Web Transplant

Newsday’s Decision to Charge for Content is Desperate and Stupid

2009-02-27T13:06:26+00:00

I began my career at Newsday in 1986 when I was hired at the age of 23 to work on some of their very first online services. I spent seven years working on online services there and got to know some fantastic people. My final presentation, before leaving in 1995, was an introduction to this new thing called HTML and linking. I haven’t been at Newsday for a while now, and its changed owners and management a few times, but somehow I still care about the place.

My company, SubHub, enables people to build subscription websites quickly and easily. So you’d think I’d be applauding Newsday’s move to such a model. But I’m not. It’s going to fail.

Charging for content works when the content is unique, actionable, highly targeted and from a trusted source. Newsday ticks perhaps two of the boxes – it’s a trusted source, and maybe some of the content is actionable (restaurant reviews, business news, etc.).

Charging does not work for commodity content, and that’s mostly what Newsday has. National and international news is readily available elsewhere. Sports coverage, syndicated features – all available elsewhere. Movie reviews, music reviews – virtually everywhere.

Newsday’s knowledge of its local market is more unique and valuable, but even that too is available in general news coverage from numerous online and offline competitors.

In short, Newsday has little to charge for. This doesn’t mean it couldn’t create some online content that meets the criteria for charging successfully. The Wall Street Journal keeps coming up with new online packages it can get audiences to pay for. But I haven’t heard that Newsday plans to do this.

Just putting the existing stuff behind a firewall isn’t going to help. Bundling it with programming from parent Cablevision – well what’s that all about? Is Cablevision going to create new local video content that people would pay for? Or does access to Newsday online just become another throwaway incentive to buy a cable subscription?

Putting Newsday’s existing content behind a firewall is just a way to deprive it of oxygen and kill it. Unfortunately, the kind of creative thinking necessary to create content that people will pay for is not likely to come from a cash-starved newspaper company or its cable operator owners. It’s more likely to come from the smaller players and individual entrepreneurs, like the ones we see at SubHub.

Newspapers are crashing and burning all around us now, and Newsday and its owners have found another way to do it. I wish them well, but I’m glad I’m not on the online team there anymore.

Why Facebook Will Eventually Go Premium

2008-12-14T17:32:49+00:00

There's more bad news for Facebook as it seeks to justify its huge valuation -- the world's largest advertiser is not finding Facebook to be fertile ground, according to Randall Stross in The New York Times.

The most successful effort that Procter & Gamble was willing to point to on Facebook was a 2006 page for Crest Whitestrips, which attracted 14,000 fans at its peak -- many apparently lured by free giveaways such as concert tickets. Out of Facebook's 130 million users that's not a rousing success.

That the Crest Whitestrips experiment left a funny taste in P&G's mouth was reinforced by the comments of a senior P&G marketing executive, who said, "I really don't want to buy any more banner ads in Facebook."

(The article also brought me a bit of deja vu when it described P&G's "America's Favorite Stains" campaign for Tide detergent on Facebook. This took me back to a meeting I participated in with P&G for Excite about 12 years ago, when they eagerly described their desire to have an online stain finder application on Excite -- an idea that as a product guardian made me feel a bit dirty. Apparently P&G persists in its noble quest to bring stain information to the world online. I felt vindicated to learn the Facebook version had attracted only 18 comments.)

There is further evidence of problems at Facebook when we consider the news that Facebook CFO Gideon Yu was in Dubai in October seeking to raise additional funding. Why Dubai? Because U.S. investors weren't interested at the proposed valuation, the reports said. And seemingly Dubai investors weren't either, as we've yet to learn of any recent new investment.

There was more bad news last week when it was reported that Facebook cancelled plans to allow employees to sell some of their shares at a $4 billion valuation. Why? Because potential purchasers were balking at the valuation.

It's not difficult to understand why this is happening. Facebook is the latest to apply the classic Silicon Valley model which says build a big audience first, and then figure out how to monetize it. Investors, meanwhile, pile on in hopes of enjoying a big payout once monetization happens.

But, oops, monetization looks like it's going to be very difficult on social networks such as Facebook. At least, it will be if it's dependent on advertising. Investors are looking for some evidence that Facebook is succeeding in leveraging its vast audience to generate advertising revenues, and so far the evidence is scant.

The many of us who use Facebook addictively can certainly attest to its value in our lives. However we can also probably attest to just how irrelevant advertising is to us on Facebook. That's Facebook's problem, and it's a huge one.

The solution? Start charging a premium for access to certain Facebook features. The basic Facebook membership would continue to be free, but enhancements would be extra. This might include photo and video storage beyond a certain limit, or sharing of certain data, or friends beyond a certain amount. I'm just guessing at the ideas. But given how essential Facebook has become for so many of us, it's easy to envision many users paying a monthly or annual fee for an enhanced membership.

At 130 million members, if 10 percent paid $5 per month for enhanced memberships, Facebook would be clearing $65 million per month or $780 million per year. There are other revenue streams to develop too.

That's not enough to justify an overly inflated valuation, but it's a pretty good start. And it's likely a lot better than they're going to do helping P&G teach young people about stains.

So watch this space. Subscription is increasingly the future, and Facebook will eventually join the bandwagon.

Worlds Have Collided

2008-12-03T18:26:24+00:00

My old industry friend Len Muscarella has a bit of a grumble in his latest Interactive Media Associates newsletter about the increasing use of Facebook for networking by business colleagues.

Len was one of the pioneers of online media, having been one of the early executives at Prodigy, which in the early 1990s was one of the first and most cutting edge consumer online services. I worked with Len at Newsday when we brought him in to help us launch our own service on the Prodigy network. Len has seen more trends in his career then most of us ever will.

I understand where Len is coming from, but I think the cat is out of the bag on this one. The days are over when we could compartmentalize our business and personal lives, as if they were separate personae.

(I can't help but recall the Seinfeld episode in which George Costanza's fiancé meets his friends for the first time. "Worlds have collided!!" he shrieks.)

In today's world it's all out there, if we choose to use these services. And if we don't, we're left behind. So we've got to put it out there.

That's why I know that last night a leading venture capitalist went to a particular concert, or that a prospective employee recently had a new baby.

For some people this might be too much, and it does take some getting used to at first. But actually, it's not so bad to know you're doing business with a real person, with their highs and lows, joys and heartaches -- rather than an empty suit.

Now this doesn't mean that we must lose control of our public image. If you post photos on Facebook of yourself incomprehensibly drunk, or leering at members of the opposite sex -- well then you're stupid. Or maybe that's you. And maybe people will not want to do business with that person.

But if you want people to know who you really are, and what excites and inspires you, or where you come from, then Facebook is a great place to do it. You might find some common ground that you didn't know existed. You'll be human. And after all, we're all humans doing business with other humans.

Oodle Gets Facebook Classifieds

2008-12-03T15:37:28+00:00

Oodle announced today that it will take over the running of Facebook Classifieds, adding to its roster of deals which includes MySpace as well.

This is a great move for Oodle, founded by some of my ex-Excite colleagues including CEO Craig Donato.

It's also an acknowledgement by Facebook that it cannot do everything and expect to do it well. Rather than run its own classifieds service, it outsources to a specialist. What they give up in revenue sharing they should make up in increased activity.

This is especially true for classifieds which depends for success on having a critical mass of listings. A neutral player, aggregating listings across multiple networks, will have a more robust database than individual networks would have if they took the silo approach and built it themselves.

But even in general it always seems to take forever for the big network players to come around to realize they'd often be better off outsourcing than owning. Again and again their impulse is to own and control it all.

So suddenly you have telco executives who fancy themselves to be content programmers or advertising salespeople. Or you have social networking sites who think they can do classifieds. Or mobile operators who think they can run a "walled garden" portal that will somehow satisfy their surfers.

We already own the customer relationship, the logic goes. We already own the billing relationship. So let's extend it by giving them great programming. And why share revenues -- let's just do it ourselves.

Often years and millions of dollars later, they finally realize that outsourcing to specialists is not a bad idea. Of course, at many of these companies there is no collective memory to learn from as executives get moved from one position to the next, never able to apply learnings. So someone else comes along and makes the same mistakes again.

At least Facebook has a bit of Silicon Valley culture, which typically means a willingness and ability to learn lessons more readily and adapt more quickly. Probably this has not been a costly lesson for them to learn. The Oodle deal now provides some upside opportunity.

The challenge now for Oodle is to generate enough activity to make its classifieds database broad and robust enough in an increasingly fragmented classifieds marketplace. But certainly, landing some of the prime beachfront real estate, on Facebook and MySpace, is going to help.

Who Decides What You View?

2008-11-30T17:57:37+00:00

In today's New York Times Magazine, Jeffrey Rosen asks who decides what content we can view over the Internet.

Increasingly it's Google, with its vast and global search engine reach as well as its dominance of online video via YouTube.

Somewhat disconcertingly, we learn that the first line of arbitration at YouTube is a corps of twenty-somethings who rule on individual requests to find certain videos unacceptable. If it gets too tricky for them, they bump it upstairs to Google headquarters where a cadre of lapsed journalists-cum-attorneys try to strike a thoughtful balance between local law and free speech.

Not so easy when the laws vary so much from country to country and when the volume of content is increasing nearly exponentially. Even the Google-istas admit their current model is unsustainable.

And what happens if Google and other companies choose in the future to weight their decisions more in favor of commercial considerations than free speech objectives?

Worth reading.

Wake-Up Call

2008-10-14T08:46:37+01:00

Picking up this morning's Metro on the train platform, I couldn't help but be struck by the front-page headline above the article on the £1.9 trillion bank bailout.

Metro puts it in stark terms. That's:

£288 for every man, woman and child on the planet
10,000 times the total raised by the Band Aid and Live Aid concerts
36 times the aid sent by the richest nations to the poorest each year
190 times the GDP of Ethiopia

The front page photo is not of bankers in suits or overwrought Wall Street traders watching their positions erode, but rather of African children lined up for food.

Manipulative? Maybe. Political? Yes, in the great tradition of British newspapers. Sobering? Definitely.

A few months ago I attended a talk by Bob Geldof, who passionately and with great clarity reminded the developed world to keep its commitments to the poor nations of Africa and elsewhere. Remembering Geldof's talk, it's difficult not to be struck by how easy we've found it to bail ourselves out while as a society we seem to find it so difficult to meet our relatively measly commitments to our less fortunate fellow humans.

If we let every bank collapse, we would not have it as bad as many of these people who spend their entire lives hoping for a handout or a hand up and often don't get them. And I think after recent events we can finally put to rest the self-serving theory perpetuated by Western governments that vast wealth creation at the top of the pyramid somehow trickles down to those at the bottom. It does not.

Geldof cleverly brought his talk back to his audience's self interest. We're running out of everything, he reminded us. Water. Clean air. Raw materials. We cannot keep consuming at the rate we did in the 20th century. We need to find new sustainable ways of living, more modest ways of living, or we will hit the scrap heap.

Let's hope this financial crisis represents the death throes of the era of consumption without heed for consequences. Let's hope we get some political leadership that encourages us to live responsibly and sustainably. This wasn't a bubble bursting, it was a collective delusion. Time to wake up.

Opening Night at Jamie's Italian

2008-10-07T00:33:23+01:00

Jamie's Italian opened tonight here in Bath. It's the new Italian concept from celebrity chef Jamie Oliver and Bath is meant to be the flagship of the new chain. We decided to head on over and see how it measured up.

Various photos are on my Flickr page.

Probably this chain will give Carluccio's a run for its money -- they are the closest competitor in terms of concept -- quality Italian food, rustic setting, affordably priced.

For now, however, Jamie's Italian needs a bit of work. There are long waits (they take no reservations) and the bar area is small -- the pasta maker, working nearby, gets lots of room. It wasn't too bad, though -- we put our name on the list, headed around the corner, had mojitos and headed back. Within a few minutes we were brought to our table.

We were seated near the kitchen; tables in this area offered only stools. With my aching right shoulder feeling every one of its 44 years, I would have liked a chair with a back (tables elsewhere in the restaurant did have proper chairs). We also could see no obvious place to hang our jackets -- eventually we settled for piling them onto an empty stool. This is Britain, and people wear coats. Provision must be made. This seems like an oversight.

Noise levels are high, but this is not a bad thing when you have kids -- ambient noise disguises kid noise. We left them at home this time, but probably next time we'll bring them. Ventilation needs some work; smoke from the open kitchen drifted out and clung to our clothes which needed a good airing afterwards. Service was friendly and patient.

Our starters were delicious -- marinated vegetables for J and sausage papardelle for me. The papardelle was very good -- lovely long curly ribbons of fresh-made pasta, cooked nicely al dente under a light red wine sauce with breadcrumbs and crumbled sausage. The marinated vegetables were fresh and still retained some of their firmness.

Unforunately this was the best part of the meal. The mains badly disappointed. My main, "Jamie's Flash Steak," was room temperature at best. The meat was tough and gristly. J's main, the chargrilled Catherine Wheel sausage on a bed of polenta, was awful. The presentation, overly artsy, resembled more a curled-up turd than a delectable sausage. More importantly, it was not so much chargrilled as burnt. It tasted burnt. It was very unpleasant and J could not finish it.

To be fair, this was opening night -- and no one should judge a restaurant by its opening night. Arguably no one should even go to a restaurant on its opening night. We did, so we've got to cut them a lot of slack. And to their credit, when our waitress asked what we thought of our mains and we told her, the manager soon came over, asked what had been wrong, and comped us for both. That's the right thing to do, and we appreciated it.

Jamie's Italian is open for breakfast, lunch and dinner. It's got 200 seats, so other than a modest wait there should be no problem getting a seat -- or a stool. Things should improve as they settle into a routine. There's no reason to bring the curtain down on opening night, and we will be back.

Pricing Politicians

2008-09-09T17:13:19+01:00

Today I received an email from the Obama campaign inviting me to attend a lunch with Al Gore in London on 25th September. Price: $10,000. And for $28,500, I can also attend a half-hour reception beforehand.

Wow! I haven't spent that much on lunch since the internet bubble.

Last year I was invited to attend an entrepreneurs breakfast at 11 Downing Street with then-Chancellor Gordon Brown. Price for breakfast: 45 quid -- about $90.

Say what you will about Gordon Brown, but compared to Al Gore he sure is value for money.

From King to Candidate

2008-08-28T19:18:18+01:00

It's symbolic, if coincidental, that tonight Barack Obama will accept the Democratic Party nomination for president of the United States, on the 45th anniversary of Dr. Martin Luther King's "I Have a Dream" speech.

The New York Times has a moving article today focusing on the handful of Democratic delegates who will be there tonight and who were also there for King's famous speech on the National Mall on August 28th, 1963.

From a practical standpoint, when it is so urgent to get the Republicans out of power before they further wreck the country, I am sorry it's not Hillary up there. I am still not confident that Obama can defeat McCain, although I am pretty sure Hillary would have.

However, from a standpoint of seeing how far America has come, there is something wonderful about seeing Barack Obama, a black man, standing up there as the presidential candidate of a major party. Forty-five years ago, when black men and women were still being beaten in the streets of America for trying to claim their basic rights, it could only be a dream -- and the most bold thing that Martin Luther King Jr. could do was to relate that simple dream.

Today, Barack Obama is a symbol of how far America has progressed. Today it is a black man who may lead our nation. That's change I can believe in.

Farewell Dave Freeman

2008-08-27T18:26:26+01:00

I was sad to learn today about the death at age 47 of Dave Freeman, co-author, with Neil Teplica, of "100 Things To Do Before You Die," the quirky and popular travel guide.

One of the things I got to do before I die was to work with Dave and Neil way back in the internet 1.0 era, around 1997, when I was director of City.net, owned by Excite.com. City.net at the time was the most popular travel site on the web according to PC Meter (later Media Metrix). We had tons of traffic and were looking to bulk up our content offerings.

I can't remember how Dave and Neil came to us but their website, WhatsGoingOn.com, provided the perfect, original antidote to the standard travel guides that anyone and everyone could license for the web. With their original take on offbeat events and their unique set of icons indicating "danger," "risk of vomiting" and the like, we loved what they added to our service.

And Dave and Neil were such nice guys, we were really glad to send our traffic their way. It wasn't hard back in those days for Excite to drive a hard bargain with a small content producer -- and we often did -- but there were times when you helped somebody out too, and that's how we felt with Dave and Neil. At least that's how I remember it today and I hope they'd remember it the same way.

Of course many web 1.0 dreams did not work out, and WhatsGoingOn.com eventually fizzled out (so did Excite, for that matter). I kept in touch with Dave and Neil only occasionally, usually through some address book update.

Reading his obituary was not a happy way to be reminded again of Dave. But I was glad to realize how he and Neil had ultimately turned their website into a best-selling book that captured the public imagination as much as their website had captured ours more than a decade ago. And reading the tributes to Dave made me realize how many people he had reached, and inspired.

If there's one thing any of us would like to do before we die, it's to inspire others and be remembered for it. Dave pulled that one off. I'm happy for him.