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March 30, 2010

The Savior of Publishing is LexisNexis, Not Apple

There is a lot of talk about how the iPad will be the savior of magazine publishing.   The thought is that the iPad’s use as an eReader, combined with its accompanying content store, will revitalize the fading periodical industry. The implicit strategy is to get people to pay for online content. If periodicals can convince readers to buy subscriptions on the iPad, they can also require similar subscriptions on their website.

The music industry placed similar hopes in the hands of Apple with the iTunes store.  It didn't work out for them and it's not going to work out for print.  Instead of placing their hopes in a consumer electronics company, they need to look to a company that figured out the publishing industry’s business model years ago;  LexisNexis.

Asking someone to decide between an online subscription to the New York Times and the Washington Post is an absurd choice.  Years ago all news was pushed to readers by a single newspaper.  People didn't need to read about the same story from two different papers, nor did they have the time.  With the Internet, readers are pushed news by many sources (Twitter, Facebook, feed-reader, email), and they pull news from search engines and browsing.  Given these various channels, choosing a content source to subscribe to becomes impossible.  At any given moment a person can be sent an article from thousands of publications.  Without p

rior knowledge of where they will receive their content from, how can they decide which publication they should subscribe to?

What happens when a story breaks in real-time on the Washington Post, but I subscribe to the New York Times?  What happens when someone shares an article with me on a publication that I don't subscribe to?  What happens when I do a search for a topic and the top result is for a magazine I don't pay to access?  These are all common use cases and in each, the concept of paying for a single source of content breaks down.  The only logical way to move forward is to charge people for a better quality experience than the one they are currently comfortable with.   I’ve said this before; people are willing to pay for content, but it has to be instant, unlimited, comprehensive, and organized.

For the periodical industry, this means one-fee to access to all content across magazines and newspapers.  LexisNexis has been offering this to libraries for years and now it's time to bring that service to consumers.  The library is charged a single fee to access the digital version of thousands of publications.  Doesn't that make more sense for everyone?

Apple will eventually offer this for both publishing and music, but nothing is stopping these industries from acting now.   Maybe LexisNexis will step up to be publishing’s killer app.

December 5, 2009

The Value of a Captured Imagination

Neuschwanstein Castle

When I was traveling around Germany I visited Neuschwanstein.  The whimsical castle was never finished because its patron, King Ludwig the II, was declared insa

ne. The enormously expensive construction was halted in 1886.  Walt Disney went on to model his castle after this amazing building.

This story reminds me to never underestimate the value of capturing someone's imagination.  The people of Ludwig's time thought he was out of his mind to spend money on this castle, much like people think that it's crazy for VCs to invest in startups with no business model.  The next Walt Disney is out there, and she will turn that captured imagination into a fortune.

August 24, 2009

The Internet Destroys Profits

The Internet is a force that levels communication, distribution, information, and access. Controlling these four things has been the foundation of business.  In the past if you could control one of these things better than your competitors, you had an advantage. The Internet removes this advantage, and thus, levels money out of practically every industry it touches.

It is my opinion that both the individual and humanity as a whole benefits from the Internet. I also think that particular businesses have capitalized on the unique opportunities the Internet presents.  From a macroeconomic standpoint I worry that the net result of the Internet has not been positive for business.  As the Internet increases efficiency, the efficiency creates unmanageable data overload. While it drives down costs, it also drives down profits.  It increases communication but it demands instantaneous, around the clock responses.  It allows for quick and cheap distribution, but the distribution channel can no longer be controlled. Digital files can be infinitely replicated at zero cost, but it drives down the value of the contents to near zero.  It provides businesses with vital information, but that information is also available to competitors and consumers.  It gives us access to the world, but it prevents anyone from restricting access to anything.

It's clear that this has happened with music, movies, television, print, cable, auto, telecom and real estate.  I'm sure there are dozens of industries that have not had their profits ground out by the Internet.  I

would theorize that this is only because the Internet has yet to set it's sites on that industry.  Where the Internet touches, profits shrink.  You can think that your industry will be exempt, and you might be right. Chances are it will be swept under; it's only a matter of time.

This may seem like an odd thing to say coming from someone who is a proponent of the Internet.  The Internet has reshaped the business landscape and redefined the profits that can be expected.  It doesn't seem like the business world has fully adjusted their expectations.  I keep hearing the question asked, “How can X industry return to its former level of profits?”  In response the industry inevitably tries to generate more revenue with the same business model and it doesn't work.  It's possible that once the Internet touches an industry, pre-Internet revenue levels will never return.  The only solution is to change the size of company so it is in line with the profit potential.  For example, you don't need a massive building with hundreds of employees to sell music.   It is very likely that this is the dawn of the small business age.

Of course, there is the chance that for every industry with destroyed profits, there is an entirely new business model that the Internet has enabled.  At the moment, the Internet may be a net negative for business because those new possibilities have yet to be realized.  What's more likely is that some industries will discover a new model, but most will have to reorganize around adjusted expectations.

August 14, 2009

Wrong Lesson: Music is not an indication that content must be free.

Whenever someone talks about content and the idea that nobody will pay for it, they implicitly reference the fate of the music industry.  Music started us down this path by showing us what can happen when an industry does not adapt to the Internet.  Unfortunately, the lesson everyone took away was that people aren't willing to pay for content.

Music absolutely does not have to be free and people are more than willing to pay for it.  What people are willing to pay, and how they want to consume it has dramatically shifted.  The music industry's downfall was that they never adjusted their own perceptions on what music was worth.  To this day, 10 years after the release of Napster, they have yet to accommodate the new pricing structure and format the consumer demands.

P2P gave people unlimited, unrestricted access to the worlds catalog of music. It's a beautiful achievement, almost poetic, and the music industry underestimated just how important that was to people.   Back then, what if people had been given the option to pay for Napster exactly as it was?   The worlds music had just been opened up to everyone, the RIAA was actively trying to shut it down, and there was a credible threat that they may start suing file-sharers.  Before they nailed the coffin on Napster, what if they music industry had said, okay, you can do this, but it's $20/month.  I believe that almost everyone would have paid.  If you were a kid, your parents would have paid just like they pay for cable.  If you were a student the university would have paid to avoid a lawsuit.

Napster did relaunch as a paid service and nobody was interested.  People were uninterested in paying for a service that was inferior to the original Napster.  It cost $20/month for unlimited downloads, but if you ever stopped paying the subscription the music disappeared.  Not only that, it didn't work with the iPod.

If people would have paid for the original version of Napster, what about a clean, organized, virus free version? What about iTunes priced $20/month instead of $1 per track; download as much as you like.

Do you spend $20 per month on music? Does anybody you know?  In the heyday of the CD industry if you were the the type of consumer that bought one CD per month you were a gold-mine.   Columbia House was an entire business based on mailing you one CD per month and it made a fortune.  The only thing stopping the music industry from getting back

to the equivalent of one-cd-per-month for every music fan is moving to an all-you-can-eat subscription model.  Download all you want, play it on any device, keep it forever.  They would get to keep the entire $20 because there is no physical disk to press, no shipping costs, and no store.

The artist would be paid on attention. All of the money from the subscriptions would be split up based on what percentage of overall downloads each artist commands. If you're an artist that can get everyones attention, then you'll get a lot of the pool.

The music industry is incredibly fortunate to have their consumers tell them their business model.  They want unlimited, unrestricted access to music.  Simple.  Provide it and make money.  There are multiple indicators that people are willing to pay for this including bigger hard-drives, faster Internet connections, iPods, iPhones, and the expensive risk of a lawsuit. Entire industries are cashing in on this desire and the music industry is missing out.

If this really is the answer then why doesn't the music industry just do it?
1. The three companies that own the music industry can't seem to work together, and you need everyones buy in.
2. Those three companies have abused their artists for so long that they can't work with them to rewrite every contract to accommodate this new model.
3. The music industry has yet to shift their perception of what music is worth
4. The music industry is setup to sell CDs and as a result they are more comfortable with digital models that are similar
5. If an artist on a small label can compete on the same field with an artist on a big label, then their oligopoly is over

My suggestion would be to fold all the labels and start from scratch.  What's more likely is that new artists will refuse to sign with the major labels.  When there is a critical mass of top artists that aren't controlled by a major label, the smaller labels will band together to make this happen.  Emusic.com is in the best position to bring about this change.

What's important is that we do not take away the wrong lesson from this.  Newspapers, movies, content, and web apps do not have to be free.  People are willing to pay for content, but it has to be instant, unlimited, comprehensive, and organized. The music industry failed because they couldn't adapt to this new model, not because everyone demands free.

June 12, 2009

Why Picking a Facebook URL May be More Than Vanity

Tonight there will be a rush on Facebook.com as they launch the ability to choose a profile URL such as facebook.com/yourname.  I have been doing some serious consideration into what the best one might be.

Facebook is in the best position to be the keeper of online identity.  It will very likely become the way that I will prove that I am Jason Schwartz as I travel around the Internet.  I think of my Facebook username and password like my social security code, and my profile like a state id.  Add in the information they have about my entire social graph, and in the future my Facebook URL may become the center of my online identity.  While a Facebook vanity URL seems absurdly trivial now, if my prediction turns out to be true, what I pick tonight takes on an awful lot of importance.

Here are my options:

Jason: It’s short, easy to remember, common, and will be the toughest to get before someone else does.

JasonSchwartz: My full name.  It’s long, difficult to spell, fairly common, but professional.

JasonDSchwartz: My name with my middle initial.  I go by that in a number of places because Jason Schwartz is so common.  When you Google Jason D. Schwartz you only get me.  I started doing this before I built up SEO around Jason Schwartz, but now its not quite as necessary. I also own jasondschwartz.com.

JasonS: First name last initial. Generic and common, but also short and easy.  It's also my LinkedIn URL.

Jschwa: This is my screen name, which I carefully curated over the last few years. It’s short easy to remember, easy to spell, and what I am known as throughout the Internet. Unfortunately it's a bit common as well, and sometimes it's already taken when I sign up for a new service.

I asked the members of the NY Tech Community what they're going to do:

Here are the responses.

@Woodlandalyssa: Alyssagalella (full name)

@Dens: DCrowley (first initial, last name) Because: “[Facebook] requires [more than 5 characters] so I can't be “Dens”.  I'll prob go for dcrowley. The 4 letter thing sucks”

@Evbart: Evbart (screen name) Because: “Evbart seems easier [than Evan Bartlett]”

@Kmaverick: Kmaverick (first initial, last name ALSO screen name) Because: “I use that name all across the web. Plus, when you clic

k on Facebook you get so many more details about me and my full name.”

@Ceonyc: Ceonyc (Screen name) Because: “Screen name everywhere. People use screenames b/c they are unique, self chosen. I'm the only ceonyc but not the only Charlie O'Donnell. I made me ceonyc.”

@Orian: Orian (first name ALSO screen name)

@Tmarman: Tmarman (first initial, last name ALSO screen name)

@Davidsrose: DavidSRose (first name, middle initial, last name)

@Innonate: Innonate OR Nate OR NateWestheimer (confused like me)

@MSG: Mgalpert or MichaelGalpert (first initial, last name OR first and last name) Because:  “To find me on Facebook just Google “Facebook Michael Galpert” I don’t really care for personal vanity urls, biz url is different story…I only care to have facebook.com/aviary”

@AJV “For our clients [http://vaynermedia.com], I like for them to have their real name for both twitter and FB – if the name is hard (like mine) – then initials. The biggest thing is consistency – unless you can upgrade [to a 4 letter name. Celebrities only]! If you can get facebook.com/jason – go get it!”

@Garyvee: Already has facebook.com/gary.  His advice: “1st go for name Jason then JasonSchwartz then JasonS”

It seems that everyone’s choice is dictated by what screen name they chose to begin with, and how close they got it to their actual name.   If their name is short and phonetic then their screen name is very close, and therefore they don’t have a problem keeping it consistent with their Facebook URL.

If their name is a little more complicated like Schwartz or Westheimer, the need for a creative screen name grows.  The thing about a screen name is that it’s a bit like a character or a persona.  It can take on a life of its own in a way that a persons name can’t always do.  This seems to be the situation I’m falling into with Jschwa, and deciding if I am Jschwa on the Internet, or I’m just Jason.

Ultimately I think I’m going to follow AJ and Gary’s advice and choose Jason, and if that’s taken then JasonSchwartz, and then JasonS.  Jschwa seems to fit me, but maybe not in the future, and the future is what I'm concerned with here.  I may be talking about Facebook vanity URLs for now, but who I am on Internet, and what this URL may come to represent, is a topic worth consideration.

April 11, 2009

Stop Backstabbing Our Colleagues: The Diggbar Debate

Last week Digg.com released a toolbar.  When you visit a site from Digg.com, the site will now have a Digg toolbar at the top and the URL shortened to a Digg url.  John Gruber from Daringfireball.net wrote a post about how this is 'bullshit'.  He claims that the frameset they use to add the toolbar is somehow inherently wrong. This touched a nerve and the blogosphere set to work vilifying Digg.  (Note: Daringfireball.net was only on the front page of Digg 2 times last year.  The fact that Gruber wrote code to disable the DiggBar from his blog is grandstanding.  It also doesn't appear that the DiggBar has a negative effect on anything)

In response, Ted Dziuba wrote a post about how this move from Digg is a sign of desperation to show growth numbers to their investors.

If this is what Digg needs to do as a business, then this is what Digg needs t

o do.  It's their site, their users, and their traffic.  This is SUPPOSED TO BE A BUSINESS.  This isn't utopia, everything isn't supposed to be free of business objectives.  We need to stop stabbing our own in the back every time they they act like a business instead of a playground game.

If a company wants to use framesets to increase user engagement and it works, then we should support them. If it proved to be a worse experience for their users, that's a different story.  At this point unique vists are up 20% so it seems like the experience is improved.   The future of our industry depends on our ability to execute at this crucial juncture to turn a profit.  If we can't, then the venture funding will dry up and we'll have to figure out what to do with our 'Internet skills'.  The answer will probably be to work for a giant corporation who won't give a shit about a whining blog.

Stop undermining our colleagues when they make business decisions.  Stop 'taking a stand' against something that doesn't even effect you just to cause a stir and drive traffic.   Backstabbing our colleagues when they are executing is useless and detrimental to our industry.

February 28, 2009

The Baroque Period in classical, the Modern Movement in Architecture, and the Web 2.0 Era in Interactive Theory

Charlie O'Donnell postulated that the greatest trick Web 2.0 ever pulled was convincing the world it ever existed.  He starts out with this quote:

Most of the services that inspired such categorization never consciously decided to be or aspired to be “Web 2.0 companies”. That's usually the way evolution happens–natural selection and environmental adoption spits up a set of traits that get adopted through natural selection and some anthropologist comes along later and throws a taxonomy on it–drawing lines across the gray areas almost making them seem intentional.

I have stated before that I believe Web 2.0 to be an Interactive Theory on how to build a web application.  We have spent the last few years experimenting with those gray areas and figuring out where those lines should be drawn.  I also believe the Web 2.0 Era existed.  It was when the world was convinced that there was such as thing as a Web 2.0 Business.

He goes on to say that it is unfair to categorize many companies across industries as Web 2.0 just because they subscribe to the same Interactive Theory or best practices.  That's the equivalent of saying its unfair to call two Baroque composers Baroque, or two Modern Architects , Modern, or two Impressionist Painters, Impressionist.  Web 2.0 was a defined period i

n both Interactive Design and Business Theory, just as the previous examples were defined periods in their respective disciplines.

An architect creates a Modern building because that is what's in vogue at the time.  That's what people want, and that's what the customer will pay for.

Internet startups applied Web 2.0 theory to their projects for the same reason.  That's what a segment of end-users wanted, and more importantly, that's what the VCs were willing to shell out money for.  Startups very deliberately rode the 2.0 wave because a lot of 'visionaries' were saying that they were the next generation of BUSINSSES.  The 'visionaries' were so convinced of this they forewent business models.  The thinking went, 'Not having a plan worked for Google, so it must work for these startups too.'

Out of the investor’s belief that this was true, and out of the entrepreneurs desire to cash in that Google lottery ticket, the Web 2.0 Era was born.  The Era was the Interactive Theory + the belief that any website employing Web 2.0 theory must be a business.

The Web 2.0 Era is more or less over.  Applying an interactive theory does not equal revenue as so many seemed to believe.  Investors are already backing off investments unless the entrepreneur can provide a clear path to revenue.

The interactive theories that we learned in the Web 2.0 Era will live on long after the era is over, just as techniques from one era in architecture are used to build on the next.  What is over is Web 2.0 experiments, that very deliberately catered to the Web 2.0 Era investors, being thought of as businesses.

December 22, 2008

Web 2.0 Was About Building Experiments, Not Businesses

It looks like we are coming to the end of another bubble, if it’s not already over. In March of 2006 I added the definition of Web 2.0 to Urban dictionary.

“Web 2.0 – Interactive media theory where an infrastructure focusing on content creation, management, and dissemination is built for the user to generate that content in a community framework.”

I think we have taken that theory and successfully put it into practice.   In a few rare cases we even accomplished this with normal people, a feat that was all but impossible during the first bubble.  It’s a major step forward. The Angel Investors and Venture Capitalists that funded this research over the last few years deserve to be recognized.  They took a big gamble, and their efforts have helped to move an industry forward that will define our era.

The Early-Stage industry may need to tell their limited partners that they were making investments in businesses, but anyone in the Social-Media industry knows the truth.  We didn’t create businesses, we created experiments.

In October VCs sent letters to their portfolio companies telling them that now is the time to cut costs because raising money will be difficult.  The subtext to this is that now is the time to start generating revenue because the safety net is gone.  Shouldn’t they have invested in companies that were doing this from the start?  Maybe not.  Maybe the early stage industry is wise to invest in innovation,  but lets call a spade a spade.  The truth is that now is the time to generate a little revenue to subsidize the funding of innovation until the economy picks up.

It’s possible that the early-stage industry has had enough of funding innovation.  Maybe now really is the time to stop messing around with experiments and to create real businesses online.  We have spent 3 years thinking about innovative way

s to engage people, and then figuring out how to monetize that later.  We can thank Google for the strategy.  It may be the best way to radically innovate.  It may even be a great strategy to make money when everyone else believes that a site with engaged users is valuable.  Whatever the motive, funding innovation is a noble pursuit and we really do owe them a debt of gratitude.  However, now may be the time to flip that strategy around; determine what people will pay for, and then figure out how to get people engaged.

Thinking this way will probably not result in radically innovative social media applications.  We will have businesses that aren’t as sexy, not as fun, and probably won’t classify as social applications.  They will be boring, revenue generating businesses.  It’s not play anymore, it’s the real thing, but the real thing makes money.

If we get serious, and start building businesses for revenue instead of for innovation and community, what happens to the Web 2.0 social applications?  Should we abandon them as a flight of fancy of an opulent time?

I think we just need a shift in perspective about what they are. A great social application is more like a movie than a business; it’s a piece of interactive entertainment.  A movie can be monetized, which makes it valuable to create, but nobody thinks of a single movie as a businesses.  The movie industry is run by people who make many movies and then monetize those assets.  In that sense the internet is already very much like the movie industry, only our studios are Google and VC Funds.

We should keep creating social applications because they expand our ability to express and open up new possibilities for information transfer.  Social applications that can generate money to justify the investment of the patrons of innovation are even better.  But let’s all stop pretending.  We are creatives innovating around a radically new medium.   It’s not some mystery why we haven’t turned these into businesses.  The truth is that they were never businesses to begin with.

December 1, 2008

Delicious.com is for normal people

Everyone who uses the Internet uses bookmarks.  Anyone who uses the bookmaking features of a web browser has a massive list of unorganized sites.  Show any normal person Delicious.com and watch their eyes widen.  You don’t need to explain what it is, just start using it and they will ask you.  Explain it and they will want it.  They won’t believe that such a great service exists and nobody told them.

Delicious is for everyone.  Bookmarking is something that everyone already does, it’s easy to use, and it’s immediately useful.

The reason that Delicious didn’t make it to normal people is because Yahoo never packaged it in a way that a normal person could understand.  Go to Delicious.com and try to determine what’s going; it’s impossible.  You would never think that Delicious is a bookmarking service for YOU.  It looks like a site to find new interesting sites, an activity that is popular among geeks.

The entire product category is called Social Bookmaking.  There is nothing less social than bookmarking a site for YOUR future reference.  The concept doesn’t make sense to a normal person.  Delicious bookmarks are public by default, which at first would be weird for a normal person.  The trick is to lead with the value proposition of a personal, organized bookmaking system, available anywhere.  Describing it as a social bookmarking tool leads with the one piece of Delicious that they are least likely to be comfortable with.

I have said before that the formula for creating an application for normal people is to let a technology marinate for 2 years and then dumb it down 100%.  The bookmarking features of Delicious are pretty simple.  In fact, they are even simpler than Google’s Bookmaking service.  Now they need to dumb down how they present themselves and how to get started.  Stop confusing people

with a site discovery application, stop pushing the social features, and focus on creating a site with a clear value proposition: A personal, organized, online bookmaking tool so bookmarks aren’t trapped in the browser.

Could someone else swoop in with a simpler product to capture the market?  Maybe, but I doubt it.  You still need the installed base of geeks who have vetted the service to tell their friends about it. Despite the fact that they have dropped the ball for years now, because of their userbase, Delicious is still in the best position to bring online bookmaking to the masses.

Delicious is Yahoo’s biggest failure.  I don’t know how a company full of smart people could have overlooked their most valuable acquisition.  Then again, that’s the story of Yahoo.  Acquiring companies and then failing to leverage them.

The semantic web is the holy grail in the search engine wars.  How do you beat Google? Have thousands of people describe web pages instead of scanning keywords, put those sites into categories, and point to which is the most popular.   Yahoo has this with Delicious and it should be their top priority to integrate that rich data set into search engine results.  Their second priority should be to broaden the demographic of the userbase so more pages in different subject areas are tagged.  I find myself using Delicious as a search engine quite often.  The interface is too confusing for your average person, but the results are excellent.

I’m not saying that integration would be easy, and they did make an attempt at the beginning of the year.   I’m sure there are many reasons why this is much more difficult than it seems, and a challenge that the Delicious product team has likely rammed their head into the wall to figure out.  Despite this, it is the single most valuable asset that Yahoo holds that Google does not.  If I were them, I would be focusing on that instead of a merger with AOL.

November 27, 2008

The First President of a Generation

For the 5 days leading up to the election I campaigned for Barack Obama in the battleground state of Ohio.  I knocked on doors, talked to voters, made phone calls, and entered data for 16-hours a day.  It was exhausting and the hardest I have worked on something unrelated to the Internet.

I was not alone. Thousands of people, the majority under the age of 30, had dropped their life’s pursuit to do the same.  Many had been at it for the 5 months, postponing medical school, jobs, and lives to elect their candidate for president.  They were relentless, attacking a campaign with an energy that only the youthful can sustain.

The result of those efforts played out at a bar in Cincinnati where hundreds of members of that campaign gathered to watch Barack Obama elected to the presidency of the United States.  The young crowd embraced each other and screamed with excitement, not only because a great man was elected president, but because he was elected on their backs.  He was elected because they had cared enough to effect change, and they were victorious.

Obama is the first president of my generation.  Technically he is a part of Generation X, but he listens to Hip-Hop, he uses the Internet, and he was unequivocally elected by the brute force of the mobilized youth.  Not only is he our first leader; he represents the first time we have collectively don

e anything.  We have been complacent with our politics and mediocre with our music. This was our coming out party.  We heard Obama’s call, “ENOUGH” and we answered forcefully.

As I watched Obama’s acceptance speech, I felt unexpectedly overjoyed that the nightmare of the last 8 years was over. I no longer had to feel ashamed of the leadership of my country, and that the process of restoring our place in the world could finally begin.  I felt like we had just overthrown an oppressive regime, an out of touch generation, and our own characteristic apathy.  I even felt a little gratitude towards Bush for showing us how horrific things could be when we choose to do nothing, for motivating us to strive for better.

We are not excited or motivated by much.  Past generations may call us jaded.  It’s difficult to look at the result of the energy of the sixties and feel like there is any use in getting worked up.  We are measured, even keeled, and skeptical.  We are bread on advertising and our ability to filter out bullshit is razor sharp.  Compared to the sixties, we are not a breeding ground for the arts, for passion, or for creativity. Despite this, we may just have the perfect temperament to run the world.  I’m thankful that we have decided to step up to that challenge, and despite our past apathy, that we have the opportunity to do better.