Web 3.0 Just Kicked Through the Door

In the playbook for Google's world dominance there is one play still in the developmental stage:

GoogleNet - the one missing link. No pun intended with the missing link part. Link....network... get it?

The posting below is a repost from February of 2007. I'm reposting because I think it is just as applicable today as it was then.

Couple quick thoughts before my paste:



- the amount of data on every persons habits that google will be able to manipulate and exploit is scary. the Chrome OS and Android just gave google 5 times the access they had to me before. Why? Android was built to run on devices and I can't stand windows crashing every hour so i'll gladly switch to a more stable android. not to mention its free. Android will be the OS for my mobile phones, set top boxes, home entertainment systems, appliances (refrigerators, ovens, vehicle management and entertainment systems, home automation devices (remember google's forays into the home automation and electrical smart meter markets?) and probably, in the not too distant future, they'll manage our terlits too. Thats a shit load of visibility they'll have in to the patterns and habits of connected people. Again, no pun intended :)

- will the Feds just sit back and watch as Google take it deeper than Ma Bell ever dreamed possible?






They are giving away everything else, why not connectivity too? Its all about efficiency right? Operational efficiency, risk mitigation efficiency and customer efficiency. Efficiency is the driving force behind Googlenet(gnet). What is GNet? Google's foray into the ISP business. This 'business' for Google is the means to an end. At the end of the day Google sells advertising and they'll use whatever means necessary to do that, be it building an OS and giving it away for free or by providing free connectivity so that free OS stays online 24x7. The more interaction we have with devices the more impressions google has to sell to advertisers.

The gnet hypothesis: Bandwidth costs have fallen to a level that the advertising revenue more than subsidizes the cost of the network. We are in the very early stages of a true 'gloabl village' as Marshall McCluhan called it. The cost structure for a traditional ISP like PacBell DSL..errr AT&T, comcast, etc to supply services to the residence is around $40 per month and trends down as they grow because they get cost scale.... in the network world, the more you buy the less it costs.

goog will be placing a bet, and a very calculated one, that advertising $$ will not only subsidize operational costs of providing free services(isp, voip, office, etc), but will exceed them.

Owning the customer's network routes from end to end(being the ISP) provides Google with private infrastructure platform for delivering customized content and adverting to each and every one of the people using their service. this delivery platform is always on and knows where you go, what you type, where you live, who your friends are, what files you have downloaded, what you look like, and whatever else they add on to their services. So when Johnson & Johnson or GE or Proctor & Gamble or Coca Cola or Pepsi is planning their media buys for the next year do you think they'll purchase advertisements on radio, television, print or the 4th network(Google)? based on the ability to target a specific population that has certain attributes you desire, the choice is clear...you pick google. Why? because you know that your marketing msg is going to a qualified prospect as opposed to the traditional 'shotgun' approach. plus, you can get results in realtime and tweak your msg if its not working in real time. with the other three media you are somewhat ratholed into trusting some third party for ratings that may or may not even reach the people that you want it to. by the time you figure this out a slew of things can happen...some good some bad but why chance it when you don't need to.

At the end of the day, Google is building a traditional media killer and the funny thing is..actually not really funny but kinda, that the writing is on the wall but nobody seems to believe it. I do. @Home Network had this vision but couldn't pull it off because the cable co's couldn't get their heads out of their rear to see the opportunity that was sitting right in front of them.

goog already has deals in place and likely in the works with the producers of original content which will allow their users access to that content. if i'm a content producer where would i want my content to be seen? ex. let's say you are the producer of The Office and goog offers you the ability to place your content on their network so that it can be viewed by anyone, anywhere, anytime and offers a revenue share or some other creative structure around it such that you know your worst case scenario beforehand. simple choice right? sure abc or cbs might offer an upfront fee in the form of $$ per show but the audience is limited, the timeslot is finite and in order for someone to view it, they have to purchase cable tv or satellite or whatever whereas on the google network you content would be globally accessible and the broadband access which replaces the cable or satellite tv service, is free to the masses. additionally you can develop complimentary services that engauge your viewership such that you are able to really develop a community around you content as opposed to content around a community.

What does this have to do with being an ISP? Everything, why do you think there is such a brouhaha over net neutrality? Without connectivity none of this is possible and with the right connectivity, all of it is possible and defendable from the threat of new competition emerging to pose a challenge.

The internet hasn't changed anything when it comes to the bare bones media model. The driving force of media is and always will be advertising. Without it, there would be no televsion, radio, print or internet. It doesn't matter if its old world or new world, it's still dependent upon advertising and gnet is to google what airwaves were to ABC, NBC and CBS, something to exploit in order to sell advertising.

Net Neutrality: The Ugly Bride

Over the next 20 years net neutrality will be left at the alter many, many times. At&T already did it once when they had no way to provide cable modem service because @Home Network had been the choice of partner for the cable co's. Meaning AT&T didn't have a broadband connection into the home. What did they do? They found the other kid who wasn't invited to the party, AOL, and cried all the way up to the principals office where they screamed and yelled about how poorly they were treated and how they should be included. Funny how shortly after the TCI acquisition was approved they slowly crawled across and into the anti neutrality, anti gov't intervention, pro free market camp.

What about Google? Google talks a good game but like the Barons of the past, they're so rich and powerful that it's easy to be preaching the socialistic smoke screen of open access when the commotion you're making distracts the attention from the real reason you need open access policies: Advertising $$.

Before I get into why, this thesis hinges on where I see Google taking it's road map over the next ten years. Google will become and will accomplish during those 120 months:

- already is today and always will be, and DON'T EVER FORGET IT, generating revenue by getting a piece of the advertising and marketing budgets of BUSINESSES worldwide (Sound familiar? It should because you know many similar companies. Companies like NBC, CBS, ABC, FOX, etc)

- building out an IP network that will kick ass on anything we have today because they'll squeeze every little drop of 'utility' out of each tiny unit of that network, driving the revenue per packet higher and higher the longer that packet stays on it's network. The big deal in this? They will give access and access device away for free to anyone who wants one. Just like the bikes at the googleplex, take one when you need one and leave it for the next guy to use when you're done. Since they're free, there really is no reason to steal them because there is no reason to buy one, right? Riiiight.

- will emerge as the leading global wireless phone carrier, giving access to voice and data via free gPhones to the masses.

- will enable a true global village as Marshall McCluhan predicted. providing ubiquity in access reach, speed and scope. no kids left behind, just like the California school system. uh huh.

How could such a beacon of industry and a company that is studied and admired as the pinnacle of American enterprise show its true colors and be so fickle? Flip flopping from one side to the other? I love answering my own questions and since nobody else is raising their hand I will tell you; first, its real simple and sheds some light on why net neutrality is a pipe dream. Net neutrality itself is a concept and notion created by the telco's and in cooperation with their opposition, which pits each other in a one extreme to the other showdown. Nobody will ever win this showdown because if someone did it would then be over and if it's over how can they conveniently flip or flop to the other side when need be? Everyone wants to have their cake and eat it too and when your talking about something you can see, touch and feel, the history of any given involved party is easily forgotten, effectively masking economic warning signs. The most obvious one being the saying, "if it's to good to be true, it is and never will be true."

It's all about one $ and maximizing how many times that same $ can be 'turned over' during it's lifetime. For this example, my definition of 'turned over' is the value of the taxes the US gov't(or any type of tax collector) collects on each dollar it spends, collects, spends, collects, etc...

Keeping that packet on your network all the time ensures you can have more opportunity to market to the user, provides them with more and deeper analytics of this persons habits, a deeper understanding of what is important to this person and what are they hiding. After all, the easiest way to get someone to do some action is by guilting them into it.

Yes, businesses will do what they can to maintain an advantage in the market for the assets they've built or acquired. This is nothing new and is happening on behalf of every industry, not just telecom. And it is expected. If you elected an official who is uneducated and susceptible to rhetoric and hype you have the ability to change that instead of throwing more rhetoric and hype on top of it. The fact of the matter is that with or without net neutrality, market innovations will happen that shake up the landscape. We're seeing it now with wifi. In a few years the net neutrality debate as it relates to in ground last mile connections to the home will likely be a laughable memory because of innovations by companies addressing a market deficiency such as lack of competition for the last mile connection. Wifi, WiMAX, satellite or any other protocol/standard/whatever bypasses the last mile altogether, thus bypassing the ILEC, MSO, etc.

So, if you really want a competitive market for alternatives to any of the technological services we have today, the best way to ensure that is to allow those companies to keep their systems closed and have tiered offerings because the capitalistic market forces will produce alternative, innovative, ground breaking and industry shattering service offerings. Does Napster ring a bell?

Another thing to consider, the telcos(distributors) rely on the content producers(websites, aps's, isv's, etc) as much as the producers rely on the telcos. They are complimentary in nature and it is in their best interest to play together because the combination of the two is what makes each, in its own right, attractive. What would Yahoo or Google be without the internet? Why did GM pull that all electric car they used to have off of the market and now why is Tesla coming out with an even better one? Because the oil companies needed GM as much as GM needed the oil companies.

We aren't fans, we are participants. Just how fans often confuse their favorite team signing a questionable player or a player saying something negative about their team, these industries are made up by for-profit businesses which must show a return on investment or they will vanish faster than they got here. Don't be fooled by the smoke screens!!!

Logic and Advertising on Facebook

Is it me or does there seem to be a growing number of naysayers bagging on Facebook as an advertising platform? It could be me but I don't think and this is why; Of the 26M unique visitors for the month of May 2007, 13M were older than 24 years of age. Of that 13M, 10M were above age 35!

If advertising on Facebook isn't showing a return then advertising on any web property should be questioned as well. This is because, at the end of the day, Facebook isn't just about college students, it's about a college educated audience that is smarter than the advertisers. To me, that poor click through % sounds like a statement from the users that the advertisers are doing a poor job on the creative front and the in your face front. Facebook users are educated people and generally speaking, educated people question things, especially when they are groomed with the notion that advertisers are like used car salesman. Slimy, untrustworthy, fickle, after the quick buck and once their done with you they are on to the next victim. Whether that is true or not, it doesn't matter, it's a perception and in this case perception may be reality.

Does this mean Facebook isn't worthy of the attention or prospective valuations floating around? Hell no, for if that was the case then NBC, ABC, CBS, Clear Channel, Fox, Viacom and all the other advertising dependent 'networks' would be less than worthless because they have exponentially greater expenses than Facebook. This means Facebook is the catalyst to the transformation of advertising as we've known it which is best described as the effort to create fear, uncertainty and doubt all wrapped around a call to action, into a relic of the past. In doing so they are resetting expectations of and possibly causing a reevaluation of prior efforts by advertisers and more specifically, their agencies. It's about time that ad click throughs and pageviews be tossed aside as the main metric for placing a value on marketing to a set of users. I can tell you with a straight face that in my 15 years of being on the internet, I have clicked on less than ten banner ads yet bought tens of thousands, if not a hundred thousand dollars worth of goods and services online. I can't tell you the last time I looked at a banner ad and thought it was intriguing. Because they aren't. They are a one way street and often an intrusive obstacle in my daily routine when they impede the performance of a website or do that overwrite or splash page crap they do on Forbes.com and sometimes on Cnet. If that isn't a reason to not click on an ad then I don't know what is.

It's about time the advertisers start giving something of value to the internet ecosystem as opposed to throwing shit on a wall and expecting revenue to flow their way. Some people may argue that they do give back via the $15B+ a year they spend on online advertising which is revenue to the companies in the business of generating revenue by selling ads. But that is not adding recognizable or measurable value to the marketees, those of us who they try to get to click on their banners, the everyday users, all of us.

What is different about the internet than the three other media networks, TV, print and radio? It's measurable. Really measurable. The way the internet works is much different and precise and specific than that of a broadcast network in that measuring a broadcasts audience is at best a guess and at worst a hope. On the internet it is possible to track how many users came to your website, where they were from, how long they stayed, what OS they were running, what browser they were using, where they came from and where they went when they left and get that info as it is happening. Those features are what makes the Internet an 11 on a scale of 1 to 10 as way to gauge effectiveness of a particular effort, in this case marketing. On the broadcast mediums you can afford to be lazy because there is no way to track how effective a particular effort is other than by sales numbers but that doesn't mean an increase or decrease in sales numbers are directly attributable to that marketing effort. There are plenty of companies that did and/or do ZERO advertising yet generate hundreds of millions of dollars a year in revenue. Its not that they don't market themselves, they definitely do, but they don't advertise. Big difference. Advertising is a form of marketing and with it come negative perceptions. Perceptions that for many, are so ingrained deep inside that they will never be unseated but can be lessened if and only if there is a sense of trust between the marketee and the marketor.

How is that ever going to happen? The most simple form is recommendations or word of mouth. When someone you trust recommends something you are more likely to believe them than you are some Madison Avenue marketing dude who created the 'coke is it' campaign. More like coke is shit because it is bad for you and how many times have you had a friend come up to you and recommend Coke? For anyone who grew up in the 70s 80s or 90s I'm referring to the brand of soft drink :) Conversely, how did you hear about Google, YouTube, Facebook or Thomas Keller's Restaurants like French Laundry, Bouchon or Perse? All leaders in their respective fields. I can tell you one thing for sure, it wasn't from advertising and that is a fact.

Does this mean we're in an economic bubble and the sky is falling? Absolutely not. Does it mean companies like advertising agencies on Madison Ave and ad networks placing banner ads on sites need to adapt to the internet? You betcha. Huh, how can an internet advertising network not be adapted to the internet by virtue of it's existence? That is very simple, they are applying 19th century methodologies and beliefs to a 21st century audience and platform. Do you take your horse and buggy to the gas station to refuel? No. Then why assume your 200+ year old demand creation theory is applicable now?

What I am getting at is that generally speaking the internet is not so much an advertising platform as it is a branding platform. That is very powerful for both sides of the market, the advertisers and those being advertised to because that means that poor advertising can be harmful to a company's place in the market as easily as subtle branding can strengthen it. Over the long haul, subtly reinforcing a brand without creating fear, uncertainty or doubt will only strengthen that brand and build trust with customers which will lead to them recommending the products and services associated to that brand to their friends and acquaintances which drive revenue growth. The same thing that advertising was supposed to do but apparently isn't. In conclusion, it's not Facebook or their users being a non marketable audience, it's that they're being targeted by 200 year old theories that were never tested or proved to be effective in the first place.

Google to Viacom: Bring it on!!

The quote below from Michael Arrington at Techcrunch is telling:


"The DMCA goes out the door under certain circumstances, like profiting from violations, refusing to take down offending content, etc."

YT profiting? Yeah right. My understanding is YT was a big money loser on its own and certainly wasn't generating a profit ever. And surely they aren't now, they're effectively being amortized and $1.6B is alot of write off. Sure google is profitable but that won't be hard for anyone with a clue to separate why YT is a drain on profits to goog.

To my knowledge, YT has no reasonably offensive content on its service and even if they did, it wouldn't matter unless it was viacom's content so this doesn't seem to be applicable. I'm not sure what other examples Michael means when he says 'etc' but this lawsuit is no big deal to Google. In fact, I imagine they played viacom like Sumner plays the skin flute, masterfully.

5 years from now google will have squashed viacom and whoever else goes illogical on them. Squashed because viacom just committed a slow and painful death to themselves. Who are they(viacom) kidding trying to go up against the new media king, google? Viacom will learn that the internet, or IP, is the most efficient way of delivering content. more efficient than the other three networks; TV, Radio and Print. When google rolls out free internet access to anyone in a coverage area and owns the entire user experience or has significant influence on it, they will flick the viacoms, cbs', ge's, fox's, etc of the world off their back like a fly being smacked off a horses ass....by the horses tail :)

Face it, Viacom makes money selling advertising. Google sells more advertising than anyone in the world and can buy any company that poses a threat. As we know, Google is branching out to TV and Print and even Radio. When they own all four distribution channels and combine all their advertising packages to one network, where will viacom be?

Google's real threat isn't Viacom or any other lawsuit that comes their way. Their biggest threat is the DOJ. Comparing Google's scope to the scope of Ma Bell pre breakup is like comparing the Airbus 380 to a Boeing 737. Google, the A380, dwarfs the 737 in terms of scope, capabilities, load, range, power, etc. Sneaky Google is. They are getting as close to the edge as they can without grossly crossing it in the eyes of the general public. Will DOJ intervene? Who knows but if they set the precedent with AT&T, where the hell are they now? Oh yeah, how could I forget...they're busy protecting our youth from steroids and other human growth hormones.

The Facebook Marathon

Robert Young wrote an interesting post on Gigaom asking the question whether Facebook missed the boat or is here to stay.

One thing that is crystal clear is that the guys at Facebook are just getting started. The recent video deal with Comcast, the upcoming gift shop, the jobster deal and probably a boat load more on the way. Last time I was in Palo Alto I wondered what was up with the line of people stretching out from facebook to hiway 280 and back was all about, now I know, it was all the BD guys from the F10000 waiting to do deals :) (joke). The Facebook niche is as much college aged adults as was googles niche the technorati. They did both start there though. Facebook is and will continue to do deals, real deals, with name brand, established companies who all want so badly to market to the Facebook users.

Robert and some of his readers bring up some interesting issues that these advertisers appear to be experiencing via their placements in Facebook. It seems they aren't getting the results they want or thought they would. SHOCKER. Could it be that this population doesn't have the disposable income they thought, are more fickle than anticipated, have no patience, are multitasking while online, or just don't buy stuff online?

Perhaps, but doubtful. I believe the problem is these advertisers haven't qualified the audience they are marketing to and developed a strategy to assuage the fact that these people know that if it talks like a rabbit, hops like a rabbit, &^$%s like a rabbit and eats carrots night and day then chances are it is a rabbit. The rabbit in this case is their marketing efforts. These advertisers also spend ad dollars on network television and rely upon Nielsen ratings to tell them whteher or not they spent their money well. Yet in the online world they experience low immediate purchases and they question the value as it relates to where they spend their ad dollars. That makes perfect sense in a vacuum environment like television or radio or print where you literally have no idea how or who is watching what. Is Nielsen selling beachfront property on the Texas gulf too?

When an industry like advertising can get lazy and assume what worked in the past will work in the future, their clients will experience a relative decline in the utility of a dollar spent on advertising. In this case, the agencys are developing campaigns and buyin inventory from facebook and placing their campaigns in the inventory and when an ad is served, it's served and that's it. It's just served. Why is that? facebook users have grown up on the internet, know about spam, pop ups, phishing, dos, ddos, etc and just as the generation before them became immune to direct mailings that came via USPS delivery person, this generation is immune to the lame ads being served today. If these advertisers want to really see value in their advertising spends they will need to make some major adjustments including adopting a long term, not short term strategy.

Short term is like a one night stand and nobody likes being screwed. They like to get laid which implies a mutually pleasing relationship. Success based advertising is short term and there is certainly a place for it among these users but it's definitely not coming from a mainstream company like CocaCola or McDonalds. It's coming from the guy across campus who just posted a msg saying he has KGB for sale for $40 an eigth. Brand establishment, brand placement and brand alignment are the long term approach advertisers will need to take if they aren't selling drugs or sex. It shouldn't be a surprise, they've been thinking they were doing this all along with the other three networks(TV, Print, Radio). We're seeing product placement in films so and some TV programming and we will soon see it online too. Conde Naste and Reddit is an example of this alignment and that combination will be a winner because they are bridging that gap that the advertiser can't and the Madison Ave marketing agency sees this new wave of strategy marketing as a threat to their business model of selling airtime, eyeballs, ears, clickthroughs, etc they are disincented to adopt it now, when the opportunity is in front of them. Like anything else, advertising strategies and associated successes are cyclical and have a finite timeframe and always have some association with the culture of the time. Therefore, as time moves on so should your thoughts on marketing.

Facebook wasn't stupid for choosing to remain independent, they 'get' it and are quite clueful. It is a marathon, not a sprint and steady progress will allow facebook to cross the finish line. If we're in mile 8 right now, facebook, google, salesforce, ebay, amazon, and yahoo are all still very much contenders who will likely find romance amongst them, it just may not be what we thought it would or when we thought it would happen.