Mark Evans

Deep Thoughts About the Web

I've been online since 1995 (pre-Netscape) and consider
myself a creature of the Web (obsession to e-mail, willingness to try just
about any Web 2.0 application/service, blog-oholic, etc.) but I was blown away
impressed earlier today by a presentation given by Jeff Cole, who
is director of the USC Annenberg School Centre for the Digital Future. (The
event was sponsored by eBay). Cole is heading up an ongoing study looking at
how the growth and growing use of the Internet impact what people do online and
offline. The audience, which is pretty Web-savvy, was entranced by some of the
findings that Cole presented. For a newspaper journalist, however, it was a
little depressing because Cole believes newspapers face a declining future over
the next 20 to 30 years. Rather than read a newspaper, people will more and
more of their information from the Web. So what does this mean for newspapers?
Well, it means they need to leverage their brands and credibility to create Web
sites/services that generate revenue. Cole also had some ominous news for
television industry. He argues television advertising has been in decline since
the 1970s when the remote emerged as the way to consume television. A
particularly troublesome reality is only 5% of people actually watch television
commercials. Does this mean product placements will be the new way to reach
consumers? No. So what does the television industry do to survive? Cole said if
he knew the answer, he'd be on his private island rather than giving
presentations in Toronto
in late-March. In any event, it was a fascinating presentation that rasised
more questions than answers. If there was any consolation from Cole's
presentation is he touched on many of the questions and areas (business,
politics, marketing, advertising) we'll be trying to answer at the mesh conference on May 15/16.
Update: I'll augment this post on Sunday with some more facts and figures.

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Are Blogs Coming In From the Cold?

My column in the National Post this week takes a look at Time Inc.'s recent hiring of Andrew Sullivan and Ana Marie Coxe to write for the magazine and the Web site. The big question is whether Time's embrace of blogging and bloggers suggest blogging is coming out from the cold. If this is, in fact, happening, how do newspapers and magazines leverage blogs without institutionalizing them? In other words, how do they absorb blogs into their traditional ways of operating (editing, hours or days before they appear) and culture without affecting the vitality and personality of blogs? If newspapers and magazines try to institutionalize blogs, then they risk losing the essence of what makes blogs work. That said, there are forward-thinking newspapers. In a recent study, NYU said the Guardian has established a good reputation as one of the leading blogging newspapers in the world, while NYU recently cited the Houston Chronice, USA Today and Washington Post. Meanwhile, NYU said Canada - surprise, surprise - is lagging behind.

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Zennstrom Bails on VON Canada; Vonage Savaged

This shouldn't really come as a surprise but Niklas Zennstrom has pulled out of his VON Canada keynote that was scheduled for next week.(hat tip to Jim Courtney). He'll be replaced by Stefan Oberg (who?), Skype's v.p. of product development. Zennstrom's disappearing act comes days after Skype, Janis Friis and Zennstrom were sued under RICO laws by Streamcast. Given the sensitivities of a lawsuit, the idea of Zennstrom giving a keynote must have benn quickly killed by eBay's P.R. folks and its lawyers. This is yet another big blow for VON Canada, which saw Vonage decide not to participate because its Canadian P.R. firm apparently doesn't think VON has enough of a consumer angle. Needless to say, the VON folks are not pleased given VON founder Jeff Pulver was one of Vonage's co-founders. It's also curious to see Pulver isn't kicking off VON Canada. Instead, sidekick Carl Ford will give the opening remarks.

Update: Speaking of Vonage, CNN/Money has a story suggesting Vonage is shopping itself, which may explain why its IPO has been filed for two months. The potential buyers, according to CNN/Money, are Sprint, Verizon and Qwest. Om Malik hits the nail on the head when he asks if there's little interest in the IPO, why would there be any interest in an acquisition. Meanwhile, Alec Saunders weighs in with a blunt post - “Worst IPO Candidate of This Year?” - looking at the bad economics of the VoIP markets - lots of competition, lower prices. Saunders concludes it would represent the “ultimate triumph of greed and stupidity over common sense” for anyone who buys into the IPO or acquires Vonage. That's harsh, Alec, but oh so true!

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Rejoice Couch Potaotes: Slingbox Goes Live in Canada

After months of speculation - well, at least a couple blog posts and bunch of click-throughs - the Slingbox is being sold in Canada. So rush down to your local Future Shop, Best Buy or London Drugs store and slap down C$299. I had big plans to install my Slingbox last weekend but had to put things on hold after realizing it would take some time - and involve the brainpower and patience of my younger, tech-savvy brother.

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Google's Insatiable Appetite for Cash

So Google is raising another $2-billion to meet demand as it prepares to join the S&P 500. Why? The company already has a $8-billion war chest so it's not like it needs the money. And if index-focused investors have obligated to buy stock for their portfolios does it mean Google has to play nice and accommodate them? So what's Google thinking? The last time the company tapped the markets for cash, it used $1-billion to buy a 20% 5% a stake in AOL. Susquehanna Financial Group analyst Marianne Wolk thinks Google could be looking to enhance its presence in Asia through a strategic investment or acquisition. Another possibility, she said, is a “massive investment” in storage for Web developers along the lines what Amazon is doing with its S3 Storage Service. Then, there's Wi-Fi and the rumours Google is looking to launch an advertising-support, nation-wide network. In any event, Google now has $10-billion of cash on the balance sheet so something has to be going on. Given how close Larry and Sergey hold their strategic cards to the vest, we'll likely only find out when the a deal is unveiled.

Update: BuyGoogle has an intriguing - and detailed post - on whether Google might use its cash hoard to acquire Amazon.com.

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The RIAA's Russian Nemesis

While the RIAA has been on a legal jihad in recent years, a growing number of consumers have been using allofMP3.com. The Russian-based service sells albums for $1 to $2.50 - depending on their popularity and the bitrate quality selected. Apparently, the company has been allowed to operate because of Russian copyright legislation, which lets "phonograms be performed publicly without the authorization of the copyright owner for broadcasting and cable transmission". If the music industry was pissed off with allofMP3 before, they'll be even more agitated with the release of alltunes - a desktop and mobile interface that makes it even easier to find and download music. TechCrunch has an overview on the new application.
  While allofMP3 can argue it's protected by Russian copyright rules, I wonder whether they protect consumers in North America? How do U.S. copyright rules, for example, apply to music downloaded from another country? In Canada - despite the claims of the music industry - downloading is still quasi-legal until the copyright rules over overhauled or clarified. A contentious issue in Canada is the levy regime, which slaps a "tax" on products used to record digital content such as hard drives, CD-Rs and audio cassette tapes. These fees, in theory, are supposed to compensate the music industry for loss sales but it doesn't work because music downloading is still wildly popular in the Great White North. For more on the controversial levy regime, IT Business ran a story on it earlier this month. You can also find a treasure trove of information on the issue on Michael Geist's blog.

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Lunch with WordPress's Matt Mullenweg

I was already impressed with WordPress but after having lunch with Matt Mullenweg today, I'm even more so. Within all the hype surrounding Web 2.0 and blogs, Mullenweg has insight, intelligence and perspective that belie the fact he's 22-years-old. Our chat, which included a sun-drenched walk down Yonge St., touched on a variety of topics, ranging from WordPress's strategic plans and why Microsoft isn't evil to the future of newspapers and why software should be free. I'll post more on Friday when my column in the National Post appears. Maybe we can get him to participate in our mesh conference?
Tags: WordPress, Matt Mullenweb

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Internet Adoption Losing Steam

According to new Ipsos Insight study, the global online population climbed just 5% in 2005, compared with a 20% jump in 2004 - while expections for 2006 are, at best, modest. While some markets are still seeing robust growth, Ipsos believes adoption in Canada and the U.S. (72% and 71% regular usage respectively) may have plateaued. For high-speed service providers in North America, the Ipsos report suggests they need to migrate dial-up users, convince non-Internet users to venture into cyberspace and/or drive more sales of value-added services such as anti-virus and anti-spam. At the same time, it may provide the anti-net neutrality forces with more ammunition they need other sources of revenue such as downstream tollgates to remain viable if the number of subscribers isn't expected to climb.

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The Timing of the Deal

Has Facebook missed the M&A boat? An executive with the social-networking service apparently told BusinessWeek the company is seeking a $2-billion takeover deal after turning down a $750 million offer earlier. Of course, you can ask for the stars and the moon but it's a mute point if no one makes the right offer. Facebook's apparent desire for the pot of gold at the end of the rainbow does put the spotlight on the fine art of timing a deal. Skype (Niklas Zennstrom and Tim Draper) played the market perfectly by putting out the message the was company was for sale, setting a quasi-public price ($1-billion) and waiting for the suckers…er, I mean…buyers to emerge. It was a masterpiece performance. Vonage, on the other hand, has probably blown it. In a ideal world, it would have done an IPO when VoIP was red-hot a year or so ago. Instead - large losses, soft capital markets, etc. - Vonage waited. As a result, a $600-million IPO has turned into a $250-million S-1 filing that has mysteriously been collecting dust at the SEC. Does this mean Facebook isn't going to get $2-billion? Probably, but it depends on various factors: is there a buyer willing to pay the price, how does Myspace.com's growing success influence Facebook's value, etc. At the very least, the fact Facebook has tipped its hand in BusinessWeek means it wants a large audience to deliver its message or, as rumoured, it's been on the block for awhile and needed a new way to incite interest. It looks like they should have given Tim Draper a call before they hatched their exit plan.
   Facebook's plans are being picked apart in the blogosphere. Om Malik cites flat page views, reach and traffic trends while B2Day point holes at the $2-billion price-tag after doing some rough back of the napkin math. Michael Arrington, on the other hand, does not dismiss Facebook's desired valuation.

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Web 2.0: Post-Newsweek Thoughts, Facebook

In light of Newsweek's discovery of Web 2.0, I had an "enlightening" chat with one of Kijiji's Canadian managers yesterday. It went something like this:
Me: "So what's Kijiji's business model? How does it make money?"
Them: "We don't have a business model. Everything on the site is free."
Me: "Oh, then I guess Kijiji is a real Web 2.0 company."
For months, I've been ranting about how the lack of viable business models within all these cool Web 2.0 services/applications is a huge and troubling problem. How can you create a business if the service is given away free? - and I'm not talking about jumping on the AdSense bandwagon. If, like me, you have a thing about revenue and profits, the vast majority of Web 2.0 ventures make no sense other than being vanity/make-work projects or hobbies for smart developers.
   But maybe I'm taking a totally wrong approach. Maybe Web 2.0 isn't about creating businesses but, instead, a tool to show off the true power of the Web as a communication, collaboration, entertainment and e-commerce engine. Perhaps the Web is going through an important, but necessary, stage focused on showing how easy it is create new services and start new companies. This contrasts with the dot-com boom where it looked expensive to start and establish a company online. Perhaps what happens next is all the lessons from the dot-com boom and all the lessons from the current "development boom" will be used to create a new formula that provides a path for the establishment of innovative, low-cost, money-making businesses. Maybe this is what I've been missing for the past six months. Then, I could be wrong.
Update: BusinessWeek has a story that Facebook.com - a classic Web 2.0 company - is looking to be acquired for as much as $2-billion. The social-networking company was started two years ago by Mark Zuckerman, now 22, at Harvard University. It raised $500,000 in an angel round from Peter Thiel in September 2004, and pull in another $12.7-million last May from Accel Partners. Mathew Ingram weighs in on Facebook's prospects.
Update: Fred Wilson has a new Web 2.0 business model description called Fremium whereby a company provides a service for free to attract as many users as possible. Then, it rolls out premium services to generate revenue. The challenge with this model is whether users balk at paying for something they've been getting for free.

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