Archive for the ‘Regulatory issues’ Category

Regulation Is Here, Internet Professionals

May 5, 2010

I’ve been saying it for well over a year and Facebook may have been the final straw. The concern over privacy and user control raised in the wake of the Facebook “Open Graph” and Social Plugins initiative, as well as ongoing questions over behavioral targeting and online data mining, have created a kind of perfect storm that are all but certain to bring new regulation to data collection online.

New draft privacy legislation in Congress has already been proposed and circulated:

No consent is required to collect and use operational or transactional data – the routine web logs or session cookies that are necessary for the functioning of the website – or to use aggregate data or data that has been rendered anonymous.

Companies need an individual’s express opt-in consent to knowingly collect sensitive information about an individual, including information that relates to an individual’s medical records, financial accounts, Social Security number, sexual orientation, government-issued identifiers and precise geographic location information.

Some version of this Boucher bill (.pdf) will pass in Congress. On the surface and at the highest level it may not be that different from IAB “self-regulation” schemes or best practices employed today. What may be different is that the legislation empowers the FTC to make more rules and enforce the law. The state attorneys general are also empowered to enforce these rules and punish offenders through civil litigation. They can accordingly seek injunctions and civil damages against the offending companies.

This would also open the door to a wave of private and class action lawsuits against companies perceived to have deep pockets that violated the law. It effectively puts the burden on publishers, ad networks and others to very strictly comply with the rules and disclosure requirements or face punishment in the form of damages.

By playing “fast and loose” with privacy, being arrogant, naive, manipulative and aggressive about data collection and ad targeting online firms have brought this on themselves.

Google and then Yahoo have developed relatively clear pages that enable consumers to exercise some control over data collection and privacy (JumpTap has done a version of this in mobile). But this model has not been widely followed by others. Regulation might have been avoided if there were a more sincere and pervasive effort to do something similar across the Internet.

Any “self regulation” efforts now put forth are too little too late. Federal privacy regulation is coming. Indeed it’s almost here.

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The IAB doesn’t like the bill of course, while consumer groups think it’s too lenient.

Google Books: DOJ Likes Concept, Not Terms

September 19, 2009

The US Department of Justice filed its statement and reaction to the Google Books Search Settlement and came down somewhere in the middle. The US supports the concepts behind the settlement but raises a bunch of concerns and issues surrounding the specifics (emphasis added):

The United States strongly supports a vibrant marketplace for the electronic distribution of copyrighted works, including in-print, out-of-print, and so-called “orphan” works. The Proposed Settlement has the potential to breathe life into millions of works that are now effectively off limits to the public. By allowing users to search the text of millions of books at no cost, the Proposed Settlement would open the door to new research opportunities. Users with print disabilities would also benefit from the accessibility elements of the Proposed Settlement, and, if the Proposed Settlement were approved, full text access to tens of millions of books would be provided through institutional subscriptions. Finally, the creation of an independent, transparently-operated Book Rights Registry (the “Registry”) that would serve to clarify the copyright status and copyright ownership of out-of-print works would be a welcome development.

Nonetheless, the breadth of the Proposed Settlement – especially the forward-looking business arrangements it seeks to create – raises significant legal concerns.  As a threshold matter, the central difficulty that the Proposed Settlement seeks to overcome – the inaccessibility of many works due to the lack of clarity about copyright ownership and copyright status – is a matter of public, not merely private, concern.  A global disposition of the rights to millions of copyrighted works is typically the kind of policy change implemented through legislation, not through a private judicial settlement.  If such a significant (and potentially beneficial) policy change is to be made through the mechanism of a class action settlement (as opposed to legislation), the United States respectfully submits that this Court should undertake a particularly searching analysis to ensure that the requirements of Federal Rule of Civil Procedure 23 (“Rule 23”) are met and that the settlement is consistent with copyright law and antitrust law.  As presently drafted, the Proposed Settlement does not meet the legal standards this Court must apply.

The papers spend a bunch of time discussing how the proposed settlement fails to comply with Federal Rule of Civil Procedure 23, a set of procedural guidelines that govern class actions. In terms of the anti-trust question and whether the settlement potentially violates the law (as some of the opponents allege), the DOJ says this (emphasis added):

The Department of Justice has opened an investigation into the competitive impact of the Proposed Settlement.  That investigation is not yet complete, and future modifications of the Proposed Settlement in response to comments filed in the instant proceeding may bear on the conclusions of that investigation.  For these reasons, the United States cannot now state with certainty whether the Proposed Settlement violates the antitrust laws in any respect.  Nevertheless, the Department’s views on certain core issues are sufficiently well developed that articulating them now may be beneficial to the Court in its consideration of the Proposed Settlement and to the parties in their continuing negotiations regarding possible modifications. 

In the view of the Department, the Proposed Settlement raises two serious issues.  First, through collective action, the Proposed Settlement appears to give book publishers the power to restrict price competition.  Second, as a result of the Proposed Settlement, other digital distributors may be effectively precluded from competing with Google in the sale of digital library products and other derivative products to come. These problems are evident on the face of the Proposed Settlement and the concerns they raise have not to this point been convincingly addressed by the parties.  The parties have indicated, however, a willingness to consider modifications that would address at least some of the concerns set forth below.

In conclusion the DOJ says:

This Court should reject the Proposed Settlement in its current form and encourage the parties to continue negotiations to modify it so as to comply with Rule 23 and the copyright and antitrust laws.

Bottom line: The DOJ is probably doing the right thing here, supporting the concept of what Google is doing (as inevitable) but identifying the terms that require modification, along the lines of the paragraph immediately above. There may be some additional class notice requirements to comply with FRCP Rule 23.

Gary Price has rounded up the coverage here. The NY Times is here. Danny Sullivan also pours through the filing and has some thoughtful comments. More at Techmeme.

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Related: NY Times discusses the parties’ ongoing negotiations to address all the concerns raised in the filings. October 7 is the hearing date for approval of the settlement. But as the article points out, the deadline is likely to be extended.

FTC-Sears Deal Points toward BT Regulation

September 12, 2009

The US FTC has approved a settlement with Sears regarding online tracking that requires it to destroy data collected from consumers, who were paid $10 to download software that monitored their online behavior. According to MediaPost, the Sears program sent “pop-up ads to 15 of every 100 visitors that asked for their email addresses. Respondents were then invited by email to download software that would track ‘online browsing,’ and promised $10 if they kept the software for at least one month.”

The settlement between the FTC and Sears was originally announced in June by the government agency. Here’s the FTC’s summary of the case and the remedy:

The FTC charges that the software would also monitor consumers’ online secure sessions – including sessions on third parties’ Web sites – and collect information transmitted in those sessions, such as the contents of shopping carts, online bank statements, drug prescription records, video rental records, library borrowing histories, and the sender, recipient, subject, and size for web-based e-mails. The software would also track some computer activities that were not related to the Internet. The proposed settlement calls for Sears to stop collecting data from the consumers who downloaded the software and to destroy all data it had previously collected.

According to the FTC’s complaint, Sears invited certain consumers visiting the sears.com and kmart.com Web sites to become members of the “My SHC Community.” Sears solicited these consumers to “participate in exciting, engaging, and on-going interactions – always on your terms and always by your choice.” Sears paid consumers $10 to participate. As part of this process, Sears asked consumers to download “research” software that it said would confidentially track their “online browsing.” Only in a lengthy user license agreement, available to consumers at the end of a multi-step registration process, did Sears disclose the full extent of the information the software tracked, according to the complaint. The complaint charges that Sears’ failure to adequately disclose the scope of the tracking software’s data collection was deceptive and violates the FTC Act.

Under the proposed settlement, in addition to destroying information previously collected, if Sears advertises or disseminates any tracking software in the future, it must clearly and prominently disclose the types of data the software will monitor, record, or transmit. This disclosure must be made prior to installation and separate from any user license agreement. Sears must also disclose whether any of the data will be used by a third party.

In this case we already are seeing the future of online data collection going forward. Here are the most interesting and relevant bits from the excerpt above:

Only in a lengthy user license agreement, available to consumers at the end of a multi-step registration process, did Sears disclose the full extent of the information the software tracked, according to the complaint. The complaint charges that Sears’ failure to adequately disclose the scope of the tracking software’s data collection was deceptive and violates the FTC Act.

Under the proposed settlement, in addition to destroying information previously collected, if Sears advertises or disseminates any tracking software in the future, it must clearly and prominently disclose the types of data the software will monitor, record, or transmit. This disclosure must be made prior to installation and separate from any user license agreement. Sears must also disclose whether any of the data will be used by a third party.

(Emphasis added.)

I think these provisions point the way toward future FTC rules that will govern all of online advertising and behavioral targeting in particular. Here’s what I think the regulation will look like:

  • Prominent disclosure requirements (what is being tracked and by whom)
  • Prominent ability to opt-out of tracking
  • Data retention (disclosure that tells people how long their information will be stored)

If I’m correct this could throw a big monkey wrench in the works for BT because if people see prominent disclosures that they’re being tracked they’re likely opt-out, wouldn’t you? The “benefits” of behavioral targeting are highly abstract to consumers, though very real to marketers. However Google, with its “interest based ads,” may be something of a model for the future. Here’s Google’s discussion of the privacy controls in the program:

  • Transparency – We already clearly label most of the ads provided by Google on the AdSense partner network and on YouTube. You can click on the labels to get more information about how we serve ads, and the information we use to show you ads. This year we will expand the range of ad formats and publishers that display labels that provide a way to learn more and make choices about Google’s ad serving.
  • Choice – We have built a tool called Ads Preferences Manager, which lets you view, delete, or add interest categories associated with your browser so that you can receive ads that are more interesting to you.
  • Control – You can always opt out of the advertising cookie for the AdSense partner network here. To make sure that your opt-out decision is respected (and isn’t deleted if you clear the cookies from your browser), we have designed a plug-in for your browser that maintains your opt-out choice.

The Ad Preferences Manager is a kind of dashboard for consumers to convey their “interests” and opt-out:

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Make no mistake, regulation and enhanced disclosure requirements are coming. Marketers and publishers should be preparing for this inevitability.

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Related (from AdAge): The Ad-Tracking Debate: Where Should Disclosure Live?:

A more perfect (and not much harder) solution would put links to disclosure both in the ads and on the page or site. As proposed by industry groups, there should be a recurring icon in or around ads that consumers can come to associate with tracking and learning about why any particular targeted ad was served to them.

But if consumers want to look into their privacy options on that site more generally, a link on every page should take them to one place with all of the privacy information they need.


In Brief: Google, YouTube, Marchex, FTC Regs

August 3, 2009

Here are some things going on this morning/today that I don’t have time to give more attention to:

Google CEO Eric Schmidt resigns from the Apple board because he has too many conflicts of interest given that the companies compete across a number of areas now. Here’s Apple’s official statement; it’s clean:

“Unfortunately, as Google enters more of Apple’s core businesses, with Android and now Chrome OS, Eric’s effectiveness as an Apple Board member will be significantly diminished, since he will have to recuse himself from even larger portions of our meetings due to potential conflicts of interest.”

YouTube to feature local news. From the NY Times:

YouTube, which already boasts of being “the biggest news platform in the world,” has created a News Near You feature that senses a user’s location and serves up a list of relevant videos. In time, it could essentially engineer a local newscast on the fly. It is already distributing hometown video from dozens of sources, and it wants to add thousands more.

YouTube says it is helping TV stations and its other partners by creating a new — but so far not fiscally significant — source of revenue.

YouTube and the Internet more generally are a substitute for cable TV long term.  TVs or TV boxes in a growing number of homes will access the Internet. And with YouTube, Hulu and Netflix, why would I want to subscribe to pay TV — with some notable exceptions of course. Pain is coming to cable TV and more pain is coming to broadcast. Quality (not lowest-common-denominator-cheap-to-produce-schlock) is the answer. But when cost is an issue quality typically loses. TV is generally a wasteland anyway. So be it.

Marchex asks: Can Locally-Focused Display Ads Make The Phone Ring? The argument in the piece is that display should be part of the local marketing mix but that local advertisers will want to be billed on a performance basis (clicks or calls, preferably). What do you think about display and local:

  • Will it work for local advertisers? (most have not used, according to survey data I have)
  • Can it only be sold on a clicks or calls basis?
  • Must it be outsourced and created by the partner/sales agent or will self-service (e.g., AdReady) be viable at all?

As the FTC looks more closely at online advertising and data mining, stronger regulation (disclosure and opt-in/out requirements) are coming. Mark my words. Or to use the Internet cliche, “watch this space.”

IAC Q2 Results: the Local Part

July 29, 2009

IAC reported Q2 results, which are very mixed but improved from Q1. Here are excerpts that pertain to local:

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Citysearch [part of Media & Advertising] launched its new technology platform and announced the addition of Yellowpages.com and Superpages.com to its Citygrid partner network. IAC now has approximately 5.5 million local smartphone apps downloaded in total.

ServiceMagic revenue benefited from a growing and more active service provider network and 5% growth in service requests driven, in part, by increased marketing efforts. Revenue benefited further from contributions from the businesses now comprising ServiceMagic International (acquired October 29, 2008) and Market Hardware (acquired January 23, 2009). Profits were adversely impacted by an increase in marketing expense per service request as well as a shift in the mix of service requests from higher margin discretionary home repair and improvement requests to lower margin requests which was due primarily to the general economic slowdown. Profit declines also reflect higher operating expenses primarily associated with the expansion of the sales force and losses related to ServiceMagic International and Market Hardware.

Separately, yesterday, ServiceMagic announced a deal with magazine publisher Meredith:

The arrangement pairs the Meredith Women’s Network – a Top 5 online female network of Web sites including well-known, home-related properties inspired by the Better Homes and Gardens brand such as BHG.com, DIYadvice.com, Kitchenbathideas.com and Remodelingcenter.com – with ServiceMagic.com’s network of prescreened local service professionals. Meredith’s premium sites, which draw 16 million unique visitors each month, will now feature a fully-integrated, customized find-a-pro tool powered by ServiceMagic.com. The free tool will allow consumers using Meredith Web sites to link directly to ServiceMagic.com’s database of top-rated local professionals.

Micro-Hoo: Thoughts Part 2

July 29, 2009

The deal’s big winner is Microsoft, which makes no upfront cash payment and gets Yahoo!’s reach now for its advertisers. Yahoo! wasn’t compelled to do this deal but perhaps the board and the market pressure was too much.

Yahoo! gets some revenue guarantees, access to search data (for BT on other properties) and doesn’t have to invest many resources in search going forward. Longer term, however, this is probably not a good deal for Yahoo! but we’ll see.

Stock is down right now:

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There are lots of open questions:

  • What happens to SearchMonkey and similar initiatives, etc.?
  • Microsoft and Yahoo! have said they’re still competitors. How will that affect the execution of this deal?
  • How does this affect Yahoo!’s newspaper relationships?
  • What happens to specialized vertical search on Yahoo! properties: Local/Maps, News, Real Estate, etc.?
  • How will the anti-trust arguments play out? In my mind there are legitimate anti-trust arguments to be made but they’re unlikely to succeed. EU scrutiny will be tougher than US.
  • What happens in 10 years when the deal is up?

Your thoughts?

Google OS Makes Sense, Creates Problems

July 8, 2009

Picture 4Google Apps, Google browser, Android . . . Chrome OS. As most of you know by now, Google announced a full-blown operating system for netbooks and PCs:

Google Chrome OS is an open source, lightweight operating system that will initially be targeted at netbooks. Later this year we will open-source its code, and netbooks running Google Chrome OS will be available for consumers in the second half of 2010. Because we’re already talking to partners about the project, and we’ll soon be working with the open source community, we wanted to share our vision now so everyone understands what we are trying to achieve . . .

Google Chrome OS is a new project, separate from Android. Android was designed from the beginning to work across a variety of devices from phones to set-top boxes to netbooks. Google Chrome OS is being created for people who spend most of their time on the web, and is being designed to power computers ranging from small netbooks to full-size desktop systems. While there are areas where Google Chrome OS and Android overlap, we believe choice will drive innovation for the benefit of everyone, including Google.

Quick thoughts:

  • Until people see and evaluate the OS no real assessments can be made of its prospects but Android suggests it will be solid and viable
  • Accordingly this potentially gives MSFT a real run for its money (literally) in the netbook segment — the only healthy segment of the PC market. Could also eventually go “upstream” and challenge on laptops/PCs but that’s farther off and much more speculative.
  • Google now is almost a complete alternative to MSFT (OS, apps, mobile, browser)
  • Open source code (like Android) means that netbook OEMs will probably use Chrome to boost margins (if only a very little)
  • The move is logical because Chrome (the browser) was a kind of OS or platform for developers and apps development. Android is an OS but perhaps not technically “robust” enough for netbooks and certainly not full PCs
  • Chrome the OS will be deeply integrated with the browser experience and try to create a more seamless online-PC experience. Google made much of HTML 5 in the browser and what it could do — not quite enough it would seem, however.
  • Apple and Google are now true competitors across a broader range of fronts. Google is very much like Microsoft now in many respects. It’s only a matter of time before Google CEO Eric Schmidt will be compelled by investors or regulators to depart the Apple board (the DOJ is looking into the two common Apple, Google directors)
  • Even though there’s nothing explicitly anti-competitive here — in fact it makes the OS market more competitive — Google makes its position potentially more difficult with regulators simply because the company spans several key market segments and is using their integration to maintain leadership (though not illegally) in search online and extend it to mobile

You can read the scores of posts on Techmeme.

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Agree with Henry Blodget’s remark about Chrome:

If Google wants to succeed in its boldest product launch to date, the Chrome OS, the company needs to focus on its success with the same intensity it once dedicated to search.

If it doesn’t, Chrome OS will end up just like Chrome: yet another irrelevant skunkworks project used by a handful of digerati and Microsoft-haters and ignored by everyone else.

Not sure that the criticism of Chrome the browser is fair yet. But Google’s “if we build it they will come” attitude more often than not has lead to products falling short of their potential. But Android success suggests that if Chrome the OS is good OEMs will use it.

Newspapers, YPs Sing the De-Listing Blues

January 5, 2009

First it happened to Idearc and now RH Donnelley:

R.H. Donnelley Corporation, one of the nation’s leading Yellow Pages and online local commercial search companies, announced today that The New York Stock Exchange (NYSE) has determined that the trading in the common stock of R.H. Donnelley should be suspended in view of the fact that the Company did not maintain a market capitalization of at least $25 million over a consecutive 30 trading day period as required by the continued listing standards. As a result of the suspension of the NYSE listing, R.H. Donnelley expects its common stock to begin trading over-the-counter (OTC) on the Pink Sheets beginning on January 2, 2009 under the symbol RHDC. Pink Sheets provides the leading inter-dealer electronic quotation and trading system in the OTC securities market.

Newspaper publisher Lee Enterprises also faces de-listing. According to MediaPost:

Lee informed shareholders that it received a letter from NYSE warning of possible de-listing on Dec. 30, but also said it has a plan to increase share value and market capitalization to restore compliance. It said it would tell NYSE the details of this plan by Friday, Jan. 9; the NYSE allows a six-month grace period for noncompliant companies to shore up their stock prices, but this grace period can be canceled if market capitalization also remains too low.

What’s amazing is that Idearc and RH Donnelley have billions in revenues that are many times their market caps, which reflect their debt loads and investors’ pessimistic view of their prospects.

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picture-5

Separately in a move to boost ad revenues, the NY Times said it will sell display ads on the front page of the print edition. This has been done by other papers for some time, but the Times had yet to cross that line.

Why Not a Newspaper Bailout?

November 14, 2008

BusinessWeek colunmist Jon Fine offers a “tongue & cheek” [sic] suggestion of a bailout for the newspaper industry. In a way, why not? It’s being discussed for GM.

Fine says:

This industry employs over 52,000 journalists, thousands of other workers, and it faces unprecedented challenges. It takes more than a quadrennial sales spike from a closely watched election to save newspapers. Also, the bailout money is there, and—ask any struggling retailer or chain of hair salons soon to claim that they, too, are banks—it won’t be there forever.

Of course it’s not going to happen.

But why are autoworkers and the auto industry (which was greedy and failed to plan ahead) more worthy of Washington’s financial aid than the newspaper industry and journalists?

Posts at SEL

November 5, 2008

I’m tired so I’m not going to post much here today. I was up too late last might mourning the loss of John McCain (kidding).

Earlier today I did three posts on a number of Google and search-related developments at Search Engine Land:

The White Spaces issue and decision is potentially significant because it creates more (free) spectrum for Internet access.

At LMS: SES Mobile, 700 MHz and ‘Dream’

March 21, 2008

Here are recent posts from Local Mobile Search:

Turning Display Ads into Directional Media

March 20, 2008

I wrote below that consumer privacy concerns may create problems for publishers, ad networks and advertisers seeking to turn aggressive targeting into greater relevance for display ads just as brand advertisers are starting to shift big dollars online.

However there are interesting potential alternatives to BT for display, which include units such as Linkstorm’s overlays, widgets (e.g., Google Gadget Ads), brand advertising in search results (see also here), and other interactive display units such as Admission‘s dynamic platform.

Here’s an example of the latter’s inventory based display advertising:

Auto banner

Clicking on any of the individual cars opens a window as follows that becomes a lead-gen form (and could contain video):

Lead gen

These sorts of ads can take ride on top of BT; however, more importantly, such units can be effective outside of it. They can be targeted contextually to the content of a site or to a geography or both without relying on any consumer data mining. Consumers interact with the ads and then self-select, turning a display ad into “directional advertising” — the equivalent of the behavior that has made search so effective. (And some of these ad units include a search box as well.)

As mentioned, there are a range of companies offering display advertising with interactive capabilities or elements. But if legislation or regulations are enacted that require tracking notifications and consumer opt-out opportunities, these sorts of alternative strategies to make display ads more effective, by making them highly interactive, are going to be the way that the industry needs to go.

See this related piece I wrote at SEL regarding branding in search results.

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Disclosure: I’m an advisor to Admission Corp.

ISPs Get into the Ad Game

February 21, 2008

There is a movement afoot for ISPs to get into online advertising, in terms of providing data support and tracking for ad serving purposes. Phorm in the UK and and ISPs in the US are seeking to take data on users and their behavior and factor it into online ad targeting.

From a “local” standpoint, this will potentially improve geotargeting. But the emphasis and focus of discussion is on BT and serving brand advertising that relies on deeper data mining about individuals. In my opinion, BT may ultimately collapse under the weight of its own “greed.” It reportedly works but there are going to have to be very high-profile and voluntary consumer privacy measures taken by the involved companies themselves or outside forces are going to try and reign it in.

BT is fairly shadowy right now in terms of consumer awareness and understanding. Consumers want more “relevant” ads but are also uncomfortable with being “tracked.”

While US regulatory agencies are generally ambivalent about consumer interests and tend to favor business, in Europe the European Commission is going much farther to safeguard privacy. We may see some fairly aggressive positions taken in Europe that require actions on the part of search engines and portals at odds with BT capabilities and objectives. It’s not clear at the moment what these might be as a practical matter.

Privacy is a once again a huge issue (see my post on Google Health and consumer privacy).

The online ad industry’s general disregard of the consumer — notwithstanding rhetoric to the contrary — and its desire to offer ever more specific and powerful targeting capabilities to marketers may ultimately “kill the golden goose” by failing to properly self-regulate or educate the public and legislators.

Search is largely immune because it’s “directional” and doesn’t rely on data mining, although Google has experimented with BT in search in the form of ads based on past queries.

EU Review of Google-DoubleClick Acquisition

November 14, 2007

This is not a surprise, given the difference in the way that the US and Europeans dealt with the anti-trust case against Microsoft. The company essentially “got off” in the US, while the Europeans were much more aggressive and harder on the company. So too with review of the Google-DoubleClick acquisition.

I anticipated that the Europeans would bring more scrutiny to the deal. I would be surprised, however, if they prevented it or required major concessions from Google. We’ll see.

Will BT’s Wings Get Clipped Prematurely?

October 31, 2007

The success (or failure) of the still-nascent behavioral targeting (BT) online ad segment will depend on public and Congressional perceptions of the technology and how intrusive it’s seen to be. BT and a number of related, targeting variations are being seen as critical to the performance of display advertising online and are often celebrated as the cure to historical “banner blindness” (so is video).

If consumers have to see ads, almost without exception they would rather see ads that are more “relevant” to their interests and needs than ones that are not. However, the concept of being tracked by publishers and ad networks in order to deliver those more relevant ads is unsettling to many.

Thus AOL (which acquired BT firm Tacoda) has proposed allowing consumers to “opt-out” of BT style targeting and tracking. And then there’s also the proposed “do not track” list that would be to online advertising what the do not call list is to telemarketing. There’s also a US FTC “town hall meeting” coming up later this week to examine “behavioral advertising” and its impact on consumer privacy.

The AOL opt-out initiative amounts to something of a proactive or call it a preemptive effort on the part of ad networks to prevent BT from becoming a PR liability, as click fraud became for SEM. But there’s also heat coming for privacy advocates who want to see significant restrictions imposed on consumer tracking, which is central to BT.

If you ask consumers “Ads or no ads?,” they’ll opt for the latter generally. Indeed, the bulk of the action surrounding BT and whether or not it gets regulated is about framing, perception and, to some degree, semantics. Indeed, “relevant” ads are desirable, while “behaviorally targeted” ads are not.

Monday Roundup

January 22, 2007

Over the weekend, the WSJ (sub req’d) speculated that Google would soon be acquiring Adscape Media, which inserts ads into video games. Microsoft bought Massive, which does the same thing, last year. This of course makes sense for Google as it seeks to expand its reach. According to the Entertainment Software Assn., about 60% of the US population plays video games. It skews about 60% male (not as high as one might think perhaps) and a the average age of game players is 33 (I’ve seen conflicting data on this point). The point here is that gaming is a multi-billion dollar market with lots of users.

The NY Times over the weekend ran a piece about using ads in mobile to subsidize mobile Internet access or higher cost services like video. In other words, people will be asked to accept ads (opt-in) in exchange for lower monthly wireless bills. While this looks good “on paper,” I’m doubtful that this will be a mainstream phenomenon unless it is very carefully executed. From the article:

“I would not want them on the phone even if that would help cut costs,” said Conor Kelly, 20, a student at Savannah College of Art and Design in Georgia.

MarketWatch ran an interesting piece on the traffic controversy and an audit of Nielsen and comScore methodology going on now. This is a chronic problem in the industry and affects things like ad rates and stock prices.

Here’s a GigaOM post on telcos rallying around to promote Net non-Neutrality to defend against Google et al. AT&T was forced to make certain neutrality concessions prior to gaining approval of its BellSouth takeover. I believe, however, this is ultimately a self-defeating move by the telcos and they should just compete more effectively (if they can) rather than pursuing government protection of their franchises. (Yahoo!’s in an interesting position here given its relationship with AT&T.)

IBM said it will build social networking features into its Lotus software with the enterprise in mind. And the NY Times featured a wide-ranging article on social networks and how “big media” have fully embraced the phenomenon. Now that “everybody’s doing it,” publishers will find that not everybody will participate and it can’t be done in a perfunctory way. Just because you build it doesn’t mean they will come.

In a related article, here’s CNet’s Stefanie Olsen on children and their expectation of and control over on-demand media.

Steve Case’s vertical portal RevolutionHealth launches today. This is a hot and increasingly competitive segment with an anticipated Google Health on the way. Here’s the WSJ story. The business model is low-end free with premium (consumer pays) services. Whether this strategy is viable depends on how good the content and site are vs. free competitors such as Healthline and WebMD.

Travel site Farecast launches “airfare insurance” program Fare Guard. This product, critical to the site, offers to pay the difference between what you may have paid on Farecast and a lower fare that may occur after your purchase. In my view this will NOT help the site gain traction because it requires too much of consumers. Farecast is ultimately a feature of a larger travel site and not a site unto itself.

$100 Laptop + Writely + GDrive = Now I Get It!

March 16, 2006

Ever since it was announced, I have been fascinated by the potential appeal of the $100 laptop developed by MIT, with the backing of Google and AMD among others. It's now in production. I've written about it a bunch in the past and won't reproduce all those comments (or links) here. I said originally this is the realization or "second coming" of Oracle's Larry Ellison's "network PC" idea, which was a response largely to Microsoft's market position and power. Google co-founder Larry Page in his CES Keynote mentioned the low-cost machine as a way to overcome the first-world, third-world digital divide.

Bill Gates doesn't like the idea for several obvious reasons (neither does AMD rival Intel). But more importantly he doesn't think that consumers will like it. In a somewhat related vein, Microsoft has touted Origami as a response to the size/power/functionality challenges of mobile computing (the price range is $799 to $999).

I do think that consumers will be interested in the $100 computer (there's already considerable evidence). The current "hand-crank" design may have less appeal to certain consumer segments than it could but design elements can be changed over time. Alternatively it may indeed turn out to be a product for emerging markets (I don't think exclusively so). That's still millions upon millions of potential customers.

The thing that struck me tonight all about all this was that a kind of global vision for Google comes into focus. People have been speculating for the last couple of years about a GoogleOS or a GooglePC. There's no GoogleOS, per se — although there is GooglePack and the deal with Sun regarding OpenOffice. And now there's the Google acquisition of Writely. And then there's GDrive.

Let's put aside the major, major privacy issues that may prevent GDrive from really hatching into a full-grown butterfly. Having made that very important qualification, let's step back and look at the really big picture here:

  1. Low cost computers that don't have big hard drives (say the $100 laptop or similar device)
  2. Ubiquitous high-speed access (see GoogleNet or FON)
  3. Web-based consumer software apps (e.g., GMail or Writely)
  4. Virtually unlimited personal online storage (GDrive)

Now you see where I'm going.

This is not to say it's the same place that Google is going. But from one point of view it's certainly a compelling roadmap. Google thus would be the network and host most of the necessary software. Google and its allies would thus replace Microsoft as the primary computing platform — swapping the Internet for client-side applications. Microsoft sees the storm clouds on the horizon and that's why I among others believe it's pushing Live (in addition to the market segmentation value there).

The supreme irony of all this is that while Google genuinely wants to offer value to consumer-users it doesn't as clearly recognize how the realization of its vast ambitions would effectively turn the company into Microsoft (maybe it does), in terms of market domination and corresponding suspicion (which already exists). Microsoft, for its part, is now cast as the underdog and "good guy" when it comes to the Internet. That is an amazing turn of events — and not lost on the people in Redmond.


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