Octavianworld

Open Social: The Empire (and Friends) Strike Back

I recently wrote a post reacting to Brad Fitzpatrick's August 17 essay, "Thoughts On The Social Graph".  Brad recently left Six Apart to go to Google.  Now, as many predicted, the other shoe has dropped, with Google and others announcing the new "Open Social" standard. 
Here's today's NYT article on the subject.

The concept of the social graph -- a digital map of who knows whom -- represents an increasingly critical element of many web applications, especially public ones.   Early social networking services like Friendster, MySpace, LinkedIn, Facebook (and behind-the-firewall versions like Contact Networks, where I used to work) became valuable because they offered advertisers and other business users  "viral  pathways" to communicate through that more closely matched how people really filter/ absorb information -- word of mouth from trusted, or at least known, sources -- in an age of information overload.

Facebook recently pushed the utility of the "social graph" one step further by providing an API to allow others to build applications that take advantage of it.  This strategy has been a runaway success.  Third-party developers get more efficient access to an audience than would be possible through the conventional "email to a friend and then have each one register separately" MO we've been using for ten years.  Facebook gets inventory to advertise against, and maybe a cut of commerce at some point.  Users get more utility out of a platform they already like -- which means free stickiness for Facebook.  All this goodness is why Facebook is worth 100x revenues to Microsoft (and whatever other investors get announced).

Now, as is the way of all flesh in the software business, a group of Facebook competitors, who individually and collectively find themselves behind in the race to build their own social graphs, have banded together to see if they can re-capture the initiative.  The vehicle for this is a new standard called "Open Social".

Domain Farming: This Is Clever

From Seth Godin:

http://sethgodin.typepad.com/seths_blog/2007/10/farming-domains.html

Neat.  What other domains have this potential?  Sure beats simply parking them.

Pricing iPhone Freedom

It's fashionable among the digerati to complain about how Apple forces you to use AT&T's network.  It's even more fashionable to unlock the phone so you can add third-party apps and decide what carrier to use.  Folks then howl when Apple "bricks" their phones with firmware upgrades, and they lose wonderful third party apps they've grown fond of.  When they get the chance, they lecture the carriers directly.

I see both sides of this argument.  Apple's not interested in open standards here, they're interested in control and profit of their (you read it here first) "i*" franchise.  Control means minimizing the damage that the tasteless hordes can do to their wonderful products, and the associated premiums Apple can command in the market.  Profit means the estimated $18/month/phone that Apple gets from AT&T.  Hey, it's a capitalist system, they're entitled.  So what if by virtue of running a closed system they miss the chance to learn from outsiders innovating on their system?  It's not clear to them how opening up today would be any smaller a mistake than it was for IBM to outsource its PC's OS to a startup called Microsoft a few years back ;-)

I'm more interested in deals that get both sides what they want.  Some ideas:

1. Apple could give users a choice:  "Either you pay us and we unlock, or AT&T pays us and we lock."

2. Apple could offer an "ad-supported" unlocked version of the phone ("This phone call brought to you by..."  Maybe a deal with Google to personalize the ads based on the subject of the conversation?  They already do this with Gmail after all, and the privacy complaints seem to have diminished.  Crazy I know, but...)

3. Apple could get affiliate commissions from the third-party developers who make money (however) by running their apps on iPhones.

4. Since many of these developers are too poor, maybe an infrastructure player who benefits from development and usage of such apps might kick in a fund to subsidize unlocking, directly or indirectly.

5. A direct-to-consumer play might involve a loyalty program -- "Buy $x with us each month and we'll pay this nasty fee for you." 

The first of these is likely to happen only in cases where businesspeople can write off $18 a month justifiably, to use some network or app that's pretty important if not mission-critical.

The second would take lots of ads.  if we make a really simple assumption of an $18 CPM for the iPhone (which assumes a nefarious degree of personalization and contextualization to get a rate this high), that's a thousand impressions a month or roughly 30-35/day, or ~50 during waking hours, or hundreds during the time the iPhone's actually used.  If we assume a lower CPM, the number of impressions skyrockets accordingly.  All in a form factor where advertising is still swimming against the current, on a number of dimensions.  So, not much joy here.

The third... maybe, for select developers, like maybe Amazon, which might want to deploy an app that works better than the browser would for the mobile context.  But it would take *a lot* of purchasing volume for this to work.

In the fourth case, certain infrastructure providers would certainly have a "geek credibility"/ goodwill-building reason to do this, though they'd have to swallow their pride to pay to reach Apple's customers.  On the other hand, these arrangements are not unprecedented in tech-land -- they're called "partner programs".

I think the fifth case, maybe in combination with the fourth, holds the most promise.  Partner X says to iPhone Geek Y, "Buy my Product Z and as part of the bargain I'll pay your Apple Unlocked fee, or even toss in an unlocked iPhone into the bargain."   I can even see Apple signing up for this, via iTunes maybe?  Buy $x worth of songs each month, we waive your fee (of course there's the question here of simply compensating folks for purchases they would have made anyway, but that elasticity study is for someone else to do, if it's not happening already).

Hope to see you at Mobile Internet World on November 13 (click the "Mobile Internet World Executive Summit" tab for info on our 4p session) to debate it further!

Postscript:  Via my colleague Simon Neale, Apple's addressing some of the complaints (SDK for third-party apps, though not yet network choice AFAIK).

Update: PRSA Event Postponed to Spring '08 Date TBD

Go Sox!

PRSA Boston Panel October 30: How To Make Friends and Influence PR Plans

I'm participating on a Public Relations Society of America panel run by Jack Jackson at Bentley College on October 30.  Hope to see you there.

Branded Readers

Reading news and blogs through an RSS reader has been great for me.  I can get through a lot of stuff in very little time:  I'm guessing I'm 4x as productive going this route.  (I've tried a few different readers -- FeedDemon, Thunderbird, Newsgator, and I'm currently using Google Reader, with mixed results.)  Despite the clear benefits of these tools, few people outside my friends in tech use them.  I've been wondering why, and what opportunities the answers might mean.

Digg for Marketers

Via Bill Ives's post, Marktd.  Inevitable I guess.  Would be better if I could filter the RSS feed with one of the tags provided for each item.  Or, did I miss how?  And, could benefit from the "Mark As Spam" button for users or volunteer managers.

Online Video: That Sound You Hear Is The Dam Bursting

By various measures there are some $500 billion spent globally on advertising.  About 40% of this goes to TV, which is why Oxygen is worth a billion dollars to folks like NBC.

Yesterday I saw a press release in which Sony announced more content partnerships, with folks like CondeNet and Sports Illustrated, for the "Internet Video Link" service it packages with its BRAVIA high-def television sets.  Sony gets unique content it can sell ads against.  The online publishers presumably get a rev share on video assets they've already produced, and extra traffic going back to their sites.  If I understand how the service works, this completely bypasses the cable TV infrastructure by using whatever broadband you have available.   Memo to cable company, re: $100/month digital cable subscription:  "Ask not for whom the bell tolls..."

(Ok, you say, but why buy an HDTV if all you can watch is low-res Flash clips?  Not so fast.  See this interesting announcement from Brightcove and BitTorrent yesterday?  How long will it take Sony to add BitTorrent nodes into the   Internet Video Link modules on its sets?)

So, how do we know if Sony's video content bet is ultimately better than NBC's?

NBC paid $12 per Oxygen channel subscriber.  According to news reports, there are about 300k Oxygen viewers in prime time.  Let's assume of course that different people watch different shows each week, and that prime time is as popular as all other times combined.  So I figure that 300k prime time viewers translates into 1.2 million unique viewers per month (cross-check: Oxygen.com has 1.2m uniques).  OK, so $900 million (Oxygen's acquisition price), divided by 1.2m = $750 per unique viewer.  (NBC also has to continue producing programming and pay carriage fees to cable networks to continue to reach those viewers.) Against this up front and ongoing cost, Oxygen gets about $7/unique (per month of course, ~$100M in sales/ 1.2m uniques/12 months). Figure a 15% margin, and NBC's netting $1/unique out of that top line (Oxygen Media LLC didn't disclose income AFAIK).

I don't know the terms of Sony's rev share, or how they are placing those ads with advertisers.  Let's assume the overall split is 1/3 to each party (Sony, content partner, video ad network).   Let's assume a $30 gross CPM for the premium content.  So  Sony's getting $10 CPM.  If  I assume each unique is good for 25 impressions per week, this translates into $1/unique, but that's essentially cost-free (no programming, no carriage fees, no amortization of acquisition costs) if you ignore the cost of the Internet Video Link network infrastructure.  So, Sony's getting the same $/unique.

Now for the sound of the dam bursting:  if I'm an advertiser and I can pay an ad network $3/unique (split three ways between publisher, ad network, and Sony) to reach my audience of women watching TV via, say CondeNet content, vs. paying NBC $7/unique, and get better targeting and measurability (remember, this is *Internet* video), which do I prefer?

Seems to me Sony's got the better growth/ scalability story, though reach is more limited in the short term.

I'm not criticizing the Oxygen deal;  there are sure to be cross-promotional opportunities with iVillage that add to Oxygen's value to NBC (if a small fraction of iVillage's 15M uniques go to Oxygen, that's a huge leg up).  And of course, there are near-term limitations of Sony's Internet Video Link value proposition to advertisers: low reach (the number of people with Internet-ready HDTV sets), and low availability of content from its partners.   Plus, there are a number of apples-and-oranges problems with my analysis (like, are these ways of reaching viewers really the same?  Do they ultimately reach the same viewers?  Are viewers in the same frame of mind?). 

The broader point, though, is about the significant arbitrage that is appearing for advertisers between reaching TV viewers the old-fashioned way and the new-fangled way, and about the dramatic shifts in fortunes that will occur over the next couple of years as dollars flow accordingly.  It's a good time to be long high-quality video content, and to be aggressive about getting online with it.

Carmun.com Re-Launches

via Lori Cohen, this news of the re-launch of Carmun.com, an education-focused "social search" service which I wrote about a while back:

Congratulations Lori and Jonathan!

Bionic Leadership at Harvard's Kennedy School

This morning I was a guest lecturer in Jerry Mechling's class at Harvard's Kennedy School, "Leadership in a Networked World:  The Challenge of IT-Enabled Change".  Jerry had asked me to speak about "personal information management".   In a moment of weakness I suggested we call the session "Bionic Leadership", since I had planned to talk about how new tools can help people running organizations "sense, synthesize, and socialize" more effectively.

Bill Ives joined me, and together with the class we discussed not only tools themselves, like Google Reader,  Marketspace's "tribal bookmarking" version of Del.icio.us, and Twitter, but also more exotic combination possibilities with real-world applications to the kinds of problems K-School students might care about.

It's always interesting to survey groups like this on adoption of technologies.  This group of ~40-50 was pretty diverse:  estimated age range 25-55, from all over the world, from a number of different sectors (business, government, non-profit, military, etc.).

• Roughly 40% are on Facebook, with a handful on other social networks
• Maybe 10-15% use feed readers (skewing younger, at a glance)
• 10-15% read blogs regularly (evenly distributed)
• one class member publishes a blog

These numbers track with my experience recently in other settings.  Facebook is becoming a de facto "bridge into the future" for many people, making a Facebook app an essential part of any new web venture's promotion strategy.   

November 13 Boston Panel: "The Anywhere Transaction Model"

On November 13,  I'm moderating a panel on "The Anywhere Transaction Model" at the Mobile Internet World conference at the Hynes Center in Boston.   See here for details: http://www.mobilenetx.com/seminars/ (click on the "Executive Summit" tab).  Hope to see you!

Postscripts:

Video of Ford Cavallari's session, "Learning To Profit Through Anywhere Advertising":

http://bnettv.com/player.php?id=919

Video of session I moderated on "The Anywhere Transaction Model":

http://bnettv.com/player.php?id=927

Interview Condenet's Carrie Seifer (one of our panelists) did for bnettv:

http://bnettv.com/player.php?id=923

Interview I did on the session for bnettv:

http://bnettv.com/player.php?id=912

One Social Graph To Rule Them All

It seems not a day goes by that I don't get an invitation to connect with someone on one social networking service or another.  It's all very flattering, but it's getting really hard to manage, especially as many of these services don't syndicate well, or at all.

In an ideal world, I could connect and interact with people and groups from a single interface.  Of course, different providers of these services would feel very differently about this.  Smaller ones would love to have this outlet as an alternative to almost-certain obscurity.  Bigger ones say, "I already got one, it's my world, and my users are just living in it, thank you very much."

Via Caroline Meeks and TechCrunch,  I just finished reading  Brad Fitzpatrick's August 17 essay, "Thoughts on the Social Graph".  Brad does a very good job of laying out the problem to be solved and how to go about solving it.  Better yet, he and friends are actually working on it.  With Google behind him, this is pretty serious.

Still, I wonder if it's a bridge too far.  Prediction:  with agents like Jonathan Miller and Ross Levinsohn at Velocity now out there trying to aggregate interesting web properties into networks with the minimal reach necessary to make them interesting to advertisers (i.e., moving them up from the AdSense basement I live in), we'll soon see "federated" APIs based on these individual properties' collective social graph emerge.  Why?  Because doing so will make it more interesting for advertisers to build their own versions of "Facebook applications" on top of these social graphs. 

Let's take an example.  Let's say mythical new age ad network "Travelamigos" goes out there and rolls out a bunch of small travel social networks.  People who use these networks are more likely to find and connect with buddies if they are connected across all relevant networks, not just bilaterally, so they'll find such a capability useful and be more likely to join the underlying services.  Advertisers will have a larger, better-connected user base not just to sell ads to, but also to develop services for.

For large media firms, who currently control and are expanding their own "social media" properties, aggregating and exposing such a "social graph API" would also seem to be a natural progression.