broadstuff

Today Google released Google Gears, to allow developers to build services that use "online" applications offline. Its a very good idea for users, but probably bad news for Microsoft.

And it's also one in the eye for the WebService 2.0 Zealots.

We've argued from the get-go that the whole purely online Webservice world was a nonsense...simply because comms is not totally ubiquitous, never mind secure, reliable, sufficient etc etc

Old hands will of course recognise this as just another swing in the continual pendulum-ing between the "mainframe" mode - its all done centrally and the clients are just dumb, and the "Power to the Edge" movement where its all done on the client.

The answer, as always, is that WebServices will be yet another client / server compromise and it will shift as infrastructure's structure changes.

More here and here

Jason Calacanis has launched Mahalo in alpha.....its a "Human powered" search engine that aims to only search the "fat head" of search topics, and aims to have the top 10,000 or so in by year end. As Valleywag put it:

Points for a contrarian approach: the orthodoxy is that only machine indexing of the web can satisfy users' obscure curiosity; Calacanis says that doesn't matter because the top 10,000 search terms account for about a quarter of all queries. They're also the terms against which the majority of text advertising is bought.

It is interesting....Google is observably getting less useful as it gets more gamed (and as the web simply gets richer in content) so humans can surely add value - but using humans rather than algorithms means it is far harder to scale the operation, so this probably forces the economics of Pareto (the 80/20 or "fat head") on Mahalo, rather than that of the Long Tail.

However, it is probably also reflecting the reality of online Ads today - the Long Tail may be great for flogging stuff directly, but no Adman wants to pay anything interesting for that eyeball in the long grass. In theory interactive advertising will change all that, but today the value is still in volume - - probably more out of history than economic reality, but things take time to change.

But, will this business scale - rather than sale - as its not hard to imagine doing the same 80/20 job with a far more automated service and still hoovering up the Ad cents. Also, will people really be happy to continually go to a site that doesn't search everything and anything?

In the post below we calculated that at $280m for c 15m users, Last fm was worth about $18 / user, and we also noted that MySpace went at about $22 / user*, Photobucket at c $13 / user.

* Initial number was incorrect in previous post, this post has also been corrected

So...what does this imply for Bebo, which was recently reported to have received a bid for near $ 1 bn by Yahoo.

If one takes the c 30m users that are being bandied about (quick Google search) as Bebo's user base, and make some heroic assumptions that the NPV of user value and growth paths are about the same, that gives:

At Photobucket valuation c $ 390m

At Last.fm valuation c $550m

At MySpace valuation c $660m

(All the usual caveats apply in valuations of course, but it does seem that a pattern is emerging - the more of a "new broadcast" media play it is, the more it is worth - but YouTube at c $70 / user was probably on the high side, even with a Video media and market Leader premium)

Facebook numbers are reportedly half of Bebo's (health warning - one network's definition of "users" seldom equal anothers'), but we will assume equal optimism in reporting, so one would assume roughly half the valuation of Bebo - yet Facebook was reportedly under a $1.6 bn offer from Yahoo last year and there are rumours that Google is running the ruler over it now.

Of course, both Facebook and Bebo claim they are not for sale, but the example of Friendster casts a long shadow across the "generic" SocNet game.......these things do have a shelf life

We are also told that StumbleUpon will be bought by eBay today for between $45 and $70m...with 2m users thats a value of between $22.50 and $35 / user. The lower figure would seem more in line, but this is eBay doing the buying - they paid $50 / user for Skype when it was making $1/ user / annum

Postscript...bought at $75m....apparently its 2.3m users right now - thats c $32.60 a user....that implies a signficantly higher estimate of growth, or wealth transfer - or both - vs the average Last.fm user

After months of rumours and a lot of speculation over last few days, Last fm sold today for $280m to CBS.....see here on BBC for confirmation. This is to date the UK's largest "Web 2.0" acquisition. Congratulations to the team !

Timing, as they say, is everything - and this was a good time as the legal environment and competition is getting a lot tougher now. Especially as (in our view) Pandora probably has the better model longer term as it's music genome database gets you up and running far faster from scratch than a pure Social Net play - in our view this is a more useful model when a particular Social Net niche gets very competitive and many 'Nets are competing for attention of new users.

Its quite interesting looking at why CBS did this - they say they are buying great technology and a very vibrant, active community".

To quote the BBC article

"They want to move from a content company to an audience company giving the audiences control and learning from this and that's why Last.fm was their choice,"

That's a telling comment, the move from a content company to an audience company...the old adage that "content is king" is not quite what it once was!

This is clearly driving the behaviours of the traditional Content Kings - and the valuations:

In this case its c 15m users at $280m, ie a valuation of a shade under $19 per user - that's a bit less than the average UK singles buyer spends in a year and a lot less than album buyers.

To compare values, in 2005 News Corp bought MySpace with c 27m* users for $580m (£290m) - about $ 22 per user, last year Google paid $1.65bn (£0.82bn) for video site YouTube with about - about $67 a user (sorry, unique visitor) and earlier this year MySpace bought Photobucket for $250m (£125m) at about $13 a user.

Still a lot cheaper than Flickr and deli.cio.us, which were in the c $80-120 per user bracket - though at their smaller scales - c 300,000 users - arguably the base business assets and larger growth assumptions distort the valuation per user.

So (bearing in mind dangers of measuring "real" users vs unique visitors, etc etc) valuations of SocNets are:

- photo webpage site c $ 13/ user (when you threaten to close it down if you don't get it)
- music site c £ 19 / user
- static webpage site with market dominance c $ 22/user
- video site c $ 70 / user - though there is some argument here that either (i) YouTube had such a huge premium due to its sheer market share / video premium / both or (ii) Google overpaid hugely to make sure others didn't get it (or just overpaid...)

(though they probably all paid far more per user if one takes the regular users only - don't know what % that is, but its usually far lower than the total user figures, so for Last fm say for example more like $90 at say a 20% conversion rate.)

What's also interesting is why players like Yahoo, Google and MySpace feel they need to buy such companies rather than build - could one not actually build a service and recruit users for those prices? Unlikely for Last fm, though we did feel that YouTube was on the build not buy pricing. Partly its because of the timing is everything mantra (too often so the deal is done on "my watch" , but partly because they just can't build 'em.

Yahoo had a photo service but bought Flickr, Google had a video service but bought YouTube. In both cases the uniquely branded stovepipe, one click away from the action, proved to be the better model by far.

So...now that CBS has one, will this start a gold rush for the others?

....opens up a veritable Pandora's box in fact

* put in 70m originally when initially posted....it was a finger poking error and post has been corrected.

You may know that we have both a Twitter edition and a Facebook profile....but we saw a new app today that allows you to update Twitter with your Facebook stuff. (see here for example)

This is an interesting development, because - in our view - people will not exist in one SocNet, and just being able to Open ID onto various Closed Worlds is not going to be good enough.

A good start is to be able to export and import data - a good application of course is the ability to export this blog's posts into both Twitter and Facebook - but not all the "web 2" media is so open

For example, we cannot directly bring photos from other Flickr into Facebook (or at least we haven't found a way yet - any advice welcome*) which is frustrating, we don't really want to have multiple copies of photos, we want to be able to link all the vertical use properties we have so that they are navigable by users.

* Addendum - found a way to do this.....just need to hunt around in the user developed apps

But it could be a lot more open.

If you start to think about what SocNet Mashing could be like the possibilities are quite fascinating.

For example, do you know the music I listen to on Pandora (assuming you want to know, that is....)? The books I am reading? The art galleries I have been to, the restaurants I like, which classic car I own, where I am etc.

(OK, easy on the "where I am" - clearly one wants some form of control on who can view what)

This data all exists (along with different social nets of friends) in all those social nets I belong to, and I really don't want to reproduce that data multiple times....we need to get it out - but not just aggregated into Yet Another Social Net - the ideal would be to have a Federated Soc Net structure, (our expanded Federated Identity) where the "bits of me" are fairly easy to link.

This was what "Web 2.0" was partly about, but it seems that the data is still in silos. Big picture though, I think this art-toon by Lynette Webb says it all:

Read this soon after writing the previous post re the Hoberman / Lane Fox reunion...First Tuesday is also coming back

Bubble 2.0 is fizzing methinks.........

Web 1.0 stars Brent Hoberman and Martha Lane Fox are rejoining to put together a Dotcom 2.0 for that most Zeitgeisty of things, House Decoration.

As the Times report we linked to above notes:

The firm has begun to approach retailers and other suppliers that will provide the furniture and household wares sold through Mydeco. Hoberman said he was aiming for “the aspi-rational mass market . . . people who want to improve their home surroundings”.

Hoberman, 38, said Lane Fox, now 34, “was obviously a great partner at Lastminute. She will be very helpful in that we are targeting a large female demographic”.

Surely they mean largely....

An interesting concept....LastMinute was a genuine internet based disruptive play on the mainly f2f based travel market in existence at the time, but its less clear what an online interactive House Decoration service offers vs the existing "Good Enoughs". Will the capability and penetration of broadband allow such a service to work in Web 2.0 mode where similar ideas failed in Web 1.0? It has some impressive backers already (as well as the founders), so clearly some smart people believe it will. And maybe Henry Blodgett 2.0 will help promote it come AIM time

But will they perhaps have missed the (house)boat by launch time?

Evidence in Rest of World, and even the Rest of UK (outside of London) is that the Great Housing Boom is perhaps coming to an end as the extra low interest rates that fuelled it (caused of course by attempts to alleviate the impact of Crash 1.0) start to rise.

And when this happens, the House Decoration biz unwinds - fast! Anyone recall Coloroll, to name one of the casualties from the last time?

The need for house decoration doesn't go away in this phase of course, but a lot of the supporting hoopla - TV programs, colour supplements, advertising budgets - certainly do.

Of course, LastMinute's timing was impeccable, a few months after Lastminute.com's IPO, the whole Web 1.0 thing crashed, so maybe this is the best way of timing the Great British Housing Crash

So, how to hedge one's risk as an investor in such a venture?

Interestingly, Hoberman also invested recently in moveme.com, which is designed to make house moves easier - this (in our opinion anyway) is a more predictable business, as the % of moves per annum is a far more stable number, though there are already online move services businesses run by existing estate agencies etc.

But we believe the real answer lies elsewhere in other habits of the British....

We humbly submit that that organ of future trends, Lonely Planet, may offer some hints - the latest edition describes the British as fame and celebrity obsessed, binge drinking yobbos with the fastest growing Internet porn habit in the world. Add that to our avid consumption of broadband and Social Nets and the New New Service is staring one in the face......DeFaceBook

Remember what PT Barnum said re never underestimating taste.....

DeFaceBook is, we feel therefore, a better Zeitgeist based business plan, combining user generated sleb, porn and binge drinking content into a fully Open Source Social Network WebService - with Online Advertising and access via Twitter from the start, and it will of course have Open ID and be readable as keitai media on your mobile phone.

You read it here first...

...though we read the original Mydeco article over on Vecosys

We don't know if any of our readers have been following the Cyberwar in Estonia over the last few weeks, its been hard to get a complete account about what has been happening (essentially a Distributed Denial of Serices - DDOS - via spam triggered botnets) but there is a good precis in the Economist this week. To quote:

At full tilt, the onslaught on Estonia was also of a sophistication not seen before, with tactics shifting as weaknesses emerged. “Particular 'ports' of particular mission-critical computers in, for example, the telephone exchanges were targeted. Packet 'bombs' of hundreds of megabytes in size would be sent first to one address, then another,” says Linnar Viik, Estonia's top internet guru. Such efforts exceed the skills of individual activists or even organised crime; they require the co-operation of a state and a large telecoms firm, he says. The effects could have been life-threatening. The emergency number used to call ambulances and the fire service was out of action for more than an hour.

This has of course been predicted for some time by 'net security experts, sci fi writers and even the odd consultant who dabbles in IP security

However, it is still concerning now that it has happened, partly because of the point made above - that it probably required the collaboration of a part of a state and/or a large telecoms company, but also partly because the average net user (as well as many innocent social nets, special interest groups etc) is unaware of even the basic requirements for protection, and it is not clear what most of the major B2C players are doing to protect their customers data (or themselves) in the event of such massive targeting.

We noted last year that we thought 2007 would be the year that the first serious abuse of the broadband 'net would come, but we never thought it would be like this. We expected (and still do expect) the main attack to be on 'net consumers' deeply detailed identities that can be collated by the likes of Google, Facebook etc - the potential value is so high that its hard to see any one company being able to prevent a concerted attempt.

In a small way it was brought home via the spam on my new OpenCoffee account - I haven't had something like that for awhile from an eGroup, but it shows the number of people willing to disrupt the net is very large, and willing to go after relatively small beer (or coffee....) - and they keep on popping up if not kept under constant surveillance.

As Bruce Shneier puts it:

“It is easier to come up with a new attack than with a new defence,”

So what to do...you can't really build fully secure networks nor watch all the people on the net.

There is a way to go with the "speedbump" solutions - do basic things that are are pretty 80/20, that raise the bar so that the attack has to come from a fairly savvy quarter. The strongest defence, says Frank Cilluffo (quoted in the Economist), may be resilience: “the ability to reconstitute quickly, recover and absorb.”

But how to do that as a small business, or even a large one.....the resource needs are probably more than any one company can muster?

Its a problem...and an opportunity no doubt

At any rate, its probably a very, very good time to start thinking about it - and the related area of privacy - both as a customer and a service provider. This stuff, like spam before it, will only get more prevalent. The potential returns are too high today.

Postscript....in a parallel development, Google has just bought a virtual malware startup

Lions and Crocs take out baby Cape Buffalo in South Africa's Kruger Park....all over bar the shouting one would think...until the rest of the herd arrives.......ontmoet my vriende!

Nature is red in tooth and claw, but collaboration trumps it.

An amazing demonstration on the power of a (very traditional) social network's ability to take on the dominant players who seemingly hold all the cards. Makes you think about how social nets started.....

Also an interesting demo of UGC's power, and an expose of some of the different accents in the english speaking world!

So....finally got round to signing up to Open Coffee today on Meetup and within minutes this arrived...my very first message from Open Coffee, from another - erm - "entrepreneur".....a salutary lesson in the benign goodness of global social nets !

I am sure the gentleman is a respected member of the Kuala Lumpur Koffee Klub, but this looks suspiciously like a 419 Scam.

Disgraceful, I hear you say - who in our esteemed membership would do such a thing - without even a terms sheet or an NDA attached

A hint from a Web 1.0 Old Fart....someone needs to take on a membership moderation role or this sort of thing eventually kills off any SocNet grouping. The way we run similar groups is for e.g. to make the a one liner about the person mandatory, stops most of this.

Postscript...had a few emails from others who got the same email, extraordinary how many people on the OpenCoffee list have the same surname as dead rich people in Kuala Lumpur

One email also said the article seemed a bit snarky, and re - reading today I guess could be read that way, though it was intended as tongue in cheek - so apologies if anyone felt offended - we are supporters of OpenCoffee, its a great idea.

********************************************************

Hello Alan Patrick,

Muhammad Jeffery Charles sent you this message from London
OpenCoffee Meetup on Meetup.com:
----------------------------------------------------------------
Attn:Alan Patrick

My name is Mr Muhammud Jeffery Charles. I am a legal
practitioner with MAK.ONG & NG. Law Firm in Kuala Lumpur,
Malaysia.

I saw your contact and profile i decided that you could
cooperate with me in this proposition.I have a client who was
deceased in March 12, 2004, in Kuala Lumpur, Malaysia.I am
contacting you because you have the same surname as my deceased
client and i felt that you could help me in the distribution of
funding that were left in my deceased client's bank account.

This funds is closed to be declared UN-serviceable by the bank
as there were no indicated next of kin or next of beneficiary of
the funding in the bank account.

The bank had issued to me a notification to contact the next
of kin of my deceased client for either to re-activate the
bank account or to make claim of beneficiary, of the funding
in the bank account, with a month surcharge of 6% to be
deducted as an Escrow safe keeping fee of the bank account,so
as to avoid the indefinite closure of the bank account.

My proposition to you is to seek your consent, and to present
your kind self as the next-of-kin and beneficiary of my
deceased client, since you have the same last name with him.
This means that the proceeds of his bank account would be paid
to you as his next of kin or the legitimate beneficiary.
When the proceeds in his bank account are paid to you, we
would share the proceeds on a mutually agreed-upon percentage
of 60% to me and 40% to your kind self.

All the legal documents to back up your claim as my client's
next-of-kin would be provided by me. The most important thing
I would need is your honest cooperation to in this proposition.
This would be done under a legitimate arrangement that would
protect you from any breach of the law.

If this business proposition offends your moral and ethic
values, do accept my sincere apology. Please contact me at once
if you are interested by replying the mail and ignore it if
you are not.

Best regards,
Muhammad Jeffery Charles Esq