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The couch is the new battlefront

Mobile, schmobile. Few people carry a smartphone, but every home contains a couch. God’s sake, don’t quote me on that.

Observers of the tech scene were shaken with disbelief noticing spiritual idol, Steve Jobs, among the glitterati last Sunday at the Oscars. What has always been a night of prime Hollywood superficiality and old-fashioned gossip, was infiltrated by the squeaky-clean and digital, the perfectly featured iPad between sets, and its commandant between panting agents. I, however, am almost as shaken by a different sight entirely: Google knocking at the doors of dens and living rooms everywhere – a last enclave of television where we can sit for five minutes without a Google search box to remind us that there is much investigating still to do – inserting its technology into Dish set-top boxes. And of course, this is only the beginning. The two events are undoubtedly related.

Most of us would be likely to forget that, in some ways, Steve Jobs is as much a part of the Hollywood community as he is of San Francisco. But we should not need a cameo appearance at the Academy Awards to remind us. Jobs was, after all, the CEO of Pixar and is currently the single largest shareholder of Walt Disney. He is not only on the company’s board, but is actively involved in the management of the Disney/Pixar combined animation business. (Here is an even more interesting piece of trivia, based on very cursory and approximate web research (using Google): Jobs’s dollar ownership of Disney, based on recent market caps, exceeds his dollar ownership of Apple.)

There has always been a distinction in the media world between entertainment and information, as much as there has been a separation between Hollywood and Silicon Valley, and, for that matter, New York. If the open web is about speed and efficiency and completeness of information – in short, utilitarian functionality – then Apple has always been about style: controlled design, premium and highly architected content. If the open web is about Google, then Apple is no doubt about Hollywood and New York: film studios, magazines, music. All those things for which consumers still pay, not on the basis of speed or efficiency or information flow, but on the basis of pleasure, quality, enjoyment.

In the iPad commercial that ran during the Oscars this weekend, we saw image after image depict home relaxation. We did not see a mobile use of the product on the go, and we did not see an office use where the likely need is news or some other information. We saw private individuals kick back in an armchair, on a couch, in a living room or elsewhere inside a residential setting, with an iPad on their lap. We saw them use their iPad in the same setting in which we now read magazines, watch rented movies, listen to music on speakers, and consume cable television. This was the same posture, incidentally, in which Jobs sat as he presented the iPad on stage at its first launch.

This association of Apple products and relaxed entertainment has been years in the making. iTunes, after all, which dominates the music business, is central to the iPod experience, and the iPod was the precursor of the iPhone, which is the precursor of the iPad. During the same period of time that Apple was systematically immersing itself into entertainment and leisure, Google was establishing itself as the platform of choice in the realm of open web traffic with superior utility. These are two entirely different worlds, two entirely different consumption profiles, which require entirely different tactics, entirely different modes of approach.

If Apple has never tried to offer a search product of its own, if Apple has never presented itself as primarily utilitarian, there is a reason. The CEO’s Hollywood education has undoubtedly taught him about consumer behavior and taste, and that consumers approach premium content and utilitarian functionality in different moods. It is easy to understand why Google would look to expand into television, particularly as cable access and web video are becoming increasingly intertwined. But there may be a culture clash ahead for the search giant, which will make the den a more difficult place for Android to break into than the open streets on the go.

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By Dan Ramsden – March 9, 2010

Other recommendations for you (3)

This was going to be the time that I write my recommendations for you about movies, to coincide with the Oscars, and I guess a promise is a promise even if I’m late. But I can’t get inspired to comment about a plastic blue guy in three dimensions and the assortment of extreme reality and melodrama that competed with said computer-generated fantasy for top artistic honors. “It made me laugh, it made me cry, it made me choke up with a myriad of emotions. In 3D, just like life!” Meh. There actually were three movies I enjoyed this season: Tarantino’s World War Two spoof, the Coen brothers’ wry comedy about suburban angst, and Fantastic Mr. Fox. That last one, as is often the case when Wes Anderson has a new release, may be my favorite. But I’m not really in the mood to critique this year’s product.

I’m in the mood for older fare, having returned from a successful shopping expedition at the Strand, where I picked up a stack of $0.48 paperbacks – some real finds, almost incredible really, the extra-brown sort that’s been tossed around from room to room and down stairwells for decades – and a couple of higher-end $1 ones with pages that actually don’t crumble like dust, before crossing the street to Second Hand Rose to leaf through the mint-condition vinyls. Yes sir, that’s what I call an afternoon! And it really put me in the mood for some Sergio Leone.

Those western operas, those desert soundtracks and triangular shoot-outs, those extended silences until a raindrop falls like a cannonball. Clint Eastwood’s dry humor as the Man with no Name. Charles Bronson’s harmonica that always presages vengeance. Lee Van Cleef’s disarming smile before he fires. Eli Wallach, the lovable crook. A Fistful of Dollars. For a Few Dollars More. The Good, the Bad and the Ugly. Once Upon a Time in the West. Henry Fonda, who never before or since played a villain, as the amoral gang leader whose eyes seem to weep but are really full of cold and recklessness.

These may not top the best-of lists and catalogues, but if you rent them on DVD one evening – in lieu of a night out to see Avatar with glasses – the money you’ll save will protect your downside for taking my word. It’s an easy gamble, I think, a calculated risk. And now, if you’ll excuse me, I must sign off to watch the red carpet show on E!.

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By Dan Ramsden – March 7, 2010

You better be nice, San Francisco

Bubbles don’t happen because valuations are high. Bubbles happen because valuations are in excess of what business fundamentals can reasonably justify. As the word implies, a bubble occurs when that which is solid is supplanted by air. Thus, it is quite possible for bubbles to occur even in a low valuation environment.

I remain fascinated, and not entirely in a positive way, by the continuing debate over that which defines the San Francisco web ecosystem as opposed to that of New York. That San Franciscans want to “change the world” while New Yorkers are all caught up in financial statements was last week’s entertainment. There is a new installment on the airwaves now, as exemplified by this blog commentary from yesterday’s press, according to which New York is not sophisticated enough to even understand practical matters. The author points – and I detect some pride – to a dark underbelly of west coast media entrepreneurship, in which web traffic procurement is a matter of tricks and wizardry, secret buttons, “secret sauce,” invading the contact lists of unsuspecting emailers, (dare I say, hacking), and such other stuff that would make New Yorkers, apparently, blush. (In this morning’s headlines, a long profile piece on Facebook’s Mark Zuckerberg would support the case presented, although Zuckerberg’s roots were in stately Boston. Nevertheless, he is in San Francisco now, and a staple of the local culture.) In short, San Francisco has us beaten in matters of idealism as well as brass-knuckled dark-alley affairs.

I don’t know about idealism and changing the world; I suppose that when for a century a place has been the center of the world’s artistic, economic, and political scene, the stuff just happens and we tend not to think about it much. With regard to our street savvy being questioned, however, I take offense, recalling Times Square before it was cleaned up and Disneyfied. Perhaps New Yorkers do indeed blush more easily since Giuliani, I haven’t conducted studies, but I can’t believe our heritage would come to ruin, to be slighted for our lack of smarts and belittled for naivete. I can’t believe that centuries of feisty Horatio Algers, crowds, advertisements, big lights, theaters, magazines, television, Madison Avenue, have fallen to a point of irrelevance, because there is a secret to new media that is so profound, so dark, so unfathomable, that only San Francisco gets it.

I am reminded of a time, back in the late 90s, when another hot communications sector called wireless was coming into its own. This gave rise to a new asset class called communication towers: you’ve seen the ugly metal things on highways and in suburban yards. It being a new asset class, it being the late 90s, it being Wall Street, tower developers were strongly encouraged by capital markets to erect as many of these, as quickly as possible. Naturally, there was a rush to do so in Texas, where space is ample and zoning restrictions nil. In short, tower portfolios were created, as ordered, but there was a bubble… because numbers alone don’t matter if there is no underlying business, and there is no underlying business for towers that are ten feet apart in the middle of nowhere. I exaggerate to make a point, but that story did not end well, and my recounting it should not be taken as a digression.

Back to the web’s entrepreneurial cleverness and the dark underbelly referenced… we should consider the following: Not all traffic is quality traffic, not all advertising impressions are quality impressions, fabricated audience is not sustainable, and substance sooner or later does matter. Perhaps this is my patriotic pride as a New Yorker acting out, but our media community benefits from a uniquely rich tradition and history lessons that should not be discounted. There is a culture of making real money here in media, with real advertising and real subscriptions to a real audience, and it is wrong to dismiss this age-old presence and knowledge-base as trivial or inferior somehow. Advertising revenue in media is not a thing of the past, and neither is subscription revenue. At some point, one of these two economic modes has to bear fruit, even for Twitter, and that is more likely to occur in New York than elsewhere.

Until then, and all kidding aside, entrepreneurs on both coasts will have to adapt to an ultimate reality: capital is necessary for what you do, and VCs don’t have your backs without exits… M&A will not pay top-dollar without an IPO market to prop it up… Wall Street is New York, not San Francisco, and you will not IPO until New York says it’s ok to do so. You better be nice to us, San Francisco, and brush up on our ways more than you have. Facebook is starting to learn.

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By Dan Ramsden – March 5, 2010

Unlocking value through simplification

The media market has never been larger. The products offered by media have never been more various and exciting. And yet advertising, which has always been media’s revenue engine, has been hurting. I do not believe this phenomenon is strictly a matter of economic cycle. While media has never been more exciting, advertising has never been more complex.

The parallels between media and its advertising sub-sector are long-standing, and there may not be another sub-segment that more perfectly reflects the state of the broader industry. Advertising and media go hand in hand, each depending on the other. In past times, when media was dominated by the traditional and analog, Madison Avenue was quaint and full of artisanship. (I know, I know, but bear with me.) The effectiveness of advertising was measured through an assortment of surveys, studies, “ratings,” that were not doubted (be patient) even if the science of these was subject to interpretation. It was (more or less) a matter of trust, and there was a sort of clubbiness in the dynamic, in which advertisers, agencies, and publishers all participated. Today, as the analog handshake of traditional media is being replaced by the digital interaction of the web, advertising is becoming technical, more mechanic, algorithmic, hugely complex, and not necessarily more effective. One thing is sure: the advertising model is more difficult to explain, and trust is out of the picture completely.

I was just the other day conversing with a friend about the confusing mess that advertising has become in the last few years, and we each took comfort from the other’s shared state of confusion. Luckily, neither of us is in advertising, but we sympathize. I had a similar discussion with another acquaintance later, and the gist was the same. So here I had been thinking that I was on my own not “getting” it all this time, and in two discussions I uncovered two allies. That’s a percentage of 100. A survey of two is not exactly a market study, this is no Arbitron or Nielsen report after all, and one should not rush to conclusions… but I suspect there are lots of us out there.

So to my great excitement and opinion validation, I came across this article in Business Insider, authored by a senior editor of Advertising Age no less. Here is a representative passage: ”The space between advertiser and publisher has become jam-packed over the last decade, with literally hundreds of ad networks, data companies, yield managers, ad servers and exchanges all purporting to serve advertisers or publishers in some unique way; but all have their own business models that may or may not be adding value to either.” Thank you!

This mess has to be cleaned up if the media sector is to live up to its potential. When one of two revenue sources for media is bogged down by the chaos described, while the other is driven by direct customer payments (i.e., subscriptions and variants thereof) in an increasingly free environment, that cannot be a healthy situation for sector economics. And it isn’t strictly a matter of economic value – although the same AdAge article argues that publishers only see $1 for every $5 of advertising sold – but also one of business soundness and, frankly, morale. With so much algorithm, intermediation, digital chaos, and lack of understanding separating the publisher and the advertiser, is it possible for either one to appreciate the other? For either one to even hear the other? For either one to see the point of the other? I entertain doubts, but that being as it may, the numbers tell a story that cannot be denied.

With all this in mind, however, a powerful case can be argued that we are at a market bottom. As the complexity described is more likely to abate than to increase, just looking at the matter relatively, there should be economic upside built into the very simplification that will happen. The question is one of time, and letting the process run its course. For those who are more inclined to take charge rather than wait, here is a call to action: Google’s advertising product, embarrassingly simple, drives revenue that has never stopped growing, in any cycle.

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By Dan Ramsden – March 3, 2010

Space exploration in the atom

There is an interview with Peter Thiel in Wired, in which the PayPal co-founder and first Facebook investor makes an interesting case for new outlets of invention, new growth vehicles in a global economy that is in jeopardy for lack of growth. These new fields, according to Thiel, can no longer be Internet reliant because the Internet is tapped out. Thiel’s perspective is notable, especially in the context of the last hundred years of economic evolution. “The Internet may be culturally important,” he says, “just as the automobile was culturally more important in the ’50s than the ’20s, as we got suburbia and built the Interstate Highway System. But the last successful car company started in the US was Jeep in 1941… Obviously we’ve done well online. But how much more progress is there going to be? How many big new Internet companies are there? In the ’90s we had Netscape, Yahoo, eBay, Amazon. In the past eight years there have been only two: Google and Facebook. [Possibly Twitter.] Still, the numbers suggest a maturing industry.”

With this in mind, Thiel has been thinking about the next stage of evolution, a necessary and urgent undertaking in his view. According to Thiel’s perspective, it is imperative that the historically unprecedented growth of the past century continue, not only for economic reasons but also for political stability. Such new growth areas, he believes, are to be found in the science fiction novels of the mid-20th century, and he is currently looking into space programs as an example. (I am reminded of a blurb from William Burroughs, who preceded Thiel by several decades: “The only thing that could unite the planet is a united space program…”) But anyway.

This Wired interview, though very brief, and probably incomplete in capturing Peter Thiel’s philosophy, was nevertheless thought-provoking on many levels. The maturation of the web sector and considerations associated with such maturation have been observed in this column often, most recently here and here. Two even more interesting ideas, however, which Thiel’s comments bring to mind, are that the breathless pace of innovation and expansion must continue, lest we suffer consequences more dire than a stagnating economy, and that we have put ourselves in this predicament. I don’t know if such a perspective is valid or excessive, but I hope it is the latter because acceleration cannot continue into perpetuity, and it would be unhealthy, I think, for most of us to try.

We have, nonetheless, lived through an era from which such notions, such enormous perspectives, ambitions, and the suggestion of mind-numbing consequences, can emerge. (Whether or not venture capitalists should try to “change the world” is actually a subject of debate today.) It is difficult, in contrast, to imagine a discussion about the necessity of space travel and investing to change the world in, say, the 1970s, let alone the 1870s, let alone the 1470s. Stepping back for perspective: It took millennia for Machiavelli, Spinoza, and other Renaissance thinkers to build upon the lessons of ancient predecessors, while it’s been a mere hundred years since we were driving in horse-drawn carriages and did not know about typewriters. And yet, here we are, feeling the urgency of space travel because we have come up with PayPal.

Perhaps there is a more plausible path to the future than one that involves enormous goals for which we may not yet be ready. Perhaps a more sensible path, rather than trying to climb swiftly onward to some ever-higher rung before we have even had a chance to absorb our own progress, may be to perfect that which remains only half-finished. Surely there is tremendous growth potential in that alone. Consider: PayPal is still known to malfunction, Facebook is still burdened by snags, venture capital is still a broken asset class, Toyota cars are unreliable, and the “great American novel” has not yet been written, not even by the visionary Burroughs.

I will throw this out there only as a thought – because the subject is far too complex for any definitive conclusion in a little blog article – but perhaps the thing that will lead us more naturally and more manageably into the future, is more pedestrian than conquering the universe: Maybe the solution lies simply in a job well done. We still have a very long way to go.

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By Dan Ramsden – February 28, 2010

Trust, and protecting the house

Communication, like banking, is predicated on trust. When trust is breached, the system fails. The safekeeping and efficient commerce of trust determine the robustness of the house, the reliability of the system, even in matters of nuance and degree. The trust that differentiates reportage, advertising, and propaganda, is relative in the same sense that risk is relative in various forms of investment. When a high-risk investment, however, is presented as a secure loan, this is a breach of trust that jeopardizes the integrity of the bank. This breach may trigger a bank run and potential collapse, reflecting large scale distrust among depositors. The same is true with matters of communication.

Three headlines in this morning’s news serve as reminders of the issue: (1) From Wired: IPad Apps Could Put Apple in Charge of the News. This is a mildly hysterical piece, (which leads me to distrust Wired as being aligned with Google), suggesting that Apple would use its platform to act as censor. (2) From Mashable: Facebook Secures Patent for News Feed. Implications remain unknown, but the headline is not an understatement. We are talking about the news feed, which in principle now belongs to a relatively untested protector of the world-wide late-breaking. (3) From Forbes: Google And The Law. On the heels of the widely publicized ruling in an Italian court to hold Google executives personally accountable for users’ content uploaded to YouTube, the issue of web openness vs. censorship is debated.

What each of these three headlines highlights is that the Internet and its principal hubs are maturing and no longer mere youthful distractions. Even in matters of personal media consumption or utilization, (i.e., the social web), which will not necessarily shake up the newswires, the issues of trust, security, and integrity, cannot be ignored. In some ways, these issues play an even more important role in the social web, in which personal sensitivity is at stake. And when media companies begin to dabble in news (reportage), commercial media (advertising), and private communication, simultaneously, the risks and sensitivities are not dissimilar to those of universal banking that becomes active in everything from checking accounts to emerging markets hedge funds to private equity to sub-prime credit derivatives. The entire house is vulnerable to the point of highest risk.

Case study in real-time: Google and its vulnerability to Buzz. Should we begin to distrust Google on account of its lax rollout of a social product that mishandled our personal information, should Google be moreover perceived as insensitive to such issues, then this matter of breached trust can quickly extend to other parts of the enterprise. Google Docs and Google Apps, for example, both predicated on the upload of private documents into Google’s cloud, could lose credibility. But this would be a minor thing, because it wouldn’t hit Google where it hurts most: Search. Producing almost 100% of its profits, this product, which is really an advertising directory, is entirely dependent on our continued trust that results are wholesome and precise.

So, when in the aftermath of the Buzz fiasco we begin to see articles like this one, and blogs like this other, highlighting the enormous complexity and sophistication of Google’s search foundation, and the meticulous seriousness with which the company treats this engine, we recognize the propaganda’s motive. If Lehman Brothers, Bear Stearns, Merrill Lynch, can fall, then Google may not be immune. At the very least, market share may be lost, and chunks of stock price. And if Google is not immune, there are much lesser houses at risk. The Internet is no longer a toy, and the stakes are grown-up stakes now.

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By Dan Ramsden – February 26, 2010

The clean and the sloppy, the pure and the cloud

A study in contrast, two job candidates. Ralph Google floats in, somewhat disheveled and bizarrely translucent. Tell me your greatest weakness, Ralph. “I’m curious, Sir, and I talk too much.” Surely enough, Ralph swiftly rummages through the paperwork on your desk, describing it loudly and in detail while office colleagues stop in the doorway to listen. Next candidate, Louie Apple. Almost robotic, but excellently mannered, with upright posture and firm handshake. Same question. “I am clean, Sir, almost sterile, and excessively well organized.” Apologetically, almost sheepishly, Louie straightens out the mess of your papers and sundry items into perfect stacks, logically ordered, and wipes off crumbs and loose paperclips neatly into the trash bin. A study in contrast, like I said, from whence the expressions: “to hang a Louie” and to “hang a Ralph.” Two opposite alternatives.

I came across this article from Business Insider the other day about the virtues of Google’s upload feature, which allows Google Docs users to tap into 250 MB of document storage capacity remotely on Google’s servers at no cost. With a Google login, one can then access stored documents with any Internet connection anywhere. Moreover, as documents are stored in the Google Docs system, these can be shared with other users without having to email bulky attachments around, simply by inviting others to view the documents online. A real cloud miracle! A wonder! And exactly the kind of service that cloud evangelists from coast to coast have been preaching these past years. Why, but imagine: Google’s secure and redundant systems, ease of use, transportability, reduced personal hardware requirements, virus-free storage, no cost, etc. and so on… had this been two or three weeks ago, it would have resonated well. But now that we’ve had our interview with Ralph, which is to say, the Google Buzz debacle fresh in our memory banks, and having born witness to the cavalier way in which Google opened up its email users’ private information, we have to pause. Even if briefly, but longer than we might have paused before. Do we trust the cloud? I don’t know, I’m asking.

This question bouncing around in my mind, I noticed the rigmarole and indignation with which Apple’s decision to ban adult content from its app store has been received. While the blogosphere ran mostly rampant with disbelief, legal debate, pontification, even outright anger, one industry observer raised the possibility that Apple’s house-cleaning and newly found family values may be an attempt to lure the education market to the purity and safety of its products. Perhaps so, perhaps this was the rationale. Still, I find it interesting, and not necessarily inconsistent with the theory, that the timing of Apple’s broadly sensationalized decision would coincide with a public relations problem of quite a different sort for Google. In short, I detect a signal of sorts, a reminder from the sponsor, about cleanliness and the sloppy; purity and the cloud.

(It probably bears noting that memory-intensive hardware with plentiful hard-drive capacity and locally hosted software is a core part of Apple’s product mix, which stands in opposition to a cloudy Google Docs upload system.)

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By Dan Ramsden – February 24, 2010

Pace and the churning conglomerate

Fast times are upon us, baby, fast times. If this isn’t yet a song lyric, it should be. Would be a hit, a YouTube sensation, because we can all relate. If there has been a unifying thread in this column and in the news these past months, which seem like years, it is that of velocity. I should get rid of the arbitrary categories for my articles – these all just beat around the bush – and in a fell swoop replace with this alone: Fast times, and getting faster.

I don’t recall which determines which, at one time I knew but it’s been a while since physics class: velocity and force are related. These days, velocity is the driving force, science and formulas aside, and speed is a central figure in an increasingly complex plot. It is that character behind the curtain who shapes the velocity culture of entrepreneurs, who manipulates giants to rush products like Buzz, and even a choreographed and meticulous offering like an iPad, half-done. “If you’re not breaking stuff you’re not moving fast enough,” quoth Mark Zuckerberg of Facebook fame. I’ve touched on the complexity of investing, and thoughtful valuation, in an environment marked by such speed, using the Facebook example as a sort of case study. And we may also have noticed velocity’s influence in the  declining value of content, diminished by the speed with which such content is consumed.

Such musings often lead me to think about the challenges that present themselves to closed systems, (necessarily slow and rigid), in this extreme environment. A closed system, slow and rigid, is for example a business enterprise, or a private funding vehicle, or a government: systems that are necessarily limited in their motion, or in the effectiveness of rapid motion (e.g., Buzz, see above), or at least so in comparison to a surrounding atmosphere that, as shown, is fast and getting faster. When speed and accelerating change determines any given context, the outcome of illiquid investing (or decision-making), slow exiting (or decision reversal), and everything that occurs between, is undermined. The challenge is not merely one of execution, when dealing within a closed environment, but of value creation and protection, when such a closed system resides in a universe that is open and marked by flux.

(In public capital markets, the ups and downs, the trials and tribulations, and all manner of activity that takes place at the enterprise level or outside it, are reflected in a trading dynamic which often thrives on instinct and is itself marked by velocity. In public markets an almost perfect decision velocity is possible. In and out. In private systems – closed environments in which it is difficult to trade – instinct and velocity are less actionable, and reversal is more difficult.)

This dichotomy of an evolving and sometimes chaotic outside, on one hand, and an inside that is confined by the limits of a closed structure on the other, has always existed; but in an environment in which outside speed reaches extreme levels, the contrast is more pronounced and can become problematic. In such an environment, an approach is called for – in regard to the private model and the nature of its decision making, actions, investments, and the uncertainty of reversing exits – that is not only a broadly diversified portfolio approach, but one that is as much as possible self-contained. Position reversals that can be reasonably implemented by a mere shutting down are preferable to an IPO requirement. Assets that produce profit and thus a built-in exit scenario for investors are preferable to capital intensity or the need for additional resources ahead. Platforms that may serve multiple purposes are superior to narrow-scope strategies that may soon be outdated. In short, we are talking about a conglomerate approach that is marked by churn, and this can be taken as literally or as figuratively, as narrowly or as broadly, as suits a given scenario.

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By Dan Ramsden – February 21, 2010

Not evil, just misunderstood

Maybe it’s the rainbow-colored logo, or the company’s advocacy of net “neutrality,” or the fact that almost everything Google offers to consumers is free of charge. Or maybe it’s the pre-school corporate motto, “don’t be evil.” It may be all these things in combination that have caused us at times to turn a blind eye to the notion that Google is hardly a neutral not-for-profit organization or some charitable cause, and to idealize Google as the champion of an open web system, free for all, as compared to the colder sentiment we might nurture about, say, Apple, a company that makes no qualms at all about charging a premium price for any of its products, a company with a sharp silver logo and a founder who wears black turtlenecks,(to the Google co-founder’s red t-shirt.) With the introduction of Google’s latest online trinket, Buzz, this protective bubble of benevolent web Willy Wonka may have at last been punctured.

I am not only referring to the splash and uproar since the Google Buzz release some days ago, although there has been plenty of that. The early adopters have learned a hard lesson of beta testing, and the bloggers have been having a feast with privacy issues that seem to get more messy with every new fix. Even the New York Times is chiming in, a legit publication that also covers sports and the economy. A more lasting concern, however, even as the kinks get ironed out, may underlie the very nature of the Buzz product: We see, for the first time, that Google’s business goals are not necessarily costless for the consumer.

To state the obvious, and despite possible protests by the company to the contrary, Google is ultimately and almost purely an online search business, as evidenced by the search product comprising some 100% of the company’s otherworldly cash flows. This business is not only limited in its future growth potential, with already 60%+ market share, but is at that massive level vulnerable to attack and diminution. Every new Google offering, every new announcement, has to be seen in this context, which is to say, from the perspective of Google’s commercial motive to protect and even extend its search business dominance.

Google Chrome, for example, by all accounts the speediest browser around, increases the number of websites we are likely to access within a fixed timeframe, which in turn increases web traffic, which in turn increases the likelihood that we will search for something, which will likely be via Google. The company’s recently announced “fiber to the home” national infrastructure initiative aims at the same result – to expedite web traffic flow – by improving broadband connectivity. YouTube, Maps, Docs, and Google’s other free online services are all meant to keep us browsing longer.

The linking of Google Buzz to the Gmail system – which is at the root of the privacy issues and aforementioned uproar – is not a flaw, but an essential element of the product. Because Gmail, unlike Twitter or Facebook, is necessarily a browser based offering that comes with its own Google search box built in. Contrariwise, Twitter is increasingly being accessed on derivative platforms such as Tweetdeck – a browser-free experience that bypasses websurfing altogether – and Facebook is developing its own search platform that would altogether bypass Google. Both of these competitive trends won’t do at all for Google, and when we see Google as the market-conscious web operation that is behind the “don’t be evil” mantra, Buzz not only makes sense but is a necessary strategic move for which the company cannot be faulted. Beyond good and evil, however, what does arise is a new question that Google has not had to answer before: can Willy Wonka be trusted?

The question is huge, because trust and search reliability are closely connected, and the market’s answer could in the long term impact Google’s core business.

UPDATE (February 15)

This profile article appeared in the San Francisco Chronicle today: “Facebook directs more online users than Google.” The column describes the recent emergence of Facebook as the leading source of traffic to the major portals, and the rising prominence of social media optimization in relation to search engine optimization for marketers. Although there are two sides to every story, and Google’s prominence remains safely huge, the social media trend can’t be ignored. There is good reason, no doubt, why Google rushed its new product introduction.

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By Dan Ramsden – February 14, 2010

On insularity, Twitter, and Foursquare’s strategic relief

If you’re going to be in the media business, insularity is not a good thing. Insularity is never a good thing, although I should not generalize as undoubtedly there are exceptions. Pluto, for example, is doing fine out there, and has been for some time. Pluto’s been out there, you know, even before the worldwide web. But that’s different. That’s a planet in distant orbit. Still, if given a choice, I bet Pluto would interact a little with the rest of the universe, at least on occasion, just to see what else is going on.

I was reminded of Pluto and its distance when seeing the Mashable story this morning about Twitter finally rolling out a Blackberry app, in beta, some time later this year… it now being February, and later this year comprising almost the year’s totality. In other words, no time soon, no hurry, it’s only Blackberry. Now Twitter hasn’t been out there as long as Pluto, although it sometimes feels like it, but nevertheless a long time, and long enough to think about the most popular smartphone around, as unhip as it may be. That’s right, as incredible as it probably seems to some around the core of web x.0, the Blackberry device still comprises almost half of the market, almost twice as much as the next closest competitor, the revered iPhone, which in turn still outdoes the Android phone by multiples, and somebody should probably make this known at a conference or something. I’m just saying.

By way of contrast, I look at the way in which Foursquare is conducting its business, and I tip my hat. Here is a company that is about as novel and indicative of social web hipness as can be, which has gone out of its way to interact with the big universe outside of Silicon Valley and downtown NYC. In the last few weeks alone, this group, which has been around for a far lesser time than Twitter, has announced strategic alliances with countless traditional magazines, television networks, and other businesses north of 14th Street… and has even rolled out a Blackberry app that works well. Granted, these magazines are not exactly subversive and many are still (sigh) available at “news stands” for “money.” (I use quotation marks because of the retro aspect of such things.) And similarly, the television networks with which Foursquare is cavorting are not yet accessible with Boxee, but believe it or not HBO is still pretty popular on “cable television.”

Now, before I dig a hole for myself and come across as an old media crank, which I am not, I will point out that traditional media has for decades been just as insular as some of the web x.0 may be at risk of becoming… and perhaps even more so. New web entrepreneurs should learn from this history lesson, because traditional media is now itself losing steam, perhaps as a result of this insularity, and what seems new today will probably not last forever. One should look at Foursquare and the strategy on which it is embarking as a positive and refreshing approach that is hopefully groundbreaking. Which is to say, bridging the divide between the old and new, bringing the traditional into the fold of the innovative, are actions and a way of thinking that have throughout history proven more effective than isolated comfort. The latter, in my opinion, could lead to a false sense of permanence in an environment that is in flux, and possibly even cyclical… Pluto and the universe notwithstanding.

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By Dan Ramsden – February 12, 2010