broadstuff

Research reported in the Grauniad from Harris that only 5% of people would pay for news (the research was sponsored by Paid Content, which I find ironically deeply amusing....):

If their favourite news site begins charging for access to content, three quarters of people would simply switch to an alternative free news source, people who read a free news site at least once a month told us.

- Just 5% of those readers would choose to pay to continue reading the site.

- 8% would continue reading the site's free headlines only.

- 12% of respondents are not sure what they would do.

This is a poke in the eye for News International's Rupert Murdoch's plan to force people to pay to read online newspapers. The gamble must be that there will be no other sites left standing as free alternatives, or maybe buy them all - but in the UK the BBC will exist:

n Britain, there will always be the BBC - unless the Murdoch-inspired anti-BBC propaganda forces it to close or to reduce its online service. I don't see how any paper will circumnavigate that problem.

In the US, there is no equivalent to our public service broadcaster. So let's imagine that Murdoch's attempt by his own News Corporation to stitch together a digital news cartel comes off.

Except, in the US there is Google - makes its money by advertising and not public financing, but uses it to hand over content for free as well.

Still, 5% is 5% - thats a similar number to what seems to emerging as a rule of thumb for Freemium use, so that probably points to the answer - offer extra value and you will get a 5% freemium user base. Much cheaper than trying to Bunker-Hunt the news market and buy them all. (Buying Google will be a tad expensive of course......)

There was an article on Mashable yesterday about Foursquare beating Twitter to the business market that was sycophantic to a degree I haven't seen in a tech blog before (hmmm...is this a new New Media business model emerging, copying the Old Media and just regurgitating PR guff sans thought?), but fortunately TechCrunch was quick to take issue with it:

There’s some hoopla today that the location-based social network Foursquare has found its business model (and as such, has beaten the more mature Twitter to one). But hold your horses. While Foursquare does have an idea for how to eventually make money (as we’ve discussed in the past), they aren’t actually focusing on making any just yet, co-founder Dennis Crowley confirmed to us today.

The aim is to build deals with retailers so that frequent users get discounts or freebies, but drive other users to the site to buy stuff. These types of deals (dubbed “Mayor Deals” as a frequent virtual user becomes a Mayor* of a place, even though they need never visit it) become a business of some kind. However, the downside of all this was rather well put by Aubrey Sabala in SF Weekly.com

Imagine the following scenario: You're quietly enjoying your tea while reading a newspaper at your local cafe, when someone you've never before seen interrupts your morning respite by hollering your name from the next table. You look up to see them waving frantically, leading you to wonder if one too many tequila shots were the cause of this temporary amnesia. Before you can question the acquaintance, they simply say hold up their iPhone and say: "Foursquare!"

Far-fetched? Nope, just another day in Web 2.0. This exact scenario actually happened this weekend, a result of social network foursquare's recent update: the ability to see who else is checked into a venue. Foursquare - for those not familiar - is a location-based social network where users 'check in' to venues as a way to gain points (currently an nonredeemable social currency) and explore the city.

The article goes on to suggest a few steps you can take to protect yourself, but it all amounts to bodging the desired default workflow. Of course the question you ask, dear reader, is why the change from privacy respecting to privacy invading?. The answer, of course, is money - or rather, how to show a 5 year hockey stick in a revenue model. Plying privacy from the user perspective is not what customers (advertisers, recent funders and businesses) want.

Note to all - in these sorts of consumer services that today skate on the thin ice above the tempting waters of user privacy abuse, mark well the difference between a Customer and a User. A Customer is someone who gives you money, a User is there, well, to be used.

Note the difference well....... there is no regulation, little operating experience and virtually no "good practice code" safeguards to prevent privacy abuse from location based services. Good treatment of the user is at the sole discretion of the supplier, but is not really in it's interest. By this I mean that the average user has very little idea of the medium and long term ramifications of handing over their dynamic data to the public sphere, and thus is less wary than in Real Life. As Mat Morrison noted at TEDxTuttle last week, a huge amount can be deduced just from looking at your friends on a social network. I can tell you, gratis and for free, that a huge amount more can be deduced from your movements. The trend towards default broadcast of position and opt-in tells you which way these systems are being nudged. The opportunities for exploitation are thus larger, and with the pressures on the startups to perform, its hard to believe they will not often be taken.

(Paranoid? Moi? Ah, but I plan to survive..... )

Updates:

- very interesting article by Fred Wilson about Urban (data) Architectures that these sorts of services can bring about. I like this, it shows what could emerge
- a realisation: the main use case here is just the latest transmutation of the 1990's early m-commerce "you get bribed to invite your friends to a cool restaurant" narrative (its also the main use case underlying a lot of the augmented reality startups) but with the added benefit that you hand over your static and dynamic data en route.

*Probably just me, but I wouldn't go near a place that some other d*ckhead has become "mayor" of, especially if they've never even been there.......

...was one of the points raised by Mat Morrison during his talk at TEDxTuttle on Thursday last week. His point was that in a social network, even if you don't give away much about yourself, a lot about you can be predicted from your friends - especially those you interact with frequently. This has some "interesting" applications, for example unintentional outings, as an MIT study reported in the Torygraph showed:

The small-scale survey indicates that people who believe they have discreet online habits may still be making personal information about themselves public.

As part of the study the researchers Carter Jernigan and Behram Mistree scanned the Facebook friends of more than 1,500 fellow students who indicated their sexual orientation – straight, gay or bisexual – on their profiles.

This analysis revealed that homosexual men had proportionally more gay friends than straight men, allowing the students to devise a computer programme to predict the sexual orientation of other Facebook users based solely on the sexualities of their friends.

They ran this programme on 10 men who were known to be homosexual but did not reveal this information on their profiles. In each case, the software correctly identified the men to be gay.

Mat used similar approaches to tell political affiliation. Time to start recruiting some faux friends quick, to put those digital gaydars off the scent.................

Update - I see the Panglossian Right-on Tendency are horrified at this, but its just the inevitable dark side of the social web's lax privacy systems.

A short note on the eBay/Skype fiasco.....this is a chickens coming to roost thing.

I find it nearly impossible to believe that a due diligence team in this sort of size of transaction (eBay buying Skype) would not have been aware of the red flag that was the ownership of the underlying IP. (The biggest transactions I ever did were about 1/5th this size and for that price every jot and tittle was crawled over in minute detail). I would strongly suspect that there must have been a decision to overlook the IP issue.

So, what was eBay's management and Board thinking when they decided to press the button to buy? And more to the point, why were they thinking it? Why was it decided to overlook the IP issues? The mind boggles!

Fast forward a few years, and a soap opera like cast of characters manoeuvre to buy Skype from eBay, and even though most of the players seem to have been in place to see where the skeletons are buried, still the play goes on. As one of the commentators on the TechCrunch piece notes:

Niklas/Janus were obviously interested in buying skype, using the lawsuit to drive down the price which was effective… then Volpi who they hired to run joost teams up with Index who they let invest in skype, and Volpie/Index go on to steal skype from under Niklas/Janus without including them in the deal…

…that’s why this is getting uglier by the minute

I suspect anyone who has ever done M&A (and many who haven't) is pretty certain that a lot of dirty washing is going to come out now.......

Nice post by Fred Wilson re who drove the sale of Mint to Intuit for $170m - Management or Investors:

Here are some rules that I've learned over the years:

1) When the founders and management want to sell, the VCs ought to go along (within reason) because blocking a sale and having angry and unhappy founders and management running the business is a bad outcome.

2) VCs often impact the price and terms of an exit but they rarely drive the exit itself when the founder is still actively running the business.

3) When a company is doing really well, the investors rarely want to sell. VCs make all of their money on a few investments per fund. When a company is in that group, they don't like to see an early exit.

4) When a founder owns a large stake in the business and is still running it, it is very likely that the founder drove the decision to sell and the sale process and was advised by the investors and board.

5) If the founders are no longer involved in the business and the management was hired by the VCs, and the VCs control the business, then it is likely that the investors drove the sale process and the decision to sell.

6) If the company is not doing well, then the decision to sell was likely forced by the VCs.

This leant itself to a little game theory truth table, which I've drawn up above. What it also shows is a case that is missing in Fred's analysis, ie where the company is doing badly but the Founders are still in control. In this case my observation is that the founders usually try and keep going, but as they take in more cash they get diluted until they lose control, at which time a sale is forced.

That Top Right Hand box may well explain why the investors let the Facebook guys sell and lock in some of the benefits - far better that than the Founders/s (I lose track of who exactly founded Facebook) force a sale. If the investors thought Mint was such a good company one assumes they could have followed suit?

Yesterday saw the TEDxTuttle event held. It went by without any major glitches, and those that did occur were marvellously covered by the presenters and our superb Front Of House team, Tuttle members Joanne Jacobs, Janet Parkinson and Julia Shalet. Kudos also to Stewart Townsend and the Sun Startup Essentials team for the help, venue and sponsorship.

A bit of behind-the-scenes for you all: in organising this we chatted to a few people at Tuttle about the sort of things they might like as a conference theme, and one of those that came up was a view of trends into the future. There were others, but when Tomorrow's World* presenter (and Tuttle member) Maggie Philbin agreed to kick it off, the die was cast. Again, we had asked around about themes people were interested in - Digital Technology and Social Media are Tuttle's raison d'etre, but there is also a strong interest in Sustainability so we decided to run with those 3 broad themes and look at what was happening in them in the near to medium term future

In the sign up process, we asked people to list areas they were interested in within these themes. What we found was that there a number of "clusters", quite inter-related in many ways, and we used those to select topics for videos and speakers.

So the program resolved itself to:

- Maggie Philbin leading us into a history of the worlds of tomorrow, via some fascinating clips from the 60's, 70's and 80's of what people thought the hot hot things of those past futures would be.

- Technology stream - we covered Robotics with P W scary Military Robots video , Mobile Multimedia with the amazing 6th Sense and - on the advice of Tuttle member Sarah Blow - we asked Rachel Armstrong to come and talk about the fascinating area of living architecture.

- Sustainability stream - Jared Diamond's Collapse to keep the Collapsonomics crew happy, set against Willie Smits amazing talk on how to rebuild a wrecked ecosystem, and Tuttle founder Llloyd Davis on curating a sustainable online/offline social network

- Social media stream - first, Ben Walker looked at the dynamics of Twitter via words and music, Clay Shirky's video looked at Social Media's potential, Mat Morrison gave a talk on how Social influence is measured, and we rounde off with Dan Pink's video on how open problems cannot be solved by carrot and stick incentives

Maggie then closed with some hilarious videos of daft inventions from times of yore.

The TED videos you can watch for yourself, here is a precis of the talks (Adam Tinworth wrote a great liveblog yesterday over here on One Man and His Blog, I've borrowed some of that and added what I recall):

Maggie Philbin

Maggie showed a timeline of when inventions were first aired on Tomorrow's World. What really hits you is:

- How long a lot of the stuff that we think of as "modern" actually first emerged onto the market
- How many of the "sure fire" predictable successes of the day turned out not to be
- How many of teh things we take for granted today were ridiculed, lampooned or ignored when they first came out. (CDs, Mobile phones, Personal Computers) by the consumer "experts" of the day

Maggie also ended off a very good Q&A piece with teh observation that people were far more interested in science and technologies then, today a lot of kids see "media fame" as their future path

Rachel Armstrong

Rachel is working on what I would consider one of the most imporatnt (and probably valuable0 emerging areas of technology - Living Architecture. In other words, building materials with living organisms (simpel microbes) in them. The two key benefits are:

- Buildings that can modify their environment via the live microbes contained in teh materials (eg give out oxygen, take in CO2 - imagine if every wall and roof on the planet could do this)

- Buildings that can grow themselves, repair themselves and evolve organically according to need

You've read about it in the Science Fiction, Rachel showed the state of the art in today's science

Lloyd Davis

Lloyd looked at his experience of curating teh Tuttle club over the last 3 years. Its main claim to fame is it is still growing in size and capability after this time and has yet to be perverted from its (lack of) specific purpose As he points out, its major claim to fame is that it is an open club (its fervently open to anybody, but its not for everybody) . Some key points were:

- Its like running a Kid's Birthday party - "nudge" aberrant behaviours early rather than be draconian later
- Someone has to shoulder the risk - I'm here, I'm doing this - and give others the confidence its happening
- Tuttle spends nothing on promotion, etc - the best way to do this is to do cool stuff and then talk about it.
- Tuttle uses Twitter heavily, its ideally architected for the Tuittle dynamic - but its mainly a way for people to talk face to face. However, the online/offline conversation means that you interact with the real person
- "I know more about people, but not in a creepy way, because I see them every week." That leads to more opportunity for serendipitous meeting and connection, as we get to know and trust people

My own view is that Tuttle is functionally the modern equivalent of London's famous coffee clubs of the Age of Reason, and in my opinion could possibly also become like the Groucho Club for the digital media tribe.

Ben Walker

Ben is famous for his funny song "You're nothing if you're not on Twitter" (penned in a lazy hour at Tuttle, by the way) but gave us a hilarious, thought provoking and musically adept guide to twitter as he set various people's tweets to different types of music. Some takeaways were:

- You can never look at a tweet again after hearing it set to music - from then on you look at every one from the point of view of "what sort of soundtrack is this tweet"
- Twitter may be 40% Babble, but Babble + Context = Conversation

One cannot do Ben's talk justice in words and I was too busy laughing to remember most of it - you will just have to wait for the video (we will do this one first, I promise)

Mat Morrison

Mat has spent a lot of the last few years on the mathematics behind social networks (The first time I met him we spent a very enjoyable 2 hours in a late night nightclub talking system dynamics and network maths) and gave a talk on some of his analysis work. Some highlights:

- Companies are increasingly trying to use social media to make people do what they want them to do, people are increasingly using social media as a filter. thsi means that the obvious influencers (eg thsoe with the most Twitter followers) are not, except for the most banal, low risk things
- Viral isn't - the curve is more like a series of hiccoughs, declining in size. This is because very seldom does one person tell more than one other person (on average) about something. Also, most beople's social networks are clumpy so soon they are "going viral" to each other.
- Also, most people are "homophilous" - is the cleave to people and memes like themselves, and when the meme crosses the boundary to a new and different "homophilous" set of people it often dies
- There are people who span a number of networks - the "Between-ness ratio" Mat calls it - but due to the above effect their influence is limited
- You can be judged - literally - by the friends you keep. It is far more reliable to make predictions about you from looking at your friends than by the confusing data you put out yourself.

Anyway, the feedback so far seems to be very positive, and most everybody had a good time (a relief for us Broadsight Boyz, as we did all the back end CMS, website, audio visuals etc. It was quite fun gettin' dirty with all the wires and cameras again too).

I will put up the key feedback learnings for any next time in a separate post.

*Tomorrow's World was a BBC TV show that ran from the 60's to the 80's and on which she was a presenter. It was to look at new technology, and with people like Maggie on, it was the start of the meme that geeks can actually be cool.

(Cross posted on the TEDxTuttle blog)

Mandy Rice Davies was an "escort" caught in the Profumo scandal in 1960's Britain, where it seemed that the Government, the Russian spies and some of the UK's movers and shakers were sleeping with the same women at the same time. Bad for state secrets, don'tcha know. Anyway, one society mover turned out to be a pimp as well:

While giving evidence at the trial of Stephen Ward, charged with living off the immoral earnings of Keeler and Rice-Davies, the latter made a quip for which she is now best remembered. When the prosecuting counsel pointed out that Lord Astor denied an affair or having even met her, she replied, "Well, he would, wouldn't he?".[5]

"Well, he would, wouldn't he" has entered the British lexicon to describe that sort of "duh" event. And so it seems when I read about News International's Rupert Murdoch and Google's Eric Schmidt.

News International wants its customers to pay for news, and made this clear a few weeks ago - Mr Schmidt has now responded and said Oh No, it must be Free:

Schmidt was responding to an announcement by News Corp CEO Rupert Murdoch that he could start charging for content online. As Reuters notes:

"In general these models have not worked for general public consumption because there are enough free sources that the marginal value of paying is not justified based on the incremental value of quantity," he said.

To paraphrase - well they would, wouldn't they. Those are the cornerstones of their respective business models.Where they both seem to agree though is in the future of niche information:

"Eric Schmidt said he could, however, imagine niche providers of content such as business news succeeding in this area."

And Mr Murdoch bought the Wall Street Journal..............

No posts today - the whole Broadsight crew were at TEDxTuttle running the Audio/Visual bit of the event and a bit of light emcee-ing - we've been very heavily involved in the "back end" of it all, including building the website and all the filming.

Thanks to all the speakers - Maggie Philbin, Rachel Armstrong, Lloyd Davis , Ben Walker and Mat Morrison for all their effort

Seems like a good day was had by all......Adam Tinworth has a nice series of blogs on the day, starting here.

More later, as they say.

RedBeacon wins it, says TechCrunch, but its essentially just a service that matches local service providers:

Using the site will be easy for anyone who has used a local review service like Yelp. Simply type whatever service you’re looking for (be it plumber, gardener, or hair stylist), and the site will present a list of recommended service providers in your area. RedBeacon also employees natural language processing so it can figure out exactly what you’re looking for (for example, “Cupcake maker” would search for any bakers in the area). The site will then present a list of profiles for each match, featuring reviews and comments from other users, basic information like their hours, and star reviews imported from Yelp.

Good luck to them, but I wouldn't have thought this was a major online business play, there will be a huge amount of traditional "shoe leather" selling into local SMEs etc to get it to work. I wrote this in the comments section:

These sorts of businesses are already around in many local areas, we’ve had one like this where I live for years.

There is no competitive advantage, no unique technology, no barriers to entry, very hard time capturing a mass market, very difficult to scale….

I have no particular axe to grind re TC50, [or RedBeacon] but choosing this as a winning business seems daft. One wonders what the selection criteria were.

I really do wonder about those criteria. Still, the publicity should ensure a tidy sale to Yelp or similar in a year or so.

In my opinion there were better companies at TC50 and better ones not even selected to go. Maybe Paul Carr will have an idea if he is still employed there

Facebook is apparently now Free Cash Flow positive says Inside Facebook:

From the company blog post on the news, from founder Mark Zuckerberg:

We’re also succeeding at building Facebook in a sustainable way. Earlier this year, we said we expected to be cash flow positive sometime in 2010, and I’m pleased to share that we achieved this milestone last quarter. This is important to us because it sets Facebook up to be a strong independent service for the long term.

For those not familiar, “free cash flow” means the amount of cash that a company generates after budgeting costs required to maintain and expand itself.

Free Cash Flow is also a very moveable number....... It is:

Income + Amortisation/Depreciation - Changes in Working Capital - Capital Expenditure

But the last 3 values are all open to some, ahem, "flexibility" - just ask Enron, who hid a lot of these things off their balance sheets - and they are not alone. Just changing the method of depreciation can shift from +ve to -ve for a bit or vice versa. Also, a negative free cash flow is not necessarily a bad thing if there is major capital investment going in.

By the way, Cash Flow +ve does not mean profitable! That is a different calculation.

Given that Cash Flow +ve was a 2010 target, why announce now, why not wait and make sure its not an aberration? I'm trying to see reasons for "going early" but none as yet - any ideas?*

(Could be its just reality of course, but thats too simple an explanation )

Until properly audited numbers are available treat these with extreme care though, and after they are available treat with a fine tooth comb.

*Surely they wouldn't massage the numbers to give 4 quarters of respectable financial data before an IPO