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September 30, 2006

Google to Phase Out Froogle

froogle

Froogle is being elbowed out of the online price comparison sector. Like or not, the essence of a good price comparator is the quality and depth of its database, and the quality of its search. In my opinion, the google search and google base combination will inevitably see froogle out of the the door.

Meanwhile Google is circumspect about Froogle's future, stating

G: Froogle is alive and well. We are continuing to integrate shopping and product search features into Google.com to make it as easy as possible for users to find product information through Google. We don't have any more specifics to share publicly on how this will look down the line but we will make sure to let you know about any developments. [Via John Battelle's Searchblog: News:

Google is no stranger to failed projects. In fact it thrives on them, using the darwinian approach of beta testing a huge number of potentials and only picking the best and fittest projects.

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September 25, 2006

Google Looses Case on Fair Use Against Online Newspapers

Google Belgium Order
The look of google.be this morning. The belgium courts have favored the press association to protect the online newspaper sites against the theft of copy right material by Google. Google news has been found guilty of printing the headline and an extract of news items from belgium online newspapers. The court has deemed said action to be an infringement of the online newspapers copyright terms, concluding it is outside any "fair-use" usage.

The court clearly does not understand that

  • the online newspapers are liberally rewarded with a huge influx of traffic from Google
  • small quotes appearing on Google are great PR and marketing for the newspapers
  • the material published is a very small fraction of the material in each article

The belgium court in question is clearly a copyright and trademark stalwart, not even allowing for a small quotation of the copyright material. Quite the opposite of the creative commons licence models.

It remains to be seen whether the papers are actually advantaged by being excluded from the Google search engine, which dominates European internet traffic. After all the "fair-use terms" of copyright material were designed into the law for the benefit of both authors and the community.


UPDATE 04th October 2006

Rachel Whetstone, European Director of Communications and Public Affairs, blogs an update on the About the Google News case in Belgium, stating that

...if publishers don’t want their websites to appear in search results (most do) the robots.txt standard (something that webmasters understand) enables them to prevent automatically the indexing of their content. It's nearly universally accepted and honoured by all reputable search engines.

Rachel deems a court case is unnecessary to settle exclusion from the index, or financial payment for use of newspaper content. The case will be settled on the 24th of November.

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September 23, 2006

Emergent Democracy and Viral Marketing: The Pirate Party

george bush

The declining impact of TV advertising is having a positive impact on politics. A billion dollar war chest will no longer guarantee you an elected office. Now you need support from social groups and communities that are hard to influence centrally.

Collaborative filtering sites, like digg.com, del.icio.us, and even Google, are the political battle grounds of the future. A political candidate will have to gain approval of communities of decentralized, independent and diverse individuals.

Community reputation in these collaborative groups is difficult to buy with money. Political campaigns win or lose by whether their ideas spread, by whether individuals are recommending them. A politician will win if his ideas are new enough, potent enough to spread like viruses. As a leading viral marketing expert explains,

"Your political goals (right, left or center) don't really change the reality that marketing in politics is changing forever. The idea of a spend-and-burn candidacy is fading (how much more than a billion dollars per cycle can we spend?) and it's being replaced by a person-by-person, viral approach that relies more than ever on authentic storytelling and worldviews." Seth's Blog: Politics and the New Marketing

The efficient flow of information is giving rise to emergent democracy in politics, just it does to efficient markets in finance. Thus emergent democracy, as recently described by Joi Ito, will see the best representatives appointed to office regardlesss of party and financial backing. Representatives elected for the benefit of the whole, not the few.

Examples of smartmobs overthrowing governments in extreme situations are being replaced with popular ideas disrupting everyday politics to allow open society to self-organize without encumbrance from status quo institutions.

pirate party

An example of such a disruptive flash politics is The Pirate Party (Swedish: Piratpartiet). The party has gained wide support without institutional or financial backing. The idea that has enthused so many is to re-balance the power of copyright and patent laws in favor of the open society needs.

Politics is becoming an efficient market where support is earned through providing value to the community as a whole, and the status quo's high-context in-groups are loosing their lock on representatives.

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September 21, 2006

Extra $600m for Google's State Funded European Competitor

eu
Fed up with Google's dominance of the European market, the German and French governments add another 400m EUR funding to their state funded search engine, Quaero.

The search engine has been contracted to a consortium of 25 companies, Thomson, France Télécom, Siemens AG, Thales, Bertin Technologies, Exalead, Jouve, Synapse Développement, LTU Technologies, Vecsys, and a host research institutes such as INRIA, CNRS, Clips Imag, RWTH Aachen, and Karlsruhe.

Wolfgang Wahlste, director of one of the consortium partners, states that Google is web 1.0 search engine, while Quaero will be a web 2.0 based service, relying heavily on Semantic Web standards for their crawler and processing spiders.

Given the immaturity and lack of achievable goals of the semantic web relative to the bulk of internet web pages, Quaero might be long time in the coming.

Unfortunately, institutional innovation has a poor record compared to market driven innovation. Being an entrepreneur, I am skeptical of the entrepreneurship and creative skills of publicly funded committees. Few creative class capabilities are being harnessed by the Quaero consortium:

  1. No user base from which to test different ideas - Google's beta servers trial thousands of solutions every year, to see what internet users like best
  2. Rigid top-down, rational, central design innovation - as opposed to a darwinian test of many ideas from many, diverse and independent contributors
  3. No strong online marketing capability amongst partners and institutes- specially viral marketing - (they do not even own the quaero.com domain)
  4. Ultra-centralized development - opposite of linux style distributed development
  5. No Open Source technical or marketing support - as the development is secret and centralized; the worldwide hacker community responsible for free international alternatives, like Linux and Firefox, cannot contribute either technically or marketing
    Open Sourcing should be the ONLY way forward for this project, given its public funding
  6. Political wranglings amongst the 25 institutions competing for the public funding
  7. French nationalist overtones - thanks to Jacques Chirac trumpeting of the European identity - bad marketing
  8. Public funding Euros have little business potency relative to VC Euros - a proven fact when comparing public and privately funded startups

Loic LeMeur, a top European entrepreneur and strong EU supporter, lists his disappointments with the Quaero project.

Mr Jacques Chirac's project is a snub to European entrepreneurs. If the project had been assigned to a free market, entrepreneurs and VC general partners would create ten times the value with the 500m EUR already spent on this project.

[Via » EUR 400 million to the European search engine Quaero]

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September 20, 2006

Telco Dollars All Powerful in Net Neutrality Debate

Proof that the Telco money is dominating the Net Neutrality debate in Washington is the latest from the Senate Committe on Commerce latest poll; the result of the poll among 800 registered voters is that
.. an overwhelming majority of American voters favor video choice over onerous “Net Neutrality” regulations...

The sampled voters prefer to leave choice to the consumer, believing in the efficiency of the free market, rather than legislate constraints on the abuse of the market by Telco companies.

Unfortunately, the poll merely shows how easily the Network Neutrality issue is distorted. The first aberrant fact about the poll is that it was funded by Verizon ; a leading interested party against Net Neutrality. The poll does not clarify that Net Neutrality is what currently makes the internet successful, and its loss will have an unpredictable affect on the web.

Upon examining the design of the poll, Valleywag is screaming Telco propaganda push

At the same time, more credible and objective institutions are supporting Network Neutrality. The American Electronics Association (AeA), which represents 2,500 companies from every corner of the high-tech industry, released a report yesterday strongly supporting Net Neutrality and urging Congress:

“Don’t stifle competition and innovation by allowing network operators to change and distort what is currently a highly competitive system.”

“The principles of Net Neutrality have created the Internet as we know it — the most dynamic network for communication and commerce in human history,” .

the AeA calls on Congress to “safeguard the competitive nature of the Internet by allowing consumers and content providers to connect with each other in an open marketplace, providing consumers with equal access to all content.”

Allowing the nation’s largest phone and cable companies to tilt the market in favor of larger and better funded content providers would “undermine the fundamental principles of open and free exchange of information across the network,” according to the American Electronics Associationreport on Net Neutrality.

In spite of the vast resources spent by the Telcos in Washington, they are unlikely to have all their own way.

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September 19, 2006

Wifi to Receive a Wider Spectrum Range from Military

After many years of fighting for more radio frequency spectrum to be awarded to the public, the UK MoD is looking to unlock a spectrum range from military use. The bandsharing forum, formed on Monday, will oversee the transition and awarding of spectrum for public and corporate use.

Currently, the Bandsharing Forum claims that organisations such as the MoD and the Civil Aviation Authority control more than 40 percent of the most useful radio spectrum. And the majority of the non-military spectrum is awarded to Radio, TV broadcast and mobile phone operators. With a small fraction being open to public, non-regulated, use through Wifi, Wimax and bluetooth technologies.

Wifi and bluetooth technologies have proved that open public use of radio spectrum generates the most value out of the limited resource. The value generated by public wifi use of a fraction of the range is far beyond that generated by mobile phone operators, for instance. Unfortunately, wifi and bluetooth users muster little lobbying power compared to mobile phone operators.

Open spectrum organizations, and the wireless internet commons will be lobbying for some of the new spectrum to be released for open public use.

The key breakthrough of open public radio technology, like wifi, is that it allows all users an equal share of the resource, and manages the contention when users collide on the spectrum. A model first used on the TCP protocol which is the cornerstone of net neutrality on the internet.

More spectrum will allow wifi to increase its range and accomodate more simultaneous users.

[Via Military spectrum eyes civvy street - ZDNet UK News]

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Youtube: Waiting for Adsense for Videos

youtube

Youtube, the leading video clip sharing service, is creating a lot acquisition rumors with much of the debate centered round its valuation.

youtube

Looking at reach and page view alone, with 10,000m page views a month and double digit growth rate, a billion dollar valuation range, like MySpace's, is not out of the question.

Fred Wilson offers a $150M estimate for revenues with $15 CPMs. But other opinions are much less optimistic.

The debate of Youtube revenues highlights problems with monetizing video clips. Jason Calacanis touts a low value for the likely youtube revenues, with only $20M from junk CPM advertising. Jason's estimates a $2 CPM for Youtube contextual advertising, arguing that the "dorky" video clips with very little segmentation or keyword context will not earn the higher range $15 CPM's for quality full context and full segmentation video content.

Similarly Mike Cuban predicts a a dramatic decline from major problems with copyright owners

Considering the RIAA will sue your grandma or a 12 year old at the drop of a hat, the fact that Youtube is building a traffic juggernaut around copyrighted audio and video without being sued is like.... well Napster at the beginning as the labels were trying to figure out what it meant to them

I think the biggest issue is the difficulty of using the Adsense advertising model on Videos. Given that Google's algorithm works only on text, identifying keywords from video content is ineffective, and hence advertising no longer targets intention or demographics. Categorizing videos manually is not a viable solution, when you have tens of millions of video clips. The only way forward for YouTube is good user tagging.

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September 14, 2006

eBay Disrupts the M&A Advisory Market

ebay

Mergers & Acquisitions professionals have food for thought as Kiko, the web2.0 calendar application, sold itself on eBay for $238,000. The sale of Kiko to Tucows cost $3800 in eBay's intermediary fees, 1.5% of the transaction value.

Many M & A boutiques have traditionally advised technology companies in fund raising, acquisitions and exits just like Kiko's.

Arthur Anderson (now Accenture), Price Waterhouse and Ernst & Young made a furious trade as acquisition advisers during the 2000 boom. Not to mention the lucrative IPO advisory. Though not the most expensive advisers, I repeatedly paid said consultants six figure sums for advise through acquisition and sale transactions. And the IPO consultancy typically cost well into seven and eight figure sums.

Even nowadays, the standard fee for "creating a market" for raising funds for a company is an upfront fee typically in the thousands, and a minimum percent or two of the transaction value.

M&A consultants and startup advisories were harshly hit by the 2000 dot com crash. Many boutiques have closed down, and the remaining have moved on to advising the private equity market. But the hits keep on coming.

google

First Google dis-intermediated much of its IPO underwriting through its use of the Dutch auction technique. Rather than the banks creating a market of buyers and sellers pre-IPO to ensure a good volume on the IPO, Google used an electronic buy-sell market for part of the sale instead. Naturally, the traditional IPO underwriting banks were aghast at Google's snub of their service.

Similarly, Kiko has used eBay to sell 100% of its equity. Though the value involved is low by M&A standards, the ease and success in creating a liquid equity market with hundreds of bidders spells more dis-intermediation for the M&A advisory boutiques.

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September 13, 2006

For Great Innovation Do Not Follow the Money

Both Seth Godin and Guy Kawasaki, doyens of entrepreneurship, agree that great innovation is seldom achieved by pursuing revenue streams. Nor does Peter Drucker centre on money in his guide to the practice of innovation. Advice that rubs against any corporate managers grain (mine included); what business manager is comfortable without his trusty profit and loss spreadsheet ?

The hunt for a disruptive advantage on the market has no easy financial guide. Seth's view is that the pursuit of money is at the expense of your innovative drive

pioneers are almost never in it for the money. The smart ones figure out how to take a remarkable innovation and turn it into a living (or a bigger than big payout) but not the other way around. I think the reason is pretty obvious: when you try to make a profit from your innovation, you stop innovating too soon. You take the short payout because it's too hard to stick around for the later one.

Guy cites the pursuit of meaning, and not the pursuit of money, as guiding light in your innovation hunt.

My experience is that innovation hunting requires an artist's approach to the market, services and products; a total obsession of the subject matter at hand. Like great pianists or painters, the innovator must have talent & training in the art form in question. Most corporate managers have neither the time nor the patience for the learning curve involved.

Denizens of this creative innovator class have, in my experience, different culture and value systems from that found among professional managers. And, in spite initial protests, the MBAs I recruit accept that the creative staff are more prolific and bountiful in launching succesful services.

The irony is that as soon as you execute your idea, you commit to customers, you have salaries to pay, it is all about the cash flow and quality of service. Then financial spreadsheet skills, administrating, and the ability to squeeze the lemon come to the fore.

Nowadays, good corporate management and creative innovation go hand in hand. Successful company cultures, like Google's, have to accomodate the two contrasting approaches.

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September 8, 2006

Social Filtering Site Digg.com Gets Smarter

digg

Social news filtering sites, where users votes on the importance of news, are set to replace newspaper editors in the future. But current sites are struggling to harness the wisdom of the crowds of contributors. Digg.com one of the leading news filtering sites has made changes to improve their members voting quality.

With the ever increasing amount of information and news sources, filtering and ranking news has become essential. The blogosphere is often criticized for its bad quality and inability to inform, and newspaper owners are toughting bigmedia, newspapers, will win over the web. The big criticisms aimed at the blogosphere, at the Citizen Journalist, as a replacement to newspapers are:

  • Rubbish blog entry quality
    "Some blogs are conversations among people you'd frankly prefer not to meet, others ar cries for help and their writers are clearly in need of therapy. Others are just people expressing themselves, which is an entirely honourable pursuit, but would you like to meet this geek on a dark night?" Paul Hayes, The Times.
  • Inability to filter the good from the bad
technorai

Social filtering sites, like digg.com and technorati.com, are filtering and extracting relevant quality information. Work still remains though, one of the problems is Groupthink ; a herd mentality amongst voters, where the editorial is set by a smaller group of friends, and show a common thread or opinion. Worst are the habitual witch hunts with the most popular digg A-listers tarring digg.com critics

James Surowiecki, the leading proponent of the wisdom of the crowds, sets certain conditions for this filtering to be effective:

  • Diversity of Opinion:The broader the input of opinions and news the better
    A group of mix-skill agents perform better than a group of skilled agents
  • Independent Casting of VotesIf voters can imitate or be influenced by others in the casting of votes, groupthing or monkey-see-monkey-do syndrome sets in. In fact Surowwiecki observes the Unwisdom of the Crowds that comes with too much concensus and conformity
  • Decentralized Channels where no central organization has powers to influence the vote or the filtering, so voters remain truely independent. Linux development is a great example of decentralized collaboration
  • Intelligent Aggregation the diverse and independent opinions of the crowds must aggregated and averaged to extract its wisdom. A great example is Google's study of people's web links to a site through a complex aggregation system called pagerank to extract a ranking of web sites
The change to digg.com tries to resolve the herd or groupthink problem by favoring independent voters
This algorithm update will look at the unique digging diversity of the individuals digging the story. Users that follow a gaming pattern will have less promotion weight. This doesn't mean that the story won't be promoted, it just means that a more diverse pool of individuals will be need to deem the story homepage-worthy. Kevin Rose, digg.com

An additional problem is the spammers skill in gaming the aggregation system in pursuit of peoples valuable attention.

Google has a groupthink problem also in that, due to the predominance of its search engine , people are now linking to sites the appear at the top of Google's ranking only. People's votes or web page links are being influenced by the concesus of the crowd. It seems information filtering sites are being hampered by their own success.

[Related link Head of "The Times" Dismisses Wisdom of the Crowds]

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September 5, 2006

Microsoft Loosing its Lock on the Office Software Market

oasis

The Open Document movement, from the OASIS industry consortium, is slowly but surely wresting Microsoft's market dominance in word and spreadsheet applications. The Oasis consortium is formed by government and public institutions around the world, as well as software vendors that commit to public licenses.

Governments all over the world are starting to demand a common open standard for their documents, such that they are no longer limited to using Microsoft's Word and Excel applications. The idea is that documents are stored in an open public domain format, such that anybody can write a program to process the document; all software vendors can compete in providing a word and spreadsheet applications.

open office

Best of all, the open source openoffice.org suite of office applications, are free to use. The office suite includes word processor, spreadsheet, presentation, vector drawing, and database components. It is available for any platform, including Linux and Microsoft.

The commonwealth of Massachusetts leads the push to make an open document format obligatory. WIth so much pressure Microsoft has had to respond and open its proprietary binary document formats. The first step has been to set up its own XML-based file formats, and granting a conditional public license for its use; its Office Open-XML standard. The downside of the standard is that it is taylored for Microsoft Office Suite, in addition to a license prohibiting some competitors from using it.

In the most recent breakthrough, Microsoft has announced it will also support the Open Document Format (ODF). Thus Microsoft Office documents will be open to other applications, like the free openoffice.org free editors and spreadsheet software, opening Microsoft up to huge market pressure.

Open Document Standard Fight Continues

The development of the document standards has been accompanied by strong debate. One the one hand figureheads from Microsoft, like Brian Jones, who is a leading player in the Microsoft Office team, and developers at IBM and SUN who are part of the Oasis and openoffice partners.

xml

In spite of the continuing debate over the pros and cons of the two standards, the fact is that Microsoft is having to embrace a public domain format based on the XML, which is the bedrock for the long term commons vision of the web.

[Related entries

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September 1, 2006

Blog or Die !

Jason Calacanis, the head of Weblogs blog network (acquired by Netscape), sets out his vision of the corporate blog's role and importance to a business. In his inimitable style:

If you are in the Internet industry and you don't have time to blog about your product then you should quit. Go home, give up, and find another career. Your competitors are blogging about their products and talking to the market, and there is no way to compete if you don't engage the discussion. So, by not blogging you basically are giving up and telling the market that you don't care. That's the honest truth.

Blog or die!

You can't compete in the web-development space without a blog any more. Period, end of story.

[Blog or die. - The Jason Calacanis Weblog]

Not much room for subtlety in Mr. Calacanis' view. A more conservative company policy, which will probably reach mainstream companies in the next few years, is to use blogging as a part of a companies Public Relationships tool kit.

On a most basic level, with more press release agencies going online, a blog is a substitute for the News & Events section of a corporate blog. Two popular online press release agencies are:

Second, is the importance of giving the company a human face. Specially, if you have a strong corporate brand name, having an emotive fuzzy image can go a long way to generating a positive response. More and more important is also a companies interaction with its community of clients.

Unfortunately, a blog is not the be all and end all. May be necessary but not sufficient. A blog by itself will not generate a strong brand; you have to do that by other means. More and more brands are created through exceptional products and services.

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