Friday, December 23, 2005

An interesting Web 2.0 Service

Here’s an interesting Web 2.0 service that enables media sharing among groups of friends. It hasn’t been released yet, but you can check it out here and sign-up for their free beta.

While it enables the free-for-all media sharing of a service like Flikr, it also allows sharing among defined groups or individuals. It is built into Firefox, making it seamless. I can’t wait to try it.

Thursday, November 10, 2005

More on Googlebase and Automat

I feel like the modern day equivalent of Paul Revere riding through the newspaper industry yelling "Googlebase is coming, Googlebase is coming!" Googlebase is going to hit the newspaper-based classified ads hard. Revenue from newspaper classified ads has already been hard hit by Craigslist and eBay. Google’s forthcoming Googlebase will kick it up a notch.

Just about any search you do on Google these days results in an ad for eBay. In fact, I just tested this by searching for "dog crap" and yes there was an eBay ad. Man they sell everything at eBay. Anyway the forthcoming "patent pending" Automat from Google will place the Googlebase ads next to the AdWords ads integrated right into users' search results.

As I mentioned in my previous article on Googlebase, its real advantage is in providing structured forms for various types of goods to ensure: (a) more complete information on items/services for sale; (b) the ability to find exactly what you want and filter out the junk, since you can search by field. This will further decimate newspapers' classified revenue.

What can newspapers do about this? Well there are three options: (1) Throw in the towel on classifieds and simply milk that cow dry; (2) Jump in bed with LiveDeal; (3) Launch your own Googlebase with a classified ad solution we will be releasing soon. You can see an almost complete implementation at the mapping of ads will be added within days.

The LiveDeal option is tempting. This has no upfront costs and you get a branded site pre-populated with content. The downside is that your ads are pooled with everyone else. So if you spend $10M promoting your site and building up ads, I can open one just down the street for free and have all of the same ads. In essence you aren't building your own base of advertisers, you are building LiveDeal's base of advertisers. Then there is some revenue sharing for all of the money you generate through your traffic. This isn't too different from receiving affiliate revenue from sending your customers to eBay. But, I’m sure that this will do well for LiveDeal, because the quick jumpstart is tempting.

Our classifieds provide more structure, like Googlebase. There are specialty forms for every subcategory just like the forthcoming Googlebase (see description of the benefits above). We provide a mapping of all ads too, which Googlebase will probably have or add shortly after launch. But the benefit of our solution is that you own it. You can do whatever you want with it. You get the source code and you can make changes or we can. For example, we are also adding scraping to go out and spider websites to pull in ads. Maybe we'll scrape Googlebase once it goes live.

If you run a media property and see the tsunami of Googlebase on the horizon following the pounding you've already received from Craigslist and eBay, you might want to jumpstart your online classifieds. LiveDeal and ZiXXo are your best options, consider them carefully.

Tags: Googlebase Automat Classifieds Classified Ads Newspaper

Monday, November 07, 2005

Is Knight Ridder the First Domino?

In the time since I wrote Plotting a Course for Newspapers (Part 1), there have been a few moves that have sent shockwaves through the Newspaper publishing world. I’m referring to major investors Private Capital Management, Harris Associates and Southeastern Asset Management calling for Knight Ridder to be sold. In explaining their rationale, they point to “limited revenue growth across the newspaper industry”. This indicates that Knight Ridder is the first, but probably not the last newspaper company to face such pressure. Knight Ridder has responded by hiring Goldman Sachs to explore a possible sale.

I have followed the travails (including declining circulation) of the newspaper industry in this blog for some time now, so this clearly comes as no surprise. Knight Ridder owns 84 newspapers (31 dailies and 53 non-dailies). I doubt that the new media barons (Google, Yahoo, MSN, AOL) are interested in shelling out $6B to buy KRI, only to cannibalize the papers with their online offerings, but who knows.

Alternately, the company could be broken into pieces and sold, but that doesn’t solve the underlying problem. What can newspapers do to retain relevance in an increasingly Internet-age?

I don't know who will buy KRI, but since the entire newspaper industry is suffering from lack of revenue growth, is KRI the lead domino that will set-off a chain reaction?

Wednesday, November 02, 2005

Windows Live vs. the Web OS

In a previous post titled The Web OS vs. The Desktop OS, I talked about how Microsoft was moving to evolve desktop applications by extending their functionality into the web, while the web companies (Google et al.) are evolving web application by leveraging client side functionality via technologies like AJAX.

Now Microsoft’s shows their hand in this battle for dominance of what I believe is a “hybrid platform”. It is a hybrid between the desktop and the web. If users want to edit their documents locally and then integrate that with group editing, sharing, etc. via the web, then Microsoft wins. If users want to do everything on the web, with a responsive user interface via AJAX, then the web guys win.

With Ray Ozzie as the CTO (his background being Notes and other collaboration tools), there is no question that collaboration will be increasingly built into everything Microsoft does.

Given the installed base and learning curve invested in the feature-packed Office applications, it will be hard for companies to pry users away from their desktop applications. I believe that email is a different beast because it is inherently network-centric.

Windows provides the tools to extend the functionality of their core system by building gadgets. Again, Microsoft is going for a platform play, trying to get developers to build gadgets that extend their core functionality. The old embrace and extend play directly from the tried-and-true Microsoft playbook.

On the other hand, we are finding more and more value from collaboration, social networking, etc. Do these AJAX-powered network applications provide sufficient value to usurp the network-aware desktop applications? My guess would be that a few applications will shift toward online apps, like email and calendaring, but the rest of the Office suite will continue to dominate with their growing network-aware capabilities.

Wednesday, October 26, 2005

What Does Googlebase Mean to the Newspaper Industry?

In case you haven’t heard, Google is building a massive database for user generated content, called Googlebase. Having studied this problem for years, I believe I can offer some insight particularly with regard to the impact this will have on the newspaper industry.

It appears that Google came to a similar conclusion I did on the classified ad market. Of course, this didn’t surprise me since Google’s VP Engineering (Adam Bosworth) and I were early XML/database/structured data guys. That conclusion is that current classified ad solutions, including Craigslist and eBay don’t provide a scalable user experience.

The systems scale quite well, but as the amount of information grows, it becomes increasingly hard for users to find what they are looking for. If you want to buy a 1985 Corvette on Craigslist, a search will find everything that has the term 1985 and the term Corvette. This can include a lot of junk (parts, services, etc.).

Furthermore, when an individual creates an ad, there is little to guide them. They simply get a blank text box. As a result, the ads are pathetically deficient. For example, when listing a car for sale, many people forget to describe the interior, transmission, engine, and various add-ons.

The answer to both of these problems is to use category specific forms for both data input and search. The forms then guide the advertiser in creating the ad, and allow buyers to search by field (e.g. year = 1985, Make = Chevrolet, Model = Corvette).

From what I understand, this is exactly what Google is building into Googlebase. They provide a variety of forms based upon what you are selling and, presumably, what you are looking for.

I believe that the combination of:

Google’s traffic/brand + Structured Data Entry/Search + Free = Killer!

There are a couple of areas where Googlebase may have an Achilles heel. They still need to develop a sense of community that eBay and Craigslist provide. They could also benefit from an online transaction mechanism a la Paypal, possibly a Google Wallet. If the final version of Googlebase provides these capabilities, then watch out.

So, what does this mean to newspapers? We’ll if you thought Craigslist and eBay were tough competitors, this is your worst nightmare. If newspapers still harbor any hope of being able to charge for classified ads, this should permanently dispel those outdated thoughts. Welcome to free, now deal with it.

Newspapers can only play in this game if they: (a) provide an equivalent or superior classified solution; (b) lead the way in offering free listings; (c) move quickly; (d) cannibalize the classified ads by converting usage with a hybrid online/offline solution (reprint the free listings in your newspaper for free or very cheap).

The newspapers have a local presence, users, local business relationships and a local brand. They MUST throw all of this at drawing a line in the sand against the Google onslaught. They must capitalize on their local presence or they might as well kiss off classified ads forever.

The problem is that newspapers cannot afford to kiss off the classified ad business. They need the fresh content and usage that classified ads generate. They need that local anchor. News is good, but that is being aggregated by everyone. How can newspapers differentiate themselves as a local portal? They need a depth of services, and classifieds is a big one.

I know what I’m talking about. Our company started by building a collection of destination sites offering classified ads services in over 100 U.S. cities. We decided back in March (two months after our release) to get out of this business because we cannot compete with eBay, Craigslist, all of the newspapers and now Google. But in the process we built the best classified ads solution on the market, complete with simple category-specific forms for data input and search, advertiser ratings, everything.

Instead of competing with these big guys, we have instead decided to sell our classified ad software to newspapers and others who want to put a stake in the ground around local classified ads. Our company isn’t big enough to be a combatant, but we’re happy to be arms merchants in this battle for local dominance. If you are interested in getting into the local classified ad business and you want a “Googlebase” of your own, drop me an email and mike.hogan (at)

Additoinal Insight into Googlebase is available from Greg Sterling at The Kelsey Group, Charlene Li at Forrester, John Battelle and others here too.

Wednesday, October 12, 2005

Plotting a Course for Newspapers (Part 1)

In the past few weeks six of the largest newspapers have executed significant cuts in their newsroom staff. Between the San Jose Mercury News, Boston Globe, New York Times, Philadelphia Inquirer, San Francisco Chronicle and Philadelphia Daily News, there have been 352 newsroom jobs cut.

Joe Strupp of Editor & Publisher explains that, with the exception of the Chronicle, all of these newspapers are profitable. So these cuts seem targeted at increasing profit margins not stemming losses.

I have blogged about the dilemma facing newspapers as they confront the impact of the Internet, particularly the cannibalization of classified ads, general advertising, editorials (blogs) and news.

Anyone can point out the problems facing the newspaper industry, which requires no deep insight. The challenge is plotting a course through this changing sea that enables the newspapers to maintain their prominent role.

Before I delve into this topic, I must point out that the newspaper world has been populated by a collection of locally dominant newspapers. With a few exceptions (e.g. Wall Street Journal, USA Today and New York Times) newspapers serve a city or metro area. Of course, some companies such as Tribune, Gannett and Knight Ridder own a few such local papers.

The Internet threatens such local monopolies. More precisely, the largest Internet properties are challenging the need for local newspapers. Instead of relying on the local newspaper to provide the syndicated news, you can get that, and more, instantly online for free.

As a result, I foresee a bifurcation of the newspaper business into a very few serious national/global players and a collection of smaller local portals. The big Internet news outlets will be the Yahoo, Google, MSN and Time Warner/AOLs of the world. I believe that Rupert Murdoch’s News Corp. is attempting to position itself as a player in this space as well.

The big question is whether the pure-play model like Google (all Internet) will dominate this segment or whether “mixed-media” companies like News Corp and Time Warner can exploit those oft referenced “synergies” to provide a better user experience. If the Time Warner/AOl example is any indication, I would bet on the pure-play companies.

Yahoo is using an interesting alternative. They are a pure-play Internet company, but behind Terry Semel, they are attempting to leverage mixed-media synergies through partnerships. Yahoo provides Hollywood with a toehold in the Internet.

News Corp has bought Internet properties like Scout Media, Intermix and IGN and word is that they are attempting to acquire Blinkx. But if they really want to be a player in the Internet business (which will subsume the global/national non-TV news business) then they should consider buying Barry Diller’s Interactive Corp. The synergies would be excellent. Also, given the P/E multiples for Internet properties (YHOO: 31.7, GOOG: 89.69) they could improve News Corp’s current 21.7 P/E and IAC’s “also-ran” P/E of 12.75 by combining and providing a serious alternative to the big Internet companies.

A News Corp/IAC combination makes sense because it would create a credible competitor in the upper echelons of the Internet market. I believe that the combination would garner a higher P/E multiple for both properties; the old 1+1=3 scenario. The combination would probably earn a P/E multiple in the area of 25 or 30.

Independently, I think IAC could easily double their value if they found a home with a larger partner that can make a play at being a top-tier Internet property. While there might be some personal issues between company heads Rupert Murdoch and Barry Diller, this combination looks to me like a winner.

There is also talk of Comcast or Google buying AOL from Time Warner at a supposed valuation of $20 billion. At this price tag, which seems quite high, it is beyond the reach of all but the largest Internet properties and Microsoft.

In the future, you’ll probably get the bulk of your non-TV news from the Internet and there will probably be only 4 real players in this field. The question is who will be left standing after the partnerships dust settles.

Of course, this leaves the local newspapers out in the cold. What can they do to chart a course toward future relevance? I’ll address this in a future post.

Just for fun, my long-term stock picks are:
Interactive Corp. (IACI): $24.98/share with 12.48 P/E
Yahoo (YHOO): $33.93/share with 31.56 P/E

Tuesday, September 13, 2005

eBay/Skype: Royal Wedding or Royal Mistake?

eBay’s ability to extract value from their Skype acquisition hinges on the following:

(a) eBay’s successful integration of Skype’s VOIP into the eBay suite of eCommerce services: eBay, Paypal,, Classifieds (Kijiji/Craigslist/Marketplatz/;

(b) The market evolving toward proprietary VOIP networks;

(c) VOIP being the lead purchase in the communications suite.

Point (a) is pretty straightforward. The synergy makes sense on paper (or whiteboard) and it is a matter of making it work in practice. Implementation on this account is largely within eBay’s control. In a nutshell:

Paypal + Skype:

  1. Paypal is used to pay for Skype = more Paypal users = Paypal grows dominance as payment mechanism, creating barriers to entry by Google and Microsoft.
  2. Skype taps into Paypal vendors for a pay-per-call (PPC) add-on with associated SkypeOut revenues.

eBay + Skype:

  1. eBay taps into the Skype user base, comprised of bargain-hunting, technically savvy, early adopters (nice correlation). eBay adds PPC to improve communication, increase sell-through, enable international sales and raise barriers to entry by competing auction solutions.
  2. Skype taps into the eBay user base of bargain-hunting, technically savvy early adopters (buyers and sellers) and introduces them to VOIP with PPC. + Skype:

  1. benefits from better communication, helping to grow the percentage of users who buy, versus just research and buy locally. Improved communication = improved comfort = improved sell-through rate.
  2. Skype taps into yet another base of technically savvy bargain-hunters.

Classified Ads (Craigslist, Kijiji, Marketplatz,,, etc.) + Skype:

  1. Classified users can get additional information and schedule to meet/transact, it can all be anonymous too.
  2. Skype enables eBay to monetize the large number otherwise free transactions by providing PPC services. And of course taps into yet more technically savvy bargain hunters.

Point (b) is a little more challenging. Will Skype continue to win the hearts and minds of users, resulting in a proprietary network/client combination? Or will something like the SIP protocol and Gizmo project or Asterisk or other such clients/PBXs using an open and interoperable network win the market?

If the telephone network is any indication, it started as a collection of proprietary networks, evolved into national networks and then the national networks worked among themselves to interoperate. Skype leapfrogs much of this with an instantly International network, but does it have the legs to remain the dominant proprietary network. Will, for example, IP phones circumvent the need for Skype? Will Skype license its solution to mobile phone companies to leapfrog POTS (plain old telephone service). This story is not yet written, and there are successful examples for both proprietary and open networks. The open TCP/IP protocol beat out Netware’s proprietary IPX/SPX despite a solid early lead. On the other hand the IM clients are all still proprietary networks.

If eBay can pull off point (a) that would be goo, but they need success on point (b) as well, in order to recoup the investment in Skype. If they also pull off point (c), described below, then the acquisition of Skype will go down in history as a great deal by a visionary company.

Point (c) is straightforward. I firmly believe that there will be a communications suite. People will use one platform for all real-time communication. That one platform should provide voice, file sharing, chat/IM and potentially even slide/whiteboard presentation capabilities. The $64,000 question is whether users will want their voice solution to handle IM or whether they will want their IM solution to handle voice. Which feature drives the user’s product selection?

Why will these features be offered in a combined platform? Because they go together like chocolate and peanut butter. Because you want to communicate with people, and communication involves all of these capabilities. I’m on the phone with someone, I want to send them a link, copy a quote, send emoticons (conference calls especially). Or I might be IMing and we get to a point that requires more verbal interaction, so we shift to voice. Also, keep in mind that Microsoft taught the world about the power of bundling with its come from behind to own the market effort with Microsoft Office.

If users want a voice platform that handles IM, Skype could dominate this field. If they want IM that provides voice, then AOL, Yahoo, Microsoft and others are in the lead position. If you ask the average person on the street, which of the two functions is most important, they will say voice. This bodes well for eBay/Skype. If they pull this off, it will be huge!

My recommendation is simple: eBay needs to buy Cerulean Studios. Their Trillion product is a meta-client for IM that operates across AIM, ICQ, MSN, Yahoo Messenger, and IRC. eBay needs to add this to Skype, in essence saying, get our VOIP solution and you can interact with any IM folks as well. Embrace and extend. Cannibalize IM with a meta-client and make everyone play on your home field: voice.

Wildcard Alert: Microsoft could also bundle all of this into their next operating system. That, of course, has the potential to reshape a market’s dynamics just as it did with the IE/Netscape market.

In short, it looks to me like it could be a great bet for eBay, given the current market conditions and resulting prospects. But those prospects could change with customers wanting voice added to IM, instead of vice-versa or with a killer Windows communication client.