Searching for the Moon

Shannon Clark's rambles and conversations on food, geeks, San Francisco and occasionally economics

Archive for April 13th, 2007

Google is NOT in the search business, neither is Technorati

Posted by shannonclark on April 13, 2007

Got your attention did I?

What do I mean?

What business a company is in is not the same as asking what do they provide, or how are their resources used by others. Rather the business of a company is what brings value and resources into that organization.

In Google (and Technorati’s) case this is not search. (well in Google’s case they do have a very small < 1% of revenues enterprise search business that does directly generate revenues through the sale of search technologies in the form of dedicated hardware to be installed inside of enterprises as a part of their Intranets, but as a stock analyst might say, at least today not a material part of their revenues).

Both Google and Technorati are, actually, in the business of providing a platform and set of services to other companies to reach customers and spread brand messages (i.e. advertising). Technorati has a further business of selling data – information that companies (or their service provider firms such as PR agencies) can use to track brand impressions, live web opinions etc.

Yes, both Google and Technorati have lots of “users” – but these users are not “customers” – that is, they are not directly (in most cases) paying Google of Technorati (though some may have separate advertising relationships with Google for example).

And certainly in both cases a significant part of their development and technology resources are dedicated to these users. But their revenues are a by-product of the user’s actions – not from the users directly. So the business relationships of the firms are with a smaller set of entities.

This distinction between what a company provides – and the business it is in can be a very hard one to grasp, both for startups and even for long established companies. Some rather large portion of car companies, for example, are perhaps best thought of as financing firms first – and manufacturers second. Further complicated because the actual customer interactions for most car companies are not direct – but are mediated by a layer of car dealers who though licensed by the companies are not directly part of those firms.

So if you modeled a car company, most of their actual business relationships would be with this layer of car dealerships, a number of large fleet buyers (i.e. rental car companies, some government agencies), and the financial services firms that provide the liquidity for the company’s financing activities, and to a smaller degree sales of parts to service dealers (though in many cases mostly only to licensed dealerships – everyone else might often use third party parts). That’s on the revenue in side of things.

On the costs side of things clearly many car companies have a great number of big relationships – to their employees (past and present) mediated via Union agreements, to a handful of large parts providers, to various governments, to many utilities, to transportation providers, and to financial firms for debt financing. Ford, for example, managed to spend $12 billion more than they earned. (that’s a $1 billion loss per month, nearly $33 million/day, or to put it another way 5-10 Web 2.0 startups PER DAY)

Apparently Ford’s business these days is spending.

So what business are you in?

Posted in economics, Entrepreneurship | 3 Comments »

My advice to Rolling Stone on their new Social Network

Posted by shannonclark on April 13, 2007

According to Techcrunch today (and Mike credits a journalism student for breaking the story), Rolling Stone magazine will be launching their own online social network.

In a very long comment on TechCrunch I offered the following advice to Rolling Stone on their new social network. I republish my comment here for posterity

If Rolling Stone does this well they could have a chance to revitalize the value of subscribing – and of their brand more broadly.

Social Networks are evolving to be more open and interactive places (see Marc Canter’s recent discussions about Digital Lifestyle Aggregators).

A few years ago I proposed, but did not end up working on it, that a company with a lot of very niche magazines create dedicated social networks for those publications. Linking deeply to their customer database, to their advertisers, and to their rich archives of content (as well as to the ongoing process of writing new stories and covering the industry). These were very niche publications (think Optometrists) and I still think there is a very good business there for both the publishers and a software provider to provide technology and services to them.

For Rolling Stone my advice would be:

– leverage your subscribers – make it very very easy for them to start using the social network (i.e. use something on their label as their access for example, pre-populate their profile based on info you have, give them visable rewards for things such as Years they have Subscribed).

– deeply integrate the rich archive of content you have – especially content that may not just have been in the magazine (recordings of interviews, photographs that didn’t make it into print, searchable archives of reviews, tour dates etc)

– do not ignore the value your advertisers create in the magazine – and integrate them directly into the network. Not as an afterthought but as another stream of content and resources. Make it really, really easy to access all the ads & offers (i.e. offers of free music from a service like emusic – make sure the offer from the magazine is available easily online as wel) Get metadata for things such as when records are being released, for links to label’s websites, band’s myspace pages etc (this also points out – don’t be afraid of the rest of the web or the other social networks – link back and forth between them)

– respect your audiance and KNOW IT. You should (you being Rolling Stone) know the actual demographics of your readers. Design accordingly. Respect them and do not either talk down to them, or design only for a subset of them (i.e. don’t design the network for teenagers – unlikely to be your current readership)

– make the network open to non-subscribers, but give special notice/prominence/benefits for subscribers (and afterall since you now sell a subscription for very little – I think $10 or so don’t make it too high of a burden)

– LISTEN to your audiance. Make the social network more than just readers talk to each other (though that’s really valuable) – make it readers talking to you, to your advertisers, to the music industry at large. Give people lots of ways to interact, to see their voice being acknowledged

– take this conversation back into your print publication – and outward to the rest of the web.

– Music is a multiple senses businesses – so integrate music, audio, video as well as print and photos into the network. Strike deals with lots of sources for embedable videos, for downloadable music, for music co-discovery (pandora, lastFM, etc)

– consider also focusing on the other strengths of Rolling Stone – your history of covering American culture, not just music (and your long tradition of high quality, long form journalism). Remind people of this, reemphasize it, break out your archives (and btw pay the authors or their estates when you do so).

Now, will they listen?

Who knows?

Shannon

– founder/organizer MeshForum – http://www.meshforum.org an annual conference on the study of Networks, including social networks

Posted in Entrepreneurship, meshforum, networks | Leave a Comment »