Dylan Hunter

From eMarketer, (they’ll lock it up soon, but out of fairness, here’s the link until they do):

Search Engines Help Small Businesses

MAY 22, 2007

Small businesses depend more on search engine traffic than larger firms, according to a study conducted by Hitwise in early 2007.

The firm measured the percentage of average monthly traffic companies in the Internet Retailer “Top 500 Guide” received from search engines in 2005 and 2006. Half of the businesses ranked from the 400th to the 500th positions depended on search engines for 50% or more of their total site traffic.

By comparison, none of the top 100 retailers generated more than 40% of their site traffic from search engines, and half had between 20.1% and 30% of their traffic come from search engines.

Web-only merchants averaged 64% their of monthly site traffic from search engines.

Chain retailers and consumer brand manufacturers averaged 28% and 27% of their site traffic from search engines, respectively.

Very glad to hear that AOL took the “riskier” path, (see prior discussion on my post here and that it’s doing so well for them.

New York - A Time Warner executive said on Tuesday that the media giant’s strategy to offer AOL’s content for free has attracted new users at a faster rate than expected, Reuters reported. Jeffrey Bewkes, Time Warner’s COO, told investors that 40% of the service’s new users were not previously paying subscribers, adding that AOL’s advertising sales have been “very robust.” Bewkes also said that former subscribers were adopting AOL’s free services more quickly than originally predicted, Reuters reported. The company announced its radical change in strategy in early August, all-but abandoning its dial-up Internet model in an attempt to increase its ad revenue by attracting larger numbers of users.

More temporarily here. Unfortunately, since Yahoo keeps expiring their news articles, which really makes for a significant hole in the discussion if one reads one of my prior posts, am sure will be finding a good substitute soon. BTW - note to Yahoo: Please seriously rethink this expiring thing - I know one of the last things you care about anymore is linklove, but for those of us writing about stories you post, you’re really giving us every incentive to find someone else to use / link to / send traffic to. Does that sound like a good long-term strategy for an online media company?

Whew, does this one bring up some haunting memories of some very similar conversations we had back at ATW a long time ago. We, like AOL, were generating far and away more revenue from an older, dying, rev stream, with major downward pressure on it, (ours being white label B2B licensing fees - dropping even more precipitously than AOL’s - down 80% in 16 mths) with new customer win rates and renewals on our older line of business falling through the floor, again, as AOL’s.

We really had two major choices - either go whole hog consumer, turning ATW.com into a formal search portal, (we had been dancing around for 2 yrs). My opinion, this gave us both the highest degree of control over our future as well as highest long-term potential once we adjusted focus, but also required restructuring, as well as a strong leap of faith that our newer efforts would work, or shop around the internet business entirely, keeping it going via the older dying rev streams in the interim. In our case, the choice was made in favor of the status quo / liquidate - the lure of the drug of current revenue, even if dying, has, and will always be, amazingly powerful, making leaps of faith, especially when also requiring restructuring/firings, very hard to pull off. From the view up here in the Nosebleeds, I would agree that this is the right way for them to go, but we’ll have to see whether their Board bites.

Dulles, Va. - Two weeks away from pitching his radical plan to transform AOL into a free, ad-supported service, CEO Jonathan Miller is expected to call for thousands of layoffs and a “near halt” to marketing of the company’s trademark Internet service, The New York Times reported on Monday. Miller, who will detail his proposal to the board of parent Time Warner, is expected to “defend his unusually draconian plan by arguing that trying to wring every last dime from its dial-up subscribers is preventing AOL from being as aggressive as it can in competing with Yahoo, Microsoft and Google on the web,” The Times reported, citing anonymous AOL executives. The plan, however, could be a tough sell to some board members, since they would initially have to accept lower profits until the company is able to boost its advertising revenue. The plan is scheduled for public announcement on August 2.
Link

BTW - Since I absolutely hate places that put content behind forced registrations, will hopefully be moving the above link away from the NYT very soon. Apologies to everyone for including links to this kind of crippled content if you hit this before then.

This really is the most disgusting part of a dying tech company. When they can’t actually make a business out of doing what they were supposed to be doing, the investors start getting the IP lawyers to start poking the carcass to see if they can pull a Unisys, (especially on really basic stuff) building themselves an annuity on the backs of those who actually succeed, turning what at least might have passed into history as something to have once been proud of into a future plague.

It really is sad to see this kind of ridiculous IP protection, especially on the Internet, used by bottom-feeders who fail against those who succeed, (especially for this kind of really stupid common sense ones) or, in this case, use as a method to try to force someone with a useful social network asset to buy Friendster out for the patent, when the business itself couldn’t justify. Here’s hoping that the numerous companies that will receive the soon-to-follow flight of C&D threats do what many of us did with those from Unisys - insert them deeply into the circular file.

P.S. Can you tell that these kind of IP issues really get under my skin?

Good for them for adding CTR as an element of PPC ranking, rather than just pure $. Interestingly enough, though I’m sure there are Yahoo ad sales guys choking right now, really should be a big gain all around:

1) For the high-paying advertiser, he’ll only pay now when his offering, (or at least his ad text) is actually relevant to the search occasion itself, thereby improving his odds on the conversion side,*1*

2) For the high-relevance advertiser, he won’t have to keep being held hostage by being outbid by a bunch of less relevant advertisers who just beat him out on bid price.

3) For Yahoo, CTR goes up, as more people find the ads more relevant, which means that their overall revenue goes up - remember, in the standard bid-price only sort, the high bidder gets position #1, but if position #1 is not strongly relevant to the actual search occasion, no one clicks on, and thus not only does Yahoo not get the $1 the poorly-relevant high bidder bid, but they also don’t get a chance to get the $.15 that the highly-relevant, but less-wealthy advertiser bid for the same phrase, so ends up getting nothing. By including CTR, (depending on the degree to which CTR is a contributor, of course) if the high bidder is also the most relevant, Yahoo gets the $1. If not, Yahoo at least gets the $.15, rather than the 0.

4) For the end-user, especially on economically-oriented queries, (mortgage, Viagra, “mesothelioma lawyer”) they get a second set of sources that now become much more valuable to them.

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*1* Yes, it will mean that he’ll need to start paying more attention to his conversion strategies, rather than just simply firing large sums of money out, and relying as heavily on the laws of big numbers to help, but in the long run, that’s also good for them in terms of improving their ROI.

A quick blurb on the newspaper industry and how to deal with the Internet. A nice stat to put in the queue:
“….”But on-line media produce 20 to 100 times less revenue per reader than newspapers do, he said. To put it another way, for every print reader lost, newspapers have to replace them with between 20 and 100 website readers to gain the same revenue….”

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(BTW - Congrats to MediaPost for finally getting their URL posting straightened out, so that I don’t have to cut and paste the full text anymore - yeah! )

Cute.. Not seeing tremendous need for me to text $20 to my buddy, (heck, if I don’t have the $20 to give to him in cash right there, chances are I need to hit the ATM for me, anyway! ) but could be a nice compliment to mobile text response search / info, (i.e. you’re at your local car dealership, looking at car X, you text a message to service Y to get you the Consumer Reports and / or Intellichoice report, and this tinks $10 off your credit card). Would have to be for very focused info, (since, of course, smacks of trying to monetize content again, and we know how well that works! ).

Woo-hoo - here’s one for the good guys! I hate these kind of utterly bogus attempts at supporting failing business models through technology, and specifically this kind, where you’re hiring a company specifically to piss off your most avid consumers.

Again, here’s a bizarre idea that I’ve spoken of before - work on correcting the value imbalance, and crap stunts like what this company used to do, (again, hooray!!! ) become unnecessary, (and yes, I’m well-aware that it’s a heck of a lot cheaper to hire a couple of hackers to do this than to address the real issue, but it’s hardly the way to make friends and influence people like - oh - those folks who are your only shot at being able to survive as a business over the long term…).

It’s about time, as The RIAA, etc., keeps working harder and harder to make sure that it keeps killing any services working on what is very much a high-demand service,*1* *2*to see at least the nail driven into the coffin of one of theirs.

It’s funny, but if there were a RIAA for text content owners, there would be no search engines at all, (no Google, no Yahoo) as they all locate content that inherently has all IP rights reserved, (by its very production) and point directly to the most “useful” IP, most often taken out of the context desired by the copyright owner, facilitating _massive_ copyright infringement, while concurrently making money by selling ads around these infringements, and, of course, not sharing a dime of this revenue with the copyright holders of the content itself, (and, in fact, concurrently charges the IP-infringed should they wish to get people to examine their content in its originally-designed context, and for its original purpose). Instead, Search has become a multi-billion dollar industry, with tremendous growth potential, and has become a critical part of all our lives on what could have been entirely snuffed out in the early days of the Web, if the “PublisheRIAA” had been established. And we all would have been… better off therefore?

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*1* Normal folks outside of college campuses won’t be able to use for several years, at least, but some darned fool gives The RIAA access to Internet2, and they promptly work to shut down a file sharing service in its infancy there - i2Hub - read more here

*2* As well as the solutions that these services would drive to the increasingly-problematic bandwidth expenses for individual bloggers / podcasters, etc., (and if you don’t think this is a real issue and hindrance to richer and richer media being created by more and more individuals, go ahead - try producing your own show, and find out the entirely-counter-to-radio economics of doing so, due to both bandwidth expenses and the obscurity of royalty payment schemes, and then tell me that continued work isn’t needed to solve these issues).

And what about VoIP - Skype gets bought out for literally billions of dollars, by providing us the ability to make phone calls anywhere around the world for free, (or, really, rather by making it now included as part of our bandwidth expenses). And where did this technology come from? Yep, some of those “pirates” from Kazaa, (and yes, can still hold them out as laudable for the Kazaa product itself, as I can entirely without conflict consider them scumbags for largely being the naiscent force behind the growth of the spyware industry - tech good, business model bad).

A company that fought net piracy by adding fake files to file-sharing networks is being closed down.

Overpeer led efforts to battle the rising popularity of file-sharing networks such as Kazaa.

More

I always love these arguments - “you can’t actually let the consumer decide to just consume what he wants… you’d lose all that great… other content… that he doesn’t… want.. to consume…” Unfortunately, though the next logical word, the “nevermind” rarely actually gets to see the light of day!

For me, I pay $70/mth, (not including high-speed internet) for something like 150 channels of content, so that my kids can watch 3 channels - Disney, Nick Jr and Noggin - and so that my wife can put me through the horrid nightly torment of having to watch endless editions of the same stupid story on the 45 versions of Law & Order. So, I’m paying the equivalent of $23 / channel / mth for what I actually want, (presuming that I want said torment, to keep my wife happy). Tell me that a la carte will have me paying more than that, and I’ll listen.

Otherwise, no, I don’t want to watch Hispanic MTV, (or any MTV, for that matter - sorry, that phase of my life is over) and totally don’t care that there may not be enough funds to support the latest Survivor or The Apprentice: Martha Stewart Edition. Sure, go ahead and hit me up for something on the Public TV realm, (making sure _they_ actually get the funds) but other than that, if I don’t consume it, I shouldn’t pay for it - simple. And if enough people aren’t willing to watch and pay to keep The Military Channel up and running, it _should_ die. And if they come after one of my History Channels, and they can’t generate enough funds to keep themselves afloat, yes, they should die, too. Imagine if each channel had to actually compete for viewership with content - bizarre idea, isn’t it?

More here

Another good little blip on free music file sharing vs. paid in Europe. The most important part of the article - “Among the 46% of European online 15-24 year olds who use the Internet to consume music….40% do not consider the CD to be a good value for money…”

The RIAA and IFPI can and will*1* continue their campaigns against their members’ most involved consumers, but so long as this situation remains, where consumers feel like they are receiving less value than they are giving up when consuming music, there will continue to be a strong, and well-motivated free file-sharing community.

As someone who’s had to work free-to-consumer business models for years now, there is _absolutely_ no question in my mind, there _is_ some level >0 where the majority of these folks would feel like they were receiving an even exchange for their money, and would indeed pay for it.

Now, I know full well there’s not a chance in hell that the established music industry will engage in the real hard work of trying to figure out how to make this thing work until someone else, (Apple, others) forces them down a path, so, suppose will have to look to keep helping be that force! *2*

More here
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*1* Since that’s effectively their sole purpose in being, and they’re now smelling blood with the horrible recent US Supreme Court Grokster decision

*2* And I know the companies that support the RIAA and IFPI would never in a million years consider this, but it definitely keeps occuring to me - maybe, as multimedia continues to become more and more prominent, music as a fully-independent media vehicle has largely had its run, and it’s time to do something different. I can’t even begin to tell you how many times I’ve thought to myself that when I buy a SharkTales or Robots DVD, I think I should be able to bring it with me in the car, load it into my CD player, and get the soundtrack as part of the package. If you want to goose the price of DVD up by, say, $1-2 / unit to pay for that, yeah, I’d go for that, and then you, Music Companies, would get, let’s say, $24 / yr, (presuming one kids’ DVD / mth @ $2 royalty) for someone that otherwise might spend $18, (presuming 2 soundtrack purchases / yr) or a net increase of 33% on Gross Rev, not including the fact that if my kids’ DVD included such soundtrack for that $2, I’d definitely be tempted to buy more of them, (gated, of course, by the quality of the content that the movie industry can come up with, but hey, wouldn’t that be something - two different media divisions of many of the same companies pooling time, effort and resources to actually help develop better content - I know, I know, whoa Boy, what are you thinking? ).

Silent media - long dead.

Black and White media - largely had its run.

Non-HD video media and Non-Interactive media - both have maybe another 10 yrs of life.

It’s time to start not just thinking about, but actually working toward, the kind of much better marriage of value generated vs. cost required that can do away with the horribly conflicted relationship between music companies and their most voracious consumers that exists now, (and then we can all stop wasting our money on the RIAA & IFPI, since it’s _our_ funds that are being used against us).