Mapping News

By Erica Naone

A new startup called YourStreet is bringing hyper-local information to its users by collecting news stories and placing them on its map-based interface, down to the nearest street corner. While there have been many companies that combine information and maps, YourStreet is novel in its focus on classifying news by location.

When a user opens the site, it detects her location and shows a map of that area, stuck with pins that represent the locations of news stories, user-generated content called conversations, and people who have added themselves to the map. The user can zoom in or out of the map or look at another location by entering a place name or zip code into a search bar. CEO and founder James Nicholson says that what sets YourStreet apart is its extensive news service: the site collects 30,000 to 40,000 articles a day from more than 10,000 RSS feeds, mostly from community newspapers and blogs. “We’re not relying on the users to provide us with articles,” Nicholson says. The stories featured on the site aren’t of a specific type, and users will find the locations of murders marked alongside the locations of upcoming music shows. Stories featured on the site are teasers, and, if a user clicks to read further, she will be directed back to the source of the information.

Nicholson says that he hopes the broad base of news will provide a foundation upon which the site’s community can be built. The site includes social-networking features, such as the ability to log in, meet neighbors, start conversations, and leave comments to annotate stories. “The basic goal behind YourStreet is to connect you to the information that’s most important to you,” Nicholson says.

The site’s main technological advance lies in its ability to mine geographical information from news stories. Using natural-language-processing algorithms developed in-house, as well as supplementary algorithms provided by the company MetaCarta, the site searches the text of regular news stories for clues about associated locations. The system searches particularly for entities within cities such as hospitals, schools, and sports stadiums, Nicholson says, relying on databases of entities created by the U.S. Geological Survey. YourStreet is currently working on some improvements to the system’s ability to recognize nicknames; for example, it should be able to interpret “GG Bridge,” as many bloggers refer to it, as the Golden Gate Bridge.

Other companies have designed similar but contrasting services. Outside.in, for example, features similar hyper-local news features, but it relies much more on human participation than YourStreet does. Participating bloggers or users add tags to stories to place them in the correct locations, and Outside.in employs a small team of part-time employees to match articles to places by hand. Launched about a year ago, the Outside.in interface is much more focused on information than on maps. According to John Geraci, one of the company’s founders, these features are all purposeful. “Making the map the first thing a user sees is a mistake a lot of mapping sites make,” he says, adding that he thinks the user is only interested in a map once information has drawn her in. Geraci says that Outside.in is built to rely heavily on human intervention, rather than on natural-language search algorithms, because, in his opinion, the algorithms don’t work well enough at this phase, and, with this type of service, stories are only useful if mapped accurately. “When you’re talking about location, there’s a low tolerance for noise,” Geraci says. “We believe you need people, that you always need that discernment.”

The entries for the Boston neighborhood known as Union Square provide some insight into the challenges faced by both YourStreet and Outside.in. YourStreet’s algorithms did filter out all the stories about the famous Union Squares in New York and San Francisco. But there was a story about the Union Square in Somerville, a city located very close to Boston. Outside.in, on the other hand, included only posts that were relevant to Union Square in Boston, but it didn’t provide as broad a range of fresh material as YourStreet did.

Dan Gillmor, director of the Center for Citizen Media, says that companies are still figuring out how to provide hyper-local news properly. “YourStreet’s approach of combining aggregation with content creation seems promising,” he says. However, he notes that YourStreet faces heavy competition from other geographically focused sites, which run the gamut from Google Earth, to the do-it-yourself atlas site Platial, to the local-news service Topix.

Nicholson says that YourStreet will add a few features in the near future. In about a month, the site will launch an algorithm that compiles statistics on which stories are more interesting to users and brings those stories to the top. The site will also launch a widget that bloggers can use to paste information from YourStreet onto their sites. More far-off plans include the launch of a tool kit that developers can use to integrate with YourStreet, and a system that would allow users to classify stories by subject matter. The company plans to make money through targeted advertising.

Source:Technology Review

Search for Tomorrow

By Alison Overholt

It was an advertiser’s worst nightmare. Last summer, the New York Post ran a breathless story about a gruesome murder in which the victim’s body was hacked to pieces, the parts stashed in an old suitcase. Opposite the online version of the story ran an advertisement cheerily touting the benefits of . . . luggage.

The offending ad was served up using Google’s search-marketing technology called AdWords. For the uninitiated, search-engine marketing lets advertisers bid on keywords or phrases. Top bidders then have their ads appear alongside search results whenever a user types in that phrase. Or in this case, the ads run alongside editorial content containing the keywords. Suitcase in the article. Suitcase ad. We have a match.

It was an excruciating goof, emblematic of the tricky juncture where the search-engine marketing industry finds itself today: The dream is to transform the Internet into a sales tool that finally delivers on the promise to generate eminently qualified, targeted, and trackable customer leads that convert quickly into big sales. Marketers that embraced the first generation of these tools have already achieved phenomenal success by targeting ads to consumers seeking products and services on search engines. Now the toolmakers, predominantly Google and Yahoo, want to serve up ads to the rest of the Web — delivering relevant messages not just when buyers come to a search engine already hunting for something, but any time, and any place.

There’s big money at stake in nailing the solution. In an advertising environment that has steadily weakened over the past three years, search marketing has breathed new life into online advertising by showing how powerful it can be when an advertiser catches a shopper’s attention at that perfect moment when she is ready to buy.

Advertisers rewarded the nascent industry by doubling its revenues in 2003 to the tune of $1.9 billion (a figure that is expected to jump again in 2004 to $2.8 billion dollars, says Forrester Research), or nearly one-third of all online advertising spending. And those hefty totals ring up in small increments: Expedia, for example, is the top bidder on Yahoo’s service for “Miami vacation,” paying 83 cents a lead.

Three techniques are emerging that could push online ad revenues even higher: contextual ads, behavioral ads, and local ads. But none of them are slam dunks. In pushing the envelope to make related text ads as ubiquitous as the 30-second TV spot, the search engines and the marketers that use them tap dance along a very fine line between what is helpful and what is obnoxious, what is exciting and what is simply in very poor taste.

Keeping Things in Context

“We advertise on TV and radio,” says Steve Hartmann, the director of online marketing for eHarmony, an online dating service. “But we discovered that a lot of people only vaguely remember our name. Maybe they’d just catch the word ‘harmony’ and that we were a dating service. When they typed that in at a search site, that’s when they’d find us.” Hartmann discovered that close to 70% of eHarmony’s new customers from online advertising channels arrive through search-based ads.

Seeking to go to the next level, Hartmann bought contextual ads from both Google and Overture (owned by Yahoo). He did so because the ability to place eHarmony ads where serious-minded singles spend time on the Web — say reading an article on CNN’s Web site about a scientific discovery on the brain chemistry of love — sounded ideal. Google and Overture dominate search marketing and offer contextual ads through partners such as AOL, MSN, CNN.com, and the Web sites of The New York Times and The Washington Post.

But contextual ads don’t seem to target consumers as effectively as pure search ads. “We’re definitely not seeing the traffic from newspaper sites that we see with search engines,” Hartmann says.

There are many reasons for this lower success rate. Many publishers are leery of these ads for fear of blurring the lines between editorial and advertising, so their reach is limited. The bugs in the system also remain, ergo the very targeted but terribly unfortunate luggage ad. These incidents expose the flaw in the logic that purchasing a given keyword can guarantee relevancy to the material next to the ad.

Overture has responded by instituting an editorial review process. “We needed human influence to deal with those words that are ambiguous in meaning,” says David Karnstedt, senior vice president and general manager of direct business at Overture. Google, meanwhile, believes its technology can fix any editorial problems.

Perhaps more problematic to contextual marketing’s prospects is the very nature of the Internet experience. When someone types the name of a product or service into a search engine, chances are he wants to find it and buy it. When that same person surfs a news or content site, he may just be catching up on the day’s events. “They’re not in shopping mode, they’re in browsing mode,” says Danny Sullivan, an analyst who runs SearchEngineWatch.com. And there’s not any fine-tuning that can be done to fix that.

Fresh Ads for Good Behavior

Because of the inherent flaws in contextual marketing online, the stakes are even higher for the online advertising industry’s next big play: behavioral marketing. This technique promises to serve up ads based on a Web surfer’s habits and mind-set. “You’re targeting the person, not the content,” says Forrester analyst Charlene Li. It’s far more ambitious — and more advertiser-friendly — than contextual marketing. “You could never target intent before, in any medium,” says Li, capturing what’s exciting about the new method. “You just put your message out there around content that seemed likely to attract the right people and hoped it worked.”

To deliver on that opportunity is a daunting technological task. It requires analyzing the surfing habits of millions of users in order to define segments based on what users are reading, how often they read it, and what products they search for. One of the first entrants in the market is Kanoodle, a small New York-based search-marketing firm. It has joined with online advertising network 24/7 Real Media to launch BehaviorTarget, a behavioral search service. “We’ve created a taxonomy of 486 topics that we’ll roll out slowly as we reach critical mass with each audience segment,” explains David Hill, president of media solutions at 24/7 Real Media. “If you visit sports sites several times a month and fashion sites several times a month, you might fall within our ‘active women’ behavioral segment.” Unless you’re a guy who likes sports and fashion, or works in one of those industries.

Though a potential gold mine for advertisers, data collection on this scale — and at this level of detail — is, for many consumers, a little scary. It raises a host of privacy issues as well as questions about who retains the rights to or ownership of particular kinds of information. Lance Podell, president of Kanoodle, is quick to defend his company’s concern for privacy. “I’m tracking a cookie, not you, and you will be able to opt out at any time. That cookie doesn’t know your address or your Social Security number, it just knows your behavior. IP addresses aren’t being collected,” he says.

Lycos is one of the first companies to sign up for BehaviorTarget. Says Steve Gross, Lycos’s vice president of marketing, “We need different and creative ways of making money off of our user base. We have a unique user base in the tens of millions, but our ability to understand that base was limited.” Consider a group of users who have been defined as car enthusiasts because they visit automotive sites such as Edmunds.com and NASCAR.com. Gross is eager to sell ads aimed at that group and deliver marketing messages to them even when they’re visiting a technology blog. “Television advertisers would love to understand composition this well, to identify audiences and what they want, beyond just age and sex, which is how they sell ads now,” says Hill.

So although it may seem simplistic to get lumped into a bucket because of a few Web-surfing habits, it is better information, as Gross notes, than most advertisers have to work with. Yet even its boosters acknowledge that behavioral marketing is a work in progress. “There are things we’re still working out,” admits Hill. “For example, somebody goes to a series of auto sites, but how many times must they visit before they become part of that segment? Our plan is to use our software to watch their behavior over the course of time, then do branding studies to hopefully get the mix and the formula right.” If that works, and if the privacy guardians don’t howl too loudly, this may be the method with the best chance of taking off.

Think Local, Act Local

If the search engines have learned anything from their original keyword-advertising system, it’s that when people type a product name into the search window, they want to buy that product now. Chances are, though, that users see ads from online retailers who can ship it within the week, not the minute. How can you feed immediate needs, such as where’s the closest party-goods supply store that’s open late? Hit ‘em where they live.

In March 2004, Google launched a beta site called Local.google.com that lets users search by zip code or local address. Thirty percent of all advertising is purchased in local markets, and the Yellow Pages ad market is estimated at $14 billion per year — a stash that Google would love to break into. So far, the company has focused on importing Yellow Pages data into its local engine and getting the location algorithms right, without serving up additional ads alongside search results. The big question will be whether the advertisers arrive when local goes live.

Seth Berkowitz, vice president of business development at the car-buying information site Edmunds.com, says no thanks. In theory, he’s a likely customer, since he sells customer leads to local auto dealers. But he’s focusing on buying location-specific keywords through traditional search-marketing products. “I love it when people type in ‘Los Angeles Honda Dealers’ because 20% of those people execute on those ads,” he says.

“To make local search work,” says Jupiter research analyst Gary Stein, “you have to get all the plumbers and dentists on there, then you have to get people to shift over to thinking about using Google to find plumbers.” Don’t expect local search to be a significant moneymaker for anyone until national retailers hop on board to let you know where the closest Home Depot is and whether they have that sander in stock you’re itching to buy.

It’s obviously too early to pass judgment on any of these emerging online marketing techniques, although each has significant flaws. Remember that GoTo.com, the precursor to Overture, was laughed at in its early days for selling simple keywords on a search engine. No matter which, if any, succeed, what’s clear is that these models for segmenting, targeting, and reaching customers are forever changing the way companies think about advertising as a sales tool. When you can select your target customer by geography, actual (not projected) buying patterns, and browsing behaviors — and track the return on investment of each ad by following a customer from the time she is targeted to the time she makes the purchase — it’s hard to go back to fuzzy math and schmoozy ad salespeople. The technocrats will have the last laugh, even if it’s at the marketers’ expense.

Source:

Wikio – A European user-managed news search engine on course to become the continent’s next high-tech blockbuster

By Sarah Wachter

Wikio is the latest internet start-up from Frenchman Pierre Chappaz, who is best known for selling Kelkoo, a European online price comparison service, to Yahoo! for €475m. Wikio is a user-managed news search engine that allows people to create their own pages of news, blogs and podcasts subdivided into a dozen categories, from health to fine arts. Users can vote for favourite items, or default to the most-accessed news and blogs provided by other subscribers. Wikinauts also have access to the site’s shopping search engine; to buy a camera, for example, a user can call up product reviews for comparable brands and find the lowest prices from a list of stores closest to home.

While custom news services abound in the US, Europe is an open playing field. Wikio covers more than 10,000 reliable sources for France, for example, while Google News covers only around 500. “There is nothing comparable on a European level, aside from a few small sites,” Chappaz notes.

Wikio launched in mid-2006 after Chappaz conducted the largest “beta” test in Europe, which involved 28,000 users registering their feedback online. Today, the site draws 2.3 million visitors a month, half in France and half outside. In its first year, the company aims to build its user base to three million, but Chappaz, who is the executive chairman, says the site has the potential to attract an audience of more than 10 million.

The company aims to turn a profit by using the “cost per click” business model of Google, where Wikio will receive 10 cents per click for every user who visits a vendor’s site. The shopping service is currently available in France, Italy and Spain, and will begin soon in Germany. “We’re not obsessed by sales,” says Chappaz, who put €1m of his own funds as seed money into the venture. Traffic has grown solely by word of mouth, and some analysts claim Wikio is the most interesting European start-up since Skype.

Unlike the Skype founders, though, Chappaz is no computer geek. Equipped with just a general studies degree, he stumbled into the high-tech arena when he was hired to create the permanent computer exhibit for Cité des Sciences, located inside Paris’s Parc de la Villette. He then spent a decade in various marketing posts for high-tech firms, including as marketing director, western Europe for IBM, and later struck out on his own with a communications boutique.

The company is truly a “2.0”-style undertaking: its technical staff of 30 hails from various parts of France and Switzerland (Chappaz resides in Geneva, where the company is headquartered). There is no office space, and staff members “meet” once or twice a week in cyberspace. CEO Bertrand Peretra is the former managing director of French shareware outfit Planète Soft.

Many users of Chappaz’s service may be surprised to learn that Wikio has absolutely no connection to the creators of Wikipedia, the free-content encyclopedia written collaboratively by contributors around the world. Chappaz insists he chose the five-letter word because it is short, simple and conveys the meaning “tell me quickly”. Actually, Wikio doesn’t stray too far from the original meaning of wiki – the Hawaiian word for “fast”.

First month of trading June 2006
2007 predicted sales €100,000
Start-up money €1m in seed money; €4m in venture capital
Product range Customised online news, blogs, podcasts, videos and shopping
Marketing spend Nothing yet

Source:CNBC European Business

The Semantic Web Goes Mainstream

By Kate Greene

During the course of a day, the average person who works at a desk deals with torrents of information coming from many sources: e-mails, Web searches, calendars, notes, spreadsheets, documents, and presentations. Sorting through the information is tough, and for the most part, it’s done in an ad hoc manner. But in the next couple of months, there may be a better way. Radar Networks, based in San Francisco, is releasing a free Web-based tool, called Twine, that it hopes will change the way people organize their information.

Twine is a website where people can dump information that’s important to them, from strings of e-mails to YouTube videos. Or, if a user prefers, Twine can automatically collect all the Web pages she visited, e-mails she sent and received, and so on. Once Twine has some information, it starts to analyze it and automatically sort it into categories that include the people involved, concepts discussed, and places, organizations, and companies. This way, when a user is searching for something, she can have quick access to related information about it. Twine also uses elements of social networking so that a user has access to information collected by others in her network. All this creates a sort of “collective intelligence,” says Nova Spivack, CEO and founder of Radar Networks.

Spivack says that Twine leverages decades’ worth of work done in esoteric research fields such as machine learning and natural-language processing. “Twine helps you become smarter, more productive, and collaborate, share, and organize in a smarter way,” he says.

The idea underlying Twine’s function and technologies is known as the Semantic Web, a concept, long discussed in research circles, that can be described as a sort of smart network of information in which data is tagged, sorted, and searchable. Spivack says that his company’s tool is “one of the first mainstream applications of the Semantic Web.”

To be sure, Twine is not the first Semantic Web product or tool. For years, companies have used database software that automatically puts information in certain categories and searches for it accordingly, with varying degrees of accuracy. Even today’s simple blogging tools have elements of the Semantic Web: people add tags to their posts, thereby creating useful metadata that can be searched. In addition, del.icio.us, the online bookmarking site where people add tags to links of saved Web pages, is an example of giving structure to previously unstructured data.

Thus, a hard-and-fast definition of the Semantic Web can be elusive, says Clay Shirky, professor in the Interactive Telecommunications Program at New York University. “There’s a range you’re playing in,” he says. At its most basic, says Shirky, the Semantic Web is a campaign to tag information with extra metadata that makes it easier to search. At the upper limit, he says, it is about “waiting for machines to become devastatingly intelligent.”

According to Spivack, Twine can be called a Semantic Web application because the software was written with Semantic Web standards, established by the World Wide Web Consortium (W3C), in mind. This means that its design follows certain conventions, and because of this, Twine is compatible with other Semantic Web applications, and its information can be shared across applications.

In addition to employing the Semantic Web standards, Twine is also using extremely advanced machine learning and natural-language processing algorithms that give it capabilities beyond anything that relies on manual tagging. The tool uses a combination of natural-language algorithms to automatically extract key concepts from collections of text, essentially automatically tagging them. According to Spivack, these algorithms adroitly handle ambiguous sets of words, determining, for example, whether J.P. Morgan is a person or a company, depending on the context. And Twine can find the subject of a text even if a keyword is never mentioned, he says, by using statistical machine learning to compare the text with data sources such as Wikipedia. “We can determine when a document is about a subject even if the subject isn’t mentioned in the document,” Spivack says. “So we can add new paths and new ways to get to the document” during a search.

Another technique that Twine uses is graph analysis. This idea, explains Spivack, is similar to the thinking behind the “social graph” that Mark Zuckerberg, the founder of Facebook, extols: connections between people exist in the real world, and online social-networking tools simply collect those connections and make them visible. In the same way, Spivack says, Twine helps make the connections between people and their information more accessible. When data is tagged, it essentially becomes a node in a network. The connections that each node has to other nodes (which could be other data, people, places, organizations, projects, events, et cetera) depend on their tags and the statistical relevance they have to the tags of other nodes. This is how Twine determines relevance when a person searches through his or her information. The farther away a node is, the less relevant it is to a user’s search.

It’s still too early to know if Twine will be successful with consumers, says Tony Shaw, president of Semantic Universe, an organization committed to raising awareness of semantic technologies in business and consumer settings. Success will not simply depend on making the technology work, but also on managing people’s expectations of the technology, he says. “It’s about fighting the hype problem.”

Twine will open up to invited users starting today. In the next couple of months, says Spivack, the tool will accept more users, and by the summer of 2008, it should be completely open. In addition, Twine will have an open platform that allows software developers to build tools on top of it, such as visualization software so that users can see their information in different ways. “But first, we’re starting with the basics,” Spivack says.

Source:Technology Review

Israeli Startup Sports Events 365 – The Google For Sports Events

Sports Events 365 Ltd. is a start up company, and the owner of www.sportsevents365.com, a unique Internet search engine for upcoming sports events, worldwide. Our web site enables the users to search for major sports events by location. It is a powerful tool for tourists and travelers who wish to add watching live sports to their trip. After choosing a sports event to his (or her) liking, the traveler can book a hotel or a flight and even purchase tickets for every match on our database. It is a one-stop tour-planning device that a growing number of people find useful to their needs.
They offer information on approx. 20,000 sports events worldwide (on annual basis), that will take place in 700 cities in 100 countries. The site display:

1: Football – first division football matches in 16 European countries, Champions
League, UEFA Cup and EURO 2008 qualifications – all over Europe.
2: Tennis – Grand Slam, Masters, ATP, WTA Davis and Federation cup.
3: Motor Sports – Formula 1, Nascar, MotoGP.
4: American Sports – Football, Baseball and Hockey.
5: Cricket – World cup, Ashes and more.
6: Rugby – World cup, Heineken cup, Tri Nations, Six Nations and more.
7: Basketball – NBA and first division matches in 6 European countries, Euroleague,
ULEB Cup– all over Europe.

Users of www.sportsevents365.com can search for sports events at a specific destination (search by country, search by city) and receive a full list of sports events for that destination as well as for nearby cities, up to a distance of 150Km. our database contain additional information such as the exact date and time and the exact location of the event including means of transportation, maps and venue charts.

Sports Events 365 has now two fully operative search engines for upcoming sports events. The sites are used regularly by thousands of people as part of their tour planning process. Work on turning www.sportsevents365.com into a multi-lingual site is in progress and a few White Label agreements were signed with leading bodies in the tourism industry, from several countries, all over the world.

Source:”a href=”http://www.israel-on-blog.com/israeli-startup-sports-events-365-the-google-for-sports-events”>Israel-on-blog.com

Investing: The Net Wisdom of Peers

by David Bogoslaw

Two years ago, Eric Wolff, 25, was handed the reins of a $5 million family trust after his family saw how badly it had been managed by a full-service brokerage firm. For the four months ended Oct. 31, the $1 million in accounts that he directly oversees has returned 13%, something he attributes to advice he received on Covestor.com, an online investing community, and top-notch research he’s found at other financial Web sites such as Valueinvestorsclub.com and Seekingalpha.com.

People saving for retirement are equally inspired to find the best investment advice. Increasingly, they’re less willing to trust brokers who they believe are motivated by greed and tend to put their own interests ahead of their clients, according to a 2004 study commissioned by the Securities Industry Assn.

Burned Retiree Tries His Hand

Bob Craft, 64, a retired pilot for Delta Air Lines, joined online investing community ValueForum.com in early 2004 after losing 82% of his defined pension when Delta filed for bankruptcy. At the time, his assets were invested in mutual funds. Nervous about his retirement savings, he split his portfolio three ways—between Fidelity Investments, Bank of America, and his own trading account—to compare the investment results.

Craft’s brokers told him that over the long run, he wouldn’t be able to beat their performance because they invested for a living. At the end of the first year, his account had increased 30%, while the money managed by the brokerage firms was up just under 8%. His returns far outpaced those of his brokers in the second year as well. “The highest return every year has been by me, so I just moved all my money to me,” he said, adding that he couldn’t afford his brokers’ low gains.

Craft now manages 100% of his portfolio, spending about six hours a day reading up on stocks he hears about from fellow members at ValueForum and placing orders through Fidelity’s ActiveTraderPro. Year-to-date, his portfolio is up 38.2%, he says, and he no longer worries about his retirement nest egg.

Communities’ Key Asset: Transparency

As more individual investors like Wolff and Craft take control of researching and buying stocks, options, exchange-traded funds, and mutual funds online, they’re joining a new generation of online investing communities to help them reach their goals. So instead of following recommendations from full-service brokers or advisers, for investment advice they’re turning to people who are putting their own money on the line. The online investing communities take the old forums and message boards to the next level by offering tools to verify the track records of and rank up-and-coming investing gurus.

Unlike the social networking platforms TradeKing.com and Zecco.com, these new investing sites don’t execute trades. What they’re selling is the ability to pull in and aggregate trading data from members’ existing brokerage accounts so they can track each person’s total portfolio.

Tracking capability is important because these communities aim to level the playing field, paving the way for a new type of investment adviser, one who’s more credible because you know what stocks he owns. Full-service brokerages and other incumbents are afraid of this, since nontransparency protects their profit margins, says Rikki Tahta, chief executive of New York-based Covestor.

What Investors Want

Before launching publicly in mid-September, CakeFinancial.com, a San Francisco-based online investing community, conducted several focus groups to see what online investors were really seeking. Steven Carpenter, Cake’s founder, said investors want to find peers with the same basic outlook or trading strategy, but better performance results. Cake also learned they want advocacy—the assurance that the customer’s best interests, not the adviser’s, come first—more than education.

Cake tracks stocks, ETFs, and mutual funds and plans to add options and fixed-income trades in the future. While all the trading activity that Cake imports can be measured, members don’t have to reveal their net worth, the amount they’re investing, or the number of shares they’re trading. Eliminating the sensitive information allows users to communicate freely with each other, says Carpenter.

Cake’s service is free, but once membership has grown to at least 10,000, Carpenter says he’ll create low-cost, customized asset-management services based on the aggregated performance metrics of Cake’s members. The idea is to take aggregated performance data and overlay it on a member’s portfolio to show what stocks he should sell and which ones he should hold on to. A premium service would show members the asset allocations of their top 10 model investors and notify them via e-mail whenever one of these people buys or sells a stock, or even adds a stock to his watch list.

Fund Management Insight

For Covestor, the imperatives are verification and evening out the playing field for retail investors. By giving them the same tools that a hedge fund manager has, such as the analytics that help them understand the risk they take vs. the returns they get, and how those compare with their peers, benchmarks, and professionals, Tahta hopes to “burst open the fund management world.”

Covestor is currently a free service, but plans to go to a compensation business model sometime in 2008, under which members would pay a fee to follow top performers’ portfolios, and Covestor would collect a small percentage of the fees charged by its top performers.

When ValueForum launched in late 2003, it offered a flat fee for lifetime membership to the first 200 people to sign up for the service, and within six weeks it had sold out. Through those early adopters telling friends, the community has grown to 1,400 members—most of them age 55 and older and retired with an average portfolio of $1 million, says co-founder and Chief Operating Officer Adam Menzel. Members pay an annual fee of $220 to use the site.

ValueForum doesn’t import and track members’ investment accounts, but it gives members the chance to gauge each other’s performance in other ways, such as quarterly contests where each person chooses three stocks they think will rise during that three-month period.

Growth in Self-Directed Portfolios

Another reason that investors are looking for new ways to exchange financial advice is that broker-advisers are showing less interest in handling portfolios valued under $1 million. That leaves 15 million U.S. households with assets between $100,000 and $1 million looking elsewhere for investing advice. These households’ assets total $4.5 trillion, or 35% of U.S. retail assets, most of which is being serviced by the mutual fund industry, according to a study by Forrester Research published in March, 2006.

Institutional investors are also getting involved in online investing communities. Marketocracy.com, a San Mateo (Calif.)-based investment company that launched in July, 2000, uses a social network to generate the research that informs its funds’ investment decisions.

Marketocracy’s founders, Ken Kam and Mark Taguchi, opted for an alternative to Wall Street research based on what they learned while co-managing a top-rated technology fund at Firsthand Capital Management in the late 1990s. Kam, who had previously worked in the medical devices industry and was running the fund’s health-care/medical portion, found that the best ideas about a company and its business prospects came from people working in that particular industry, not from Wall Street analysts and brokers.

“It’s a process of asking the right questions of the right people,” says Kam. “People on Wall Street aren’t the right people because they rarely have the experience to ask the right questions.”

Kam and Taguchi believe it takes at least five years of tracking a person’s trading decisions to be able to discern their skill level. But after a year and a half, they felt confident enough in the collective wisdom of a select group to pick the top 100 out of about 40,000 members to serve as model portfolio managers for the mutual fund they set up. Six years later, the Marketocracy Masters 100 Fund has roughly $45 million under management and, since inception, has returned 92.42%, compared with a 53.37% return by the Standard & Poor’s 500-stock index, including dividends, over the same period.

Wisdom of Crowds vs. the Individual

One bone of contention among the next-generation investing communities is whether the financial rewards of following a single individual match those of tapping into the collective wisdom of the crowd. Cake believes in taking what seem to be the best practices among groups of like-minded investors and showing members how they compare to others who are doing better than they are, both as individuals and in the aggregate, says Carpenter. It’s not a herd mentality that Cake enables members to tap into, but the collective wisdom of the few who resemble them and consistently outperform the markets over time, Carpenter says.

To identify such model investors, Cake has a feature that gathers up to 10 years of back data from the trading accounts members have opened at 11 of the top brokerage firms. Data extending over that long a time span are more convincing than the three months’ worth of back data that most other sites import, Carpenter says.

For Covestor’s Tahta, it’s the idiosyncratic thinking of individuals with insights into particular sectors that’s paramount. He cites one member, a doctor in Wisconsin, who has a unique understanding of relative strengths and weaknesses among medical equipment makers. Given all the factors that inform investment decisions, such as goals and risk tolerance, he believes it’s a waste to limit this information to a single investor’s account when it could help others with the same basic approach.

Marketocracy believes it’s beneficial to be able to access the group’s aggregate wisdom and that of individuals at different times for different reasons. Their model portfolio managers, a rotating group of the top 100 performers, tend to know the right questions to ask, based on their trading experience in certain sectors. But they often turn out not to be the people with the right answers, says Kam.

“Through our forums, increasingly what we’re finding is that you want to let everybody post [comments], because the person who has the answer might have a poor portfolio overall but may have the key piece of information that will make a great investor have conviction in the stock idea,” he says.

High-Quality Discussion

It’s likely that even without the functional bells and whistles, online communities would attract investors based solely on the quality of the discussions—a welcome refuge from the junk many say is clogging the message boards on financial portals at Yahoo.com and AOL.com. ValueForum even allows members to vote to dispatch off-topic posts to a separate discussion board called the “Coffee Shop” so that the main discussion threads stay focused on investing matters.

Online investing communities have also begun to extend their reach beyond the virtual into the physical world. Take InvestFest, an annual conference organized for and by ValueForum members. Now in its third year, the conference offers presentations not only by members who specialize in certain investing topics, but also by industry professionals such as investment newsletter editors and occasionally a company chief financial officer. Cake is also envisioning local investor cocktail parties around the country in the future.

Many people tout the Internet, and message boards in particular, as tools that are democratizing the flow of information. But for Kam and Taguchi, research by social network is more about meritocracy than democracy. It’s about weighting people’s voices by their track records and giving commensurate attention to the most talented. Says Kam: “Other social networking sites looking to make a play in investing are interesting and share the same goals as us, but it’s going to be years before they have anything substantial to prove to investors that they can add value.”

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Investing: The Net Wisdom of Peers

By Deborah Perelman
Historically, recruiting has not been a particularly transparent process. Organizations looking to hire put a job description out on a Web board such as Monster, CareerBuilder or Dice, and candidates apply on that limited information alone. The vast majority are rejected without ever knowing why. “In effect, corporations are basically screening people out. Candidates don’t feel like they’re being recruited into organizations, or being made to feel wanted,” Zach Thomas, an analyst with Forrester Research, told eWEEK.Though Web 1.0 recruiting technologies such as big job boards and vendor-powered ATS (application tracking systems) on corporate career sites have been effective in increasing efficiency and driving down recruiting costs, in the Web 2.0 world, candidates want more texture in the recruiting process—transparency, unedited content, answers to user-submitted questions and communication that is not only top-down. “It makes the whole process a lot more transparent. It puts the community in control of the information out there, versus the traditional ‘here is the position and we will tell you what it is all about,’ where the candidate can’t ask questions or see for themselves,” Thomas said.Organizations that limit their recruiting efforts to outdated processes will lose out in the long run, Thomas said, as a younger generation of job seekers wants more transparency in the recruiting process. Furthermore, the passive majority of candidates—those who may not even know they are looking until presented with the right offer—are increasingly “out there” in social networks but are not being approached.The answer is for organizations to start taking advantage of social computing, something colleges have long done to meet students where they are, but that has yet to move into corporate culture.

“I get a lot of questions from customers about how to engage with this new work force and what they’re looking for. There’s a lot of room for innovation out there, and innovation tends to start in the consumer market and move into the corporate one,” Thomas said.

The profile of those who use social computing speaks for itself. Forrester found in an Oct. 25 report that the biggest users of social technologies were highly paid professionals, well-educated individuals, and new entrants to the work force. The first group was the most active but also the hardest to recruit. In the latter group—new entrants—70 percent of Generation Y were found to be engaged in social networks and are expected to replace today’s business leaders at a relatively younger age.

“We are also in an environment where people are not working for GE for 25 years and then retiring, but switching jobs at a rapid pace. Learning experiences are very important to them, as is the ability to immediately contribute to the organization and not be weighed down by bureaucratic processes,” Thomas said.

Organizations often don’t know how or where to start using social technologies to recruit. Some may fear the level of transparency that accompanies a two-way conversation, and others have internal policies that prevent the use of social networks.

“I tell organizations to start doing this to the degree they are comfortable, and as they see the results, get it more and more ingrained in their culture,” Thomas said. “But if you express your corporate culture to be something it is not, you’ll get hung.”

While recruiters tend to agree that social technologies can be useful in locating professionals and making an initial contact, most caution against relying on them too heavily.

“Social networking sites and tools represent just one early step in a company’s overall hiring and recruiting process,” John Estes, vice president of Robert Half Technology, in Menlo Park, Calif., told eWEEK.

It still takes recruiters and hiring managers a lot of time to bring someone on board after that initial contact is made.

“There is no substitute for a real-life connection with a job seeker,” said Estes.

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Software licensing costs set to fall

By Andy McCue

Software licensing costs are set to fall over the next decade as IT industry trends converge to give buyers more bargaining power.

Analyst Gartner predicts vendors will find themselves increasingly challenged as IT departments look to reduce software costs as they have done with hardware and services.

In a research note Gartner VP William Snyder said: “Up until now the unique nature of the software market has meant that buyers had very little negotiating power after the initial purchase of a software licence. We expect those dynamics to change considerably over the next five to 10 years giving CIOs and software procurement officers more bargaining power while potentially reducing software vendor profit margins.”

Gartner has identified seven major trends converging to change software delivery models, reduce dependence on the giant application vendors and force prices down.

These include business process outsourcing; software as a service (SaaS); low-cost development environments, such as China and India, combined with modular architectures and service-oriented architectures; the emergence of third-party software maintenance and support; growing interest in open source; the rise of Chinese software companies; and the expansion of the Brazilian, Chinese and Indian markets.

Although Gartner says open source won’t topple the likes of IBM and Microsoft the analyst believes it will put pressure on traditional software margin structures, particularly in areas such as servers, operating systems, development tools and database technologies.

Gartner also predicts a quarter of all new business software will be delivered by SaaS by 2011.

Synder said buyers need to realise that the pendulum is beginning to swing in their favour with an increasing number of alternatives in the software market.

He said: “We would advise IT organisations to use BPO and open source alternatives to improve their negotiating power with software suppliers as well as employing the emergence of third-party vendors as a means to reduce higher maintenance fees on older versions of software. Costing out the possibility of using offshore skills to build application functionality as web services will also help negotiations with vendors.”

Source:Silicon.com

How to Organize the Web

By Erica Naone

There are dozens of online tools for organizing information: wikis, social-bookmarking sites such as del.icio.us, and RSS feed readers, among other things. Researchers at Microsoft’s Live Labs, an incubator for new Internet-related technologies founded in 2006, hope that a tool called Listas will distinguish itself by being more general than all the others. Listas launched at the recent Web 2.0 Summit in San Francisco and is available for preview online.

Listas is, put simply, about making lists. Users can make their own lists, by either typing in original content or taking clippings from Web pages, or they can read or edit public lists. The lists can include almost any type of content, including images and videos. They can be designated either public or private, and they can be tagged to make them easier to search.

Like other social-networking sites, Listas also allows users to acknowledge each other as “friends.” A user’s lists, lists made by his or her friends, and public lists that the user has linked to are all collected on a single page on the Listas site. Downloading and installing the optional Listas toolbar, which is built to work with Internet Explorer, makes it easy to grab items from other Web pages and add them to lists. Those items might include short bits of text, URLs, or blog posts or product listings with their original structure intact.

“Lists are a fundamental data type across the Web,” says Live Labs product manager Alex Daley. “Whether you look at task managers, blogs, RSS, shopping lists, or wish lists, they share a simple, linear list structure. A great deal of the information we produce and consume across the Web is in this structure.” Similarly, says Daley, the virtue of Listas is its generality: it allows users to organize data in whatever way they want and begin to tease out trends.

Gary Flake, founder and director of Live Labs, says that Listas was born from his sense that his information online was no longer under his control. “There was just an awareness I had that my data was spread out everywhere,” he says, noting that the more involved a person is with online communities, the more severe this problem can be. By using the Listas toolbar, a person can aggregate all of his or her contributions to online communities in a single dashboard, annotate them, and share them with others. Although a similar effect could be achieved without the toolbar, Flake says that he thinks the system will feel incomplete without the ease that the toolbar contributes to the process.

Other companies have tried to address the problem of organizing data with more specific tools. ZingLists, for example, shares some features with Listas, including the ability to make lists private or public. It is intended, however, as a productivity tool, according to its developer, Steve Madsen. The lists on ZingLists take the more traditional form of to-do lists, while Listas’s lists can behave like to-do lists, blogs, or RSS feeds, depending on how users construct them.

IBM’s Lotus Connections, a business product, includes a bookmarking system called Dogear that organizes information with the participation of a networked community. When a user bookmarks a site, up pop tags that other users have added to it, says product manager Suzanne Minassian. Dogear also shows how many others have bookmarked the same site and provides links that can lead users to those people. The result, Minassian says, is that users can find people with shared interests and connect to those people through the system.

Listas’s developers are still working on increasing community involvement with the site, Flake says. “With all community sites, there’s a bit of a chicken-and-egg dilemma,” he says, noting that a strong community attracts more community activity. Live Labs’ technology previews are meant to be even more raw than most products’ early releases, Daley says, and are very much works in progress. “We try to release early and release often,” he says. As a result, many changes to Listas are on the way.

Some of those changes will be aimed at increasing the usability of the interface. For instance, using the toolbar to clip information could be a more streamlined process. Other changes will advance the philosophy of the service, such as Flake’s plan to change the way comments are structured. With most of today’s blogs, Flake says, if you post a comment, that information no longer belongs to you: you often can’t edit it or delete it, and it’s hosted on someone else’s page. Flake says that he plans to give Listas a system that structures comments as simply another list–one belonging to the person posting the comments.

If Listas does well, Microsoft may integrate it with products or develop it as a product, but for now, the researchers say, there is no effort to make it profitable. “Listas is at the beginning of the experiment,” Daley says.

Source:Technology Review

Social Networking with the Elite

by Douglas MacMillan and Paula Lehman

Are you on the digital A-list? It’s no longer enough to get invited to exclusive conferences or be asked to join professional organizations—many movers and shakers are taking their hobnobbing online, where a new crop of social networks aim to keep out the riff-raff by demanding credentials at the virtual door. As MySpace, LinkedIn, and Facebook have expanded to people of all ages, classes, and affiliations, there’s a backlash against the open culture of social networking. Walls are going up. The scene is more velvet-roped club, not open-mic night. These three gated sites are among those with tough membership requirements and, presumably, more elite social networking.

REUTERS SPACE

In October, British news giant Reuters launched a private online networking community for hedge fund managers, traders, and analysts. Dubbed Reuters Space (space.reuters.com), the industry-specific site leverages its own pool of proprietary data on thousands of companies to verify the employment status of applicants, be they futures traders or chief investment officers. Members each have a feeds page, where they collect news from Reuters and other sources tailored to their financial specialty. Each one also has a profile page—a personal blog where they post notes to colleagues and close industry contacts and set privacy controls to determine who has access to their contact information. The site has potential for companywide rollouts: For example, London-based Schroders Investment Management, a global asset management firm, is planning to adopt the platform to give more of a sense of community to its employees in 24 offices around the world.

INMOBILE.ORG

Launched in April, 2006, INmobile.org is a network of more than 900 executives who work in or close to the wireless industry. To qualify, you have to be at least a director at a large company, a vice-president at a midsize company, or in the C-suite of a startup. So far, members include executives from carriers such as Verizon Wireless, content providers such as Walt Disney, and handset makers such as Nokia. Arthur Goikhman and Stephen Dacek, co-founders of New York mobile-games startup Cellufun, joined in February. They were able to make connections with Yahoo! on the site and struck a deal with the search giant to place ads with Cellufun’s games. “I’m glad it’s not a free-for-all,” says Dacek. “It really does make it a lot easier to network.”

DIAMOND LOUNGE

This invitation-only social and business network, making its debut this month, relies on a selection committee elected by all members on the site. The committee has already chosen 100 members out of more than 7,000 applications that came in before Diamond Lounge (diamondlounge.com) went live. Members, who pay a monthly $60 fee, can hail from any industry and have two identities: a social profile in “the Lounge” and a business profile in “the Boardroom.” For the social profile, members set limits on who can view them based on such characteristics as age, physical build, and gender; for the boardroom they provide their income, industry, and job title. They can exchange gifts, much like Facebook, where members buy icons of cakes and teddy bears, for example—but Diamond Lounge gifts include real Gucci bags or tickets to business events.

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