Guest Post: Online Video Today: How We Got Here and Where We Need to Go

By Guest Writer - March 19, 2010

By Dave Stubenvoll, Co-founder and CEO of Wowza Media Systems.

The recent introduction of Apple's iPad has re-opened discussion around Flash and Flash support, or rather, Apple devices' lack thereof. While this discussion brings to light the conflict between the two corporate agendas of Adobe and Apple, it isn't really about Flash or a methodology that Apple picked for video delivery. What it does begin to lay out, however, is a much larger discussion about online video. The discussion widens even further as supporters of alternative technologies and approaches like Silverlight, HTML5, and others begin to chime in with their thoughts on the current and future states of online video.

While each approach has its merits, all of the technology options just mentioned present challenges to the online video industry that may not be obvious right off the bat. One would think that having multiple technology options/platforms would be a good thing for businesses and consumers, and it is, but only when the market dynamics are right for it.

Continues >>

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Posted to A Top Story

March 19, 2010 | Permalink | Comments | Subscribe to SVW

Startups In LA... Building The West Coast Corridor Of Innovation - 1400 miles Long

By Tom Foremski - March 19, 2010

I caught up with Kieran Hannon the other day. He was in the Bay Area for a meeting with the Irish prime minister (he's on the board of Enterprise Ireland) and I realized it had been a good few years since I had last seen him.

He used to be co-managing director of Grey Advertising, then had gone off to Texas to work as VP of Marketing for Radio Shack, and then moved to Santa Monica, in Southern California. He's now working as COO at a promising startup called Sidebar, which has an interesting mobile technology that recommends content based on what people like, very useful for online retailers and others.

Kieran and his family had spent 18 years living in San Francisco, and I was curious what life in Southern California (SoCal) was like.

He said life was good, and that the startup scene was healthy and that there are a lot of media/technology centers there. I often write about how Silicon Valley has become Media Valley, because of all the media companies here (Google, Facebook, Yahoo, Twitter, etc) so it makes sense that SoCal, with its rich media history, would be a fertile breeding ground for media technology startups.

Earlier this week, Mark Suster, a VC based in SoCal, wrote an excellent post about startups in LA. Want to Start a Technology Company in LA?

He makes some great points:

...LA [is] the second largest city in the country with a population if 16 million. We have universities like Caltech, UCLA, USC and many more. We have many seasoned entrepreneurs who have built successful companies here and made a lot of money for investors and themselves. But LA is not Silicon Valley and we don't need to aspire to be so. We will never be Silicon Valley in the way that Toronto will never be Hollywood. But we have a great city for building technology companies.

He goes into details about how LA is not like Silicon Valley.

- Funding is different, there are smaller "A" rounds of around $3m rather than $10m here.

- Recruiting is different. There aren't huge pools of engineers, but it is possible to build 100+ sized teams.

- Commuting isn't as bad as people think it is, most people live close to where they work. And hey, commuting isn't that easy here.

- Lots of content creation skills. This is an interesting point to make because software engineers can be found almost anywhere in the world today, but content creation skills are very culture specific, you can't outsource this work.

- There are now larger numbers of successful entrepreneurs, many are on the their second and third successful company.

Here are a few success stories:

There is a lot of innovation happening in LA from places like Eqal, Deca.TV, DemandMedia's studios, Clicker, Filmaka and other initiatives.
. . .
The whole category of "sponsored search" came from a successful LA company, Overture. (my firm, GRP Partners, was an investor). LA produced Applied Semantics that created AdSense and was bought by Google. We were also an investor in the early local listing company, CitySearch - an LA company. LA was a leader in lead generation (LowerMyBills), comparison shopping (PriceGrabber, Shopzilla), social networking (MySpace ... I know, I know - Facebook won - but it was still a big business). If we extend a bit North up the coast line we have many affiliate marketing innovators including ValueClick, Commission Junction and FastClick. They also produced GoToMeeting and CallWave.
. . .
A great team from MySpace has created Gravity. Gil Elbaz from Applied Semantics has now created Factual. Zorik Gordon is tearing it up at ReachLocal. TechCoast Angels backed GreenDot should be a major IPO this year. Frank Addante has created Rubicon Project. Douglas Merrill, the former CIO of Google, is building his next company in LA. Scott Painter, founder of CarsDirect has created two new generation LA startups (Zag and TrueCar, both backed by GRP Partners). Brett Brewer (ex MySpace) has AdKnowledge, there is Adconian, Legal Zoom and many more. Hautelook, Gogii, Magento - all very high potential companies building in LA.

Mr Suster is one of the organizers of Launchpad LA V2, which was announced today. This is a project aimed at helping first-time entrepreneurs and helping to educate them and guide them in building successful companies.

We will be selecting 10 startup companies to participate. There is no cost but you must physically be based in or move to Los Angeles for the 6 months of the program. Applications are due April 6th, 2010, the form is on the website and the Twitter address is@launchpadlad

A West Coast corridor of innovation...

It won't be long before we have a West Coast corridor of innovation stretching from Silicon Valley to Southern California, and beyond.

In fact, if you fly from San Diego heading north along the coast you pass over tons of innovation centers:

- The communications and biotech industries of San Diego;

- The electronics industries of Orange County;

- The media centers of Hollywood and Santa Monica;

- Then you reach San Francisco/Silicon Valley with its electronics, software, media tech, biotech, cleantech industries;

- Then Portland with its thriving startup scene plus Intel's big presence there;

- Seattle with a thriving tech scene mostly spun out of Microsoft, and Amazon;

- Vancouver and its software industry.

Wow. 1400 miles of innovation. There's no other region like it, hundreds of miles of world-class, industry leading, innovation and creativity.

Interestingly, it's all built on top of one of the most unstable fault lines in the world. A disruptive reality. Is there a connection?

I've always said that innovation has to be disruptive otherwise it's not innovation.

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Posted to A Top Story | Disruptive | Media Valley

March 19, 2010 | Permalink | Comments | Subscribe to SVW

Russia's Ultra-Rich Are Buying Up Newspapers - It's Not An Investment In Journalism But In Propaganda...

By Tom Foremski - March 18, 2010

Robert Andrews is puzzled. Why Are Russians Spending Like Mad To Save Journalism? | paidContent:UK

He writes:

The latest - after last year buying France-Soir, the country’s smallest daily, for €50 million, shipbuilder’s son Alexander Pugachyov is now spending a further €20 million on a marketing campaign to take it mainstream. He’s upping the print run by 20 times, has halved the cover price and has more than doubled newsroom staff from 40 to 100.

Jealous? There’s no part of this that makes immediate sense. In fact, contrasted with the cutbacks, climbdowns and contraction many parts of the industry are seeing, it looks like madness.

...

The Pugachyov scenario in France mirrors that of Alexander Lebedev in the UK ... The former KGB agent took the London Evening Standard, whose circulation was falling, off DMGT’s hands for just a nominal fee, forewent cover-price income in favour of free distribution on a higher print run, and pledged a £25 million investment over three years.

“£25 million investment??” That’s unheard of in today’s news publishing economy... Now Lebedev’s set to repeat the act by buying The Independent.

I think I can help Mr Andrews understand what's going on. It has nothing to do with "saving journalism."

These are prominent publications in their country. They are being bought not to make money but as vehicles to influence politics and society.

It's not the first time this has happened. Hearst used his newspapers for political influence, and many others have done the same.

Investing in propaganda...

The Russians, in particular, understand the power of media. At the heart of the Bolshevik party was its newspaper, Pravda.

The Bolshevik party wasn't investing in journalism when it funded and published Pravda -- it was investing in having its ideas discussed in society, and in the political realm.

These are ultra-rich individuals, they aren't buying the publications as investments in that business, but as an investment that will aid their other businesses.

Mr Andrews notes that Alexander Pugachyov is the son of a Russian shipbuilder and that the French government may place an order for four battleships. I think that's a pretty big clue that the investment isn't about "saving journalism."

Media businesses are often loss-leaders that help drive other businesses. You see this today a lot. Most online media sites, especially blogs, don't make money from online advertising but from selling other things, such as services, or research reports, hosting events, etc. You don't make money directly from the traffic.

- - -

I already have a loss leader, I just need to add services and products that I can sell to help support my journalism. That's why I've started to do some consulting for companies such as Intel, Pearltrees, SAP, and others.

Let me know if you need some help on media/business strategies - 415 336 7547.

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Posted to A Top Story | MediaWatch

March 18, 2010 | Permalink | Comments | Subscribe to SVW

Russians Announce Their Own "Silicon Valley" - And My Tiny Contribution...

By Tom Foremski - March 18, 2010

Reuters reports:

President Dmitry Medvedev on Thursday announced that Russia would build a high-tech hub near Moscow to spur modernization of the economy and reduce its dependence on oil and gas.

The center, designed to develop five priority sectors -- energy, IT, telecommunications, bio-medical and atomic technologies -- will be built near Skolkovo, a new private-sector business school in the Moscow region.

(It would be tempting to call it "Silicon Steppes" if it were in Asiatic Russia...)

I had a very small part to play in this story. In late 2007 I met with a large Russian delegation that had come over to Silicon Valley to learn some of its lessons. Their goal was to use Russian oil money to establish several Silicon Valley-like regions.

They asked me lots of good questions. They made it clear that they did not want to replicate Silicon Valley, they wanted just the best bits.

I told them I would tell them the secret of Silicon Valley's success. They went silent, and leaned in closer to hear what I had to say. "Failure."

(This was before the EPIC Fail craze of recent times...)

Silicon Valley tolerates, and funds, massive amounts of failure. Only about one out of twenty startups succeed.

Probably no other culture allows people to fail as many times as Silicon Valley. Inside every successful Silicon Valley entrepreneur is a failed entrepreneur.

No other culture in the world, (except for maybe Las Vegas), tolerates and celebrates as much failure as Silicon Valley. This is the "best bit" of Silicon Valley, and its also the part that can't be exported.

They nodded. And they made some notes.

I asked them about how they would structure their VC funds, and about the Russian entrepreneurs that they hoped to attract.

One of them, the head of a quasi public/private VC fund, said that they had a problem finding and funding startups. It was an exasperating problem. The Russian entrepreneurs won't tell them about their business ideas.

They don't trust them. "I'm running a VC fund, I'm not going to run off with their business idea!"

- - -

By the way, did you know that Tim Draper, one of our most successful VCs, penned a song called "RiskMaster" to welcome the Russian delegation?

I have no idea what the tune is, obviously something stirring, I can imagine something between Red Army choir and Welsh choir:

Hey! You want to start a business?
Russia seems to show some promise
While weighing all your choices
"Go to Moscow!" you hear voices
Google founder came from Russia
Parametric? - Not from Prussia!
Genesis and PayPal too

SVOD and what is new?
With luck you'll become a
Master!

From Soviet biology
Comes really cool technology
Software immunology
From Nukes we get ecology
Ukraine's Orange Revolution
Good for all-freedom solution
And then political pollution
Now it's all in execution


Chorus:
With luck you'll become a
RiskMaster!

All you need is a faster chip
A million rubles
A couple of engineers
RiskMaster!

- - -

Please see: Turning Oil Into Innovation: Russian Delegation Seeks Silicon Valley's Lessons - SVW

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Posted to A Top Story | Silicon Valley

March 18, 2010 | Permalink | Comments | Subscribe to SVW

Twitter's Future: Tyrant Or Benevolent King...

By Tom Foremski - March 18, 2010

I recently wrote about Twitter's business model as ultimately enveloping ever greater parts of its developer community. [Twitter Is The Black Hole Of The Twitterverse...]

After all, why leave money on the table? Why not produce the best desktop client, or mobile client? Why let others build lucrative businesses out of your community?

That seemed to be the way things were moving for Twitter after one of its engineers Tweeted:

"If you had some of the nifty site features that we Twitter employees have, you might not want to use a desktop client. (You will soon.)"

Khris Loux, co-founder of JS-Kit Echo, a commenting service, writes that Twitter has a choice of being a tyrant, or a benevolent king.

How Twitter Can Become A New Breed Of Technology Company | paidContent

Twitter has an opportunity to create either value or angst for the developer community. The Twitter platform has led to countless third-party innovations, resulting in a rich set of applications that enhances the core platform. And Twitter has publicly encouraged these developers to join in the “gold rush” of opportunity and build businesses on its platform.

Indeed, the staggering growth of the service and a healthy ecosystem of complimentary applications have made Twitter a sort of benevolent king.

Now the hard part: building a business without becoming a tyrant.

Twitter’s recent release of Twitter Lists, for example, undercuts the work of partners like TLists and shows the tightrope that Twitter (indeed all proprietary platforms) must walk to both grow their core platforms while also making sure that developers have an incentive to build on top of those platforms. Twitter’s failure to strike that balance could alienate a prime engine of its long-term value and growth.

Well put. But where is that balance?

How does it balance making money and letting others make money too?

How much money is it appropriate to let others make from your platform?

A young company such as Twitter, doesn't have the time to exploit all the business opportunities. That's why third-party developers have moved quickly to generate a plethora of Twitter apps: desktop clients such as Seesmic and Tweetdeck are two top examples.

But why let others profit from your community?

Twitter has investors, its management has a duty to maximize shareholder profits. And with each new round of investors, Twitter has to be able to promise new revenue growth.

Where's that going to come from?

It will come from looking at its developer community and seeing where the low hanging fruit is, where maximum bucks can be made from minimum development costs.

Twitter can decide to buy a business or develop a look-a-like. That's a simple decision: cost to buy the business versus development costs and time-to-market.

This is the way the way the world works, and it has nothing to do with being a tyrant or a benevolent king.

If you have a profitable business you will attract competitors. If you have a successful Twitter apps business, if it's not Twitter coming after you, it will be other developers.

If your business is small enough, it's probably not worth the development costs for Twitter to replicate it.

So the message to developers is: don't make too much money from your Twitter apps otherwise your star will be sucked in and extinguished by the black hole at the center of the Twitterverse.

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Posted to A Top Story | Silicon Valley

March 18, 2010 | Permalink | Comments | Subscribe to SVW

Social Media Is Not About Conversations... It's About Something Much More Amazing

By Tom Foremski - March 17, 2010

I was glad to see Joel Postman's post on his Socialized blog: Social Media Isn’t Conversation, It’s Publication because this has been a subject close to my heart.

Joel writes:

...I mentioned one of my favorite Marshall McLuhan quotations, “Publication is self-invasion of privacy.” We threw this idea around a little and together came up with the idea that online communications are a form of publication, not conversation, and a failure to understand this distinction can be troublesome...

I agree, social media is about publishing, not conversations.

About a year ago, I wrote about "The Myth Of Online Conversations: Lots Of Chatter But Not Much Discourse

What is so striking about the online world is how little conversation takes place, how little two-way communication happens.

One comment to an article is not a conversation. 300 comments on an article is not a conversation.

Yet everyone talks about social media being about "conversations." A PR firm I sometimes work with is called "The Conversation Group."

Social media is not about conversations it is about publishing.

Social media represents the fact that we have now wired up the other end of the Internet, your end.

The Internet enabled us to publish to any computer screen no matter where. Now, any screen can publish back. This is huge.

That's what social media is about. It's about publishing, allowing anyone to publish back. It's feedback, it's a response, it's not a conversation.

A printing press in your pocket...

What is extraordinary, is not the 'conversational' nature of the Internet, but the fact that now every screen is a printing press.

I can publish from any screen, small or large, yours or mine. I have the equivalent of a printing press, with the potential to reach of tens of millions, in my pocket. And so do you.

It's no wonder Rupert Murdoch is pissed. You used to have to be a media mogul to have a printing press.

It's not the content...

Let's not get distracted by the content, the endless Tweets about inane things, the blog posts about nothing-in-particular...

The content is not the message. The message is that we now have an online printing press, (and TV studio, and radio studio) nearly anywhere, and everywhere we are. That's huge.

Internet 1.0 was about being able to publish to anything with a computer screen. Now, anything with a screen can publish back.

That's what social media represents...the 'me' in media.

We've wired up the other end of the Internet. It's a two-way Internet now. This is the Internet on steroids.

If you thought Internet 1.0 was amazing, you ain't seen nothing yet.

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Posted to A Top Story | Internet disruption | MediaWatch

March 17, 2010 | Permalink | Comments | Subscribe to SVW

Analysis: Google Is Building A Private Internet That's So Much Better And Greener Than The Internet

By Tom Foremski - March 17, 2010

The Internet is huge but it's a hodgepodge of hundreds of thousands of smaller, private networks, connected through thousands of Internet Service Providers (ISPs) and dozens of backbones operated by the large Telcos and service providers.

Moving data from one end of the Internet to the other can mean traveling across many different computers and different networks. Some of these computers and networks are old and inefficient while some are modern and very efficient.

They are all tied together into what we call the Internet, through a collection of standards. These standards determine how a packet of data can reach its destination, complete and undamaged.

Many large Internet companies own large chunks of the Internet through building their own data centers, networks, backbones, etc. This helps to keep their costs down.

Google is big...

Google is one of those companies that owns a large chunk of the Internet. It has more than 50 data centers around the world; it builds its own servers; it operates its own backbones that shuttle huge amounts of data across the world; it develops its own software for managing all of its data; it keeps banks of servers in the data centers of ISPs so that it can cache data closer to delivery; and more, much more.

How big is Google? asks Arbor Networks. It's a rhetorical question because Arbor knows, it sells network control and monitoring hardware used by the largest ISPs and corporations.

Arbor says that Google is very big:

I mean really big. If Google were an ISP, it would be the fastest growing and third largest global carrier. Only two other providers (both of whom carry significant volumes of Google transit) contribute more inter-domain traffic. But unlike most global carriers (i.e. the "tier1s"), Google's backbone does not deliver traffic on behalf of millions of subscribers nor thousands of regional networks and large enterprises. Google's infrastructure supports, well, only Google.

Based on data from 110 ISPs collected in the summer of 2009, Google was responsible for as much as 10% of all Internet traffic.

If a company wants to compete with Google on a large scale, the costs of shuttling data packets around, whether they be Twitter packets or video packets, starts becoming very important at these large scales.

Arbor says:

The competition between Google, Microsoft, Yahoo and other large content players has long since moved beyond just who has the better videos or search. The competition for Internet dominance is now as much about infrastructure -- raw data center computing power and about how efficiently (i.e. quickly and cheaply) you can deliver content to the consumer.

And that's why Google has focused on building the most efficient, lowest cost to operate, private Internet. This infrastructure is key to Google, and it's key to understanding Google.

The cost of aluminum...

Google will locate its massive data centers where electricity costs are low, such as where there is hydro-electric power. There's a shortcut to finding these locations, look for places where there are aluminum smelters -- these use huge amounts of electricity.

[Back in 2005 I was tipped off by a source that Google was looking at places for new data centers, related to aluminum smelters. But I was unable to write about it directly. I put the scoop in the form of a cryptic sentence and called it a "Crypto-Scoop."

GOOG is prophetic, rather than superstitious,
about its interest in places of power,
associated with the 13th building block of the Original Design.

(Aluminum is the 13th element in the periodic table - a fundamental building block of the Universe.) I have no idea if anyone worked it out :)]

Power and computing costs...

Google knew back then that electric power costs would be important in determining the cost of data centers. Today, it is high on the list of priorities for all data centers. That's also why it has been investing in power generating technologies, such as wind, sun, and geothermal.

It has a key goal of generating electric power from renewable energy sources at a cost less than coal-generated electric power. That would be an incredible achievement.

Always lower costs...

Google always focuses on finding the lowest costs even though it can easily afford to pay more. Google builds its own servers, made from off-the-shelf low cost components, with cheap hard drives. It has developed its own software that deals with component failure and moves work loads across huge numbers of servers. Managing failure is built into Google's data center operating systems.

It has bought up lots of "dark fiber," at a very low cost. This is optical fiber that hasn't yet been 'lit' but it is in the ground, in place, ready to be hooked up.

Because Google has so much fiber, it operates one of the largest backbones in the world. It also means that it can trade bandwidth with others.

Large Telcos and ISPs have peering arrangements with each other. This means that if they have the capacity, they will carry extra traffic for each other. These peering arrangements mean that Google's bandwidth bill for all that YouTube video is zero.

It's difficult to believe, but your bandwidth bill to watch a YouTube video is more than Google's. Because of bartering through peering agreements, its only cost is in maintaining its own networks and backbones.

Skipping the last mile...

Google still needs ISPs and Telcos for the last mile, to deliver its various services and products, to the end user/consumer. But it has been experimenting with going direct.

It has experimented with free municipal Wi-Fi, and more recently, it is setting up high speed bandwidth to communities with 500,000 people or less.

This doesn't necessarily mean that Google wants to become an ISP or a Telco. It is not a service organization and it doesn't want that headache, but it does want to spur ISPs and Telcos to develop high-speed data connections, so that it can deliver future products and services that require high speed data.

The Internet is becoming ever more Google's...

Googles growth means that it is building a much faster, and much more power efficient, and much greener Internet. And through peering agreements, it is carrying much more than just Google traffic, it is quickly, and quietly becoming an important carrier for all Internet traffic.

There are huge indirect benefits from Google's work that make the Internet a better service for every Internet user.

Essential facility...

What will this lead to? It's going to lead to regulatory scrutiny because Google will be increasingly seen as an 'essential facility' vital for the economies of regions, nations, and entire trading blocs.

Increased scrutiny by governments, and regulatory bodies, will make it more difficult for Google to execute on its business strategies. Combined with the increased scrutiny of Google's acquisitions by the Federal Trade Commission, Google's future ambitions will become ever more restricted.

Google sees the writing on the wall. It has boosted how much it spends on lobbying in Washington. [Antitrust Heat -- Google Spends Millions To Influence Washington - SVW]

A layer cake business...

Google might decide that its value lies in its incredibly efficient infrastructure, which is far more efficient and lower cost than the Internet as a whole.

Once you have the lowest cost infrastructure, you can layer and scale other business services on top. Such as payment systems, basic voice and data services, security systems, and commerce platforms (advertising).

Google might decide it doesn't need to own a Facebook, Twitter a Yahoo, or an Amazon -- when it can host all the data packets. It can carry and trace a data packet from source to destination and back again -- it can mine all that transactional data. That's extremely valuable.

It's a little known fact that Google keeps all of its data, all transactional data. It erases part of the identifiable meta data, but that can be reconstructed. [Google Keeps Your Data Forever - Unlocking The Future Transparency Of Your Past - SVW]

That transactional data is incredibly valuable, and even though we can't unlock it to its fullest value today, Google is working on it.

No umbrella...

By being able to build the most efficient, private Internet, Google makes it extremely difficult for any competitor to challenge it. There is no 'price umbrella' that competitors can use.

For example, there used to be lots of mainframe computer companies because IBM, the largest mainframe computer maker, used to charge very high prices. There was a substantial price umbrella set by IBM that sheltered competitors, and allowed them to sell IBM compatible mainframes and still make a good living.

You can see similar price umbrellas in other business sectors.

Google has made sure that by building the most efficient, lowest cost infrastructure, there is no price umbrella that could be exploited by competitors. It's more like a manhole cover, try to get under it, and you fall into a hole...

This strategy means that Google leaves money on the table, it could make more money over the short-term by creating a price umbrella. Instead, it has chosen a long term business strategy which doesn't give competitors any toehold, let alone an umbrella.

Its stock ownership is set up so that founder's stock has ten times the voting rights of public shares, this allows it to avoid shareholder pressure to pursue short-term business goals.

This all adds up to make Google into a truly formidable force, and one that continually amasses greater powers and influence. 'Do no evil' is the very least it can do.

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Please see my PearlTree on the 'Google Internet.' [PearlTrees is an SVW client and it's a great media technology that organizes web pages in a visual way.]

  

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Posted to A Top Story | Disruptive | Internet disruption

March 17, 2010 | Permalink | Comments | Subscribe to SVW

Tech Giants Struggle With Copy And Paste...

By Tom Foremski - March 17, 2010

It was two years before the iPhone got copy and paste functions. Now, Microsoft says that its Windows Phone 7 Series, won't have copy and paste when it becomes available later this year.

Engadget reported:

Microsoft just mentioned in a Q&A session here at MIX10 in no uncertain terms that clipboard operations won't be supported on Windows Phone 7 Series

And:

Update: We just super-double-ultra-plus-confirmed this with Microsoft -- Windows Phone 7 Series will not have copy and paste functionality. There is a data-detection service built into the text-handling API that will recognize phone numbers and addresses, but Microsoft says most users, including Office users, don't really need clipboard functionality. We... respectfully disagree?

I agree with Engadget. Copy and paste makes life a lot easier, it saves having to rekey data from one application on the phone, to another.

Apple first ran into problems, and now Microsoft. It could take years before it's added to Windows Phone, says Engadget.

Copy and paste must be a very difficult technical problem on smart phones, and I have to admit, that I don't understand the scale of this problem.

Microsoft said it plans to spend $9.5 billion on research and development this year, which is $3 billion more than its closest rivals. I hope a few billion dollars of that budget goes on solving the copy and paste problem. Microsoft could gain a significant lead over Apple.

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Posted to A Top Story | TrendWatch

March 17, 2010 | Permalink | Comments | Subscribe to SVW

Paperless In Seattle...Successful Online News Businesses

By Tom Foremski - March 16, 2010

This week marks the one-year anniversary since the Seattle Post-Intelligencer newspaper stopped printing on paper and moved completely online. http://www.seattlepi.com/

Monica Guzman, at the Seattle PI, has written an excellent roundup of how other digital news ventures in the Seattle area are doing.

Here are some extracts from: New media ventures blossom in Seattle

West Seattle Blog
Independent neighborhood news site covering West Seattle.

The site is profitable, and more than 60 paying businesses known as sponsors support it, editor and publisher Tracy Record said.

...Apart from having to beat down an early stigma that independent news "bloggers" were not to be taken seriously (she's a journalist, so she prefers you call her that), Record didn't take a vacation until August 2009, when she could pay enough freelancers to keep an eye on things back home.

"All the people who send story ideas, crime reports, texts about traffic, a picture of a cool event at a school -- that's the part that grows exponentially," Record said. "That's the part that's always humbling, every day."

Techflash
Tech news site owned by The Puget Sound Business Journal.

"It's not something I imagined I'd ever be doing back when I was in J-school (journalism school)," said Bishop.

"It shows you can be entrepreneurial and still be a journalist."

"Journalism isn't only about giving a community information. It's about helping to build that community up."

"I laugh when I think about coming into the Seattle Post-Intelligencer at 9 and leaving at 6. It's almost comical. Twelve hours a day is probably the norm."

Neighborlogs
Seattle-based community news platform and ad-sharing network.

"We see room for something that lets people be journalists, lets people focus on newsgathering, lets us worry about the technology," said Carder.

"The cost of content is so high, you have to find ways to pinch technology and all the tools as tightly as possible. Plenty of players will be gone because they don't know how to do that," he said.

Next Door Media
Seattle collaborative community news network.

"We believe there's a natural balance between journalism and the community. For too long journalism hasn't listened, and it really caught up with the industry," said co-founder Cory Bergman.

"A lot of companies take a tech approach. We're taking a more people-centered and community building approach."
All Next Door Media authors happen to have either worked in journalism or have a journalism degree, Bergman said -- though that's by no means a requirement.

PubliCola
Seattle civic and cultural news site.

"We are reporters who are changing blogging, as opposed to blogging dumbing down reporting," said Feit, a longtime political writer.

InvestigateWest
Northwest nonprofit investigative reporting shop.

"Our model is to sell in-depth journalism at the price that existing news outlets would pay for plain old journalism," said Robert McClure, the Northwest reporting shop's chief environmental correspondent and one of several former Seattle Post-Intelligencer reporters behind the nonprofit.

"It's kind of scary," McClure said. "You're a little mouse on a wheel. You've got to keep going. You can never relax and say, 'We have enough.'"

"I just can't believe that people in this country are going to let in-depth journalism go away completely," he said. "To what degree we can sustain what we have and modernize it in a way that gets the public engaged and keeps them engaged -- that's the big thing."

Crosscut
Northwest nonprofit news site.

... if you want short, flashy treatments of tough local issues, you're in the wrong place. The site's often lengthy analytical pieces aim for a certain audience...

Crosscut is out to activate local discussion ..."Our tagline, 'news of great nearby,' is partly an attempt to say that local can be big local," Brewster said. "We want to have people feel like they're a part of something big."

You can read the whole of this excellent report here: New media ventures blossom in Seattle
(I think my headline is better :)

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10 Basic Digital Publishing Skills Journalists/Anyone Should Know...

By Tom Foremski - March 16, 2010

Most journalists I know can barely type, they certainly can't spell but they can tell a great story.

Most professions have to continually upgrade their skills yet I know lots of journalists that are very reticent about adding new skills. They hate to shoot photos, or video, or edit the video. I know a journalist that does not know how to upload a photo!

Carrying a pencil and a notepad is not enough, journalists need to know how to produce media content in a variety of ways.

Here are ten basic skills journalists, heck, anyone should know:

1 - How to shoot a photo with a digital camera and transfer it to a computer for a quick edit.

2 - How to upload an image to a web site in the right format and size.

3 - How to add a hyperlink to a word or part of a sentence by hand. (i.e. hyperlink)

4 - How to quickly shoot digital video and do a quick edit and upload it to a hosting service such as YouTube, in the right format.

5 - How to embed the code for a video in a web page and resize it to fit the page width.

6 - How to capture audio for a video, or just an audio-only podcast, so that the audio is clear and background noise is minimal.

7 - Know some basic HTML and what it does so that common problems with a web page can be quickly fixed.

8 - Know some basic CSS (Cascading Style Sheets) and what it does, and be able to quickly fix any problems with a web page.

9 - Know how to promote your content on the Internet without alienating contacts and family.

10 - Know how to get used to an always-on work day that often extends beyond 9-to-5, and produce three times as much digital media content as you think you can, while maintaining high standards of quality and accuracy.

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Media Engineers At New York Times And CNN

By Tom Foremski - March 16, 2010

The Guardian.uk has an article about how the New York Times and CNN are becoming technology companies.

How the New York Times and CNN try to keep up with the tech companies

"The New York Times is now as much a technology company as a journalism company," its executive editor Bill Keller said recently.
...
While CNN.com closely collaborates with technology companies like Facebook, Apple or Google, the New York Times anticipates technical change in-house with the help of its research and development department.
...
"We made an experiment and put an RFID chip into the phone, the computer and the television. The chip was there to track the user's reading. When a user stopped reading a story on the phone as he or she arrived at work, it opened it again on the desktop. When the user entered the living room, related videos to the story were presented on the television screen," explains the NYT's Nick Bilton.
...
CNN has launched an iPhone application, redesigned its website and reached out more to social media. CNN was among the first TV broadcasters to understand the full impact of social media on television, and teamed up with Facebook for the presidential inauguration.
...
Today, CNN's iPhone app is as much a news-making as a news delivering application, and as the iReporters can add their telephone number, email and location to their report, CNN's editors can get back to them or even assign them to certain content CNN is looking for.
...
...it looks like the news organisations that tear down the wall and build a bridge between editorial and technological thinking will be most likely to survive.

I'm glad to see these types of stories. For the past five years I've been writing about the need for 'media engineers' - part software engineer and part media professional. And also 'media architects' the people the create the media technology infrastructure for media companies (BTW every company is a media company.)

Media engineers will be better paid than software engineers because you need a broader skills set.

- - -
Please see my PearlTree on 'media engineers.' [PearlTrees is an SVW client and it's a great media technology that organizes web pages in a visual way.]

  

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SAP Co-CEOs Pledge To Move Company Faster

By Tom Foremski - March 15, 2010

SAP's new co-CEOs today promised faster software innovation and better execution on a hybrid enterprise software model that includes cloud computing and traditional enterprise software.

SAP, which describes itself as the world's largest business software company, recently reshuffled its top management replacing CEO Léo Apotheker with Bill McDermott, who was head of field organization, and Jim Hagemann Snabe, who was head of product development.

Their appearance at the SAP Silicon Valley center was their first joint press/analyst conference since the announcement of their appointment in early February.

Here are some notes from the press conference:

- Business by Design, the cloud computing offering, has been slow getting off the ground but has been successful in terms of software quality. The development team has been using agile software techniques which has reduced development team size by one-third and produced higher quality software than expected.

- SAP continues to believe a hybrid strategy is best, combining the traditional enterprise software business model with cloud computing/on-demand software as a service.

- SAP intends to become the number one on-demand software company in the world. It sees huge opportunities in the Chinese market.

- This summer there will be a major new release of the Business by Design software service and will be followed regular improvements every five weeks.

- Oracle was criticized for not being innovative. It's acquisition strategy is not providing any benefits to customers, unlike SAP, which has been investing hundreds of thousands of man-years in innovation, such as enabling customers to take advantage of new features without having to upgrade their systems.

- The new co-CEOs will try to move the company at a faster "clock-rate" than the former CEO. The basic strategy will remain the same but the execution will be faster.

- SAP wants its employees to be excited about coming to work. It is also impressed by its developer community, which is coming up with lots of interesting ideas.

- SAP is not going to follow Oracle's strategy of tying applications to specific hardware, as through its acquisition of Sun Microsystems. But it does want to eliminate the conversation about stacks and focus on solutions.

- Best of breed solutions were criticized, the problem is that "they don't breed well."

- The acquisition of Business Objects was important in broadening SAP's view of the software world. It sees the future as enabling customers to work with many different companies and allowing their corporate systems to easily interact with their business partners.

- SAP justified the maintenance fees being paid by customers because the company is innovating across industry sectors.

- Innovation was a frequently used word during the Q&A but it wasn't clear what this meant or what it would look like.

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Posted to A Top Story | Enterprise IT

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SAP's New Co-CEOs Hold First Press Briefing In US

By Tom Foremski - March 15, 2010

SAP recently reshuffled its top management replacing CEO Léo Apotheker with Bill McDermott, who was head of field organization and Jim Hagemann Snabe, who was head of product development.

I'll be at the press briefing this afternoon. If You have any questions please leave them in the comments or contact me through Twitter @tomforemski.

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GOOG Falls As BIDU Rises On Expected China News

By Tom Foremski - March 15, 2010

In mid-day trading, Google [$GOOG] was down 3.4 per cent to $559.73 on concerns about an imminent announcement that it is closing its Chinese search service.

Its Chinese rival Baidu [$BIDU] was up 4.1 per cent to $572.95, as investors expected it to benefit from Google's exit from the Chinese market.

Please see:

Analysis: Could $GOOG Face Problems Outside Of China For Its Opposition To Chinese Government?

Analysis: Financial Times Says GOOG Has Detailed Plans To Close China Search

Looks Like Google Is Out Of China - Senior Official Says It Must Obey The Law

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Analysis: Could $GOOG Face Problems Outside Of China For Its Opposition To Chinese Government?

By Tom Foremski - March 14, 2010

Google's [$GOOG] opposition to the Chinese government over censorship of the Internet is making life difficult for its partners in China. The New York Times reported Sunday, that Chinese officials have sent warnings to Google's Chinese partners that they must obey the law.

Chinese government information authorities warned some of Google's biggest Web partners on Friday that they should prepare backup plans in case Google ceases censoring the results of searches on its local Chinese-language search engine, said the expert, who did not want to be identified for fear of retaliation by the government.

China's most popular Web portal, www.sina.com.cn, features the Google's search box in the middle of its home page. Ganji.com, another highly popular Web site, displays Google's search box in its upper-left hand corner.

Even if Google's partners stop featuring the Google search engine, just being associated with Google, in any way, could be bad for business. The Chinese government has great powers over the commercial sector and because of Google's opposition to China's laws, it could consider Google's allies to be adversarial simply by association.

The Chinese authorities are not predisposed to negotiating with foreign organizations over changing their laws. There are bad historical precedents of foreigners forcing changes in Chinese laws that have led to massive disruptions in Chinese society. The British are notorious for forcing the Chinese to pass a law that legalized opium use.

Backlash against employees...

On Saturday, the Financial Times reported that Google is concerned about a government backlash and retaliation against its Chinese employees.

The retaliation could take the form of narrowed employment prospects for Google's Chinese staff. Having Google on a resume could be perceived negatively in China, where there is a strong sense of national identity and a long tradition of suspicion of foreign organizations.

Just a few months ago, Googlelost its head of Google China, Kai-Fu Lee. Did he see the writing on the wall as Google founders, Larry Page and Sergey Brin, grew increasingly concerned about Chinese censorship?

A government backlash could potentially be extend to Google's Western business partners . For example, in early February, Reuters reported that Google is part of a Disney-led consortium seeking to buy a $100 million stake in Bus Online, a Chinese digital advertising company. Such deals require Chinese government approval.

It will be interesting to see if Google's membership of this consortium sinks the deal, or if it is asked to leave.

Beyond China...

The Chinese government could potentially punish Western companies for simply being associated with Google in non-Chinese markets.

Even just a rumor of such discrimination could quickly affect Google. With the Chinese Internet market exploding, many foreign firms are trying to build a presence in China. If those corporations fail to win Chinese government approval for their business ventures, they will lose out on sharing in the world's largest and fastest growing Internet market.

Western companies have already given Google the cold shoulder. Earlier this year the search giant asked other companie to come forward and admit they had also been hacked by Chinese agents. Intel was one of more than 30 companies hacked about the same time as Google. Although Intel admitted to the hacker attack, it denied any Chinese connection.

It's clear that Western companies already see disadvantages in siding with Google.

What is Google leaving...

The McKinsey Quarterly just published an article titled: "China's Internet obsession" [free registration] looking at the Chinese Internet market that Google will leave behind.

Here are some extracts:

...by the end of 2009, the number of Internet users in China had touched 384 million, more than the entire population of the United States. That's an increase of around 50 percent over 2008. Moreover, 233 million Chinese--twice as many as in the previous year--accessed the Net on handheld devices, partly because China's cellular providers started offering 3G services widely last year.

...

People in the 60 largest cities in China spend around 70 percent of their leisure time on the Internet, according to a survey we conducted in 2009. In smaller towns, the corresponding number is 50 percent. The PC is fast replacing the TV set as an entertainment hub...

...

One in five consumers between the ages of 18 and 44 won't purchase a product or service without first researching it on the Internet. They shop online at auction Web sites such as Taobao, paying for products and services with prepaid Taobao cards that the post offices sell for a small commission. The volume of e-commerce in China more than doubled last year.

...

Seismic changes are likely to take place in the Chinese consumer market because of the Internet--and we aren't talking just about the fact that 50 million Chinese may soon have to stop using their favorite search engine, Google.

It is commendable that Google values a censorship-free Internet above the value of the Chinese Internet market. Even if Google has just a 30 per cent of the Chinese search market, it's still a very significant share of a highly prized market. The behavioral data alone could be used in other markets.

It remains to be seen if Google's principled stand in China has consequences for its business outside of China.

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Posted to A Top Story | ChinaWatch

March 14, 2010 | Permalink | Comments | Subscribe to SVW

Analysis: Financial Times Says GOOG Has Detailed Plans To Close China Search

By Tom Foremski - March 13, 2010

Richard Waters at the Financial Times, reports that a source "familiar with the company's thinking" has told him that Google is 99.9 percent certain it will close its Chinese search service.

...the company is likely to take some time to follow through with the plan as it seeks an orderly closure and takes steps to protect local employees from retaliation by the authorities, the person familiar with its position said.

Google is also seeking ways to keep its other operations in China going, although some executives fear that a backlash from the Chinese authorities could make it almost impossible to keep a presence in the country.

Foremski's Take: The move was expected following yesterday's remarks by a senior Chinese government official that censoring the Internet was vital for public stability.

Looks Like Google Is Out Of China - Senior Official Says It Must Obey The Law

It also shows that there is a deep division within the ranks of Google's leadership. Eric Schmidt, the CEO, has repeatedly said that Google is committed to China. But he was unable to persuade Larry Page and Sergey Brin, the co-founders, from separating their concerns about censoring Internet search results in China, from Google's business in China.

It is unlikely that Google can maintain operations within China because any foreign business requires the approval of the Chinese government. Google has shown itself to be in opposition to the Chinese government -- this is an untenable position.

This also means that Google will unlikely be able to take part in joint ventures with others in China. In early February, Reuters reported that Google is a member of a consortium led by Disney, to buy a large stake in Bus Online, a large Chinese advertising company. It's difficult to see how this deal will go through with Google as a member, if it is an opponent to the government's censorship.

This means Google is barred from the world's largest and fastest growing Internet market.

The McKinsey Quarterly just published an article titled: "China's Internet obsession" [free registration] looking at the market Google would leave behind.

Here are some extracts:

...by the end of 2009, the number of Internet users in China had touched 384 million, more than the entire population of the United States. That's an increase of around 50 percent over 2008. Moreover, 233 million Chinese--twice as many as in the previous year--accessed the Net on handheld devices, partly because China's cellular providers started offering 3G services widely last year.

...

People in the 60 largest cities in China spend around 70 percent of their leisure time on the Internet, according to a survey we conducted in 2009. In smaller towns, the corresponding number is 50 percent. The PC is fast replacing the TV set as an entertainment hub...
...
One in five consumers between the ages of 18 and 44 won't purchase a product or service without first researching it on the Internet. They shop online at auction Web sites such as Taobao, paying for products and services with prepaid Taobao cards that the post offices sell for a small commission. The volume of e-commerce in China more than doubled last year.

...

Seismic changes are likely to take place in the Chinese consumer market because of the Internet--and we aren't talking just about the fact that 50 million Chinese may soon have to stop using their favorite search engine, Google.

Too bad for Google it is absent from such a vital market. It's a huge blow to its business and future strategy.

But it is a bold move.

Google's founders see the issue of Internet censorship as being important enough to give up its China business. They've put a huge price on the importance of Internet freedoms -- and that's commendable.

But what future is there for Eric Schmidt? There's a big division between him and Messrs Page and Brin.

- - -

Please see:

Do GOOG Founders Still Need Adult Supervision?

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March 13, 2010 | Permalink | Comments | Subscribe to SVW

I'm In The Wrong Job Dept.: - Internet Scams Doubled To $560m

By Tom Foremski - March 12, 2010

It seems you can be ethical but poor when it comes to Internet business practices. The FBI estimated that Internet business scams doubled last year to reach $560 million.

In a delightful irony, the most popular scam used the FBI's name, reported the Associated Press:

The most frequently reported scams were those that falsely used the FBI's name, accounting for 16 percent of the more than 300,000 complaints received last year. Authorities say another scam involved messages with a voice similar to President Barack Obama's, urging people to visit a Web site to claim a share of government stimulus cash. Visitors are charged a fee, and no money is ever received.

There are a whole range of scams, including diet, work-at-home, dating and many others. Once the scammers get hold of peoples' credit cards, it is difficult to cancel monthly subscriptions. This is made even worse when scammers get hold of people's debit card numbers because it can lead to overdrafts and high bank charges.

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Looks Like Google Is Out Of China - Senior Official Says It Must Obey The Law

By Tom Foremski - March 12, 2010

Joe McDonald with the Associated Press, today reported:

China's top Internet regulator insisted Friday that Google must obey its laws or "pay the consequences," giving no sign of a possible compromise in their dispute over censorship and hacking.

"If you want to do something that disobeys Chinese law and regulations, you are unfriendly, you are irresponsible and you will have to pay the consequences," Li Yizhong, the minister of Industry and Information Technology, said on the sidelines of China's annual legislature.

That's a position that has no room for negotiation.

Yet Eric Schmidt, CEO of Google, earlier this week was reported by Jerry Dicolo at the Wall Street Journal, saying, "We are in active negotiations with the Chinese government." He added that "something will happen soon."

What are they negotiating over? The Chinese position is crystal clear: we're not budging.

It has been two months since Google threatened to leave China as a response to attacks by hackers it said were agents of the Chinese government. It said it would stop censoring Google search results in China.

Li Yizhong told the AP that China will continue to censor Internet content for the public good.

"If there is information that harms stability or the people, of course we will have to block it," he said.

The Chinese government has repeatedly denied that it was the source of the hacker attacks on Google and has said it would severely punish any Chinese hackers but that Google had not made an official complaint, or provided any evidence.

Foremski's Take: It looks as if Google has painted itself into a corner in China. By saying it will stop censoring its results and that it may have to leave China, it has left itself with no options. Negotiations with the Chinese government have produced no compromise from the authorities.

It's interesting to speculate what those negotiations could have been about. What could Google offer in return for being allowed to stay in China but not censor its search results?

The Chinese authorities are far more skillful in these types of situations than Google's leadership.

Will Google still maintain research, and sales operations in China, but withdraw its search service? What about its other products such as GMail, etc? Will Google's spiderbots still index Chinese web sites?

Leaving the world's largest and fastest growing Internet market is a serious blow for Google, especially if it turns out that the hacker attack was not of Chinese origin.

[Were Google Hackers Amateurs Or Chinese Cyber Commandos?]

- - -

Please see:

Intel Admits To Cyber Attack At Same Time As Google, Denies China Connection

Criminal Penalties Coming For US Internet Companies That Don't Protect Human Rights Abroad

Is Sexual Blackmail An Issue In China Cyber-Hacking Of US Companies?

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Google Must Change Acquisition Strategy As FTC Likely To Block Deals

By Tom Foremski - March 11, 2010

The Federal Trade Commission (FTC) appears to be stepping up its scrutiny of Google and anti-trust issues related to its business. Bloomberg reports that the FTC is asking for sworn statements from competitors and advertisers.

This action usually precedes the filing of a lawsuit seeking to block the $750 million AdMob purchase announced in November.

Agency officials typically collect declarations “when they think there is some significant chance” the agency will ask a court to block a merger, or seek to modify a deal, said Stephen Calkins, a former general counsel at the FTC who is now a professor of law at Wayne State University’s law school in Detroit.

You can bet that Microsoft is happy to testify about this deal. Microsoft has a lot of experience with anti-trust and can craft its complaints in a language that FTC's lawyers can understand.

Scott Cleland, writing on The Precursor Blog, predicts that Google is likely to withdraw from the deal before the FTC files a complaint.

The last thing Google wants to do is have its own actions or recalcitrance be the catalyst for a much broader and more serious antitrust crackdown on Google's rapidly proliferating anti-competitive behavior.

For Google, it means it has to rethink not only its mobile ad strategy but also its acquisition strategy. It will be very difficult for Google to make large acquisitions in the future. But trying to grow its businesses organically, will reduce its ability move quickly, and dominate new markets. Which is precisely what the FTC means to do.

At some point, Google may decide to make a stand and challenge an anti-trust complaint. But it will have to choose its battleground carefully, because it will lay itself open to anti-trust lawsuits from other businesses, it will need solid footing.

Google's difficulties in making acquisitions bad news for the VC community. With very few IPOs around, acquisitions have become the main exit strategy for many venture-backed companies.

- - -

Please see: Nine years later does Google still need 'adult supervision?' | Tom Foremski: IMHO | ZDNet.com

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Posted to A Top Story | SearchWatch

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You Can't Get There From Here - Why Andreessen Is Wrong

By Tom Foremski - March 11, 2010

Marc Andreessen, the co-founder of Netscape, likes to give business advice to media companies. For a couple of years, he has been advising newspapers to completely abandon print. He said it again in a recent article. Alan Mutter, a former reporter, and successful media entrepreneur, writing on "Reflections of a Newsosaur" says the idea is "plain nutty."

Marc Andreessen had a really good idea when he invented the first popular browser for the web, but his latest notion – that newspapers should walk away from a business grossing more than $30 billion a year – is just plain nutty.

I agree. Newspapers can't abandon print when their online revenues are less than 5 percent of total revenues. Google's chief economist Hal Varian presented a bunch of dismal figures for the newspaper industry earlier this week.

GOOG's Chief Economist Hal Varian Has No Solution For Newspapers

The newspaper industry is stuck. Moving its business online involves extra costs in terms of needing staff with a variety of web skills, IT costs, etc. Yet the revenues don't match its cost of operations. And there's more...

I remember a conversation with a publisher of a very good IT print magazine. He told me he was thinking of stopping advertising on his web site. I was flabbergasted, how could you do that?

He said that he offered online advertising packages to his print advertisers. But when his advertisers looked at the poor click-through rates they assumed that their print advertising wasn't effective. So they would pull their print advertising. For the sake of a $600 monthly online ad package they were pulling $50,000 in print advertising.

This also works the other way. Online advertising rates lower than print but can be more effective. For some advertisers, a $600 ad buy can replace $50,000 in print advertising.

You can't get there from here.

It's a Yankee phrase that never made sense to me. But it makes perfect sense in defining the situation of the newspaper industry and its attempts to transition its business online.

There is no way that online news revenues can support the cost of operating newspaper newsrooms. Because the newspaper industry cannot give up print, it leaves the online field wide open to competitors, which have significant advantages:

- no legacy costs of business such as printing plants, unions, pension plans, office buildings, layers of admin.

- new competitors can build news businesses based on the dismal economics of the online world. For example, the extremely successful Huffington Post has fewer full time journalists than the New York Times has people moderating its reader's comments.

Newspapers are forced to watch smaller online competitors run off with the audience. You see that happening with the Gawker media network, and elsewhere too.

The situation is made even more horrible for newspapers because the rates for online ads continue to drop. Yet their costs of operations haven't dropped, they increase as they try to transition to online.

You can't get there from here.

- - -

Please see: Disruptive Technologies Disrupt

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