broadstuff

From the "You Can't be Serious" Dept:

A Web site owner has blocked Firefox users from accessing his site in protest of a popular browser extension that blocks text and display ads.
Firefox users who go to http://jacklewis.net/weblog/ are redirected to Why Firefox is Blocked, which says the Adblock Plus extension undercuts Web sites dependant on advertising revenue.

"Accessing the content while blocking the ads therefore would be no less than stealing," wrote Danny Carlton, a Web site designer and author, who runs both sites. JackLewis.net is his personal blog site. "Millions of hard working people are being robbed of their time and effort by this type of software," he added in a posting on the Why Firefox is Blocked Web site.

(seen on InfoWorld)

Errrm...I'm a Firefox user...guess what I do when I reach a site that won't let me in...thats right, I immediately switch over to IE and try again.

Not.

The creator of Adblock Plus, Wladimir Palant, wrote earlier this year that the popularity of the tool can be attributed to poor Web site design, which has overwhelmed users with too many ads.

"Why does everybody who puts up a site on the Internet assume that making users watch as many ads as possible is the best business strategy?" Palant wrote. "It isn't Mozilla who is pushing Adblock Plus into mainstream -- you [Web-site operators] are.

Guys...read this and try again.

Has YouTube just blinked, or was it a knowing wink?

The story so far......of all the options possible, YouTube had decided to go for on-screen overlay Ads because they were the least offensive type, even though they were still seen as offensive and it did not seem that they would make very much money anyway (see our post on that here).

Now it would seem there is a little backshuffling going on..despite the stated intention that...

YouTube plans to continue on with the InVideo overlays, and hopes "to make the ads an important part of the advertising model for online video," said Aaron Zamost, from Google corporate communications.

...it would seem that they are actually going to allow a bit of user generated permission:

Only videos from content creators that have signed up for the advertising scheme, called InVideo, will host ads, leaving the majority of videos on YouTube free of the overlays, a Google spokesman said Friday.

(Saw story on Yahoo)

It's still worth trying it out as the learning will be useful, and (yo)U-turning now will be tres embarrassing , but 3:2 odds on it all being quietly dropped in 3 months time......

You can't make this up...Henry Blodget (yes, that one) has noted that Morgan Stanley's Mary Meeker (yes, that one too) has erred in her calculations of what the YouTube Ads were worth next year. (Update...they have had another bite at the cherry - see end of post)

Ms Meeker estimated $720 million benefit (15% of $4.8bn gross revenue), only problem is that they misunderstood the $20 CPM that YouTube is charging...CPM means Cost per mille (it's from the latin , means thousand) so one has to divide the $720m number by 1,000 - ie it's $ 720k - and that's 0.004% of Goog's revenues, not 4%

Ooops

And if $720k is the gross benefit YouTube will get from potentially pissing off its customers with Ads and sending them elsewhere....

Ooops again

(I checked the maths, and so can you - its in Exhibit One on the second page over here)

So that's how the Great Web 1.0 Boom and Bust happened

(Actually I feel really sorry for Mary and the team, its just the sort of mistake we all make when we're in a hurry - but sorry guys, its just too good to not blog about

But assume the recast numbers are roughly right - 2 billion clips/month, 1% have Ads served, $20CPM, 15% goes to YouTube = $720k. I don't know what YouTube's burn rate is right now, but 18 months it was reputedly $1m a month, and that was with an order of magnitude less clips served - so that number probably has to go up 2 orders of magnitude to be profitable. It's not likely to come from much higher CPM, so it has to come from % clips with Ads served - assuming people will put up with near 100% clips with Ads - or from elsewhere.

Update - its been picked up by Valleywag over here

Postscript - The Morgan Stanley Team have changed the numbers!

Yup, that 1% of YouTube clips going to Ads gave the Wrong Answer - as we noted above - so they have upped the %, at the same time as YouTube is shuffling backwards

Post - Postscript - BubbleGen reckons CPM's for clips can go north of $100.....It would be interesting to see the rationale for that.

Meg Pickard has done rather a good job of explaining the problems of "friends" on social networks over here. Meg has focussed on Facebook ( how surprising but it is true for any social network site. To quote:

For example, at present on Facebook, I have (among others) the following listed as “Friends”:

- My husband
- Several people I’ve known since I was 11
- College friends I haven’t talked to in 15 years
- My boss
- A couple of people from university I’d lost touch with
- Several people I know from t’internet, but haven’t met / don’t actually know
- A few people on a mailing list I belong to
- A handful of family members
- A few people who work for me
- At least one ex boyfriend
- People who I’ve seen around the office but never exchanged more than words of greeting with

While I obviously wouldn’t have connected with these people via Facebook if I hadn’t wanted to, it’s pushing the definition a bit to lump all of them together into the same bucket, labelled “friends”. Why? Because most of them aren’t strictly friends (although they’re all lovely, obviously).

We've argued the same for quite a while (see here for eg) - these online social nets are just not nuanced enough to manage the various types of "Friend", and you wind up with a number of issues around Intimacy. As Meg puts it for herself

I’m constantly aware of being snooped on as much as I snoop on others. Whatever I write, or add, or play is going to be potentially (mis)interpreted differently by every “friend” on there. As a result, the lowest common denominator for values of “appropriate and relevant” information usually wins - i.e. nothing.

Or in the case of many others, Everything! On Facebook et al a whole raft of casual acquaintances suddenly know a huge amount about you.

We've had this discussion/argument a number of times over the last few years - there is definitely a "let it all hang out" brigade who think that those who believe this is not necessarily a Good Thing are scaremongers when they point out there is a Dark Side to all the groovy kids. Charles Frith has an interesting take, labelling such as children of the Cold War Era. Sez Charles:

there are roughly speaking two types of people plodding around the planet at present. Cold war survivors and the ones after, lets call them Post-Coldies. This has only a little to do with age as its a mindset that can easily be absorbed from say parents and different environments.

He goes on...

Cold war survivors are a guarded bunch. MSM and their parents taught them to be that way. They manage their online identity with Stalinist control, feel uncomfortable with online pictures of themselves, default to using very spy-like online monikers, never use 'include message in reply' in their emails and compartmentalize their offline lives with a strict policy of not mixing say work friends, then family, and life friends.

As Lloyd Davis (Who pointed me to Charles' post) noted:

Charles also points out that post-coldies don’t mind their friends meeting up, whereas the others will do anything to keep “different” areas of their life separate, even to the extent of lying to their “friends”. No wonder there’s such drama at weddings & funerals.

Whereas Sez Meg:

Put simply, I wouldn’t consider having a party to which they were all invited at the same time - apart from a wedding - so how can I expect to engage with them socially in a single setting online?

So.....Is Meg merely a Cold Warrior, or a pragmatist ? Time will Tell, but the past X thousand years of human history don't make us think that a new Age of Aquarius is dawning just yet, so our view is on Meg's side - Be Careful Out There

Meg has also done a useful analysis of the way she would design her own network - to build on that and generalise it, our own work for various assignments has led us to design an "Onion Ring" model, which maps our Identity against layers of Intimacy and maps what part of our Identity we are prepared to show to whom. Here is a simplified slide of this model.

:

Within these Onion layers (this is simplified btw - one can add a plethora of subgroups, and they should be user-configurable) one would choose to expose various amounts of your Core Identity, in a controllable way. It does need to be toggle-able, as there are some very private data that one will reveal to friends and not family (and vice versa), and must allow differential blocking of visibility of the networks - I don't really want my workmates to see my niece on Facebook (and I'm sure she doesn't want her mates to see me!). This is one of the drawbacks of Linked In...being asked to pass on what are effectively sales calls to my network irritates a lot of people.

However, there is also a risk to making it too controllable, in that setting it up and managing it becomes too complex, so we believe some form of Templated "Reduced Layers + Toggle" will suffice - so for e.g. you may set up say "Pub Friends" in the same category as "Work Friends" template, and then just toggle a few details.

We are in the early days of SocNet design, and - imho - they are not nearly nuanced enough yet to allow us (i) to manage our complex social nets properly and (ii) to test for cheats, frauds and other snake oil salesmen in the multiple ways we as a species have developed over millenia. This must be the next step for them to work without being abused and - again imho - is crucial before social nets can be opened up fully.

(Postscript - Meg's proposal to make this do-able in Facebook is to break your ID up into multiple Groups and shift your friends into the various Groups for their type. Won't work fully as F/B is currently structured, as Group functionality is low and you still can't set network intimacy levels for types of Friends - you would need Multiple Megs as ID's today)

There are two things that are interesting about the new YouTube advertising approach:

Firstly, its not that new - it's an approach that has been used by a number of players for quite a while, but suddenly the Media (including the New Media pundits) are picking up the story because it's YouTube (Update - one of the pioneers of the format, VideoEgg, is making its point of view known).

Secondly, until now its has not been seen as the potential killer method (Takeup being quite low so far - see note at bottom of page) - there are various problems, for example:

- content creators tend to hate people messing with their artistic integrity
- if you are looking for viral transfer it has problems if the ads play on others' sites
- it is more complex than simple sidebar approaches (more moving formats)

So is this now the best Ad-thing since sliced bread? The YouTube team say that it has proven to be the "least worst" ad approach:

Across “millions and millions of tests,” the ads have performed “5 times to 10 times vs. traditional display advertising” said Shashi Seth, YouTube group product manager

Clearly Google is trying to achieve some form of ROI on the acquisition of YouTube, so Something Had To be Done, and everyone was watching YouTube very closely so kudos to them for trying it out - we would expect quite a bit of iteration still, however.

The price of $20 CPM puts a datapoint on the value of Web TV ads and seems quite high by TV standards (to break even on $1.65 bn acquisition cost thats 0.83 trillion eyeballs that have to see the ads to break even ), and it will be interesting to see just how targeted it can be - no doubt initial pricing is partly a novelty effect, and we can expect gradations in the scale based on popularity over time.

What will be very interesting now is how the consensus of free UGC in exchange for free viewing will now play out, however - in Olde Media the content is usually paid for, so it will be interesting to see how the "talent" will start to extract its penny now that its clear there is some some dough to be made

Update - a new post on TechCrunch has this comment from Jeremy Allaire of Brightcove on their experiences to date (tallies with the stuff we have):

Interestingly, despite having been 18+ months “ahead of the market”, to our disappointment, there has been extremely limited uptake by the advertising community around these formats. There are a lot of factors behind this limited uptake, including:

- the advertising community buying video have been very focused on leveraging existing creative and buying patterns in the online video space
- most content publishers and media owners have been focused on getting the ‘basics’ up and running, and also responding to the RFPs from marketers and advertisers, which are almost 100% focused on basic short-form video commercials
- for premium brands and content, the basic pre-roll and companion banners are yielding extremely attractive CPMs and there is little evidence that :15 ads have any negative impact on end-user viewership behavior — in fact, our own metrics show that sites that run without any ads, and then introduce :15 pre-rolls and banners achieve identical usage and performance (e.g. no drop-off in users because of ads) on their content.

Maybe this is The New Sliced Bread......we somehow doubt it though, if it really worked the mainstream media would have used it long ago. Still, maybe we will have to eat our words....

.


...seems like they were a darn sight faster and more agile than all these johnny come latelies. So next time some oik says you are past it cos you're older ...

“Our research, which used the minimum leg-muscle mass T. rex required for movement, suggests that while not incredibly fast, this carnivore was certainly capable of running and would have little difficulty in chasing down the footballer David Beckham for instance.”

.....just smile and remember that not only can you outrun the young-uns, but your teeth are a lot sharper too

(But to catch Bryan Habana you'd need to be a Velociraptor - here he is at full pelt

Was reading Dave Winer's post on the portability of one's contact directories across multiple Social Networks:

4. There are enormous economic incentives for companies that run social networks to not let users of other networks access their services. Shareholder value is a function of how many users they have, how they are "monetized" and how hard it is to switch. The harder it is to switch, the more money each user is worth. Any exec that did anything to decrease the number of users they control would probably be fired. So anything that depends on this isn't very likely to happen, in existing networks.

Got thinking about this.....as we all know, the life of the average Social Network may be gay and delightful rather than nasty and brutish, but it is still short. We flit from one SocNet to another like social butterflies....or social bees maybe, we all seem to migrate to a new hive every few years, leaving the crumbling profiles our previous existences like so many broken, drying pupae (anyway, you get the picture)

So counting users is not valid - all those drying profile pupae count as users, but the butterflies have long gone, so caveat any emptors !

I have a theory - empirically based admittedly - that the half life of the average social butterfly is about 1 year - ie you will capture all their attention in year 1, 1/2 in year 2, 1/4 in year 3 etc etc. A corollary of this is that by the end of year 2 they are already flirting with new SocNets. Worse still, its the queen bees (to mix metabugs) that set flight first, followed by the drones and fanbees.

So what does this imply for the valuation of a SocNet - quite simply that there are very few years of sunshine to make hay with, and that must have a big impact on any NPV calculations.

When you therefore look at the proposed value of the Social Networks, and divide them by the number of current users, and make heroic assumptions about growth over 5 to 10 years, and calculate their monetisable value its probably hugely overstated because:

(i) There is no 10 years, no one major SocNet has lasted that long (I submit)
(ii) and maybe not too much left after 5 years once one factors in the half lives of those users

In other words real activity is probably more like a bell curve, which leaves a huge value gap (the area under the S graph vs under the bell). Granted one should use a high discount rate to reduce the value, buet even so.

However, if it were an open, portable system, and the people were flitting from Socnet to Socnet in the ecosystem building up their own Directories all the while, then value would be larger and more permanent because:

(i) Each user would have a larger directory (think about all the gaps in all the various contact directories you have on all your SocNets)
(ii) Less effort (attention) would be expended in the hard grapht of re-setting and maintenance, more in additive services - I would also hypothesize that because friction is lower, more services would be used more often
(iii) There is simply a bigger lump of value to be created (more of my years x more of my attention per year x more of us = more value)

This will come to pass, the 'Net wills it (to me Facebook, MySpace et al are like AOL, Prodigy etc in the Days Before Mosaic). Its clear that its better for users to have an open system eventually from the above analysis.

(Quiz - which quadrant to you prefer most in a 2x2 that has closed/open and your data/their data as its axes?)

And which quadrant are you in now?

The only issue is when - right now its very hard to create this world in situ, and thus the initial trend is towards closed systems.....as Dave concludes, open systems are likely to be built ground up, system by system. I sadly concur with him re Open ID as it is today, but would end with a thought towards Ning - Marc A.'s last revolutionary step was Mosaic, imagine what a service like Ning could be like if it too were totally open.

There is an interesting little piece in the McKinsey Newsletter on this today:

Standard economic theory treats human beings as rational, calculating machines, but behavioral economics holds that the machine often breaks down. Business people, no less than others, are subject to cognitive biases that can undermine their objectivity—particularly in emotionally traumatic and potentially career-destroying decisions to exit foundering businesses or cancel struggling projects.

Having been on all sides of this one, its interesting to see the McK thinking. They see cognitive biases in 3 key areas:

1. In analyzing the probable future of a project, they see a confirmation bias in those involved - ie seeking data that confirms their view. The proposed solutions are either (i) getting rid of existing management and/or (ii) adding extra accountability.

2. In the Exit/Invest stage, they see two problems, viz:

- Sunk cost thinking - ie counting costs that are irrecoverable
- Escalating Commitment - aka throwing good money after bad

The solutions are to use zero based budgeting and set up contingent roadmaps respectively (I think they got it the wrong way round in the chart)

3. In Proceeding with the Exit, the risk is that people become anchored around previous higher valuations and are unable to make the adjustment. The proposed solution is to use caretaker managers and/or independent evaluators

All very valid, but this does still rather sound like the Rational Calculating Machine approach though - my experience is that these things are much messier, much harder to discern at the time when you can do something about it - ie by the time it is clear, its too late.

For example, analyzing the future is often done in the context of a few deals that if they do come off can be shape changing, what is usually unclear is the probability / time / cost equation - which is of course what drives the "good money after bad". Changing and/or burdeining the management can be unhelpful here and (i) the New Manager has to get up to speed - wastes time at a critical point, plus (ii) turkeys don't, by and large, vote for Xmas no matter when they are drafted in.

Likewise, that price at Exit can be driven as much by the financial (or reputational) impact of the Funding body having to write it off, or the fear that signals sent to the market by bringing in caretaker managers will drastically reduce valuation.

In hindsight, I'd say there are another set of pointers one could use to see things at the time when changes can still be made:

1. Analyzing the future - Rate of change of sales in the industry segment and rate of change of sales of the business as a % - either of these slowing down is a signal that life is going to be harder - both turning down means it will get hard, fast. Customer defections can be a lead indicator as well.

2. Exit/Invest - When the above occurs, consolidation is the emerging game in town, so be consolidatable - you are still of value as you have customers/revenues/reputation etc etc. (i.e. there are probably still greater fools out there)

3. The "F*ck Off" price you receive today will usually be better than the "f*ck off" price you receive later when you, the market and your buyers are all (i) more clear on your situation, (ii) more clear on the market's (reducing) potential, so any optimism is gone, and (iii) capital can be put to use elsewhere sooner.

(And an old and very veteran friend once told me this one - decide who the biggest sleazeball in your org is...when they jump ship, you know its time to think of exit)

Be very interested in others' "early indicator" thoughts.

We have just completed a fairly major piece of work for a client that had as a major component the development of the SaaS / SOA market (but never call it ASP, thats sooo Web 1.0), so it was with some interest I read Nick Carr's blog on the death of ERP. In essence Nick is arguing that traditional ERP may be blindsided by ERP as a Web Service, mainly due to new services such as Workday, which is apparently a first "ERP SaaS" - to quote Nick:

It's an alternative to ERP, rather than a Web-delivered version of ERP, because the system's software guts are entirely different. Rather than being tightly tied to a complex relational database, with thousands of different data tables, running on a separate disk, the Workday system uses a much simpler in-memory database, running in RAM, and relies on metadata, or tags, to organize and integrate the data. Having an in-memory database means that the system can run much faster (crucial for Web-delivered software), and using metadata rather than static tables, gives users greater flexibility in tailoring the system to their particular needs. It solves ERP's complexity problem - or at least it promises to.

This will blindside "trad" ERP because it gets rid of the Complexity Problems:

In The Trouble with Enterprise Software, an article in new issue of the MIT Sloan Management Review, Cynthia Rettig deftly lays out the case for the latter view. Enterprise systems, argues Rettig, not only failed to deliver on their grand promise, but often simply aggravated the problems they were supposed to solve. "The triumphant vision many buy into is that enterprise software in large organizations is fully integrated and intelligently controls infinitely complex business processes while remaining flexible enough to adapt to changing business needs," she writes. The reality is very different, says Rettig:

But these massive programs, with millions of lines of code, thousands of installation options and countless interrelated pieces, introduced new levels of complexity, often without eliminating the older systems (known as “legacy” systems) they were designed to replace. In addition, concurrent technological and business changes made closed ERP systems organized around products less than a perfect solution: Just as companies were undertaking multiyear ERP implementations, the Internet was evolving into a major new force, changing the way companies transacted business with their customers, suppliers and partners. At the same time, businesses were realizing that organizing their information around customers and services - and using newly available customer relationship management systems - was critical to their success.

The concept of a single monolithic system failed for many companies. Different divisions or facilities often made independent purchases, and other systems were inherited through mergers and acquisitions. Thus, many companies ended up having several instances of the same ERP systems or a variety of different ERP systems altogether, further complicating their IT landscape. In the end, ERP systems became just another subset of the legacy systems they were supposed to replace.

This is - imho - a bit over-egged - ERP systems are after all just software simulations of most of the "stuff" that is done in any Enterprise, this software will exist one way or another - ERP systems arose in a previous generation of architecture to allow multiple functional modules of software to inter-operate with the same data. Prior to that the Inventory, HR, Logistics, Billing, CRM, VRM, SFA etc etc all came from different suppliers with different databases, and that was a real nightmare

However, as veterans of quite a few ERP, OSS and similar sorts of big database systems, our experience is that the major complexity in implementing and operating ERP systems and similar is not really in the software, or in the database used. Its in setting the whole thing up as a model of the Enterprise in the first place:

- the business rules (processes, workflows, policies etc) within any one Enterprise are complex, and mapping that onto software and databases to get a fairly good model of reality is non trivial, irrespective of the actual technology used

- getting accurate data into these systems - and keeping it accurate - is actually quite hard and time consuming.

- getting users to use (and not abuse) systems is always a challenge

The move from indexed sequential file databases to relational databases in many ways reduced efficiency as it allowed enterprises more flexibility in how their data was structured - which of course increased the complexity of the implementation, thus increasing the difficulty of maintaining it and changing it. One could argue that the software influences the ease of modelling the enterprise, and there is some truth in that - but my experience was often that complex software was used more as a way to map existing (archaic, politically expedient, not best practice) practices than to go to the huge effort of actual Business Process Redesign etc etc (the Simplify, then Automate mantra you may recall). As anyone who has tried to put in any form of Lean Operations will testify, the intra-company political battles can be immense. Automate then Complicate was a frequent result.

In-memory databases using metadata are no doubt a step forward performance wise, but this is not the critical path for ERP success - its a processes, disciplines, GiGO issue - thus its hard to imagine that the software architecture per se will make a critical difference. Yes good software helps, but its really not the key to success - Japanese companies can just about run entire manufacturing plants on pieces of coloured paper card and 60W lightbulbs.

In fact, often one got most of the benefits in the implementation from just sorting basic data and processes out, before sticking in any software.

Where SaaS does make a major material difference is in the business model - given that its hard and expensive to make ERP work, then not buying the whole software kit and caboodle upfront but renting it has huge benefits on cashflow in the short to medium term (ie the average tenure of the responsible C level exec in the hotseat). But this still does not solve 3 fundamental problems:

- The Data is in Someone Else's system format, exporting it to a new supplier is hard
- Ditto the processes, workflows, policies etc etc
- In Saas models, there is the risk of (i) losing connection or (ii) supplier shutdown (at least with bust software companies your package was on your machines)

Now where it could get really interesting is if the in-memory database models could de-risk these sorts of problems by separating data from application, and even better if modules (CRM, VRM, etc etc) within those verall Enterprise applications were then interchangeable - if the Enterprise could own all its data and metadata, and could just switch application supplier in a (relative) heartbeat, while keeping its data models intact. This of course needs a rethinking of how the low level messaging data layer interacts with applications, but if one could make software module that were open, re-usable and data independent that would be really revolutionary.

Postscript...saw this note re Workday:

Workday is using REA (Resources, Events and Agents), a 25 year old idea to develop modern software. In REA theory, the economic data surrounding accounting entries that gives context to those entries is captured. It goes way beyond simply recording of debits and credits. REA defines a way to capture entire processes or process parts, depending on the extent to which the process designer wishes to develop or expose process. The way Workday has interpreted REA allows them to atomize process objects so they can be assembled to represent pretty much any view a user requires.

Blimey....deja vu 2.0 Issue then as now is allocation of overheads......

There has been much recently about the "death of blogging" which is curious, as the number of blogs is still rising globally. How come the disparity?

Was musing on this after reading Hugh Macleod's two sequential posts, the initial one was "Why we are all blogging less", followed up by "Blogging is part of something more important"

I don't agree that "we" are all blogging less, seems to me the main contingent giving up are either (i) people who have been blogging for a long while and are tired of it (which one would expect), or (ii) those who are finding that as blogging grows, their blogs do not quite stride the stage as before.

(Update - Hugh has replied that he didn't mean all bloggers, just many of the veterans he knew personally)

What makes more sense to me is the argument that blogging is just a part of something bigger, which is the emergence of an array of new publishing tools - starting with webpages - and as bandwidth goes up and costs go down, more will emerge.

There was also a good quote on Hugh's piece:

I remember Robert Hughes, the great art critic saying in his wonderful book, "The Shock Of The New" that the Conceptual Art scene that emerged in the 1960s-1970s was actually good for "Painting".

Why? Because with everybody else scattering bits of string around gallery floors and calling it “Art”, or covering themselves with butter, rolling themselves in the grass and calling it "Art", the only people left painting were those, as Hughes put it, "who still actually wanted to paint".

To take it to its logical conclusion, just replace "bits of string" with "Twitter" and the words "art" and "painting" with "blogging". Micro-blogging indeed.

(It does seem that the "bored of blogging" contingent do have quite a strong "in love with Twitter/Facebook/Insert Next New Thing Here" correlation - aka Cool Hunting as Malcolm Gladwell calls it - it's not just me who has noticed either ).

Postscript - a friend emailed re why Blogging was no longer in California - the implicit point was that blogging is now a global thing, so the centre of gravity has shifted. Our precise calculation shows its moving WNW and will pass through Montauk at noon GMT today