Monthly Archive for December, 2010

Why blogs are turning into newspapers and Quora is the future of journalism

MG Siegler wrote a post following our exchange on Twitter. I called him out because for the second time that day, I had logged into Quora only to see minutes later a TechCrunch post being Tweeted that was rehashing the original Quora discussion. Is this the future of journalism?

Blogging 3.0
Siegler wrote an eloquent post expanding on my original jibe that he was practicing blogging 3.0 (I called it that as over the years Marshall Kirkpatrick would constantly joke Twitter is what paid his rent). Now don’t get me wrong: Quora is one of my favourite websites right now, and Siegler (as well as Kirkpatrick) are two of the more talented writers in the blogosphere. But it made me wonder: what’s the role of the journalist in the world, and by implication, the news blogger?

For the bloggers out there who receive bonuses by getting headlines on Techmeme — what’s stopping Gabe Rivera (Techmeme’s founder) from simply importing the RSS feed of Quora posts and having its human editors headline the best answer? As Siegler points out, he (worryingly) already has. Given Quora responses are like blog posts and get aggregated into a community wiki-like answer summary, I can’t see why this won’t become a new input source for Techmeme, completely bypassing the traditional blogs.

And while we are on the topic: Julian Assange of Wikileaks argues that they are pioneering a new form of journalism, which he recently argued in an editorial for The Australian, as “Scientific journalism“. Scientific because you can read the source of the material in its naked form or accompanying an article that discusses the source.

Source material is democratised
Journalists, it is said, are becoming curators of information. Siegler claims he has retrieved information from an obscure source, amplified it, which in turn will be broadcasted by a bigger publisher like CNN. But if Quora democratices the source gathering — it’s so obscure that everyone in Silicon Valley is on it, include billionaires like Steve Chase who founded AOL and Mark Zuckerberg of Facebook — what’s stopping me from “breaking” the apparent news? Or Rivera from doing a direct RSS import of the top answers, direct to his audience of thousands?

If the big blogs are traffic hungry that have them reliant on the aggregators like Techmeme to feed their pageviews….And if this trend to scientific journalism is being promoted, where journalistic bias adds colour to a source only if you want (rather then the bias being the source of your information consumption) — then one has to ponder. That the evolution of journalism will come not from changes in journalistic style, but by changes in technology — an evolution where every single one of us can talk openly about the world and in an applied way.

Siegler says this is business as usual for the bloggers, but I think it’s business as usual for the disruption technology is generating for the news making business. Disruption that will continue to favour those who tease out the source of news (like Quora, Twitter and Wikileaks has) and those who curate it into an efficient way to consume (like aggregators such as Techmeme, Google News and Digg).

The future of journalism resides with those that create the originating value: traffic or content
Before the Internet, newspapers were the sole source of information and so had an elevated role in society. Now they are being relegated to just one of the many sources of news; once considered a horror if they disappeared, they would not impact the world if they went bankrupt today (as there are plenty of online mastheads to replace their value). As social media technologies continue to be refined — where the participants curate the source material themselves — blogs will not disappear like how newspapers won’t disappear. But their position in the world is far from guaranteed, as the audience curation is being done better by the aggregators and the source material is now no longer proprietary to a journalist.

The new magazine

The Facebook homescreen is a remarkable thing. I just saw a video of a friend throwing food at birds; relatives taking pictures of themselves in a hot tub; a link to a mind-expanding article; and a status message that made me laugh. It made me think: the homescreen is the new magazine.

Sure, we can be simplistic with this and say lots of pictures and content makes thee a magazine. But what strikes me as fascinating is how much personal content is shared. People’s thoughts, insight into their lives, and the real-time autobiographical dictation by our “friends”. It makes me think of the fascination people have with celebrities, and how gossip magazines are some of the highest grossing of their kind. The same phenomenon is being exploited here — which is people want to know more about people they know. While with celebrities you could potentially say people do it due to a fixation on celebrity status and looks, I would argue the reason gossip magazines are so popular is due to the curiousity into the lives of people who are familiar. People would be equally fascinated with a magazine about celebrities as a magazine of their neighbours, if it was practical.

It’s almost like Facebook’s homescreen is the new media version of a publication. But of your friends. And like a glossy magazine. Of original content from otherwise hard-to-obtain situations.

Or more practically speaking, like a gossip magazine of your neighbours.

Delicious will go down as one of the great tragedies

As Marshall Kirkpatrick eloquently wrote, I’m also another person disappointed that Yahoo! is shutting down Delicious, the social bookmarking site that helped generate the Web 2.0 trend. But this reflects a deeper problem at Yahoo.

How Yahoo’s spreadsheets miss the point
As a “heavy” user myself, it may be ironic to say that I never visit the site; I often will not bookmark a site for month’s. And yet, it hits me like a shot to the heart to hear that it will be shut down. Why? Because it’s so valuable to me. The amount of times I’ve been able to rediscover content I’ve previously read has alone made it valuable — the tagging innovation that Del.icio.us pioneered makes my search for hard-to-recall content much more efficient. But there was even a time, where the most popular links of delicious were my homepage: the quality of the content being shared justified my daily attention in the same way other aggregators have to me like how techmeme.com have.

In fact, I’ve recently rediscovered this as I experiment with the Rockmelt browser, and I check the most popular links via the widget on the side of my browser.

Delicious via Rockmelt

But notice how I don’t visit the website? I might see what links are popular, but that doesn’t mean I will click on them. I don’t visit the actual delicious website and so the metrics the Yahoo management are reviewing are skewed. If advertising is on the site (the only type of revenue model attempted), it would not convert much. They believe no one is using the service, but the truth is, they are.

I never thought the “network” operating model could suffer due to the fact metrics measuring value can’t be quantified. So it’s completely reasonable why a Yahoo management team thinks it time to shut down this service: low on traffic, low on revenue. Numbers in the spreadsheet say this is a loss: let’s kill it, says the MBA.

What we have here though is a management team who not only are out of touch with how people use delicious (potentially because they don’t get the vision that only the founder truly gets — and he’s long gone), but more important, completely misunderstand how to capture the value of this valuable asset (not property). As a point in comparison, Yahoo acquired the other Web2.0 darling Flickr, which is a service I also have been using for over 5 years. And when I say using, I mean a paying customer that has paid his subscription without hesitation every year (which I will note, there are not many services I pay for which makes this even more impressive). Like Delicious, I store data with Flickr that I may not use for a while — but the way it manages my data has become an invaluable tool for my life.

I worry more about Yahoo and any company it acquires
Yahoo’s management should have implemented a subscription model like Flickr, because it’s obvious that a “book marking” site will never get a lot of a traffic (you can book mark sites without having to need to visit delicious.com). Tools like this don’t make money from traffic; and network business models like this generate value beyond the confines of the web property.
With the news breaking, it will now force an action. Either sell it to people who have now seen their cards (in fact, I’ve had friends of mine not in tech ask me how can they put an offer for this!), open-source it (like how Google reacted when etherpad was going to be shut down), or shut it down as they said they want to and lose the opportunity to capture its value. Of course, they could publicly announce they won’t shut it down, but everyone now knows what they think and it will kill the service due to new users being paranoid about their data. Yahoo! gains nothing with this.

But the sad thing about this, is that it’s forced them to ignore the opportunity of potentially being more innovative with the revenue model. And because they failed to do this, this impacts the company more generally — monetisation is key to sustainability and if you have a management that can’t do that (which presumably, is the reason it’s being shut down), then there’s something even more wrong with this new age media company that as Jeff Jarvis has called, has become the last old-media company.

Yahoo is an amazing company, and companies need to make tough decisions sometimes to grow the company. But not understanding the potential of Delicious will go down in web history as one of the great tragedies — and if Yahoo sells it, one of its biggest blunders.

Update: And just as I clicked “save” on this post, the Delicious blog posted saying they are now going to “sell” it as it’s not a strategic fit, which as I mentioned in my post was one of the likely outcomes. So if it’s not a strategic fit, it begs the question again, what is Yahoo?

Another scandal about data breaches shows the unrealised potential of the Internet as a network

The headlines today show a data breach of the Gawker media group.

Separately, I today received an email from a web service that I once signed up to but don’t use. The notice says my data has been compromised.

Deviant Art community breach

In this case, a partner of deviantART.COM had been shared information of users and it was compromised. Thankfully, I used one of my disposable email addresses so I will not be affected by the spammers. (I create unique email addresses for sites I don’t know or trust, so that I can shut them off if need be.)

But this once again raises the question: why did this happen? Or rather, how did we let this happen?

Delegated authentication and identity management
What was interesting about the Gawker incident was this comment that “if you logged in via Facebook Connect, in which case you’ll be safe.”

Why safe? For the simple reason that when you connect with Facebook Connect, your password details are not exchanged and used as a login. Instead, Facebook will authenticate you and notify the site of your identity. This is the basis of the OpenID innovation, and related to what I said nearly two years ago that it’s time to criminalise the password anti-pattern. You trust one company to store your identity, and you reuse your identity in other companies who provide value if they have access to your identity.

It’s scandals like this remind us for the need of data interoperability and building out the information value chain. I should be able to store certain data with certain companies; have certain companies access certains types of my data; and have the ability to control the usage of my data should I decide so. Gawker and deviantART don’t need my email: they need the ability to communicate with me. They are media companies wanting to market themselves, not technology companies that can innovate on how they protect my data. And they are especially not entitled for some things, like “sharing” data with a partner who I don’t know or can trust, and that subsequently puts me at risk.

Facebook connect is not perfect. But it’s a step in the right direction and we need to propel the thinking of OpenID and its cousin oAuth. That’s it, simple. (At least, until the next scandal.)

Why the angel bubble is not a bubble but actually the missing link

Naval Ravikant has written a thought-provoking post on the growing “angel bubble”. His thesis is that there is no bubble because the total money amount of money being invested in venture hasn’t increased. What’s changed he claims, is simply that instead of bigger Venture Capital (VC) rounds that are fewer in number, we’re seeing smaller but many more Angel investments occurring. In other words, the VC industry — not the Federal Reserve — are the ones that should be worried about this “bubble”.

I actually think what’s happening is that the market is now more resistent to bubbles. Contrary to a previous post of mine where I hypothesised the seed investment bubble (which I’ve since reconsidered and I’ll explain later in this post), the Angel “bubble” is a externality of one simple fact: it’s now a lot cheaper to build a startup. To understand this, watch the presentation Naval gave a few month’s ago which is the best I’ve seen to date in this trend.

So as a consequence, angel investment has now becoming (and rightfully so) the dominant way for a company to fund a startup company, with the existing VC model being relegated to more of a latter stage role.

Why is this a good thing? Well first of all, a lot more startups are being funded — but with the same amount of money in the economy. Statistical theory will claim that this alone will be good thing for the economy, as there is a higher probability of home runs. By spreading risk among more bases, there’s a better opportunity to generate returns.

But something more important is happening. VC’s now have a better qualification of a business to invest in. The huge amounts of capital they can invest into a business, are now going to be done after having seen a more advanced startup’s potential future, pushed to that stage by the seed accelerators or angels that cover their startup cost.

What I mean, is that by the time a company gets to VC, they will no longer be a startup — which is a business searching for a business model — but instead a high-growth business that’s now executing on their newly discovered and high potential business model. The VC firms are no longer needed in the business of starting something in information technology; they are instead now purely in the business of growing a business (where already some of the larger funds exclusively focus on). And the capital they are putting at risk on behalf of the endowments and pension funds that gave them that money, now have a lower risk of achieving higher returns.

Better still, the VC’s funds can focus on the future of technology like clean energy, biotechnology, and nano  technology — industries that were what information technology was in the 1970s: high startup cost, low chance of return.

And while that’s all well and good for the VC’s, this new funding lifecyle actually opens up opportunities for returns for everyone (which is why this isn’t a bubble). The seed accelerators and angels have the ability to pass the baton and exit their investments to better capitalised groups like the VC’s, allowing them to focus on the earlier stage of the market. With the IPO market dead since the introduction of the Sarbanes-Oxley legislation, tech has relied on acquisitions as the sole form of return. But with earlier stage investors like the Angels getting exits to VC’s, and the VC’s having better qualified businesses that they can grow to a large IPO, this is actually going to see the IPO market reopen due to this focus.

All in all, that’s not a bubble: that’s called efficiency and a rejuvenation. The Angel bubble isn’t a bubble but a maturity and evolution of the technology ecosystem. This is actually the missing link in efficient information technology being built — the link which now connects the super-highways of the economy to sustainable growth and value, not bubble.