From Istanbul To Sand Hill Road

Twenty Years and Still The Same Technology Problem

This post is about a consumer electronics technology problem that hasn't been solved for twenty years.  I recently experienced it, and remembered vividly how I had also suffered from the same problem exactly 20 years ago just about now.  I will get to this amusing problem in a second, but I have to digress for a little while, because 20 years ago, just about now, was a very memorable moment in sports history that needs to be mentioned.

Mexico 1986.  The first World Cup I was old enough to thoroughly enjoy and remember.  It was the world cup where I saw the greatest goal ever scored, on June 22nd, by Diego Maradona against England.  It's not the "hand of God" goal, but the other one.  I still remember it like yesterday.  I was sitting on a couch when Maradona took the ball at midfield and was about 2 centimeters from the screen by the time he passed everybody and scored over Shilton.  You can watch that goal again and again here.  Argentina beat England in the quarterfinals, Belgium in the semis (with another amazing goal from Maradona) and played Germany in the Final.  Brown and Valdano gave Argentina a 2-0 lead, but Rummenigge and Voeller tied the score and Buruchagga "the son of the wind" scored the winner for Argentina.  What a game that was.

Now fast forward 20 years and tomorrow Argentina is playing Germany again.  20 years ago I was living in Europe watching the game in North America, and now I live in North America and will watch the game in Europe.  Well, not exactly watch, I'll have to record the game using a DVR, which brings us back to the technology problem I wanted to mention in the first place.

Couple of days ago Ukraine beat Switzerland 3-0 in penalty kicks.  Wasn't a noteworthy game until I got an email from my Brazilian friend Eduardo saying that "we could kick better penalty kicks than the Swiss team"  The game became interesting after that comment and I went to a friends house to watch the penalty kicks.  He had programmed his DVR to record it, but alas! we had a problem.

When a soccer game goes overtime the DVR doesn't know to continue recording and after regulation play it promplty cuts the recording short and misses the overtime.  Therefore we couldn't see the penalty kicks.  What a bummer.  Funny thing is, this was the exact same problem I had 20 years ago with a Betamax video recorder.  You program it for the length of the game and are out of luck if it goes over time, since it has no way to know.  After generations and generations of technology and innovation, this exact problem persisted, just as unsolved and equally disappointing.

I don't know if it is VOD that will fix it, or network PVR, or personalized TV, or IPTV, or BitTorrent, or Youtube, but I just wish for my son's sake that in the next twenty years, this problem can be fixed once and for all. 

Empowering the Consumer

Yesterday at the Internet Venture Fair, Jonathan Miller, the Chairman and CEO of AOL gave the keynote speech.  It was a very well done presentation that clearly highlighted what's important for AOL.  One of the points made was about "empowering the consumer."  As opposed to the "walled garden" approach, empowering the customer means allowing them to embed all sorts of third party widgets, applets, and content on their web page.  As long as the consumers are happy, then they will be your distribution channel bringing their friends in and adding value to the overall platform.  That's the idea behind empowering the consumer and allowing third party products on your pages.

In theory this is fantastic, but I think we will see some limitations to how empowered consumers will end up being.  I asked Jonathan Miller this very question:  "Where do you draw the line in empowering the consumer, when some of the third party widgets may actually harm AOL and draw the consumer away from AOL sites?"  His answer was that AOL will be as liberal as possible.  In Jonathan Miller's words "it's not a good long-term strategy to get in between you and your users."  He gave the example of AIM pages launching with Flickr (which is Yahoo) as the photosharing solution and not the AOL photosharing solution.  Sounds good on paper but I don't think this will be the modus operandi going forward for most sites.

First and foremost, some widgets are designed by the company behind them to siphon traffic away from the site they are displayed in to another site where the widget maker makes money.  This is in effect, hijacking pageviews.  Today this may be a mere nuisance to AOL, but when some of the these widgets become popular it will become a problem.  After all, the battle is for eyeballs and pageviews.  The more pageviews you have the more ads you show.  Even in this blog you are reading there is a widget that hijacks pageviews.  It's on your lower right, entitled 'Tags'.  If you click on my tag cloud it will take you away from my blog into ZoomClouds where you will see their ads instead of mine.  If you click on the article it will bring you back to my blog.  This is a value added service to me, but annoying and the first that I will throw out when I find a widget that does the same without the hijacking.

There are other examples of more meaningful sites doing the same thing.  The first one that comes to mind is Ebay disallowing the use of Rapleaf in their product descriptions.  You can read more abou it here.  Rapleaf is a reputation engine that competes with Ebay's own.  Their reputation engine is one of Ebay's most prized assets and a global and independent reputation engine is a threat even though it appears to value to Ebay's users.  By the way, it turns out by the way that any link on a product description on Ebay that takes you out of Ebay is violating the EULA.  It wasn't enforced until now.

Another example is Myspace shutting down Singlestat.us.  It's a site that lets you know if somebody's status (single, dating etc.) changes.  It is a value added service to Myspace users, but the users pay Singlestat.us and not Myspace for it so they had them shut down.  You can read about it here.  This is an example of getting in between you and your users.

Myspace did the very same thing to Datinganyone.com.  You can read it on Techcrunch as well.  So there are cases where if you are taking traffic away, or delivering value the site wishes to deliver, or if you are making money by delivering the service, then you can be shut down.

So we can all talk about "empowering the consumer" but when push comes to shove we will see less and less of it.

Avatar Based Marketing

The June issue of Harvard Business Review has a very interesting article written by Paul Hemp, titled, Avatar Based Marketing.  It talks about ways to market to people who spend a lot of their time in virtual worlds such as Second Life.  I've been fascinated by these games for a long time both as a business and as a way of life.  Some 10M people subscribe to these games, pay $15/mo and many spend more than 40 hours a week in these worlds according to the article.  I knew what a big business the subscription revenues were, but I hadn't thought of the potential for advertising and marketing in these virtual worlds to their virtual inhabitants, who have the ability to spend real money buying virtual product.

The logic is very simple.  Each person in the US gets about $2000/year of advertising spent on them, in the form of promotions, billboards, magazines, TV, yellow pages, direct mail and Internet. Well, if one player spends north of 40 hours a week in these worlds, adjusting for sleep time, thats about 2 days a week.  So for every 5 days you exist in flesh and blood, 2 days you exist as an avatar.  Do the math.  With say 20 million users in the near future, that's about a $11B advertising market waiting to happen.

There is another twist as well.  According to the article, current advertising "has always targeted a powerful alter ego: that hip, attractive, incredibly popular person jus waiting to emerge (with the help of the advertised product) from an all too normal self."  This is very true.  However, in the virtual world, every body looks hip and attractive.  So how do you market to this group and capture this $11B market?  It's going to be intersting to see, stay tuned.