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April 28, 2006

Who's afraid of the big, bad Google?

I honestly think that one of the happiest days in my life online was the day I found Google. At the time, the best search engine was Altavista, and it had become dog-awful to use: cluttered, slow, messy, and annoying. Google was the online user's dream: clean, white screen, cute logo, speed, good results. Home. No one may ever really beat a path to the door of the manufacturer of a better mouse trap, but they certainly did to a better search engine.
It took a long time - or it seemed like it - for the world to catch up. "Only geeks use it," I was told for some years.

"But how can they make any money?" financial analysts complained. The received wisdom, even when Google reinvented advertising with paid search, was that Google's audience could vanish overnight if someone came along with a better search engine. Two problems with that. First, it's really hard to come up with a better search engine than Google. Second, Google was capable of finding people working on technology to improve search engines - and hiring them.

Search engine audiences turn out to be more locked in than it appeared in the rearview mirror. True, most people don't care what search engine they use as long as they get good results; but that also means they are unlikely to change. Google won on usability as much as quality of results, and the longer you use it the more you learn about how to work with it.

The first stirrings of Google dislike probably showed up when Google bought Dejanews and began constructing the most comprehensive Usenet archive available. People who had posted to Usenet in the early days had thought of their ramblings as ephemeral. Now, they were going to be available for every Tom, Dick, and Maureen in Human Resources to search. Of course, then everyone loved Google again when it did Google Earth.

Concern about Google seemed to begin among privacy advocates with Gmail, because of its vast storage and the automatic searching that inserts ads. Log in, read your email, do your searches, and Google collects all the data. Valuable stuff. Search your hard drive. Upload its contents to Google as a backup.

At this point, there seems to be no doubt that Google is becoming the Microsoft of online information. You do not have to own the information itself - any more than Microsoft had to make computers. It is sufficient to control the gateways. In Microsoft's case, that was the operating system. In Google's case, it's the search engines and, just as important, the advertising. Almost every blog that can carry advertising - even Nick Carr's discussion this week of Google's float - carries Google AdSense.

In it, Carr noted something I've been pondering for some time: the vastness of the universe of people who have signed up for AdSense, and the revenues Google has derived from the clicks on their sites, and the percentage of those people whose payouts have not reached the $100 necessary to actually get paid. I am one of the people in that universe; there must be millions of us.

The float thus generated seems hardly likely to make a dent in a company of the size that Google now is - but on the other hand, float is how Warren Buffett became the second richest man in America.

Carr also notes that the terms and conditions that accompany signing up for AdSense ban people from disparaging Google. And it appears that you can be thrown out of AdSense for other reasons, such as displaying Google ads next to content that might upset the advertisers. I'm not convinced that being dumped out of AdSense has to end a successful blog, though it certainly means you need to rethink where your income will come from. But AdSense is like eBay: it matches, through search, buyers and sellers. And like eBay, the bigger its user base gets the more successful it will be at doing so.

Every move Google makes now is offending someone. Google Print upsets publishers and some authors. Google's plans to digitize books for online reading upsets many libraries. Telephone companies. Newspapers publishers losing classified ads. All media sources, convinced that Google News will cost them differentiation between the Kew Society Newsletter and CNN. Human rights groups, when Google cooperated with China. eBay, which would like to reduce its dependence on foreign search engines. Business Week has a long list. Even its doodles, surely the best part of its service - a search engine that's fast and sometimes makes me laugh! - got it in trouble with the Miró estate. You must, I suppose, be doing something right in business terms if this many people feel threatened.

Even so, the reality is that Google is never going to be hated the way Microsoft, which is back in antitrust court in the EU this week, is. For a very simple reason. Everyone's primary contact with Microsoft is the daily frustrations of using Windows. It is all negative. Everyone's primary contact with Google, however, is that it finds you things you wanted. That's a hard burst of positive fuzzies to overcome.

April 21, 2006


LiveJournal, home to approximately 1.3 million active blogs and 10 million overall, announced this week that it's inaugurating ads on its site, following on from a post on the subject from the founder about six weeks ago. The general idea isn't all that dissimilar to what Salon has been doing for the last five years with its Premium service: you pay for the value you receive with either ads or money, your choice. LiveJournal has always offered free and paid accounts, basing the incentive to pay on limiting the features available to the free accounts. Now, it will offer an intermediate "Sponsored" level which will include ads. If you're a logged-in paid user you will never see ads; if you're a free or sponsored user (or visitor) you will see ads on LiveJournal's main site and on sponsored journals. No one has to display ads on their journal.

Almost simultaneously, Six Apart, the owner of LiveJournal, announced that it had secured $12 million in venture capital funding. LiveJournal was a cooperative community; now it's a business.

We will pass over quickly the storm-in-a-Slashdot about the changes to LiveJournal's terms of service that banned the use of ad-blocking software on pain of having your account deleted. LiveJournal has already said the clause was a lawyer's error. It must have been: it would have been such a pointless, stupid, and self-destructive clause that it's hard to believe anyone ever seriously intended to implement it. For one thing, such a stick would have had no effect on anyone not logged in. For another, we've had so many of these TOS thrashes by now that there can't be a remotely technically savvy management team that doesn't know how much negative attention they'll get from this kind of announcement. Posting new TOS that no one has read and considered carefully isn't too bright either, but it's a mistake not evidence of Evil.

The advent of ads will be interesting. LiveJournal isn't just a blogging site; it's a powerful cross between blogging and social networking. On most social networking sites, the links between people are tenuous and ill-defined. There is no distinction on Orkut, for example, between a friend I've known intimately for years and a "friend" I met for five minutes last week. There is only one kind of link, and it doesn't tell you much.

On LiveJournal, however, it implies real interest, if not friendship, if I add someone to the list of blogs on my friends list. There is still only one kind of link, but it is more meaningful, and some conclusions about its strength can be derived from seeing whether it's one-way or two-way, and how large a cluster it's part of. If the goal is ads targeted to people's interests – which would be logical – LiveJournal has a very rich structure to mine and an even richer base of information about all its users based on what they post about themselves in their blogs. You can see why ad sales people might salivate over the notion, particularly in the wake of this week's other blogging story, the one about graphing the mood of the blogosphere, specifically LiveJournal's part of it.

That technology strikes me as gimmicky: it relies on self-reporting. I look forward to the first mass protest via LiveJournal mood tags, when users club together to post specific moods so they'll show up on the graphs. The concept, however, is likely to develop further into datamining and textual analysis of the blog entries themselves (which are less likely to be spoofed, because of the amount of effort involved), and it's easy to imagine how valuable those results could be to marketing people trying to spot trends they can capitalize on.

The problem LiveJournal is up against in all this is that the lock-in they have for customers isn't as good as it might seem at first. In fact, the lock-in for LiveJournal is considerably less than it is for Google, whose audience financial analysts used to regard as alarmingly easily lost. It wasn't true of Google, largely because Google was so much better at what it does than everyone else is.

But it doesn't take much to start a blog somewhere else. The tools aren't much different, and you don't have to take down or lose the old blog to do it. You just start the new one with an entry pointing at the old one, and move on. The phemonenon of RSS readers, online and off, mean that the socially networked LiveJournal structure can be mimicked almost anywhere by anyone – and those tools are going to continue improving. More than that, if you have any hope of turning your blog into a source of income, however tiny, you move off LiveJournal because you can't run your own ads. If LiveJournal wants its new gambit to work, it's going to have to give sponsored users a slice of the action. Because, aside from anything else, sponsored users are going to find themselves at the bottom of the social LiveJournal totem pole. Everyone will know who they are. And they won't get anything for it.

Wendy M. Grossman’s Web site has an extensive archive of her books, articles, and music, and an archive of all the earlier columns in this series. Readers are welcome to post here, at net.wars home, at her | | Comments (0) | TrackBacks (0)

April 14, 2006

A question of balance

The good news is that the UK government has undertaken a review of copyright law. "While it has been suggested that the present UK system strikes broadly the right balance between consumers and rights-holders, it also appears that there are a variety of practical issues with the existing framework," runs the introduction to the consultation document. You have until next Friday, April 21, to submit comments. Go.

But here's the bad news: do you notice anyone missing from that list of balancees? If you said, "Creators", you are a freelance and I claim my five pounds.

Freelances in journalism (in particular), and individual creators in just about every other field, are being increasingly and consistently forced to surrender their copyrights. Until 15 years ago (or thereabouts), magazines and newspapers in the UK bought First British Serial Rights; the freelances benefited from reuse of their work. It is now rare in both the US and the UK to find publishing outlets that don't demand all rights including moral rights (the right to be identified as the author of a particular work). It is equally rare to find a publisher that offers to pay more for the extra rights they are demanding. When they do, you are usually selling off all future interest in your work for a comparatively small sum (25 percent, in one case where I remember the details). Where there have been cases -- such as New York Times v. Tasini et al in the US -- establishing that, say, publishers must pay freelances for reuse of their work in electronic databases, publishers may make those payments once, but thereafter they alter their contracts to ensure they will never have to do so again.

The Creators' Rights Alliance spells all this out pretty clearly (although I disagree with their stance on the BBC). The same pattern is repeated throughout the creative industries. Photographers: high overheads, shrinking fees due to pressure exerted by the digital libraries. Filmmakers? The average director – as one said to me last year – is paid to do a film and sees nothing further once it's done; the same goes for most other participants in the making of a movie. The record industry? Read Courtney Love on that.

Copyright is not just a balance between consumers and rightsholders; two-legged stools don't stand up very well. Copyrights (and the other intellectual property rights) is a three-way balance between consumers, rightsholders, and creators/inventors. The latter group, without whom no new intellectual property will exist, is being squeezed by both the first two groups. Increasingly, the only people who will be able to afford to create anything will be people who are either rich to begin with or who have made enough money from some other activity – acting, modeling, founding a business – that they can afford it as a hobby. The idea behind paying professionals is not that no one else should enter the profession, but that it should be possible for someone to make a living; paying someone to write, think, paint, create full-time in theory makes it possible for them to create more and do a better job of it. Martina Navratilova may say airily that she wrote all her new book herself and that she just had "help" with the organizational side of it – but anyone who actually writes for a living knows that organization is the really hard part of writing a book. Anyone can throw words around.

So: what needs to be said to the Gowers review people?

First, get that third leg back under the stool before the whole edifice topples over. As Doris Lessing has written (of better writers than I am): "Without me the literary industry would not exist; the publishers, the agents, the sub-agents, the accountants, the libel lawyers, the department of literature, the professors, the theses, the books of criticism, the reviewers, the book pages – all this vast and proliferating edifice is because of this small, patronized, put down, and underpaid person." No one is saying that anyone is owed a job. What we are arguing for is fair treatment.

Second of all, that the current situation with respect to intellectual property rights disadvantages everyone except the stars. Patents are too expensive to obtain – and still more, to litigate – for small businesses. Fair use should be expanded to incorporate the notion of private copying; there is no legal exemption allowing people to copy their CDs onto their iPods. That may have made sense when there was no technology for private copying, but these days it's just ludicrously out of step with what people actually want to do. We need limitations on what DRM is allowed to do (as net.wars has argued before).

Third of all, the notion of extending copyright terms on sound recordings and performers' rights from 50 to 95 years is ludicrous. Doing so will not inspire new work. It will benefit only the big record companies. There is no reversion of rights in the recording world when music releases go out of print.

Don't get me wrong: I really hope the Gowers review will come up with good recommendations for reform. But as written, the consultation is all about the business of copyright, and very little about the goals copyright is intended to further.

Wendy M. Grossman’s Web site has an extensive archive of her books, articles, and music, and an archive of all the earlier columns in this series. She has an intermittent blog. Readers are welcome to post there or to send email, but please turn off HTML.

April 7, 2006

Becoming virtual

There are three reasons to visit a physical-world store over an online one: convenience; a chance to sample in person a wide range of goods; good customer service. All right, there's a fourth: it's fun. At least, number four on that list is the reasoning behind such phenomena as Niketown or those airport hangar-sized Levi's stores that try to look like night clubs (at least, I guess that's what they're trying for).

Dixons, which this week threw in the towel as a British High Street retailer in favor of turning itself into an Internet-only retailer, has been scoring pretty low on all of those for some time now. Convenient locations – if you work in town – it had. However, notorious for being staffed by young, ill-trained (particularly with respect to computer equipment) kids detailed to sell extended warranties, it was never going to win awards for customer service. The stores were too small to carry a really wide range of merchandise. They couldn't compete on price with the big, out-of-town stores (including the chain's own PC World or its electrical retailer, Currys, which is to be renamed the so-1999 "currys.digital"). And visiting one of those stores was certainly never fun. I can't think of a direct US equivalent, in part because it's so long since most parts of the US have had comparable city centers. In Britain, where public transportation has kept city centers (mostly) alive by keeping foot traffic going past stores the "High Street" – the generic (and often specific) term for the main shopping drag in any given city, like Main Street in the US – has continued in its traditional role. Britain has some out-of-town malls and category killer stores, and it has many, many chains, but you can still find a local butcher or hardware store.

Pretty much all the headlines blamed the growth of ecommerce. Yet Dixons is being squeezed by all the factors above, not just the Web. And in fact, if they attempt to compete on the Web with their current high prices, it's hard to believe that its own brand name is going to be sufficient to make it a long-term success online. The same increasing competition that's squeezing the bricks-and-plastic Dixons – supermarkets like Tesco, which has expanded into electrical goods – are already firmly entrenched online. Sure, you can buy an MP3 player from Dixons. But without the real-world stores to advertise its existence like a painted van touring the streets, Dixons as an online brand name can't compete with Amazon, eBay, or Google's or Yahoo!'s shopping engines. And those are its main competition. Despite its ecommerce operation having grown by 50 percent year-on-year since 2002, does Dixons itself command the kind of loyalty that will get its less Net-savvy shoppers to follow it online? It seems hard to believe.

Among the non-Neterate of my acquaintance, I note that when they want to buy something confusing, like a computer, they do want to buy from a company they've heard of – but they typically want that company to be in the physical world, where they can go see what they're buying. The Web's habit of reducing such purchases to a list of features and specifications works well only if you are experienced and knowledgeable. Of course, we know there's nothing to see when you look at a computer that tells you anything valuable other than whether you like the keyboard, but the presence of a human to explain things and promise to fix them if anything goes wrong is infinitely reassuring. Even if that human is completely ignorant, barely out of school, and gives the wrong advice. I may react in horror when one of these folks goes to PC World instead of the much nearer and more helpful local computer shop, but they do it because they've heard of it and they think that fact offers some security in unfamiliar blocked drains.

It's mildly amusing to look back about eight years and remember that at the time everyone was predicting that the big offline retailers would come online and stomp all over the cyberupstarts. And then again to about five years ago, when everyone was saying that "clicks and mortar" was the way to success. Instead, what seems to be happening is that retail, like so many other things in life and business, is becoming increasingly polarized between the huge names and the niche players. You're the local café or you're Starbucks. You're Cybercandy or you're Tesco. Increasingly, the middle is squeezed out.

Meanwhile, branding is supposed to be the answer for everything. Sometimes – for example, Interfauna – it is the shop's brand that matters. But more often these days, especially in consumer electrical goods, it's the brand of the goods you are buying. No one buys anything from Wal-Mart because the name "Wal-Mart" conveys quality; the one quality that name conveys is "cheap". You choose Wal-Mart as the retailer because of the price, and you choose the brand of the merchandise for its design, functionality, quality, style, or perceived value. Retailer branding is comparatively fragile, even something as apparently unassailable as Amazon.com.

The most likely is that Dixons is a dying brand, and its Web operation will eventually be folded into a single operation that ecompasses currys.digital and PC World. And then Tesco or Wal-Mart will buy it.

Wendy M. Grossman’s Web site has an extensive archive of her books, articles, and music, and an archive of all the earlier columns in this series. She has an intermittent blog. Readers are welcome to post there, at the official net.wars blogor to send email, but please turn off HTML.