I didn't know the Russian phrase for "Group hug, people!" So I just stood in the back and spread out my arms.

I showed them some of the very basic tools to promote your content – the simplest being the blast e-mail alert to people you’ve signed up on a subscription list.  A couple of people in the class were already up on Twitter, and I sang that particular gospel, as well as the advantages of setting up Facebook groups or using the same functionality in the Russian equivalent, which is a Classmates.com-alike.

As always, the skill level in the audience was very uneven. Some people were way out in front of the pack, others seemed to be lost. I tried to deliver a wide variety of tools to hit everyone. I got just a couple of hours to do some very basic tourism after this session.  The scale of the construction going on here is truly awe-inspiring.

It's pretty chilly here; not snowing yet, but it's thinking about it - thus the heavy clothes. Also, behind me is the new Presidential Palace.

…and yes, I know, I don’t have the excerpts and such that made the other videos interesting to watch. But I figure if you’ve gotten this far, you’re probably already pretty interested in what this guy has to say.

Excerpts to come…

mmm

Battelle says he stayed up late one night (visions of the mythical college dorm room & heavy inhalation) to come up with this heavy information and interface theories, and worked up this speech to try to describe where he sees the future of the web going.

If what he said above is right, then there is about to be another evolutionary stage, and the current titans of search (i.e. Google, Yahoo, etc.) are going to be replaced by The New Hot Thing.  He seems to be hanging his hat on “conversations” which sounds pretty good to me – the human urge to connect & trade information is one of the strongest forces on the web.  I’m just not entirely convinced that the Facebook/MySpace paradigm is at all viable.  We’re been waiting a while now for anything remotely resembling a business model to emerge, and the latest news is that Google’s shareholders are starting to get a bit bent out of shape about subsidizing the world’s inconsequential home videos, and that Emperor’s Missing Wardrobe-type questions are starting to get asked about the 1/2 billion a year burn rate.

Money quote:

YouTube will manage to rake in about $240 million in ad revenue in 2009, against operating costs of roughly $711 million, leading to a shortfall of just over $470 million. This half-billion dollar loss comes after more than a year of feverish experimentation in various forms of advertising, cross-product embedding, licensing and partnership deals. YouTube is adamant that ultimately they’ll find an advertising solution that will enable the ungainly behemoth to reach profitability. Looking at the math, it doesn’t seem likely.

Battelle’s take on where all this is headed is pretty complex, and not all that out of line with things that you’ve probably heard before.  This is only the first part, so stick with it – it gets more rewarding as we go along.

Here’s some teaser quotes to get you to click over and watch the video – please excuse the camera movement, but Battelle kept pacing around on the stage, and I had to either go so wide that focus was a problem, or track him, making the camera movements a little jerky.

Every publisher is now a marketer … you have to engage the audience in a conversation … if you don’t know how to do that, you’ll die.  That’s it. It’s over.

I call this the conversation economy.  It’s kind of a sequel to the search.

The three-bump theory of how man interacts with technology … as Eric Schmidt is fond of saying ‘25% of GDP is fine with me.”

We all give Apple credit, but basically we know that Windows won.  I call this the “hunt and poke” interface … that’s way better than learning a foreign language like FORTRAN.  That’s also called the “I’m lost in a foreign country interface.”

We started having conversations at scale with our customers.  All of a sudden every customer could talk to every company, and nobody was ready for the conversation. But around the turn of the century, we started to develop that interface, and that interface, I argue is search.  This is the first time we have ever been able to have a conversation in our own natural language with a machine.  People don’t see search that way, but I do.

But – two items this week converged (yeah, there’s that word) to illustrate one of the powerful, emerging lessons about New Media.  It’s one that I learned years ago, when I first rode a couple of dot-bombs all the way down into the crater.

Big site traffic numbers do not necessarily mean big money.

First, let’s hear from apostate blogger Dennis the Peasant, who was one of the founders of Pajamas Media until his partners chucked him overboard a couple of years ago.  The news this last week that PJM was no longer going to write fat checks to its bloggers was met with screams of rage from said suddenly unfunded right-wing bloggers (and joygasms from left-wing bloggers who had long derided the PJM checks as “wingnut welfare” – a POV now seemingly shared by said wingnuts’ former employers).

So Dennis had schadenfreude & Cassandra-vindicated moment, in which he flipped off the camera & did a Snoopy dance.  And then, he got around to some actually interesting stuff about the economics behind blogging:

The thought in everyone’s mind is If only I can get enough traffic I can make money. If I have the traffic the advertisers will pay for access to it.

Everyone assumes site traffic is the key to blogger riches.

And, everyone is wrong. It is that simple.

(snip)

… what we discovered seemed to suggest we were sitting on a goldmine: Large household incomes, very well educated, disposable
income out the blowhole… what we assumed advertisers wanted.

Well, by January of 2005 Roger and Charles had disappeared in a cloud of pure bullshit, and there I was, left waiting to hear about the
“new model”, the “new partners” and “the new” what not… Being the curious sort, I arranged for a friend of mine to introduce me to the
managing partner of a small, but prestigious, advertising firm in Columbus. I packed up our survey statistics and headed to a luncheon
engagement that I assumed was going to convince this guy I was on to something.

Well, I spent 20 minutes explaining our idea and the business model as I envisioned it, and then, as the capper, whipped out the survey
statistics and showed them to him. He looked at them for a moment, laughed, and then threw them down on the table in front of me.

“Worthless,” he said, smiling.

DtP goes on to talk about something that New Media folks take for granted, but that Traditional Media people still have problems wrapping their heads around. See, newspapers, radio, TV, billboards, direct mail, etc. etc. — they all base their ad rates on the pure numbers of eyeballs on their content.

While have a big audience is nice, in web terms it can actually be more of a hindrance than a help.

Which is where Facebook comes in. Today it celebrates its 5th birthday. And it is hemorrhaging money from every orifice, with no clear business model in site. (Here’s an interview the BBC did with founder Zuckerberg last fall)

The perennial question for Facebook has been how to monetise the site and cash in on its 150 million users who critically spend more than two hours each day on-site. Analysts Neilsen compared that figure to the 90 minutes users spend hanging out on MySpace.

As the pressure mounts on the Facebook team to make money, the job becomes harder amid the present economic downturn.

(snip)

the clock is ticking fast.

“At some time the economic model has to grow with the rest of the firm.

“Investors will want a return on their money and in this market, investing in vapour can be very difficult. Their time is up for doing this without making money.

“They need to develop a business model soon before they find their funding sources start drying up,” warned Mr Enderle.

The Facebook Advertising page, like its obvious model Google AdSense, tries to make it easy for an individual or small-biz owner to buy an ad. Contrast that with all the hoops you have to jump through to buy an ad in traditional media.

The numbers that came our recently show that Facebook has among the lowest click-through scores on the web – 400 clicks for every 1 million page impressions. This has not gone unnoticed. The pro-Facebook & social media mavens claim that the demographic information that has been amassed by Facebook, MySpace, Bebo, etc., is going to pay off with highly targeted ads that garner higher CPMs. And they have an easy-to-use frontend that is quite obviously modeled after the AdSense DIY concept.

Facebook’s experiment with tying ads to your personal information was, however, a disaster. And critics have started pointing out that maybe Facebook doesn’t know all that much about you…

And the stories are starting to come out about how desperate they’re getting – despite the impressive raw traffic numbers, time spent on site, and user engagement indices — all numbers that media companies try to pay attention to.

I can tell you from my experience with a succession of dot-bombs, big page traffic without the proper monetization scheme is actually a detriment to your survival. Especially in the video space.

While bandwidth charges are a small fraction of what they were even six years ago, they still rack up quickly.  And if you have a million people watching a 10 meg video on your site (as can happen if you get a viral hit), and your monthly service contract with your hosting service starts charging you after, say, 250 gigs … well, work the numbers.

1,000,000 users x 10,000,000 megs downloaded = 10,000,000,000,000 (10 terabytes aka 10,000 gigs) of page traffic, just for that video.

Depending on your contract, your site will either crash and you’ll have to wait a month or whatever before you can bring it back up … or they just act like a cabdriver and flip down the little flag and start the meter running.  At the end of the month, just like with a cellphone company when you go over the minutes, you get charged up the wazoo.  Say it’s a $.10 a gig, the way DreamHost does it.

10,000 – 250 = 9,750 gigs

9,750 x .10 = $975 overage charge for the month.

Now, there’s no way that Facebook is paying that much for its bandwidth – economies of scale and all that.  BUT.  The bandwidth still does cost.

DtP makes the point that 400 dedicated readers in a well-defined niche space, such as photography, beat the hell outta 40,000 drive-by users in an amorphous mob. Advertisers will want to reach those 400 people, because they know them, know what their interests are, and know that the ads served to them are going to the right people.

General interest sites, however … well, let me put it this way.  Check out the sode aisle in the supermarket next time you’re there.  Diet Coke, Diet Coke with Lime, Diet Coke with Splenda, Diet Vanilla Coke, Diet Black Cherry Coke, Coke Blak, Regular Coke, No-Caffeine Coke, Coke Zero, Diet Caffeine Free Coke, Vanilla Coke, Cherry Coke, Diet Coke with Vitamins.

Each of those products exists because there is a niche out there that wants to drink them. Why would Coke want to waste its ad dollars for health nuts that want a soda that has vitamins and that they can delude themselves into thinking that is “good for them” … on a site that has an audience of cigar-smoking red-meat-eaters?

The advertisers have had to fragment their products. Those fragmented products have to be marketed just to the people who are going to buy them, or they are not viable.  That means that the platforms that those products advertise on have to be similarly well-defined.

The root of the problems with mass media isn’t that there isn’t interest in the information – it’s that the advertising money is shifting away to places where the audience is better defined & targetable.

Technorati Tags: Facebook advertising, Pajamas Media implosion, blog, advertising, monetization, web economies, click-through rates, audience, segmentation, marketing, demand

While the concept of a bailout for newspapers (and allegedly for good journalism) seems attractive at first blush, I fear that in practice, the billions in bailout funds would suffer the same fate as the billions bestowed upon the banking industry.

That is, they would be swiftly pocketed in the form of “well-earned bonuses,” and only a few crumbs would make it down to the level where the money would actually do any good.  While I’m not in the “burn baby, burn” camp the way many other digital triumphalists have been (and there’s at least a faint whiff of that hereabouts), I think that dumping fat stacks on media conglomerates will not solve the underlying problems of the crumbling of business models.

Now then – a Manhattan Project (of sorts) to build solid business models to support quality journalism? That would = the hoary “teaching a man to fish” paradigm.

I know faith in The Invisible Hand is in short supply these days (and where it can be found, it’s usually being in the stocks in the town square, being pelted by posters on Angryjournalist.com), but the fact is that there is a demand for something to perform the function of information dissemination that newspapers do/have done. If the Drug Wars have taught us anything, it is that where there is a demand, and money is attached to that demand, there will correspondingly be a supply.

This is all growing out an essay on the op-ed page of the NY Times and chittering in the Twiterverse, as the nervous journalists see the vultures staring downward, and big guy in the hood with the scythe striding through the newsroom.

By endowing our most valued sources of news we would free them from the strictures of an obsolete business model and offer them a permanent place in society, like that of America’s colleges and universities. Endowments would transform newspapers into unshakable fixtures of American life, with greater stability and enhanced independence that would allow them to serve the public good more effectively.

Well, allow me to respond to that one.

Not to get all Reagan on you, but that is complete and utter madness. Newspapers are so important, so crucial to our lives, that it is the duty & obligation of the government to preserve them?

Wow.

OK, it’s a given that journalists have something of a Messiah Complex.  You have to have something else going on psychologically to get into this low-pay high-stress field. But this is really crossing the line. And making an unfortunate conflation between the newspaper industry and good journalism – yes, it gets done at newspapers, and there are some magnificent examples of this. But the industry is asphyxiating itself, and dumping wads of cash on it will not solve the underlying problems.

Government intervention here would create more problems than it would solve. Allison Fine is onto this issue:

So, the fundamental premise of the need to endow newspapers and preserve them at public expense is that false information exists on the Internet? Of course it does, as it does on TV, on the radio (should we also consider endowing Rush?) in magazines, and in many, many newspapers. Which media would the authors like to choose as being least likely to contain false information? And which medium do they think did the best job of  bringing the lies and corruption of the Bush Administration to light — hint, don’t look at newspapers, Josh Micah Marshall and his Talking Points Memo website would be a much better bet.

So, the fundamental premise that only newspapers can hold government accountable is specious. But that isn’t my biggest issue with the article. It is the naive assumption from those outside of the nonprofit sphere that 1) nonprofit status is intended for companies that don’t have a viable business model, and 2) raising billions of dollars in endowment funds is doable, particularly in today’s economy.

If anything, the effect of billions spent on preserving the newspaper format as it is, without any changes, will mean that we’ll all be getting print products dumped on our doors that are increasingly ad-free.  Yeah, there will be a number of advertisers who will still be there because the eyeballs are there.  But the trends of readership of mass print products are not heading up (niche and community newspapers are another story).

Worst of all, the preservation of a business model that is clearly no longer functional will suck the oxygen out of the room for the products that should (and are, in some cases) being developed to do the job that newspapers have done.  Artificially propping up newspapers in their current form will stifle the innovation in the marketplace, and long-term, only make the inevitable collapse worse.

We’re kinda seeing that take place in the real estate and credit markets right now. The government artificially propped up the economy for eight years with crazy spending and stupid low interest rates.  Instead of hard work & ingenuity to produce real growth, it was Free Money Day Every Day, as real-estate speculation in areas like Scottsdale, Las Vegas, Miami & L.A. led to the “$30,000-a-year millionaire” who made $10,000 in arcane mortgage kickbacks every time he/she signed his/her name to a loan document.  The results of that are the global economic meltdown we see occurring right now.

Meanwhile, driven by the market economics, ESPN is starting to experiment with setting up a disaggregated local blog network to cover sports at a granular level.

ESPN sees the writing on the wall. In their industry they need strong stories to promote sports and strong sports to drive interest to their stories.  A fan that is underserved by his newspaper is less interested in following his team on ESPN.  Additionally, there is big advertising money for ESPN if it can become the resource for local sports.

This is a long term proposition, however. Even the mighty ESPN cannot yet afford to hire 30 beat writers to cover each NBA team. Instead it is working towards its goal by teaming with independend bloggers in a win/win/win proposition.  The bloggers have a chance at monetizing their efforts, ESPN can become the central resource it wants to become and fans can get the information they want as a new, viable local sports media business model starts to thrive.

The other gang strike force cops protested that it wasn’t Pacman that had done the bad, stupid shooting – it was actually a cop who was Pacman’s enemy, and that they should tell the gangs the truth.

Bob Hodges (Robert Duvall), the grizzled old cop, says basically, “What difference does it make? If they think he did it – he did it.”

What does this 20-year-old gang movie have to do with the much-maligned Republican vice-presidential candidate?  Well, stick with me here. 

After watching Sarah Palin on Saturday Night Live, and in the interviews airing this week on NBC, it’s becoming increasingly clear that she’s not a complete and total doofus. Yeah, maybe she’s not a total policy wonk, able to spout off the import-export stats on Burkina Faso off the top of her head, but she’s clearly not as bad as her public image would lead you to believe. 

She can talk coherently, when she’s not so over-coached and micro-managed – it’s the panicking handlers’ fault that she comes off as a malfunctioning robot, spouting nonsensical phrases.  She’s never going to be one of our leading governmental minds, never going to have a memorial dedicated to her next to Jefferson or Lincoln … but she’s also not quite the drooling, babbling dimwit she appears to be.

It’s also clear that that doesn’t matter.

Palin arrived on the scene, basically a blank slate, tabula rasa.  The rollout of this new product at the GOP convention was greeted with a lot of fanfare – and initial euphoria.

In product marketing terms, the packaging was great.

The problem was that McCain’s handlers had nothing prepared beyond the initial product rollout.  Big initial marketing push, lots of glitz & glamor, the American people take the product into their homes …

…and that’s when the troubles began.

See, they really hadn’t thought this whole thing through.  They hadn’t prepared for what was going to come next.  In much the same way that the invasion of Iraq was botched because nobody who was (allegedly) in charge stopped to ask, “And then what? After we destroy the Iraqi army and take over the country … then what?  What’s going to happen next?”

In retrospect, this all becomes sickeningly clear.

Again, in product terms – the American people took this into their homes and tried to figure out what made it tick. The media, doing their jobs, tried to figure out what this newcomer to the scene was all about.  And, in response, the Republican party had prepared … nothing.

You’d think they’d have the equivalent of what NBC does for the Olympics for the athletes – little pre-shot segments of the athlete at home, in training, interviews with family and coaches talking about the dedication that was needed for this underdog athlete to brave the odds and pursue her dreams… c’mon, you can see this in your mind’s eye already, right? All leading to a flatteringly lit scene with the athlete sitting in a loveseat with her adoring husband in front of a cozy fireplace, talking about the day she almost succumbed to her self-doubts, but (choking up a bit here), her faith in herself and the support of her family (stifled sob) carried her through…

If that had happened in the three weeks after Palin was introduced to us, we’d be having a completely different conversation about this election right now.

Instead, there were the disastrous interviews with Katie Couric, which led to the skits on Saturday Night Live.  After the first skit, there was still a chance that Palin might be able to turn things around.

And then came this little gem from last night:

This pretty much sealed it.

Palin’s image is now cemented.  She’s a doofus who, along with her fellow odious doofus, George W. Bush, is costing McCain his shot at the presidency. 

It doesn’t matter anymore if she’s not what we think she is. In much the same way that it no longer matters whether or not Al Gore invented the internet, or Dick Cheney personally subjects prisoners to torture. 

We think they do, so they do.

A lot of this damage was caused by the ham-handed way the McCain campaign dealt with the New Media. They’ve been late to that party this entire campaign. I don’t know if that’s because McCain doesn’t understand this medium, doesn’t care, or if the handlers that were so adept at playing the media back in ’04 have gotten fat & lazy with their successes.

And yeah – the selection of Palin without having a plan to deal with What Comes Next is indeed an indictment of McCain and his decision-making process (one of the key objections that just won’t go away). Snap decisions that later wind up being disastrous? I think we’ve had just about enough of them these last eight years…

In the movie Colors, Pacman is saved only because a prisoner rats out the plot to kill him, and the gangs attention then turns to silencing the rat.  I don’t see any possible equivalent on the horizon that can save Palin, particularly in light of the recent revelations about her shopping habits, the cost of her makeup person, the fact that she and her husband are having to testify under oath today in “Troopergate,” and damn, just about everything else.  Her image has been set, the die is cast, and from this point forward, all information that comes out that affirms our collective perception of Palin as a moron will get accepted and spread around, while contrary information is buried under the weight of all the “Can you believe what just came out of her mouth this time?”

Oh yeah – for safety’s sake – here’s the segment from Colors that I linked to above – damn YouTube links have been kinda sketchy lately.  Enjoy the cheesy party scene.  I can’t figure out if the redheaded kid is Carrot Top, or the villain from “Children of the Corn.” Both?

Technorati Tags: Palin, Colors, image control, SNL skits, marketing, new media