Dot-com 2.0?

May 8, 2009May 8, 2009 ~ Jim Eltringham ~ Leave a comment

I talking about social networks and online environments with a colleague this week, the 400-pound gorilla of the web 2.0 world came up: nobody is making any real money yet. “What people don’t realize,” he said, “is that YouTube has a lot of views, but has been losing its shirt. Facebook doesn’t make money. Twitter doesn’t make money.”

It’s a good point. Just as the “dot-com” craze launched a bubble and an eventual bust in the late 1990s and early 2000s, the Web 2.0 industry has a bubble of its own. Outside of Google – who has made tons of money, but is seeing their business model coming under attack from privacy groups – most companies have been supported by venture capital.

For all their popularity, Facebook and Twitter will have to figure out some way to make money off the masses who use them or they could find themselves endangered. And while some recent innovations (like Facebook opening up it’s back-end programming) make these sites more useful to more people paradoxically make it harder to make money.

For the past year and a half especially, people have tracked and managed Twitter accounts via third-party programs either on their laptop or mobile phone – people rarely go to Twitter.com. With Facebook opening up their programming, it invites the same pattern of usage. In other words, both these sites promise to offer infrastructure for people to use for sharing content – but without having eyeballs on their actual sites, they can’t rely on the advertising revenue stream that so many other online companies have used as their bread and butter. That’s why there’s some speculation that browser companies might take over social networking as an attractive add-on to Firefox, Chrome, or Internet Explorer.

At the same time, outside groups have an interest in keeping these services afloat. Politicians and advocacy campaigns come to mind immediately as entities who have benefited from online networks. But wherever monetization ultimately comes from, at some point the monied interests who have supported the web 2.0 bubble will look for a return on their investment. If that return isn’t there, this bubble may burst, too.

Workers of Detroit, unite!

May 1, 2009 ~ Jim Eltringham ~ Leave a comment

It’s a red-letter May Day, as working comrades in the UAW are taking over Chrysler. By the looks of things, they same fate may befall GM if they cannot work out a deal with their creditors.

Some analysts feel this is a good thing – reasoning that the union would have to abandon a single-minded quest for higher wages to think about the company’s broader needs. But in the era of bailouts and government safety nets, there really is no incentive to do that.

"I should be able to get some sort of job…"

February 21, 2009 ~ Jim Eltringham ~ Leave a comment

Our nation’s newspaper of record, the New York Post, today chronicled the lifestyle of Christopher Poole. Poole runs 4chan, which is one of the most active web sites, but lives with his Mom and is about $20,000 in debt.

Poole’s story is markedly different from other computer wunderkinds – like Bill Gates – who dropped out of college to devote time to digital endeavors, and it’s reflexive of different times. Gates, Steve Jobs, and other innovators of the late 1970s and early 1980s used their own creative abilities to invent or build products that were commodities – software, computers, etc. – that could be bought and sold. These commodities became high in demand and served as the cornerstones of a revolution in computing, making the innovators rich.

Poole is successful on today’s internet because he built a successful forum that harnessed the creativity and imagination of its users; 4chan originated as a site about Japanese animation and evolved to serve a specific and active niche audience. And unfortunately for Poole, use of his product is free. It is also a bastion of free expression, meaning advertisers are loathe to be associated with the site’s often inappropriate content.

That Poole has had trouble parlaying his online success into offline profits speaks to the need for any individual to devote attention to his or her personal brand. Clearly, Poole is an expert at something, or has certain experiences no one else has. He could bill himself as an authority on running a website, creating an open forum, managing a product that takes on a life of its own, or even Japanese animation – or possibly all of the above.

Not to mention his whole situation could be a book in an of itself.

Novel concepts from the 30s

February 11, 2009 ~ Jim Eltringham ~ Leave a comment

Mashable mentioned an interesting trend yesterday: businesses are building blogs that are focused on their area of expertise, but not necessarily on their products. The idea is simple: by building a media outlet that interests their target demographic, businesses hope to lure more customers.

As the post notes, some journalists would argue that private companies are not credible sources. You can probably find these journalists’ stories on the pages of your favorite newspaper – right next to the ads that fund those pages. Mass media has always relied on sponsorship – entertainment or information nestled around product pitches. Why take offense when the same thing happens on the internet that happened on the DuMont network in the 50s?

From the companies’ perspective, using online media makes perfect sense. There are few better ways to extend your brand – for instance, Whole Foods runs a blog about food and recipes to help establish itself as an expert in groceries. And it’s cheap to do – all the company really needs is the mental discipline to update a blog daily.

With ventures like this cheaper, easier, and more effective than traditional advertising, you can see why advertising revenues are declining. It’s another way the business community will have to adapt to a changing world.

Waking up about Wal-Mart

February 3, 2009 ~ Jim Eltringham ~ Leave a comment

Bruce Springsteen’s Super Bowl halftime appearance came as he apologized for a promotional deal he signed with Wal-Mart to promote his greatest hits album. Springsteen feels Wal-Mart doesn’t treat its employees well.

First off, where does someone nicknamed “The Boss” get off talking about employee conditions? The boss never knows what’s really going on.

Second, there are some people Springsteen should talk to before chiding the working conditions at Wal-Mart. The first is Jason Furman, a key economic advisor to President Obama, who wrote a paper calling Wal-Mart “A Progressive Success Story” for providing low-income workers with affordable goods.

The other is Charles Platt, a blogger who gave an insider’s account of life behind the smiley face as an actual Wal-Mart employee. I think it’s been a while since Springsteen found himself inside a Wal-Mart, so I’ll take Platt’s word on what the working conditions are like.

Most of the criticisms about Wal-Mart come from unions – who would love to siphon off union dues from the paychecks of Wal-Mart’s millions of employees. The bad news for them is that Wal-Mart and its employees have a good thing going – even if the Boss doesn’t know it.

The choice of a new generation?

January 29, 2009 ~ Jim Eltringham ~ Leave a comment

Sure, Congressional Democrats continues to work on a giant spending bill even with the economy in the doldrums. But luckily, President Obama seems to have instituted his own stimulus plan to help our struggling businesses create more jobs – companies like Pepsi are capitalizing on the themes of the Obama campaign to move more of their own project.

As this Metro billboard suggests, Pepsi has adopted the mantra of hope and change. It’s more appropriate than they know – Pepsi has been claiming to be the “choice of a new generation” for decades – probably long enough to be the choice of the next generation that came along after the original new generation. It’s a message based more on positioning a brand than on any kind of substance.

T-shirts: saving the internet?

December 13, 2008 ~ Jim Eltringham ~ Leave a comment

There is money to be made in online content – just not by making online content. So writes Wired.com’s Clive Thompson, who observes that through the use of do-it-yourself sites like Cafepress, people who make web comics or online video series can monetize their art without charging a subscription fee. (Which is good because, by and large, subscriptions don’t work so well.)

In other words, making money online follows the same concept as any other activity online: you have to think a bit resourcefully and differently.

T-shirts: saving the internet?

December 13, 2008 ~ Jim Eltringham ~ Leave a comment

In other words, making money online follows the same concept as any other activity online: you have to think a bit resourcefully and differently.

Yahoo! CEO! Steps! Down!

November 18, 2008 ~ Jim Eltringham ~ Leave a comment

Jerry Yang announced he is stepping down as CEO of Yahoo! today. Yang’s year-and-a-half long tenure as CEO was marked by him railing against a Microsoft takeover and failing to complete an advertising agreement with Google that probably would have been blocked by the Justice Department anyway.

Yang understood what his company isn’t: it isn’t an arm of Microsoft, the Gibralter of computing that makes up for its lack of innovation with its largess. Though he did express some willingness to negotiate, surely Yang’s heart had something to do with his resistance. As the first search engine to acheive mainstream appeal and recognition back in the late 1990s, perhaps Yang felt it would be unfair for the once-cutting-edge Yahoo! to be swallowed by Microsoft’s corporate establishment.

The problem is that Yang can’t answer what his company is – and, more importantly in the online world, what it will be. Google fills so many niches in the online world, how does Yahoo! compete? Yang saw this and attempted an ill-fated search advertising deal that, in the end, went nowhere. Clearly, Yang loves Yahoo!, but the company – whose stock price has fallen from a 2008 high of jsut over $30 per share to a low of just over $10 per share – clearly needs a direction and vision.

Hopefully for Yahoo!, Yang’s replacement will match his passion for the company with a vision for how it fits into the modern web world.

Content is king

October 16, 2008 ~ Jim Eltringham ~ Leave a comment

Radiohead‘s last album, In Rainbows, went triple platinum and made more money than their previous album. This is big because they “sold” their album online before its official release – and set their price at “whatever you’d like to pay.”

This is a good thing to pay attention to if you’re a creator of content. Now more than ever, you have to produce quality to break through the noise that comes from consumers having so many media options and choices. But Radiohead also demonstrates that if your product is good, the money will follow.