Google’s roots

Recently Google published its quarterly reports, showing 26% growth in profit, which is particularly impressive in light of the escalating economic crisis (more here).  The primary reason for such growth is attributed to strengthening of Google’s brand among advertisers and its growing (advertising) market share.  For example, AdSense alone generated revenue of US $1.68 billion.  Very impressive!

Ironically, Veronica was reading the very first (and I don’t know if the only) article Brin and Page have published about Google.  It is available here and you are welcome to read it.

Why is it ironic you ask?  Well, if you go to Appendix A in the article, they write:

“advertising funded search engines will be inherently biased towards the advertisers and away from the needs of the consumers”

and they continue:

“Since it is very difficult even for experts to evaluate search engines, search engine bias is particularly insidious. A good example was OpenText, which was reported to be selling companies the right to be listed at the top of the search results for particular queries [Marchiori 97]. This type of bias is much more insidious than advertising, because it is not clear who “deserves” to be there, and who is willing to pay money to be listed. This business model resulted in an uproar, and OpenText has ceased to be a viable search engine. But less blatant bias are likely to be tolerated by the market. For example, a search engine could add a small factor to search results from “friendly” companies, and subtract a factor from results from competitors. This type of bias is very difficult to detect but could still have a significant effect on the market. Furthermore, advertising income often provides an incentive to provide poor quality search results. For example, we noticed a major search engine would not return a large airline’s homepage when the airline’s name was given as a query. It so happened that the airline had placed an expensive ad, linked to the query that was its name. A better search engine would not have required this ad, and possibly resulted in the loss of the revenue from the airline to the search engine. In general, it could be argued from the consumer point of view that the better the search engine is, the fewer advertisements will be needed for the consumer to find what they want. This of course erodes the advertising supported business model of the existing search engines. However, there will always be money from advertisers who want a customer to switch products, or have something that is genuinely new. But we believe the issue of advertising causes enough mixed incentives that it is crucial to have a competitive search engine that is transparent and in the academic realm.”

So yes… very critical take on online advertising in 1998 (including siting Bagdikian!) and $5.54 billion revenue primarily from online advertising in 2008.  Ironic, isn’t it?  I am of course not suggesting that Google is taking money for promotion of companies to higher search results, but at the same time, I don’t think we can deny Google’s proactive role in shaping our current advertisement industry and commercialization of the internet.  In fact, this is a great example of the Structuration Theory, but that is for a different post.

P.S. Today in Google if you are based in the US and you search for cellular phone, the first thing you get are Google.news results, followed by a Wikipedia article, followed by T-Mobile website…

Do social networks have a business model?

As the economic sky is getting covered with clouds of financial crisis and deepening recession, people start questioning the web 2.0 oriented business models, or more so the lack of thereof.

Recently I read about Mark Zuckerberg making statements suggesting that growth is the primary goal of Facebook at this point, and not revenue.  They do a pretty good job with the former (even though it is becoming harder), but at the end of the day it is the latter that matters.  Basically what he said in an interview to (German newspaper/site) NAZ.com is that Facebook has yet developed a business model, which is really mind boiling provided the amount of investments the receive.

In this light, I started thinking about the different approaches the US and the Russian social networking enterprises are taking.  And I wonder if at some point, Facebook and others will try to adopt some of the methods they Russian counterparts are using.  I think that Russian enterprises are not as “spoiled” in terms of investments and in terms of their investors’ patience.  Yet, there are social networking websites in Runet and they are rather blunt and creative in the way they are making money.  I have some degree of familiarity with two of them – Vkontakte.ru and Odnoklasniki.ru.

“Vkontakte“, which is a blunt rip off Facebook, is rather mysterious.  It does not have any ads (but does have a lot of spam) and it is not clear at all how it is funded (to a degree that some conspiracy theories suggest that it is a government project aimed at spying on Russian citizens).  Yet, it seems to be the most popular social networking website in Russia these days.  Some suggest that it has cloned FB’s business model, but I could not see the exact parallel.  They do allow you to buy virtual gifts in Vkontakte, but I have not seen a single add.  The last fact actually attracted some English-speaking people who miss the old FB or cannot access it from work.

I find “Odnoklasniki” more interesting in the sense of monetizing on social sentiments of their users, even though it is not as popular as Vkontakte (and it probably appeals to a different demographic, but that is for another post).  To start with, they have a pretty horrible interface design.  FB (and as a derivation, Vkontakte) have done a significantly better job in making a useful and interesting website (or should I say “platform”?).  Odnoklasniki is very simple and not very intuitive, but apparently it works.  In addition to (supposedly contextualized) ads, Odnoklasniki is experimenting with making money off the very basic human needs that bring people to use their website in the first place.

For example, Odnoklasniki has a very different view of privacy and unlike FB, it always shows you who and when viewed your profile.  Yet, they understand that as much as we want to know who is looking at us, we don’t want others to know that we are looking at them.  So, if you would like to remain invisible as you visit other people’s profiles, they can offer you this service for just a little bit over US $4 a month.  Apparently it works!  You know that because even when an “invisible” user visits your profile, you still see that there was a visit, you just don’t know from whom.

Another example is the picture rating system they use on the website.  Odnoklasniki allows its users to rate other users’ pictures on a 1-5 scale.  This is of course another socially sensitive issue.  On the one hand, you would probably like to complement people you like by giving them the highest rating possible.  On the other hand, it is a social networking website, so it has a little bit of a beauty contest component to it.  In other words, you want your pictures to have high ratings, as this probably signifies popularity.

Odnoklasniki are using (or shall i say exploiting) both sentiments.  On the one hand, for a little bit over US $4 a month, you can get an ability to give out a 5+ mark to other people’s pictures (5+ vs. 5 is like A+ vs. A).  On the other hand, you can insure one picture at a time in your collection from getting low ratings.  When you apply this service, the system will automatically add 1 point to any rating below 5.  Surprisingly, this service is free, but it is “sponsored” by an insurance agency, which proudly advertises itself when you are trying to insure your pictures and I assume once you apply this insurance.

These are just a couple of examples and some of the serveices are rather new.  I don’t know how viable the business model of Odnoklasniki is, but I do find it fascinating that they are trying to monetize on the social aspects of these networks, which is why people people are using these domains in the first place.  What do you think?  Can/should FB think about other aspects of the platform they’ve developed?  Should they view it not just as an advertising platform?  Can/should they try making money out of it?

MLM on Facebook

Recently, I saw a number of my Facebook contacts (actually quite a large number, something like 18) becoming “friends” with Alberto Floro Da Silva.  This triggered me to share this story and a few thoughts on our online habits.

A while ago I got a Facebook friend request from someone named Alberto Floro Da Silva.  Although I think my Facebook profile is not the most restricted in terms of privacy, I do not usually add total stranger to my friends list.  In most cases I have met most of my contacts or have mutual acquaintances who think we should maintain a linkage.  I would almost never add a complete stranger to my list.

Alberto and I had indeed a number of people as mutual Facebook friends.  However the age difference between him and those acquaintances was quite significant and I could not identify a clear pattern of relationship (geographical, event, etc.).  So, I emailed Alberto asking whether or not we actually know each other and got a reply from his saying that no, but he usually adds all the friends of his friends and would appreciate a link to me as well. For a few moments, I was puzzled, and then decided to accept Alberto’s request.  My decision was based on some observations I had about various patterns of using platforms such as Facebook among people of different ages and different cultural backgrounds.  “What can be wrong,” I thought to myself, “that’s the way he is using Facebook and there will be no harm or cost in adding him.”

Apparently I was wrong.

A few days after adding Alberto, I got the following message from Alberto:

DIMA EPSTEIN, it could please analyze this presentation of technology for http://alfloro.ffivision.com environment . it informs its research please. grateful alberto – Brazil

When you follow the link it shows you a short video about global warming and a call to join a business that “will change your life and help fighting the global warming” (more or less in these words).  No additional information is available on the website, only a form to join.  To me it looked fishy.  I emailed Alberto asking for explanations, but never heard back.  A few days later, I removed him from my friends list.

Now, after seeing over a dozen of my friends befriending Alberto I went on and researched a little bit more about the mysterious link.  Apparently, this is a company in Florida that distributes some sort of engine performance enhancing add-on, which uses multi-level marketing (MLM) as its marketing vehicle.  I didn’t spend too much time on the investigation, but the brief one I did, draws a picture of a pretty sketchy enterprise.  Most of the search results for FFI (the commonly known name for the company) bring up web pages of distributors such as that of Alberto.  Interestingly enough, the only link to the full name of the company on the first page of Google results is a sponsored linked to some kid of MLM clearing house.

If you search for the full name (”Fuel Freedom International”), there is a rather badly written Wikipedia article about it with sort of an editorial war going on between people who are pushing the product and everybody else.  There is of course the company’s website, which has more marketing texts, but little substance.  And if you really have time, there are dozens of online debates (such as this one and this one) and YouTube videos, debating whether or not this is scam.

The more I looked into it, the more fascinated I was by the phenomenon of how multi-level marketing is (ab)using the online tools.  I could, in fact, write an entire post looking into the debates about the authenticity of this product (from my short review, I remain skeptical about it), but I would to limit myself to an observation of to how Alberto is exploiting our reputation and our “befriending” habits to promote his business, whether it is legitimate or not, on networking sites (yes, he has profiles in more than one).

My lesson from this story is that even though I treat Facebook more as a self-updating address book, I should be more careful with how I use it.  In the short period of time Alberto was my Facebook “friend” this fact might have encourage other people on my list to befriend him.  But not only that, having my name on his “friends list” probably gave more credibility to his message (i.e. product and marketing strategy he is using) in the eyes of people who trust me (just as having people I know on his list, gave him more credibility in my eyes).

This later point is what I think we, online users, should be really thoughtful about – having a publicly observable link to a person, shares some of our credibility with him/her.  Bringing our offline perceptions and habbits to the online environment, we tend to trust people referred by people we know.  However, the weight of relationship or the referral in online environment appears to be significantly less than that in the offline life.  The combination of the weight we give to referral whether it is online or offline, and the lightness with which we provide those referrals online (voluntarily or not), create quite a dangerous exposure that can, in fact, cost someone money, or other resources.  I find it really interesting, and I am sure, somebody out there is already studying it :)

To wrap it up, please be thoughtful when you befriend people online and if you had asimilar story, please share it in the comments.

How do you say “Google” in Chinese?

There is a really vibrant discussion going on nowdays about the potential colaboration between Google and Yahoo.  Some claim that the venture can end up with Google gaining control of 90% of the advertising market in North America.  To a large degree Google’s leading position in online advertizing market is based on its leadership in the world of search, where Google is a definite global leader.

However, it appears that one place where Google isn’t winning the search (and online advertisement) battle(s) is in one the fastest growing economies today – China.  The local rival’s name is Baidu and according to this article it holds 60% of the Chinese search market, compared to Google’s 25%.  The article goes on to discussion of potential reasons for the gap, attributing it primarily to Baidu’s business practices and better cultural fit to the Chinese business culture.

I think it is a really interesting case of how culture interacts with technology and business.  I also wonder to what extent internet policies employed by the Chinese government (primarily filtering of the content) are actually helping the competitive advantage of Baidu?

Politics, popularity, and personalization

I already said that i love DC. Another reason to love it, are the many opportunities offered by this city.

A week ago or so, i participated in a debate/discussion about “new” media and political campaigns hosted by Google and National Journal and titled “The First 21-st Century Campaign“. Being hosted by Google, the event attracted some very interesting people and was held in a format of discussion rather than a traditional (academic) presentation-style lectures. Unfortunately, i wasn’t smart enough to bring a camera even though the event was absolutely open and the organizers even encouraged people capturing it in any possible way. Another unfortunate thing was that i couldn’t stay for the entire event and in fact stayed only for the first panel (out of three).

Fortunately, though, the first panel was very thought provoking.  Nothing super controversial or innovative has been said, but it was great to hear thet the industry people are concerned with the same issues that academics are.  Actually, i think the panel would benefit from a visionary academic person who could bring the entire discussion under a comprehensive (dare I say, macro) umbrella.

The first panel, moderated by Judy Woodruff of PBS, hosted Mark Halperin (”Time” – as a representative of the old media), Katherine Ham (Townhall.com, even though she announced she has a new job now), James Kotecki (Politico – he and Katherine were the representatives of “new” media), Phil Singer (Clinton campaign), and Kevin Madden (Mitt Romney campaign _ he and Singer were the political practitioners on the panel).

Most of the discussion focused on the tensions between the “old” and the “new” media.  In my view it started pretty awkward with Kotecki’s remark that he doesn’t see himself as a journalist and was (i got a sense that he was implying that he still is) making his video just to feel popular.  It was particularly stonning because one of the main points of the discussion was credibility of the “new” media as a journalistic practice.  Kotecki himself was making claims for being credible, which (together with some of the other comments, such as those made by Singer) got me thinking whether or not the 2.0 culture equates credibility to popularity.  If so, i find that idea pretty disturbing.  One the one hand, i can buy into the idea of wisdom of crowds (that’s the term i think), but, on the other hand, i cannot buy into dismissal of expertise that seems to be attached to it (at least in the current discussion).

Another interesting point came from the campaign people and it was primarily about the use they make of information.  For Madden, the “new” media were all about speed and precision of the media message.  Even though they never got talking explicitly about how they use microtargeting (even though i raised that questions), it was constantly implied in the examples they provided.  Building of the idea of popularity, it was now also the ability of precise targeting of the message.  I would describe that as an ability of talking about “popularities” rather than a single popularity.  To a a degree that appeared as a distinction between the “old” and the “new” media as well.  I found the latter rather interesting – the basic concepts mass (popularity) did not change, but progressed and evolved (into popularities), but the substance became implicitly even less important.  In other words, there is no substantive change in the policy or in the ideas, but the package is more personalized.

As the discussion evolved, it became more interesting and sophisticated.  To one degree or another, the panelists touched upon many relevant points.  This highlight was, I think, when Singer or Halperin, noticed that the mere division between the “old” and the “new” was artificial.  Ham also was very sharp when talking about the relations between the “old” and the “new” media (even though she was clearly advocating for the legitimacy of the latter).  I found this particularly interesting, because usually you hear a very deterministically-dichotomous discourse where the “new” is presented as separate and mostly superior to the “old”.  Even though Judy Woodruff finished the panel with some techno-utopian remarks (mostly as a tribute to the host), it did spoil the overall flavor of complexity.

On the practical level i came out of this symposium with two titles for potential books.  Not that i plan on writing those this summer, but… If i were to write a book with critical analysis of the modern Western society, particularly focusing on the youth, i would title it “The popularity generation.”  Maybe there is such a book already and maybe it will become the label of generation Y with all the reality shows and a myriad of televised competitions (for popularity of course :).  The other book would be about this campaign, or about contemporary politics in a broader sense.  That one i would title “The politics of personalization.”

Finally, kind of getting back to one of my first points, i think the symposium would really benefit from an academic input.  Maybe even more broadly, i think this industry could learn as much from the academia as the academia is learning from it.  At the end of the day, all the points raised by the panelists are being discussed and studied, and bringing those inputs would enrich the discussion and probably take it into the next level.

You can read a short post following the event on Google’s blog or you can actually watch the entire thing on C-Span (and enjoy me asking some questions :).

Limited “neweness” or lack of tact?

Thanks to Veronica, who mentioned this to me, i read the following debate (HE) about whether or not it would be appropriate to announce a funeral via FaceBook(FB). The primary argument is around whether or not it is tasteless or not to invite people to a funeral using “events” on FB. On its face it is a ridiculous question and my guts reaction was “hell no!”. But as it also go me thinking…

When somebody dies in Israel, the closest relatives and friends are usually receive a phone call, and more distant acquaintances and colleagues are getting the message through the grapevine or through institutional channels such as an organizational memo. Recently, i hear more people using SMS to announce the tragedy to wider publics. To a great extent, these practices are dictated by the Jewish tradition, which requires the body to be buried as soon as possible. In many cases this means that the funeral is taking place on the same day of the death or the following one, but rarely later than that.

One particularly interesting practice of announcing a funeral is using the media. Frequently people would publish an announcement in a newspaper about a death of a person, the time of the funeral, and the location of shiva. Another common practice is to place notification with the same information in public places, particularly in the area where the person lived.

These latter practices prompted me thinking about the FB case from a different angle. What is the principle difference between placing an ad in a newspaper and placing an announcement on FB? The popular claim is that alternative media and social networking platforms replace mainstream media outlets, particularly for the younger generation. If people consume political, economic, cultural, and other news through personalized feeds, why would it be wrong to announce a personal tragedy using the same medium? If we are to talk about the “new” media, why (or where) is this newness limited to the not serious stuff only? In a way, this may be even more humane compared to a newspaper ad, because you know that the message goes only to the people who cared to one degree or another about the passed away person.

What do you think?

Facebook numbers drop?

Recently there is a buzz in the blogosphere about the drop in FB numbers. It looks like people got tired of constant stalking of their own friends or just moved on to other platforms. It may be just a seasonal fluctuation, but it also may be that the growing number of social networks websites crossed a point where people are not coping with managing so many instances of their social connections and are backing off. If that is the case, it looks like the next big service will be a system that will allow a single control panel for all the major social networking website. For example Eszter just blogged about FriendFeed which seems like a move in this direction. What do you think?

To shift or not to shift?

It seems to me that there is a growing trend of shifting everything online. By “everything” here I mean our personal computing. Why would you spend scarce gigabytes on your hard drive if you can keep all your email on gmail, all your documents in google docs, all your pictures in picasa, etc.? Having stuff online is not just practical in terms of saving space, but also in terms of access – your online storage can be accessed from anywhere, which is particularly convenient if you happen to use different computers at work, home, school, etc. At the same time, how much trust should we put in the third party company/s in order to keep all our information there (and i am not talking about privacy this time).

As Tarleton mentioned in his last lecture, we tend to pick on the big ones. So, it would not be surprising that I will refer here to Google, which I tend to both appreciate and examine with a critical eye. Usually, my concern with Google is about privacy and about the concentration of search services, however this time it is actually about reliability (and a little bit on consumer service :). Criticizing my skepticism, Leonichka once mentioned that he trusts Google until it does something to prove this wrong. Frankly, it was an important comment in my critical appreciation my thinking about Google. The only remaining question is what happens when this proving-wrong event actually takes place?

Last year I blogged about my not-so-pleasant encounter with gmail, when i was locked out of the email for about a week. Today I read a post by Danah Boyd about her friend’s encounter with Google. If you don’t have time/patience to read the original post, the story is simple. The guy has practically his entire life on Google (gmail, orkut, etc. – they do make great products!), but unfortunately, his account got hijacked (fishing) and soon deleted for spam abuse… (dramatic pause)… oops… (another dramatic pause)… Your work, your hobbies, your contacts, your communication – all is gone…

You do need to read more into Danah’s post to understand that it is not simple talking to Google and getting not-so-standard services from them. Eventually her friend got his data back, which raised another set of questions about “deleting” stuff from Google, but that is for another post.

I am left disturbed and puzzled after reading about this incident. On the one hand, here is a real scenario of potential lost or theft of your information stored online. That does not mean that the same thing cannot happen with the locally stored data. Maybe that is even more common. I, for example, lost some data recently while reinstalling my laptop, but it does not change the fact that the third party online solutions are not immune. On the other hand, it is important to mention the backup services that the online repositories and services provide. I think it is safe to assume that industrial backup processes are more professional compared to a self-performed backup at home. In turn, this aspect raises again questions of privacy and of what happens when you actually want to delete the data. Not to mention of course the horrible costumer service you have to face in order to get your data back (I hope one day they will understand that opening a new account is not always the ultimate solution).

So, here is a question – to shift or not to shift? Or to maintain both environments? And when it is enough evidence to start questioning company’s integrity? When it happens to 1000 random people, 10 people you know, or when it happens to you?

Breaking down Google

Well, not really.  Just breaking down Google’s traffic.  Here is an interesting post from HitWise analyzing the breakdown of activity, originating in the US, at different Google’s services.  It is pretty amazing how the use of Google’s services is constantly growing…

Correcting the mistakes of Beacon

It looks like Facebook (FB) is looking for ways of resolving the Beacon issue and this time they decided to use their users. Recently a call for participation in the survey appeared under a nice title “What do you think”?

In fact FB doesn’t really care what you think, but it is interested in knowing more about your online shopping behavior. Here is what they got there:

1. Have you bought anything online in the past three months?
2. In total, how much have you spent online in the last three months?
3. In total, how much do you intend to spend online in the next three months?
4. Thinking about retailers you are loyal to, how important are each of the following in making you a loyal shopper to those retailers? (followed by 14 items that you can rate on a 5 point scale).
5. Have you done any of these activities while shopping at an ONLINE store in the past three months? (that’s and interesting one, because i think it is clearly aimed at looking for ways of utilizing social network website for advertising). Here are the categories for answer:
   • Sat at the computer with friend(s)
   • Talked to a friend via cell phone
   • Sent a text message to a friend via cell phone/device
   • Received a text message via cell phone/device
   • IMed a friend
   • Emailed a message to a friend
   • Emailed a link to the store to a friend
   • Took a photo and emailed it to a friend
   • Emailed a product photo to a friend
   • Emailed a cool/funny app to a friend
   • Used a general search engine
   • Shared a link with a friend on Facebook
   • None of these
   • I did not shop in an online store in the past three months
6. In the past three months, approximately how many of your purchases for each type of product were made ONLINE? (followed by 18 items that you can rate on a 5 point scale).
7. In the NEXT three months, approximately how much money will you spend on each of the following types of products? (followed by 18 items + an open field; for each one you can choose a range of sums you are willing to spend).

Now, it is pretty clear that they are trying to think about new ways of implementing and marketing Beacon. I find it actually a clever and innovative way to start thinking about online marketing (not the use of survey, but the ideas behind this specific one). But there is still somewhat weird about it, especially if you take into account that they are now trying to repair the damaged relations with the users. If you (FB) are asking me to share my opinions in clear attempt to improve your business model (= make more money on me), don’t i deserve some compensation? The least you could do is showing me the results. Otherwise, why would I fill it out?

I view it as yet another expression of arrogance and greediness. On the one hand, FB hold their users as careless enough not to think why they are presented with this survey and just answer it because it is as cool to answer surveys as it is to send a virtual beer. On the other hand, the intention here is to actually feel the $15 billion evaluation with content, but why put money into it if we can just (ab)use our users? (at this point it becomes a cyclical argument :)

Or is there something else? Something that i am missing? Or a cultural gap that i am not managing to bridge?

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