Saturday, August 29. 2009
So there I am, working away, with Spotify on playing some stuff I really like, when suddenly on comes this music track Ad - its totally different in style and volume, and is advertising a type of music I don't like. It totally jarred with the music of a few seconds before, the shock was visceral. I was incensed enough to Twitter:
Hey Spotify - inserting a few seconds of some random singer that totally jars with what I'm listening to at the time really doesn't work !
Which of course brought a few sensible replies on the lines of "buy the premium service", "turn it off until its over" etc. But there was one reply which I really had to blog about - David Jennings, fellow Tuttler and expert on all matters to do with online music, noted that:
I recorded the same thing ("audio whiplash" with ads) abt We7
We7 being a music service a few years ago (where are they now....). For those of you who don't know him, David wrote "Net, Blogs & Rock n Roll" which in my view is still the definitive guide to online music in the social media age - and other online media by inference. Anyone who fancies themselves a strategist or expert in this industry needs to read David's book.
What David wrote in his blog (also called Net, Blogs and Rock n Roll) about this issue, over here, in a piece entitled "Audio whiplash from personalised ads with free music downloads", was:
"Audio Whiplash" was exactly the right term. That shift in music really had impact, I felt mentally assaulted. I hated the advertised music and artist far more than I would have in a neutral environment, and I was incensed with Spotify for being so insensitive as to play it when I was listening to something so different, that I liked.
Its interesting to think about why I had this reaction. Music may have the charms to soothe the most savage breast, but it certainly works in reverse if its the wrong music. My initial hypothesis is that music reaches deep into us and bypasses some of our more rational functions, so that when it goes wrong, the reaction is far more visceral than even a popup Ad will cause.
In my view, any service that is dealing with music probably has to be far more careful to tailor the Ads to what the person is listening to, and as David notes, music selection is probably a far better guide to personality - and mood - than any blander demographics. Spotify and other music stations are in my view sitting on a goldmine of realtime user demographic data, but its clearly very early days in terms of using it. Considering David wrote his piece in 2007, its clear that there is still much to learn.
Or maybe its just me - others thoughts?
Friday, August 28. 2009
The FT reports that:
The other people breathing down Facebook's neck are the European Union and some of its member countries, as Facebook potentially violates some of the conditions of their data protection acts.
Facebook's latest play is to try to encourage users to make more of their information publicly available, but the question one is left with is "why don't US privacy laws offer these basic protections to their own citizens?".
Our advice remains, with all US based services that take a lot of your data, to be careful with what personal data you disclose. Many of their economic models rely on using your data, and with the ongoing failure of Ad-funding models the temptation to slip from use to abuse will be irresistable in some cases. And its a heck of a lot harder to get legal recourse in a foreign country, especially one which seems to have very weak privacy protection laws.
(hat tip Katherine Corrick for pointing out article)
Thursday, August 27. 2009
Since everyone else is at it.....
Although the Snow Leopard is named after the Leopard, it is a significant forking of the DNA code (in fact being closer to the Tiger), and is thus called Panthera Uncia, rather than Panthera Pardus, being uniquely adapted for operating in cold, high altitude environments. From Wikipedia:
Snow leopards are smaller than the other big cats but like them, exhibit a range of sizes, generally weighing between 27 and 54 kilograms (60 and 120 lb). Body length ranges from 75 to 130 centimetres (30 to 50 in), with a tail of nearly the same length.
This compares to the Leopard and its many variants:
Head and body length is between 125 and 165 cm (49 and 65 in) and the tail reaches 60 to 110 cm (24 to 43 in). Shoulder height is 45 to 80 cm (18 to 31 in). Males are about 30% larger than females, weighing 37 to 91 kg (82 to 200 lb) compared to 28 to 60 kg (62 to 130 lb) for females.
And the other great rosette-spotted cat, the Jaguar (Panthera Onca):
We do not compare these cats with the Cheetah (Acinonyx Jubatus) in this review, which is totally different and optimised totally for speed, whereas the other cats are built for general purpose operation. Snow Leopards have no speed advantages over Leopards, but have been seen making c 15m (46 ft) jumps.
The Snow Leopard, like the Leopard, does not have spots in its rosettes whereas the Jaguar does. In addition there is no known example of a Snow Leopard with Melanism functionality which you can get in Leopards and Jaguars. Melanism is result of a dominant allele and causes the fur to be near black in colour (ie Black Panthers). Also, the Snow Leopard cannot roar due to the dropping of some morphological features of the larynx.
Snow Leopards are very rare, on account of the extreme difficulty of finding their elusive prey, Yetis. To the best of our knowledge they have not yet learned how to catch mountaineers which we think would be a rather useful adaptation in the next release into the wild, and we encourage zookeepers to let them practice on visitors.
(Sorry, naming computer operating systems after the Great Cats is just naff. Rodents, marine micro-organisms or even faraway star systems, fine.....)
There - I've said it - no pussy-footing around on this blog
Wednesday, August 26. 2009
Readers of this blog are invited to go back to an article we did earlier this year on YouTube economics, which showed that it swings hugely on the % of its videos (very small today) that can be advertised against. The problem with UGC video is that its seen as very risky, for a variety of reasons (taste, quality, legality). Today, YouTube carries on in its attempts to make money by increasing the % withcuration of the "hit head" of its UGC video collection. :
This is thus an attempt to get the UGC videos that actually could make money to actually make money, by wrapping them in a program that is safe to advertise against, and has proven its quality by the quantity of hits. Videos are more expensive to serve than searches, owing to their bigger file size, so the transaction return per Ad has to be higher - hence the curation only of the "hit head" UGC videos.
By the way, if a proof of the general economic uselessness of the Long Tail in current new media was needed*, this is it. Follow the money, as they say...... in venality veritas.
(*apart from being a large number to bamboozle dumb companies to part with plenty of money to buy your New Media entity, that is )
Tuesday, August 25. 2009
Simplified Gartner Hype Curve for Web 2.0 Multi-Taskers
Stanford University Research:
That largely explains the whole Social Media phenomenon and microblogging in particular .
Even more interesting is that multi-taskers are much worse at filtering, remembering, prioritising and were even slower at switching from task to task.
Cartoon courtesy Geek n Poke, hat tip Zoli Erdos
No - the munchkins seem quite happy to give away pictures of their naked teenage daughters for 5% off (as one chap at SXSW earlier this year put it). And now, more evidence - Ad Age reports that:
No surprises there I'm afraid. We got this all wrong, big time, - 3 years ago we predicted the "consumer backlash" on privacy within 2 years - the signs were all there, and then Beacon came out - surely, we thought, the scales would fall from their eyes - but turns out that the average grockle just don't care. There are some concerns that this study is a bt self serving :
Ideally, the online-ad industry wants to remain self-regulated, and improving the friendliness and ease of opting out is one way to convince legislators and regulators it takes the job seriously. More than a half dozen industry organizations recently launched a new set of regulations in hopes of staving off government involvement.
But we have searched in vain for major grass roots concern about online privacy for 2 years. Initially we thought it may be nefarious attempts to hide the small print (a la Facebook), sneaky opt ins etc etc or just consumer naivete - but in reality most people will do anything for a discount. Hand over all your shopping data for a penny back in every £10? - sure thing, here's my supermarket card!
It would appear the UK inadvertently cleared the decks of some basic video restrictions 25 years ago - from the FT:
An administrative blunder under the Thatcher government that has only just come to light has opened the door for retailers to sell unauthorised DVDs and video games, including banned films and pornography, to anyone, including under-age children without legal threat.
You can't make this stuff up! We now await with eagerness a large cache of previously banned material to be "released into the wild" (aka left on a train in transit from one government department to another....... )
Monday, August 24. 2009
FFI Plain Preferred Term Sheet -
There has been quite an outbreak of rational behaviour in startupland in recent weeks, the gist of it being that a set of simplified agreements could be used rather than individual negotiations every time. This would save a lot of money in legal fees as wll as time and hassle. I was reminded of this via TechCrunch's post on TheFunded's Adeo Ressi's Sample Memorandum (see above). I have a few other articles on the spike about this too:
Firstly, Chris Dixon did an excellent summary of very common terms over here. The post is so good I've reproduced it entirely:
I have come to believe there is a clearly dominant set of deal terms. Here they are:
I also have the Venture Hacks analysis of option allocation, hat tip Christine.net
Then there was Fred Wilson on the travails of Tranche Investing, which partly comes about because the transaction costs of any particular round are so high:
You all know this blog well enough to know what we're thinking, right
Thats right - why now? Why, after all these years of VC handle cranking is everything being changed? Standardised T&C's, and even the worker bees getting some money early like at Facebook?
Some people hypothesize its the open nature of the Internet, information flows around so fast now that it will force transparency and homogeneity into the market. We think its much simpler than that - its about transaction and opportunity costs.
Simply put, Moore'Law seems to apply to startups too - at least it has since abput 2000 - ie every 2 years you can launch the same startup with half the money the last one needed. This means that after 8 or spo years they are starting up on 1/10th the costs of the dotcoms, so having £30,000 ($50,000) terms negotiations makes no sense - the transaction costs more than the company.
Most startups aren't worth the wallpaper they buy after about 18 months, but some make a lot of money. Those are the nes every Funder wants. But, in a world of little differentiation between funders (everybody will introduce you to the right people, hire the right talent, yadda yadda), and the probable oversupply, one way to differentiate is to hand value back the entrepreneur. And instead of handing back the funders' stake, this way they hand back cash consumed in the early stages - gold dust to startups - while keeping stakes and valuations
Update - interesting discussion from VentureBeat on how, owing to a combination of lower cost to startup and nervous climate, "Seed" funding ($0.5 - $2m) is the new "Series A" ($2-5m) - but beware:
Many VCs will propose a seed deal using a Series A term sheet (whether by design or mere convenience), and this can end up costing the company much more than it bargained for. Here are some tips for entrepreneurs when negotiating seed deals (with the caveat that each deal is different, and rarely will an entrepreneur get their way in all of these categories):
On the other hand, Seed funding is far more risky, so the funder will require tighter safeguards......
Scott Rafer blogs on his lessons learned from Lookery's demise:
Coulda-Shoulda #1. We exposed ourselves to a huge single point of failure called Facebook. I’ve ranted for years about how bad an idea it is for startups to be mobile-carrier dependent. In retrospect, there is no difference between Verizon Wireless and Facebook in this context. To succeed in that kind of environment requires any number of resources. One of them is clearly significant outside financing, which we’d explicitly chosen to do without. We could have and should have used the proceeds of the convertible note to get out from under Facebook’s thumb rather to invest further in the Facebook Platform.
As Scott notes in hindsight:
.....there are three key moments at which a different and defensible decision might have made all the difference. In chronological order, the sins Lookery committed under my leadership were continuing our dependency on a large partner (March 2008), not knowing when to cut bait on a failing asset (September 2008), and building ahead of the market (December 2008). I and we made any number of other mistakes, but all the rest were correctable.
This is a gentleman's post from a chap who clearly has some integrity, and kudos for writing it. To be fair, cutting bait is a damned hard thing to predict and time, and the whole essence of entrepreneurialism is to build ahead of the market, so I think (iii) above is beating ones self too hard with hindsight. The strategic point is well made, and it equally well applies to people building stuff now on Twitter's API.
There is another lesson I take away from all this though - there will always be people willing to fund these businesses (looking at those lining up to fund Twitter API based based startups it seems thaey forget nothing and remember nothing, as it were...) So, would Lookery have been better off to grab a lump of outside money to give them runway to change the model after it was clear Facebook was a dead end? Another year or two of sitting pretty wouldn't have hurt right now methinks.
More evidence of the timing of an IPO from a Bloomberg article discussing Facebook's increasing hiring:
Facebook Inc. plans to expand its staff by as much as 50 percent this year as it benefits from a surplus of engineers amid the recession, Chief Executive Officer Mark Zuckerberg said. “No one else has been hiring,” Zuckerberg, 25, said in an interview. “It’s been a great environment for us because the economy has helped out.”
Seemingly contradicting that is this comment, however:
In today's market (or any market except the most bubbly), cashflow positive is a pre-requisite for an IPO of this size. In fact fully profitable may well be the yardstick if recession continues, but failing that, wearing a hairshirt building sets the right tone for the analysts and PR scribblers. What is most interesting is that they clearly believe they will very probably need to make an IPO to get the next major tranche of funding.
Anyway, revenues are expected to be $500m this year (I believe this may be possible, because Marc Andreesson has been on record about it). With a 50% increase in staff to c 1,500 that's an approximate staffing cost of c $150m (assuming fully loaded costs of c $100k per employee per annum) - say $200m with contractors etc, which is only 40% of revenues, low for this sort of business (the "wetware" is usually the bulk of costs in any non pure-video web outfit).
Apparently Zuckerberg has tried to stay close to cash positive since founding, but assuming a more than doubling of revenues to $500m requires only a 50% increase in staff will be an interesting one to watch (one cannot help but suspect the real staffing requirements will only be met post IPO and the current troops will be flogged like (option owning) mules . Keeping 'em happy will be key! ).
This makes the ostensible reason for the decision to buy Friendfeed a bit odd though - the entire annual bill for the new 500-odd people would be c $50m, about what Facebook paid for Friendfeed. I don't fully buy that it was "for the talent" - if you are going to buy another 500 people there is a good chance that the top 10% are as good as anything Friendfeed has, so one can only assume they believe it's acquisition was required to add to the IPO credibility story - maybe to shore up the "real time" story so it doesn't look like a yesterday's man compared to Twitter.
(This will be interesting to watch, making tech acquisitions work "in the knitting" is very hard, too often they wind up being slowly strangled by the acquirer's cultural arrogance )
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