The old guard of media have years of status and experience that make them seem more important. The Associated Press’ recent hoopla over links to its articles shows a disconnect from the old guard to the web world. Start-ups dream of getting some New York Times coverage because that would just set them up for success, but they ignore an article in TechCrunch or popular story on Digg might be more valuable.

Martin Varsavsky wrote for the Huffington Post about publicity his company Fon was getting. The New York Times featured him and his company on the cover of the Sunday business section followed by an article in Forbes magazine. But his website only saw 200 new uniques. A popular post on Digg netted him 50,000 uniques.

Varsavsky recognizes the benefits of print media - more resources, physical product, and established reputation. “Paper is more credible than pixels” he says. But if its traffic you need, old media won’t help you.

The Associated Press reminded me of this issue because, even as it whined about other websites sending it free publicity, the A.P. refused to link to other websites. It had no problem quoting them and saying the name of the blog, but wouldn’t include links to the quoted blog. The New York Times has recently started adding links, mostly to their blog and not their articles. Other mainstream media sites leave you the impression there’s nothing else on the web. Even new media companies like IMDB.com won’t provide links to sources, even when quoting them directly.

The issue is these links are incredibly valuable. The major tech blogs and aggregators, TechCrunch, Gigaom, Slashdot, and Digg to name a few, can bring a website down because of all the traffic they send. And once that traffic is on your site, it’s your job to keep them there. 2.3 million people read the Sunday times, but it’s a lot harder to get them to sign online and go to a website. With a link provided, you just click. Easy, no effort, effective.

Mainstream media needs to join the link culture. Linking to other sites isn’t just polite. Many sites (like Prodigeek) show links to sites linking to them. I’ve gotten reliable traffic from several blogs and that traffic inspires me to link to them more. Moreover, I don’t like to link to websites that don’t link at all (unless they’re the original source). I’d prefer to send traffic to other blogs who share in the link culture than news sites that don’t. And companies that are hostile to the link culture get blacklisted.

For companies trying to monetize their website, whether through sales, advertising, or something else, need to put their PR where the traffic is. That means publicize on the TechCrunches and Gigaoms and taste makers of your industry. The credible that comes from a Times article sounds nice, but it isn’t helping you meet traffic goals. As companies (hopefully) recognize this, blogs and websites will gain credibility as they become the next-generation of king-makers, discovering the next Googles, Microsofts, and Facebooks while the mainstream media plays catch up. Mainstream media needs to join the link culture (which includes not suing websites) or get left out and left behind.

Updated 6/24 1:37p.m. - I just read a great post by Chris Brogan on this same subject, noting how the Boston Globe wrote out the link to his blog on their website and newspaper, but didn’t link to it.

The most talked about new web 2.0 sites, from Facebook to Twitter, are facing business model challenges. Scott Karp points out the challenge of print advertising online while Alexander van Elsas goes farther in his post “Advertisement holds web 2.0 in a death grip.”

Web 2.0 has focused on free services - free services that build virally fast and then, hopefully lead to a business model when the venture capitalists get impatient. But banner ads and tier subscriptions aren’t enough.

Advertising, as Karp and van Elsas point out, isn’t useful. Google pioneered ads that use your search terms so they are relevant and unobtrusive, whereas the only thing Facebook can sell me are gay dating sites (Google advertises better ones). The challenge isn’t simply advertising isn’t working, but that you can’t charge people for your services.

Most web services offer a paid option with valuable features. Remember the Milk charges $25 a year just to sync my tasks to my phone. Yahoo Mail wants another $20 to give my email portability. Each service doesn’t cost too much, but add them up, and suddenly the internet got expensive.

Bernard Lunn says social networking “is at a major fork in the road” (leading to web 3.0?) where they have to choose between walled gardened, open APIs, or mix. All the free on the web will need a business model, and every site from social to content providers will find charging customers harder and harder and advertising spread thinner and thinner.

Google’s strength came from reinventing advertising to its strength - search - creating a unique model that let companies and individuals advertise without upfront costs. Amazon and eBay have built retail businesses that couldn’t exist in brick and mortar stores. Most other sites have relied on 7-8 figure buyouts to make money.

Other websites will need to find new business models. Some ideas like market research and statistics, like I discussed for Facebook and other social networks, make excellent use of their large user bases, but will lead to a decrease in value when every social site starts offering this research. Further, with open source and APIs all the rage, regular pageviews will become less reliable as people use services how they want, not how the websites want them to. For example, advertising will work even less for content providers once RSS readers takeover the mainstream.

This is a lot of doomsaying without many solutions. I think sponsorships and product placement has potential, but again, it’s going to be impossible to control users. The best business models thus far have been enterprise level customer service, best seen in companies like Red Hat which provides customized Linux solutions and and MySQL’s Enterprise Unlimited. Companies will pay for customized services and research which individuals have no use for. Less than one percent of MySQL’s customers pay, but that was enough for Sun to pay $1 billion to buy the company.

The focus over the next few years needs to be on developing new and hopefully revolutionary business models that recognize the internet, software, and content want to be free (yes, even music and movies). The old business models required payment, but the future doesn’t have to be constrained by old-fashioned thinking. Think outside the tubes.

Television uses commercials. Movies run ads and endorsements. Video games should join the trend.

Many sci-fi and fantasy video games cannot benefit from in-game advertising. No one wants a Coca-Cola ad in Final Fantasy. But maybe there’s a compromise so video game producers can pad their bottom lines and gamers don’t have to sacrifice quality. Video games can be sponsors by companies themselves. Just like a TV special brought-to-you by a lone or small group of advertisers, a video game could be brought-to-you by a car company or soft drink.

There are a variety of ways to implement this. The game could come with a commercial a the beginning, skipable with the start button. Even if the commercial is skipped, every time you play the game you see some quick logo to remind you of the sponsor. Before you scream at me, think about how many times you already have to hit start for all the game company logos you have to sit through (do I care that much that Havok’s physics engine was used again). One more time ain’t going to kill you, especially if it cuts $10 off the price tag (or at least allows for a bigger budget and a better quality game).

Also the game box could be valuable real estate. On the back of each game bottom, there already reside soon-to-be a dozen logos of game companies and partners. Why not charge McDonald’s a million dollars to put their logo there too? And to not piss off the gamers, maybe toss a coupon in the game. For even more synergy, let McDonald’s share commercial time or sponsor free trailers and demos. Advertising won’t suck if it gives us something cool at the same time.

Production costs for video games are rising fast scaring away ambitious development (damn casual gamers). Finding a variety of revenue opportunities can calm anxious executives worried about the bottom line and, hopefully, at the same time give gamers some added value.

How did you discover that new web game or hilarious video? Between social bookmarking, social networking, socializing, the internet has made sharing information and ideas as simple as pointing and clicking. So do we need anointed trend setters anymore? Two conflicting theories are hashing out the marketing debate, but both forget to give credit to the real influencer - the internet. The internet has flattened the playing field for anybody to contribute to starting or spreading a trend.

Marketing conventional wisdom has followed the teachings of books like The Tipping Point by Malcolm Gladwell and The Influentials by Jon Berry and Ed Keller. These books claim a few well connected individuals inspire the vast majority in terms of the clothing we wear or movies we watch. These people are often called influentials. Marketing companies promote their connection with these influencers and often focus advertising budgets strictly to reaching this oligarchy of culture.

New research is challenging this conventional wisdom. Clive Thompson writes for Fast Company about Duncan Watts research on social trends.

[Duncan Watts] has analyzed email patterns and found that highly connected people are not, in fact, crucial social hubs. He has written computer models of rumor spreading and found that your average slob is just as likely as a well-connected person to start a huge new trend. And last year, Watts demonstrated that even the breakout success of a hot new pop band might be nearly random. Any attempt to engineer success through Influentials, he argues, is almost certainly doomed to failure.

“It just doesn’t work,” Watts says. “A rare bunch of cool people just don’t have that power. And when you test the way marketers say the world works, it falls apart. There’s no there there.”

Watts theorizes trends are more random, or at least harder to track. All the research done on trends has looked at successful trends. Trends that failed to catch on are harder to study. Watts computer simulations give more credit broader social networks, meaning marketing to a larger group is more important than a select group. Simply, if more people know about your product or idea, the odds are more likely someone will share that information.

Continue reading…

Firefox makes web browsing better. You get more information faster and even prettier. One way of doing this is to block ads. All those win-free-stuff-play-this-game ads flash and sparkle often at contrast to hosting page. The New York Times published a story about Adblock Plus, a Firefox plug-in that blocks most web advertisements, and how web content providers are getting worried they are loosing revenue.

The Times, as well as similar articles, point out the similarity between Adblock Plus and television’s TiVo where users can fast-forward through commercials. But as CNet.com points out, the differences are significant. Television deals with a fixed cost regardless of the number of viewers whereas websites have to pay for the bandwidth of each user. Also, TiVo wanted to avoid the fate of ReplayTV which got sued by the television networks for completely skipping commercials. TiVo will only let you fast-forward, not skip. Adblock Plus, as an open-source, free plug-in for all, answers to no one. The response: whyfirefoxisblocked.com. This site offers ways to block all Firefox users from websites to prevent ad blocking (forgetting Internet Explorer has a more complex plug-in as well).

I find Adblock a quandary. First of all, I use Adblock Plus (as well as Comcast DVR). My reason for using Adblock has more to do with saving RAM than blocking ads. I often have several dozen tabs in several windows open. With all those Flash and JavaScript ads, Firefox freezes like it’s on a 14.4k modem. Though I allow ads on Google because I find those helpful (more on that in a bit).

My dilemma is I do think blocking ads like this on the web threatens the budding web economy. Web pundits pressure content sites to forgo the paywall and give out content for free supported by advertising. But then the geekiest of us block the ads preventing the suggested revenue model.

On the other hand, web advertising is annoying. Large animated graphics telling me to dress a naked cartoon girl while reading a story about web server doesn’t make sense. Television, because of the cost to make and buy ads, requires a high-level of quality not yet seen on the web. Even on major sites like Facebook and MySpace, the ads are tacky (and embarrassing for any co-workers look over my shoulder).

Whyfirefoxisblocked.com claims blocking website ads is stealing. This theory sounds unlikely (and probably a byproduct of the piracy debates calling everything under the motherboard stealing). Web content is given out for free, like television. Ads are an agreement between the content provider and the advertiser. Never does the user enter any agreement (websites can’t claim that by using their site, you agree to all their rules, that’s not legally binding). This argument is like saying going to the bathroom during television commercials is stealing the television show.

Unfortunately, at present we are in a catch-22. Web advertising is cheap allowing anyone with a website to make and buy ads. There aren’t enough major advertisers for large websites to hand pick the ads they show (like television shows can). The best logic came from Wladimir Palant, the creator of Adblock Plus, who wrote on his blog:

“There is only one reliable way to make sure your ads aren’t blocked — make sure the users don’t want to block them. Don’t forget about the users. Use ads in a way that doesn’t degrade their experience.”

Web advertising will take lots of experimentation from how much ads to put on a page to placement to visual styles. Pop-ads are disappearing (since pop-up blockers are so effective, but not as bad since they don’t block all advertising) to be replaced by even more annoying overlays that hide their close buttons.

I am a fan of advertising. I like learning about new products which I then, of course, research and gossip about. Even products I don’t care about often make fun and entertaining ads. May more targeted advertising. That’s why I like Google AdWords. They are simple but focused on my search - something I already want. I don’t mind some video game ads when I read IGN.com. Gamespot.com has experimented with options for the ads. For example, if the Marvel: Ultimate Alliance game was advertised, I could pick between Spider-Man, Captain America, or Wolverine to be my background. Focused, entertaining, and immersive. That’s good advertising. And I wouldn’t want to block that.

The massive, and occassionally copyright infringing, user content of YouTube makes advertisers nervous if not downright confused how to reach users. So here is My Pitch for YouTube to attract advertisers without allienating its independently minded users.

Have a company, or several companies, sponsor biweekly or monthly contests where users are to create their own commercials for these companies. The commercials, or short films, must feature that company’s product. The company(ies) then offer prizes: money, video equipment, coupons. Users then vote on their favorite videos, providing constant views who will watch several “commercials” featuring said product. The company will also pay YouTube a certain amount, in a sense, paying to advertise the contest. One contest can be the “Featured” contest of the month with two or three smaller ones for additional revenue (and fun).

Users keep control of the content while advertises get very inexpensive yet addictively interactive commercials.

My Pitch is a semi-regular column where I propose a possible solution or idea for evolving media and business in the new media.