Posts Tagged ‘TechCrunch’

Making $470m with a Bunch of Comments

Friday, December 18th, 2009

yelp-googleBack in 2004 Yelp started a web site that listed local businesses, and encouraged people to contribute ratings and comments. Take a look at Pandora’s Jewelry store for an example of a page that is content-rich thanks to the crowd contribution. I have a ratings plug-in on some of my web sites, but what you need to make these things work is the critical mass because people need to see comments before they make comments. Reaching this tipping point is the secret sauce that converts a simple idea into a valuable web property.

Yelp had the benefit of $31m in venture funding to invest in developing a great interface and generating traffic, and now TechCruch is reporting that they may cash in to Google for $500m.  It’s not a bad return for the founders, who are former PayPal execs.

In an earliet post I reported how Google has started suffocating organic search results by pushing them down below the fold. A big part of this is the interactive local maps with ads popping out of them. If the Yelp acquisition goes ahead we can expect more of this. If you are an internet marketer targeting the long tail, then it might be time to start thinking about investing in an authority domain, or raising $31m for that great idea you have.

Right now you can make a few thousand bucks a month from information and affiliate sites, but my sense is that this is going to get harder and harder. With people accusing Demand Media and its eHow site of polluting the internet, then mini sites of lower quality will get taken down with it if there is a clean up.

I welcome your comments below – it’s my $470m strategy.

Tyrannosaurus Murdoch Fossilizes Before Our Eyes

Thursday, December 17th, 2009

Victim of Google Theft

The internet’s disruptive effect on print media is coming to a head, and the dinosaur Murdoch is going to fossilize before our very eyes. It’s the height of entertainment to watch him blame the theft of content for his empire’s demise, when in fact he is partly to blame for our current perilous situation: this is the man who has conditioned the masses to accept entertainment and information of the lowest form.

The cost of production of media is not just reduced by technology, but also the fact that people accept lower standards these days. Let’s face it, journalism of The Sun’s standard hardly needs professional journalists to write it (the paper is Britain’s biggest selling daily and a Murdoch rag). So while Murdoch pays Oxbridge graduates to write about Tiger Woods’ ‘piece of rough’ it is no surprise that the likes of Perez Hilton can undercut him blogging out of a coffee shop.

A sad reflection on our times is that the Miami Herald has five million online visitors a month and is going out of business. According to DN Journal, ‘the paper says the problem is that they can only charge online advertisers about a tenth  of what their print advertisers have been paying and that is not enough to cover their news gathering nut.’ If you are unable to monetize five million visitors a month then you either have some serious overhead, or don’t understand how to convert visitors into cash. I guess it’s a combination of both for the Miami Herald.

The Herald has started asking its readers for donations, which is perhaps a bit more progressive than Murdoch, but unfortunately I think that the real problem is that people are no longer willing to pay for quality journalism, and are prepared to settle for something less rigorous. Of course, this decline in standards is happening in tandem with the realization by most companies that the value of print advertising is minimal when compared to alternatives that involve customer engagement. But let’s set that aside, and concentrate on the fact that we no longer need quality.

TechCrunch predicts the end of hand crafted content, and companies like Demand Media are pumping out moderate prose that Google ranks highly. The only way that this sea of mediocrity can be slowed is if the search engines tweak their algorithms to give higher weightings to quality measures such as bounce rates. Given that Google is an advertising company, and the readers of Demand’s products have a decent CTR I shouldn’t expect too much from Big G. Perhaps they are getting tired of scanning all the books for their online library and are happy to see us reduced to a tweeting rabble.

Disclosure: I read The Sun for the football coverage :-)

Related posts that I have commented on:

Is charity a profitable strategy?

Monday, December 14th, 2009
The Angel

He didn't answer my LinkedIn connect request!

Reid Hoffman is the man you want to have as your angel investor. He gets it. And if he gets your company then that’s a sure sign that you might just be on to something. Not that he has actually cashed in on that $1bn LinkedIn valuation just yet. However, once he does there are signs that he might do a Bill and Melinda and apply his expertise to philanthropic ventures.

At Silicon Valley’s TEDxSV on the weekend he confirmed that he wants to be a public intellectual. He went on to explain that he thinks that the same tools that drive social media can help cause-based foundations create platforms for change. TechCrunch reported that, “One of the things that Hoffman finds interesting is that corporations, because they have the reach of millions of people…can make cause-based initiatives part of their web based platform. This is exemplified by Facebook’s Causes application.”

Personally I am more interested in seeing LinkedIn list as a profitable company, and seeing Facebook convert its 350 million members into cash, than I am in looking at how cause-based organizations can use crowdsourcing to drive change. Let’s see the model refined and proven as a for-profit strategy first.

That’s just my personal area of interest though, and there is no reason that companies and charities can’t move in parallel. The issues that cause-based organizations are trying to solve are usually extremely complex, and if they can leverage mass collaboration to solve these problems then the profit-driven companies can probably learn a lot from how they do it.

Customers Become the Brand
Also, I would like to explore the idea of companies using their business web platforms for charitable activities. Bringing in their customers as part of this might just make it a profitable venture. A brand sharing a common world outlook with its customers – as they engage together in charitable activties the customer moves from outside to inside the brand. Now that’s brand loyalty.