Aug

30

Paradigm Lost

Filed Under Blog, data protection, Industry Analysis, internet, news media, online advertising, Publishing, Search, semantic web, Uncategorized | 1 Comment

So what happened in August? While I was on vacation the world seemed to change in mysterious ways, or, at least, I awoke to mysteries long in the making. Quite apart from England starting to win cricket matches on a regular basis, that is. Or summer to be sunny in these parts. Something fundamental happened.

I had the first inkling of this from the headline “Lycos sold for $35 million” (http://www.medianama.com/2010/08/223-lycos-ybrant/). So now we are 16 years on in the glorious history of the networked globe, and we have our first example of a start up with an almost complete cradle to grave financial history. Founded with a $2m investment from CMGI, this was the fastest company to the market when it floated on Nasdaq in 1996. By 1999, with a range of subsidiaries in some 40 countries, it became the most popular Website in the world. In May 2000, Telefonica of Spain bought it for $12.5 billion, according to cnet.com, and with the acquisition of Tripod, Lycos created the characteristic surge of the Bubble years – the Portal. When enterprize search failed for it, Lycos began to shed its subsidiaries, and sell off its local manifestations (to Bertelsmann in Germany, for example). The now diminished company was still innovative (remember Lycos Phone of 2006), despite its sale for $94 m to Daum of Korea in 2004. This latest sale, to the Indian advertising services player, Ybrant, emphasises that the current migration is to web advertising services. Revenues in 2009 were reported as $24.76 m. Ybrant made the acquisition for $36 m.

This is not a “how are the mighty fallen” story. It tells us instead how fast brands grow in the networks and above all how fast and threatening the steep slope of the success graph can seem for established players: Lycos and the creation of Terra Lycos was Telefonica’s vastly greater equivalent of the Murdoch Moment over My Space. And it is not a story about lack of ingenuity and innovation: Lycos genuinely moved with the tidal waters of business model change, and its history shows managers trying hard to re-position and re-use their access and brand position. This is a story about search.

At the root of the Lycos is Google and its growth. In many ways Lycos was a John the Baptist project, and the work which Google’s founders did was not so much an exercise in replacing the fundamentals of search created by Lycos and its competitors, but in adding back into the mix something of the experience of previous users (PageRank) in such a way that the user perception was “better results”.

Today Google has 85% of the market in search, and this year its results have begun to decline slightly. Not much, mind you. A peak of 86% market share followed by a near 2 percentage point decline is not a disaster, but it underscores something else: unless you are in India or China (and Google’s numbers are still roaring away in the former despite Google’s well publicized problems in the latter) the most significant global user communities are already on the Web – or unlikely to use the Web in significant numbers for very many years.

So will Google also and inevitably follow the path mapped out by Lycos? The pressure from the Semantic Web and the world of Linked Data certainly point in the opposite direction from keyword searching. But clearly not if the acquisition programme comes through, and the new business development programme matches it and Google are able to grow a new business alongside Search. The sector has never seen a company like Google for using its wealth to pursue opportunity outside of its core markets. From YouTube to Android, from DoubleClick to Aardvark, from Google Earth to Google Energy, the company sometimes seems to be restlessly evading its destiny while remaining 98% tied to advertising for its revenues.

For its destiny is surely now reasonably clear. There will be a decline in search as an apps orientated world moves more fundamentally towards solutions. Already Google is feeling some of this, as well as the continuing movement of advertising markets away from the traditional way of contextualization. There will be continuing pressure within solutions created for professional and business services for search to be customized to need, and good enough for active purposes (which may be better or more targeted or more rigorously selective or more representative of niche user groups than public search environments).

On their track records you would have to say that Google, driven by current management, will diversify and survive. But it may be a closer issue than many expected at IPO time, and some of this is reflected in the current share price decline. And if they do accomplish the building of a new company out of the old (an Internet first in itself) then it may be by rediscovering what users do in a way that the apps market already does. As someone wittily commented “if they had really cared about users all these years, the service would have been called Find, not Search”. But in the meanwhile business and professional information service providers may be relieved to find that insuperable Google pressures may lessen a little in order to allow integrated solutions to grow. This will create opportunities that are time limited, so nobody should sit around waiting for users to ask or rival revenues to grow.

And a final sob story. In 1994 our favourite comparison was the pornography marketplace, which blazed a trail in viral marketing and online portal techniques. Porn established itself as a sector to watch closely if you were in advertising markets, and a model of content protection and business model evolution if you weren’t. According to an article in Technology Review (www.technologyreview.com/web/26074/) porn is blighted by mass evasions of copyright on peer to peer networks and the rise of user-generated content. Wage rates are falling in the industry and so is program production. I do NOT know what the “solution” is here, but it is only to be expected that when all the other models created in early web days are changing then this one would as well.

Jul

11

Viewing the Ruins of Policy…

Filed Under B2B, Blog, Education, healthcare, Industry Analysis, internet, online advertising, Publishing, Uncategorized | 1 Comment

Do you have a moment? Let me take you to a site I know, where you can see a government caught in a quandary. Its at https://www.schoolsrecruitment. dcsf.gov.uk/ and it represents the entanglement of media, a networked society, and the controlling urges of government in a fairly graphic way. The dilemma for the UK’s brand new Con-Lib coalition is as follows:

* the previous lot, outed on May 11, were moving in education towards the idea that teacher and school staff recruitment was best controlled by government on its own website. This is it, launched only 3 months before the UK election.

* one of the big bills for local government in the UK is teacher advertising. If this were to be done by government itself on the web, serious savings could be made, and these could be channelled back into the education system.

* futhermore, government doing the advertising enables better quality control to take place, offers ways of monitoring local government practises and ensuring compliance. And online application using government approved forms would create productivity gains and entrench better human resources practises. And government need not expand to contain the new service – it has been outsourced to Tribal Education, a supplier whose service fees would be less than the annual cost of advertising every vacancy in the commercial education press.

* and, what is more, the previous government can be blamed for the scheme! Surely a winner, then?

Hold on a minute. I did type “commercial education press”, didn’t I? Well, yes, there is one, led by the venerable Times Education Supplement (TES). Does it do teaching jobs online? Yes, it has an excellent service, developed since Mr Murdoch’s News International sold this unit away from Times Newspapers, fearing as he did that government may pull this trick. Now its owned by private equity investors who have courageously re-invested in it to modernize it, enable it to beat off web competition from eTeach and, to my great delight, have re-created it as a portal for communications amongst teachers. It has a great role yet to play in the exchange of resources in the UK teaching marketplace.

But will it be able to play that role if government policy cuts off its lifeline advertising revenues? Hard to say, but surely a Conservative government, devoted to the interests of private enterprize, will discontinue such a media abusive policy and ensure that this saving is not made. Even harder to say, in my view: government now has a bigger reason for not doing anything about putting  this into reverse – cost reduction beats out ideology in most instances.

Of course, that begs the question of whether costs really will be reduced this way. Last time round this track in the UK, it was National Health Service jobs. Britain’s NHS, with 1.6 million employees (third in the world behind the Red Army and the Indian Railways), was and is a huge recruitment advertising engine. Creating NHS Jobs permanently blighted the prospects of the nursing press and health management publishing in the UK, but there was a private sector winner, in the form of DMGT’s Jobsite, who leased the systems it used to the NHS in return for being able to mirror the NHS site, getting traffic though no revenues. The NHS system is now embedded in NHS personnel practise and there can be no going back.

So government has the capacity to blight whole sectors of publishing activity through re-inventing publisher services on the web? You betcha, and if you doubt, look at the UK’s regional press, once deeply dependent on local government advertising. The huge decline in local press interests, despite all the bleatings of politicians who professed their devotion to the local rag, was as much about the loss of government advertising as anything. And is this inevitable and should it be reversed? Given that government uses the network less effectively and in a more costly way than most users, there is a good case for advising them to stay clear. But that will not happen.

In a society where publishing is increasingly democratized, government will see its chance. And the ability to control and direct is irresistable. If the instrument of control is a job ad, then so be it. The advice to a Young Publisher may well be “Join the civil service” in due course, but for society at large this process may create a democratic deficit.

Come to think of it, did I describe that website as a policy ruin? I was wrong. It is a foundation for the next incumbent to build a more ideologically correct version. But how I wish that I was wrong about that too.

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