage supervision of a kind: they hired Sheryl Sandberg, a former Google executive (see her interview at the D6 Conference)

Facebook is under more pressure from its investors as explained in New York Times DealBook. There, a professor of economics brilliantly reminds Mark Zuckerberg what are the rules of high tech funding. (For an overview of the social network current situation read also the story in Fortune)

Mobile phone –The value of data

ComScore, the internet measurement company, announced it was acquiring M:Metrics for $44m. Not a deal comparable to last year acquisition of Telephia by Nielsen, for $440m but still a significant event. This acquisition confirms that tracking the expansion of mobile devices as well as the behavior of its users is as important as the data currently collected on the Internet. M:Metrics is specialized in analyzing the usage of mobile phones, and more importantly, smartphones. As the founder of M:Metrics, Will Hodgman, pits it: “We want to know behavior across the internet regardless of device.” (His interview to Moconews, here).

How Wired does it: the “quant” way

I always considered Wired as the most inventive magazine of our time. It is always interesting, sharp, and fun to read. And its journalistic grasp is wide. Stories can be quite nerdy, which is fine since they are always carefully edited to remain readable by “the rest of them”. At times, editorial choices look not wired but weird when the magazine runs a story about a team of ship salvagers or profiles the structural engineer that built the Burj Dubai skyscraper. For having met the original founders of Wired, Louis Rossetto and Jane Metcalfe, back in 1993, I thought the magazine was still run by a kind of instinctive, passion-driven journalism consistent with the early days’ DNA. I was wrong.

Chris Anderson, the editor-in-chief, runs Wired on left-brain side. I visited him few weeks ago in San Francisco. The original HQ of the magazine remains the same, in the (former) industrial district of the city, where buildings have still high-ceiling and cinders-blocks walls. Anderson’s office is not filled with journalistic personal memorabilia, it’s all about data, charts, graphs on the walls and market reports on his desk and table. The guy is a data freak. “If I had the opportunity to run this magazine the same [quant] way as a hedge fund, I would do it without hesitation”, he tells me. Anderson’s editorial decisions are fact based. Months before an edition of Wired hits the streets, story pitches are circulated among staff members. They rank each project by vote. A passionate discussion ensues, in which Chris and his close staff will argue to include a pitch that ranked poorly or will kill a story they consider irrelevant. Once the table of content is set, three possible covers stories are market tested with various headline, graphics, etc on no less than 6000 panelists. In the background, Wired also relies on tons of surveys performed by the incredible sharp research department of Condé Nast, the magazine’s publisher. Each month, Anderson receives five centimeters of analysis of previous issue: story-by-story analysis, time spent by the readers, appreciation of content, length, graphic environment (very important).

This analytic approach to journalism has a lot to do with Chris Anderson professional background. He is a trained physicist who has worked in Los Alamos National Laboratory, before jumping into scientific journalism in Nature and Science. Then, he spent seven years at the Economist in London, Hong Kong and New York, as a tech editor and finally as the US bureau chief. (Anderson coined the term “long tail” — he even registered the brand, he’s now working on a book about the free economy). How does that translate into business? Well, Condé Nast is privately held company and does not releases figures. Wired is grossing about $50m, for a unknown profit (if any). But it is a hell of a brand — that allows other Wired Media entities to do very well. Today, Wired remains the perfect example of how a well crafted print product can make dollars and sense, even though it is a virtually free — a subscription costs $10 a year on the US market and its content is fully available online.