Ever since the economy started to tank there’s been a lot of blather online about whether the so-called Web 2.0 era is coming to an end. To the extent that “Web 2.0” is defined as a business model that relies on user-generated content to drive high-margin profits the answer is clearly “no” – all one has to do is look at the burgeoning growth of Facebook and Twitter to see there is still gold left in them ‘thar hills (though, in fact, neither Facebook nor Twitter have figured out yet how to mine that gold…). The poster child for successful Web 2.0 business is probably craigslist (they prefer the lower case c don’t you know). Last year CNet published [estimates] that the 30 person company generated $80 million in revenue – which works out to an astonishing $2.7 million per employee – and could well double that amount this year. Or maybe not. That estimate was made before craigslist came under scrutiny by various attorneys general and the dreaded mainstream media for their lax oversight of some of the shadier content on their site(s).

Watching the initial [response] of craigslist owner Craig Newmark and CEO Jim Buckmaster to the shitstorm that erupted following the arrest of the “Craigslist Killer" (who used the site’s prostitution ads to connect with his victims) was remarkable. Cloistered away in their little Silicon Valley bubble they clearly hadn’t a clue about how to manage the scrutiny of meatspace media and ambitious law enforcement officials looking to score. At first they refused flatly to make changes to the way they did business, falling back on the Web 2.0 mantra that the craigslist community would police itself (after all, users provide the content for free, why shouldn’t they also provide the editing for free?). Then, when it became clear that Newmark & Co. were heading to court and maybe to jail on fraud charges, they acquiesced and agreed to change the way they manage listings for adult services – including hiring additional staff to screen out illegal material.

But at least one AG is not satisfied and has threatened to initiate criminal action against craigslist if they don’t remove even more objectionable material from their site by this Friday. Today, Buckmaster [responded] to the Attorney General of South Carolina in a blog post (of course) and just when I thought they couldn’t be more clueless about how to handle this PR disaster he surprised me. Instead of doing what any mature company would do in the face of aggressive policing (think Microsoft and the European Commission…), i.e., aiming to get the moral high ground by swiftly agreeing to meet or exceed demands for cleaning up their sites, Buckmaster demands an apology from the Attorney General, challenges the AG to prosecute South Carolina newspapers that also run off-color ads (and suggesting that he won’t because of cynical self-interest) and offers what I’ll call the “me-too” defense: craigslist shouldn’t be singled out for abetting indecency because all the other kids in the playground are doing it too! The PR trainwreck thunders on.

Sensing that this has the potential to tame the Web 2.0 golden goose that drives so much revenue with so little managerial oversight and cost, some of the New Media machers are weighing in with support: Mike Arrington at [TechCrunch] urges Buckmaster to “Stand firm. Don’t back down. In fact, just turn off the South Carolina site entirely and ban IPs from that state. Forever. And if they press criminal charges, fight it with everything you have.” Then, with a little less bravado, “And if you do end up in jail, don’t worry. I promise to visit at least once a month, even though it will be in South Carolina.”

New Media gadfly Jeff Jarvis takes time out from dancing on the graves of newspaper journalists to [offer], “And so, once again, the internet becomes a threat to the control and power of an elite and they are exploiting craiglist – and the murderer who used it – to reassert their control. But it has the marks of a witchhunt.” Jarvis doesn’t seem to get that the “elite” is law enforcement and the issue is violations of local decency laws. Minor matter.

Perhaps one of Buckmaster’s friends (does he have friends?) could suggest that he take some of that huge profit he makes from the site and hire a decent flack. And a lawyer.

A couple of events occurred last week that might have seemed completely unconnected but were, I think, flip sides of the same coin: in the first case, a Swedish court convicted the owners of the Pirate Bay file sharing site of copyright violations involving facilitation of theft, sentencing them to fines and prison time, and, in the second case, Oprah devoted valuable on-air time to the Twitter phenomenon, introducing her legions of fans to the service and calling out Ashton Kutcher as the first Twitter user to gain over 1 million followers. What ties these apparently disparate events together is the fact that they demonstrate in unique ways the mainstreaming of the internet as a medium and its changing character(s).

Piracy 2.0

As an invention of technology, it makes perfect sense that the early proponents of the internet were members of the “technorati” – the geeky folk who build and fund tech start ups and those who buzz around them. Back in the 90’s as the commercial internet was just taking off, one could read one after another manifesto from these folks proclaiming the nascent medium a digital Valhalla, revolutionary in its potential. A good example was [“Cyberspace and the American Dream: A Magna Carta for the Knowledge Age”] in which futurist Alvin Toffler, venture capitalist Esther Dyson and others attempted to spell out the game-changing nature of this new technology and what was needed to foster it:

To start with, liberation – from Second Wave rules, regulations, taxes and laws laid in place to serve the smokestack barons and bureaucrats of the past. Next, of course, must come the creation – the creation of a new civilization, founded in the eternal truths of the American Idea.

Likening themselves to frontier settlers, they wanted complete freedom to reinvent commerce on the web any way they saw fit. Such freedom would, of course, lead to the unfettered creation of enormous wealth and that is exactly what happened (well mostly for well-connected technocrats, anyway). But the lack of oversight also led to a Wild West ecosystem online where hordes of thieves committed untold abuses of intellectual property. Sadly, some who should know better even sought to undermine claims of intellectual property by basically implying the [inevitability of theft] and [apologizing] for it under the rubric of “free culture”.

Read the rest of this entry »

Following up on my [post] of a few days ago that called out the New York Times for publishing an essay by one of its writers trumpeting the Google party line while neglecting to disclose the author’s association with Google, and that failed to indicate that one of the sources quoted on the deal works for a company (Publicis) that may benefit by it…

Even after bloggers and online journalists took the Times [to] [task], today the other shoe dropped — Google published a [website] entitled, “Facts about the Yahoo-Google advertising agreement” that collects in one place the flackish arguments in favor of the deal that’s now under review by the Department of Justice and European Commission. The site quotes prominent sources that back up Google’s claims, notably highlighting the very New York Times article that people have raised issues with and also features a quote from Maurice Levy — the CEO of Publicis — who views the deal as “very positive.” No kidding.

The arrogance of this company is really… unbelievable.

Was it good for you, Baby?

Something is officially fishy at The New York Times. It’s been obvious for awhile that the editorial oversight of the Technology section of the online paper was not subject to the same rigorous standards as the more traditional news sections (one need only track the baffling ascendancy of the gossipy Saul Hansell for evidence), and I’ve commented here on some of the more egregious [recent] [examples] of apparently favorable treatment that Google has received from one of the Times’ tech writers. But this weekend, something happened that was categorically different. On Friday, they published a column by Randall Stross entitled, “Why the Google-Yahoo Ad Deal Is Nothing to Fear,” that presents many of the anti-anti-trust arguments that Google has been making in favor of the pending Google-Yahoo ad merger that is now under review by both the Department of Justice and the European Commission. The article is significantly deceptive. The author regurgitates Google PR boilerplate about how the deal will not risk price-fixing by Google, though they will basically control somewhere between 70 and 90 percent of search advertising, because Google’s system is auction-based and (in theory) advertisers set the prices. Stross then compromises his own argument by acknowledging that prices may be higher than in the current environment with Yahoo acting as a competitor to Google but so what? — the quality of ad delivery from Google’s system is worth the increment. Stross works very hard to pitch the concerns about Google’s growing monopoly position as mere corporate warfare on the part of Microsoft — and quotes David Kenny, of the ad holding company Publicis, on the beneficial effects the deal could have for Yahoo and the advertising environment. What Stross neglects to mention is that Publicis is a business partner of Google and stands to benefit, through [preferential pricing], from the deal. Additionally, what the New York Times neglects to inform its readers is that Randall Stross — identified in his byline as “an author based in Silicon Valley and a professor of business at San Jose State University” is the author of a book about Google to be released this month that, according to [advance press], “[is] Based on unprecedented access he received to the highly secretive ‘Googleplex,’”. Sounds cozy, no?

Access is the key, more on that in a moment…

Read the rest of this entry »

One of the wonders of [Hulu] is that it allows you to view and share full-length features. I’ve wanted to share the segment called “The Grid” from Reggio’s 1982 classic Koyaanisqatsi for as long as I’ve been writing this blog and now I can. Albeit with the risk of commercial interruption… Even still, if you’ve never seen the movie you’ll get a sense of one of the most amazing cinematic experiences ever committed to film.

Koyaanisqatsi carries the rap of “message movie”, decrying modern technology — an overlong music video whine — but it’s much more subtle. Reggio himself refused to label it as anything beyond a meditation on technology. Sure, there are some digs at the regimentation of life that tech imposes (keep an eye out for the unsubtle visual metaphors using snack foods…), but I can’t help watching this and not being amazed at the beauty of man-made forms and rhythms. The scene of commuters rolling off the old PATH escalators at the World Trade Center in waves is an astonishing blend of nature and technology.

And if you have good speakers attached to your computer, crank the volume — Philip Glass’s amazing score will make your head fly off. In a good way.

All is not well in the Web 2.0 world. There’s a basic tension in the world of people who write online that has been brewing for awhile and has bubbled up once again. Until very recently, publication was a relatively limited option for most people who sought an audience for their writing primarily because of the costs involved. With barriers to entry high, the probability of being offered the opportunity to reach an audience was slim — but, if successful, was rewarded with a fair probability of being read. The internet promised to change that formula, and has. On the one hand, technology has reduced the cost of publication to near zero, which allows just about anyone to self-publish and seek an audience. On the other hand, somewhat ironically, the increased number of competitors for reading attention has effectively reduced the probability of any particular writer collecting a significant audience to near zero. What Web 2.0 offers with one hand it takes away with the other: the democratic, hierarchy-flattening promise of technology leads not to a Commons where all voices are equally considered, but rather a cacophony of voices, above which only a few are heard clearly.

Chris Anderson’s theory of [The Long Tail] could be seen as an article of the Commons faith — as with any other consumable, with technology providing even residents of the long tail of the consumption distribution access to readers, one could still hope to find at least a niche audience. But [recent work] out of Harvard suggests that the web actually acts to flatten the long tail and magnify the impact of the short tail. For those who are frustrated by the apparent inequities of the online publishing world, this will not come as good news.

For bloggers, the short tail is embodied in the “A-List” — whether in the tech or political worlds — the celebrity bloggers, like Robert Scoble and Arianna Huffington, who collect the most readers and who exert extraordinary influence over the public conversation. One regularly reads impassioned essays such as [this one] by Jim Kukral declaring war on the idea of the A-List or even, as in Krukal’s case, wishing it away entirely by decree. But there are reasons A-Lists exist that can’t be wished away. The principal one is: they provide value. A-List bloggers gain their authority because they enjoy advantages that most writers do not, primarily access. By dint of geographic location and professional history they are directly connected to sources of news and product information that are highly valued by their readers. Their connections make them valuable to their readers who, in turn, make them popular, more influential and better connected, hence, more valuable. It’s a “virtuous cycle” that benefits the A-List bloggers and their readers but not, alas, the millions of other bloggers scrambling to gain attention for their work.

Those who are unhappy about the elite status of certain writers need to be clear about who they are really unhappy with and why. The “who” is other readers, like themselves. The “why” I’ll leave to them to figure out.

Hundreds of iPhone fans stand sweltering in 90° heat, oblivious to impending disaster.

Unless you spent the day on the Moon you’re aware that today was the day Apple rolled out the new iPhone 3Gs. Alas, the launch wasn’t quite ready for prime time and the faithful, who began queuing up early in the morning, spent most of the day struggling with failed activation servers and even credit card approval crashes. I walked over to the big new Apple Store in the Meatpacking District to find — even at this hour (4pm) — hundreds of people in a line that ran down 14th Street. Standing under black Apple branded heat collectors… er, umbrellas that were handed out by the store, they were quiet and a bit somber. As is only appropriate for religious pilgrims on their way to the shrine.

NYT: You’ve got a friend…

One of the hallmarks of an effective PR operation is the ability to get outlets with high prestige to write well of your client. To my mind, there is no more effective public relations operation going than the one at Google. Not only do they have the good will of Silicon Valley’s heavy hitters and “influencers” in their corner, but also thousands, perhaps millions of bloggers and early adopters. Their magical touch extends well outside of Silicon Valley, as well, all the way to the ink-stained hallowed halls of major news outlets, including the New York Times.

There’s a piece today in the Times entitled, ["Google, Zen Master of the Market"]. The article describes Google’s growing power in the online economy, calling on academic sources to describe the “indirect network” effects of their dominance that act to inhibit competition. And yet, the full implications of that dominance are not developed — are, in fact, blunted. Parallels to Microsoft’s dominance in the PC market are invoked, but not, as one might expect to describe Google’s ad platform as the advertising “operating system” of the Net — rather, the writer takes pains to point out how the cases are different. Elsewhere in the article, serious questions about Google’s transparency and the ability of regulators to assess its behavior are raised and then, instead of seeking input from Google’s competitors or the advertisers who are constrained by the ad monopoly, the writer goes to Google for a summation in which we are told, “Google looks at what happened to Microsoft, and we’re going to follow the rules.” Whew! That’s reassuring. End of article.

The style of the writing seemed familiar so I checked and, sure enough, it was written by Steve Lohr the same writer who penned a Google [puff-piece] back in December entitled, “Google Gets Ready to Rumble with Microsoft”, in which every talking point that the Corp Comm folks in Mountain View were floating about their (non-existent) competition with Microsoft for the enterprise space was trotted out in the guise of reporting. In both cases, Lohr, either through ineptitude or something else, buries the real story: in the enterprise piece, whether Google is being led over a cliff by an Ahab-like Eric Schmidt seeking that one last go at his white whale and, in the current piece, whether the remedy to Google’s dominance of the ad market is to insist that it be opened up to competitors. In other words, if Google’s ad network is the de-facto operating system for search commerce, should it be “interoperable” and non-exclusive the way Windows was forced to be?

I would’ve enjoyed seeing Hal Varian’s response to that question.