JPG's dead. Why your advertising-funded business could be next…

JPG Magazine is dead. That’s a bummer because, as TechCrunch wrote this morning, it was a radical idea in publishing: one that used crowd-sourced data to serve the magazine’s readers.

There were a few problems here:

1. They never got a large enough following to make a business viable. That’s because book stores are going away and the ones that are left are not willing to increase the shelf space to magazines. Tim O’Reilly talked about this in the interview I did with him a couple weeks back for FastCompanyTV. To make it in media you’ve gotta be where there’s increasing shelf space. Today what’s increasing? Newspapers? Nope. Magazines? Nope. iPhone apps? Yes! Facebook apps? Yes!
2. Photography is a tough place to make money off of advertising. Look at Flickr itself. Why haven’t you seen many ads there? Because advertisers haven’t figured out how to sell stuff by putting their messages next to photography. If they can’t figure that out online there’s no way they’ll figure that out in a magazine.
3. The web overwhelmed the model. Flickr has a really cool page called “most interesting over past seven days.” Look at it. I’ll wait. Now, why would I wait eight weeks to get those same photos sent to me on paper? Hint: I’m not. If you can’t answer the question of why I would change my behavior from what already exists, your business will be in trouble.

But, there’s something deeper here. If you’re going to go after advertiser dollars, you’ve got to have a pitch for how they are going to sell more stuff. This is why Engadget is such a great advertising play. Everyone visits Engadget to look at gadgets. People who look at gadgets probably buy 300x more than people who don’t. Right now Microsoft is advertising on Engadget. Why? Because they know that the audience that both cares about, influences other people about, and buys gadgets is there. Now, go back to JPG. What kind of audience is there? One that likes old photos from Flickr? Can you see the advertising sales problem there?

Many companies are making the same mistakes that JPG did. Thinking they are in a hot space just because they are associating themselves with the power of the crowds, and social software, and all that hot hooey. Me too! This is why Arrington and Calacanis, when they tell me to get back to blogging thoughtfully instead of spending all my time over on Twitter and friendfeed, are right!

You’re advertising-funded business is next after JPG if you:

1. Rely just on the geeky audiences that read Techcrunch. Or me. (Which is why I spent time getting to know other networks the past year).
2. Don’t have a well defined audience that you can present to advertisers. Facebook, for instance, goes in saying “we can introduce you to very specific demographics. You want to reach every 22-year-old woman who skiis, is Republican, likes Daft Punk, lives in New York, and who posts at least one video a month? We can do that.” What could JPG present to its advertisers? “We have a bunch of people who care about photography.” Not nearly as effective a pitch.
3. Are not gathering transactional people. Why does Popular Photography (a magazine that’s been around for a long time) do so well? It gathers people who are transactionally-oriented. What do I mean by that? Walk by a magazine rack. Most of the best photography magazines do NOT display photography on their covers. What do they do? They have EQUIPMENT on their covers! Why do they do that? Because they really don’t care if you are into photography. They care about gathering people who are into buying equipment. Why? Because that’s who advertisers want to reach. So, are you gathering transactionally-oriented audiences? If you aren’t, you’ll be swimming up stream. This is why Flickr itself is a tough business.
4. Aren’t giving advertisers a good way to talk to customers. This is why, I believe, Flickr recently added video. Why? Photography just isn’t a very good way anymore to reach customers, especially in today’s real-time-web environment. What is? A place that has a mixture of video, text, photography, and interactivity. What does that look like? Well, it isn’t printed on paper anymore.
5. Aren’t getting “shelf space.” Or, distribution. You might be the best community in the world, best blogger, best videographer, or best social network, but if you can’t get people to see it, use it, try it, you’ll be toast. JPG just wasn’t able to get the shelf space necessary to attract the audiences it needed to attract advertisers. I never saw it on the news stand. So, now, if you are an iPhone app and you can’t break into the top apps, you better figure it out or you’ll be toast.

Here’s hoping that we all avoid the problems JPG is having. Good luck out there! If you’re an advertising focused business, how are you closing deals and getting revenues? Any good ideas? Love to hear them, leave a link to your blog here.

UPDATE: JPG should have called SmugMug’s CEO. He wants to help save the magazine. Funny, because SmugMug doesn’t live off of advertising revenues. They have hundreds of thousands of users who pay money to use SmugMug.

Social network advertising: not your father's banner ad

When i visited the San Jose Mercury News yesterday, what did we talk about? Advertising and how newspapers were going to make it online.

Well, one trend we’re seeing big time is the move to social networks. Facebook alone has more than 100 million people on it. When you add MySpace, Microsoft’s new network, Hi5, LinkedIn, FriendFeed, Twitter, and others, these networks are seeing some sizeable traffic.

But how do they monetize? Well, Facebook has been seeing a bunch of ads lately.

Problem is banner ads just aren’t working well anymore. Most users ignore them and the smartest users use software that blocks them from being seen at all.

So, how do you overcome those problems? Make ads that people play with and want to talk to their friends about.

That’s what Kevin Barenblat’s firm, Context Optional, does. One of his Facebook apps is driving 60,000 users a day to the website that sponsored it.

In this two-part video we take a look at both the kinds of apps that Context Optional is building, but in the second part we look at the whole Facebook marketplace.

Part I, six-minute video.
Part II, 10-minute video.

The best marketer of 2008 reads us the ROI act

You think the best marketer of the year is Tom Peters? Guy Kawasaki? Seth Godin? Sorry guys.

It’s Gary Vaynerchuk. He owns a sizeable wine store in New Jersey. Sells $50 million a year. And he reads all other marketers the riot act.

Er, the ROI act.

Why do I say he’s the best marketer? He’s taking his local brand, which is quite profitable, and turning it into a global brand. It’s impressive what he’s doing, but he’s also matching what I’m seeing happen in the media world. Advertising ad buyers are telling me they are looking at online and will be increasing their buys (after they get over being freaked out by the economic downturn).

I find it fascinating that my friends on FriendFeed are saying to buy Apple. I think buying Google makes more sense. Apple has exposure to a fearful market because we’re not going to buy new gadgets while we are in hoarding mode. Google will get hit down (already has been) and will have a couple of quarters of bad numbers, but will remain stronger than Apple through the storm.

Plus, long term, who is better positioned to take off after the economic downturn ends? I think Google is. Why? ROI baby. ROI. (You have to watch Gary’s video to get the ROI story).

My Fourth of July Present to you: the geeky Congresswoman

Get in a patriotic mood by listening to our conversation with Zoe Lofgren, the world’s geekiest politician (she’s a Congresswoman from Silicon Valley). This is part of our trip to Washington DC.

“We’re boring,” she said, when I noted that Andrew Feinberg chastized me and other tech bloggers for not going to Washington DC more often (Andrew runs the Capitol Valley blog and setup these interviews for me).

After that bit of joking around we got into broadband policy, network neutrality, immigration policy, R&D incentives, and she tells us what geeks should pay attention to in the political world of Washington DC.

Enjoy, and enjoy the Fourth of July with your families. For those of you who aren’t Americans, see ya on Saturday.

Some notable things she said: “it’s ridiculous,” she said, that we’re increasing our prosecution of nannies and decreasing our prosecution of organized crime.

She advocated for a chief technology officer and decried that there are still lots of pieces of the government that are still working on paper.

Regarding advertising, she admitted that the technology is moving faster than Congress can move.

Thank you to Seagate, producers of great storage devices, for sponsoring this show, which makes it possible for us to bring stuff like this to you.

Advertising in casual games

One thing that came out of last week’s meetings with lots of elected officials is that their attention is on the advertising industry and that means our attention should be on it too. One interview in particular, with Representative Ed Markey (he’s the Chair of the Subcommittee on Telecommunications and the Internet), stood out in my mind. He got very passionate about how deeply advertising is tracking people’s behavior and he’s worried about that.

So, over the next few months, I’ll be doing several interviews with people who are watching the online advertising industry.

In the meantime, though, we have an interesting interview with Mochi Media’s CEO, Jamison Hsu, where he talks about his company’s advertising network that’s aimed at online casual games.

It’ll be interesting to see if Congress tries to limit what these new companies, along with the older, bigger advertising-funded businesses like Google, Yahoo, MySpace.

If you were on Ed Markey’s committee, what would you be worried about with online advertising? Would you be voting to expand the ability for companies like Mochi Media to target advertising more tightly, or would you be forcing them to be more transparent about where their tracking devices are working?

Why Microsoft will buy Facebook and keep it closed

Cartoon about something important happening on Web

It no longer is about Data Portability or Social Graph Portability, if you will.

I’m hearing these rumors too that John Furrier (my ex-boss) is reporting. That Microsoft will buy Yahoo’s search and then buy Facebook for $15 to $20 billion. Add that to all the news that Microsoft is buying Yahoo’s search and that gets very interesting.

That just changed the whole argument of Facebook vs. Google to one of Microsoft vs. the Web.

Think about this just a second.

Let’s say Microsoft gets Yahoo’s search. That doesn’t look that brilliant. After all, we know Google is gaining share there and taking Yahoo’s best advertisers (and let’s just forget Microsoft’s efforts, which have been an utter failure so far).

But these two moves would change everything and totally explain why Facebook is working overtime to keep Google from importing anything. First, let’s look at what is at stake here:

Loic Le Meur did a little test with me a couple of weeks ago. He listed his Le Web conference on both Facebook and Here’s the Facebook listing. Here’s the one.

The Facebook one can’t be seen if you don’t have a Facebook account. It’s NOT open to the public Web. Google’s spiders CAN NOT REACH IT.

He put both listings up at exactly the same time and did no invites, nothing. Just let people find these listings on their own.

The Facebook one is NOT available to the Web. It has 467 people who’ve accepted it. The one IS available to Google and the Web. It has 101 people on it.

This is a fight for the Web. We all just crawled inside a box that locks Google out.

Don’t believe me?

Go to Google and do a search for “Le Web 08.”

Do you see a Facebook entry there? Nope. Google is locked out of the Web that soon will be owned by Microsoft. We will never get an open Web back if these two deals happen.

This has created HUGE value for Microsoft and has handed Steve Ballmer an Internet strategy which brings Microsoft from last place to first in less than a week.


Now Microsoft/Yahoo search will have access to HUGE SWATHS of Internet info that Google will NOT have access to.

Data and social graph portability is dead on arrival.

Microsoft just bought itself a search strategy that sure looks like a winner to me.

If all this is true there is no way in hell that Facebook will open up now.

It’s Facebook and Microsoft vs. the open public Web.

Can the open public Web fight back? Yes. It’s called FriendFeed. Notice that FriendFeed replaces almost all of Facebook’s killer features with open ones that are open to Google’s search.

So, now, do you see why I’m so interested in FriendFeed? It’s our only hope to compete with Microsoft’s new “buy enough and keep it closed” search strategy.

Don’t think this matters? It sure does. Relevancy on Yahoo search will go through the roof when it has access to Facebook data and Google doesn’t. People will see that Yahoo has people search (something I’ve asked Google for for years) and Google doesn’t. That’ll turn the tide in advertising, and all that.

Brilliant move, if this all comes true.

I’ve SMS’d Mark Zuckerberg and asked him if he’s selling. I doubt he’ll answer. I hope he holds out for more than $20 billion. He just might get it.

UPDATE: Someone on Twitter (Soulhuntre) says that it doesn’t matter as long as HTTP keeps working. That’s just the point. Facebook BLOCKS HTTP if you aren’t logged into its system and it can remove you at a moment’s notice. @irinaslutsky (former employee of mine) was removed last week from Facebook. This is a scary company and if it gets in the hands of Microsoft will create a scary monopoly.

UPDATE2: thanks to XKCD for the cartoon. I love those cartoons.

Microsoft's real problem

I almost wrote a very long blog post telling Microsoft how it could get back into the search business. In response to all this stuff in the Wall Street Journal and on TechMeme about how Steve Ballmer is telling employees that he thinks he can guide Microsoft into the advertising business without buying Yahoo.

I got about halfway through that long post and I just deleted it. Why? Because they don’t care to listen. So why am I wasting my time talking at 1:30 a.m. to a few billionaires and a bunch of arrogant coders who think they built something of value when, in fact, they’ve just built second-rate Web sites (Windows Live Spaces anyone, sorry, it sucks even if there are 100 million of them) who don’t have a clue about how to get back into the search game and who are never going to have a clue?

I’m bored. Microsoft buying Yahoo is just going to be very boring for users for a long time. Why? Even if things go perfectly it’ll take six to 12 months to get approval by EU and DOJ. And they won’t go perfectly. Even after the deal is done it’ll be another six to 12 months before these two cultures get together in any significant way. So, that’s a year to two before we even see anything non-boring.

I find that Google listens a lot more than Yahoo or Microsoft does. Google has left billions of dollars on the table that it will go after over the next year, if they are as smart as I think they are.

Where are those billions? Well, let’s just look at one tiny little sliver of Google’s system that it’s left alone. Google Travel. That page sucks. Think about how you decide to take a trip. Does that page help? Not really. No video. No cool people telling you about interesting places. No personality. No branding. No interesting Web services.

And the big brand travel sites aren’t any better. Now, what about parenting? Other activities?

This is why Facebook is so interesting as a business. Facebook has some inherent advantages to creating market need that no one else is even attempting to do. Ask Jeff Pulver how he gets hundreds of people to show up to his breakfasts all over the world. He just opens up a Facebook page and writes what he’s doing.

Or, ask any winery how much of an impact this small little video show is having on their business. The red carpet rolled out on our little wine tasting trip told me everything I needed to know about its impact.

Funny, Microsoft just bought Farecast, which is one piece of what I’m thinking about, but will Microsoft do anything innovative with it? I think it’s distracted with this purchase. Too distracted to do anything soon enough to keep the newbies like Mahalo and the Googlers’ from figuring it out.

I just don’t see Microsoft and Yahoo making any serious moves into search or advertising that comes off of search, do you? Yet I see that Google is weak in other areas (and I told them such when I met with them the other day — they listened, and that listening behavior told me they know that they are going to see more growth in non-search areas if they execute well). It stuns me why Ballmer isn’t going after those areas (as bad as Google’s Travel page is, Microsoft’s is worse) instead of spending billions trying to buy Yahoo, who clearly doesn’t want to be purchased (Farecast, again, was an interesting purchase, but only if put inside a bigger strategy).

Unfortunately Ballmer is hamstrung by two things: 1. the returns that they need to see to have any real effect on the bottom line are so huge that it causes Ballmer to have blindness to small things and 2. they really don’t have that many people working there who really grok the Internet. Think about that for a second. If you really knew how to build a scalable web site, wouldn’t you be joining Facebook or FriendFeed right now instead of toiling inside Microsoft where they can’t even seem to execute on a purchase of Yahoo very well? Heck, just reading Mini Microsoft tells you that things aren’t being seen well from inside the walls. Yeah, there are those inside Microsoft who are happy with the way things are going, but I’m hearing more and more screams lately from inside the walls. I hope to learn more when I go to Seattle June 10-13 to visit Microsoft and learn more about the Internet strategy (which is becoming more interesting on several fronts like what Scott Guthrie, tools, Ray Ozzie, Mesh and infrastructure, and Dean Hachamovitch, IE, teams are doing).

I don’t see the Yahoo acquisition ending well for Microsoft but I’m losing my will to care anymore and I’m not the only one. THAT is Microsoft’s real problem.

Google: take the money off the table — build great niche search sites around topics like travel, wine, parenting, housing, automobiles, etc. You have a year to do it before Microsoft can even START to figure out where you’re weak.

Too bad that Ballmer didn’t have a vision for the Internet. Imagine if Microsoft started doing some really great niche sites with its $40+billions? Imagine that…