Archive for February, 2009

How Silicon Valley can Re-grow the Economy from the Bottom Up

February 28, 2009

Details:

1)     Create an Open Ad Network, similar to Adsense but for any multimedia, for use on social networking sites like Twitter, Facebook and FriendFeed, as well as blog sites like WordPress.

2)     While anybody can upload an ad and say how much they are willing to pay for its run, only users will have the power to distribute the ads.  IOW, users get to pick and choose the products and services they wish to endorse for their own social graph and casual readers.

3)     Ads are very dynamic, mostly limited-time offers and invitations by companies previously approved (Users will input their “150” – the number of brands we are each loyal to on average, which serve 80% of our everyday needs) .  Once the goal of the advertiser is met (such as 10,000 coupons saved or printed), the ad is automatically replaced by another in the queue.

4)     Of course, there will be room to introduce new products and services, too, for those companies seeking brand awareness.  This will spawn limited offers to targeted influencers such as “Can we send you our new coffee maker to try at home?”

5)     As users’ friends, family and followers engage with the ads, the user makes money.

6)     Smaller businesses that can’t afford to pay cash can offer users discounts.  For example, $.25 per engagement towards meals at my local restaurant (so if 20 of your local friends check out the ad of the new restaurant you recommend, you get $5 off your next meal there).  Also, if a startup cannot afford to pay, the user can override the “place best paying ads first” function and distribute the ads for little to nothing, to give deserving companies a boost and help make sure they stick around.

7)     Earned money can be spent at participating LOCAL businesses via cell phone exchange, so that users are encouraged to spend the money locally, to shore up their own communities.  If spent this way, the money is not taxable for the user (but would be subject to tax for the businesses) and the business picks up the bank transaction fees.  So even if you earned $1,000 a month or more via this system, you wouldn’t get taxed on it and you wouldn’t increase the tax rate of your primary income. (Of course, the government will have to sign off on this, but given the state of our economy, if there were a groundswell of support for this, it shouldn’t be a problem.)

8 )     The alternative is to withdraw cash once a month, which will be reported to the IRS and bank transaction fees will be charged.

Advantages:

1)     Individuals will earn and spend extra money, stimulating the economy, especially their local communities.

2)     Since people will be recommending products and services they know and enjoy, then trust, confidence and demand will all increase.

3)     Advertisers will finally benefit from an online advertising method that actually works for demand creation (as opposed to Search’s demand fulfillment).

4)     Because companies themselves cannot distribute the ads, goodwill and not just money is required for any and all ad runs.  This will make businesses more accountable to customers and society at large.

5)     Crappy ads will not be distributed.  Demand for higher quality ads will increase and professional copywriters, photographers, videographers, and so on will be put back to work.

6)     Everybody has the same, level playing field so that small companies without huge advertising budgets can still access the marketplace and compete effectively with big companies.

7)     Being able to access the market will make entrepreneurism skyrocket, creating income, tax revenue and jobs.

As I’ve written before, we should create a for-profit consortium to make this a reality.  The sooner the better.

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When are Tweets Worth Paying for? And how much money would YOU make?

February 28, 2009

Dawn’s Plan is about making money from your social media activity, whether or not you have a blog.  And with some of this money, you could pay for content to enhance your own offerings (like running a comic strip on your feed) or just for your own enjoyment (like downloading songs or utility apps).

So nobody would have to put in money via a credit card or Paypal or whatever.   The system itself would allow you to earn money and spend money for digital content.  It would be its own economy.  The “digital economy” that people have long anticipated but that has never materialized in any meaningful way, except for Apple and a few others.

Most people would make money via advertising.  That is, they would choose ads that they would like to run on appropriate pages they create.   And as their friends, family and followers engage with the ads, they would earn money.

And then some people would also make more money via other digital content they create, like for cartoons, apps, songs, poems, stories and so on.

But what about somebody like Karl Rove, who is now on Twitter?  Somehow I can’t picture him picking out ads to run next to his tweets.  And maybe you wouldn’t want to do that either.

If songs and apps are worth paying for (and iTunes prove they are), then under what conditions would somebody’s stream (like a FriendFeed or Twitter feed) be worth paying for?

Personally, I’d be willing to pay up to $.25 cents a month for the following feeds (again, out of the money I’m earning via the system, so it’s not coming out of my job’s pocket).

1.      Someone who collects the best information there is about X subject on an ongoing basis.

2.      An interesting inside look into a job or position I’m interested in.  So if my goal in life is to become a cameraman in Hollywood, then I would pay a cameraman in Hollywood to tweet what he does during the day.

3.      Instructional knowledge, like a blacksmith who can tweet (along with photos and maybe videos) how he makes knives.

4.      Vicarious support for something I’m going through, like a woman could chronicle her weight loss progress and feed me tips and motivation.

5.      The “first look” at art and entertainment by some favorite creators – like cartoonists, photographers, animators, etc. – with personal commentary, behind the scenes photos, etc.

6.      Collections for charity – like celebrities Twittering their lives and giving the proceeds to save dolphins, or whatever.

 

If you had 5,000 followers and earned 80% of the $.25 each month, that’s $12,000 a year in earnings.  Not bad.

How would that compare to making money off of advertising?  Again, let’s say you have 5,000 followers. If you put out 3 posts a day (long, short, whatever) with three very targeted “offers and invitations” attached, and the average “engagement rate” to each one pays you $.05 (a conservative estimate) , and 2% of your readers engages with just one of the ads per post (since these ads would be relevant to their lives and most likely entertaining) , that would earn you $5,475 in one year.

Of course, when it comes to advertising, the things you write about and the people you attract would impact your earnings.  Some people won’t pay attention to that and just naturally talk to their friends, family and co-workers, come what may.  Others will see this as a business opportunity and put more thought into it.

The one thing that everybody will have to stick to if they want to be successful, is to only promote the products and services that they actually use and are willing to legitimately endorse.  We each have an average of 150 brands we are loyal to that satisfy 80% of our daily needs.  So most of the ads would be offers and invitations regarding these, as well as our favorite places to dine locally, etc.

So is this crass commercialism that will destroy our enjoyment of social media?  Yeah, some people will think so, but I don’t.  I believe most people will see this as a service.  The truth of the matter is, if our purchasing is guided by people we trust , then we won’t waste so much of our money.   And if we are in control of ad distribution, then advertisers will have to be more accountable to their customers.  Money won’t be enough to distribute ads.  Companies will also need goodwill.  And good ads!  No more sitting through poor, irritating commercials.

Besides, each person can override the “display the highest paying ad” system (similar to AdSense) and decide to distribute an ad no matter what the owner can afford.  This ensures that small companies will have as much access to the market as giant corporations.  Very cool.

My plan gives control of advertising to users, and also lets users own and control their social graph and be compensated for its use.  If that’s “commercial,” then good.  For two hundred thousand years social networks were also economic networks, and they should rightfully be so again.  If everybody participates on an equal playing field, then there is nothing crass about it. 

Personally, I think Facebook and others who throw ads in our faces that are irrelevant and intrusive (and on our own pages that we’ve created!) so that they can become billionaires is what’s crass.

We need a true, functioning digital economy so that people around the globe can earn money with little environmental impact, even those in poor countries with few natural resources.  My plan allows the world to “drill, drill, drill” human talent, an infinite resource.  It also ensures we can regrow the economy from the bottom up by injecting trust and confidence back into consumerism. 

Would you rather work in a factory or create your own works?  Would you rather buy something that will sit on a table collecting dust until its sent to a landfill someday, or would you rather buy something that entertains, enlightens and/instructs?

During this recession that could potentially move into a prolonged depression, do you want to help the individuals and companies you care about survive?

If you think keeping the status quo is worth destroying all these benefits, then I hope you’ll make your case in the comments.

Follow People? Follow Topics? Why not Both at the Same Time?

February 26, 2009

There’s been growing controversy lately about following people on Twitter – debate on why, who, when, how many, etcLouis Gray suggests that it’s topics, not people, that we really want to follow.   I think it’s both.  

How do we know people in the real world?  It’s by the roles that we play: Mom, churchgoer, PTA member, etc.; but it’s also by the interests we have:  blacksmithing, motorcycles, photography, and so on.

What social networks need to do, IMO, is break people down by their “hats” like Marine Mom, Movie Lover, Social Media Watcher, CEO, and so on.  Then instead of following a whole person, you can pick and choose which of their hats you want to follow and then designate which hat you are wearing as you do so.

1) Take Robert Scoble as an example.  Robert and I don’t agree on politics and we’ve clashed because of it.  I’d like to follow Robert’s “tech evangelist” hat, but I don’t want to follow his political hat.  Robert could slice himself down into the different persons he is:  Father, Silicon Valley Resident, Videographer, Photographer, whatever, and then I could pick and choose which Roberts I want to follow.  This takes out all the noise and offensive stuff I don’t want.

2) So instead of tagging every post to make it searchable, the writer simply has to state which hat she’s writing under. 

3) The system could easily keep track of the urls that people are exchanging and aggregate the pieces talked about most often by hat so that popular stuff is never missed.  There could also be a digg-like ranking.  This “group push method” decreases the need to follow so many individual people.

4) Since I would tell the system which hat I’m wearing as I follow somebody’s else’s hat, that person will know what it is I am expecting or wanting from him.  For example, right now Robert is just Scobleizer.    He doesn’t know why different people are following him.  But if people signed up for his feed under their hats, he could get a much better sense of who his readers are.  Maybe some are CEOs, some are IT guys, some are geek-curious…  The first tenet of writing is to know who your audience is.  A breakdown of hats by percentage is a heck of a lot more meaningful than the current blind lists of strange faces we now get.

5) With Twitter (or whatever social network it is) getting thin sliced into varied hats, it would be very easy to find people you want to talk to.  For example, I’m a dog lover.  I could read the dog lover feed which would blast every dog lover’s post, but from that I could select individuals I wish to follow, in order to get it down to a manageable size, customized just for me.  The way I would design this is to have a +1 and -1 ranking, so that when I see something I like, I give it a +1 and when I see something I don’t like, I give it a -1.  The system itself would keep track of who I like best and I would automatically start following those people I respond well to, with the others falling off.  Of course, I could also choose outright to follow certain people and block others.  (Wouldn’t it be interesting if everybody’s Twitter or FriendFeed posts were blind and you started sorting people by +1’s and -1’s according to what they write?  Do you think you’d end up following the same people you are following now?)

6) At some point, hats could be subcategorized so that I could still be “dog lover” but also “boxer owner” as a subcategory.  And hats could be cross-checked.  So if I choose to have a “Hillsboro, OR resident” hat,  too, another boxer owner in the area could easily find me and we could make a play date at the dog park.

7) With this system, there is no pressure to follow particular people.  I myself think it would be better if people could choose to make it blind or not.  Personally, I don’t think it’s anybody’s business who I follow and who is following me.

8 ) Of course, all this thin slicing sets the table for very targeted ads (even local ads!!) so a strong monetization plan is readymade.  Of course, as I’ve written about many times on this blog, I think that advertising should be turned over to users, so that you pick and choose which ads to promote (if any), and you get compensated.   This way, you don’t have to keep a blog to make money from all your interaction.

9) Besides hats, social networks should be divided by space, too – Intimate, Private, Social, Public – but that’s another story.

I don’t think Twitter is a fad, but I do believe all this following-orgy is.  That’s why I designed my own ideal social network a different way.  But with this horrible economy, I won’t get funding, and I’d still like to see this implemented.  So maybe somebody else will go for it.  If Twitter did, I’d start using it.  As it is now, it’s worthless to me.  More pain than gain.

At the risk of being a broken record, let me say once again that all of these problems (and more!) could be avoided if technology wasn’t the only thing that VCs and CEOs cared about when designing sites and applications.  It’s SOCIAL media, after all.  Bring in the social scientists and others who understand vital issues besides coding, and the Web will be a much better, more efficient and more peaceful place.  Not to mention a whole lot healthier financially, too.

Offered: Online Payment Plan for Print

February 25, 2009

Michael Learmonth has written an article for AdAge called Wanted: Online Payment Plan for Print, subtitled: As Everyone Weighs in on How to Save the Business, the Question Is Whether Consumers Will Cough up for Content They Can Get for Free.

I’ve spent years monitoring this problem and just about as long incubating on it, and while my plan – that is “Dawn’s Plan” – may not be perfect, I believe it is the best hope for saving journalism.

The key to solving the “how to pay for journalism in a digital age” dilemma is to understand the Square Triangle and adapt it to the Web, as I’ve introduced here.

Journalism has been supported by advertising for at least a few hundred years and there is no need to deviate from that success now.  The key is to implement an advertising system that actually works.  As Mr. Learmonth reports, banner ads certainly are not it.  CPM is a total waste, and CPC generates massive fraud.

Here is an outline of how my plan works to monetize journalism via effective advertising:

1) First, we create a substitute for email (I call it Swig) that is based on the same technologies as Twitter and Friendfeed.  The space is divided as we naturally divide and manage our offline space: Intimate, Private, Social and Public.  Newspaper and magazine stories will be part of the public feeds, as will advertising. 

2) Users of Swig will be able to “thin slice” themselves into their roles and interests or “hats.”  So you will participate in social and public discussions (and even some private conversations) based on whichever one of your hats you choose to currently wear.  Not only does this allow members to easily find information they will be interested in (and allows the system to aggregate all the best information related to that hat), but it also creates space for very targeted ads.  An elegant low-tech user-empowered alternative to all the nefarious data mining that currently drives ads.

3) Key to making this work is to acknowledge that the above ad inventory (i.e., the space for ads that is generated when you converse online) rightfully belongs to the person writing the content.  Users will therefore get to choose which ads are allowed on their pages, if any; in other words, you will promote only those goods and services you wish to support and only where you want them to be.  As your social graph (i.e., your friends, family and followers) engages with these ads (which can be different types of multimedia, depending on the ad’s goal), then you will earn money.

4) Now this is where journalism comes in.  Professional media will get “first engagement rights.”  Remember, you make money when your friends, co-workers, etc. engage with the ads you have chosen for your pages.  But how are you exposed to the ads in the first place?  The ads will be fed to you attached to news articles related to the hat you are wearing as you surf information.  When you yourself engage with these ads, you don’t make the generated money, the media outlet does.  Not only that, but if you choose to “swig” one of these ads [that is, take it and put it on your appropriate page(s)], then when your social graph in turn engages with these ads, the media outlet will continue to earn a cut.  And as your friends swig ad copies off of yours to expose to their own social graphs, you and the media outlet will both take a cut of generated income.  So newspapers and magazines will be paid by readers’ attentions who aren’t necessarily their own readers! 

5) This system requires that newspapers and magazines break up their feeds into the same hats that Swig users create.  Sports Nut, Movie Buff, Dog Lover, Political Junkie, Business Owner, Catholic, Biker,….  The reality is, professional journalists and everyday folks write about the same things.  Media hats and user hats will not be in conflict but will naturally conflate.

6) Okay, so where do the ads that are on your news article feeds come from?  From the existing ad departments of newspapers and magazines.  These departments are underutilized assets that should be leveraged.  Facebook is hiring tons of ad people.  That’s crazy, to my mind.  They should stick to technology instead of trying to reinvent the wheel and their own corporate culture.  There are already boots on the ground in every community in almost every country around the world.  This system makes local advertising as feasible and effective as national advertising, which will put billions of dollars into the hands of newspapers, magazines and Swig users.  For the first time, demand generation advertising will work online.  (Search is about demand fulfillment and does nothing to create demand.)  Creating brand awareness and increasing consumer demand worldwide will help save the global economy as well as journalism.

Will this work?  One indication that it will is the fact that there are over 200 million abandoned blogs on the Web.  That’s a lot of people wanting to “join the conversation” but who found it too demanding, too troll-filled, or too lonely with nobody commenting back.  Why be stuck to a rigid format that demands you focus on one or two subjects if your desire is to build up a big enough audience to earn money?  Why can’t you earn money from one post here about this subject, or another post there about that subject?

What Dawn’s Plan essentially does is make individual users the center of their own online universe.  Information will orbit you, rather than you having to go to multiple websites.  And your every contribution, no matter how much you participate, can be potentially monetized.

Newspapers and magazines need to be able to orbit users where we are and where we’re talking, instead of having only destination sites.  If they thin slice their feeds the way Swig users will thin slice themselves, then the attached advertising will be targeted and appreciated as a service rather than an irrelevant affront. 

This system elevates readers as co-publishers who have a financial stake, too.  If newspapers and magazines are willing to allow that, then they can continue to make money in this digital age.  Yes, they will have to share it, but they will still get a lion’s share. 

If newspapers refuse to do this, it’s doubtful that they will survive.  Without effective online advertising, it’s very unlikely that existing newspapers will make it.   And until and unless consumers themselves get control of ad distribution, online advertising will remain broken.

Of course, some users will make a lot of money and others will make little, but having advertising recommendation-based means everybody should have a lot more confidence in their spending (which will again help the economy!).  Furthermore, you will undoubtedly be exposed to special offers and invitations, so even if you don’t earn a lot of money, you can potential save a lot of money.

With some of the earnings, users will be able to buy digital content from artists, photographers, app developers, musicians and so on, which will make their pages more alluring and help them make more money off advertising.  It’s the same way newspaper syndication works, just on a micro level.

The Square Triangle will succeed if only it’s implemented.  And it won’t be that difficult to execute.  There is no required technology that doesn’t exist right now.  It’s simply a matter of partnering technology with anthropology and merging all stake holders in a symbiotic fashion.

If you want more details, look here.  You can also read my other posts, as they are all pretty much related to my plan in one way or another.

The Internet’s Destiny: Five Truths

February 23, 2009

I’m honored that yesterday, Louis Gray – an extremely prolific and well respected social media observer and commentator – named Dawn’s Plan as one of his “five new blogs to watch.”  Since I’m getting new readers here because of it (Thank you, Louis), I thought I’d state my basic beliefs that inform everything I write about here.

 1) Business Models must be Distributive

The Digital Age is inherently about undoing the most egregious economic imbalances created by the Industrial Age, not creating more of them.  There is little difference between getting obscenely rich off the backs of others and getting obscenely rich off the brains and hearts of others. 

To his credit, Mark Zuckerberg recognized the value of each person’s social graph.  To his failure, he has yet to acknowledge that your social graph belongs to you and you should be compensated for its use.

Zuckerberg is a billionaire on paper while the Facebook membership that makes the network valuable earns nothing.  I predict Zuckerberg’s paper wealth will never be realized, because obscene concentration of wealth generated by exploiting others goes against what the Internet is naturally meant to be.

2) Advertising Distribution must be in the Hands of Users

Except for Search, Internet advertising doesn’t work.  It will never work when it is thrust upon us, because it is kneejerk to despise and easy to ignore.  Online advertising must be willingly accepted to be effective.  This demands taking ad distribution control away from advertisers and giving it to consumers.

Closed ad networks that pollute the Internet and do little to help the advertisers themselves will inevitably be replaced by open networks which offer ads that may be taken by users and placed on their own pages – if it is a product or service they wish to help promote.  This power shift will make corporations more accountable and will lead to higher quality ads and products.  Also, people will be less fearful of buying when they have recommendations from friends, family and coworkers. 

Placing ad distribution in the proper hands will thereby help our economy rebuild from the bottom up, as trust is injected back into the system and people start consuming again.  So by giving up power to distribute ads online, companies will gain.  At least the ones that are worthy will.   The others can die a quicker death and quit wasting resources that can be freed for better concerns.

3) Free must be replaced by Free plus Compensated

Free has been a collective disaster.  We obviously cannot move from an industrial economy to a digital economy (which we must do to survive) if there can be no transfer of digital goods and services for money.  That’s what an economy is.

4) Everybody must have a Place at the Digital Table, despite their Talents and Geography

Let’s face it, when it comes to making a living, the Internet has so far mostly benefitted left-brained people and has too often devastated right-brain people.  While geeks’ opportunities and incomes have exploded, creators like reporters, photographers, cartoonists and other writers and artists have lost their jobs and incomes.2008-05-01

Trade in digital goods and services holds the promise of allowing great numbers of people all over the world to make a living without raping the environment, but this can happen only if doors are opened to allow in all skills and talents, not just coding ability.

5) Google’s Domination is Unhealthy and Potentially Treacherous

Yeah, I don’t like Google.  Their hegemony rivals that of ancient Rome.  The good news is that Google is much more vulnerable than people think.  Their lion’s share of online ad revenue won’t last once the above four tenets are inevitably manifested.  The only unknown is exactly how long it will take.

If you want more details about any of these, I suggest you check out my archive.  You can also subscribe to my feed.

I hope you will stick around and give me your input.  I appreciate your comments and welcome discussion about how best to spur the Internet towards its natural destiny, for everybody’s benefit.

Friend Limit Frustration Exposes Tech World’s Weakness in Social Science

February 15, 2009

Debate about friend limits has once again erupted, this time started by Louis Gray on FriendFeed. 

This is yet another great example of the problems that have been caused because social networks are created by tech guys who know little to nothing about social science.

Out of all the different social networks that have been launched, not a single one is architected to the way human beings naturally function. 

Here’s a tip guys: divide online space the way we all divide our offline space, into Intimate, Private, Social and Public. 

This hell-bent desire to dump sales and promotional activity into SOCIAL space is exactly why none of the current social networks will make it to the IPO finish line.  Advertising and PR should be a part of PUBLIC space.  Obviously, Facebook et al don’t know the difference.

Of course, I’ve been saying this for over two years to Robert Scoble and other thought leaders in the tech world, even to the creators of Twitter and FriendFeed directly, but nobody has yet aligned social networks to the realites of social science.  Design anthropology isn’t something Silicon Valley has shown any willingness to even listen to, much less submit to, much less invest in.   So I won’t hold my breath that these frustrated arguments caused by anti-human-nature design will cease any time soon.

Take this Ad and Shove it. Then Turn Advertising Distribution over to the Members

February 12, 2009

Louis Gray marked all Facebook ads he ran into as “offensive” then asked his readers to do the same.  As he and the rest of us know, Web advertising is intrusive and irrelevant.  So it’s also ineffective.  It helps nobody and irritates everyone.

A fundamental understanding needs to sink in before anything changes.  As I’ve pointed out before, Facebook, Twitter, FriendFeed…none of these are publishers.  They are the equivalent of a printing press, not a newspaper or a magazine.  Their members are the publishers and its publishers who rightfully control the advertising on their pages and get compensated for their run. 

Facebook and all other social networking sites aren’t going to get advertising right until they turn over ad distribution to their readers and compensate members for the use of their social graph.

Why should Mark Zuckerberg become a billionaire off the backs of you and your friends?

You’d think that after so much time, so much money thrown at the problem, and so many attempts, Facebook would be doing a better job with advertising.  They should start over with a new attitude.  Instead of “How can we make money off advertising?,” the correct question, the question that will actually produce good answers for all stake holders is: “How can we empower our members to make money off of advertising?”

The Web Needs a For-Profit Consortium

February 5, 2009

Facebook, Twitter, FriendFeed… they are all going to fail and go away if the Web isn’t made economically sustainable.  Each thinks they can independently find their own path to riches.  It’s highly unlikely that this will happen.  And it’s unlikely your Web startup will make money either.  Why?  Because the underlying Web culture and potential economics models are misaligned.

Yesterday, I proposed creating a for-profit consortium to realign the way the Web works so that

1.      online non-search advertising finally works so that it can generate the wealth needed to sustain Web 2.0

2.      individuals can earn money online expressing their talents and passions

These two things will create numerous gains, including improving the economy, the environment, world understanding, our individual wallets….  I will be outlining the many benefits my last “Part 3” post soon.

I expected at least some positive response to my article yesterday even though it was long (sorry, but the problems are complex…I’ve tried to make the solution as simply expressed as possible).  All I got back was a couple of “What the hell is a for-profit consortium?” pokes.

Okay, that’s fair.  They’re very rare, after all.  Here’s an official definition of Consortium:

A group made up of two or more individuals, companies or governments that work together toward achieving a chosen objective. Each entity within the consortium is only responsible to the group in respect to the obligations that are set out in the consortium’s contract. Therefore, every entity that is under the consortium remains independent in his or her normal business operations and has no say over another member’s operations that are not related to the consortium.

Consortiums are often used within the non-profit sector, specifically with educational institutions. They often pool resources such as libraries and professors and share them among the members of the group. Several groups of North American colleges and universities operate under consortiums.

For-profit consortiums also exist, but they are less prevalent. One of the most famous for-profit consortiums is the airline manufacturer Airbus.

For the purposes that I’ve outlined, our “Square Triangle Consortium” would be made up of existing companies or startups in the tech space, and preferably some input from established media, too.  We would negotiate how much each participant’s relative contribution is worth, create stock and then divide the stock accordingly.

The purpose of the consortium is to turn the economic quagmire of Web 2.0 in a hotbed for economic growth that will explode out to many sectors, benefiting everybody who is dependent on adverting – be is companies with something to sell or media.

Okay, so if you think of Web 2.0 as largely a bunch of different companies floundering around in search of sustainable business models, then what our consortium will do is align all stake holders’ interests – social network users, advertisers, developers, investors, media – so that ultimately each company can do its own thing. 

Our goal is to make technology, advertising, media and entertainment work together again.  The Internet broke a lot of the synergies between these sectors and we must get them back.

Okay, so I know my posts are a lot to absorb.  But I’m right about this.  I hope people will start taking a bit of time to understand what I’m saying and react to it, even if it’s negatively.  I’m sure there are flaws in my plans that I haven’t recognized.  That’s why we need a lot of divergent brains to come together and act for the Web’s common economic good.

There is much at stake here, Folks!  Finding economic success for Web 2.0 is not just about making VCs happy.  It’s about making sure social media survive and grow into Web 3.0 and 4.0 and on and on.

The Square Triangle’s History

February 2, 2009

 

I believe if we look to our past and remember how our modern economy was created in the first place, we can find our way out of the economic disaster.

Most people will point to the industrial revolution as the catalyst that propelled us into our modern economy, and certainly that’s the primary impetus.  But the industrial revolution had been churning away across Europe and the U.S. since the mid-1700s.  After 150 years of slow progression, it was something else that lit the fire that would thrust us forward dramatically.

4-together1That “something” is what I call the Square Triangle.  It was created by the serendipitous combination of four things:  technology, advertising, media and entertainment.

  

print2You can think of the triangle as a technology, in this case, the printing press, connecting 3 points: publishers, readers, and advertisers.  Newspapers existed like this for centuries, each focusing on its own small community. 

 

The change came in the United States when the first national brand, laundry soup, was created in 1906.  Suddenly, brand advertisers across the country wanted to reach ALL potential buyers, including the so-called “illiterate masses.”  So comic strips were born.  This created two more points that squared off the triangle, adding cartoonists (artistic types) and newspaper syndicates (business people).

bloggerComic strips drove eyeballs in mass to newspapers, which drove eyeballs to pictures of national brands, which created demand and the one mass market.  A fury of innovation,  production and consumption followed; the economy exploded in growth and our modern middle class was formed.

Cartoonists were considered heroes.  They became the rock stars of the day and were treated as such.  Newspapers were eager to pay for comics because it meant they could secure more and better ads.  More ads, more products, more jobs, more money to invest, more tax revenue.  Living standards increased substantially for over two decades, until the Great Depression, which I could argue was an inevitable reckoning.  Nobody knew how to handle the increasing complexity of such a huge market.  Sound familiar?  History has repeated itself all these decades later as the one global market has grown beyond the establishment’s capacity to handle it and we’re now having to regroup.

But getting back to the history…

So then it’s the 1940s and WWII is finally over.  People have money and want to celebrate.  At the same time, a new technology has emerged, the television.  From the late 40s on, more entertainment is matched to more advertising and when household television ownership reaches a tipping point, another explosion of growth occurs.

 

tvAgain, the Square Triangle is the model.  Various creatives like actors, writers and directors pool together to collaborate, and business people like lawyers and producers manage it all.  Networks eagerly pay for programming because it, in turn, generates more money from advertisers.  Quality and quantity of shows grow rapidly and great cultural progress is achieved as we learn more about strange places and diverse lifestyles.  The giant leaps in understanding and tolerance from the 1950s to today are happy consequences of the Square Triangle.

Which brings us to the Internet.  Internet connections started hitting the mainstream in 1995, almost 14 full years ago!  So why hasn’t the success of the Square Triangle been repeated?  Because it has never been adopted.  The “Dot com” bubble and crash were mainly about selling retail products online.  Originally, the only online advertising was by electronic versions of newspapers.  So that was the best approximation of the Square Triangle.  Trouble was, they didn’t have an effective entertainment component.  Newspapers relied on the same print comic strips that editors have kept trapped in 1950s sensibilities to this day — most of which didn’t appeal to young Internet audiences.  Plus, the syndicates put the same comics online for free on their own websites, so why go to a newspaper to read them?  Since there wasn’t compelling entertainment to match to the ads and make them effective, advertisers soon lost interest and fled the Internet.  Massive retail sales never materialized.  Dotcom crashed.

internet2From the ashes came blogs and that recreated the triangle.  But the squaring has still never happened.  Why?  Because of Free. 

 

To make the Square Triangle work, publishers need to have confidence that if they purchase entertainment, they can get bigger, more loyal audiences and more and better advertising, and thereby make a lot more money than they’re spending on content.  As the Internet exists today, there is no way to do that.  The vast majority of consumer-generated entertainment isn’t consistent enough in quality to ensure audience loyalty.  And when something worthy does appear, it’s passed around for free. 

It’s not that talent doesn’t exist to make high quality Internet entertainment.  Far from it.  The problem is that the countless talented people out there who could be producing and collaborating don’t have the time and focus to do so on the consistent, ongoing basis that is demanded for the Square Triangle to work.  They must attend to paying jobs in order to make a living.  And because all media are on a downhill slide, it’s increasing likely that those jobs are not “creative” at all, and that their talents – which could be used to make Internet advertising effective and catapult our economy forward just as cartoonists did a century ago – are going to waste.

There’s no Square Triangle to generate high quality, innovative entertainment made specifically for the Internet, except in relatively small pockets like the gaming sector. 

There are movie actors and TV actors, after 14 years, why are there no Internet actors?  There are screen writers and television writers, why are there no cell phone writers?  Why aren’t photographers and cartoonists and illustrators making a living by directly selling their products online – instead of having to give them away for free in the hopes of generating paid work that has all but disappeared offline, too?

If the past 100 years has taught us anything about wealth creation, it’s that audience-building entertainment and demand-building advertising must go hand in hand. 

4-apart2But here we are, with poor melding of sectors and stagnation.  No demand creation, no job creation, no economic and cultural boom.

 

I strongly believe that if we take the Square Triangle – a model that has proven itself for one hundred years to be extremely effective at creating economic and cultural growth –and apply it to the World Wide Web, then global peace and prosperity will make giant strides. 

The Web as a Cathedral

February 1, 2009

cathedral

In 1994, I had the honor of being among the first group of Americans to visit central Bulgaria after communism fell there.  It was a remarkable trip in many ways, but the thing that has stayed with me most vividly over these years is the marvel and awe that swelled within me when we visited a breathtakingly magnificent cathedral, brimming with truly glorious works of art and craftsmanship.  Every direction I looked, every spot that met my eyes whether near or far, was stunning.  It was an incredibly inspiring yet humbling experience.

Then, just one year later, an oddly similar feeling was evoked within me the first time I “dialed up” and connected to the World Wide Web.  How ridiculous, some might even say blasphemous, the comparison is!  Yet, there it is.  My eyes are actually tearing up as I write this.

A cathedral is a monument to the God I believe in, and whether or not you believe in Him, too, perhaps I can persuade you, as crazy as it might sound at first, that we should consider treating the Web as a cathedral to *something* that is much bigger than any one of us.

Great Cathedrals took centuries to build.  Carpenters, artists and craftsmen gave their lives to a project they would never see finished.  They toiled and sacrificed without fully knowing what it would someday become, but with the faith that whatever its ultimate form, their own little piece of it would be as splendid as they could possibly make it.

And they expected no credit.  We don’t know their names now because they didn’t record their names then.  It wasn’t for their own glory that they labored.

Brick layers, glass makers, sculptors, architects, painters, cabinet makers, weavers, goldsmiths, engineers…it’s overwhelming to consider all the varied talents and passions that people brought to the one effort that benefited all.

All of us, together, who contribute to the Web are building a great cathedral that will not be finished within our lifetime, no matter how old or young you are.  But too many times – and I include myself in this! – we forget that we are serving the one World Wide Web and self-centeredly build a cathedral to ourselves alone out of human followers and on-paper valuations.

The Open Movement has it right, I think.  Sometimes Open feels like an affliction, like a disease that is eating away livelihoods.  But open source developers are doing generous and noble work.

For me, and feel free to disagree and share you own perspective, a problem comes in when we confuse “open” with “free.”  The engineers and artisans who built the cathedrals were all paid in one way or another.  They and their families had to have food and shelter, after all.

I believe there is a good way to have an open Web that does not doom talented, hardworking people to the poverty of having to give all of their work away for nothing.  I further believe that we can throw open the doors to allow people the world over to make a living off the Web no matter what their talents and sensibilities and personal resources might be.  Geek or not.  Social or not.  Wealthy or not. 

The secret is The Square Triangle, which I have talked to deaf ears about for the past three years.  Perhaps with this damaged economy, when people are looking for new answers that don’t depend on Free alone, the Square Triangle can gain some traction.  I’ll explain it once again in the next day or two.

In the meantime, I think I’ll see if I can find my photo album and old video tapes that record that Bulgarian trip.  It was awesome, in the truest sense of the word.  My wish is that for everybody around the world, the Web will become just as awesome every day as my first experience of it was.  If people can make a living and thereby afford to express their passions and talents as we continue to build the one Web “cathedral” with all of its countless varied treasures, I think it will be.