Sharp drops in online advertising predicted

Submitted by acohill on Mon, 01/05/2009 - 08:53.

Ars Technical has an article that reviews several signals that suggest the boomtown days of online advertising are about to come to an end. The sharp drop in the sales of high end electronics is bringing a related drop in advertising for those devices, but the article suggests the bigger driver in online ads is a maturing of the marketplace, where businesses are finally figuring out just what an online ad is worth with respect to click throughs and sales. Businesses that are not getting results with their online advertising are cutting back, and that drives prices down. The article makes a particularly interesting point about the difference in value between a TV show or a movie and a Web page--the Web page has significantly less value because it occupies the viewers attention for a much shorter period of time and also has many outbound links. A TV show or movie, by contract, has the viewer's attention for a more predictable (and usually longer) period of time. That makes TV and movie ads more valuable.

The year that newspapers died, part two

Submitted by acohill on Wed, 12/31/2008 - 09:16.

2008 will likely be remembered as the year of the tipping point for newspapers. A new study by the Pew Foundation indicates that more people now get their news from the Internet than from newspapers, a sharp increase over 2007. 59% of young people (under 30) use the Internet as their main source of news and information, a figure that has doubled in the past year.

This has important implications for communities and community leaders, who are often more comfortable communicating via press releases and TV news conferences. Younger voters, literally, are not tuning in to traditional news sources. Unless communities find ways to connect with younger citizens regularly and consistently using newer information channels, community decision-making will become more and more difficult.

Revenue share model works for iPhone software

Submitted by acohill on Tue, 12/30/2008 - 09:29.

I have long advocated a revenue share model for community broadband, in which a single community-owned digital infrastructure is made available to private sector providers to deliver services like voice, video, and Internet access to customers. Service providers would pay a share of their revenue to the network to cover the cost of build out and maintenance.

Critics of this approach argue that it is too "risky," and "unproven," although it has worked successfully for years in other countries.

We have a data point that hints that this can work. Apple has used exactly this approach for marketing software for the popular iPhone, and the results have been nothing short of astounding.

Apple made and continues to make a huge investment in the basic infrastructure needed to market and deliver applications to individual iPhones--the iPhone App Store. Software developers can place their software in the store for free, and pay nothing until they make sales. They pay Apple 30% of their revenue, so an application selling for a dollar means Apple gets thirty cents to cover the cost of hosting that application in the App Store.

This approach is exactly the same as an open services broadband network:

• A single owner/manager creates a fully integrated, high performance infrastructure and makes it available to any provider that meets minimum standards. This aggregates a very large marketplace of potential customers.

• Providers have a very low cost of entry into this aggregated marketplace, which preserves business capital and allows companies to spend more on innovative products and services.

• The low cost of market entry attracts business start ups and levels the playing field, with no "big company" advantage and extensive competition as the market matures.

• Extensive competition keeps prices low, a major benefit for customers.

• Extensive competition also encourages innovation, because highly differentiated products or services can support higher prices.

• A single infrastructure owner/manager provides a level of quality and performance beyond the capacity of any individual company to deliver.

The key concept is shared infrastructure. For both broadband networks and the software marketplace, everyone wins, including service providers and software developers, because costs are lower across the board. In the case of the iPhone marketplace, it is much less expensive for a start up developer to place a product in the Apple App Store than to design and fund a stand alone marketing effort. In the case of broadband, it is much less expensive for a service provider to deliver services like Internet access over a shared network, despite increased competition, because the costs are so much lower than building a private (non-shared) network and because the marketplace of potential customers is much larger.

Mobile phones driving social networking, the Web

Submitted by acohill on Tue, 12/23/2008 - 16:11.

A new report says that mobile phones are playing a bigger role in Web use, especially with social networking sites. Users are updating their social network information directly from their cellphones, adding commentary, pictures, and video with their phones. The iPhone and other iPhone competitors have much improved Web browsers, allowing fast and easy access to social networking Web sites, and the integrated cameras make it easy to upload multimedia content.

The death of TV, Part 5

Submitted by acohill on Thu, 12/18/2008 - 16:22.

Here is a first person account from someone who just canceled their cable TV service (but kept the Internet connection). They have what is becoming the same old story, "Who needs it?" Almost any show you want to watch can be watched via a broadband Internet connection, so you can save yourself forty or fifty dollars a month by just skipping TV altogether.

Ad revenue on social networking sites down

Submitted by acohill on Mon, 12/15/2008 - 18:13.

This article discusses falling ad revenue for social networking sites. That probably explains why the ads on FaceBook seem sleazier lately. About every other time I log in, I get pummeled with an ad to meet "sexy singles in Blacksburg," along with what is supposed to be an example of a "sexy single" in a bikini. Bottom fishing ads like this one may be helping to pay the bills on these sites, but as the sleaze factor goes up, more parents are going to start declaring the sites off-limits to their kids.

iPhone beginning to drive shopping

Submitted by acohill on Mon, 12/15/2008 - 18:09.

WalMart is the latest company to build a special iPhone-compatible interface to its Web site. As the iPhone becomes more popular, more Web sites (news sites, particularly) are adding content designed to work well with the iPhone Web browser.

The year that newspapers died

Submitted by acohill on Tue, 12/09/2008 - 10:05.

The New York Times is taking a mortgage on its office building in Manhattan because it can't pay its bills. The LA Times has filed for bankruptcy. Many local papers are quietly going out of business. The newspaper is a venerable icon, but smearing ink on dead trees is, well, dead. Newspapers have failed utterly to adapt to the Internet, largely because they have been unable to distinguish between their core competency and their historical distribution medium. Newspapers have stubbornly clung to the notion that it is their job to throw wads of paper in driveways every morning. They have continued to do that long after there have been better and different ways to distribute the news (e.g. the Internet). Tweaking the font size of headlines, adding color pictures, and reposting news articles to the Web for a day or two before making them disappear are strategies that have only slightly delayed the inevitable.

The core competency of newspapers has always been to filter the news for readers; printing that news on dead trees has simply been the expedient way to distribute their work efforts for the past couple of hundred years. But we still need editors and reporters--in fact, we need them now more than ever--we have more news, from more sources.

The blogosphere has risen to the challenge while the old guard of reporters and editors have simply turned up their noses and pounded their chests about how they are "professionals" and bloggers are just sitting around in their pajamas. To coin a phrase: "Whatever...."

We still need news organizations, and there is plenty of ad money sloshing around online, but the newspaper business has just refused to adapt. It will be interesting to see how the void is filled.

The year that TV died

Submitted by acohill on Tue, 12/09/2008 - 09:53.

2008 may be the year that TV died. Lately, I have begun meeting and hearing about people that have simply disconnected their cable TV service. They can get whatever shows they want to watch off the Internet, fee or free, with less effort and with more convenience. If you are willing to pay a buck or two, you can watch a one hour TV show in forty minutes because the commercials have been removed--is twenty minutes of your time worth $2? Or put another way, if your cable TV bill is $60 per month, you can download and watch 30 hours of TV--without any commercials--for the same amount of money. If you don't mind the commercials, you can download and watch as many hours as you like for the cost of your Internet connection.

TV is dead. Cable TV is dead. Satellite TV is almost dead (satellite will hang a bit longer because in rural areas Internet access is still awful, so many rural residents can't switch to downloading TV shows). NBC has announced big cutbacks in staff and is likely to cut back programming hours as well--because fewer and fewer people have any reason to watch network TV.

The complete transition will likely take another ten years, but at the end of it, TV as we know it will have gone the way of the music store.

More Web 2.0 social networking failures

Submitted by acohill on Fri, 12/05/2008 - 10:46.

With the downturn in the economy, we are likely to see many more weak social networking business ventures fail. It Died is likely to do very well for the next year or so as it documents flops like People Connection, Flip.com, and Pownce. It's like the remake of an old horror movie--The Return of the Dot.Com Swamp Thing.

As I have said many times before, the fact that you can mash up Twitter, file sharing, and instant messaging (the Pownce strategy) does not mean you should, or that there will be a market for it. Social networking tools and sites have a place in the digital world, but there are so many that we can make use of at any given time. For the time being, FaceBook and MySpace have probably won.