Blogs Alive, Kicking and Growing

All the reviews I've seen of 2007 seem to feature facebook rather strongly. This is probably quite accurate as they did have a pretty fantastic year. This time last year people thought facebook would be worth about $1Billion now many seem happy with a valuation around $12Billion. If the valuation was proportional to newspaper articles it would be even higher.

Before the newspapers begin knocking down the poster boy they tried to build up, how about the poor little kid who got completely ignored during the 'social revolution' of 2007?

Poor little blogs were pretty much written off at the start of last year. Many news sources were showing that hte number of new blogs being created was slowing, the number of people posting on the already created blogs was also reducing.

This much was probably true. What people weren't looking at, however, was the number of people READING these blogs.

In terms of absolute gains, Wordpress have had a fantastic year. Their traffic figures, according to Comscore, have rocketed up by about 700%. The y axis is thousands of monthly unique users:


The growth has been consistent throughout the year, bringing Wordpress into the top 30 in terms of UK traffic. All this traffic is looking at the hundreds of thousands of blogs within wordpress.

It's not just Wordpress though, Blogger has also had a fantastic year with steady and consistent traffic growth. Guido Fawkes' intrusion into the national consciousness last year was one of the many blogger blogs to actually make it into the mainstream in the UK.


The thing about all these blogs is that they are fragmented. Their branding is minimal and focused towards people who want to write rather than design. Therefore it is quite easy for them to sneak under the radar. Blogger can easily slip through as most industry metrics tool will aggregate the blogger listings into Google's.

The stats themselves paint a picture of blogs as being in extremely good health, quietly increasing their traffic and readership. I'm sure at some point someone will figure out how to make a large amount of money out of them and then start shouting about it. Wordpress and Blogger could definitely make some money out of the page impressions they see in front of them, but they may then lose many users. It's always going to be tough.

Would be interesting to see how many blogs with actual traffic feature adwords or equivalent on them. It may also be possible that many of the blogs are actually affiliate sites taking advantage of the free hosting.

Whatever the answer to the above questions the blogging sites are succeeding in growing their traffic so one has to assume that a decent level of interest exists.

This growth is against static growth for the major established opinion providers such as the Guardian. I think I need to do some graphs that will show the number of sites people look at has grown.

Google's "Masterplan"

Nice little video by what looks like some design students. Really reminds me of the graphic design which was part of the Hitchhiker's guide to the galaxy. Their concern centres on the privacy issues around Google.

This blog is written on Google software, they can see what I search for (personalised search), what I read (Google Reader and Google News), and even what files I look at (Google Desktop). This will translate into a very detailed picture of me.

Google's performance shows that the majority of people are willing to accept services in exchange for a loss of privacy. It is quite impressive how much information Google currently has on me, but I am quite comfortable with that. There have been no examples of Google abusing privacy so far (that I am aware of).

As with all web services, Google are acutely aware that their competition are only one click away. If you even think that there's a small possibility that Google could do something that would make your life worse, you're going to go to the competition. Hopefully Google will keep that in mind when they're being tempted to abuse their data.

Media Predictions

I've just been reading Deloitte's Media Predictions.

It's a good piece of fluffy PR from some consultant(s) who should have been gainfully employed preventing things like this.

Some of the article reads well and contains predictions which wouldn't look hugely out of place in a horoscope. However, throughout the article, jarring conclusions suddenly appear, supported by nothing more than thin air.

Having read this, I thought I would take it apart. Partly through my envy of my Deloitte friends' inflated paypackets, but mainly because I dislike fluffiness. Fluffiness is OK from creatives and from hippies, but management consultants really ought to do better.

So we begin:

User Generated Content

The report's overall point is that the majority of blogs and social media is utterly rubbish to the point of being boring. They also notice the fact that your average blog will not attract the majority of the billion readers on the Internet. They are concerned that the lack of quality makes it difficult for anyone to make money out of it.
This conclusion misses the entire point of blogging and social media. Some bloggers are looking for an audience. Most are not. For me, blogging is part diary, part writing practice. This post is an attempt to write a detailed and coherent case against a detailed and coherent article. I don't care if someone is reading this or not.
Some blog services are able to extract subscription money out of their users.
Deloitte can only see things through their involvement with old media - they can only see the revenue available for established media owners.
Established media owners trade on the reputation that their media brand has achieved. They hope that the trust created by their relationship with their readers viewers users will be worth additional money to advertisers. They also hope that the audience consuming their media will be worth money to advertisers. If they're lucky, they'll be able to get their audience to part with money for the service. Their problem is that blogs have small, undefined audiences. Their relationship with the authors tend to be personal, or information driven.
Ultimately this model won't work for blogs. Subscription won't work, because computing power and data storage are commodities. Commodities which are falling in price at a scary pace. The cost of showing this text is currently less than 0.000002p (these are commercial terms from a quick google search). Ad yields are probably around 0.02p per page view (assuming a CPM of £0.20). It doesn't take much sense to see that there is money to be made if you can build a good system. A good service should be able to make significant amounts of money if it is free.
Google, Wordpress and the social networking sites have turned the established media business model on its head. They provide services to consumers, at no charge. Users are happy to concede the indignity of having adverts imposed on their content in return for being able to publish for free. Google have even managed to make this last term optional, and share the advertising revenue with the user.
As any vaguely competent management consultant should be able to tell you, large profits from this will require large volumes. MySpace has 130 million users at the last count. 130 million multiplied by any of the above numbers will result in a large number.
Deloitte's assertion that "UGC could be used to enhance the loyalty of an established media format, such as a television show" is correct, although misses out the fact that this is already happening (Courtney worked on a good example)

Overall, Deloitte misses the fact that blogs can and will become a major revenue spinner. This could be because the report is aimed at established players, who will have difficulty implementing the technology necessary to run blogging services.

Broadcasting

Deloitte argue that 'participation' is going to become more important to Television. Allowing the audience to interact and feel that they can make an impact on events in their shows should increase loyalty. Telephone voting will allow the stations to recoup the crippling decline in television advertising revenues. I don't have a problem with their section on Broadcasting, though it is very woolly.
Basically, the article can be summed up as saying 'Participation is not amazing, but it can be good if done well.' How is that a prediction?
My own opinion on this, since it is safely outside my area of expertise, is that television is not dead. Broadcasting still has a long way to go, as the report points out in all the other sections, a huge amount of people are comfortably spending the majority of their media time in front of the television.
The problem is that they are, increasingly, watching different programmes. This is the factor which is hurting ITV so much - their ad revenue declined by around ten percent this year, which is not a good things for them!
It must be tempting to give up on the challenge of attracting loyal audiences by pursuing the lowest common denomination and trying to rely instead on revenues from telephone voting. However, this will not last in the long term. Eventually audiences will tire of spending large amounts of money on these telephone lines. Government action will hopefully come into place which will force the television companies stop extracting money from population groups which are not affluent enough to continue throwing relatively large amounts of money at mobile phone numbers. The practices for extracting money extend further into gray areas each month, ITV recently got into trouble for charging people £1 an attempt at connecting to their hot-line for one of their cash cow late night programmes.
The alternative should be to concentrate on supplying fewer programmes with greater quality. This will be difficult for ITV with their significant public service constraints. It is almost certain that these will be removed at some point in 2007, providing ITV with the chance to compete more effectively. Hopefully their new CEO will inject a bit of much-needed creativity into their programme makers.

News

Deloitte make the stunningly insightful prediction that "print media companies are likely to make increasingly diverse and creative use of both paper and pixels."
They also advise that "Publishers and other media companies should create a balance between paper and pixels."
I think that this was the point where I realised that Deloitte weren't going to make any actual predictions in their research paper. I'll have to make my own.
I think 2007 is going to see the rise of the 'global news-source." The web provides companies the chance to greatly increase their distribution with little additional cost. Once again, Google is responsible for the change in news consumption. News aggregators are becoming more common - allowing people to immediately see the breaking news, and removing the journalism from news. The New York Times actually said that they were scared of what was developing from the 'death of the editor.'
I think we are already at the point where the UK's quality newspapers have more Internet readers than daily sales (apart from the independent). I predict that all the UK newspapers will have more monthly unique users than daily circulation (another example of the problem of measureability).

Internet Retailing

Deloitte talk about Chris Anderson's book on the 'Long Tail' too. Actually, I think they didn't read it - someone just explained what it was about and they had a stab at using that explanation.
They miss the entire point of the book. Take this quote:
"The vast repositories of content available for sale over the Internet may struggle to sell even a tiny fraction of the volume generated by blockbusters."
This, after waxing lyrical about the opportunities offered by niche products. Depends how many products you offer - the book's point was that if you it costs the same to list 10,000 products as to list 1,000,000 products, you'll be able to make more money.
If 10% of the products listed sell only 0.1% of the top product, you'll still see those products combining to give 1,000 times as many sales as the top product. There will also be less competition for the niche products, meaning higher margin.
They then talk about the recommendation system:
"While one customer's purchase may consist of a couple of CDs in the same genre, another customer may well be collecting gifts for a wide range of friends and family. So the purchase history for one may make little sense for anyone else with a different combination of friends and family (in other words, potentially everyone in the world)."
Have these people used Amazon?! Recommendation systems are not solely based on purchases. Last.fm and Pandora are providing services that look at what you listen to, and then give recommendations. This will completely eliminate the problem they gripe about. Amazon and other retailers get around the gifting problem by offering gift wrapping, and the chance to tell the system what doesn't interest you.
Recommendation systems are about exchanging information, it's not a one way system. This is another area where Deloitte are stuck in the old media age.
Overall Deloitte have missed the fact that Internet retailing is about lowering costs, NOT generating higher volumes. Once low costs are in place, high volumes will come.

Measurement

Deloitte rightly point out that there is no easy way to compare different media. The advertising industry has been discussing this since the 1960s and probably even earlier than that. Predicting that we'll be still be discussing this in 2007 is like me saying people will still be playing football this year.

Video on Demand

"Video-on-demand may leave you waiting" is the title. It completely misses the fact that VOD is already deployed in more than two million homes in the UK right now, through cable television operators. For Deloitte, VOD is only possible through the Internet. The fact that video files can come from almost any source doesn't seem to influence them. This, to me, is an error that can be corrected just by looking on Wikipedia. I hope that there's no-one in Deloitte working on any of the big IPTV projects.


I'm bored and can't be bothered to continue. I think the overall review has missed the incredible rise of social networking in the last year. I think it has the potential to make the Internet an even more important part of people's lives. The new Apple TV is the first step in the Internet's march from the office, to the study, and now to the living room. Mobile Internet won't be huge this year, but the iPhone has the potential to take widespread Internet use on the move.

2007 is going to be different, exciting and I'm looking forward to getting involved in some of these shiny new things.