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Comparison shopping was one of the first areas of “indirect” e-commerce services. It emerged on the Web back in the mid 1990s, shortly after the debuts of the first true online retailers. Comparison Shopping engines like PriceGrabber, Shopping.com, NexTag and my own venture, MySimon, helped consumers aggregate pricing data almost instantly, and it trained a generation of consumers to seek out such tools to save them both time and money.

As the traffic and prominence of these sites grew, venture capital dollars quickly followed, and the comparison shopping category became known as much for generating outsized venture capital returns as it did for saving consumers money. But things have changed dramatically in recent years for the comparison shopping space. Whether you judge it by the traffic to these sites, the venture money raised or the recent investment returns, the party is pretty much over. Three key factors are now driving the collapse of the once-lucrative comparison shopping business:

• Pricing strategies are producing diminishing returns as the price ranges across competing vendors shrink to insignificance — an effect of pervasive and readily accessible pricing information. The shopping engines are becoming a victim of their own success.
• Google has dramatically changed how it treats shopping engine URLs. Now assigned “low-value-add” status, they are relegated to search-engine wasteland (third page of search results or worse). Adding insult to injury, Google places its own “Google Shopping” results right up on the first page of any product search, further limiting traffic that otherwise might have gone to the independent comparison shopping search engines.
• Amazon has made a massive expansion into virtually every area of consumer goods, offering a huge selection, “good-enough” pricing, personalized shopping recommendations and top-notch convenience tools like Amazon Prime. This powerful combination ensures that customers often begin and end their virtual shopping trips on the Amazon site because leaving to find a slightly lower price is just too much trouble.

Today’s consumers have figured out that their time is now worth more than potential savings they might find through price comparisons. They need a more compelling reason to venture off of Amazon — such as a more compelling shopping experience, unique or curated product selection, or better customer service. Merchants trying to attract customers with lower prices must make them much lower — a virtually impossible strategy as overall margins continue to shrink and Amazon’s economies of scale grow.

E-retailers are acutely aware that they must adapt to this new reality and find new ways to differentiate themselves. Increasingly, they are competing by providing a superior customer experience. They streamline the shopping experience and engage us by making it more enjoyable — from the time we load the Web page to the day the package arrives at our doorsteps. It’s the best way to get consumers to shift their loyalties in this post-pricing-centric era. Customer service quality has replaced price point as the key e-commerce metric.

For example, Zappos keeps customers so satisfied that they routinely pay up to 10 percent more than they might pay elsewhere. The entire company is aligned around customer service, and customer comments — good and bad — are regarded as treasures to be mined. The company even relocated to Las Vegas because the region had a larger pool of call center experience. In the Zappos philosophy, deliver happiness to the world and profits will follow.

More recent e-commerce entries take this trend a step further, getting quite creative as they seek to provide value beyond the price tag. ModCloth combines exclusive fashion items sourced from small labels around the world with amazing social engagement tools, generating passion and loyalty among their customers. One Kings Lane lets consumers purchase luxury brand items for less in limited-quantity flash sales of overstocked, out-of-season or otherwise excess goods.

The Science of Customer Satisfaction

Zappos, One Kings Lane, ModCloth and broader online retail aggregators like Amazon make things so simple and comfortable that it isn’t worth our time to leave their sites on a price-shaving quest. However, because their customer-centric initiatives focus more on customer experiences and satisfaction, the value they deliver tends to be subjective and difficult to measure.

Consider Yelp and Amazon, which juxtapose customer comments with five-star ratings that rely on individual viewpoints. It is not uncommon to see a four-star rating associated with a terrible experience, and a two-star rating with a pretty good one. Shoppers have a hard time basing informed purchases on such input. Meanwhile, merchants have a harder time figuring out what to fix, where to invest and how they really stack up against their competitors on objective measurements.

“Knowing where to invest your resources is critical, because you can’t be good at everything,” says Frances Frei, Harvard Business School professor and co-author of “Uncommon Service: How to Win by Putting Customers at the Core of Your Business.” “You must identify and deliver on the service dimensions your customers value most, and strategically underperform on the ones they value least.”

For “Comparison Shopping 2.0” to really take off, the market needs comprehensive tools that will give online merchants the information they need to out-service their competitors, and help shoppers differentiate between those merchants.

One company seeking to fill this need is StellaService, which continuously measures and rates the customer service performance of online retailers. The company leverages a network of full-time service analysts and mystery shoppers to collect hundreds of data points around the customer service performance of each retailer it evaluates. The company then makes the data available to retailers to benchmark against peers and competitors, enabling companies to identify strengths and weaknesses, and adjust accordingly. Merchants can also see the effect of new customer service initiatives or investments in the performance data. In addition, merchants whose service is rated high enough qualify to display the StellaService seal, which signals the quality of the expected shopping experience to consumers.

With customer service now the differentiator, merchants need to distill huge amounts of qualitative data and are ready to pay for it. Meanwhile, consumers are looking for purchasing guidance beyond the price point.

Comparison Shopping 2.0

Standing out from the crowd is a tall order for today’s online retailers. Lower price points don’t cut it anymore. In a way, online merchants are a victim of their own success — price-comparison tools are what brought consumers online in the first place. Now the price spread across online merchants has narrowed, and Google search changes have further limited SEO-based comparison shopping.

Comparison Shopping 2.0 makes pricing take a back seat to customer experiences. Merchants with the best online service offer live customer support, respond to inbound messages in real time, ship quickly and don’t haggle over refunds.

To support this process, an emerging class of comparison shopping strategies, tools and measurements are delivering the right kind of data and analytics. They extract actionable insights and let merchants know where they need to improve. For the first time, online retailers can measure the return on investment they get for implementing new customer satisfaction technologies and improving their hiring and training processes.

Merchants want to win big with customer service, and customers need a way to choose the right merchants. Technologies and services that enable uncommon customer service will redefine e-commerce in the years to come.

Of the companies mentioned in this post, ModCloth and StellaService are NVP portfolio companies.

Joshua Goldman brings to Norwest Venture Partners more than 20 years of operational experience, having been a repeat entrepreneur, CEO, board member and investor in several high-growth technology companies including MySimon. He focuses on investments in consumer-facing Internet products and services including search, e-commerce, social networking and digital media. His current investments and board seats include ModCloth, Quirky, Lumosity, Gilt Groupe, Sojern, RetailMeNot and StellaService. He also holds board observer or advisory roles with Retrevo, Apigee, Sabre Holdings and JiWire.

“This is your last chance. After this, there is no turning back. You take the blue pill — the story ends, you wake up in your bed and believe whatever you want to believe. You take the red pill — you stay in Wonderland, and I show you how deep the rabbit hole goes.”
Morpheus, The Matrix

Even though we may not realize it, we live in the matrix today. Often, it is easier to date someone who lives across the globe through text messaging and Skype than it is to sit across the table from him or her having dinner. We have the red pill — the world before mobile — and then the wonderful blue pill that takes us to exotic places through our iPhones, Galaxies, and Droids via a rapidly growing and powerful mobile applications ecosystem. With these, we can instantly be transported to many places at the same time — our friend’s adventure in Egypt on Instagram, a heavily tweeted TED conference in San Diego, or a real-time fashion party joined by thousands of women across the country — all the while having a glass of wine at the Press Club in San Francisco.

This mobile revolution is reshaping entire industries and perhaps more interestingly, shifting power from traditional search to new ways of discovery. Over the last six months, while the public has pondered its mobile strategy, Facebook has quietly emerged as the superpower of application discovery, and is progressively playing a powerful role in reshaping e-commerce, media and advertising on mobile platforms. Facebook’s new products — ranging from open graph and timeline to mobile installs — are reshaping how brands, companies and app developers can connect with their audiences and facilitate discovery in a crowded app world.

In the early days of the Web, portals, pop-ups and other advertising and discovery systems ruled the ways consumers connected with websites. The advertising engines and portals were very fragmented. Yahoo’s home page provided one of the most powerful discovery tools for the consumer. Then Google’s entry into search and the arrival of its advertising platform, Adwords, reshaped how e-commerce, brands and services connected with that same consumer. This repositioned the power of the Web ecosystem and put Google front and center in this new world. In response, advertisers and websites from e-commerce to media shifted their strategies to optimizing for discovery on Google. Whole new classes of advertising agencies were created, and new epicenters of commerce and media were developed to focus on Search Engine Optimization and Paid Search.

As we spend more time under the influence of the magical blue pill, increasing attention and spending is shifting to mobile. Mobile’s inherent advantage in being able to connect offline and online behavior will have massive ramifications on all industries as compared to the Web. Mobile is changing the paradigm of online interactions from searching for content with keywords to pressing a single button and being delighted with new content on our home screens. Collections of blue links are being replaced by visual feeds, keywords with button press, and search by discovery as the dominant method of information consumption. As the mobile infrastructure evolves, Facebook has increasingly positioned itself as the Sun in this new solar system. Last year’s acquisition of Instagram gives Facebook tremendous headroom as it slowly but surely rolls out its mobile products for brands and app developers. Increasing dollars and optimization energies are shifting toward Facebook’s mobile ecosystem and changing the shape of every mobile advertising network and mobile media platform. This seismic shift is akin to what happened in 2000 when Google arrived on the landscape with Adwords, and is positioning Facebook to do to mobile what Google did to search.

If the red pill is the world before mobile, do we even have the option of turning back to a world without navigation apps, instant access to email and photography filters? As we spend more of our time glued to our phones 24/7, we should take a moment to contemplate what is real. As Morpheus says, “If real is what you can feel, smell, taste and see, then ‘real’ is simply electrical signals interpreted by your brain.”

The post was both effective — it showed up high on Google searches, which is the reason Huffpo created it — and symbolic of Huffpo’s traffic strategy — which was either craven or clear-minded, depending on your perspective.

Now that kind of Google-baiting is old hat. Even for august newspapers with 41 Pulitzers. Here’s what the same query for today’s Oscars looks like today:

Say this for the Los Angeles Times piece — it delivers the goods, for both humans and Google’s robots. Here’s the keyword-filled top:

The 85th Academy Award nominees and winners have been chosen, the red carpet has been rolled out and the gilded Oscar statues have been polished. But what time is the show again?

The 2013 Oscars ceremony honoring the films of 2012 is set to take place Sunday at the Dolby Theatre in Hollywood. The pre-show broadcast will begin on ABC with red carpet arrivals at 4 p.m. PST (7 p.m. EST) and will be hosted by Lara Spencer, Jess Cagle, Kristin Chenoweth and Kelly Rowland.

The awards show will start at 5:30 p.m. PST (8:30 p.m. EST) and is scheduled to last three hours. It will be hosted by “Family Guy” and “Ted” star Seth MacFarlane and televised live in more than 225 countries.

And Google is presumably extra pleased that the story’s author, reporter/Web producer Nardine Saad, is a diligent Google+ contributor who has posted more than 30 LAT links so far this month.*

What’s that? You still find this sort of thing disheartening, even if it gives readers what they want and delivers some clicks to a newspaper that can use them? Well, you’re not alone. Here’s a gut reaction from New York Times editor Patrick LaForge:

Sad. RT @harrisj: LA Times starts the SEO battle for tomorrow bit.ly/15Fnmh4

— Patrick LaForge, NYT (@palafo) February 24, 2013

But you’re probably going to be in an ever-shrinking minority, says Raju Narisetti, who heads up The Wall Street Journal digital network (the Dow Jones digital umbrella which includes this Web site).

A (good) lasting lesson @huffingtonpost taught big newsrooms MT @harrisj: @latimes starts SEO battle for tomorrow twitter.com/harrisj/status…”

— Raju Narisetti (@rajunarisetti) February 24, 2013

And yes, even people like yours truly try to engage Google (and Facebook, and Twitter, and anyone that will increase the number of eyeballs on my stuff). AllThingsD’s publishing system, for instance, allows us to create “SEO heds” — headlines created with Google’s automatons in mind.

And if you know how to find the one I’ve created for this post, you’ll be able to figure out what time to watch the Oscars tonight. Enjoy!

* Conventional wisdom among Google-watchers is that even if no one reads anything you post on Google+, the search engine will reward active users with Google juice in search results. So get posting!

Owning audiences vs. renting them, the ability to monetize within the network, and access to deep data are key concerns making brands skeptical of the bottom line impact of these networks, and rightfully so. Brands aren’t diving in head first anymore, they’re dipping their toes — and rising expectations on ROI weigh heavily on the psyche of key decision makers. Yet, at the same time, brands are producing and distributing content more than ever before — essentially becoming modern media businesses themselves. Across the board, these companies are maturing in their understanding of social tools and platforms, and YouTube needs to solidify its dominance by providing assets that build brand trust and platform loyalty for itself.

To this end, we’re seeing YouTube engage in many efforts to re-invent itself as a destination for premium content (including, but not limited to, its funded channel experiment) and focus on key pieces of missing infrastructure will ultimately determine the success of the media businesses built upon the platform in the years ahead.

Most under scrutiny in the YouTube ecosystem is the missing infrastructure when it comes to moving “one and done” viewers further down the funnel, into lifetime value generating loyalists. (Full disclosure: FanBridge is in this business.) In the digital media world, audience retention is analogous to churn for SaaS businesses — the most import metric when it comes to building a sustainable model. Note: YouTube’s recent very public focus on “watch time” as a key metric across the board. As an example of the retention problem, the mass interest surrounding Super Bowl advertising comes to mind, when YouTube becomes a surrogate for the live experience and the default “instant replay” source for fans flocking to check out the creative prowess of top-tier advertisers.

Certainly an exciting event (and major viewing success), but what happens three days later? 30 days? The vast majority of this audience navigates away from the content experience, highlighting an incredibly short shelf life, and leaving an enormous amount of value on the table as the event becomes a memory vs. the start of a fan relationship. This phenomenon is not uncommon. Many content opportunities such as the Super Bowl, fashion shows and other tent-pole programming events could vastly increase their inherent value by factoring into the content marketing strategy ways of extending engagement before and after the event itself.

This is where networks like Facebook offer more robust toolsets and analytics when it comes to audience communication and retention; however, those networks fall short on YouTube’s secret weapon — content SEO integrated into the world’s largest search engine. YouTube is already rapidly iterating both internally and via partners on platforms and tools for brands to address the audience development and retention black hole in the platform. With those improvements, combined with the SEO-driven content discovery advantage, YouTube could provide acquisition/engagement/retention funnel dashboards that blow other networks out of the water.

Another area of the YouTube experience that needs infrastructure to support future media businesses is the ability to reach deeper levels of content activation beyond just watching video. Viewer activities like voting, sharing, Q&A, structured video responses, moderated commenting, crowd-creation and more represent a major advantage over traditional media environments like broadcast television. They also expand available data to build deeper audience profiles as well as higher performance, 360-ad packages and sponsorships that go beyond the existing pre-roll world. This extension of the audience experience can also provide a framework for building proof points of what truly is “premium” content that mass advertisers look for, as they have traditionally shied away from buying digital in favor of the “nobody gets fired for buying IBM” mentality drilled into media buyers.

From a macro perspective, much of the opportunity around interactivity is also tied to the broader needs for personalization that are multi-channel and multi-device. Existing advantages in YouTube’s favor here include the opportunity to form deeper integrations across the Google product stack (i.e. Google+, Hangouts, Google Wallet, Wildfire, Android, etc.). In this regard, Google can kill many birds with one stone. It’s able to leverage existing technology to build a more cohesive, personalized experience within YouTube. This provides more fertile ground for media businesses while simultaneously piggybacking off the momentum around YouTube to drive consumer and brand adoption to a broader swathe of the Google platform, specifically areas that need mass adoption.

With Google’s footprint across software and hardware, and forthcoming expansions in areas like Google Fiber and Google TV, there is a big end-to-end advantage here that few others can match. Moreover, this infrastructure would support the rise of related marketplaces — such as the extension of Google’s Ad Creation Marketplace to enable brands to tap into a larger content supply as they grow. A massive supply of content creators plus a huge list of advertisers create a significant (and highly defensible) barrier to entry for alternatives vying for the mindshare of media businesses. With such an infrastructure in place, Google would offer an unparalleled engine for building sustainable media businesses upon YouTube.

As co-founder & CEO of FanBridge, Spencer is responsible for overseeing the development and fulfillment of the strategic vision of the company. Since its initial venture funding in 2009, FanBridge has successfully built up a global client roster across music, sports, media and entertainment reaching over 650 million fans. Mr. Richardson is a graduate of the Leonard N. Stern School of Business at New York University.

Slightly ahead of the holidays, a handful of venture-backed companies have announced TV advertising campaigns, including One Kings Lane, Fab.com, OpenSky, Gilt Groupe and Wayfair.

All of the companies are hoping to see a lift in sales and increased brand awareness, but the immediate beneficiaries of this trend will clearly be TV networks that have strong female demographics, like Bravo, the Food Network, HGTV, E! Entertainment, Oxygen, Lifetime and TLC.

The advertising campaigns could cost anywhere from tens of thousands to millions, depending on the ads and how often they are going to run, but many of the companies are being conservative and labeling the launches as experiments.

The options range wildly between Wayfair’s 30-second spot, which was developed in-house for $30,000, and One Kings Lane’s two 30-second spots created by the premiere ad agency Wieden+Kennedy New York. Meanwhile, OpenSky is characterizing its commercial as a “modest test,” and Gilt Groupe said it hired Ocean Media, the agency behind ad campaigns for Priceline.com, Overstock.com and Angie’s List. Fab.com planned to run its ad in six U.S. markets for three weeks and then take it national if it was satisfied with results.

What’s interesting is that the campaigns are trying to drive traffic to the companies’ mobile sites and applications, capturing the behavior of viewers who sit on the sofa and watch TV with their phone or tablet in hand. That trend has been coined “couch commerce.”

For example, in Gilt Groupe’s minute-long spot called “High Noon,” one cowgirl is able to order a sparkling pair of pumps in a desert shootout because she uses the app to pull the trigger faster.

Wayfair said it’s also hoping to see a significant increase in mobile traffic. After launching its first ad campaign in September, Wayfair saw a traffic lift in the five minutes following the commercial. It said 35 percent of traffic was coming from mobile phones and tablets versus 13 percent normally. The home decor site’s Black Friday commercial (which is not too shabby, considering the budget), started running in late October.

The biggest indicator of whether these commercials actually pay off will be if they are still around in any significant way in the New Year, or if they will be short-lived tests. The one drawback for any of these boutique shopping sites is Amazon’s dominance in e-commerce during the holidays. As I wrote earlier today, 53 percent of U.S. consumers are planning to begin their Christmas shopping at the mega retailer.

But potentially, if the advertisements are creative and just darn cute enough, they could help change that behavior.

Below are the Wayfair and One Kings Lane commercials (others are linked above):

What makes Wetpaint’s pitch stand out is that the company has a public lab experiment it has built out to prove its point: It built Wetpaint.com, an entertainment news site, solely so it could show off the Facebook traffic techniques it has figured out.

Now that site — which looks a whole lot like any other site that covers pop-culture candy like “Twilight” and “Real Housewives” — has 12 million uniques, many of which CEO Ben Elowitz acquired via Facebook. And Elowitz has been able to use it to start wooing clients who want his insight.

The first: Germany’s Hubert Burda publishing conglomerate, which has signed up to use Wetpaint’s technology for a multiple-year deal.

If you don’t have Burda’s checkbook, you can still get a free taste of Wetpaint’s insight here. Last week, I chatted with Elowitz about some basic Facebook do’s and don’ts:

Peter Kafka: So you guys say you know how to get stuff seen on Facebook. How can someone do that without paying you?

Ben Elowitz: The first thing is who you have working on it. There’s tons of supposed “social experts” out there. But most of them have experience with one particular brand or audience. What you really want to do is hire for analytical talent, for empiricists, not hire for any kind of supposed social expertise.

The more they say they’re an expert, the more they’re clouded by a few things that worked in a prior role. Instead of saying, “let me go see what works in this case.”

You’re talking about 22-year-olds right out of college? There are empiricists in that group?

There are. We hire them.

Do they have to be 22? Could a 40-year-old do this?

It helps to be in the demo. Because the mechanics of it, when they’re natural and you speak it fluently, as a first language — you have good intuition about what kind of things to try. And then if you’re oriented analytically, all you care about is running a bunch of experiments, and seeing what works and what doesn’t.

So what do you have these 22-year-olds do?

Experiment a lot. That’s how you generate all kinds of insights that you want.

And then really institutionalize what works and what doesn’t. That’s been really hard. In the old SEO days, you had a guy sitting off in corner, who told you “Oh, use an underscore instead of a dash in your URL.”

Now what’s much more effective is to have folks testing things, measuring them, and then making sure that when you learn something, it’s institutionalized in a playbook your entire social media team can refer back to and implement. The institutionalizing turns out to be where all the value is. It doesn’t help you to know what works for the audience if you don’t implement it every day.

Everything you’re talking about here is about framework and structure. What about the content of the actual stuff you put on Facebook? I remember hearing that people like sharing happy stuff more than negative stuff.

That’s true, but it changes by audience. We ran a set of experiments on whether happy stories or stories about life’s foibles resonate more. It turns out that for “Real Housewives” fans on the East Coast, all the stories about foibles were getting about 30 percent higher performance. On the West Coast, all the happy events — the weddings, the birth announcements, were doing far better.

That’s why I say that anybody who has a general rule is probably leading you in the wrong direction.

And how do you ensure that people don’t just see your stuff on Facebook, but actually click through and end up on your site?

There are two pieces to measure: Impressions and how much visibility it got, and then click-through rate.

Impressions are largely based on what came before — not how that particular post is doing. It’s based on what Facebook thinks the audience interest is going to be. They make a guess, before that post shows up, of whether it’s going to be interesting, mostly based on how strong your relationship is with the brand that’s publishing it.

So this is either a vicious or virtuous cycle? If I’m putting out stuff that people aren’t clicking on, then Facebook will promote it less, and fewer people will see the next one?

Exactly.

What happens when Facebook changes up what it thinks is important? They’ve been pretty up front about the fact that they’re constantly fiddling with their dials.

There’s parts of Facebook that are super volatile — like the social readers. But the basic relationship between the brands and their fans is much much more stable.

Let’s say I work for a Web site that covers technology. How do I Facebook better?

The most important thing you can do, to start off with, is to look at how many posts a day you are putting out there, and what times of day. That let’s you create an analysis of what’s worked and what hasn’t before. You can get started manually with a giant Excel table and a lot of data entry.

That seems like a lot of work.

The opportunity is way bigger than most people realize. For most sites, they get about 4 percent of their traffic from Facebook. We’ve been able to 10x that.

Sailesh wondered aloud, “How much time do we have for any of these?” “How many of them can coexist?” and “Do we really need them?” My answers were, respectively: “A lot.” “Many of them.” and “No, but we want them.” That dinner discussion prompted some observations that I am outlining here, and I invite you to share your own observations in the comments below.

In a nutshell, the Internet has evolved from being a need-driven utility medium with only a handful of winners to a discovery-driven entertainment medium with room for multiple winners. The necessary and sufficient conditions for this evolution are now in place — broadband, real names and tablets are the three horsemen of this New New Web. As consumers, entrepreneurs and investors, we should get used to the fact that the online economy is increasingly blurring with the offline economy, and in the limit, that distinction will disappear. As a result, just as in the real world, the Web of entertainment will be much bigger than the Web of utility.

A Theory of Human Motivation
One framework for understanding the consumer Internet is Maslow’s Hierarchy of Needs, which Abraham Maslow put forward as a way of explaining human behavior at large. The core premise is that once our basic needs of food, shelter, safety and belonging are satisfied, we tend to focus on things that are related to creativity, entertainment, education and self-improvement. A key aspect of this framework is that it’s sequential: Unless the basic needs are met, one cannot focus on other things. As an example, a study in 2011 showed that humans who are hungry will spend more on food and less on non-food items compared to those who are not hungry. Using this framework, we can see how consumer adoption of the Web has evolved over the last 20 years, and why all of the ingredients are only now in place for consumers to use the Web for what Maslow called “self-actualization” — a pursuit of one’s full potential, driven by desire, not by necessity.

1992-2012: Web of Need
Between the AOL IPO in 1992 and the Facebook IPO last month, the Internet has largely been in the business of satisfying basic consumer needs. In 1995, the year Netscape went public and made the internet accessible to the masses, I was a young product manager for a consumer Internet company called Global Village Communication. We were a newly minted public company and our hottest product was a “high speed” fax/modem with a speed of 33.6 kbps. Back then, using the Internet as a consumer or making a living off it as a business was rather difficult, and sometimes simply frustrating. In the subsequent years the basic needs of access, browser, email, search and identity were solved by companies such as AOL, Comcast, Netscape, Yahoo, Google, LinkedIn and Facebook.

2012-?: Web of Want
Today, the billion users on Facebook have reached the apex of Maslow’s hierarchy on the web. All of our basic needs have been satisfied. Now we are in pursuit of self-actualization. It is no surprise that on the Web, we are now open to playing games (Zynga, Angry Birds), watching video (YouTube, Hulu), listening to music (Pandora, Spotify), expressing our creativity (Instagram, Twitter, Draw Something), window shopping (Pinterest, Gojee*) and pursuing education (Khan Academy, Empowered*).

The Web Is Becoming Like TV
How do we make sense out of a Web where multiple providers coexist, serving groups of people who share a similar desire? Turns out we already have a very good model for understanding how this can work: Television. Specifically, cable television. The Web is becoming like TV, with hundreds of networks or “channels” that are programmed to serve content to an audience with similar desires and demographics. Pinterest, ShoeDazzle, Joyous and Alt12* programmed for young, affluent women; Machinima, Kixeye and Kabam programmed for mostly male gamers; Gojee* for food enthusiasts; Triposo* for travellers; GAINFitness* for fitness fans and so on.

In this new new Web, an important ingredient to success is a clear understanding of the identity of your users to ensure that you are programming to that user’s interests. The good news is that unlike TV, the Web has a feedback loop. Everything can be measured and as a result the path from concept to success can be more capital efficient by measuring what type of programming is working every step of the way — it’s unlikely that the new new Web will ever produce a Waterworld.

Why Now? Broadband, Real Names & Tablets
As my partner Doug Pepper recently wrote, a key question when evaluating a new opportunity is to ask “Why Now?” Certainly, companies like AOL, Yahoo and Myspace have tried before to program the Web to cater to interests of specific audiences. What’s different now? Three things: Broadband, real names and tablets.

The impact of broadband is obvious; we don’t need or want anything on a slow Web. With broadband penetration at 26 percent in industrialized countries and 3G penetration at about 15 percent of the world’s population, we are just reaching critical mass of nearly 1B users on the fast Web.

Real names are more interesting. In 1993, the New Yorker ran the now famous cartoon; “On the Internet, nobody knows you’re a dog.” This succinctly captured the state of the anonymous Web at the time. Reid Hoffman and Mark Zuckerberg changed that forever. Do we find Q&A on Quora to be more credible than Yahoo! Answers, celebrity profiles on Twitter more engaging than Myspace and pins on Pinterest more relevant than recommendations on early AOL chatrooms? I certainly do, and that is largely because Quora, Twitter and Pinterest take advantage of real names. Real names are blurring the distinction between online and offline behavior.

Finally, the tablet, the last necessary and sufficient piece that fuels the “Web of want.” The PC is perfect for the “Web of need” — when we need something, we can search for it, since we know what we are looking for. Searching is a “lean-forward” experience, typing into our PC, either at work or at the home office. The Web over the last decade has been optimized for this lean-forward search experience — everything from SEO to Web site design to keyword shortcuts in popular browsers makes that efficient. However, smartphones and tablets allow us to move to a “lean-back” experience, flipping through screens using our fingers, often in our living rooms and bedrooms, on the train or at the coffee shop. Tablets make discovery easy and fun, just like flipping channels on TV at leisure. These discoveries prompt us to want things we didn’t think we needed.

Early Signs
This thesis is easy to postulate, but is there any evidence that users are looking to the Web as anything more than a productivity platform? As has been reported, mobile devices now make up 20 percent of all U.S. Web traffic, and this usage peaks in the evening hours, presumably when people are away from their office. Analysis from Flurry* shows that cumulative time spent on mobile apps is closing in on TV. We certainly don’t seem to be using the Web only when we need something.

Economy of Need Versus Want
The economy of Want is different from the economy of Need. We humans tend to spend a lot more time and money on things we want compared to things we need. For example, Americans spend more than five hours a day on leisure and sports (including TV), compared to about three hours spent on eating, drinking and managing household activities. Another difference is that when it comes to satisfying our needs, we tend to settle on one provider and give that one all of our business. Think about how many companies provide us with electricity, water, milk, broadband access, search, email and identity. The Need economy is a winner-take-all market, with one or two companies dominating each need. However, when it comes to providing for our wants, we are open to being served by multiple providers. Think about how many different providers are behind the TV channels we watch, restaurants we visit, destinations we travel to and movies we watch. The Want economy can support multiple winners, each with a sizeable business. Instagram, Path, Pinterest, ShoeDazzle, BeachMint, Angry Birds, CityVille, Kixeye, Kabam, Machinima and Maker Studios can all coexist.

Investing in the Web of Want
The chart below shows that over a long term (including a global recession) an index of luxury stocks (companies such as LVMH, Burberry, BMW, Porsche, Nordstrom) outperforms an index of utility stocks (companies such as Con Edison and Pacific Gas & Electric that offer services we all need). The same applies to an index of media stocks (companies such as CBS, Comcast, News Corp., Time Warner, Viacom) which outperforms both the utilities and the broader stock market. Of course, higher returns come with higher volatility — Nordstrom’s beta is 1.6 and CBS’ beta is 2.2, compared to 0.29 for PG&E. It is this volatility that has cast investing in the Want business as a career-ending move in Silicon Valley for the past 20-plus years. As the Web evolves from serving our needs to satisfying our wants and, in turn, becomes a much larger economy, sitting on the sidelines of the Web of Want may not be an option.

Let’s Not Kill Hollywood
With a billion users looking for self-actualization and with the widespread adoption of broadband, real names and tablets, the Web is poised to become the medium for creativity, education, entertainment, fashion and the pursuit of happiness. As the offline world shows, large, profitable companies can be built that cater to these desires. Entrepreneurs and investors looking to succeed in the new new Web can learn quite a few lessons from our friends in the luxury and entertainment businesses, which have been managing profitable “want” businesses for decades. The fusion of computer science, design, data, low friction and the massive scale of the Internet can result in something that is better than what either Silicon Valley or Hollywood can do alone. It is no wonder that the team that came to this conclusion before anyone else is now managing the most valuable company in the world.

Epilogue
When we go see a movie or splurge on a resort vacation, we don’t stop using electricity, brushing our teeth or checking our email. The Web of Want is not a replacement for the Web of Need, it is an addition. Many of the Internet companies that satisfied our needs in the last 20 or more years of the Web are here to stay. In fact, they will become more entrenched and stable, with low beta, just like the utilities in the offline world. Microsoft has a beta of exactly 1.0 — it is no more volatile than the overall stock market. And for those longing for the days of “real computer science” on the Web, do not despair. Just keep an eye on Rocket Science and Google X Labs — there is plenty of hard-core engineering ahead.

Disclosures: * indicates an InterWest portfolio company. Google Finance was used for all of the stock charts and beta references.

Keval Desai is a Partner at InterWest, where he focuses on investments in early-stage companies that cater to the needs and wants of consumers. He started his career in Silicon Valley in 1991 as a software engineer. He has been a mentor and investor in AngelPad since inception. You can follow him @kevaldesai.

Online video is exploding, with annual user growth of more than 45 percent. Mobile-device time spent increased 28 percent last year — with average smartphone time spent doubling. And social networks are now used by 90 percent of U.S. Internet users — for an average of more than four hours a month.

None of this is a newsflash. Every venture capitalist, Web publisher, and digital marketer is hyper-aware of these three trends.

But what’s happening to the rest of the Web?

The Web Is Shrinking. Really.

When you take these three growth areas out of the picture, the size of the hole left behind is staggering: the rest of the Web — the tried and true core that we thought would have limitless growth — is already shrinking.

Here are the facts:

When you exclude just Facebook from the rest of the Web, consumption in terms of minutes of use shrank by nearly nine percent between March 2010 and March 2011, according to data from comScore. And, even when you include Facebook usage, total non-mobile Internet consumption still dropped three percent over the same period.

We’ve known that social is growing lightning fast — notably, Facebook consumption, which grew by 69 percent — but now it’s clear that Facebook is not growing in addition to the Web. Rather, it’s actually taking consumption away from the publishers who compete on the rest of the Web.

And just what is the rest of the Web?

I have been calling it the “document Web,” based on how Google and other Web architectures view its pages as documents, linked together. But increasingly, it might as well be called the “searchable Web” since it’s accessed predominantly as a reference, and navigated primarily via search.

And it’s becoming less relevant.

In the last year, Facebook’s share of users’ time online grew from one out of every 13 minutes of use nationwide, to one out of every eight. In aggregate, that means the document Web was down more than half a billion hours of use (that’s more than 800 lifetimes) this March versus last March. And in financial terms, that represents a lost opportunity of $2.2 billion in advertising inventory that didn’t exist this year.

The Creation of a New, Connected Web

The change in the Web’s direction is a clear indication to me that we aren’t just in the midst of a boom for new interaction modes, but rather in a generational overhaul of the Internet.

What replaces the declining searchable Web is a new and “fully connected” digital life. You may have heard this before. After all, the promise of the Web was to connect pages with hyperlinks. Well, this time, “connected” means much more. It means the Web connects us, as people, to each one of the individuals online; and those connections, ultimately, extend from one of us to all of us.

Just as significantly, this all happens in real time, and at nearly all times.

And here’s what’s different when you connect people, as opposed to pages: Now, the Web knows who we are (identity), is with us at all times wherever we go (mobile), threads our relationships with others (social), and delivers meaningful experiences beyond just text and graphics (video).

The connected, social Web is alive, moving, proactive, and personal, while the document Web is just an artifact — suited as a universal reference, but hardly a personal experience.

The Social Web Versus the Searchable Web

Analytical explanations — increasing smartphone penetration, bandwidth availability, and technology sophistication — fill in some of the gaps as we try to understand this sea change, but they fall short.

Something larger is afoot, and it’s not about science or technology. Rather, as human beings, we have changed how we fit the Internet into our lives.

And the nature of the Web is changing to match. The old searchable Web is crashing; while the new connected, social Web is lifting off.

The implications for publishers are massive.

The last decade has been defined by the rise of Google as the nearly limitless supplier of traffic to digital media properties. And so a generation of digital media publishers developed and followed the same playbook: create lots of content around top keywords, engineer for search engine optimization (SEO) and expand the surface area in search engines to reach more users. The objective was to catch visitors in their net; expand reach — as measured by ComScore — look more impressive to advertisers and capture more demand.

The landscape is changing, and fast.

SEO’s strategic value is quickly fading as Google’s growth slows and its prominence in distribution slides away. In its place, Facebook has become the wiring hub of the connected Web — a new “home base” alternative to Google’s dominance of the last decade. Facebook began receiving as many visits as Google in March 2010, and already garners more than three times as many minutes as Google each month from users, according to comScore. Looking ahead, the best projections of U.S. online reach indicate that Facebook will surpass Google on that metric in less than a year, too.

And with this change, the nature of the relationship between users and publishers is being altered fundamentally — and perhaps forever.

Search offers a utility relationship, connecting users to content for the briefest of transactions; typically, it provokes users to just one pageview so they can find a piece of information, and then they move on.

But social discovery builds a relationship. Leveraging social endorsements and an environment of serendipitous discovery, consumers meet publishers in a meaningful context. As a result, the relationship that forms is stronger — and, more importantly for publishers, it’s branded.

Unlike the ecosystem set up by Google, where the search engine ironically intermediates between users and the objects of their queries (so that users reinforce their loyalty to Google, far more than to the publisher), in the world of social publishing, the Facebook hub enables a direct, if constrained, relationship between users and media brands.

The results — at least for my own company, Wetpaint — are that social media brings more qualified eyeballs and retains them. People who come via social media stay longer on the first visit; and they are more likely to come back sooner and more frequently. Overall, our visitors from social networks have a relationship that’s several times stronger — and several times as valuable when measured in engagement, pageviews, and revenues — than the relationships people form when then arrive through search.

The Human Connection

But it’s not just a change in mechanics. It’s a change in our human relationships.

Lewis D’Vorkin, the Chief Product Officer at Forbes, speaks of it when he and Alex Knapp talk about “live” media, quantum entanglement and mutually rewarding relationships that bind authors and readers on the new connected Web. It’s a sense of the Web moving from static published reference to living digital companion.

But there’s even more, and this vast change foreshadows bigger and better impacts on our lives. The greatest innovators in social media are driving exactly along that edge today. As one friend commented recently on the full potential of connected lives, by being joined more closely together, we can increase empathy and meaning, while decreasing isolation.

Toward a Fully Connected Future

Admittedly, we’re early in the replacement cycle when it comes to the connected Web. Even for strong connected Web performers like Huffington Post, Wetpaint, and others, the sum total of traffic from Facebook, Twitter, video, and mobile may add up to only half the total, or less.

But the trend has tipped, and with that tip has come both the business necessity and the human impact potential of elevating the relationship.

As the document Web of old shrinks, the new connected Web expands and delivers experiences that make our time online more effective, efficient, and enjoyable.

And that changes the role of companies on the Web from mere content publishers or providers to truly connected digital partners for real people.

Ben Elowitz (@elowitz) is co-founder and CEO of web publisher Wetpaint, and author of the Digital Quarters blog about the future of digital media. Prior to Wetpaint, Elowitz co-founded Blue Nile (NILE). He is an angel investor in media and e-commerce companies.

According to sources close to the situation, Yahoo has grabbed one of Huffington Post’s top editors, Jai Singh, to become its editor-in chief.

The move is a big one in the online editorial arena. Before moving to the HuffPo as managing editor in 2009, which is now the key content unit of AOL, Singh ran CNET Networks.

UPDATE: Yahoo confirmed the hiring in a press release below.

A Huffington Post spokesman said:

“This is about geography–Jai made clear his desire to move back to California, where his family is located. He moved from California to work with us and, unfortunately, this job requires his being in the newsroom in New York. We loved working with him, wish him well with his new job, and look forward to staying in touch.”

Sources said Yahoo sent out an internal memo earlier tonight outlining the move, which is a whole new role at Yahoo. It’s below–natch!–from Yahoo Media head Mickie Rosen.

Hi Americas!

As we discussed at last week’s All Hands, we will continue to strengthen and grow Yahoo!’s position as the premier digital media company by expanding our original content, bringing unique voice to each property, turning Yahoo! into the place for big events, and helping to drive best-in-class tools and practices in social, SEO and publishing tools and operations.

In just the past few days since we were together, we set new records with our coverage of the Royal Wedding. And with last night’s news of Osama bin Laden’s death, we will likely create new ones. This proves the point that consumers turn to Yahoo! to be entertained and informed. We are the place consumers turn to when news happens.

With this context, I am thrilled to announce that Jai Singh will be joining Yahoo! as the Editor-in-Chief of the Yahoo! Media Network. Jai joins from AOL, where he was managing editor of the Huffington Post Media Group, responsible for the day-to-day editorial operations of all AOL content.

Prior to AOL, Jai was the Managing Editor of the Huffington Post where he developed its voice, doubled its number of vertical sections, and helped grow unique users by six-fold. Prior to the Huffington Post, Jai created CNET News.com in 1996, which quickly became a leading authority in technology news. As the editor-in-chief and senior vice president, he was in charge of all editorial and built a news staff that won scores of national journalism awards.

Jai will start May 31st. Below is the press release announcing his appointment.

Go Yahoo!

Best,

Mickie

And here’s the official press release about Singh, which is oddly buried in news of Yahoo’s performance in its Royal Wedding coverage:

Yahoo! Sets Records With The Royal Wedding;
Drives Largest Traffic Day for Single Event

Names Jai Singh Editor-in-Chief of Yahoo! Media Network

SUNNYVALE, Calif., May 2, 2011–Yahoo! Inc. drove its largest traffic numbers for a single event last week when the world turned to the company for coverage of the Royal Wedding. Over a 24-hour period on Friday, April 29, 2011, Yahoo! drove more traffic and video to its coverage of the wedding than any previous event.

Preliminary internal data shows that Yahoo! sites serving Royal Wedding content drove 400 million page views on Friday, slightly higher than the traffic levels experienced following the Japan earthquake. Yahoo! delivered Royal Wedding content at a record-breaking 50,000 requests per second on Friday, seven times the average daily peak of approximately 7,500, and video traffic was 21% higher than the previous record. In comparison, there were approximately 33,000 requests-per-second following the Japan earthquake and today, at press time, peak requests-per-second was 40,000 for content related to the death of Osama bin Laden. Yahoo! also drove approximately 30 million unique users, 27 million video streams and 2.6 million live video streams over the 24-hour period on Friday.

In the last three months, coverage of the Royal Wedding and the Academy Awards has demonstrated that Yahoo! is where global consumers come to be entertained with rich content no other online company offers. Similarly, when news breaks, Yahoo! is the world’s trusted source for in-depth coverage, from the ongoing crisis in Japan to the death of Osama bin Laden. Yahoo! is the number one online site, reaching 180 million unique users and maintains a portfolio of 10 number one sites in the U.S., including Yahoo! News, Yahoo! Sports, Yahoo! Finance, omg!, Yahoo! Shopping, Yahoo! Real Estate and Yahoo! TV (data: comScore March 2011). Yahoo! attracts more than 680 million users globally.

In effort to extend and accelerate the company’s leadership positions and further develop a unique and distinct voice across its brands, Yahoo! today announced that it has appointed Jai Singh, editor-in-chief for the Yahoo! Media Network.

As editor-in-chief, Singh will help transform the company as it increases its original content creation, build the unique voice and programming of Yahoo!’s leading properties, and help drive best-in-class tools and practices–such as publishing platforms, aggressive social and SEO distribution–and programming across all platforms. Singh will be a key member of the Yahoo! Media Network leadership team led by Mickie Rosen, senior vice president of Yahoo! Media Network. Based in Sunnyvale, Calif., Singh starts May 31 and will be spending significant time with editorial teams based in Santa Monica, Calif., and New York City.

“Jai’s appointment comes on the heels of one of the most event-filled news weeks in Yahoo! history, which underscores the importance of our editorial operations,” said Rosen. “Jai is one of the most advanced and respected editorial thinkers in digital media today, and a great addition to our editorial bench strength. It’s clear that when news breaks, the world turns to Yahoo!. Shaping our unique voice, and establishing industry best practices for the next generation of publishing will further Yahoo!’s success as the premier digital media company.”

Singh was most recently managing editor of the Huffington Post Media Group where he was in charge of all day-to-day news management and editorial operations. His responsibilities spanned across both Huffington Post editorial as well as AOL, including AOL content sites. In the two years Singh was at the Huffington Post, the site saw unprecedented growth–the number of sections more than doubled to 24, as did the number of editorial staff, and unique visitors grew nearly six fold, according to Comscore. Besides running the editorial operations, Singh helped drive product development in close partnership with the technology team. Singh was also the main point-of-contact and worked closely with Sales, Sales Development and Business Development.

Prior to the Huffington Post, Singh created CNET News.com in 1996, which quickly became a leading authority in technology news at the height of the Internet boom. At CNET.com, as the editor-in-chief and senior vice president, Singh was in charge of all editorial, including news and product reviews, as well as product development. Singh built a news staff that won scores of national journalism awards at atime when mainstream media were still skeptical of the Internet as a source of credible information.

April showers bring…well, a bad month for the still-young stock of online content maker Demand Media.

After a successful IPO in January, shares of the Santa Monica, Calif., company had stayed largely in the mid-$20 range, including a high of $27.38.

That is, until this month, when gloom in the form of algorithm changes at Google–with the seemingly dulcet code name of “Panda” and designed to weed out poorly made content–appeared to hit SEO-heavy Demand hard.

At first, the updates by the search giant seemed not to effect Demand as much as other sites. But more recent tweaks have caused traffic to its flagship site, eHow.com, to be much more negatively impacted.

And–presumably due to its search advertising-heavy business model–that worry then caused the stock to plummet from above $24 in the beginning of April to yesterday’s close of just above $15.

Since Demand went public, its shares are now down almost 34 percent.

You can see the situation pretty clearly in this Demand stock chart below (click on the image to make it larger):

Of course, this might all be needless panic on the part of Wall Street investors, but the drop has been all too real.

Not surprisingly, Demand acknowledged the dip, but also countered some third-party reports that were more dire.

It tried to staunch that worry on April 18, with a press release and blog post by its Media and Operations EVP Larry Fitzgibbon, which read in part:

…Google recently made significant search algorithm changes in an update dubbed Panda that has rolled out in various capacities from late February thru mid-April. With respect to Panda’s mid-April update, some of our properties saw Google search referrals move up while other properties, including our largest property eHow.com, saw these referrals go down.

As I said in my prior post, we generally do not comment or speculate on changes by major search engines, as these changes can happen nearly daily. However, recent third-party reports attempting to estimate the impact to our search driven traffic, including one projecting a 2/3rds decline in eHow.com traffic, are so significantly overstated that we decided to comment. As discussed in our press release issued today, we currently expect that in Q2 2011 our owned and operated Content & Media properties will generate year-over-year page view growth comparable to or greater than the year-over-year page view growth reported for Q2 2010. We have also reaffirmed our calendar year 2011 financial guidance in this press release.

That’s why it will be interesting to see what Demand execs will say on its first-quarter earnings call next Thursday, May 5, to explain how it will cope with Panda and–more importantly–what it plans to do to minimize the skadoosh impact on its business and share price.

Jim Bankoff, the fomer AOL exec responsible for buying Engadget for the Internet portal, has grabbed eight staffers who had recently left the huge tech site amid tensions, in order to start a new gadget property.

The site–which is still unnamed and will be run by outgoing Engadget Editor-in-Chief Josh Topolsky–will debut sometime in the fall. It is the first content expansion at the Washington, D.C. sports news site SB Nation, which is helmed by Bankoff.

“The technology we built is applicable beyond sports,” said Bankoff, in an interview with BoomTown tonight. “It was an opportunity to apply our model…into another content category where there was an overlap in demographics.”

That would be fanboys and, well, boys-who-will-be-boys.

UPDATE: In related news, sources said that AOL has zeroed in on Tim Stevens, Engadget’s automotive editor to replace the outgoing Topolsky. The New York-based company had already named Darren Murph as its new managing editor.

Now Stevens will be competing with Topolsky, as well as managing editor Nilay Patel, who will also lead the Engadget tech-exodus (techxodus?). The others include former Engadget staffers Paul Miller, Joanna Stern, Ross Miller, Chris Ziegler, Justin Glow and Dan Chilton.

Stern and Ziegler are still on Engadget’s editors site as current employees.

All of the above had left Engadget in a series of departures of late, all due to increasing unhappiness with AOL’s management and content strategy.

Paul Miller and Ross Miller, who are not related, both stated publicly that they did not like the editorial direction AOL was going in, especially a controversial content strategy document titled “The AOL Way.”

In his blog post, Topolsky threw another smackadoo at AOL, noting “SB Nation believes in real, independent journalism and the potential for new media to serve as an answer and antidote to big publishing houses and SEO spam–a point we couldn’t be more aligned on.”

New AOL content head Arianna Huffington has shifted toward a more journalistic path, but the talent bleed began before AOL’s $315 million purchase of the Huffington Post.

In a blog post, which is embedded below, Topolsky said the new SB Nation gadget site will be similar in pace and topic, but it will be broader than Engadget.

The move is an interesting one for SB Nation, which completed a $10.5 million Series C round, led by Khosla Ventures, in the fall.

It had already raised about $13 million in total venture funding from Accel Partners, Allen & Company and Comcast Interactive Capital, as well as from angel investors such as Ted Leonsis and others in Silicon Valley.

In related news, also restarting tomorrow will be a popular gadget podcast that Topolsky, Patel and Paul Miller had done for Engadget.

The New York Times’ David Carr mentioned the new site in the middle of a column earlier tonight.

Here is Topolsky’s blog post on the move, titled “This Is My Next Project”:

As you may have already heard (or read), there’s some activity going on in the world of Joshua Topolsky. Earlier this evening, David Carr published a piece in the New York Times about a new project that I’m embarking on…and I want to just say a few things about it.

Firstly: yes, this is happening. I’ve decided to join the team at SB Nation to build something brand new in the tech space. Now I know it might seem odd to some that I would be partnering with a sports publisher to build a technology news site, but that’s only half the story. This isn’t just about sports, or tech, or lone silos. What we will build together at SB Nation is a new media company–buoyed by the absolutely incredible work SB Nation has already done in publishing–and part of that new media company will be the as-yet-unnamed gadget and technology site that I’ll be working over the next few months to create. When we launch (hopefully in the fall), I will be editor-in-chief of a property that I hope will inform, entertain, and engage fans of technology in whole new ways.

I should say that I wouldn’t want to build something like this alone, and thankfully, I won’t have to. I’ll be joined by some very good friends at this new venture–people like Nilay Patel, for instance.

Of course, the natural question I’m sure a lot of people have is: why SB Nation? The easy answer is that the people at SB Nation share my vision of what publishing looks like in the year 2011. They think that the technology used to create and distribute news on the web (and mobile) is as important as the people who are responsible for the content itself. And that’s not just pillow talk–SB Nation is actively evolving its tools and processes to meet the growing and changing needs of its vast editorial teams and their audience communities. They’re building for the web as it is now. From the perspective of a journalist who also happens to be a huge nerd, that’s a match made in heaven. SBN isn’t just another media company pushing news out–it’s a testbed and lab for some of the newest and most interesting publishing tools I’ve ever seen. In short, I was blown away when I saw what kind of technology they’re using to get news on their front page and engage audiences, and even more blown away when I started talking to them about what could come next.

But beyond the technology (and possibly more important than the technology), there’s another factor here that’s driving my decision. It’s that SB Nation believes in real, independent journalism and the potential for new media to serve as an answer and antidote to big publishing houses and SEO spam–a point we couldn’t be more aligned on. This is a group of people that not only think independent media works, but are reaping the rewards of new publishing done right. As the fastest growing online sports publisher, they’re seen as a source for credible and honest journalism, which is why industry stalwarts like Rob Neyer have recently joined their ranks (ranks which include hundreds of talented sports experts). This isn’t tabloid page grabbing or content farming–it’s news and insight by and for a passionate and informed group of people. And that’s exactly where I want to be.

So, what happens next? We get to work.

In the coming months I’m going to be laser focused on one thing: building the best tech site in the world–and I would love to hear what you guys think the next phase in technology and gadget news should look like. Ping me with ideas, gripes, or even better–come and work here! SB Nation is looking for new developers as we speak, and as we ramp up to launch, we’ll be bringing on lots of talent to work both on the front page and behind the scenes.

I couldn’t be more excited and enthusiastic about what we can build right now, and I can’t wait to share what we’re going to make with the rest of the world. The months ahead are going to be filled with lots of early mornings and sleepless nights, intense debates, triumphs, and trials–and I can’t wait.

Despite all the polite throat-clearing in the various internal memos coming out of AOL today, with a rejiggering of its content management–including the [elimination of the job] of Media and Studios President David Eun [from the original one he had been appointed to by AOL CEO Tim Armstrong earlier this year]–what is really happening is what sources said will likely be a [drastic rejiggering of] more recent strategies of how to run its media business.

That is likely to begin with the hip-checking of [a controversial, if miscontrued, internal document titled] “The AOL Way,” which many sources tell BoomTown was [sponsored by Armstrong and created to stress best new media practices, including to garner better traffic], once the $315 million acquisition of the Huffington Post is completed.

[Whatever the original intent of "The AOL Way," it was badly received both inside and outside the New York-based company, thought of as too focused on SEO and not as much on creating the kind of high-quality journalism loudly touted by Armstrong.]

And that could mean a new and [perceptually journalistically friendly] direction forged by its the Web site’s Co-founder and new AOL editorial chief Arianna Huffington will take place.

In fact, much of what has [been put into place since Armstrong took over, from an editorial perspective at least,] is being questioned and reevaluated.

While what exactly that means is still being formulated by Huffington and others at AOL, it will likely not be using most of the mostly by-the-numbers recommendations of the infamous “AOL Way” deck.

Subtitled “Content, Product, Media Engineering and Revenue Management” and leaked to the media, it was all about how the struggling Internet portal thinks about its content properties.

Pretty much like cows to be milked, which has caused endless hand-wringing among the editorial troops at AOL. [While it might have been intended as a "best practices" memo for new media], this should come as no surprise, given damn-the-journalists-full-speed-ahead tone and SEO-overboard themes.

As reported by Silicon Alley Insider on February 1:

* AOL tells its editors to decide what topics to cover based on four considerations: Traffic potential, revenue potential, edit quality and turn-around time.

* AOL asks its editors to decide whether to produce content based on “the profitability consideration.”

* The documents reveal that AOL is, when the story calls for it, willing to boost traffic by 5% to 10% with search ads and other “paid media.”

* AOL site leaders are expected to have eight ideas for packages that could generate at least $1 million in revenue on hand at all times.

* In-house AOL staffers are expected to write five to 10 stories per day.

* AOL knows its sites are too dependent on traffic from AOL.com, and it wants its editors to fix the problem by posting more frequently, with more emphasis on getting pageviews.

[It was Eun's job to push the themes in "The AOL Way,' of course, along with upgrading the content business at AOL, which has become its main focus under Armstrong's turnaround effort.

While Eun has added several measures to stress quality journalism at AOL, since he was brought in from Google with much hype a year ago, having the colorful and influential Huffington as the flagship editorial personality at AOL--paired with trusted Armstrong lieutenant Jon Brod as COO--proved irresistible to the AOL CEO.

Of course, that left Eun without the job he had been hired for, which has now essentially been split among Huffington, Brod and also AOL exec Ned Brody.

And while Armstrong offered him different opportunities within AOL, sources said, with his original position gone in the new regime, Eun declined and decided to depart.]

In his parting email to staff, in fact, Eun continued to stress the numbers achieved under his tenure.

But, at the start, he was clear:

“With the historic acquisition of The Huffington Post, my role and responsibilities as President, AOL Media are changing. Tim and I have discussed at length how I might continue within the new organizational structure, but ultimately there isn’t a role that matches what I am seeking to do.”

Nor, it seems, for “The AOL Way.”

For your enjoyment, here’s Eun in happier days–late January–in a jiggy video he did for the troops:

]]> http://allthingsd.com/20110225/with-david-eun-ousting-the-aol-way-makes-way-for-the-arianna-way/feed/ 0 http://allthingsd.com/20110207/liveaol-explains-its-huffington-post-deal-to-wall-street/ http://allthingsd.com/20110207/liveaol-explains-its-huffington-post-deal-to-wall-street/#comments Mon, 07 Feb 2011 13:55:58 +0000 Peter Kafka http://mediamemo.allthingsd.com/?p=29429 Tim Armstrong and company spent yesterday explaining their $315 million Huffington Post purchase to the press. Now they’re doing the same for Wall Street, via a conference call.

AOL CFO Artie Minson prepped investors for the call with a memo laying out expectations. Short version: AOL thinks HuffPo will earn about $10 million on revenue of $50 million this year (as long as you’re okay with using “adjusted OIBDA” as a proxy for “profit”). It also thinks the purchase will save it $20 million a year, but it’s going to spend around $20 million on restructuring charges when the deal goes through.

I’ll liveblog the call below:

8:02 am: Greetings! About to start now.

8:03 am: On the call: Tim Armstrong, Arianna Huffington, Artie Minson.

8:03 am: Armstrong makes a Super Bowl joke that I can’t quite follow, and I like football. But now praising Arianna, co-founder Kenny Lerer and outgoing AOL CEO Eric Hippeau.

“The Huffington Post is one of the best properties on the Internet.” Armstrong, Huffington and Minson are all BlackBerry users.

8:06 am: On revenue: This gives an opportunity to serve more brand marketers, who are “very interested” in the scale this gives us.

8:07 am: Spending next 30 days on integration. “Really synergies to be had.”

Next steps: Next 72 hours communicating with employees, talking to partners. 1,500 AOL workers on the phone this morning explaining deal to others.

“This may be the smallest disruption” internally of any deal I’ve worked on. Majority of integration done within 35 to 40 days.

8:09 am: We’ve looked at a bunch of companies, though we’re mainly going to concentrate on organic growth. But Arianna is great [many superlatives] and she “also happens to be a woman.”

8:10 am: Here’s Arianna.

8:11 am: “Amazing” how aligned two orgs are.

8:11 am: HuffPo was profitable last year. We were thinking about bringing in additional investors last year, and an IPO down the line. But this made perfect sense.

8:12 am: This deal provides a “dramatic acceleration” for the plans we already had.

8:13 am: Some praise for Patch, AOL’s local strategy.

8:14 am: Can’t wait to start!

8:14 am: Alrighty, then. Here’s Artie Minson with some nuts and bolts.

Actually, it’s some color on the deal. But a lot of it is in the prepared remarks he put out earlier this morning.

8:15 am: Again, $20 million in cost savings here. And again, we’ll have to pay up for restructuring: $20 million for cuts, and $10 million for purchase price.

8:17 am: Still basically reading from prepared remarks. Some bookkeeping talk re: compensation accounting.

8:18 am: Remember, display ad growth coming will finally start showing up second half of this year.

8:19 am: Q&A:

Q: Talk about content strategy. Does HuffPo become hub for content going forward? Does it replace Seed? And how long is Arianna’s contract?

A: “The press” has been talking about our content strategy, so let me be clear–we’re focusing on premium content. Things like Seed and StudioNow are platforms–you can do whatever you want with them, different quality levels, at different types of scale.

And then the other thing that is important about those platforms is the ability they give us to work with advertisers.

One of our main interests in HuffPo is their technology and publishing system. So now we have multiple systems [which he is saying is a good thing]. “Our content strategy hasn’t changed.” The “stuff that was out in the press about the AOL Way” was just one way of doing things. [This is not very convincing]

Arianna, tell us how long you’re going to stay.

8:24 am: Arianna: “I’ve told Tim I want to stay here forever. I want this to be the last act of my life.” Anything I want to do I can do here.

[Sorry, missed next part but it was a defense/explanation of content strategy.]

8:26 am: Armstrong: Arianna has a multiyear contract, but it’s open-ended.

8:27 am: Arianna: By the way, we’re going to bring back commenting to AOL stories, and socialize them.

8:28 am: Q: Why buy instead of partnering? Were there other bidders? Also, how will HuffPo politics affect AOL?

8:28 am: Armstrong: We do partnerships where there is “limited upside to those arrangements” so ” we can really spend time on the areas we want to win”–i.e., we don’t care about sports, we do care about women.

“Arianna is somebody we’d rather have inside our building than outside our building.”

“If there were or weren’t bidders on the other side,” I think we got the right price.

8:30 am: Arianna. “As we’ve said, again and again, Huffington Post was not for sale….Nobody was in a hurry to cash out, everybody believed that we could do an IPO down the road.” It’s just that Tim gave us a great offer. [hrrrm.]

On politics–we used to be all about politics, now we’re not. Just 15 percent of our traffic. We have a divorce section now.

Talking up AOL’s “college” section.

8:33 am: Q: For Arianna: More on Patch, please. What do think about what AOL’s done with it, and what you can do with it?

8:33 am: [Every time Arianna says "local level" I think she's saying "locker level." It's happened at least twice, maybe more, on this call.]

There’s a “greatest person of the day” feature we have, and I think Patch should use that. [Or maybe vice-versa, sorry.] I also like their five percent “giving back” rule, cause marketing, etc.

8:35 am: Armstrong: Again, we can do national and local. That’s important. NFL rights are important, and so are local news stories.

8:36 am: Q: Who’s going to sell what? And can you talk about pricing disparity between AOL and HuffPo?

8:37 am: Armstrong: “We would like to maintain all the people from both sales forces [except for Greg Coleman!]. I think we will end up with a large-scale, large-property organization–I don’t know exactly what that’s going to look like, though.

On sell-through rate: Slightly lower at HuffPo, because they’ve been ramping up traffic, and sales force. On CPM, same story. So we can bring up sell-through rate and CPM, and have a larger sales force. [This is pretty much the best argument for the deal that Armstrong can make.]

[BTW: Good back-channel discussion on Twitter right now about AOL's SEO skills, and the people behind it. None of that coming up during this call right now.]

[Sorry, I meant HuffPo's SEO skills, much of which stem from blueprint BuzzFeed CEO Jonah Peretti set out.]

Q: Why not use equity for this deal?

A: Because our equity is priced too low, essentially. But HuffPo employees did roll over 25 percent of deal consideration into AOL options. So as that equity gets more valuable, they’ll get upside.

8:45 am: Q: In your statement, you talked about OIBDA growth in 2013. More on that please.

Minson–probably going to stick to my prepared remarks on that one.

8:46 am: Last Q: Your acqusitions have been about toolsets or content. As you think about others going forward, what else do you want?

Armstrong: We have long-term vision. On plumbing: We’ve wanted to get platforms and plumbing straightened out, and we’re doing that now. Think about the bones or foundation of a very large property. That’s why we’ve been doing infrastructure, like with video–5Min and GoViral and StudioNow.

Going forward, we’ll be doing infrastructure. And we’ll continue to look at “media properties and media brands” that fit our strategy. [Remember, Web site owners: HuffPo just got 10x revenue.

8:50 am: Minson: But we're very price sensitive and we've walked away from deals.

8:50 am: Arianna: And we like women!

8:51 am: Armstrong sums up: Success "in the Internet space" requires vision and execution. That's this deal. And remember, content and brands become more valuable as tech gets faster, more advanced. And "expect us to stay on strategy and on point" going forward. "We're going to overcommunicate" with both sets of employees as we integrate. [You've been warned!]

And we’re done. Thanks for reading.

[Photo credit: Arianna Huffington]

]]> http://allthingsd.com/20110207/liveaol-explains-its-huffington-post-deal-to-wall-street/feed/ 5 http://allthingsd.com/20110117/perfect-market-raises-another-9-million-to-help-papers-sell-old-news/ http://allthingsd.com/20110117/perfect-market-raises-another-9-million-to-help-papers-sell-old-news/#comments Tue, 18 Jan 2011 05:00:32 +0000 Peter Kafka http://mediamemo.allthingsd.com/?p=28180 Perfect Market doesn’t promise to save the newspaper business. But the company says it can help papers wring more money out of the stuff they’re already making.

That pitch has been enough to raise $19 million for the Pasedena, Calif.-based company, and now it has added another $9 million in a round led by Comcast’s venture capital arm. Earlier investors Idealab, Rustic Canyon Partners, Tribune Company and Trinity Ventures have all re-upped as well.

Perfect Market‘s main offering is a service that hosts big publishers’ old stories in a Google-friendly way, and sells ads against the archived content. The very short pitch: Why let Demand Media and its ilk get all the search ad dollars?

Things are getting more interesting now, though, as the company rolls out analytics and a dashboard that is supposed to help writers and editors figure out how to make the stories they’re writing now make more money in the future, via SEO-like tips.

And they’ll get very interesting down the road, as Perfect Market gives writers and editors the ability to help choose stories that are more likely to generate ad revenue down the line.

That’s either cunning or creepy, or maybe both, but the company isn’t there yet. It has been testing a version of its analytics package with the Tribune-owned Orlando Sentinel, and says it is working on a 2.0 version of its software for release this year. We’ll check back with the company later on….

]]> http://allthingsd.com/20110117/perfect-market-raises-another-9-million-to-help-papers-sell-old-news/feed/ 0 http://allthingsd.com/20101219/top-docs-on-scribd-in-2010-prop-8-p-%e2%89%a0-np-gop-pledge/ http://allthingsd.com/20101219/top-docs-on-scribd-in-2010-prop-8-p-%e2%89%a0-np-gop-pledge/#comments Mon, 20 Dec 2010 06:00:25 +0000 Liz Gannes http://networkeffect.allthingsd.com/?p=1409 Document-sharing site Scribd has compiled its own year-end list for 2010, ranking its user-uploaded docs by the number of times they were shared, commented on, liked, starred and embedded.

In the No. 1 spot was the California District Court ruling on gay-marriage voter initiative Proposition 8. Uploaded by GoodAsYou.org shortly after the ruling came out in August, the document was Scribd’s most viral ever. The start-up provided a timeline showing how it was spread (image embedded; click to enlarge).

We should note that Scribd did not provide a list of docs ranked by number of views. CEO Trip Adler said such a list would be dominated by random items that have good search engine optimization, like a scan of an Indian phone book that has long been one of Scribd’s most-viewed documents of all time. Scribd, which now has 60 million monthly uniques, attributes much of its growth to its improvement of social sharing features.

The No. 2 most-shared doc on Scribd in 2010 was the surprising claim of proof of the computer science problem P ? NP from earlier this year. Uploaded by Vinay Deolalikar of HP Research Labs in August, the paper seemed to show that a class of computationally intensive problems could not be solved using simple algorithms.

In the third spot was the Republican political platform “GOP Pledge to America,” uploaded in September by CBS News. The draft lays out policy principles on the economy, healthcare and national security.

I find it interesting that Scribd’s most social documents are more often notable for newsworthiness than timelessness. The United States Court of Appeals for the Ninth Circuit heard oral arguments earlier this month appealing the Prop 8 decision that was posted on Scribd. And as for P ? NP, while many computer scientists believe the claim in the paper on Scribd is correct, the proof itself is not seen as conclusive.

The rest of Scribd’s 2010 social docs list is a similar mix of newsworthy documents and research, as well as a little levity, including a list of 25 macaroni-and-cheese recipes.

1. California Prop 8 Ruling (Good As You)
2. PNP 12 pt (Angelica Lim)
3. GOP Pledge to America (CBS News)
4. Scribd in HTML5 (Scribd)
5. A Statement to the Viewers of Countdown (Brian Stelter)
6. Marijuana Is Safer (Chelsea Green)
7. Cognitive Biases–A Visual Study Guide (Efern211)
8. Using Facebook to Move Your Business Forward (Facebook)
9. 25 Mac & Cheese Recipes (Gooseberry Patch)
10. Influence and Passivity in Social Media (Hewlett-Packard)

25 Mac & Cheese Recipes by Gooseberry Patch

]]> http://allthingsd.com/20101219/top-docs-on-scribd-in-2010-prop-8-p-%e2%89%a0-np-gop-pledge/feed/ 1 http://allthingsd.com/20100908/google-new-search-wont-boost-revenues-in-an-instant/ http://allthingsd.com/20100908/google-new-search-wont-boost-revenues-in-an-instant/#comments Wed, 08 Sep 2010 19:07:51 +0000 Peter Kafka http://mediamemo.allthingsd.com/?p=23226 Google’s Instant is very fast, but the digerati are almost as quick: The search giant just rolled out its new real-time search feature (see John Paczkowski’s excellent liveblog), but Twitter’s shoutier members have already assessed it.

Conclusions: It’s really cool! And also, it’s totally, definitely, going to kill someone!

Exactly who that will be is unclear: Maybe it will be Microsoft’s (MSFT) Bing! Maybe it will be Twitter, which is supposed to be “real time,” too! Or maybe it will be the dark arts of search-engine optimization!

Maybe! Or maybe it will be more like Apple’s (AAPL) Ping, which was declared a MySpace Music killer before Steve Jobs finished presenting it last week. Now that people have actually used Ping, though, it seems less homicidal and more benign/inept.

In any case, one thing Google Instant won’t do is make any significant impact on Google’s P&L. So says J.P. Morgan’s (JPM) Imran Khan, in a note he just published (almost instantly!). His big takeaways:

It won’t make Google (GOOG)  any more money, in the near-term:

We think this new product will have little to no impact on monetization rates. We see this product as an improvement to user functionality and think that its impact on advertisers will be limited. All of the ads typically associated with the suggested search appear as normal as the query is being entered. No changes have been made to serving or ranking. Although the constant updates to the results page may result in more ads served as a person types a query, this should only impact CTRs not the number of clicks as a user will not likely click on an ad until the appropriate results appear.

But it won’t cost Google anything, either:

Management expects the impact on costs to be in line with their existing search cost growth curve. Engineers adjusted the product to have as minimal an impact on servers and data centers as possible. Management expects the impact to be in line with the existing search cost growth curve.

But! If people like it (it really is cool), and that prompts them to search more, then that’s a good thing for Google, long-term.

OK! Back to the killing fields!

]]> http://allthingsd.com/20100908/google-new-search-wont-boost-revenues-in-an-instant/feed/ 1 http://allthingsd.com/20100812/anyone-want-to-offer-free-seo-advice-to-a-former-businessweek-e/ http://allthingsd.com/20100812/anyone-want-to-offer-free-seo-advice-to-a-former-businessweek-e/#comments Thu, 12 Aug 2010 13:22:13 +0000 Peter Kafka http://mediamemo.allthingsd.com/?p=22578 Former Businessweek editor John Byrne has a new site up, and he’s understandably proud: PoetsandQuants has an impressive-looking survey of the top MBA programs and a slew of related stories. (Not a coincidence: Business school rankings are a big asset for Businessweek too.)

The problem, as Byrne explains in a blog post, is that Google (GOOG) doesn’t seem to care. Or at least not in the way he’d like it to: Search for “poetsandquants” and you’ll find many references to the site, including the site’s Twitter and YouTube accounts, but no direct links to the site itself.

And, frustratingly, many of the links that Google does show searchers are simply scraping/Google gaming sites with no connection to Byrne’s site at all. Byrne:

As you go through the first five pages of Google results, there are all kinds of websites that have essentially highjacked Google, rendering its search product less useful and helpful to users. There’s a so-called weblog that is little more than a place to advertise Viagra and Cialis. There’s links to TweetMeme, Interceder, tweetcepts, twapperkeeper, rallyclips, and whotechpunditstweet, among many others. Most of them are search traps that have gamed Google. There’s even a link to one fool who has no idea who I am yet calls me a “douchebag” on page three of Google’s results for PoetsandQuants. (See the screenshot below to get a real glimpse of how bad Google’s results are.) Get through the first ten pages of results and there is still not a direct link to the site.

Two thoughts:

• Join the club, John. You’re now one of many publishers who have a gripe with Google.
• The fact that you’re one of many doesn’t make your gripe less worthy. And this sort of thing really should be worrisome for Google. It’s not that the search engine is ignoring your site–it’s that it is sending searchers to the wrong place. This happens much too often, and it’s a huge hole for a competitor to exploit.

I assume that Byrne, and Google, will sort this out fairly quickly–Bryne doesn’t tell us whether he’s been able to get ahold of a human in Mountain View to hash this out. And perhaps a link from this site will help!

But I also assume that Byrne, as a bootstrapping publisher, has less advanced SEO help than he had at his last gig, which means he’s always going to have some version of this problem.

So. Any generous SEO experts want to offer some advice about ways to solve his problem? You’ve got an open forum in the comments section below.

]]> http://allthingsd.com/20100812/anyone-want-to-offer-free-seo-advice-to-a-former-businessweek-e/feed/ 17 http://allthingsd.com/20100603/richard-rosenblatt-paul-steiger-session/ http://allthingsd.com/20100603/richard-rosenblatt-paul-steiger-session/#comments Thu, 03 Jun 2010 16:10:32 +0000 Peter Kafka http://d8.allthingsd.com/?p=486

What’s the future of the media business? Demand Media, the Google-savvy “content farm” that generates thousands of computer-assigned, low-cost Web items a day? Or ProPublica, a nonprofit that produces deep-dive investigative pieces and publishes them on its own site and in the pages of high-profile partners?

Good guess: Some of both. But let’s allow both parties to make their own case.

Brief background: Demand Media is Richard Rosenblatt’s follow-up to MySpace, which he sold to News Corp. (NWS); Paul Steiger founded ProPublica after a long career at The Wall Street Journal.

Below is the full video of the interview, followed by the liveblog:

Liveblog

9:41 am: Kara asks Paul Steiger to explain what he’s up to.

Steiger: Stories are aimed at abuse of power and empowering people to make change. I started there because when I was leaving the Journal in 2007, the traditional news business was collapsing. We had $10 million in funding and that wasn’t something I could turn down in that environment. I didn’t have time to be worried–I had to leave the Journal because of mandatory retirement age, and my wife said I couldn’t wear sweatpants during the weekday.

9:44 am: Kara to Rosenblatt–Please explain the controversy regarding Demand.

[WARNING: Rosenblatt speaks very quickly. It's unlikely that I'll be able to get more than impressionistic stabs at what he's saying.]

“We only write content that people want….We’re not journalists, all right? The only people that call us journalists are journalists.” That said, what we do is “more like service journalism….There’s no piece of content made that we think is good” because we only make content that people tell us they think is good.

9:46 am: Rosenblatt–We do no marketing. All traffic comes from organic search.

I don’t know why people call this “dreck.” When you do something 6,000 times a day, it always looks like it’s of low-quality. We’re okay with that; we’re continually trying to prove to people that we’re doing good stuff.

We have a deal with USA Today and others that we’ll be announcing.

9:47 am: Kara to Steiger–What do you think of all this?

Steiger: I see this as a reordering of the environment that we’re all going to have to live in. You [Demand] make stuff people want; you control costs, and it’s working. Another model is the Politico model, with a combination of tightly controlled print plus a big Web site. We do the most expensive, the most important journalism for democracy.

Kara: Example?

Steiger: A story we did with the Los Angeles Times about nurses getting bogus licenses. A story about police in New Orleans killing people. There are five or six things like that in the past year where we can point to changes that have taken place because of our stories. These things can cost tens of thousands or hundreds of thousands to produce.

In the old days, that could be a loss leader for for-profit newspapers. Can’t do that anymore, so we need philanthropy. “Silicon Valley, come on in!”

9:50 am: Kara to Rosenblatt–Will you do “Top 10 nurses that beat people up”?

Rosenblatt: No

Kara: Wait a minute! People may want it!

Rosenblatt: I think journalism is important, and the problem is trying to pay for it. We can help publications like USA Today, where we generate content and revenue for them, and they can take that money to fund other reporting. We’re not going to save journalism, but we can help it.

Kara to Rosenblatt: You employ a lot of journalists.

Rosenblatt: Not journalists.

Kara: Former journalists?

Rosenblatt: They may have been former journalists, and they may do journalism somewhere else. We call them freelancers, content creators.

9:53 am: Kara asks Rosenblatt to explain editing/oversight.

Rosenblatt: Eleven people touch this stuff before it gets published, etc. Anyway, let’s say we do 7,000 pieces of content a day. That’s 77,000 individual touches per day, with 10,000 freelancers around the Web. That’s amazing. That’s what the Web is made for.

9:54 am: Kara–How do they get paid?

Rosenblatt: They can get paid by piece or by revenue-share. But most of them prefer to get paid by content, because it’s guaranteed.

9:55 am: Kara–at The Wall Street Journal, we had people who worked for months on a single story. Is that done?

Steiger: The Journal, the New York Times and Washington Post are still vertically integrated and have powerful enough brands and talent that I think they can make it into the next generation.

Kara: Two of those are in dicey shape.

Steiger: Remember that there are two things going on right now. There is a secular shift, with the business model being destroyed. But there’s also a recession. So as that eases, we’ll have a better sense of who can survive.

9:58 am: Steiger–I’d love to go back to 10 years ago, or longer, to the golden age of journalism. But not even Silicon Valley can produce a time machine.

Kara: So do you think even the big newspapers that survive will switch to audience-driven content creation? That’s not what journalism is about.

Steiger: No matter what you’re doing, you’re still making stuff with an idea of what the people who are reading you want. It’s a broader way of thinking about it than Demand, but there’s a common thread.

9:59 am: Kara to Rosenblatt–Where is your actual business? Is it domains?

Rosenblatt: We have two main businesses: Registrar/domains. It’s steady, recurring revenue, and it generates a lot of data. Almost 10 percent of the Web hits our servers via these domains. It’s an exciting source of data.

Then we have the media business. That’s 50 percent bigger, in revenue, than other business and growing fast.

Of that business, less than 10 percent is domain advertising business. Google (GOOG) and Yahoo (YHOO) stick ads on tenniselbow.com, etc. We think that’s a great business also.

Kara: Is your media business profitable?

Rosenblatt: Can’t talk about that.

Kara: Does that mean it’s not profitable?

Rosenblatt: Can’t talk about that.

Kara: But you’re going public, right?

Rosenblatt: Can’t talk about that.

10:03 am: Kara–you’re dependent on Google, right?

Rosenblatt: In the way that everyone is dependent on Google. Or that the iPhone is dependent on AT&T (T). But everyone searches on the Web. So some of our sites, like eHow, are getting traffic from Google. But others aren’t.

If Google changes their algorithm, we think about that. But we spend a lot of care on what we do, and we think there’s a move to quality long-tail content that Google values.

10:05 am: Kara to Rosenblatt–AOL is doing what you’re doing. Yahoo just bought Associated Content. It has more distribution than you do. What does that mean for you?

Rosenblatt: We love that AOL (AOL) and Yahoo are validating what we’re doing. “In a market this big, that’s in the first inning, there’s plenty of room for all of us.”

10:05 am: Kara to Steiger–How do you feel about the kind of journalism you do becoming nonprofit work? Does that depress you?

Steiger: “I’m the opposite of disheartened. I’m very excited.” Yes, the business is shrinking and people are losing jobs, and I don’t want to make light of that. But we’re attracting great people; we’ve won a Pulitzer Prize. The work will get done. The work is crucial to our society, and it needs philanthropic support. But so do orchestras and clinics and universities.

10:07 am: Kara–Is there a way to actually make money doing this?

Steiger: “Conceivably, but I can’t think of what it is.” If you’re focused entirely on this, “at this stage, you need philanthropic help.”

Kara to Rosenblatt: Can you think of how to do this?

Rosenblatt: You can hold a conference and charge people $5,000 a head. [Applause in conference room and in D8 cave.]

Q&A

For Rosenblatt: Why won’t you call your people “journalists”? Steve Jobs was full of venom for “bloggers,” too. Why not call people who write for money “journalists”?

Rosenblatt: If our writers want to call themselves journalists, great. But they’re not doing reporting from Afghanistan. We’re content creators, making things that people want.

Steiger: I just think that the labels get in the way.

Q: Who are those 11 people that touch Demand Media’s content? What do they do?

Rosenblatt: Some people are involved in “titling.” For SEO or social media purposes. Three people are involved in checking each title. Then people involved in each property select stories, depending on the voice. Then copy editors, copy chiefs, writers. We’re actually going to be adding more. We can make it so efficient, that we can add more roles, and everyone can keep making the same amount of money.

Q: What about rolling out content on the domains you run?

A: Not yet. Maybe in coming years. It’s not a focus right now. We do think the assets that you own and we own, we think those assets “have great optionality later” to put content on.

Q for Steiger: Do you share Steve Jobs’s distaste for bloggers?

Steiger: I sleep with a blogger! My wife blogs from 11 pm to 2 am. I’m an enthusiastic supporter of blogging. They bring a lot of audience to ProPublica’s Web site. I think what Steve was getting at is that there’s a danger of too many people commenting and not enough people finding out what’s going on. [I don't think that's entirely what Jobs was complaining about, btw.]

This content-creation session is now over.

A note about our coverage: This liveblog is not an official transcript of the conversation that occurred onstage. Rather, it is a compilation of quotes, paraphrased statements and ad-lib observations written and posted to the Web as quickly as possible. It is not intended as a transcript and should not be interpreted as one.

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]]> http://allthingsd.com/20100603/richard-rosenblatt-paul-steiger-session/feed/ 0 http://allthingsd.com/20090629/sharks-jets-page-views-web-site-story/ http://allthingsd.com/20090629/sharks-jets-page-views-web-site-story/#comments Tue, 30 Jun 2009 00:47:18 +0000 Peter Kafka http://mediamemo.allthingsd.com/?p=8755 Midsummer, short week, which means things could be slow, newswise. Which means you may be seeing more of this sort of thing for the next few days. Here’s “Web Site Story,” College Humor’s latest.

Pretty self-explanatory, but I do want to commend the gents at IAC’s (IACI) video factory for:

1. Trying to broaden their demo to include theater people, as well as parents of theater people and parents of College Humor fans. And…
2. Using some SEO savvy. Name-checking Twitter, Facebook, Evite, eHarmony, Pandora and other Web favorites should help make up some ground this will lose on Digg. Where I assume most users will be bemused, at best.

See more funny videos and funny pictures at CollegeHumor.

]]> http://allthingsd.com/20090629/sharks-jets-page-views-web-site-story/feed/ 0 http://allthingsd.com/20080911/is-google-making-us-stupid-obviously/ http://allthingsd.com/20080911/is-google-making-us-stupid-obviously/#comments Thu, 11 Sep 2008 15:19:28 +0000 John Paczkowski http://digitaldaily.allthingsd.com/?p=4839

Is Google making us stupid?

The answer to that question, recently posed by Nick Carr in The Atlantic, is a resounding yes. At least in the case of Sun Sentinel publisher Tribune.

How else to explain the company’s claim that Google is largely to blame for the six-year-old news story that gutted the United Airlines share price this week?

In a statement issued Wednesday, Tribune (TXA) said that Google’s indexing of the article, “United Airlines Files for Bankruptcy,” on Google News made the story appear new, even though it was originally published on Dec. 10, 2002.

At 1:36:57 a.m. EDT, September 7, (10:36:57 p.m. PDT, September 6), our records show that the Google search agent–known as “Googlebot”–crawled the story on Sun Sentinel’s website. Our records also show that the Google search agent had previously crawled this same story numerous times, including as recently as last week. Shortly after Googlebot crawled the Sun Sentinel site this time, however, a link to the story appeared on Google News, with a date of Sept. 6, 2008, provided by Google. At 1:39:59 a.m. EDT, September 7 (10:39:59 p.m. PDT, September 6), our records show the story on the Sun Sentinel website received its first referral from Google News.

Apparently, sometime Monday morning, the story was made available to subscribers of Bloomberg News.

As we said yesterday, the December 10, 2002, story contains information that would clearly lead a reader to the conclusion that it was related to events in 2002. In addition, the comments posted along with the story are dated 2002. It appears that no one who passed this story along actually bothered to read the story itself.”

Apparently not. Certainly the Income Securities Advisors employee who published the story to the Bloomberg financial news service didn’t. Because if he did, he surely would have noticed the original publication date in the article’s dateline, right?

Wrong. Turns out the article did not have a dateline or an original publication date. There was, however, a date above the article at the top of the Web page on which it appeared: “September 7, 2008.” Add to this the fact that the article had been given eight different URLs and one of them was listed in the most-viewed section of the Sun Sentinel’s Web site and, well … clearly, this was all Google’s fault.

Please.

Publishing a news story at multiple URLs without a proper publication date in the era of search engine optimization, or SEO, seems just a bit irresponsible for a major news organization doesn’t it? Perhaps not as irresponsible as publishing that story to a financial newswire without reading it or, you know, confirming it–but irresponsible nonetheless.

The SEC is looking into the matter.

[Image Credit: blogstorm]

]]> http://allthingsd.com/20080911/is-google-making-us-stupid-obviously/feed/ 5 http://allthingsd.com/20080415/search-market/ http://allthingsd.com/20080415/search-market/#comments Tue, 15 Apr 2008 15:05:27 +0000 John Paczkowski http://digitaldaily.allthingsd.com/20080415/search-market/ Now here’s something you don’t hear every day: Google is losing search market share to Yahoo in the states. According to a new quarterly study by SEO outfit SearchIgnite, spending by search advertisers on Google (GOOG) slipped to 70.4% (down from 74.5%), while spending on Yahoo (YHOO) grew to 24.2% in March from 19.6% at the end of the fourth quarter. Breaking it down month-by-month, Yahoo saw gains of 79.2% in January, 37.3% in February, and 43.9% in March.

A surprising trend, given the general state of affairs over at Yahoo recently and one that may, may, bode well for the first-quarter results the company is due to report on April 22. In the face of Microsoft’s (MSFT) hostile takeover offer and its claims that Yahoo’s business is on a fast downward spiral, Yahoo CEO Jerry Yang has insisted that the company will meet its first-quarter projections.

That may well be the case, if SearchIgnite’s metrics prove accurate. Said Roger Barnette, president of SearchIgnite, “If these numbers are an accurate reflection of the market, it could lead Yahoo to surpass expectations.“

Meanwhile, spending by search advertisers on MSN declined to 5.4% from 5.9%, quarter over quarter. No wonder Microsoft wants Yahoo so badly.

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