Tag Archives: Internet

Not Quite Dead, but at least Diminishing

Death of the Free Web | Cap Watkins: “I’ve actually been noticing this transition in SV for the past year or so. More and more startups are focusing on revenue right out of the gate. The old way of trying to build gigantic user-bases and then sell their eyeballs to advertisers is falling by the wayside. There are certainly still exceptions, but right now they are just that – exceptions. Seeing a startup go after paying customers used to be like catching a glimpse of a unicorn. Now, it’s the status quo. But why?”

(Via. capwatkins.com)

Great piece here by Cap Watkins. Be sure to read it in full at the above link.

Sooo glad to see this trend. This whole Silicon Valley disease of fooling people into thinking everything in life should be free has been driving me nuts for decades. 

But the free web won’t die, unfortunately. It’s like a zombie–keeps rising up from time to time no matter how much you try and kill it. I have no doubt that this ad-supported nonsense will come back around. It cycles. It’s just too tempting for the handfuls of people who stand to get rich from the advertising model, and they’re very good bullshit artists. But the current cycle is winding down on ads, at least, and that makes me happy, at least for another year or two. 

As I keep joking, I’m looking forward to the traffic and rent prices coming back down to reasonable levels here in the Bay Area soon.

We’re discovering that you can’t create that sort of passion with free.

His example of Uber cab is an excellent one. Services that set out to solve a real-world problem don’t need to be free. People throw money at trying to solve problems all the time. And they’re happy to do so. And they become very loyal to services they pay for, in a way that they’ll never be loyal to Facebook or Twitter. Uber, Zipcar, Kickstarter, Square. These are the startups of today, and hopefully tomorrow.

Facebook and the State of Web Advertising

The Facebook Fallacy – Technology Review:

“The daily and stubborn reality for everybody building businesses on the strength of Web advertising is that the value of digital ads decreases every quarter, a consequence of their simultaneous ineffectiveness and efficiency. The nature of people’s behavior on the Web and of how they interact with advertising, as well as the character of those ads themselves and their inability to command real attention, has meant a marked decline in advertising’s impact. “

(Via technologyreview.com.)

What a great read. This could have been written eleven years ago, just before the first dot com bubble burst.

Everything hums along great for a while, sure. And a few people get rich every time. But for the vast majority of people, the notion that web advertising is sustainable as your sole source of income long term is just silly. The inside players in the Valley know this; they just don’t want everyone else to figure that out until it’s too late.

Facebook may very well come up with some master stroke, some bold new idea to start making a sustainable business in the long term. But thus far we haven’t seen any real evidence of that.

The Browser will take over any day now

Pew report: The Future of Apps and the Web:

Rob Scott, the chief technology officer for Nokia, believes the web will dominate and argues, “Once HTML5 browsers and fully capable Web runtimes are in place on the common Kindle through iPhone, the Web app will begin replacing native apps.”

(Via TUAW – The Unofficial Apple Weblog)

I love how the tech world is full of this sentiment. “The browser is going to take over native apps any day now.” I’ve been literally hearing that since 2000. Hasn’t happened yet.

And why does it have to be one or the other? Why can’t I use native apps for some things, and HTML5 for others?

Native code is always going to be faster, and the experience is always going to be better when and app is tailored to a specific platform. It’s always the business suits who want to find the “write once, run everywhere” nirvana. They’re looking for cheaper ways to deploy.

Users have never asked for that and have never gravitated towards that.

I, Cringely talks data caps

That 250 gigabytes-per-month works out to about one megabit-per-second, which costs $8 in New York. So your American ISP, who has been spending $0.40 per month to buy the bandwidth they’ve been selling to you for $30, wants to cap their maximum backbone cost per-subscriber at $8.

That doesn’t sound unreasonable on the face of it. Capping consumption at 20-times the provisioning level doesn’t sound so bad, but I think it sets a dangerous precedent.

These data caps are actually a trap being set for us by the ISPs.

Data caps that may make logical sense today make no sense tomorrow, yet once they are in place they’ll tend to stay in place.

Great article by I, Cringely.

I’ve been thinking this ever since the talk of data caps started several months ago. Just like with variable pricing on music in the iTunes store, these sorts of pricing changes are never designed to actually help consumers. In the sort term, they look to make things cheaper for us. So most of us fall for it. But over the long run, they are cleverly hidden price hikes.

And the worst part is that none of it is necessary to keep ISPs in business. This is all about increasing profits. Nothing more.

2GB today sounds like a lot. 2GB a year from now might be average monthly use. 2GB ten years from now may very well be average DAILY use. Do you really think the ISPs are going to keep raising the amount of data you get for the same price over time?

Just when the Internet is becoming a necessary utility, companies are setting up the infrastructure to divide us up between those who can afford to pay for the data, and those who can’t. They’re turning something as essential to our future as running water and electricity into something only rich people can afford. And we’re going to suffer greatly as a nation because of it.

via Coyote Tracks – The filter bubble and you

And—with all respect to Alex Jones and Amy Goodman—this doesn’t require either a corporate or government conspiracy: it requires nothing more than sincerely good intentions. The Internet presents far more information to us than any of us can realistically process even as it encourages us to subscribe to ever more of that information. You’ll be behind and uninformed if you don’t use this service, too—but don’t worry, we’ll make sure you only get the information stream from it you really want.

Mind-blowing article. Highly recommend reading this and pondering the implications.

We can all agree that the Internet brings us information overload. The question is, would it be better to let us each sort out that overload for ourselves, or, as Google and Facebook are doing, let computers decide which content we are “most likely” to want?

And his final thought, that maybe what we want isn’t even what’s best for us, is particularly intriguing.

Perhaps the very act of personal filtration of information on the Internet, good intentioned as it may be, whether by computer or by ourselves, is more dangerous to our long-term learning and mind expansion than anyone knows.

Another Internet Bubble bursting

It wouldn’t surprise me to see more such quick-let’s-add-some-page-views-to-our-arsenal deals.  It wouldn’t surprise me to see Huffington Post’s main — and perhaps better — rival, Politco, get acquired over the next twelve months. I would predict MSNBC as a likely candidate to acquire them.

People are obviously in quite a tizzy over AOL’s acquisition of the Huffington Post. I say good for Ariana. She made a good business deal for herself. Shrewd business move. And as the linked article above rightly points out, perfect timing. If she had waited any longer, she would surely have left money on the table.

The bigger implication of all these recent mergers and acquisitions, if you ask me, is that we’re finally seeing the dying gasps of the page view model of monetizing information on the web. And it’s about time.

I can’t believe it’s taking so many smart people so long to figure out that page views are essentially worthless. Facebook and Twitter figured this out a long time ago, of course, but the rest of the world still thinks that tossing in ads at pennies per view is still a good way to monetize content on the web. It’s not.

Didn’t we learn this lesson at the end of the first Internet bubble? Apparently not.

It’s becoming a very predictable cycle. Web startups give everything away for free, training their audience to expect everything to be free. Venture capitalists throw millions at these companies, because they have a lot of money and love to stroke their egos thinking they’re going to be responsible for the “next big thing.” A few years go by, and suddenly someone realizes that they eventually have to figure out how to make money. So they run to their old friend, the web ad. They start with one or two ads, then five or six, then they split the articles into several pages to have more ads, then the ads start blocking the view of the content, and then the ads BECOME the content. At this point, the users start flocking to other sites with fewer ads, or they start using news aggregators, RSS readers, Instapaper—whatever they can to view the actual content and avoid the ads. Because they still think that everything should be free. And why not? That’s what you told them.

Right now we’re seeing the next phase of the bubble cycle: the big mergers and acquisitions. The previous generation’s dot com survivors, the Yahoos and the AOLs, start buying today’s generation of successful startups, in a vain attempt to get some of their old mojo back. But what usually happens as a result of these buyouts is that one or two people get rich, while the company that was bought gets poisoned by the old establishment bureaucracy. (Delicious, anyone?) Everything that made that smaller startup successful, the passion for success, the devotion to the content and the users, suddenly gets overtaken by the sole focus on making money.

Sooner or later, the venture capitalists losing money lose interest in the Internet, and start putting their money back into “safer” investments. The whole thing comes crashing down, leaving a few recognizable brands to become the next bubble’s old establishment.

The first bubble saw the birth of Amazon, Google, AOL, EBay, Yahoo. Just a handful of companies that survived the armageddon. This time, we’ll surely see Facebook, Twitter, maybe one or two others. Everything else will be a footnote in history. A Pets.com, if you will.

And I’d be surprised if some of the “established” companies from the last generation survive this one. AOL is surely flailing in desperation, although it’s been here before. Yahoo is on its way out.

And, I’d argue, probably very controversially, that Google is in big trouble this time around, too. All of Google’s income is tied up in web ads, so if web ads become worthless again, where does that leave Google? Not to mention that people are just starting to come around to the idea that Google’s main product—Search—ain’t what it used to be. Rather than improving their search, they seem to be hell bent on criticizing competitors, accusing them of copying their ideas, etc. Never a good sign.

There’s a scene in “The Social Network” where the Zuckerberg character tells his partner that they can’t put ads on Facebook, because “then it won’t be cool anymore.” People recognize the hard sell, the blatant product placement, and they immediately think you’re lame. And then they stop showing up. They go somewhere cooler. That’s what we’re seeing here.

The future of monetizing the Internet is the soft sell.Recommendations from a friend are always going to trump the used car salesman approach. The sooner people figure that out, the sooner this next bubble is going to burst. And the sooner we can get on with the next big thing, whatever that is.

Online Ads: Failing again

My argument is simple: blocking ads can be devastating to the sites you love. I am not making an argument that blocking ads is a form of stealing, or is immoral, or unethical, or makes someone the son of the devil. It can result in people losing their jobs, it can result in less content on any given site, and it definitely can affect the quality of content. It can also put sites into a real advertising death spin. As ad revenues go down, many sites are lured into running advertising of a truly questionable nature. We’ve all seen it happen. I am very proud of the fact that we routinely talk to you guys in our feedback forum about the quality of our ads. I have proven over 12 years that we will fight on the behalf of readers whenever we can. Does that mean that there are the occasional intrusive ads, expanding this way and that? Yes, sometimes we have to accept those ads. But any of you reading this site for any significant period of time know that these are few and far between. We turn down offers every month for advertising like that out of respect for you guys. We simply ask that you return the favor and not block ads.

Man, does Ars completely miss the boat in this article. Their argument is basically that people who use ad blockers are effectively stealing food out of their kids’ mouths. What their little experiment SHOULD have taught them instead is that they need to find a better way to fund their content.

If a user turns on an ad blocker, that is a clear gesture that he or she is not interested in devoting his or her attention to an ad. It’s like screening marketing phone calls with an answering machine, or turning on a spam filter in an email program. “I am not interested.”

Rather than listening to that clear message, Ars is instead trying to guilt trip its users into caring about something they don’t care about. And they are trying to scam revenue out of their advertisers for ads that are obviously not getting anyone’s attention.

Begging people to turn off their ad blockers is actually immoral on Ars’ part, because they are asking us to help them lie to their advertisers.

I understand fully that content is not free; people who create great content deserve to be paid for that content. So make that argument. Apple does this very effectively with the iTunes store. I gladly pay $2.00 for an episode of the Daily Show with no ads. Other people prefer to watch it on Hulu for no payment, but with ads. Each of us is making a separate statement. Each of is willing to pay, one with money, the other with attention.

It’s not about free vs. paid. It’s about gaining your users’ trust.

Now, read this excellent post from Shawn Blanc, as well as the other posts linked in his post. (http://shawnblanc.net/2010/03/attention-trust-and-advertising/) This is a perfect demonstration of how to respect your reader’s gestures, and how to make money by listening to your users in a way that is honest to your readers, yourself, and your advertisers.

If all this talk of ads sounds familiar, it’s because we’ve been through this before. Remember the first dot com bubble? It burst because at long last few companies had figured out a way to make money on the Web. They had all bet the farm on Internet Ads, and eventually, companies figured out that Internet ads were essentially worthless. Well, guess what? Nothing has changed in the decade that has passed since. Ads are still essentially worthless. They’re actually worth even less than before, because ads are now cheaper, which means we need to have a lot more of them, which drives the price of each one down, and so on. It’s a vicious circle, spiraling toward failure.

What does this all mean? A second dot com bubble? You bet.

If there’s one company that should be worried right now about this, it should be Google. No one wants to say it, but Google is essentially a one-trick pony. It has bet the farm on ads to a larger degree than any of the original dot com era companies. When the eventual bottom drops out of the ad business online for the second time, what exactly is Google going to do? Start charging for GMail? Wave? Buzz?

Good luck with that.

You simply can’t give something away for free for a time, and then start charging for it later and expect people not to feel betrayed by that. Offer your content for a fair price in the first place, and users will either gladly pay, or go elsewhere. You’ll never grab the whole world that way, but the people who you do get will follow you into the gates of hell, because they will trust you and respect you.