Google and the Social Web Mafia

  |  March 16, 2010   |  Comments

Q&A: Jonathan Blum, a technology writer and analyst, weighs in on Google, LinkedIn, Twitter, Facebook, and their business models.

Jonathan Blum, principal of Blumsday, a company that reports and writes technology news and features. He's also founder of TheSportsCircuit.com, which covers sports technology news. Jonathan's work has appeared in Fortune Small Business magazine, CNNMoney.com, and TheStreet.com.

Here are excerpts of my interview with Jonathan, who is participating in the keynote panel, "Search Marketing: Analyze This," at SES New York, which takes place from March 22-26, 2010 to discuss Google, online subscriptions, and more. (ClickZ and SES are part of Incisive Media.)

Stewart Quealy: You recently wrote that anything Google does is newsworthy. And anything anyone else does is not. Has Google really become a single source for news coverage and a single source of news?

Jonathan Blum: What is important here, again, is the notion of the limits of the Web. And how that affects your business day. Extending that idea down into simple search term was very powerful for us.

Google is not exactly a single source for news, but it is one of the five main tech search terms that the Web is capable of covering. The others, in technology right now, are Apple and its family of products, Microsoft - though their coverage is almost always negative, e-books, and global warming.

Beyond these so-called dirty dozen, just about anything is very difficult to get scale on. As interesting as they might seem, or as much as clients love them, anything else has little or no shot unless they are part of a sophisticated, old school, multitouch campaign, À la the Verizon Droid, or part of a major news hub like a CNN.com.

And the examples of what does not work are significant. Take HP2G. These guys essentially in their back yards, have created a 400 HP [horsepower], 500 ft. lbs. of torque, big block, push rod V-8 engine. You know the technology that keeps GM trading at $0.13 and a barrel of oil at $85.

Except his engine gets 110 miles per gallon. No joke. It has some issues for sure. But it is certainly worth being part of the conversation. So we bet heavily on this story. And it almost killed us. Nobody wanted it. And then finally after 18 months we got significant features run in Fortune Small Business and CNNMoney.com. And I really had to hand it to those clients. They took a major chance on that job.

But have you heard about the company? Probably not.

See my point: If buying an Explorer and filling it up four times a year is not a bigger story than the stupid iPad, that is not HP2G's fault. That is the Web's fault.

The Web can only do certain things. Ignore those limits at your peril.

SQ: What does it mean that you bet heavily on the HP2G story? Are you a journalist? In PR? Or something in between?

JB: Well, the fact is, the market is so competitive now that editors do not buy stories any more just because you say they are cool, you have to have the facts to prove that it is cool. So you invest the time, travel expense, and personnel into learning about a story enough to cover it. So I traveled to the Detroit Auto Show, interviewed dozens of folks. Learned about how cars worked. Basically I extended our expertise in technology into autos, figuring it was a place from which we could sell lots of content. But I was wrong. We did eventually sell a few stories, but it took over a year. So I really learned my lesson about respecting the limits of what people are interested in online. And by running significant features, it means Fortune Small Business paid us to write a six-page, in-print feature at a handsome rate on a story about next generation autos.

And we are strictly journalists. We never take a dime from a vendor or a PR firm. We do news. What Blumsday is about is trying to figure out how to keep doing news. So we invested in systems to do news faster and are experimenting in trying to carry what we know to new markets. But our ethics are all we have. Nobody tells us what to write.

SQ: Speaking of Google, the managing editor of The Wall Street Journal recently stated that Google devalues everything it touches. He said Google is terrible for content providers because it divides content quantitatively rather than qualitatively. Any merit to this sentiment?

JB: Of course there is. The editor at Time and Rupert Murdoch have all said the same thing.

The bigger question is why? And to my mind there is a good reason: Google is not a big enough company. There is not enough "there" there...

Again, this is critical: Web 3.0 is all about exploring the notion of limits on the Web. The Internet is no longer a fast growing supernova of content and experiences. In fact, it is a rather mundane world of anywhere from 4 billion to 6 billion digital cell phone users, depending on how many phones you want to say each person has.

And that is what the actual living breathing mundane Web is: a shallow murky puddle. Real access to anything close to a full data rate experience is limited at best. The Web will be lucky to get to, say, even a billion smartphone users. The iPhone will be lucky to get 25 million subs [subscriptions] by the end of 2010. And maybe 100 million users for terminal penetration.

So, the true lucrative end of the market is a tiny little drop in the bucket.

Most folks won't spend much online. And if you look at the business on anything close to a per-sub basis, there is money here. Take Google. Sure it makes $24 billion, but that's a measly $6 per sub, per year! Now you can massage the data and maybe get to $10 per sub, per year. But there is no growing out of numbers like that. Google can grow as fast as you want to, say 20 percent CAGR [compound annual growth rate] for decades and be lucky to become Boost Mobile, or about $40 per month on a per-sub basis.

And you see this lack of purchasing power in everything Google touches. Take Gmail: 150 million active users. Google Apps, say, 10 million subscribers. Google Apps Premier users? Do they even have a million? That is a looooong way to go to make a measly $50 million a year. And strictly speaking, it is not Google's fault. Amazon.com also does the same pathetic per-sub sales. Maybe $10. EBay maybe $5 per sub. And forget Facebook. Everyone is all lathered up about them making a billion this year. Stand back. Stand back. We have another Web "success story." [It] took down 30 lousy cents from each potential customer. I mean, please.

Compare all of that to a real digital content business. Say Bloomberg. It has 300,000 users who spend $15,000 a year [each] to be on the service. That firm takes down something like $5 billion.

Of course, Google et al. devalue what they touch. They have to. We are asking them to do things they cannot do.

SQ: I've seen you collectively refer to Google Buzz, Facebook, LinkedIn, and Twitter as the "social Web mafia." What part of the whole "Web 2.0 armada" rankles you the most?

JB: Now, let's be clear. I don't mind power. In fact, what I think the Web desperately needs is a smoke filled room somewhere for a deal to get cut to fix the Web. What rankles me is how feeble this gang really is: If Google AdWords paid $2 a click instead of $.0002 a click, this would be a much different conference.

And if you study what these operations are doing, there is really sort of a bizarre denial now: Google is getting into the power business, the fiber optic business, the mapping business. LinkedIn is facing up Salesforce.com with CRM [customer relationship management] tools. Facebook is reselling identities with Facebook Connect. Twitter is getting into direct mail with Lists.

How about you concentrate on your core business of delivering a legitimate in-market customer or paying more than $.02 per click on AdWords, instead of messing around with mapping Mars for crying out loud. That's the real issue there.

It hurts the whole economy, and probably worsens the recession, now that I think about it.

SQ: Keeping with the Google Buzz theme, what makes it so unique and what are the inherent opportunities for small-business?

JB: Good question. Google has the marketing power right now. And I am not sure anybody knows why. Many other products work as well if not better. There is just something so fascinating about the operation. The strange ethereal nature of what they do.

But for the small business, though the opportunity is clear: It is on the systems side. We have been very successful in taking their cloud-based tools and turning them towards the process of making news. And there is not a small operation that I come in contact with that could not benefit from a deep Google Apps integration. Which is partially why it is so nutty that not more people buy the premium product. It does some serious stuff.

In fact, I sit on a local technology board in Rye [NY] that is helping to create jobs in the lower Hudson Valley. And I love the prospect of deploying what we know into a small business right from the get go. And Google's tools are critical for that.

It really has changed how information is managed.

SQ: With the advent of new DVRs that meld broadcast and online content, it seems that everyone from Apple and Microsoft to Google is jockeying for position in a competition to combine Web content with conventional TV. Do you see a winner in that race?

JB: Sports. About the only place where we believe the Web can still fulfill on its promise is sports. So we have developed our own sports brand called TheSportsCircuit.com.

Sports still carries enough cache to drive an audience in a close enough to linear fashion that the Web can maintain some structure. And I personally think the iPad is going to be a tremendous sports appliance.

But elsewhere, it's still the same Web 3.0 reality. Shakeout. Shakeout. Shakeout. Of the survivors? Clearly iTunes will have a place. Destination live events like the Academy Awards and American Idol will be there. But to get a sense of the future, look at Jersey Shore.

It is impossible to say what viewers will find interesting. It just is.

SQ: If the "content is king" mantra is really true, why is resistance to paying for online content still so high? While The Wall Street Journal and ConsumerReports.org are exceptions, it seems that most consumers consider Web content from a commodity standpoint. As Chris Anderson explains it, free has become the default and paid is the route to obscurity.

JB: A free lunch is fun. Free stuff is easy. It is fast. You can touch it. Mess with it and throw it away. It's like rock and roll. It's so great. I love the live Web. The problem is, not only is nothing really free, touching free things all the time messes you up.

Think about, if you spend all your time with things of no value, then you're the one making the empty thing worth something. And that sucks the life out of you. We've all spent the weekend on Facebook and come out of it feeling like crap. So keeping a solid diet of good high quality content in your life generates enormous intellectual dividends.

I am a professional researcher and I don't suck. And I have never gotten more publications in print. Because it gives me a sense I am worth it.

Free stuff is crack. It will kill ya for sure.

SQ: You describe your company, Blumsday LLC, as a cloud-based custom content company with a specialty in technology. How does your model differ from other companies that deliver tailored news feeds and content marketing solutions?

JB: That's easy. We have spent a ton of time and money modding up cloud collaboration tools to make news content more efficiently. And since we are geeks, we do tech. So we can do stuff ridiculously fast and to a high spec.

We started out as just a bunch of freelancers and noticed right away that we wasted about two hours a day frittering around. So we started hacking out ways to use Google Apps, Basecamp, and stuff like that to stay on the mark. And sure enough, it really does work. You really can replicate the scales of working in a newsroom as a peered group, if you invest in the solutions. And you are willing to be disciplined about it.

The cool part is, we have just scratched the surface on how the Web can make news more efficiently. One of the things that really sucked about this downturn is that we have not had the chance to build in the business automation tools we could have. I think the [Saleforce.com's] force.com platform has some very exciting options for media creation. But with lower profits we had to postpone that and concentrate on making some money.

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ABOUT THE AUTHOR

Stewart Quealy

Stewart has been part of the Search Engine Strategies (SES) content team since 2001 and plays a key role in programming Incisive Media's interactive marketing events. In addition to SES, Stewart was part of the original Jupitermedia team responsible for launching emerging technology events such as Jupiter Advertising Forum, Plug.IN, Game Market Watch, Weblog Business Strategies, Grid Computing Planet, and ClickZ Online Video Advertising. Prior to that, Stewart worked closely with the open-source Apache Software Foundation (ASF) to launch their first ApacheCon trade shows in both the U.S. and Europe. Stewart has also worked closely with the Object Management Group (OMG), an international not-for-profit computer industry consortium, to conceive their inaugural Integrate conference. Earlier in the dot-com bubble, Stewart worked with 101 Communications and SIGS Publications, running their object-oriented programming portfolio of events, including Java DevCon, XML ONE, C++ World, and Smalltalk Solutions. Follow him on Twitter @stewq.

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