Virtual World Revolt: Avatars Untether

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Joey Seiler has become the unofficial avatar union representative in real life by asking the question: “Do Avatars Need Virtual Worlds?

It’s a valid question and it certainly fits in with my thesis that the world (of mass adoption) is not entirely ready yet for full immersion.

I agree with  Sean Ryan, CEO of Meez, when he says: “We don’t believe most people are going to spend their entire time in a world…they will spend time in (sic) the Internet, and some of that will be (in) a world, but not all of it

Does Attention Need More Attention?

I’ve written a fair bit about the Attention Economy and it is always good to see it “getting attention”. It is an important topic, and one that will have a major impact on all of our lives.

And so it is heartening to see Alex Iskold tackle the topic on Read/WriteWeb, but other than giving a good overview he does not take the conversation forward in any meaningful way.

I’m not sure I agree with his prognosis that “to enable individuals to control the information which is currently locked in silos all over the web is a daunting and somewhat unapproachable task“.  Look at what Skype has done to the telco industry — putting walls in front of entrepreneurs is a bad thing (for walls).

I’m also not sure I agree that the Attention Economy needs a strong organization to force it along. Sure, to change the status quo we need a catalyst, but my gut says it’s more likely to be via an attention-czar-induced-uprising by the people.

All a twitter about venture capital

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Funny how the wheel turns, isn’t it. Last year Evan Williams bought VCs Charles River Ventures out from his business Odeo, and set up Obvious.

I interviewed Ev late last year. One of his comments to my question of why Obvious was that he wanted to create an environment where wacky ideas could be tried without having to justify or explain them to a board, or investors, or anyone else.

I am sure that really gels with a lot of folks out there – in some respects Facebook has provided the ultimate such environment — it’s not a big leap to create a quick ‘n dirty Facebook app, throw it up against the F8 wall and see if it sticks, if it does keep tweaking, if not, repurpose. And it’s great to do so without having to write business plans, proposals or seek approval from on high to do so. But I digress…

In our interview, Ev went on to say:

Some of them won’t go anywhere. Once in a while, the wacky idea will be just what people didn’t know they were missing in their lives.

And so Twitter was born – a bit wacky, but boy the digerati latched onto it. I’ve certainly written enough, and so have others, about Twitter so I won’t go into it in any more detail, but what’s interesting is now that Twitter has gained traction it has matured to the point where it has attracted on board funding from the very firm Ev showed the door to last year – Charles River Ventures.

Twitter has taken in a round from CRV, Union Square Ventures and a number of angels, notably Marc Andreessen and Ron Conway. Fred Wilson from Union Square talks abut the investment here. This part of his post is what interests me most:

Twittering is an emerging new form of communication on the Internet that changes the expectations associated with other forms of communication and yet it’s fundamentally different than blogging. Twitter provides a platform for banter that blogging doesn’t and it’s available in so many places via IM, mobile text messaging, or the Web that it induces a different sort of behavior. Twitter encourages people to adapt and invent behavior to suit their needs.

This emergent behavior is particularly intriguing. Some of the most interesting platforms on the web have been extended and enhanced by users and now support all kinds of activities and behaviors that the creators of the service never intended. Twitter makes its innovative network for short, asynchronous public communications available via an API for anyone to extend.

If you think about it, Twitter extends short messaging (SMS) style communications to the web and does it in an open way that anyone can build on top of it. I think we’ve only begun to see the kinds of things that can be built on top of a messaging system like this.

I totally agree with Fred and look forward to seeing and participating in some of those interesting things.

The blogosphere has been all a twitter about this financing. Some of the posts have intimated that the team at Twitter raised this round with no business plan or profits – here’s Paul Kedrosky’s take:

Seeing that Twitter closed a funding round, and spotting the associated incredulity about Evan’s company not having a business plan, reminded me of something: Whatever your feelings about Twitter, business plans are overrated, and profits perhaps even more so.

Why? Two reasons. First, because VCs are professional nit-pickers. Give them something to find fault with, and they’ll do it with abandon. I generally tell people to come to pitch meetings with less information rather than more. Sure, you’ll get pressed for more, but finesse it. Presenting a full and detailed plan is, nine times out of ten, a path to a “No” — or at least more time-consuming than having said less.

Profits are a different issue. Being profitable too soon gives investors, rightly or wrongly, an idea of what the margins are on the business, as opposed to what they could be in some perfect world. As a result, it takes a mighty force for them to not start wading in with discounted present value worksheets, and the like, thus hammering your valuation and generally making funding much more complicated (and equity consuming) than if you were wildly unprofitable.

What do investors prefer. Certainly in my experience a great business plan per se does not guarantee closing a funding round. VCs are all about risk minimisation and the kind of traction Twitter has been able to garner will have derisked the investment sufficiently for Twitter’s investors to consider it a punt worth taking. Bear in mind also that Ev has built a strong team around Twitter, not to mention huge brand awareness (amongst the digerati).

Andrew Parker justifies what may appear to some as a ‘cart before the horse’ funding round as such:

You can have the most killer business model in the world, more genius than AdSense, but if you have no traction, it will never matter.

But, if you have traction, it’s pretty easy to back into a business model. In fact, taking this path, you’re more likely to back into a business model that endemic to your web service instead of a business model that offensive or antagonistic to your users.

It’s less about frothiness and more about priorities.

Umair Haque picks up on this and eloquently argues that when the market is rapidly shifting it doesn’t work to apply out of date investment principles when placing your bets. His post is well worth a read and his conclusion is a good segueway to sign off on:

Spreadsheets aren’t strategy.

Rather, next-gen investors are better off understanding why and how value creation and value capture will shift over the next 2-5 years – and then invest in plays which can dominate those shifts.

Numbers are important – sure. But it’s understanding the deeper economic logic which really counts.

Of course, this is exactly what makes Twitter a great bet. Kudos to Brad, Fred, Ev, and the Twitter kru – I think something very cool will happen here.

How green is your second life

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Wagner James Au poses the question in the title of a blog post: Virtual Worlds as Eco Incubators.

He notes that Second Life was originally conceived as a model of the real world replete with a working ecosystem of flora and fauna. Hmmm, that explains why Accel Partners passed on them as an investment even though they’d essentially incubated Linden Labs for two years.

Besides the microcosm that has since been created in SL, the interesting trend to note is corporations like Cisco and IBM focusing on the eco footprint reduction benefits that come with having an increased presence in virtual worlds. Less travel = lower footprint.

Australia catches worldwide greentech wave

The Australian Prime Minister, John Howard, has announced a pending bill that will progress his $10bn water plan. It seems it’s not only the country’s most senior politician who has embraced environmentalism, but there is greentech innovation taking place all over the country.

In addition, the handful of early stage venture capitalists operating in Australia have also noticed an uptake in this area. Ben Woodhead of The Australian has covered this trend here and here.

It’s not only Australians who are jumping on the greentech wave – uber VC, John Doerr, gave a moving talk at TED earlier in the year calling on investors, entrepreneurs and those with influence to get involved in the space. As John said, hopefully we can make a difference and its not too little, too late.

The Internet Giveth, Facebook Taketh

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I’ve received a bunch of comments recently from folks who are getting more email traffic on Facebook than off it. While you can send email from literally anywhere these days to any email account…people enjoy doing it on FB.

The same can be said for a number of web apps – you can do just about anything in the Web 2.0 arena on a standalone website or you can grab the apps on FB and do it there. The growth stats, courtesy of Appaholic, of many such apps on FB (versus what insiders are garnering) about growth off FB says one thing – seize the moment and throw your app over the fence into the FB garden of Eden.

The buzz around Facebook continues to build and as Richard McManus points out many startups have changed their business plans to focus on utilizing the Facebook platform to spread their applications among the social network’s 30 million users.

So my thesis is that at the moment FB is like a giant vortex – sucking in developers building apps, FB users playing on apps on the platform rather than out on the open Internet….and hence the title of this post: The Internet Giveth, Facebook Taketh.

Supporting this thesis, FB has acquired Parakey, a Web OS (operating system) company that enables its users to store and share data on the web. This acquisition will give FB users one less reason to wander beyond FB’s walls.

I am cautioning entrepreneurs that right now we are in a many to one scenario with FB. Many apps for one platform. It’s only a matter of time and there will be a plethora of similar platforms that are either as open or, preferably, more open than FB. Make sure you are able to transition to a many to many strategy and do not get locked into building apps only for Facebook.

The takeaway: seize the FB moment and grow your user base, but keep an eye on going many to many.

Virtual worlds, meet social media

In this post I’m going to explore what social media is, in the context of virtual worlds.

The Wikipedia definition of Social Media is:

Social media describes the online technologies and practices that people use to share opinions, insights, experiences, and perspectives with each other.

A few prominent examples of social media applications are Wikipedia (reference), MySpace (social networking), YouTube (video sharing), Second Life (virtual reality), Digg (news sharing), Flickr (photo sharing) and Miniclip (game sharing). These sites typically use technologies such as blogs, message boards, podcasts, wikis, and vlogs to allow users to interact.

Dion Hinchcliffe adds to this:

The key here is that people are the ones that use and control these tools and platforms instead of organizations and large institutions.  Further, I would add to this that social media platforms tend to work best in networked environments, particularly on the Web.

Why is the networked aspect so important?  Primarily because it’s a powerful democratizing force due to its pervasive, low cost nature; anyone can get in the conversation with only a small investment of their personal time and access to a network.  And since communication is essentially free over computer networks today, combining an architecture of participation powered by network effects makes social media platforms almost certainly the most powerful form of media yet created.

These days anyone posting anything on a simple blog lets them automatically reach the 1.1 billion users on the Web today.  And with syndication, social media content is picked up and spread throughout Internet via feed engines and the entire syndication ecosystem and can be found by anyone looking for information via Technorati, Google Blog Search, TechMeme or dozens of other innovative discovery mechanisms. At long last, hundreds of years after the invention of the printing press, anyone can truly reach a global audience by spending a couple of minutes of their time creating a blog on one of the hundreds of free blog sites.

But blogs are primarily text and there are many other forms of social media and so it’s worth looking at podcasting and video, two important types of social media that are growing rapidly with the spread of high quality, fast Internet connections.  Fortunately or unfortunately, unlike blogs, podcasts or video sharing do not have their own syndication system and for the most part they just ride inside the existing RSS/ATOM feed systems.

The video side of social media is a bit easier, with Hitwise and YouTube providing enough hard data on the most recent version of the YouTube Fact Sheet to get a general though unscientific impression of what’s happening there.  According to this, YouTube has 60% of all online video viewers with up to 70 million viewers in an evening and over 65,000 videos uploaded every day, making it both the #1 online video site and #1 social video sharing site online.  This implies that most video consumption on the Web is already based on social media, and that there are over 115 million online viewers of video overall.  At least for video, social media is not an edge case and is they dominant model overall.

He goes on to list 5 criteria for defining Social Media – the ground rules as it were:

1. Communication in the form of conversation, not monologue.  This implies that social media must facilitate two-way discussion, discourse, and debate with little or no moderation or censorship.  In other words, the increasingly ubiquitous comments section of your local blog or media sharing site is NOT optional and must be open to everyone.

2. Participants in social media are people, not organizations.  Third-person voice is discouraged and the source of ideas and participation is clearly identified and associated with the individuals that contributed them.  Anonymity is also discouraged but permissible in some very limited situations.

3. Honesty and transparency are core values.  Spin and attempting to control, manipulate, or even spam the conversation are thoroughly discouraged.  Social media is an often painfully candid forum and traditional organizations — which aren’t part of the conversation other than through their people — will often have a hard time adjusting to this.

4. It’s all about pull, not push.  Like John Hagel and John Seely Brown observed in the McKinsey Quarterly a year ago or so, push-based systems, of which one-way marketing and advertising and command-and-control management are typical examples are nowhere near as efficient as pull systems.  Pull systems let people bring to them the content and relationships that they want, instead of having it forced upon them by an external entity.  Far from being a management theory, much of what we see in Web 2.0 shows the power of pull-based systems with extremely large audiences.  As you shape a social media community, understanding how to make embrace pull instead of push is one of the core techniques.  In social media, people are in control of their conversations, not the pushers.

5. Distribution instead of centralization.  One often overlooked aspect of social media is the fact that the interlocutors are so many and varied.  Gone are the biases that inevitably creep into information when only a few organizations control the creation and distribution of information.  Social media is highly distributed and made up of tens of millions of voices making it far more textured, rich, and heterogeneous than old media could ever be (or want to be).  Encouraging conversations on the vast edges of our networks, rather than in the middle, is what this point is all about.

What are the key characteristics of Social Media?

According to the folk at Spannerworks, Social Media share the following characteristics –

•    Participation: encourages contributions and feedback from everyone who is interested. It blurs the line between the concept of media and audience.

•    Openness: open to feedback and participation. Encourage voting, feedback, comments and sharing of information. There are rarely any barriers to accessing and making use of content.

•    Conversation: traditional media is broadcast, content is transmitted or distributed to audience. Social media is better seen as conversational, two-way.

•    Community: allows communities to form quickly and communicate effectively around common interests.

•    Connectedness: via links and combining different kinds of media in one place.

Another good way to think about social media is that all of this is actually just about being human beings. Sharing ideas, cooperating and collaborating to create art, thinking and commerce, vigorous debate and discourse, finding people who might be good friends, allies and lovers – it’s what our species has built several civilisations on. That’s why it is spreading so quickly, not because it’s great shiny, whizzy new technology, but because it lets us be ourselves, only more so…

And it is in the ‘more so’ that the power of this revolution lies. People can find information, inspiration, like-minded people, communities and collaborators faster than ever before.

This is reiterated by Philip Rosedale, CEO of Linden Labs, who says that when they started building Second Life they thought they were tackling a physics problem. However, they soon realised its not about the technology, it’s really about the people.

Colin Parris, VP, Digital Convergence at IBM Research sees virtual worlds as providing a visual immersive environment and a social element. For him, it’s also all about the human side. He sees a need to improve the user experience with:

•    Easy to use interfaces
•    Improved graphics
•    Faster response
•    Better tools
•    More robust systems.

Social virtual worlds are essentially providing a new means of production and distribution – much like with words (blogs and wikis), audio (podcasts and mp3) and video (videocasts and mpeg4) – we need to give almost anyone the ability to produce and distribute (RSS, search engines) content.

Virtual worlds should not be sealed environments. It should be possible to click through to a website, for example. Or stream video from immersive space into another.

How does social media work – a defining characteristic is the blurring of definitions, rapid innovation, reinvention and mash-ups.

Mash-ups are a core component for inclusion in the stack – combining one or more pieces of content or software or websites …they are possible because of the openness of social media …developers expect people to play with their services or content and reinvent them.

Note that …the number of mash-ups can often be an indicator of popularity.

The same can be said with regard to Facebook’s F8 Platform – the number of apps and users per app is growing exponentially.

The key features of blogs, not blogging itself, can be applied into the land of virtual worlds:

•    Authorial voice: they have a certain style (conversational and personal). They are usually the work of an identified author or group of authors.

•    Topic: they tend to define what it is they are about – from specific to more general topics.

•    Links and trackbacks: the services people use to write blogs make it very easy for them to insert links to other websites, usually as a reference to an article or blog post or to provide further information about the subject they are writing about.

•    Comments: each blog has a comments section, which acts as a message board for that article.

•    Subscription: blogs can be subscribed to, usually via RSS.

•    Creation: blogs can be created quickly and easily.

Wikis are also instructive – wikis are websites that allow people to contribute or edit content on them. They are great for collaborative working and can be as private or as open as the people who create them want to be.

In an integral sense immersive spaces are 3Dwikis.

Podcasts have a key feature that has made them a run away social media success – subscription. It allows a content creator to build audiences, communities around their shows.

In a similar vein, anyone should be able to subscribe to an immersive space (provided it is opened to subscription by its owner) and receive alerts when certain activities take place in them. For example, a user may want to go into a nightclub space once it receives critical mass so that they can maximise their networking experience in that space.

Social networks work – people joining a social network generally build a profile and are then encouraged to build a network by connecting to ‘friends’ or ‘contacts’ in the network or by inviting real-world contacts and friends to join the social network.

These communities retain the interest of their members by being useful to them and providing services that are entertaining or help them expand their networks. MySpace allows members to create vivid, chaotic home pages (they have been likened to the walls of a teenage bedroom) that they can upload images, videos and music to.

MySpace has built a lot of its popularity around its music services. There are said to be over 3 million bands and musicians registered in it, trying to attract a fan base from the 107 million registered members.

Note that MySpace members are driven to have bigger networks and be more popular – they’re rewarded with increased social status the more friends they have. MySpace popularity was initially driven by its ease of use, providing templates for users to very quickly set up cool home pages.

Virtual worlds need a low barrier to enjoying rather than to creating. While creation is a precursor to enjoyment, creation simply for the sake of creation will not drive usage.

Content communities – they look a bit like social networks – you have to register, have a home page and can make connections with friends – but they are generally focused on sharing a particular type of content.

Flickr is based around sharing photography. Members upload their photos to the site and choose whether to make them public or just share them with family and friends in their network. Thousands of groups on Flickr have formed around areas of common interest.

Much of this common interest is derived from tagging photos by users, and other members – both ito interest area, but also in terms of popularity.

YouTube is the world’s largest video sharing service. Members can upload videos or make their own channels of favorite videos. The viral nature of YouTube videos is enhanced by a feature that makes it easy for people to cut and paste videos hosted on YouTube into their blogs.

As well as thousands of short videos from people’s own video cameras, webcams and camera phones there are many clips from TV shows and movies hosted on the service, while some people use the service to record video blogs.

As pointed out by Justin Bovington, the CEO of Rivers Run Red, expect a phenomenon known as “walking back through the mirror” to become prevalent. This entails content, such as videocasts, coming out of immersive spaces and into the real world.

Digg is a news and content community. Members submit links to news stories and websites they think will be of interest and they are voted on by other members. Once a story has garnered about 40 votes it will be moved to the front page where it will receive wider attention from members and visitors to the site.

Many of these products have inbuilt metrics that show how sticky they are – how long people are staying on the platform and how immersed they are. Such metric measurement tools are core to effectively managing a virtual world platform – one cannot manage what one cannot measure.

From MTV’s point of view the audience is the content. They are melding 3D worlds with programming. Their audiences watch tv and live tv through an emotionally driven multi-layered social experience that aims to be incredibly sticky. They call this 4D TV, in which they see 1+1 = 1000. Their latest virtual world product is growing at 730% annualised, with 600,000 users in its first 6 months of operation. From a brand perspective they are focused on developing 4D branding – see, interact, talk and buy. Their aim is to superserve each demographic.

It’s worth noting that social media can take different angles depending on the demographic. In fact, MTV sees the youth focused mainly on playing games, then communicating (which is more important for older teens), then personalisation and finally video. Virtual worlds bring all these facets together.

Trilogy Technologies (the company includes former EA and NASCAR folk) is working with MTV and McKenna on Pimp my Ride. From their perspective, a totally open world is not optimal. They believe rules need to be infused into the world in order to maintain integrity of experience.  They take a consumer product point of view, which is not in line with the positive chaos of social media.

It is instructive to understand their perspective, namely that you cannot allow people to simply do anything, otherwise users have to wade through a lot of junk to get to the good stuff. They see sensibility in creating finished, polished product. Note that this is a key difference between Facebook, which delimits customisation, and MySpace, which allows open customisation, and has drawn criticism from, inter alia, Jimmy Wales as “hurting his eyes”.

But I note that Robert Scoble, who like many others has been spending time on Facebook, is calling for a more open social networking platform.

I believe in a balance between usefulness and polish and well-sifted chaos. We would rather be more open to users creating anything they want and having an excellent means for others to sift through the morass to find what they are looking for. Think of the early days of the net and AOL’s walled garden approach versus today’s open-ended, anything goes Internet combined with excellent tools (Google, RSS feeds) to find exactly what interests you.

The former Netscapers building Metaverse see themselves as platform makers. Their aim is to build a network of worlds on their platform. These can be standalone warcraft-like worlds or totally open user-generated worlds that either connect into the network or don’t – at the indie developers discretion.

There are two aspects to their interoperability approach that warrant mention. The first is that a user can take data or avatars or assets from one world to another. This meta-ability is a key focal point.

Secondly, a creative can use any of a number of solutions that are base on existing standards to create content, for example, Sketchup, Javascript, 3d Max. This should be a key part of a social virtual world’s content development plan. Anyone should be able to create content, be they a 5 year old doing simple drag and drops through to an experienced 3D artist creating assets in Maya.

Linden Labs sees Second Life as democratising collaborative creation and they believe we are headed for a 3D Internet participation platform that includes community, marketplace and user-generated content. To date they have open sourced their viewer. They have announced plans to open source parts of their back end as well.

The theme of extreme ease of use resonates for the creators of Habbo Hotel. They have 7 million monthly uniques from an average demographic aged 15. They have 220 adult moderators around the globe and 20 localised sites (19 countries have their own offices). They work closely with all the major record labels for band visits.

Similarly, There.com, which has a slightly older demographic (average age is 22), reviews all items before they are uploaded. They also screen out copyright violations and have a community team that runs regular events.

They have also found that supply and demand economics play out in virtual worlds too. A rare item has higher value. In some instances, a virtual asset can have more value than its real world counterpart. They have also found that users bring brands in all by themselves, even including brands in their screen names.

An interesting point made by John Donham, VP Production at Areae, is that virtual world creators need to focus on what people already know what to do. We need to allow and enable users to do things in ways they are already comfortable with. This resonates within the whole mantra within my thesis, namely to apply a social media filter to the area of virtual worlds.

While this is absolutely a key principle, it should also be borne in mind that people have an innate ability to evolve complicated practices. In fact, Reuben Steiger, CEO of Millions of US, has commented that we should never underestimate the power of people to do sophisticated things. He sees the opportunity being far larger than simple user-generated content. There is an opportunity for independents to create sophisticated content and functionality. Like many facets of social media, it’s about achieving balance.

Mark Wallace, a journalist at 3pointD, has spoken about MySpace being the most accessible form of self expression. He has suggested that if we broaden our view we will see 3D online spaces as being very sticky and sustainable as they provide a heightened power of expression that is exponentially greater than that provided by sites like MySpace.

Mark believes the MySpace generation will naturally gravitate towards 3D. In his view, it’s not the content creation per se, but the expression angle that will attract them.

Virtual worlds provide users with the ability to consume far denser information than that afforded by the current crop of web 2.0 sites.

In conclusion, or is it really just the end of the beginning, virtual worlds and social media need to become far more intertwined. This will not only benefit them, but also the people that use them, who are the folks that really count, not the technology.

Google sued by Australian Government: What gives?

Google and the Trading Post are being taken to court by the Australian Competition and Consumer Commission alleging misleading and deceptive conduct in relation to sponsored links that appeared on the Google website [courtesy of the ACCC’s press release].

In response, Google Australia’s Rob Shilkin has said these claims will be defended vigorously and that this is “an attack on all search engines and the Australian businesses, large and small, who use them to connect with customers throughout the world.”

The ACCC appears to be gunning for Google in a test case to create certainty for businesses in Australia. As Kim Tunbridge points out, up until now the legal position has been unclear:

The legal position in Australia regarding the use of competitors’ keywords as search terms in Google Adwords, is not clear. In my view, this will be dependent on whether Australian courts regard the Google search engine as a research service (in a similar way to the US courts) or a marketing service (in a similar way to the French courts).

If the ACCC’s approach to the Stickybeek and Trading Post dispute is anything to go by, it is likely that an Australian Court will regard the Google search engine as a marketing service and will find such conduct to be misleading and deceptive conduct, passing off, trademark infringement and/or copyright infringement.

This approach would be similarly supported in other Australian internet cases involving domain name registration of competitors’ trademarks and cyberstuffing (using competitors’ trademarks as metatags).

A recent case in Australia indicates that registering a competitor’s registered trading name (whether intentionally or unintentionally) as a domain name will cause confusion and diversion of business. The court also indicated that it may be misleading and deceptive conduct if a business:

  • falsely suggests a connection between its site and a known business or particular goods or services
  • buys the domain name of a rival company and redirects traffic from that site to its site; or
  • exploits reading or typing mistakes or abbreviations.

The general view is that cyberstuffing will also be misleading and will constitute trademark infringement and passing off. Cyberstuffing involves embedding metatags in a website in order to have the metatags picked up by search engines. If a company stuffs its website with metatags containing the names or trademarks of its competitors, it is likely that its website will always answer to search queries involving those other competitors’ names and trademarks.

Arguably, a key legal difference between registering keywords of competitors in Google Adwords, and registering domain names of competitors or cyberstuffing competitors’ keywords in a website is that in Google Adwords:

  • the registrant is not building a reputation or effectively “trading” under the search term; and
  • the registrant is nominating a search term on a search engine used by the public, not reproducing
    registered trademarks on a privately owned website.

We will have to see how an Australian court chooses to deal with this.

Duncan Riley makes the point that trade practices laws in Australia are stronger than similar laws in the US, so this isn’t a case in which Google will be assured a win.
While it will prove an interesting case to follow, I can’t help but feel in a country that is fast becoming an Internet follower rather than a leader, it would be more beneficial to heed the words of Peter Coroneos, the CEO of the Internet Industry Association:

“It’s very unfortunate that the ACCC has decided to pursue a litigious strategy against one participant, rather than consulting more broadly on an issue that affects the entire industry.”

Putting local back on the fence

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Techcrunch‘s Duncan Riley has noted that Backfence has recently closed its doors. The founders, who had taken $3m in venture funding almost two years ago, state that they “still believe strongly in the need for community information services”.

It’s debateable what led to the demise of Backfence and the number of variables is myriad – bad management, fallout with investors, not enough market traction, you name it there are many ways to snuff a start up, and many get snuffed, but here’s my take.

Sites like Backfence aren’t “community information services”, they are communities. They are about the people who visit them and the people that write for them.

As Bronwen Clune, the founder of the citizen journalism site, PerthNorg notes, “Citizen journalism is about people being able to communicate their message without having to rely on a third party.”

From the Backfence founders’ language methinks they lost their way and therefore lost their community.

Bronwen, whose site is showing a sustained upward trend, has taken a sage approach: “What I want PerthNorg to become has been very fluid and I’ve left that really up to the community to decide. I’m a big believer in listening to what your community wants and being flexible enough to implement that.”

And this ties into my thesis – the success of niche or localised sites is directly correlated to the flexibility that being niche or localised allows, the flexibility to listen and adapt to your community’s needs.

Let me use a sailing analogy – imagine you have a kite and your are trying to steer a sailing craft — if its the size of the aircraft carrier currently hanging out in Sydney Harbour you are going to have a tough job even making an iota of difference, but if you are on Loic Le Meur’s kiteboard…whoa, any slight shift is going to take you careening across San Francisco Bay.

Brad Feld, a self described dabbler in niche or vertical plays (Wallstrip – Wall Street vlog, Dogster (u guessed it), Shelfari (book enthusiasts), notes two of the challenges for those going vertical are generating organic traffic and keeping users coming back again and again.

Creativity through collaboration (see my post on 3eep and Kanga Cup), guerilla marketing (see my post on Zooomr on iPhone Day) and a deep understanding and empathy for your niche all help in overcoming these challenges.

I agree with Ross Dawson’s take that there is no right or wrong place to be on the media model curve, but that, dependent on where you are on it, there are certain characteristics that should be borne in mind…

“advertising or other revenue models and content creation mechanisms need to be aligned with the audience… going for niche audiences can attract stronger revenue relative to costs. A “multi-niche” model which is effectively monetized can be more effective than traditional mass media approaches, by allowing sharing overheads and sales efforts, and gaining more value from highly targeted audiences. Scaling costs and overheads and extracting premium revenue is as viable a strategy as increasing audience size.”

An example of a multi-niche model is The Enthusiast Group (one of Brad’s investments) which has sites like YourRunning and YourMTB. This is what they have to say about themselves:

We develop websites that serve sports/recreation enthusiasts in telling their own stories without professional writing or photography help. Sports enthusiasts have compelling stories and images to share, but they typically are under-covered by traditional media. It’s nearly always the stars of any sport that get the media attention. But everyday athletes and sports participants deserve coverage, too; many have compelling stories and images to share with fellow enthusiasts.

Our citizen-media websites give a home to such “self coverage,” under the guidance and support of an expert editor who’s a sports enthusiast him/herself, while supporting it with a commercial marketplace designed to meet the needs of particular sports communities. The sites (yourBiking.com, yourClimbing.com, etc.) serve as a home base on the Internet for all those who are passionate about a sport or activity.

The websites tap into current trends of blogging (express yourself to a worldwide audience), digital still- and video-cameras, and photo cell phones’ ubiquity. These new tools allow people to share their experiences with others who share their passion — to tell their stories. We’ll make it worthwhile, too, by offering prizes and other ways for sports enthusiasts to be compensated when they share good stuff with fellow enthusiasts.

I can almost tangibly feel their community empathy in that blurb.

In short, community is king across big horizontal platforms like Facebook or the many, many niche sites out there. Just because one of them has hit Techcrunch’s Deadpool, don’t write off vertical players.

Photo courtesy of Best Kiteboarding.