broadstuff

Saw this on Huffington Post via Tim O'Reilly, about how datafeeds will allow light to penetrate into dark places:

It seems to me that we also need more regulation, but we certainly need to make sure whatever is imposed is also as technologically sophisticated as the financial transactions it's meant to monitor!

One Internet innovation, automated data feeds, might simultaneously meet the smart regulation requirement, improve banks' internal operating efficiency, and even win back public trust as well. Obama has specifically called for data feeds from government agencies as part of his transparency strategy to rebuild public confidence in government, especially as a result of the bailout crisis.

Sound marvellous at frst reading - but then, you think a bit - OK, I can hear you lining up with The Big Objection - but hang on......

Technological limits used to mean that any kind of data had to be laboriously culled and aggregated before being submitted to regulators. Now, innovations such as XML tags and data syndication in formats such as RSS (as a Huffington subscriber, you get the Post via an RSS feed) or KML (used for Google map mashups) make it simple for companies to automatically combine the data and release it, whether internally or to regulators -- and even to the public.

The District of Columbia, long plagued by corruption, began a transparency initiative under former Mayor Anthony Williams. It shifted into high gear under Mayor Adrian Fenty, and CTO Vivek Kundra. They now publish, on a real-time basis, more than 260 different data streams of statistics as varied as violent crime, building starts, and even requests to fill potholes. All of those statistics are available for anyone to analyze and interpret, and current uses range from tracking development around the new Nationals Park to showing crime reports on a Google Map.

And even better....

If the same system was applied to banking, critical statistics could flow automatically to federal regulators, while also being available to the banks' own staff -- many of whom have never had real-time data access in the past. Combined with innovative web-based tools to turn obscure data into easy-to-understand visualizations, for the first time the workforce, as well as regulators, would have the kind of real-time information that's essential in today's global economy, whether to regulate businesses or to run them.

OK, its time for the Big Objection - Garbage In, Garbage Out.

Undoubtedly using the most modern tech to get data from systems is a Good Idea, but that doesn't guarantee its accuracy in and of itself. Who shall ensure that what goes into the feeds is accurate? The minute this data becomes valuable, it will be gamed. As anyone who has implemented a new system will verify, accuracy comes from cleaning up databases, putting in workflows that cannot be subverted, and ensuring management oversight (or other forms of effective oversight). Except in these cases its harder, as management (the ones wot got us into all this) oversight needs to be replaced by independent 3rd party oversight.

Technorati has just released its 5th State of the (Blog)Nation report (seen on TechCrunch). We of course are fascinated by The Money and how it cascades down the Long Tail, but that will apparently be in Day 4 of the report, and this is just Day 1 so I just had to do a bit of actual analysis myself. Here is the graph of average revenue per blog type per user from the tabulated data in the report.



Although the monthly unique user bases of Corporate and Professional blogs are higher than Personal blogs on average (39,000 and 44,000 vs 12,000 respectively) the net revenues make personal blogs apparently more profitable, with figures of $50, $150 and $100 per annum respectively. This leads to respective 0.13c, 0.34c, and 0.83c Net Annual Revenues Per User (Net ARPU), assuming that the monthly average unique users stays roughly constant in a year. These have not been adjusted to strip out the non-Ad supported ones, which are about 45% on average. Stripping those out and upgrading gives respective Net ARPUs of 0.20c (Corp), 0.57c (Pro) and a whopping 1.57c (Personal).

The last column is of all Ad supported blogs - Net Revenue $100, 46,000 users on average (doesn't make sense given that all the subcategories have smaller average user bases, but its here for reference anyway)

Moral - By these figures, Pro Blogging in any sense or form reduces wealth rapidly - rather do loads of Amateur blogs:)

>From the report one gets a slightly different view:


The majority of bloggers we surveyed currently have advertising on their blogs. Among those with advertising, the mean annual investment in their blog is $1,800, but it’s paying off. The mean annual revenue is $6,000 with $75K+ in revenue for those with 100,000 or more unique visitors per month. Note: median investment and revenue (which is listed below [See our Analysis]) is significantly lower. They are also earning CPMs.

Bloggers are sophisticated in using self serve tools for search, display, and affiliate advertising, and are increasingly turning to ad and blog networks. Many bloggers without advertising may consider it when their blogs grow – the inability to set up advertising will not be a factor.

In other words, that hit head is making nearly all the money, if the Mean revenue is $6,000 and the Median is $200.

Now we have committed all sorts of analysins, for eg dividing median annual revenues by mean monthly unique visitors, but the data is directionally correct albeit dimensionally useless - so we await Day 4 with eager anticipation

Update - AVC gives another touchpoint - c150k visitors pm (I assume uniques by the way its written, c $30k max income pa - thats about 20c per year, an order of magnitude above the Thechnorati figures - the implication being, (as I stated above) that as you start to get to the bigger blogs, the values rise sharply.

Web 2.0 Expo video featuring Marc Andreessen talking about the industry in general, talks about a number of things including the coming "Nuclear Winter" for Web 2.0 - not so much the funding, but the reliance on Ads. Notes he is delighted to have got the funding in before said Big Freeze

Marc wrote about it in more detail on his blog in April:

We raised the money to enable us to keep scaling given our accelerating growth (over 230,000 networks on Ning now, growing at over 1,000 per day) and to make sure we have plenty of firepower to survive the oncoming nuclear winter. At current growth rates, we don't need it to get to cash flow positive, but having lived through the last crunch, it's good to be conservative with these things.

Once lucky, twice smart methinks. Marc has always been one of those people I've followed with interest - a one man prediction market in many ways - and he has a good grasp of economics as well as technology. Can't wait for his thoughts on the Great Bailout.

Interesting piece* in the New York Times today about AVC blog's Fred Wilson et al's Union Square Ventures being a new type of VC:

Mr. Burnham had spent his career investing in companies that made chips and routers, which differentiated themselves from competitors through groundbreaking technology.

Web services start-ups, on the other hand, use simple, off-the-shelf technologies and cost very little to get up and running. Their business advantage comes from their Web sites’ artistic design and ease of use, and their challenge is attracting and retaining users.

“That’s a different business than the historical bread and butter of the V.C. industry,” said Mr. Burnham. “So we had to change.”

This is something that has intrigued me - Web 2.0 companies tend to be an order of magnitude in cost less to set up than the "dotcoms", so handling investments in them with transaction costs (due diligence etc) at the same order of magnitude doesn't make sense. Union Square is doing sub $1m for sub 20% stakes (c 20%+ being the stake that gives a shareholder some rights in most countries' shareholding rules). This was Angel territory once, because Angels typically can add some real value to the day to day mix, and usually invest in what they understand, this keeping costs down. As the article says:

Because they join companies so early, they take a hands-on approach to building them and seeing them through the growing pains of start-ups. They have kept their team small, adding just one partner, Albert Wenger, and they must all agree before they make an investment, so no one can point fingers when they make mistakes.

In the UK at any rate, a number of the larger VC's have exited the startup market - some publicly like 3i, others in all but name. The interesting thing is whether this "Venture Angel" model is sustainable longer term, or if it is more just benefiting from being into the trend early (ie do VC's rush in where Angels fear to tread?). As the NYT notes:

Union Square’s investment strategy will continue to be tested. It is much harder to find promising Web start-ups now than three years ago. There are so many services and so much more capital financing them, and users have less time and attention for new offerings.

We hope it is sustainable, and is transferable to the UK, because in the UK the "Equity Gap" for small companies between the first £100k / $200k and the VC investment is a real issue, and all Her Majestys Government's attempts to bridge it with 50/50 grants etc have not really worked. Not sure about all that capital being around after recent weeks either. Whether there are still pickings in the 2.0 market is less clear though - again, quoting the NYT:

The partners said they planned to look at how Web services might transform sectors not yet touched in a big way, like education and the environment.

Ah yes...the Green wave, a well trodden path . I suspect to make money this way you need to be ahead of the main wave, not in its midst.

*In response to offline comments - yes, its a puff piece, but its interesting nonetheless. And yes, I am well aware that an early investment sets USV up well for follow on rounds. But it is still a play in the Equity Gap level, which in the UK anyway is rare.

Its been quite interesting watching the evolution of all the financial market news on the New Media, and the most fascinating has been the proposed $700bn bailout of the banks by the US Treasury (or more accurately the US Taxpayer).

When news came through about the bailout the financial community went berserk, and stock prices jumped globally (not surprising, as this essentially saved a lot of of well dressed *rses). The blogosphere also started off with its own growth (see below).



What has been possibly more interesting is watching the change in the meme, however - the initial euphoria was originally driven by the financial industry itself (no surprise there, as it essentially guaranteed the bonusses, mansions and pensions of those that were still standing).

However, it didn't take that long before the blogosphere and social media sphere to start to comment that this may be just another bill of goods sold by the financial industry, and this sentiment has been growing over the weekend, as the chart below shows:



Now I'll be the first to admit this is a simplistic analysis, and its seems the "good idea" meme is still growing - but just reading the tone of comments on for example the term ("bailout" on Summize) , its all very negative. (In fact one of the lessons of this analysis is just how hard it is to get a view of the sentiment around a meme)

The main Tech community is still largely free of all this, Techmeme being full of the usual shiny new stuff conversation, (and the main blogsites like digg and memeorandum are still mainly split between sport and politics) but this "hold on a bit" sentiment is growing not just on Twitter, but on the blogs stoo - in the Tech blogging space it has been expressed by Dave Winer, who is typically an early bird with new memes:

Now we have another impressive Almost Presidential secretary, Henry Paulson, who says there's impending doom, but he can't say exactly what it is, it's not security this time, but fear of starting another level of bank runs. Senators and Representatives come out of a Thursday night meeting with the secretary (would they have believed the President) won't say exactly what he said, but they are stunned. The next day buried in a sea of press about this event is an almost innocuous paragraph in a NYT piece that talks about a flight to safety from the US Treasury money market. OMG. A point made by the secretary to the Congresspeople, a lot of your constituents have their savings in money markets. The Senators think to themselves, Fuck the constituents, that's where my retirement savings are! (And by the way, mine.)

Although not living the US, I would say that anybody who approves a $700bn+ package that essentially (as I understand it, details are still fairly scarce - which is another problem ) pardons the guys who got them into this mess (I don't think they even lose their bonusses, never mind jobs) and penalises those who will sort them out, and passes the whole shebang into law in a few days before its been fully articulated and debated is probably not learning the lessons of the past. I think that creates the danger of being fleeced, but Dave thinks the Great US Public won't be fooled again.

Having been fooled once, sure there are some among us who will be fooled again, but we will not all be fooled again, as evidenced by the posts on all kinds of blogs.

I'm not so sure. You may not be able to fool all the people all the time, but you only have to fool enough people for long enough to enact any act into law. The interesting question to me now is whether the New Media can act as a way of focussing the opposition to this deal and proposing alternatives against a lot of vested (and we mean vested - its their shares in these companies) interests no doubt pushing their views very hard.

According to this article in the NYT, the art of texting reduces one's IQ:

“The act of texting automatically removes 10 I.Q. points,” said Paul Saffo, a technology trend forecaster in Silicon Valley. “The truth of the matter is there are hobbies that are incompatible. You don’t want to do mushroom-hunting and bird-watching at the same time, and it is the same with texting and other activities. We have all seen people walk into parking meters or walk into traffic and seem startled by oncoming cars.”

Judging by some of the conversations one hears on mobile phones, especially on the move in trains etc by loud peoples, actually talking reduces IQ by a lot more

AVC / Fred Wilson, a normally fairly sensible chap, has come up with an - er - "interesting" idea - fill the various Web 2.0 feeds with marketing messages - he starts with the thought that:

FeedBurner did that with this blog's feed and many other feeds with ok results a few years back. But honestly, the ads were not targeted enough or relevant enough to work really well. Facebook has probably done the most of anyone to allow marketers entry into the feed.

Feedburner's play limps on, and Facebook's play was not exactly a success, as I recall.....anyway:

So what we need to happen is the web services that render these feeds for us; google reader, netvibes, friendfeed, twitter, outside.in, facebook, etc, etc need to provide api accesss to these feeds to services that will serve marketers who want to get their messages targeted into them.

The targeting is the key and I am not entirely clear how this should work. In the case of search driven feeds, it should clearly be keyword based. In the case of geo feeds like outside.in, it should be zip code or neighborhood based. In the case of things like facebook or google reader, I think the targeting is more likely to be behavioral.

Two things immediately hit me.

- I can see why a VC may want some of his companies to have access to users' pub/sub feeds to make a better business plan and model, and I can see why some supplier companies would wish to do this, but I don't see whats in it for the users - its an economic tax on their attention and bandwidth.

- Users (generally) don't like this as an experience either! From junk mail to unwanted telesales, from email spam to Popups in your web browsing, this has not gone down well. Beacon flopped publicly (though I see it reared its head again, I see). We invented all sorts of online devices to cull the noise, and we don't like people that do it

Also, targeting is very hard in this case - I suspect that any form of attempt to get sufficient behavioural data for any one feed would be seen as extremely invasive. Apart from Google or maybe a Social Net or an ISP (and see the worries its causing when they do), its hard to imagine who would even begin to have enough data to do useful targeting .

I can see why a company may want to do this short term, not sure what its longer term benefit may - especially be if competitors don't.

Two interesting articles from the Olde Paper Presse, on a subject that intrigues me - how will "Knowledge Industry Structures" themselves be dis-aggregated by the New New Media?

Firstly, the Economist on the impact of Web 2.0 tools on Scientific Journal publishing:

Earlier this month Seed Media Group, a firm based in New York, launched the latest version of Research Blogging, a website which acts as a hub for scientists to discuss peer-reviewed science. Such discussions, the internet-era equivalent of the journal club, have hitherto been strewn across the web, making them hard to find, navigate and follow. The new portal provides users with tools to label blog posts about particular pieces of research, which are then aggregated, indexed and made available online.

Although Web 2.0, with its emphasis on user-generated content, has been derided as a commercial cul-de-sac, it may prove to be a path to speedier scientific advancement. According to Adam Bly, Seed’s founder, internet-aided interdisciplinarity and globalisation, coupled with a generational shift, portend a great revolution. His optimism stems in large part from the fact that the new technologies are no mere newfangled gimmicks, but spring from a desire for timely peer review.

And this one on the future of Think Tanks from the Grauniad:

Some are now wondering whether the whole thinktank model is bust. The Labour minister Jim Knight suggests on his Facebook page that thinktanks, "ultimately very elitist top-down institutions populated with very bright people who politicians sometimes seem to sub-contract their thinking to", are out of date in an era of online networking, blogs and wikipedia. "Network-enabled policymaking" may replace boring old thinktank reports, he says.

The transmission, testing and collision of ideas in an environment with the immediacy of the web is certainly a huge challenge for thinktanks: but surely an opportunity too. So long as think-tanks can demonstrate real expertise – be "elitist" in the best sense of the term – they should welcome the heat of online debate.

Today, real influence and kudos collection in these networks is still largely concentrated off line in face to face time, this allows the more established dogs to pick at the bones of those lower down:

However, what Dr Bly calls Science 2.0 has drawbacks. Jennifer Rohn, a biologist at University College London and a prolific blogger, says there is a risk that rivals will see how your work unfolds and pip you to the post in being first to publish. Blogging is all well and good for tenured staff but lower down in the academic hierarchy it is still publish or perish, she laments.

Not that different to any other New Media models then...... at least in the Olde Days the student got their name on the paper, or the young 'uns went to see the Think Tank client with the Big Hitter.

But one assumes that will change, however. At the end of the day Think Tanks and Journals are just quality-assured markets for ideas - the blogosphere isn't there yet, there is too much unfiltered / unauthenticated / opinionated cr*p. I'm increasingly interested more in structures that filter and winnow ideas - not so much a River of News but a Stream of Information. So it is quite interesting to think of how "Wisdom of Crowds" type social networks would operate here, as there will no doubt be ways of putting together such trusted / authenticated structures (the Open RSA movement being an example here, or in its own self-evolving way, the Tuttle Club).

Or, as the Economist notes:

With the technology in place, scientists face a chicken-and-egg conundrum. In order that blogging can become a respected academic medium it needs to be recognised by the upper echelons of the scientific establishment. But leading scientists are unlikely to take it up until it achieves respectability. Efforts are under way to change this. Nature Network, an online science community linked to Nature, a long-established science journal, has announced a competition to encourage blogging among tenured staff. The winner will be whoever gets the most senior faculty member to blog. Their musings will be published in the Open Laboratory, a printed compilation of the best science writing on blogs. As an added incentive, both blogger and persuader will get to visit the Science Foo camp, an annual boffins’ jamboree in Mountain View, California.

More a think hot-tub than a think tank?

The chart above shows the end of the Hubdub Prediction Market for Seedcamp 08 (or SCW08 in txtmode). (Seedcamp 08 being a UK based competition for funding for pan-European startups) The actual winners were (from the Grauniad):

uberVu: This team from Bucharest in Romania are launching in the next month; the service tracks conversation and comments from the web and aggregates them. But he's preparing to move over to London to be closer to the physical community here.

Codename Kyko: This is in stealth, so details are still under wraps. It's a gaming service... more details soon! The UK founder is just 21 and has had some hugely positive feedback during Seedcamp.

Basekit : Simple design kit for websites and applications. Great idea form this Welsh team - and they claim it could mean a site that might takes weeks of code would be put together in a few minutes.

Soup: The Viennese developers have created a multi-publishing system very much like Tumblr, but are concentrating on rolling out mutiple language version in markets outside the US where Tumblr is already established.

Mobclix: These are analytics to help iPhone application designers improve their products. A US firm.

Toksta: Messaging and video service for social networking.

Stupeflix: This French service creates video packages from photos, audio and video clips

Congrats winners, and good luck to all finalists - though after this week that huge reliance on Ad funding all the Seedcamp players seemed to be after is probably going to be a far bigger ask.

As to the usefulness of prediction markets - the results are that it predicted 1 of the 7 winners (Basekit) in its top 5, 2 of them in top 10. Not its finest hour, but I predict this is because there were just not enough "wise crowd" votes cast, more the passionate supporters.

Incidentally, I see on TCUK that Hubdub has won a deal with Reuters - did anyone predict that ? TCUK also covers the Seedcamp winners over here.