Could Google and Microsoft’s online advertising model change the pricing of all Web services

February 20, 2008

Perhaps this micropayment model is also the future of Web services or software as a service (Saas). Soon, companies like and Qualys could be offering their on-demand services with the same pay-as-you-go pricing as Google charges for sponsored links. “There’s a growing demand of the businesses and enterprise to be treated as a customer,” says Yisrael Dancziger, CEO and president of Digital Fuel, a company that makes software specifically for measuring SaaS utilization.

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Meet the Googlers

February 17, 2008

Google is different, even on a list of distinctive companies. But its employees still type their email one letter at a time. We may not understand precisely how Google’s algorithms work, but we can understand how the people at Google do their work. Here, more than a dozen describe what life is like at a place where no goal is too audacious, agility means more than power, and even cafeteria food represents an opportunity to change the world.

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M&A: Who buys Who?

February 16, 2008

Buyouts have always been the primary exit strategy for high-tech startups and the tech giants that can make them happen seem to have both the wherewithal and the appetite. Microsoft’s CEO plans to buy 20 companies a year for the next half-decade. Google has snapped up almost three dozen companies in the past three years and has billions left to spend. Even Apple’s Steve Jobs is under pressure to do something with the $15 billion war chest he’s accumulated.

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The OpenSocial Business Model: Will the biggest social containers win?

November 2, 2007

By David Berlind

I asked two questions during the Q&A session in today’s announcement between Google and MySpace that MySpace would be embracing Google’s recently announced OpenSocial framework of APIs, with executives from both companies. The first question (which I’m really still waiting for an answer on) had to do with how two or more social networking sites will handle the thorny challenge of reconciling dissimilar identity management systems (when the integration involves the exchange of personal profile data). You can see in that post what some possible answers are, but what’s not clear is how, in the demonstration given, unique MySpace IDs are mapped to unique Flixster IDs (the demo involved the incorporation of Flixster social movie reviewing service directly onto MySpace profiles).

Another question I asked had to do with business models in an OpenSocial world. I probably didn’t phrase it during the press conference as well as I should have. But going back to the example of how OpenSocial results in the embedding of Flixster functionality into larger “social containers” like MySpace; It occurs to me that, to the extent the exporter of functionality (Flixster in the demo example) relies on advertising as a business model, the idea that a lot of people might begin to experience an exporter’s content through a container (where the container gets to serve the advertising instead of the exporter) could result in a cannibalization of the exporter’s traffic (and therefore, its ad revenues). Meanwhile, the container (MySpace in this case) benefits, doesn’t it? After all, using the demo as the example, MySpace gets to serve advertising around Flixster’s content. Today, lots of sites (eg: FaceBook) go out of their way to prevent other sites from using HTML’s frames to frame their content and serve their own ads against that content (FaceBook for example purposely “busts” HTML frames).

Therefore, could the OpenSocial network lead to a world where the biggest and mightiest “social containers” win? As you can hear in the full audio podcast we have of the press conference, Google CEO Eric Schmidt answered that question as follows;

It depends on your view of how network effects happen and whether you think a single dominant player comes out in any of these spaces. The history of the Web says that that’s not the scenario that will happen. The history of the Web says that there is enormous diversity in what people are interested in and that people who are willing to take a bet on an open platform whether its a developer or leading site like MySpace get the benefit of a larger pie. It does not end up as a zero sum game. Your question can be rephrased in exactly the same question we asked 20 years ago and 10 years ago and history says that the Internet wins and that the principles of openness; that people can extend things; that in fact they end up winning because the pie gets so much larger in all scenarios.

Given the way FaceBook has come on so strong in the last few months, it would be hard to argue with the idea that no single dominant player will ever emerge so long as the platform is open. But what about a small handful of dominant players like Google, FaceBook, and MySpace. Yes, OpenSocial is also about unlocking whatever profile data you have in your MySpace vault and making it portable to other social networks.

But how often will people really switch after they’ve invested so much time in building their online personas in a MySpace, a FaceBook, or both? Maybe they’ll do it, but my sense is that they won’t do it often or lightly in which case only a few will get to rise to the top. Put another way, Flixster may indeed be a container as much as it is an exporter of data to other containers. But in which direction will most of the data flow? To or from Flixster? My sense is that people will lean in the direction of uber-containers like MySpace and FaceBook (FaceBook has not announced support for OpenSocial) to be their primary containers and specialty function sites like Flixster to serve up data into their containers.

I’m not saying that sites who primarily end up in the role of serving data to larger containers can’t win. But, if you ask me, the existence and adoption of OpenSocial will force many advertising-driven sites back to square one where they’ll have to think hard about how they’ll sustain themselves while also participating. One thing is for sure. Much the same way a day doesn’t go by when some company doesn’t carve out a niche in the FaceBook universe for itself (knowing full well that FaceBook is where the sunshine is right now), support of OpenSocial will be a checklist item for any site that’s in a position to serve data into the larger container sites. Those sites may not realize it right now. But when Google turns on its container (and you know it’s gotta have one coming or it wouldn’t be doing this), a lot of people will have their moment of clarity.


Widget Master

November 2, 2007

By Victoria Murphy Barret

RockYou is Silicon Valley’s latest Web sensation. It exists solely thanks to the recent rise in social networking sites. RockYou creates frivolous, mini Web applications that exist on social networking sites such as MySpace and Facebook. RockYou’s popular Superwall, for instance, lets Facebook folks put graffiti–words, photos, videos–on their “walls,” which are public sites where members post messages. Another, called Zombies, encourages people to “bite” friends. Virtually, of course. No joke.

Since RockYou’s founding two years ago, 90 million social networkers have downloaded its applications. For this, RockYou is making more than $100,000 a month in revenues showing ads alongside its mini-applications for brands like AT&T and Sony, as well as by plugging other developers’ mini-apps (for a fee). The pitch to advertisers: We are where the kids hang out. Yet RockYou doesn’t know much else about its customers. Facebook doesn’t share data about members’ ages, locations, education or anything else it might know.

Jia Shen, the 27-year-old co-founder of RockYou, sat down with recently to talk about how to make money selling snack-size software and what Google’s new open platform means for Facebook and MySpace. How did RockYou begin?

Jia Shen: We started two years ago noticing that everyone on MySpace was trying to “bling out” their pages. But there was no easy way to do it. We decided to put together a slide show tool. It took one week to build. I worked while I was on vacation in Japan. In one month, we had 100,000 people using it. Then in three months there were one million.

Impressive growth. But were you making any money?

None. You can’t advertise on MySpace. Facebook changed that. So now we’re like any other Web site: We make money on page views. Sony Pictures wanted to promote the film Resident Evil and used our Zombies application for a sweepstakes event.

We also advertise other applications and take a cut. Yahoo! created an application that lets you post music videos on your Facebook profile page. Yahoo! had 8,000 downloads after one month, which is pretty slow. We started promoting the application in banners above our own applications. In a single day on our network of applications, Yahoo! got 120,000 downloads.

What is your initial reaction to Google’s new open platform for social networks?

We’ve been helping Google for a while on this. In theory, it should be very cool. We tested it out with an application called Emote (This is a collection of happy, sad, flirty smiley faces). Before all these networks required different code, and it took us three days to re-write the same application for Facebook to get it to work on Orkut. With the new standards, it took us just 30 minutes to make the same application work on Plaxo. The real test comes two months from now. How many companies will really give us real estate on their Web sites?

Will Google’s open platform give a boost to less popular social networks like Orkut, Friendster and the Hi5?

Sure, if it yields them more applications, it gives people more reasons to flock to their sites. Web traffic isn’t yet a zero-sum game

Is this bad news for Facebook? Will developers spend less time on Facebook apps?

People are making real money on Facebook. So there’s risk in going elsewhere. Am I really going to spend time going after Orkut’s Brazilian audience? I’m more likely to focus on the U.S. market. Facebook is still growing nicely.

Do you worry that the social networking sites, particularly Facebook, will start launching their own applications and compete with outside developers?

It is always a worry, but something that we’ve lived with since day one. MySpace eventually built a competing slideshow, but we already had big penetration, with a diverse set of widgets. Facebook does do little feature creeps here and there. But everything they’ve done so far has been non-competitive.

What will Microsoft get from its deal with Facebook? (Microsoft announced in October a $240 million investment for a 1.6% stake in Facebook, and is serving ads on the site.)

This isn’t traditional brand advertising. But my belief is that Microsoft didn’t want only access to the ad network. Microsoft wanted to make sure no one else got Facebook. (Google was reportedly bidding.)

What were you doing before RockYou?

I came to Silicon Valley in 2000 after majoring in computer science and electrical engineering at Johns Hopkins. The first start-up I landed at failed in three months, so did the second. I thought I was the kiss of death.

But I have a short attention span, so it was fine by me. This company is changing so much I may as well be working at a different place every three months.


Facebook Could Challenge Google And Become The Remote Control For The Web

November 2, 2007

by Stephen Wellman

On Aug 16, the blog Facebook Insider reported that TripAdvisor acquired Where I’ve Been, the top travel-related application on Facebook. While TripAdvisor later denied the rumor, the ensuing story exposed something: The exploding number of applications on Facebook. Thanks to its Facebook API program, Facebook is fast becoming the front page for much of the Web.

In July, I argued that Facebook posed a challenge to professional networking site LinkedIn. While I stand by that assessment, I think that in that post I didn’t go far enough. Given just how fast Facebook’s API program is growing, Facebook may present an even more interesting challenge to the Web. Facebook could shape up as a rival toGoogle, Yahoo, and even search itself.

By integrating more applications into its platform, Facebook is trying to transform itself from being just a social networking platform to becoming a full-interactive control panel or remote control for the Web. Unlike earlier attempts to do this — think of the portal model of Web 1.0 — Facebook has designed its API system so that users can access all the Web sites they want without ever leaving Facebook, or opening new Web pages. I suspect that Facebook will expand this functionality so that eventually the entire Web can be accessed through these widgets.

In short, Facebook wants to become the locus of control for much of the user’s Web activity, letting the user seamlessly share travel information, pull in news updates from blogs like TechCrunch, or send questions to the user’s social network with apps like MyQuestions.

If you will allow me to extend the remote control metaphor, Facebook users no longer have to go “out there” in the rest of the Web to get new sites, they can pull them through Facebook, either with invites from the app providers or, more effectively, through their social network itself. The cumulative impact of this could be huge. Just as the remote control gave birth to the couch potato (the ultimate passive TV viewer), so too could Facebook change the game for Web use.

If users no longer need to search to find new cool Web applications, they won’t need to use Google, Yahoo, or MSN as much. Instead, they can rely on Facebook for finding new applications. Now, I don’t think this would mean the end of search, but it could reduce its importance pretty significantly. If that happens, Google loses power and Facebook gains it.

What do you think? Do Facebook and its exploding universe of applications pose a real threat to Google and search in general?


Will Google’s OpenSocial API Program Kill Ning?

November 2, 2007

By Stephen Wellman,

Google this week stormed into the social networking world and stole Facebook’s thunder with its new OpenSocial API program, an effort to create an open standard for creating and integrating applications into social networking platforms. While the rest of the blogosphere is pondering Facebook’s fate, I want to ask another question: Does OpenSocial spell the death of Ning?

For those of you who don’t know, Ning is startup that offers a platform designed to let users create and manage their own social networks. Ning has been around since 2004 and it has a list of big Silicon Valley boosters and investors, including Marc Andreessen of Netscape fame.

Ning is targeted at both consumers and businesses.Ning is trumpeting the OpenSocial platform and its participation in it. Ning’s leadership thinks that OpenSocial will allow Ning to explode (in a good way).

I am not as convinced that OpenSocial will be so good for Ning — or other social networking upstarts either. But for the sake of this post, I will focus on Ning.

Ning’s real value prop to date has been its ability to let users build fully custom, white-label social networks. While competitors like Facebook are aggregations of social networks (not just one social network), Ning’s advantage has been its ability to offer more user customization. Lots of different networks using the same platform behind the scenes vs. bunches of networks on the same interface.

Now, with the addition of Google’s OpenSocial APIs, Ning will offer the same kind of functionality as the rest of its rivals, including Facebook’s arch-nemesis MySpace. So if the entire social networking universe will soon offer integrated application functionality using the same standard (assuming Facebook signs on, which I think it will) what does Ning bring to the party?

Hear me out on this. I see how OpenSocial benefits MySpace. And I can see how Facebook might benefit from this too, despite all the naysayers who claim this move could kill Facebook. But, how does Ning really benefit from this?

As I see it, OpenSocial potentially gives Facebook and MySpace the ability to beat Ning at its own game. Assuming Facebook and MySpace integrate OpenSocial and these APIs give users the ability to create and integrate new kinds of applications and functionalities, why not give users the ability to create their own standalone networks in these respective platforms? Why not launch custom networks on both of these platforms and skip Ning all together?

As I see it, all Facebook, MySpace, Orkut, etc. have to do is add an additional level of interface customization and they can easily take Ning’s market right out from under it. Why use Ning when you could build a professional network for a large company on Facebook or a custom network for a movie or TV show on MySpace?

What do you think? Will OpenSocial spell the end of Ning?



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