Ok, Google might be evil. After all, the company churns out product after product feature after feature with no [intention or real] hope of them being profitable profit centers so that it can collect more data on users so that it can become the next-generation advertising platform.
We know that.
The company is synonymous with data mining on the largest of scales. We know that too.
But, the company is experiencing something of a major backlash online for - gasp - promoting its own products when people search for related keywords. Basically, you search for a city, they offer a link to Google Maps.
The horror!
I understand that Google initially set off on becoming a pure-search destination, with no human intervention and all… but to quote Chris Rock: “times change, people evolve.”
And, Google too has evolved with the times.
The day Google raised financing from venture capitalists, it changed.
The day Google decided to introduce ads, Ad Sense, it changed some more.
The day Google introduced its contextual network, Ad Sense for Publishers, the rules of engagement evolved again.
The day Google filed for an IPO, well, it changed forever.
Today Google is worth $150 billion on the public markets. Investors bid up the price by pouring in their nesteggs; when they do, they expect more. Furthermore, when advertisers buy keywords on Google, they expect more as well. In turn, when publishers add Google’s text links, well, they expect more as well.
No one seems to complain when they ad Google text ads on their site.
No one seems to complain when they receive checks from Google every month (even though someone should ask why it’s a blind revenue share, and eCPCs seem so low despite the average CPC advertisers pay according to public sources like Fathom Online, or better yet: what Google asks advertisers to pay when they turn to Google advertising).
No one seems to complain when they buy Google stock and see it rise 500% since the IPO price.
Yet… when Google decides to expand on their lead and increase their degree of financial leverage, people cry foul.
Wake up, get real, snap out of it.
We created the monster, live with it. We said that MSFT was a monopoly and we had no choice. Well, with Google, we have a choice. We “google” people and things, we don’t “yahoo” them.
If you are unhappy with Google (as many of my esteemed blogger peers are), then remove the freaking Google ads from your site. It’s really very simple.
Furthermore, by moving away from pure-search - as did Yahoo!, Altavista and others - Google creates an opportunity for new, “virtuous” players to come in and “not be evil.”
Plain and simple: if you were stupid enough to believe that piece of investor and public relations spin (”Don’t Be Evil”), then you don’t deserve to complain about Google’s ever-expanding pursuit of profit.
It’s called capitalism.
Digg this Blog
Share on Facebook
WatchMojo on Twitter
WatchMojo on YouTube
Add to Favorites
WatchMojo NewsletterMSFT is bolstering its search capability by offering behavioral targeting. Read more.
I am expecting - and have not ruled this out yet - MSFT to acquire one of the following companies:
- aQuantive
- Valueclick
- Tribal Fusion
- Revenue Science
- Tacoda
- etc.
MSFT won’t invest in content, it sold Slate.com which was its little political / content experience to the Washington Post. But to ride the online advertising wave, I could see it buying some of these firms. In fact, it might be crazy, but buying Tacodo to add a Dave Morgan - who founded Real Media - is not a bad idea. VP of Sales Joanne Bradford is seen as a star at MSN, and I’m not taking anything away from her, but if MSFT wants to get serious about online ads, they could use all the help in the world with Google continuing to fire on all cylindes and Yahoo!’s much vaunted Panama seeing the light of day.
Disclosure: I own shares of AQNT, and have owned VCLK in the past, but not now.
Just a week ago, we published our Top 10 Storylines of 2006. We were going to avoid the Top 10 Trends or Predictions of 2007 and instead do something else (we still will do that, expect it on January 1st).
But then Pete Cashmore of Mashable.com challenged us to suggest some predictions for 2007, you know our saying: “Ash and you shall receive” (though we already somewhat covered this back in October here):
To see our trends, scroll down to after the Indented portion (for an imagination run wild scroll down to #6 - 6 - ACQUISITIONS & MANAGEMENT SHUFFLE, or course, take the scenic route).
Our philosophy for trendspotting is:
It’s important to note that every year, something that is adopted by early adopters online in the previous year takes off with mainstream masses the ensuing year; while something that was already very much in vogue with mainstream audiences the previous year takes off and crystalizes.
A look back at history reveals a familiar pattern:
We’ll start from 2004. After all, 2003 can be viewed as the turning point and renaissance of the Web.
2001 was the abyss, no doubt. In 2002, things began to stabilize, and 2003 marked the turnaround. This was confirmed and highlighted with Google’s IPO in 2004, which left no doubt that the Web had shaken its hangover off and would go on to become a viable medium, and a very viable one at that.
In 2004, blogs were the buzz word (even though these were around for years). The macro-level phenomena to draw blogs into the pop culture lexicon were clearly the escalation of troubles in Iraq (and the mainstream media’s reluctance to cover them) as well as the Presidential Elections. For example, as the mainstream media sugarcoated Iraq, bloggers covered the facts as they were, or rather, as they viewed it.
In 2005, it was social networks that became hot while blogs became more and more mainstream. Think of how many more people started blogging in 2005. The reason why social networking took off, frankly, had to do both with demographics and technology. Social networks like Tribe, Friendster and MySpace had been around before 2005 of course. Demographically, the so-called trend-setting 16-17 year old crowd had entered high school at a time when the Web was part of the curriculum and de rigueur in classrooms. Technologically, broadband had taken off, camcorders and cell phones made digital media commonplace; the two were a match made in heaven and social networks like MySpace took off.
2006 will surely go down as the year of online video, partially due to broadband becoming prevalent in more than 50% of homes and the falling price of hosting. Similarly, the adoption of social networks became very commonplace. Today, for example, it was noted that the average age of someone with a profile on MySpace was much older than expected: over 50% are 35 and older, up from under 40% last year. I know, not exactly fossile-status, mind you, but you get the point. In the meantime, every one now has a blog, even the President of Iran… (he’s even set up with RSS feed and all!)
But of course, that was October, 2006, before YouTube sold to Google, before Yahoo! announced its shake-up. All right, not mich of a shakeup, but you know what I mean.
So if:
2004 marked Blogs
2005 marked Social Networks
2006 marked Video
Then 2007 will see the following:
1 - VIDEO
a) FLIGHT TO QUALITY IN CONTENT
As a result of a regression to the mean, users will demand some more quality in the video found online. We’ve gone a bit too far to one end of the spectrum in terms of, well, having too much crap online. Folks, America’s Funniest Home Videos was one (albeit popular) show, but it was not the only show, on for 24/7, and one that spawned stars.
Yet, somehow every media company wants to make funny home videos the cornerstone of their digital video strategy. It’s lame, it’s enough. Move on.
For the love of all things holy, the folks at WatchMojo.com seem to put more time, energy and effort in the Web TV strategy that some major media companies do and let’s face it, that ain’t right.
b) CONSOLIDATION IN TECHNOLOGY
Way too many platforms, way too many formats etc., as an industry we need a sweeping determination of standards (imagine where online advertising would be if there was no standard ad sizes!)
We also will see a lot of companies merge due to a shortage of talent at the top (you simply can’t take an old media executive and parachute him at a Guba, for example, it will not succeed… but take Revver and Guba, and you might have a match of senior management strengths, of course, there is ego matters, but that’s not our problem) or technology and content (say Revver has the “business model” but lacks content, and Metacafe has boatloads of content but no model - I have no idea if they do, just using as example), these could merge and will have to because…
The bottom line is that for most online video sites that are merely technology platforms, VCs will simply not fund more money. The technology alone is not impenetrable. The audience is fickle. Heavy.com is a video site that just raised more money, but it’s a content aggregation and publishing site.
Read: Online Video: It was the best of time, It was the worst of times | Tough Times Ahead After GooTube Deal.
2 - PERSONALIZATION
For a few years now, we’ve seen developers, programmers, engineers, des
ers (can you tell I don’t know who does what - I’m kidding, well…) create fantastic tools, features and applications that streamline and faciliate the content creation and aggregation process. Blogging software is just one example.
We’ve seen publishers - old and new - increasingly harness and master these tools to better manage and distribute content.
We’ve also seen individual users pull up a seat at the big boys’ table and create compelling content. Rafat Ali has more influence that most if not all writers at the New York Times to web audiences, mind you. Along with the regression to the mean, these two will converge. But you get our point.
Lower along the totem pole, some of the content is crap, some of it is ok, some of it is wonderful (like my nugget of wisdom says: “there’s hot girls in all countries!”).
Point is, people who want content will be able to pick and choose what they want (through RSS, newsletters, etc.) and people who create content can push it out by customizing what and how they produce content. Think My.Yahoo on a large scale.
The main challenge we face now is noise - pure and simple. Too many blogs all blogging about the same thing to get linked, too many image-sharing sites, too many video file-sharing sites… but this will start to “clean up” in 2007 and become a reality in 2008. One reason why to follow below.
3 - INTERMEDIATION
When Bear Stearns Cable and Satellite analyst Spencer Wang published: “Why Aggregation & Context and Not (Necessarily) Content are King in Entertainment,” he was not saying anything new to legions of web-wannabe-analysts (the WWA baby!). And yes, yours truly is definitely included amongst the WWA.
Content has evolved online, we won’t see new portals per se, but we will see vertical portals, or countless niche sites, some of which produce niche, contextual content along verticals and others who do not create any content but simply aggregate it.
As a direct result of intermediation and personalization, a lot of people will drop Digging (I’m using the term here for what Digg represents: the good, bad and ugly of Web 2.0 and not only contributors to Digg) and the like and start doing similar things for themselves.
We have a social bookmarking tool ready and go that cost very little to create. There’s nothing defensible about that, and the system to duplicate it is somewhat easy.
As per Digg’s users: people are inherently greedy. Remember: “Greed is good…” and people will realize that toiling away to generate content for Digg while a select few laugh all the way to the bank is not a fair system, especially when the community is asked to clean up spammers and Digg gamers and the CEO says “what problem?”
Being a top Digger does not get you laid after all, getting paid does.
Combine that with the fact that a lot of these diggers will hit puberty and they realize that they’d rather own a tiny space online instead of, well, you know what: nothing of Digg.
Social media will not disappear, but it will change. People will take ownership back. I edited a few posts to Wikipedia about two topics I know more of than the average person: Def Leppard and Alexander the Great (did I just admit that?). Yet the Wikimafia deleted it. So I built two sites to showcase my interest in Def Leppard and Alexander the Great.
4 - THE RETURN OF EMAIL
It won’t make large waves, but with CAN-SPAM having cleaned up the spam situation, and with more and more people signing up to feeds and what not, we see email marketing making a slow but sure return to the landscape in 2007.
5 - VERTICAL RISING
The rise of vertical communities will continue. You will have large vertical sites, you will have people maintaining tiny vertical sites. The point is, this is something that started in 2004 and 2005, rose to prominence thanks to things like Mr. Wang’s study and will only accelerate in 2007 and beyond.
6 - ACQUISITIONS & MANAGEMENT SHUFFLE
CNET for sale? Perhaps. With Shelby Bonnie gone - nothing against Mr. Ashe - we see CNET being acquired. We also think it’s possible that CNET makes one or two small, somewhat medium-sized deals to bolster itself for an acquisition.
Yahoo! and AOL? We think Google will block that like the tease they are. Read more on that here.
MSFT won’t make a huge acquisition. It’s not in their culture. But we do see it buying an online ad company like Blue Lithium, aQuantive or Valueclick. Read our analysis here.
But eBay will probably make a major move, maybe even with InterActive Corp. Together, they’ll have more bargaining power with advertisers, since both are traditionally weak there and mainly e-Commerce powerhouses. With e-Commerce gaining prominence, this will position them for growth over time.
Barry Diller will be needed as Meg Whitman will leave eBay. Where to? Keep reading.
Peter Levinsohn - who replaced Ross Levinsohn - will prove to be great in many ways but in the end Mr. Murdoch will begin to ask for immediate returns (as in, in addition to Google’s $900 million deal, which we think they overpaid for in a defensive move against Yahoo! and MSN) and a series of events will mark changes atop FIM.
While we put MySpace atop our Top 10 Best Web Acquisitions of All Time, in 2007 Mr. Murdoch will ask for more tangible results. After all, News Corp.’s stock rose 30% in 2006 due to the giddiness over MySpace, so investors will ask to see financial results from FIM in 2007. Disney too rose 30% but it was powered on financial metrics, hence why we made Disney the media stock of 2007.
What are these events?
Rupert Murdoch is clever and wise and for a few years will not not tinker with MySpace. But in May 2007, it will be two years and Mr. Murdoch will get impatient.
He’ll push Levinsohn to make changes at MySpace, who will in turn push Chris DeWolfe and Tom Anderson (MySpace founders) for changes. DeWolfe and Anderson will push back and grumblings from these two about their discontent over the Intermix deal, where they feel they got jipped.
To quiet the potential mutiny, Murdoch will side with the MySpace guys, which in turn makes the job impossible for Levinsohn. News Corp. will begin to tweak with MySpace in subtle ways. Ultimately, by mid-year, Murdoch openly asks why not enough Fortune 500 advertisers are on the site “with the most pageviews” and as a result, will push to clean the site. The result: the users will migrate elsewhere… adding to the rise of the verticals.
After MySpace fails with advertisers, Rupert Murdoch will turn to eBay’s Meg Whitman and lure her to run FIM/MySpace. Between her experiences at Disney and eBay, Mr. Murdoch views her as perfect for the new and improved e-Commerce fueled MySpace. Peter Levinsohn will focus on other areas of FIM, notably, IGN’s Digital Distribution platform.
Over time, IGN will look like the crown jewel as more and more media companies slowly but surely move to embrace IGN’s digital distribution platform. IGN’s in-game advertising continues to grow as video game companies hire IGN to plug away advertisers in their games. Meanwhile, IGN’s media properties continue to grow. Rumors begin to swirl that IGN is worth $6 billion (investors and analysts wonder where they have heard this before) and Mr. Murdoch is planning an IPO while Mark Jung, who has been sitting idle since leaving the firm, is rumored to have Great Hill Partners finance a potential buyout.
CBS Digital and the NYT will get into a slugfest over Rafat Ali of PaidContent.org. In the end, Ali prefers to walk to the beat of his own drums and Paidcontent.org remains independent. Neither company makes a deal. Quincy Smith wonders what his next career move will be when he sees few news takeover targets that will move the needle. He joins Montgomery Securities.
Viacom’s Philip Dauman will go insane and pull 3 deals: one for less than $200 million in Q1, but the Street will say it’s not enough, so he’ll pull a $500 million and one massive one for $1 billion by year’s end.
Facebook will not sell. That ship has sailed. Of course, never say never, this could be the massive $1B+ deal Viacom finally pulls but we doubt it. Investor Peter Thiel’s mega successful hedge fund is making so much money that the notion of a modest Facebook exit of $1B is not worth his time. Zuckerberg graces cover after cover, while the MySpace guys’ jealousy raise to the point of rage.
Disney will grow organically online, we called it the stock of 2007 in media and it will simply look internally and test the waters by adding content from Disney, ABC and ESPN online. It’s squeaky clean image will help it with F500 advertisers online.
Disney will be even more successful in 2007 than in 2006.
7 - OLD MEDIA TO TAKE ON OLD, NEW MEDIA; RESURGE
After many failed attemtps, old media wake up and realize that Google is worth much more than they are combined and they try to collude to take on Google. They continue to think defensively and ask Google to cease indexing their sites, Google refuses; things get ugly and they ask all video file sharing sites to take down videos. Google pays off one media company to play one against the others.
The charade ends when Google buys a media company: either a newspaper company, a magazine company or a radio company. The notion of a fat, juicy premium from Google makes the more diversified media companies calm down.
However, no offensive gameplan: no successor to Napster or AllofMP3, no successor to or YouTube Killer.
All right, so they won’t ask Google not to index their content. But it would be a pretty amazing showdown.
The Street wonders where Yahoo!’s Terry Semel will fare… more on this below.
2006 marked a year when many old media companies fared well: Disney, News Corp, Time Warner and even Clear Channel did well. We expect this to continue as many shed underperforming assets and expect more from faster growing divisions.
Which leads us to…
8 - OUTDOOR TAKES OFF
Clear Channel begins to integrate Wifi billboards, Viacom (or is it CBS Outdoors now?) enables digital outdoor signs to allow for audio and video ads, time-targeted and weather-targeted ads.
9 - SATELLITE RADIO CRASHES
Crash is too strong of a word, but we don’t see satellite radio getting stronger. For more details, click here. Sirius’ Mel Karmazin resigns… and joins Yahoo! as CEO. Terry Semel hands off the baton, looking like a genius and joins an old media company’s board.
10 - WIRELESS HYPE
We’re big believers in wireless, who isn’t. But it’s still 75% hype and 25% substance. There will be some common sense injected in this market: companies raising $100 million in financing? Give me a break.
So, there you have it.
DISCLOSURE: I think all disclosures are in there. Please note that as a writer and entrepreneur, some of these “so-called” trends I believe in so much that I am also trying to capitalize on. It’s not the other way around.
Otherwise, of the companies mentioned above I only own shares in Yahoo!
In the spirit of how I was asked to pontificate on the matter, let’s go with Podtech’s John Furrier (podcasting/entrepreneurship), Henry “Da Bull” Blodget (the analyst), Howard Lindzon (the investor/entrepreneur), Nitin (Software/search), Emergic (Global perspective) and Marshall Kirkpatrick (formerly of Tech Crunch and who joined a new video startup recently).
I hate to say I told you so, so I won’t.
But I will say this, when we wrote that times would not be as lavish for video file sharing sites in the wake of the Youtube/Google deal, we turned out to be right.
Guba, a pioneer in the space said adios to its visionary CEO earlier this month, which is a shame cause the bloke saw the light way back in 1997. There was no real doubt as to why, though it was not stated at the time.
This, of course, came one week after Revver hit the wall and two of Revver’s co-founders heading for the exit signs while the CEO was on vacation (WTF?): we covered this as well and explained why the going would get tougher here.
Today, we read on PaidContent that News.com confirmed what we’ve been saying all along:
“I think [Guba] can acknowledge that YouTube has won the big prize,” [Guba’s former CEO] McInerney said. “Guba is at a crossroads and we’re deciding whether to look for funding or to sell. I think we’re inclined to sell.” McInerney said that members of his executive team are considering whether to step down. The reason, McInerney said, is that Guba stands little chance of striking an acquisition deal as lucrative as YouTube’s.
You know, people laugh at me for wanting to produce video content, because “enabling others to steal and upload content is so the way to go,” said the wisemen to me.
Now many of those wisemen shall find themselves with no pants on when they realize that there’s not much value in being the #2, #3, #5 etc. file sharing platform when most of the content on them is not legit or of low quality and the content holders stand to generate revenue while the file sharing platforms can’t really (many will, but will it be to overcome the massive hosting and bandwidth fees?).
News.com hits it on the nail right here:
The shakeups come at a time when video sharing is supposed to be the hottest segment in digital entertainment, thanks mostly to YouTube’s massive success. But some analysts are skeptical about whether video-sharing companies can make money and question whether advertisers will want their brands associated with content that is sometimes vulgar, violent and boring.
Worst still: I still think many of these companies are great (Revver, Veoh, Guba, etc etc etc.) but the only problem is that a) I cannot tell them apart and b) they’re VC funded and the VC are not exactly patient folks.
Of course, one thing of note in the article is that Guba avoided VC money:
McInerney, 34, said Guba has operated on a profit and that he and Lambrecht have avoided accepting venture capital.
Y’all know about my (not alone probably) Sequoia | Google | YouTube conspiracy, don’t ya?
Happy 2007!
Disclaimer: we actually work with many of the file sharing sites as many like to feature our content from WatchMojo.com, the Web TV company that - get this - actually creates content.
PLAY
