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September 29, 2006

BBC looks to Microsoft for Web 2.0

In an excellently timed follow-up to my post about Web 2.0, the BBC has signed a memorandum of understanding with Microsoft to act as a framework for joint projects between the two organizations, including Web 2.0-style stuff (the details are vague, but we can probably expect stuff like video sharing).

Hopefully this will mean that I can contrive to be able to get BBC programming whilst I'm in Seattle - something I will miss when I make the move next month (yes, I know there's BBC America, but have you seen the stuff they air?). Or there's always a Slingbox, I suppose...

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Ads in your home movies?

There's been a bit of buzz around MSN's new Soapbox video sharing site of late (currently invitation-only beta, I'm afraid). Initial reactions seem to have been reasonably positive, whilst pointing out that of course Microsoft has a lot of catching up to do if it's going to compete with YouTube.

At the same time there's been some speculation about whether YouTube is a sustainable business at all - particularly given the large amounts of copyrighted content that is available on the site. Obviously the future for YouTube (and, to a lesser extent, Soapbox) depends on being able to serve ads with or alongside the content.

Obviously YouTube or Soapbox could automatically insert a short ad at the beginning or end of a user's video clip (my colleague Eric Picard has an interesting piece on Clickz about the new :05 format for TV ads). Using behavioural targeting, this ad could be targeted to the profile of the viewer. The network would keep all of the ad revenue, of course; the author of the content just has to hope that the ad isn't too annoying for his/her audience.

But how about letting the person who uploads the video decide what ad(s) to insert, and rewarding them accordingly? So the video content becomes more like a contextual ad placement. Microsoft's Points micropayment system (currently in use on Xbox Live and shortly to be rolled out for the Zune Marketplace) would be well-suited to this. Points you earn from hosting ads in your content could be spent on more bandwidth, or stuff for your Xbox or Zune player.

This system would have the benefit of allowing the content creator (who probably has a good idea of his/her likely audience) deciding what ads are most appropriate - and it has the double benefit of creating a viral distribution network for high quality video ads.

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September 28, 2006

The joy of text

Off-topic, this, but I have just discovered the Microsoft fontblog, which is set in the divine Candara font, which is new with Vista. I'm a total font geek, so I've reset the font for this blog to Candara too, though if you're not running Vista or haven't downloaded Candara, you'll still see it in the old fonts (my CSS skills seem not to be up to embedding the font dynamically, for some reason). So this is what this post would look like if you had Candara:

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Google's Brett Crosby interviewed

Manoj Jasra has an interesting interview with the Senior Manager for Google Analytics, Brett Crosby, on his Web Analytics World blog. Here are the highlights:

  • He won't say how many Google Analytics users there are (we think it's about 250,000)
  • They have some plans (undisclosed) to address measurement of AJAX applications using the MeasureMap technology they acquired a while back. Jeff Veen of MeasureMap is leading the work.
  • They're working to bring Urchin (as opposed to Google Analytics) up to date; although Brett enthuses about the ASP model, I think Google have a fairly solid commitment to provide a licensed software alternative (for intranets/private networks)

Thanks to Eric Petersen for the link.

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September 26, 2006

What is Web 2.0, anyway?

One of the questions I'm asked pretty frequently is, "What exactly is Web 2.0, anyway?" I'm going to have to answer this question in some detail for an audience at McCann Erickson  next month (I'm hoping to post my material here after the fact), but I thought I'd blog something brief here, which - who knows - may help to answer the question for some people.

The main thing you need to know is that Web 2.0 is not one single thing. In fact, the 2.0 moniker is a bit counter-productive: it implies a big, single product 'release', conjuring up images of lock-step development and the software release cycles of old. In fact, Web 2.0 refers to a collection of changes to software, the web, and related business models, that are ushering in a 'new era' of business opportunity. Vague enough for you?

At the heart of Web 2.0 is a move from a centralized, 'old-media' view (large publishers & retailers telling people what they want) to a new empowered/participative model where users are in charge: defining what they want, reading and publishing, buying and selling online. Where Web 1.0 was about hubs and spokes, Web 2.0 is about networks (see this post).

The best way to explain Web 2.0 is simply to enumerate its major elements. I've listed them here in their order of importance; at least as far as I'm concerned. Feel free to disagree.

1.  Participation & the network effect
In the Web 1.0 days (that is, the bad old days), content was created for you by large organizations like the BBC, NBC, AOL etc and you 'consumed' (read/watched/listened to) it - a one-way relationship. Web 1.0 content business models were all about aggregating large numbers of users together, like a newspaper or TV station does, and selling them to advertisers. In Web 2.0, users create their own content, as well as consuming content created by other users.

User-created content and participation creates a virtuous network effect - the more users who are participating, the better the system. Systems like BitTorrent take this to another level to co-opt users' computers to help with media distribution itself; the more computers who are joined into the network, the more nodes there are to distribute the content, so performance scales smoothly.

Who's leading the way? Blog systems like TypePad, BloggerWindows Live Spaces; video publishing sites like YouTube and Google Video; photo-sharing site Flickr; self-publishing sites like Lulu.com; and music publishing sites Msoundz and Burnlounge, as well as MySpace; Wikis like Wikipedia and Wikihow.

What's the impact? Traditional revenue models for large content aggregators, based around cutting large-scale advertising deals with a few large advertisers, are being undermined. Increasingly, the best way for an advertiser to reach their desired audience is to advertise on the hundreds or thousands of small sites which serve that audience's needs. But finding those sites is pretty challenging.

2. Personalization & collaboration
Hand in hand with no. 1 above is personalization. Whilst not a new concept, as the number and range of sources of information has expanded, users have had to become cleverer at selecting the information they want, and tools have grown up to help them do this.

The thing that makes this a Web 2.0 thing is that personalization is now a collaborative effort - by sharing their opinions and preferences, users create a very rich map of the web in a truly democratic way. One of the best examples of this is Amazon's customer reviews; this is known as 'collaborative filtering'.

Who's leading the way? Social bookmarking/tagging sites like del.icio.us, Digg and ma.gnolia; blog tagging/search sites like Technorati and Bloglines; Amazon.com's customer reviews; eBay's seller reviews; custom home pages from My Yahoo!, Live.com, PageFlakes and Google; PVR technology like TiVo, Slingbox and Sky+.

What's the impact? As users become more demanding and more savvy with the personalization tools to hand, they will spend a greater proportion of their time within their own 'interest zone'; opportunities to interest them in other things become scarcer. Such opportunities will rely on understanding likely correlations between known interests and possible new ones.

3. Democratization of market access
This clumsy title refers to the complete transformation in the ability that individuals and businesses have to promote themselves that has come about in the past few years. This whole thing is really dependent on one key technological development: search marketing. Rather than a few advertisers using large media spends to push a (relatively) small number of products, search marketing has allowed thousands of advertisers to promote a vast array of products - the so-called 'long tail'.

Who's leading the way: Google and Overture (now Yahoo! Search Marketing) created the paid search market; MSN is looking to catch up with adCenter. eBay and Amazon Marketplace achieve the same kinds of things within their own (big) worlds. Blogads extends self-service marketing to the blogosphere.

What's the impact? Small businesses can now have advertising budgets - even if they're only $50 a month, and can track the effectiveness of that advertising every day. If you're prepared to ship internationally, you can address a global market, even if you're selling left-handed widgets for Virgoans. 0.001% of the total market is still 10,000 people (based upon a billion Internet users today).

Coupled with the growth in participation and collaboration, this provides a fertile environment for small businesses suddenly to become big - if something captures the public imagination, and gets promoted via collaborative filtering and participation, it can become very big very quickly.

4. Richer apps
A lot of commentators would put the new generation of funky (in the good sense) apps as central to what defines Web 2.0, but many of the Web 2.0 'leaders' (Google, eBay, Amazon, YouTube) are (for the most part) built using Web 1.0-style development methods. But the emergence of AJAX (itself a catch-all expression for a range of things, not a specific technology) does mean that web applications can behave more like the desktop apps that most people are used to; enabling them to help people achieve more complex tasks online with far fewer clicks and less waiting time.

What's more interesting in the application development space is the emergence of web services and public APIs for things like Google Maps, which has enabled a new breed of web app to emerge: the mashup. Mashups allow new apps to be built out of existing components available on the web, to combine the best of both apps. A good example is www.housingmaps.com, which combines Craigslist housing information with Google Maps to help potential buyers or renters to find properties in their interest area easily.

The new opportunities to create cool apps has led to an enormous number of Web 2.0 startups, creating a mini-bubble. Most such startups have little or no concrete revenue model, beyond placing Google Adsense ads on their sites (which seems to be a monetization panacea these days). Most will die, or be picked up by a bigger player, as was the case with Kiko.

Who's leading the way? Google, Yahoo! and Microsoft all make APIs available for their web platforms, and so do Flickr, eBay, Amazon and FedEx. Notable mashups include WeatherBonkHotCaptcha and Read All About It; and GoogleMapsMania has a whole lot more (for some reason, about 80% of all mashups involve Google Maps).

What's the impact? Major providers of original content & services (like those listed above) will seek to build developer eco-systems around their products. What will be interesting will be the revenue models for those developers - but major content providers will end up sharing their advertising revenues, that's for certain.

To summarize...
A lot of folks have focused on some very narrow things (e.g. AJAX) as 'defining' Web 2.0. But for me, it is much more about changing business models, supported by new technology, than the technology itself. What this means is that Web 2.0 cannot be dismissed as a fad, since it is really just (just!) an evolution in the way people make money out of the web.

What is Web 2.0? By Tim O'Reilly (who originally coined the term)

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September 25, 2006

CrazyEgg launches

Have just received an e-mail to tell me that CrazyEgg has (finally) launched. It's a niche, low-end A/B testing tool (entry level pricing is free, scaling to $99 a month for up to 250,000 visits a month) with some nice heat map and page overlay reporting. I've instrumented the home page of this blog; I'll post again when I've got some data to look at.

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We apologize for the interruption to your service...

Have been failing to keep the blogmonster fed over the last few days because my wife's been in hospital with appendicitis. People (mostly who've never been there) keep telling us how lucky we are to have St Mary's hospital, Paddington, so nearby. All I can say that if this is how a well-run NHS hospital operates, I'm very glad we're moving to America.

Your trivia fact for today is that St Mary's is the hospital where Sir Alexander Fleming discovered penicillin (in the building pictured). My daughter was born in a room in the same building, on the second floor (third if you're from the US), just to the left of the entrance portico. By the state of things, we expected Sir Alexander to walk into the room at any time.

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September 19, 2006

How to measure blog success

There's a great post over on Avinash Kaushik's blog about how to measure the success of a blog - which entails much more than just measuring traffic. Avinash distils the measurement down to the following six items (slightly paraphrased by me):

  1. So what have you actually contributed (how much content have you created)?
  2. Is anyone consuming your blog’s content?
  3. Are they engaging in the conversation (are they contributing comments)?
  4. Are you making a dent in the world? (Are you standing out amongst the 70 million blogs on earth on this day?)
  5. Are you getting what you want out of it (money/friends/enemies/job offers/fan mail)?
  6. What is the blog costing you (in time as well as $)? Is it worth it?

Interesting to me amongst these are that, as well as measurements of content consumption and (primary) content creation, measuring the level of engagement (i.e. comments, trackbacks) from others is a key measure of a blog's success.

As we at MSN look to help people monetize their Spaces blogs, this kind of measurement is going to be essential - for them, but also to us.

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September 18, 2006

MSN Search becomes Windows Live Search

Last Thursday, Microsoft took the beta badge off Windows Live Search and installed it as the search engine behind MSN.com. It's pretty good - not quite as fast as Google (which is bad), but better looking and more functional in certain areas (such as image search). Try it at search.live.com.

The reason it's worthy of mention on this blog is because there appears to be a bug in the implementation of the redirector code (hosted at g.msn.com) which means that it's not passing through referrer information; so at the time of writing it's impossible to see what traffic live.com is driving to your site. This is unfortunate, to say the least; and to scotch any conspiracy theory rumours now, entirely unintentional. I expect there'll be a fix very soon (if there isn't one already).

Even when it is fixed, the new search engine will leave a different referrer trail in web analytics tools - the referring page will be http://beta.search.live.com/... rather than http://search.msn.com/...  . This means that most web analytics tools need to be updated to allocate the new referrers to MSN/Live (and extract the relevant keyword parameters) rather than categorizing them as 'No referrer' or just A.N.Other site called beta.search.live.com.

[Update 9/21/06: This has now been fixed as of this morning. Referrer information is finding its way through again. Hurrah!]

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September 15, 2006

Into the den

Was intrigued and amused to see an ex-colleague of mine, Steve Johnston, on the BBC programme Dragon's Den on Thursday night, pitching his StoryCode start-up. Steve was admirably sanguine about the moderate savaging he got on the show - at least his idea was deemed interesting enough to get one of the four or so 15-minute treatments on the show, rather than just being an also-ran dismissed within 10 seconds by Evan Davies. The highlight for me was when Steve admitted that the only business that StoryCode had done, and which he'd valued at £1m, was a £500 order from Foyle's. It was one of the more skewed valuations I've seen on the show (P/E ratio of 2,000, anyone?).

For those of you who didn't see the show, StoryCode is a collaborative filtering system for book recommendations, where readers rate the books they've read along 40 axes which describe the content of the book; the information is then used to correlate between books which have similar qualities and make recommendations to readers.

I happen to know, having known Steve for about 6 years, that the StoryCode idea isn't new; in fact, Steve was working on it when I first met him. It still retains some uniqueness, but the online bookselling industry (i.e. Amazon.com) has moved on quite a lot in that time, with Amazon in particular pioneering collaborative filtering ("People who bought this book also bought...") plus a lot of recommendation functionality in their site. But the company has other challenges, too. Here's my impression of them:

  1. The technology may be clever, but could probably be relatively easily replicated by Amazon
  2. The company's business model (licence software) is stuck in the '90s
  3. It's not a sustainable business at the moment, so no one is being paid for their efforts, meaning that investors would have to fund salaries (which never goes down well)
  4. It's not clear why people would bother to spend time rating books in the system

And here, for what they're worth, are my recommendations (not all of these are completely original thoughts):

  1. The exit strategy should be to sell the technology to Amazon (or possibly a competitor), and soon. They may buy it if by doing so they can save themselves time building something; building relationships with lots of book retailers will make this more difficult. So cultivating Amazon would seem like a good approach.
  2. The monetization strategy for the company needs to come from affiliate deals on sales of books (as pointed out by ex-Dragon Doug Richard), with a little contextual advertising (always the last refuge of the monetization scoundrel) thrown in. The market for the actual software itself is tiny.
  3. The company needs to start making (or at least taking) some money. This may (will) require some investment to drive more traffic to the site; if storycode.com starts to make a few thousand pounds of revenue a month through affiliate deals, it'll be an awful lot more attractive. Plus, it doesn't need a bloated 'management team'. StoryCode is a two-guys-in-a-garage thing which gets sold on for a couple of million(this isn't a pejorative remark) - not an old-style dotcom behemoth.
  4. They need to come up with an incentive system for entering ratings, and quick. Relying on people's goodwill is not enough. Some kind of points system, redeemable against actual books perhaps, is what comes to mind.

That's my twopence-worth. Steve, if you're reading this, I thought you did a great pitch - but there were rather a lot of holes.

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