Alex Iskold of Read/WriteWeb makes a great case for why “there’s no money in the long tail of the blogosphere.” Or, indeed, in the long tail of anything. The crux of his argument: “You can make money on the long tail but not in the long tail. ” It’s an important distinction. Too many people blithely cite the Long Tail as the reason their low-volume, low-margin business will be successful.
Iskold demonstrates his point with the example of Google, which of course profits handsomely from AdSense, purely because of the huge volume:
“AdSense works for Google because the odds are in its favor – it is aggregating small amounts of traffic across the entire web. The math works for them because it is based on the massive scale of the web. It similarly works reasonably well for the sites with large amounts of traffic, but it fails for smaller publishers who have low visitor counts.”
So, all you aspiring pro-bloggers out there, don’t give up the day job!
PC Pro reported today on a rare sighting of (an unprompted) corporate mea culpa and a fairly common volte-face. Speaking at the GSMA Mobile Asia Congress in Macau, Edgar Bronfman, chairman and CEO of Warner Music Group, admitted that the music industry screwed up on digital downloads and cautioned the mobile industry not to make the same mistake.
Quotes PC Pro:
“We used to fool ourselves,’ he said. “We used to think our content was perfect just exactly as it was. We expected our business would remain blissfully unaffected even as the world of interactivity, constant connection and file sharing was exploding. And of course we were wrong. How were we wrong? By standing still or moving at a glacial pace, we inadvertently went to war with consumers by denying them what they wanted and could otherwise find and as a result of course, consumers won.”
Of course, one quick admission of guilt is not going to fix things overnight, and as the article points out, Warner is still only toying with DRM-free music. It’s going to be a long time before the music industry snuggles its way back into consumers’ affections.
How do you when you’re in a bubble? Perhaps when one of the industry’s key proponents says we are. In a blog entitled “The Web 2.0 World is Skunk Drunk on Its Own Kool-Aid,” Steve Rubel (Edelman PR exec and Micropersuasion blogger) opines that things have gone too far: “Many people I know, love and respect are heralding every new site as like it’s Jes.usR.com. No one’s casting a cynical eye anymore. No one’s looking at valuations and reality – or at least very few people are.” He bemoans that the thirst for changing the world and creating value has gone and now it’s just about “chasing the almighty dollar.” Lots of his readers agree with him.
In a similar vein, John Heilemann of New York Magazine takes a New Yorker’s look at Silicon Valley and its bubble here. His conclusion: “Well, maybe it is a bubble. But out in Silicon Valley, they don’t think of that as a bad thing at all.”
Hot on the heels of the news of Business 2.0’s demise comes strong rumor of the re-birth of the Industry Standard – poster child of the dotcom bubble and famed for its rooftop parties.
Brad Stone reports the details here, including the hunt for an editor-in-chief. Check out this interesting comment from a former European editor, Mike Butcher:
“As a former European editor with The Standard (and blogger, during their abortive blogging experiment after the mag closed) I’d be amazed they make this work. What IDG should have done was to keep the brand going online during the Nuclear Winter when the market tanked. They didn’t and others have taken the Standard’s place. One thing they could do, however, is concentrate on investigative reporting. There is a lot of chatter these days but very few real dirt-digging scoops.”
It’s been clear for a while that the most popular blogs are faring much better than their traditional media counterparts when it comes to growing readership and pulling in ad revenue. Today, Henry Blodget (he of the Amazon $400 stock prediction) put his finger in the wind and came up with the valution of $100m+ for TechCrunch. Michael Arrington was, unsurprisingly, delighted.
Perhaps the figure is a little over the top, but the point still stands – TechCrunch et al must be looking mighty attractive to quite a few of the mainstream media who have not hit it out of the park online. As Douglas A. McIntyre (who started the discussion in the first place) points out, AOL is already the proud owner of Weblogs Inc (home to Engadget, among others), plus:
“…with the internet operations at newspapers and some other tradition media companies making very little headway, the big blogs take on a very significant attraction. They reach audiences in great numbers. They have credibility. They are not expensive to run. And, they make money.”
McIntyre makes a good case that the New York Times or Washington Post should snap up the Huffington Post for $100m or more, that the Times or Dow Jones should look at popular stock blog Seeking Alpha, and cnet should go for TechCrunch.
I was recently a mentor in the French-American Chamber of Commerce’s annual start-up workshop, the Business Booster. In addition to topics such as positioning (hosted by yours truly), marketing, finance and the all-important VC presentation, there was an incredibly useful session on legal matters, led by Eve Chaurand Fraser of IAC Search and Media and Francois Laugier of law firm RMKB. Below are my layperson’s notes from the session on how to avoid some of the more common mistakes made by entrepreneurs. It’s particularly relevant for IT start-ups, but is also applicable to most businesses.
Blatant plug: If you’re a budding entrepreneur in the Bay Area, check out the next Business Booster program, starting in July next year. You’ll get access to and advice from an amazing group of Silicon Valley executives, experts and entrepreneurs (and me). And you don’t have to be French ☺
- No collaboration without contract
Never collaborate with anyone or hire an independent contractor without a written contract (no matter how rudimentary). Be sure to describe in detail the deliverables and tie payments directly to deliverables, not according to a timeline. The last thing you want is for a deliverable to slip, but you’re still locked into paying for it in February.
- Make sure you own the IP
Always make contractors sign an invention assignment and confidentiality agreement.
- Know who you’re dealing with
Is that software engineer from a company? An independent contractor? Where is he/she based? It could make a big difference in the sad event of a legal dispute (see # 5).
- On whose behalf?
When signing a contract, make sure it is clear that you are doing so on behalf of your business entity, not in your own name. And the same goes for the other party.
- Protect your IP
Make sure that your most fundamental IP development is performed by someone upon whom you can enforce a contract. Know that it can be extremely difficult and/or costly (if at all possible) to enforce a contract if that person is located overseas.
- Always read every word of a contract
We’ve all done it – just signed a contract without bothering to read any of it, let alone the small print. But don’t! Always always read a contract – whether you have a lawyer or not – and do not sign anything you don’t fully understand. “I didn’t read it” or “I didn’t understand it” will almost never protect you. Here’s a handy tip: if you receive contracts that are overwhelming, try returning them and asking for a two-page agreement. You’ll be surprised how often this works, even with large companies. It has also been known for companies to sneak onerous provisions into seemingly standard agreements like NDAs. You have been warned!
- Make sure every contract has an “out” clause
No matter how excited you are about that new client, you never know when you might want out, so you should always be able to terminate the contract under terms that are acceptable to you. A termination for convenience (with notice) is the ideal provision.
- Actuals, not percentages
Never promise a percentage of your company’s capital, or there will almost always be ambiguity over the number of shares that serve as the basis for the percentage. If and when your company becomes successful, that ambiguity could result in a costly dispute. Always commit to a number of shares, not a percentage.
- Missing appendix
Make sure you have negotiated the “schedules” or “appendices” to a contract before you sign it. Too many times, contracts get signed with their essential terms missing, as the contract refers to terms contained in schedules or appendices that are nowhere to be found.
- Going global
If you’re not quite ready for a physical presence overseas, you can at least make a start by registering trademarks, patents and copyrights in your target foreign locations.
Uh oh. After months of brain-racking and no doubt a gazillion dollars, you come up with a name for your service that everyone likes…and then, oops, turns out you overlooked a few languages when doing your due diligence into the name’s meaning. It’s an easy mistake to make when you have the combined resources of NBC and News Corp 😉
Yesterday, NBC and News Corp announced that the long-awaited name of their competitor to YouTube was…Hulu. Chosen because it would “embody our (admittedly ambitious) never-ending mission, which is to help you find and enjoy the world’s premier content when, where, and how you want it,” according to Jason Kilar, CEO.
Today, after a little Internet digging, TechCrunch revealed that not only did “hulu” mean “butt” in Indonesian and Malay, but – irony of ironies – it also means “cease” and/or “desist” in Swahili. Hmm, someone really should have caught that.