Methodology

One of the first thing in this effort was to get a decent list of sites. Unfortunately, it seems that it has become increasingly difficult to get a sense of which sites are the most popular when it comes to number of visits. I eventually settled down on Alexa’s Top Sites list because it featured most of the sites people think of when considering what large sites are and includes a few non-US sites.

I then used the W3C Validator against each of the top 25 sites. This allowed me to get 3 different pieces of information:

• Doctype: This is what the site declares as its HTML code version. In other words, how the site identifies what version of HTML it supports.
• Encoding: This is the language the site uses, which gives us a better understanding as to whether they are targeting a particular language or trying to offer a global site.
• Validation: This is how the site validated when tested for errors relating to the HTML version it purported to be offering. It gives us an idea as to how compliant with the standards the site truly is.

Surprisingly, a number of popular Web 2.0 sites were not in Alexa’s Top 25 so I created a separate list for them.

Top 25

Looking at the top 25, here are the results:

Looking at the data, the first thing that is interesting is how many sites have made the switch to HTML 5. Of the top 25 sites, 14 have made the switch to HTML 5. This means than in the last year, 56 percent of the largest sites on the internet have completely modified their code base to comply with a new standard. 6 sites are still left on the old HTML standard and 5 are sticking to the somewhat more recent XHTML standard.

However, it is also interesting to note that none of the sites which have made the transition comply with proper HTML standards. In fact, of the top 25 sites in the Alexa list, only MSN was found to provide completely valid code. Maybe Microsoft could point those people towards their other properties. Amazon was the worst offender, with 516 errors in their code, showing that disregard for standard compliance does not seem to have an impact on economic performance. However, Ebay and Yahoo came closely behind with hundreds of errors in their code, maybe highlighting Amazon as an exception.

Another interesting phenomenon is that most of the large sites have adopted UTF 8, the encoding type that support most languages, as their default language. Once again, over half (56%) of the sites have switched with Amazon and Google being among the rare exceptions. An interesting aside here is that the W3C validator may have issues when it comes to validating chinese sites as it was not able to finish the job.

Web 2.0 Companies

Looking at Web 2.0 companies, the data was surprising:

I captured the data for companies other than those in the top 25 and a few interesting trends seem to pop up. The first thing that came as a surprise is that there seems to be that a lower number of sites have made the transition to HTML 5, with only 5 sites out of 11 (or 45 percent) having completed the transition. There seems to still be a strong preference for XHTML as the way to encode pages.

Also of note is that all sides have plans for globalization, encoding their page in the UT-8 format that can support both western and non-western alphabets.

However, none of the sites successfully validate in any of their preferred standard. It looks like there is still much room for improvement in the world of HTML validation.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title The state of HTML validation. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

Rumored numbers were off

I, like many other people writing about internet companies, have been guilty of spreading the rumor that Groupon 2010 revenue were nearing $2 billion. The reality is much starker as the company has generated revenues of $713 million for that year with net losses of over 456 million for that year.

According the S1, they also had 50.6 million users at the end of 2010, which was higher than the 30 million that had been widely reported. So if I were to revise the chart I had created in late 2010 based on the rumored numbers, it would look like this:

My first reaction, when looking at this is that we are dealing with a company with massive losses here and that’s a first red flag. Many have compared those losses to Amazon, a company that went public even though it had big losses so I decided to go all the way back to 1997 and pick up the Amazon S1 to see how it compared.

GroupOn vs. Amazon

Based on those numbers, the first thing that seems out of whack to me is the level of risk one is asked to take based on the potential revenue per user. Maybe a $200-$500 million valuation would make more sense for GroupOn at this stage, if we truly want to compare it to Amazon back then.

The other thing is that the valuation per user seems extremely high. In a world where Amazon gets $189 per user, we are led to believe that Groupon could do more than twice that number, making it almost as successful as Apple in terms of monetizing users. Color me cynical but I have serious doubt that’s achievable on the current business model.

GroupOn vs. LinkedIn

A couple of weeks ago, I ran comparisons between LinkedIn IPO and a few other tech companies that went public. Let’s superimpose the groupon numbers and the LinkedIn numbers to see how different those offerings are:

The other big thing is that revenues per users are actually on the low side compared to other technology companies. For example, Groupon makes less revenue than Ebay ($39) or Google ($24), two companies that have demonstrated long-running businesses. Furthermore, the company’s losses are staggering, even for a company in growth mode.

Bubble numbers

I’ve long warned people about tossing the bubble number around. In fact, I was probably one of the biggest debunker of bubble thinking but, if a company like GroupOn is allowed to go out at the valuation it has set forth, I am afraid that we will be making the same mistakes we have made over a decade ago. I am sorry to disappoint GroupOn shareholders but, in this case, I believe that to let such a company go public would be to endanger the whole startup ecosystem that has been flourishing over the past years.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title The bubble is (group)on. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

So the first prediction I will make is a purely personal one and more of a promise than a prediction: 2009 will be a year when more new postings will emerge from TNL.net.

Macro-economics

I do not share the optimism of many other people in the technology field when it comes to macro-economic factors and their impact on the technology field. My view is that the first half of 2009 will be much worse than the last half of 2008 and that the second half of the year will, at best, look like the first half of last year.

I suspect that the financial picture will get more constrained over the next fiew months as banks start feeling the impact of a consumer-led credit card crisis as individuals try to save their houses by maxing out the credit card instead and eventually reach the end of the credit limit, unable to repay.

In the broader economy, the current credit crunch will continue to have an impact on all industry and I suspect this will lead to large companies first encouraging voluntary layoffs, followed by further job cuts. This will translate into a larger impact on the retail sector, which is still larger than it ought to be under the current condition. Expect more consolidation in retail, with some large players closing shop altogether.

Start-ups

I don’t think it’s very hard to predict a wave of start-up failures this year. However, this will not be anywhere near as bad as it was during the first dotcom bubble because the current crash is not seeing inflated VC investments as its core. The level of investments in web 2.0 companies never reached the excesses we saw during web 1.0 so I suspect that many start-ups will float away with more of a wimper than a bang.

Established Web Players

Some of the more established web 1.0 companies will have a rough year.

I would not be surprised to see Yahoo no longer running as an independent firm by year end. My suspicion is that it will either be combined with AOL as part of a complex transaction that will spin AOL out of Time-Warner and combine with Yahoo (a combination that I suspect will leave all involved hopeful for the best at the start of the transaction and disenchanted with the result by year end) or, should the stock price drop lower, I would not be overly surprised if Rupert Murdoch were to swoop in and pick it up to combine Yahoo with other News Corp. Interactive properties (including MySpace).

eBay is another company that will have a rough year in 2009. Much attention will be paid to it as Meg Whitman, the company’s former CEO makes a gubernatorial bid in California and many will point to her leadership there as either an example of success or failure, depending on which side of the political spectrum they stand on. Meanwhile, eBay’s auction business will continue to crater and more of its revenue will come from its PayPal and Skype subsidiaries.

Amazon will survive the retail downturn and may actually emerge as a winner in the category. As more retail consolidates, Amazon’s rich data-mining abilities are making it the Wal-Mart of the online world and I expect it to see growth in the retail space as smaller players fall off by the wayside. Furthermore, its diversification, with the company also offering some of its infrastructure via web services for a low fee will pay off as more startups will move their operations to the Amazon cloud as part of some cost savings efforts.

Meanwhile, Microsoft will continue to sputter along in the online space, possibly picking up the search business from Yahoo but ultimately ending the year without any significant gains in the online space. Hopefully, by then they will have released Windows 7, which may undo some of the reputational damage the company suffered after the release of Windows Vista.

In the next entry, we’ll look at the media space and how those macro-economic changes will have an impact on that.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title 2009 Predictions: Intro. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

Looking Back

In the ensuing 6 years, I’ve been going over and over what went wrong and discovered more lessons along the way: the market conditions were wrong, we were young and arrogant, and, for the most part, we didn’t really understand the magnitude of what we were trying to accomplish: to remind people, our goal was to launch a website in 16 countries (15 EU countries + the US) on day one, localizing our site for each of them. At the time (1999), no one had accomplished that broad a coverage (nor had anyone even tried to).

So it seemed a little crazy but, then again, crazy people had built Netscape, Yahoo, Ebay, and Amazon in the previous few years. So crazy seemed not only possible but it seemed to be the key to success on the Internet. The problems we encountered fell in a number of areas: currency exchanges, tax issues, language localization, integration with many fulfillment partners and a front-end experience that called for broadband connections. We basically wanted to build eCommerce 2.0 long before there was a web 2.0.

Looking Forward

So fast-forward to now. Broadband uptake is nearing 50% in many of the target countries and the number of users has grown tremendously, governments have learned about internet ecommerce and now have specific rules relating to it. And integration across many system is what web services and mash-ups are all about. Do I smell progress? So let’s revisit my old post (which later was published in Business 2.0) points and look at them through the 2006 lens.

The Currency Problem

Back then, the 16 countries we targeted meant 16 different currencies.

Today, with the rise of the Euro as a unifying currency, the same 16 countries only have 4 different currencies (the UK still being stuck on the pound sterling and Denmark keeping its currency a national one pegged to the Euro. The US and the Euro are the other two currencies covered.) This greatly reduces the complexity of pricing models across Europe and makes the overall cost of managing the catalog much lower.

Back then, we actually had to build our own currency tracker, with people inputing the exchange rates daily into the system to keep everything aligned.

Today, you can get access to currency exchanges via web services (just off the top of my head, I can think of Reuters and CBS Marketwatch providing this type of data), therefore automating what was once a manual task and, once again, reducing administration costs for the catalog.

Tax Issues

Back then, there was no consistency in the way taxes were assessed on goods sold online. The financial people at Boo.com version 1 spent a lot of time with a big 5 accountant group and a lot of local government to lobby for normalization of rules around taxes on cross-border business.

Today, because all of those governments understand the value of internet commerce and because many have worked in conjunctions with each other (through the G8 and the EU) to normalize rules surrounding taxation of goods sold on the Internet the problem is easier to solve.

Back then, we had to build our own systems to track all the vagaries of the different tax systems. It wasn’t a build vs. buy decision because there were no packages offered on the market to deal with this.

Today, you can buy software packages that has all the taxation rules built in so that problem is no longer one you need to build for. You can just buy the technology and let the vendor worry about the changes in taxation laws.

Language Localization

When we set out to build Boo.com, a strong component was the idea of offering the online store in the local language of the user. Boo.com was actually the first store to offer as high a level of customization by market and we had to make a number of changes to the e-commerce software package to make it into a globalized platform. Remember that, at the time, e-commerce was primarily the domain of US and UK companies so selling in a language other than English was rare. E-commerce sites which sold goods in non-English markets were generally customized on a one off basis but no one, prior to Boo.com, had attempted to have a single back-end system run multiple countries.

Today, more vendors are selling solutions which can be customized across a variety of western languages. The solutions are not yet perfect but, for the most part, they work (there are still a number of issues when it comes to localization across 2-byte languages, especially when it comes to site with mixed languages.) Back then, we also had to develop a content management system that could handle translation workflows and management of content in multiple languages. It wasn’t pretty but it worked and it required a lot of internal translation to happen. Each product had description, sizes, etc… available in multiple languages. That part was actually a fairly large management of content nightmare. Today, modern content management system can handle more complex workflows (allowing to track when translations are completed) and even can provide hooks to farm-out translation of the content to external parties. This substantially reduces the cost of a multi-country offering.

Integration with fulfillment partners

Back then, a fair number of people at Boo.com were experts in EDI (or electronic data infrastructure) because EDI bridges were the only way to integrate into our fulfillment partners. Web services didn’t exist so we had batch jobs triggering every hour to the warehouses at DeutchePost and UPS so they could pick, pack and ship the orders. This was expensive and probably the area where we lost the most money on a single transaction.

Today, services like fulfillment by Amazon provide the same service at a substantially lower cost and with less integration headaches as web services are making it easy to integrate their services into an e-commerce operation. That saving alone could justify the existence of Boo.com 2.0 (actually, it would be 3.0 as FashionMall tried to resurrect Boo.com once already).

Front-end

No discussion of Boo.com can be full unless we talk about its front-end.

The Broadband Penetration Problem 

Many people laughed at the attempt we made at creating a more user friendly interface to e-commerce. Back then, a more interactive experience meant using Flash. It was the only way to get a lot of parts moving together. Things like Zoom-In/Zoom-out or Rotate type of effects were hard to accomplish with DHTML and much easier to do so with Flash. Since XML didn’t exist, we didn’t have AJAX. Since we didn’t have AJAX, we went with Flash. Since we went with Flash, the assets were large. Since the assets were large and the average user was connecting via a 56k modem, the site looked slow.

The idea was that every click should feel snappy, a model now common with AJAX-based applications but we failed in one assumption, which is that broadband penetration would move at a faster rate. Our expectation were that 1Megabit lines (much slower than what one now gets via cable or DSL) would be readily available within a year. That was a very flawed assumption and we had not planned any contingency for any slower a deployment.

Selling clothes requires details

Another interesting challenge was that we were trying to sell clothes online. Evaluating a DVD, CD, or book online is easy. However, clothing is different: when people shop for clothes, they like to feel the fabric, look at the details in the fabric. That experience was hard to reproduce online. Back then, what we set out to do, in order to help mimic some of the experience was to have highly detailed pictures of the goods. 

Every product was shot multiple times at a stunning 5 megapixels per picture (the highest possible resolution at the time). This meant picture files that were about 1–2 Mb per file, something that seems small in the era of Flickr and YouTube but was massive in the era of 56k modems. The advantage of such detailed pictures was that you could zoom in to a level higher than what you could do in a store (part of our attempt to compensate for the fact that you couldn’t touch the merchandise). Today, such level of detail is standard among most of the online clothing manufacturers and with more broadband lines, it’s no big deal.

Another innovation we introduced was the presentation of products in 3D. You could basically rotate every product in our inventory any way you wanted. This, at a time when QuickTimeVR was not on the marketplace. This meant getting our photography partners to come up with completely new approaches to taking product shots, sometimes requiring as many as 15–20 shots per product in order to get everything right. Those pictures were then taken into Flash and adjusted so that you could rotate the product and zoom in and out of it, a feat that now seems pretty standard, using QuickTimeVR.

All that photography work didn’t come cheap, especially when you consider that this was done across 5,000 products and that all the assets were then stored on our servers (Hard Drive space was nowhere near as cheap as it is now). 

Modeling

Another innovation was the introduction of virtual models you could use to try the clothes on. Today, Sears offers a lower quality version of what we were offering back then (their model still requires a reload of the full page to turn it.) Because all the products had 3D equivalent, modeling them was relatively easy and we decided to throw it in as an extra feature that helped enhance the user experience. Once again, because of the processing and bandwidth required to make that happen, the idea was ahead of its time. 

Miss Boo

So we now all know that chatty avatars on web sites are not a good idea. The concept behind Miss Boo was to help make the experience similar to that of a store, with a sales assistant (Miss Boo), helping you out. Our long term goal was to have Miss Boo attached on the back-end to a real person so we could have integrated IM while you were shopping (that plan never came to fruition as the company had other concerns after launch). In the process, though, we’ve learned that avatars are generally despised and probably helped many sites avoid them.

Tagging

Because we wanted the experience to be a more communal one, we had a way for users to tag clothing (well, we didn’t call them tags, we called them “LaBOOls” (labels, with a Boo in the middle, get it?) in the great tradition of badly named things on our site). However, because there was no AJAX or other way to quickly get the data back and forth, it required a reload of the whole page after each tag was applied. The feature was quickly killed in order to gain speed but I can’t think of any other site that had tagging on products at the time (if I’m wrong, please rectify me in the comments).

Chatty Tone

The BooZine (Boo Magazine) was our attempt to create a more friendly, open tone when dealing with users. We didn’t want to be just a store, we wanted to engage the users. When our forums (remember, this is before blogs were popular) started filling up with vitriolic comments, we were forced to shut them down, closing a channel of communication for users to us. It was a real shame but I think our attempt can be mirrored in the way most web 2.0 companies now have a blog that they use to receive feedback from users.

A more mature market

Back then, few people were buying stuff online. Even fewer were buying clothes online and an even smaller number than that was buying hip clothing. Considering all the challenges Boo.com was trying to address, its target market was just too small to make it a successful business.

Today, blogs like CoolHunting, HypeBeast or MocoLoco show that there is a market for the types of goods Boo was trying to sell. That, in itself, could be a good reason for Boo.com to come back: The market they were addressing is finally there. However, it may also be a reason for it to not comeback: the market they were addressing now has competitors in it.

Was Boo.com the first Web 2.0 company?

I have to admit that I’ve been feeling a certain level of uneasiness about Web 2.0: to me, there didn’t seem to be much there that I had not seen before: web services (yup, done since 2000), user generated content (tried it in a limited fashion with with the “labools” and forums), more transparency (tried that with forums in the past), chatty tone (attempted at Boo). What I failed to realize is that where we failed was in the way we implemented things. But looking back now, the reason it didn’t feel new was that much of that experimentation was on our site only, not part of a more widespread phenomenon.

Another thing that got me thinking along the way of Boo.com as a Web 2.0 company was the excellent post on Pixel Acres about the visual design of web 2.0. Let me explain, picking points from the article:

Integral to Web 2.0 is harnessing the input of website visitors. Users can generate content for a web service, promote it in a “viral” peer-to-peer fashion, and improve it’s data quality through their opinions and preferences.

Users of Boo could create their model, share it with friends (following the UGC model, I guess). So the input component was there, as was the sharing one.

Most Web 2.0 sites come across as friendly, approachable and small-scale, using subtle design decisions to gain our trust.

Every decision about the front end was to make it appear friendly, chatty and hide as much of the complexity as possible (that’s why so many people thought what we were doing was easy but badly implemented).

Bright, cheerful colors dominate Web 2.0 sites… Bold primary colors suggest a playful, fun attitude and also help to draw attention to important page elements.

One word: orange. The boo.com site had cheerful colors all over the place (sometimes so cheerful that I worried it would be seen as a toy)

Rounded Everything: The friendliness of rounded corners is in keeping with the comfortable, informal tone of many web 2.0 sites… In a great FontShop article analysing the logos of Web 2.0, it was clear that rounded typefaces are all the rage. This smooth approach to type lends a modern playfulness to a company’s visual identity.

Yup, Boo.com was round, very round, even the logo and the fonts. From a visual standpoint, it was much closer to today’s web 2.0 site than the ones it lived among.

Most Web 2.0 sites devote prime real estate to the message that they offer a free service.

Well, we kept pushing our “Free” boozine (Boo Magazine) and looked at it as a way to hook people into coming back again and again to the site.

You won’t find any stock photography of smiling support staff on a Web 2.0 site — that’s a tactic favored by small companies trying to mimic large corporations. Simple icons and screenshots are the order of the day when it comes to imagery on Web 2.0 sites. 3D and beveled icons can lend elegance and polish to a page design that is otherwise fairly stark.

Boo.com was 100% stock photography free. It was all icons and cartoons.

A good Web 2.0 app ought to be lightweight and easy for users to grasp, and clever visual design and copywriting can help remove barriers to entry. Smart use of layout, color, type and copy can go a long way towards easing the pain.

Well, we failed on the lightweight end of things but the design was to be as airy as possible.

As far as Web 2.0 is concerned, bigger is definitely better. Bigger text, that is. Large text is easy on the eye, and coupled with snappy copywriting makes information easy to absorb. And now that accessibility is cool, it’s possible to be a hotshot web designer and use enormous type.

… and back then, people said we didn’t make good use of the real estate because the fonts on our screens were too big. However, note that accessibility was inexistant at Boo.com

The layout of Web 2.0 sites might be described as minimal. With a focus on legibility and ease of use, good use is made of white space. White space allows important information to stand apart, provides rest for the eye, and imparts a sense of calm and order. Generous leading also makes text copy easier for the eye to follow. Some Web 2.0 layouts are so minimal that they verge on boring, but designed well, an uncluttered page can be incredibly tasteful.

Yes, we had a lot of whitespace.

Friendly, informal copywriting allows a more personal relationship with website visitors.

People complained that our content was too informal, actually. I guess taste has changed in the following years.

So, from a visual standpoint, we may have established some of the rules that are now considered good visual rules for Web 2.0 companies. Of course, feature wise, we didn’t have RSS (it had not achieved the level of popularity it now has) and worked largely as a walled garden (all interaction happened on our site) but Boo.com was probably sitting closer to a Web 2.0 sensibility than most companies that existed at the time.

Conclusion

Based on past history, the complexity that existed back then has largely disappeared, making it possible for Boo.com to exist in the web 2.0 world. The market has also evolved to the point where many of the innovations first introduced by Boo.com are now considered mainstream and where many of its barriers to entry seem to have disappeared. This means that Boo.com could have a chance at surviving this round. However, one would have to be careful about overspending on advertising (a crime that Boo.com was responsible of, with its massive multi-country ad budget). A question that remains on the viability of the brand is whether the errors of the past have damaged the brand to a point where it would not be able to come back. It is probably the most dangerous factor in the rebirth of Boo.com and, if the negative press of the past overshadows the re-emergence of this company, it could be a fatal flaw that could ultimately make this a bad idea.

I wish much luck to the parties involved in the relaunch. Hopefully, they won’t suffer from the same arrogance we suffered from in the first iteration of the company and will be able to build a strong business around this brand.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title Why the Boo.comeback makes sense. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

So yes, Google is paying $1.65 billion for youtube, Ebay spent $2.6 billion on Skype (making the Google/YouTube deal look like a cheap deal), and News Corp. paid $580 million for MySpace (making them look frugal compared to the other two big deals) but the truth is that, across 20 major deals, those 3 stand out as the exception and not the rule. It appears that, on average, deals are generally below $50 million and, in most cases, lower than $10 million.

Bubble 2.0?

I’m sure people are going to call me out on this because I’ve previously warned about the possibility of a new bubble being created. However, at the current time, it seems the data does not support that conclusion yet.

What it appears to support, however, is an interesting calendar anomaly: it appears that major deals generally happen in the 4th quarter of the years (either that, or I got my data set wrong)

Another interesting point is that I haven’t found any other chart of that type around the net. So I figured this page can be a starting point. Hopefully, faithful readers will help me fill this chart with more data points so we can do more granular analysis

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title No Bubble 2.0 yet. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

Size of the market

When talking about virtual worlds, I am focusing on the new space created by the gaming industry that allows to create online avatars and interact with other players in a fully immersive environment. From an economic standpoint, estimates range from around 100 millions to a high of US$1.5 billion a year. These are not insignificant numbers and they point to an emerging phenomenon and potentially the rise a new industry, with its own set of marketplaces, gathers, owners, creators, and marketers.

Marketplaces

To understand virtual worlds marketplace, one must first understand what si going on in those virtual worlds. When a player sets up an account, he’s given a basic set of skills. As he or she progresses and interacts with the virtual world and its denizens, the player gains more and more skills and goods. However, this type of interaction requires time. Some people have figured that, because time is money, the amount of time spend in a virtual world could be converted into real hard currency. Thus was born the concept of Real Money Trading (aka RMT), whereas players go to specialized sites and buy virtual goods with real financial currency.

The action initially started on auction sites like Ebay, where characters or other virtual goods range in price from a few cents to several thousands of dollars. Because the trades were largely unregulated, some companies, like Sony, decided to set up their own exchange while others (Internet Game Exchange, Massive Online Gaming Sales, Tek Gaming Supplies, Swag Vault, and Gamers’ Loot) have created specialized marketplaces to cater to this new phenomenon. This, in turns has led to the rise of two new classes of activities: informational ones that provide analysis on the financial going ons in those worlds and arbitration, whereas companies use people in the developing world to build up assets they resell to people in the developed world. Let’s go deeper in those areas.

Information Sites

There is now a nascent information industry surrounding the costs of goods in virtual worlds. For example, Eyes on Mogs is a shopping search engine for virtual goods. All the attributes of other search engines are part of it, including comparison shopping, comparisons of the different vendors, pricing, delivery date, and buy it now info. GameUSD tracks the financial value of virtual currencies over time, providing price trends across not only the provider but also the alternative marketplaces. MMOfx claims to track “over 18,000 price quotes daily” and provide information on the fluctuation of virtual currencies.

Arbitration

Another type of economic activity to have arisen out of the marketplace phenomenon is the arbitration of virtual work. As the primary pursuit in these worlds is the acquisition of wealth, status or levels, an emerging market has arisen to give people with real money a chance to bypass the time investment required to acquire those things. For example, Chinese workers get paid between $75 and $250 a month to work in World Of Warcraft, in 12 hours shifts, “killing onscreen monsters and winning battles, harvesting artificial gold coins and other virtual goods. Affluent online gamers who lack the time and patience to work their way up to the higher levels of gamedom are willing to pay the young Chinese to play the early rounds for them.” Similarly, Romanian players can make a living wage (the ABC News story I linked to says that $200 is a good wage for Romania) on the same kind of activity.

Edward Castranova, the leading economist on the subject of money in virtual worlds has been quoted as saying that “They’re exploiting the wage difference between the U.S. and China for unskilled labor.” What is basically happening here is that these companies have found a niche on the global marketplace to accumulate goods at a low cost and resell them at a premium. This type of arbitrage has been the way a lot of developing markets have revolutionized industries, from the export of manufacturing capabilities in the 20th century to the export of some service jobs nowadays. It’s a natural phenomenon and shows that those marketplaces are starting to develop a high level of maturity, which should be noticed by a lot more people.

Virtual Goods Ownership

Beyond the buying and selling of virtual goods in virtual marketplaces, there is also an emerging trend in the real estate business, which can be broken down into three main groups: real-estate owners, creators and integrators, and marketers.

Second Life is a virtual world more focused on the social aspect of virtual environments than on the goal oriented aspect of missions and war-craft. Fortune Magazine reported last year about the interesting case of Anshe Chung, a character created by a German woman who has accumulated more than US$200,000 in virtual land holdings in Second Life. She rents the property out to other people, after having developed the property. Similarly, the BBC reports that a 23-year-old spent £13,770 in Project Entropia and recouped his investment in under a year. In fact, the land rush has been so strong that Second Life has build a model around land use fees, generating a nice chunk of income in the process.

While visiting this world, I’ve talked to people who had few problems paying $75 per month to Linden Labs for those fees. This is pretty incredible when you think that all they are buying is portion of disk space on a server. In a way, the real estate market presented by those virtual worlds can be seen as a hosting fee in a 3D environment and could represent a high growth market (in a future entry, I will look at the opportunities in the Virtual Spaces in more details).

The Integration Model

Another nascent portion of this new industry is the integration game. As with any new technology, developing and managing something in a virtual world is an endeavor that requires specialized skills. New companies like The electric sheep company and Space Think Dream have emerged as developers/integrators, offering their services to other companies. Their main business is to use the skills they’ve acquired to help existing companies experiment in these new worlds. This is, in a way, similar to the type of work that was done by early web design agencies, treating virtual worlds as a new interface either to existing systems or to create a new value proposition.

Other companies have emerged with the sole purpose of selling digital goods in those worlds. SLexchange is a virtual market where people can buy and sell such goods. Similarly, the Electric Sheep company has created SLBoutique as a competitor to SLexchange. What is interesting here is that there is a whole ecosystem building around Second Life, allowing other companies to prosper based on this new platform. This is similar to what has happened with Ebay and allows us to better understand SecondLife as a platform for e-commerce rather than just a game, a fact that Philip Rosedale, CEO of LindenLab and the power behind Second Life, likes to emphasize. This explains why the company has received investments from people like amazon.com CEO Jeff Bezos, Lotus founder Mitch Kapor, Ebay founder Pierre Omidyar, and Microsoft CTO Ray Ozzie. Those people understand that this a new emerging platform and could see potentially high return on their investment.

Bridging the gap

The development of virtual worlds as a new platform is starting to take shape. Companies and organizations like American Apparel, the BBC, Major League Baseball, NASA, The American Cancer Society, Amazon.com and Wells Fargo are starting to experiment in that space. Increasingly, virtual worlds are becoming not only a new way to market but also a new integration point for e-commerce.

Some of the virtual worlds (Project Entropia, for example) have even gone as far as issuing ATM cards that allow denizens of those worlds to take virtual money and trade it for real money that they can use for regular economic activity.

Conclusion

With large amounts of real currency already moving through virtual worlds, we are looking at a major new economic phenomenon that parallels the initial development of the commercial web and the rise of software as platform in the last few years.

With a new ecosystem forming around some of the virtual worlds, there is a fair amount of incentive for a lot of people to see this phenomenon succeed. SecondLife will probably be an early winner in this race, largely due to how quickly it has managed to get other companies to rely on it. A few more established companies are also early in staking ground in this new space and will probably reap rich rewards for their efforts, expanding their brand into those virtual spaces.

While it may appear that this is largely a subculture of gaming, the phenomenon is much more widespread. In my next entry, I will go through the demographic profile of denizens of those virtual spaces, showcasing a rich and varied texture to this phenomenon.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title Economic Activity in Virtual Worlds. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

5. Data Mining/Research

A main attribute of social networks is how much data people provide to them. On top of it, this data and the interaction of users on those networks. This is rich fodder for data mining. For example, researchers recently used Where’s George, a website tracking dollar bills in the real world, to assess how disease spreads. Similarly, LinkedIn provides its users with demographic/geographic data about members of your social network.

Traditional companies spend millions of dollars trying to understand the flow of people, flow of ideas (or memes) and how to exploit them. From Milgram’s small world experiment to the success of “The Tipping Point” by Malcolm Gladwell, there has been a fairly large body of research in this area but, for what may be the first time in history, there is now a heavy trove of data that can be analyzed.

4. Problem Solving

Sites like Google Answers are working on providing better answers to questions. Add-in some social network glue and one could be able to figure whether the person is a subject matter expert in the area he/she is answering the question about. For example, you might want to trust an individual with strong network ties in technology on questions related to technology but might be a little more wary of answers that person would provide about medical care (and similarly, you might trust a doctor more about medical care than you would a computer geek). Social networks, when seen through the lens of expertise, can provide quick access to answers from subject matter experts in one area. It is impossible to know everything but you might have a friend of a friend of a friend who has the answer in a specific area you are researching.

Similarly, social networks can provide a way to get social matter experts to connect and work collectively on difficult problems. When combined with digg–like features, social networks could become a way to speed up the vetting process on scientific publications by allowing a large set of peers to review articles and rank them according to value. This, in itself, could help humanity make radical moves forward in the area of scientific research.

Take, for example, my friends at ACOR who have been thinking of developing, in partnership with the National Cancer Institute, a data-mining system that analyzes information about patients to identify potential root cause for different cancers. Here, we see social networks (in this case, via mailing lists that are finely targeted) potentially being useful to help advance science and hopefully discover some root causes for cancer. A set of tools to such granular community could help a scientist, for example, sent a questionnaire to a sub-segment of the population to test a hypothesis (eg. “let’s see if people who have skin cancer and drank more than 1 glass of milk a day are reacting better to this type of drug?”) before deciding to do a clinical trial. If a specialized social network for such community was created, there might be no end to how much data could be gathered. Thing of it as a shotgun approach to medicine.   

3. Marketing

Marketing, off course, is all about deep knowledge of the audience. The best way to market a message is to discover what motivates people and how to craft the message to match the motivations. When combined with the database of intentions, a social network can work as a set of focus groups for messages. Testing different messages on a narrow audience can allow people to better market their products.

2. Reputation Management

The old adage is that “it’s not what you know, it’s who you know“ is at the core of social networking. As more and more people are online and more and more interactions are happening between people with weak ties, assessing a person’s reputation is increasingly important. LinkedIn has keyed in on that effort by giving people the ability to “endorse” members of their social network, providing more information about how a person performed in a particular job. In a similar fashion, profiles no Ebay allow buyers and sellers to assess the track record of a buyer or seller before making a transaction. Endorsements by one’s strong ties generally reflects much higher than by someone you don’t know. Thus, social networks can work as the glue to reputation management. It is not enough for people to know that a person is seen as important by some random stranger but when one discovers that their friends or colleagues have endorsed a particular individual, they tend to trust those opinions more heavily.

Let’s take a pedestrian example: imagine you need to get some electrical work done in your house but don’t know any electricians. By looking at your social network, you could find such an expert with ease as the best electrician might be linked to your friends. In a way, social networks are just an extension of asking people for recommendations. Which brings me to the last opportunity on this list.

1. Recommendation

Recommendation is a very powerful driver to decision making: whether it is for hiring a person, picking a new product, or finding a general direction, humans tend to look to their existing network and do a subconscious “most-like” analysis of the information they receive. For example, Amazon has been very successful with the “people who bought this also bought…” and “people who looked at this also looked at…” features. As they gather more data, patterns emerge.

Similar approaches can be taken into the search space (where what people linked to or clicked on is ranked higher than other stuff) and in other areas like music (last.fm comes to mind) or other media consumption (for example, the success of aggregator like Digg, techmeme or tailrank can be attributed in large part to the need people have to know what other people think is good).

Conclusion

Social Networks should not really be a set of standalone tools but they are essential to building the next set of applications that leverage the power of the crowds. As such, social networking should be a feature and not an end-goal until itself. The companies that understand this basic rule will be the ones that succeed in that space, leveraging opportunities created by social networks in a fashion that will provide unprecedented benefits.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title 5 opportunities around social networks. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

Voice Over IP

The big surprise here was the acquisition game. When I made the predictions last year, i thought that the acquirers would be larger telcos. However, companies like Ebay and Yahoo! have been playing the acquisition game, looking at telecom space as a feature to add to their product set.

It does, however, show the rise of European players in the US telecom market. Skype was clearly a European player that was seen as a major player in the US market, which explains the acquisition by Ebay.

Asterisk also experienced a banner year with deployments increasing in the small and medium enterprise market. It has not yet broken into the large scale enterprise market so I get only half points for this prediction.

Entertainment Convergence

The convergence I predicted in the post is now in full swing. the introduction of the Xbox 360 as a convergence device and the rise of the video iPod as a way to move television into the arena of small consumer electronics has turbocharged the space.

While MP3 has not yet become the standard for mobile phone, it is starting to emerge. The disastrous release of the Motorola ROCKR has probably slowed progress in that area but I still content that it will happen in the future. Pass on this one.

Meanwhile, the prediction that the movie industry would start suing is starting to come true. They’ve started with a campaign trying to convince people of the evils of illegal downloading. However, the MPAA seems to have learned, to some extent, about the disastrous effect of suing one’s customers and is being careful to not follow in the footsteps of the RIAA.

Also as predicted, legal downloading of television shows is happening. It came from an unexpected source in the form of Apple, which is now taking the formula it applied to music into the rest of the space.

The decision by both XM and Sirius to offer a combined solution that includes both Internet streams and satellite feeds in the same package is following my prediction that radio is about to be upended.

The rise of user-created content is also one of the big stories of 2005 and I believe it will continue through 2006. While no star has broken out of the podcasting and videocasting world, I believe we’re on the cusp of seeing this happen. On the video end, I believe rocketboom will be the first star to break out. Their recent announcement of a partnership with Tivo is just the beginning. On the podcast end, the space is getting more complicated: the entry of the mainstream players into the market could act as a buffer, keeping new players away or at least protecting the status quo.

Business

Large mergers did indeed take the forefront in the 2005 year, however none of the mergers I predicted actually happened. A lot of money went into merger and acquisition budgets and has increased greatly in 2005.

Also impressive is the fact that many of the smaller players were the target of acquisition. It seems the new exit scenario for web 2.0 companies is not to go the IPO route but to find a larger company that will gobble you up.

Apple

This one is way off. Most of my predictions were off base: Apple did introduce a video player, to critical and consumer acclaim, and an iWork product suite, but they did not introduce any photo camera, a recording player, or a way to send images straight to printers. Their partnership with a phone company (Motorola and the ROKR) was fairly disastrous, showing the company still prefers going at it alone than trying to partner up.

Development

Service oriented architectures, trust and security did take to the forefront this year. Meanwhile weblogs and content management systems have not merged yet. However, more and more large companies are starting to take a look at weblog software, with RSS become a major distribution channel. This trend will continue to accelerate into the new year.

Personal

On the personal front, I made a commitment to blog more often. While it looks like this commitment will not come true (I didn’t create more entries), it comes with a substantial disclaimer. This year, I tried to focus on longer, more analytical types of pieces. My decision of doing it that way was largely due to a decision to try to add to the overall discussion instead of rehashing what other people have been saying. The interesting thing is that this approach has actually resulted in more readership. You don’t have to blog a lot to get people to read you; you just have to craft quality blog entries.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title 2005 Predictions: Keeping the Score. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

Grouping the metrics

In order to figure out weighting, I first started to think about how to group different metrics. For this purpose, I looked at things like the base value (which would give us a baseline as to how much a business is worth based solely on revenue and revenue growth), inventory (looking at things like traffic, reach, and output, because they all give us some data points as to the growth of monetizable assets in the future), consumer involvement (looking at info like links, subscribtions, and comments to define the value of customers), and growth potential (including some more fuzzy measure of potential growth and the advantages of the integration value).

My reasoning for grouping things in this way was that it might make it easier to figure out weighting across those large catch-all categories (and, if there is any discussion at all, I am sure that people will debate the percentage assumption against those categories). I, in no mean, try to represent those as the be-all-end-all approach to valuating a business. They are, at this time, the metrics that give me the best comparative view of a business, when I try to assess its value. However, not being much of a metrics guy to start with (my main reason for doing this series is to provoke debate among people smarter than me so there can be some consensus on metrics in this new web 1+n.x world), I hope that others will step in and show me the error of my ways along with providing some interesting information that will get all of us closer to something useful.

Base Value

The base value, as I see it, is defined by revenue and revenue growth based on historical data. The reason I would consider this to be the base value is that it is a reflection of the business as it exists today and can provide a baseline as to where the business would be headed if growth suddenly slowed or investment in the business stopped. It does not provide any information as to how to accelerate the growth of the business and does not provide more than a view into the present cash value of a business.

However, for young companies, such value does not provide much information. Start-ups, by nature, have a lower revenue and profit line than established companies because they need to recover some of their initial cost and may still be in high growth and research and development phases. As a result, to solely base one’s view of a business on its current ability to generate cash is short-sighted when it comes to start-ups.

Another question when developing the base value is how to factor in risks to the revenue base. For example, if the business relies primarily on advertising from an external network as its basis for revenue (many people have talked about businesses looking to AdSense as the primary source of revenue), one has to wonder what would happen if the dynamics of that relationship were to change.

As a whole, however, because of its overall importance in assessing the present financial value of a business, I would assume that the base value should represent about 20 to 30 percent of the overall value of a business. Initially, the value would be in the 20 percent range because potentials are higher than the current revenue line but, as the business matures, and potentials decrease, it would edge up towards 30 percent.

Inventory

Inventory would be the next potential grouping of different metrics. In it, I would include traffic (and traffic growth), as well as visitors, site counts, reach, and output. Let’s go into more details on each of those.

Traffic is important because the number of page views is something that is monetizable. However, in a web 2.0 space, pageviews are not the only traffic metric one should track. For example, RSS subscriber counts is another useful value (and controversy has already swirled around ads in RSS feeds). However, I would argue that there is one value in the inventory count that is of utmost importance: access to an API. The reason I would venture this is the most important inventory metric is that APIs, once implemented, are harder to unhook from. As such, they represent a harder type of value since they solidy a site’s reach within a particular market segment.

I believe that reach is actually going to be seen as one of the more important values in terms of inventory. The reason is that reach gives us an idea of the potential growth opportunity in a market. If a company has a high reach in an individual market, its potentials are more limited. Witness, for example, a company like Netscape, which once had a reach of 80% (ie. 80% of all internet users were using it. ) Tactically, this kind of position is one where they should have been on the defensive, the reason being that there was more potential of a drop in their reach than an expansion of it. Microsoft is now finding itself in the same position on a number of fronts: Windows, Office, Internet Explorer are all playing in a world where they will not reach a higher percentage of the market. As a result, they are forced to play defensively. One could argue that web 2.0 companies, with their reach APIs and more powerful front ends (thanks to technologies like AJAX) are representing the threat Microsoft saw coming from the Internet in the mid-90s. And one could argue that, this time, the position they’re in (ie. largest player) is endangering their future if they don’t make a radical change (because they can’t grow from the position they’re in).

Going beyond the reach, which provides some information on past growth and potentials moving forward, one has to look at output from the company. For example, in the case of a company like Ebay (arguably a web 2.x company already), the inventory is number of auctions submitted. Similarly, in the case of Craig’s List, it would be number of new ads posted, or in the case of a blog, the number of posts created. One has to be careful about ouput, however, and should measure the cost of output in order to figure out whether the output is good or not. In the case of web 1+n.x companies, output is a very good thing as it is generally created by outside parties for free. That free product is one that those companies then monetize. However, one has to be careful and evaluate if output is outpacing the company’s ability to monetize it because, if an imbalance were to start existing, the value of the output could potentially decrease.

All and all, because inventory has a measurable value and, in general, is the very thing that a company will monetize, I would guess its weight, when figuring out the value of a company would probably sit in the 10–15 percent range.

Consumer involvement

Consumer involvement, which was known in the past as stickyness, is another major group of metrics. This section would include links, subscriptions (both to RSS or API feeds and, if offered to any paid type of service), and any type of interaction a user may have with a system. For example, if you trying to get some interaction information on consumers of a blog, one could look at numbers of comments posted. Alternately, if you’re looking at a search engine, one could look at number of searches performed. Or, if you’re looking at a company which offers an API, you could look at the number of times that API has been integrated in other products and the number of times it is accessed.

I would venture to say that this metric is one of the most important ones when assessing the value of a business. The reason I would value it higher than the ones I mentioned earlier is that this is where one can see whether a business has a potential or not. The interaction with customers (either directly or via APIs) provides so much useful information that a company not looking at this metric is probably off track in terms of evaluating itself (and, generally considering the hype around new businesses, such company could fool itself into extinction as it fails to see major issues arising out of the increase or decrease in consumer involvement.)

Because it represent the value of the existing cutomer base and provides some input as to the trends surrounding that customer base, I would throw a weight of 30–35% of an overall valuation going to factors relating to consumer involvement.

Growth potentials

However, metrics in and off themselves, are pretty useless as a point in time number. As a result, one has to assume the growth potential when evaluating a business. The growth potential can be associated in a number of ways but, when it comes to web 1+n.x properties, it comes down more on the side of potential based on a number of subcomponents. In the interest of provoking more controversy, I would venture that there is a formula to calculate potential and that it is as follows:

Potential = traffic growth rate * reputation vector * brand equity vector * (integration vector (squared)) — ( Risks vector / percentage of risk that can be mitigated)

In the growth rate area, I would put an aggregate growth rate that averages out growth rates over a period of time (6 months to a year if you are computing a monthly growth rate.) The reputation vector and brand equity vector would be values based on reputational and brand equity trends, which I talked about in a previous entry. You will notice that I consider the integration vector to be of such high importance, when defining potential that I’ve decided to square its value. I will talk about integration vectors in a future entry but, put short, the integration vector is the magic glue that makes acquiring or merging a company very valuable because integrating it with another company will derive greater value for the combined entity. It is that issue generally known as synergy but trying to put a value on it would have the potential of making for better, more successful acquisitions and mergers. Last, but not least, is the rist side of the equation. Because risks have a huge impact on potentials, it is important to measure them in order to get an idea as to their potential impact. However, because some of the risks can be mitigated, it is important to capture this figure in order to assess the importance of different risks.

Ultimately, growth potentials represent the largest part of any equation when trying to value a company. Few companies are bought without an expectation of potential and this is why, in my weighting, I would assume potential to represent a substantial (30–40%) part of the equation when trying to measure a company’s value.

Conclusion: Wait, that’s more than 100 percent

If you do the math, it appears the different weight are ending up representing more than 100%. The reason is that those are ranges. However, the truth is that, in any business dealing, there is also an amount of faith and luck that comes in. For example, I sat in a meeting once where an individual was given an option to buy in whole a company which is now very successful on the Internet for around a million dollars. Looking back, it might have been worth that much at the time but I doubt that it would be worth what it is worth now (several billion dollars) had that deal being consumated. Over time, the management of that company was smart enough to mine opportunities and put people in place that helped them realize huge growth. Had that company been in the hand of more conservative (and by conservative, I mean adverse to risk) investors, it would probably not have flourished in the same way.

Having gone through a few days thinking about metrics, it is clear that there are a number of opportunities for people smarter than me to figure out some solid metrics in assessing the value of new companies. Metrics, however, should not be the sole guide when assessing a company.

Many people have asked me why I bothered to look at such boring subject (and why I’ve been blogging so incessantly about numbers lately). My main reasoning is that one of the failures in Web 1.0 (the bubble we lived through in the 90s), lack of accountability and/or expectation management lead to very inflated numbers that eventually left a lot of investors with very poor investment. Having lived (and survived) that bubble, I want people to start thinking more critically about Web 2.0 companies and, hopefully, we can all learn about the mistakes of the past and avoid over-hyping new companies into extinction… because for every bubble, there is eventually a big pop, and no one really enjoys that part.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title Metrics — Weighting the Metrics. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

It seems there are two clear camps here: the new media adopters and the traditional crowd. They can easily be identified based on whether they have laptops in front of them or not. It creates an immediate delineation line as the blog crowd obviously has a backchannel to use whereas the traditional media crowd does not. That’s another facet of WeMedia: always connected, enhanced knowledge through immediate sharing of data.

We News Panel

The AP showed a few familiar citizen generated clips of the Tsunami, the London bombing, the WTC bombing and said they started to use contributions as a way to get speed to market.

“Technology is fundamentally changing the business and if we don’t adapt, we will loose that audience” — Richard Sanbrook, BBC

Discussion of class disparity and availability of access to the internet channel. The United States are behind on this and it seems that there is little leadership in terms of moving forward on this.

Keynote: Al Gore

“TV dominates the flow of information in America… The most prominent casualty [of changes in the marketplace] is the marketplace of exchange of ideas…

It is the destruction of that marketplace of ideas that accounts for the strangeness of our times.”

He sees three basic tenet of the marketplace of ideas:
1. Open to every individidual with no barrier to entry
2. Depended on meritorcracy of ideas
3. Accepted rules of discourse presumed that all speakers were trying to find general agreement

Talks about how television is not a two way conversation (leading up to current.tv pitch, I’m assuming).

“News divisions are now seen as profit centers and used to pursue the agenda of the corporation they are owned by” He then goes on into media manipulation by the White House and current state of coverage (no real news but rather entertainment).

He now is talking about how private control of the TV airwaves is a problem for democracy (gives example of moveOn being shut out because advertising is the only way to get one’s voice on the air(because their ads were not accepted while the White House’s ones were).

Current.tv is about enabling a two way conversation in television.

He stills see TV as the dominant medium of the next few years and closes with a plea to ensure that Internet access remains free and open.

We, Inc.

Discussion of business and media. There is a lot of discussion about the potentials of the Internet as a new channel but, as Scott Rafer, of Feedster, points out, they are “on a higher socio-economic bracket… People aren’t able to find the tools to hear independent voices.”

Craig Forman, GM of Yahoo!, is asked by Jason wether Yahoo! is a media content creator or an area that content producers can work with. He talks about the hotzone, which is independent content and flickr (also owned by Yahoo!) and how the community self-organizes around new tags.

Jennifer Feikin, Director of Google Video, sees it as organising information based on user-generated content. Sees it as “just the beginning”. Lots of talk about Google Video and how it makes video content more readily available. Google’s long term aspiration is to also facilitate video on demand and be able to charge for it (this seems reminiscent of the initial Microsoft model (circa 95–96) of trying to get a vig off every transaction on the Internet)

Andrew Heyward, president of CBS News still sees the Internet as not on par with TV right now. “There is no 60 minutes of the internet. There are very few stars, no compelling storytelling… ”

There’s discussion of a generational divide. According to Heyward, the main reason traditional media is slow to react is that they still have very large audiences, ie. the people who are over 40. He also believes that opinion from journalism on the blog is probably antithetical to the philosophy of CBS news. It’s not something he wants his journalists to engage in.

The most successful writers in the blogosphere, according to Rafer, are the people who are willing to come out and tell where they stand before covering a subject.

Citizen media revenue opportunities: Scott Rafer sees it on the same size as Ebay. Jason Calacanis sees it as 20% of traditional media. Craig Forman sees the revenue opportunities as a mediator between creators, advertisers, and audiences.

We, Invest

Brad Burnham, of Union Sq. ventures, sees the real money being in the coordinate of activity, not in the activities themselves.

Brad Feld, of Mobius Venture: “Computers and software suck… from a venture perspective, there doesn’t seem to be a foreseeable end to it… The challenge is… how to find out what people are interested in and how to organize all this. ” He talks about how Google has demonstrated the value of automation.

Brad Burham counters that Google (and also goes into Skype) is partly based on automation but also based on an underlying human network. The next question he has is whether you can sell a network.

Brad follows up in agreement that scalibility is essential to the model. User attention is an essential part of monetizing traffic.

Following on a view from Rafat Ali that content is not an investment play for VCs, Feld follows up that money is in things that are not easily reproducible.

Burnham: “It is so easy to get to market [for a media company] on the net… that is hard to find something that is monetizable.

A lot of the value within the tool is in the community. It’s getting to be very hard to see the difference between a media and a software co. As the cost come down, the price of delivering a service is so low that you can support it with adsense or another ad model. A media business paid for by the person who wants to have a conversation with the person receiving the service. ”

Feld: Pays credit to web 2.0 and the web 2.0 conference as a geek gathering; “On the east coast, we have a conference where people are talking about something that I, as a technologist, really don’t understand. You have a dynamic where you think they’re coming together but culturally, they’re diverging more than ever.”

We, Marketing

Rick Skentra, topix.net CEO, talks about the value of word of mouth and how the message for the blog world must be different than the message for other traditional media.

Henry Copeland, founder of Blogads.com, talks about how there is no more We in the WeMedia. There is now a personal relationship between bloggers and their audience. Marketing messages in that channel are counter-productive.

John Bell, creative director of Ogilvy PR, talks about the challenges of moving away from a control-focus message.“What we’re seeing is an opportunity for companies to be more transparent and there is still a great split within our customer-base… Some clients are nervous but at the same time, they’re seeing things change and want to get there…”

Fernando Espuela, CEO of Voy, is targeting the latino market with community empowerment tools and marketing it through a non-traditional approach by launching the brand before launching the product.

I asked a question on pushing messages instead of working within the message from the customer. Copeland mentioned how jobs are at risk. Skentra looks at using the people out there as a large focus group. Bell likes the idea of companies that will engage in such a way.

Discussion now goes to Dell-Hell and the Jarvis discussion. Skentra looks at it as an opportunity for companies to adopt a human face and responds to markets. Rubel ask whether companies are allergic to this. Bell says size has nothing to do with it. “… and it goes beyond blogs. For example, BP did a good job when they relaunched their brand as beyond petroleum but they made sure they were not only more transparent but were also walking the walk.”

In Us We Trust

This discussion is focusing on trust and how to get it.

Richard Edelman, CEO of Edelman PR, has been talking about how levels of trust in institutions has fallen. However, one has to wonder whether this trust has eroded as a result of greater transparency which showed that the trust in those institutions was based on very thin ice to start with.

Collaboration Cafe

The goal of this session is to foster dialogue (think bloggercon for traditional media types) and discuss the concept of collaboration. Some of the ideas that were covered included active listening, discipline in caring, demonstration of passion, and general engagement, allowing for vulnerability.

Last Thoughts

The conference was very interesting and I got to meet a lot of fascinating people. The most interesting thing to me, sitting here as a media outsider, was that most of the people at the conference still believe they can have full control of the messages distributed online. This, in my view, is a major fallacy in their thinking as it is becoming clearer and clearer as time goes on that there is very little one can control on the Internet. The only way you can impact the direction of a discussion is engaging into it.

See Also

See also the Technorati Tag wemedia, the We Media tag wemedia and the WeMedia blog for more coverage of this conference.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title At WeMedia 2005. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

Apple

Scored well on the introduction of the Apple mini, which represents Apple’s entry into the lower end market. However, no video iPod this year, only a photo one, leaving Apple far, far, away from the movie downloading world.

On the computer end, Apple did not introduce a G5 portable. Wishful thinking on my part, true, and still a wish I hope to see fulfilled in 2005.

Convergence: Music Stores

As expected, Apple has solidified its relationship with AOL, offering the iTunes store under an AOL login. However, the store is not fully integrated within the AOL service.

As predicted, the world of online music is now divided into two camps: AAC and Windows Media. However, the surprising move was from Real Networks, which was the first company beyond Apple to adopt the AAC format.

Convergence: Voice Over IP

As predicted, voice over IP has had tremendous growth in 2004. AT&T’s exit from the consumer market can be seen as a move to reorganize around land-line offerings. Also of significance this year was the introduction of VoIP services from most of the big telco player.

Regulatory discussions are now exploding, with telcos pushing for deregulation as “a way to compete” against the new players in the field. At the same time, the same traditional companies are pushing for regulation of VoIP businesses.

Wireless: Wi-Fi phones

Dead wrong on that one. Maybe next year!

While WiFi continues to progress at high speed, the introduction of phone services using such service is limited.

Business: Revenge of the Internet companies

Google did its IPO as expected and that went very well. Other Internet companies also went public this year but one can hardly talk of coattail effect.

On the bright side for investors, my predictions about the decline in stock prices for the big players did not pan out. However, I still maintain that the stock prices of companies like Ebay, yahoo, and amazon are too high.

Business; Sun in Trouble

As expected, SUN continues to have trouble financially but I have to admit I was wrong in terms of what I expected them to do. They are still in the SPARC business and are still pushing Solaris as their main OS.

Development: Standards at the forefront

This one was an easy one. As sites like ESPN and Wired moved to new standard formats, more and more people and companies are getting interested in more standard compliant code. Not a headline grabber but definitely a strong move.

Society: Social Networks at the core

Wrong, wrong, wrong. Social networks were slowly moving but not really getting more important this year. Their integration with search could, however, yield great potentials.

Politics: Internet comes of age

The Internet did come of age in this election cycle but Howard Dean did not win the democratic candidacy. However he, and other groups, managed to use the Internet to mobilize millions of people. The Republicans, on the other side, used the power of conservative bloggers to attack candidates (for example, the Swiftboat veterans for truth) and then take on the establishment (Dan Rather and Memogate).

Coming Soon: My predictions for 2005!

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title 2004 predictions: Recap. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

Apple

Apple will come out with a new lower-powered, lower-cost version of the iPod. The idea here is that they want to extend their lead in the digital music space and use the iTunes music store as a leverage for selling more iPods. From there, I suspect they will introduce a new low-end iPod which will follow the existing iPod line and offer less hard drive space at a lower price. In conjunction with this announcement, they will introduce a new line of iPods that offer support for both audio and video. From there, we might see a tentative move into the digital video space, with the possibility of their extending the offering on the iTunes music store to include downloadable music videos. Later on in the year, rumors will go uncofirmed as to whether Apple plans to introduce a downloadable movies service.

Apple will also announce the release of a new class of laptops powered by the G5 chip but offering lower speeds than their desktop counterparts, due to issues relating with chip cooling.

Convergence: Music Stores

As more music store follow Apple’s lead, we will see at least one other site (probably Wal-Mart’s) offering downloadable AAC files and follow Apple’s lead. On the other side, Apple will announce that it is solidifying its relationship with AOL and offering the iTunes music store as a component of AOL.

The recognition that the online music business is a low margin one will force many players to reassess their strategy, with consolidation ensuing in that market and solidifying across two standards: Windows Media Player files and AAC files.

Convergence: Voice over IP

2004 will be a big year for Voice over IP with many companies offering Internet telephony products in both the small and medium business arena and the consumer one. As major telephone companies unroll their offering in that arena, thoughts will go to redefining what a telecommunication company is about and new consolidation and splits will see phone companies reorganizing around two business models, either as utility providers, providing the infrastructure (the hardwired lines that go into a house or office), or as service corporations, providing services that run over those lines (the voice telephone will begin to be thought of as a service instead of a utility).

By year end, there will be a lot of discussion as to what those companies are about and calls to reshape the regulatory dialogue on what a telecommunication infrastructure is about. The other discussion on regulation will go towards figuring out how to deal with pricing models on communication services as the new services will destroy the concept of local and long distance.

Wireless: WiFi phones and integration everywhere

A big surprise will be the rise of mobile phones that use Wireless Internet connectivity (Wi-Fi) and voice over IP to allow users to place calls using the Internet infrastructure.

Data services will become more prominent in mobile phones, led by camera-phones, which will increasingly be used for multimedia messaging, and the introduction of some videophone services. As mobile phone companies see more pressure on their voice services, due to the introduction of WiFi phones and continued pressure relating to number portability, they will look to data services as a new source of income.

Business: Revenge of the Internet companies

Internet business will be in the headlines again as Internet companies show they have built successful business models based on profit instead of promise. As a result, investor confidence in Internet stock will return with an increase on stocks of companies that show they can use technology to lower costs and increase productivity.

In parallel, venture capitalists will start investing in new technology companies. Much of the money that has stayed dormant for the last few years will be invested in new companies that focus on services in the infrastructure, security, and interconnectivity arenas.

Of course, the big initial public offering of the year will be Google, which will generate enough excitement in the investment community to have a coattail effect on other Internet stocks.

On the downside of the investment picture, the stocks of Amazon, Ebay, and Yahoo will loose value as investors realize that their price/earning ratio are out of proportion compared to the rest of the market. Amazon will try stemming the losses in their share price by announcing that they are moving to a new strategy: offering a complete set of hosted services for retailers who want to lower their cost, instead of just being an online retailer on its own.

Business: Sun in trouble

Sun microsystems will see itself in a difficult situation as it finds itself squeezed on the lower end by Linux, which will continue to eat Solaris’ marketshares, and on the higher end by Linux, which will increasingly be seen as the way to go when it comes to large scale applications. Companies like IBM and HP will offer utility computing as a “better approach” for large scale applications, running them on mainframes instead of large numbers of blades.

On the educational end, Sun will lose marketshares to Apple, which will be pushing its G5 and OSX platform as a better alternative.

In a dramatic announcement to save the company, Scott McNealy will announce that Sun will abandon Solaris and move completely to Linux by the end of 2005. The company will also look to sell its SPARC processor business, with either HP or IBM picking it up, and announce that it is moving to a new hardware architecture, based on chips produced by another company.

Development: Standards at the forefront

Many large scale businesses will realize the value of building Internet applications on open standards like XML, XHTML, and CSS. As a result, the redesign of many major corporate sites will support those standards and an increasing amount of time will be devoted to making websites more accessible.

RSS will also experience a major growth curve as more and more people become aware of the power offered by such a subscription model. Much discussion will be paid to defining business models for delivery of RSS with media organizations trying to figure out how to distribute advertising in their RSS feeds. Initially, the Internet community will denounce the introduction of ads in RSS feeds but will come to admit it as a necessary evil later on in the year.

Society: Social Networks at the core

While services like Friendster, Tribe, Ryze, and pluggedin received a lot of coverage in the tech sector last year, many investments in the sector will fail as companies just look at social networking as yet another feature to add to their site. The existing players will either merge or be sold to companies like AOL, Yahoo, or Microsoft, which will add social networking as another component in their online product offerings.

Apple will be the surprise player in this new arena, using OSX as the basis for a new social networking platform that will merge their address book application with mail, calendaring and chat services to provide an end to end solution on user’s desktops and offer added services through their .mac platform.

Politics: Internet comes of age

Much of the US presidential campaign will be using the Internet as a political tool to organize supporters and raise funds. The early lead taken by Vermont Senator and democractic presidential candidate Howard Dean will help him win his party’s nomination. Using the same tools during the general election, Dean will try to ignite the general democratic base in a fight against George Bush. The Republican party will enter the election season with a similar set of tools and much of the campaign will be fought online with some potential scandal arising out of one of the candidate’s site being hacked. As a result of the Internet battle, record numbers of voters will show up at the polls in November.

Of course, TNL.net will continue reporting on all this and show how wrong all those predictions were at the end of year.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title 2004 Predictions. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

This is a great tool to learn new ways to propagate a payload. New variants of this will come out, and I think that within six months, Hybris and its kids could be the most widespread Trojan making the rounds.

Later that year, Code Red became the most widespread Virus in recent history. I am now afraid to say that, with SoBig.F, we are now seeing a merger of those two paths into something that could become very scary.

Humor me for a second and follow me down a few little dystopia.

A trojan writer (and I will not go into the motivations of those people as they are as varied as motivations for programming) decides to write a trojan that attacks servers in the same way as Code Red did. However, the writer makes sure that the attacks happen at a relatively slow pace, infecting system at a relatively small pace over time. That trojan gets on a certain number of systems and contains code to update itself from Usenet. When it has infected a server, the trojan sends a Usenet note saying that it is ready and waiting. Meanwhile, the trojan writer keeps count of those notes until they reach a certain amount. Once the amount of needed systems has been infected, the trojan writer releases an update to the code. That update could be used for distributed denial of service attacks against a number of large targets (CNN? Ebay? Amazon? Some government site? Some other institutions). This could take out a number of systems quickly but what if… what if, instead of just limiting itself to a DDoS attack, the trojan kicked off something that would combine a DDoS with a full scale infection of critical systems around the net. Or what if, instead of attacking a web site (or set of web sites), the trojan attacked routers. What if, for example, the attack was held against the 13 core domain name servers as happened a year ago ? This kind of attack is looming over the horizon, I think, and we may not be prepared for the kind of Internet blackout it would create. As more and more business is transacted over the Internet, this kind of attack could result in millions (if not billions) of dollars lost.

Another scary possibility is what I called the Microsoft infection possibility. Blaster, a virus which hit only a week ago, was designed to take down windowsupdate.com, a site that is used by Microsoft to update software on windows machines. This, in itself is not a problem but, with Microsoft now talking about automated updating of systems (something they are considering in the wake of the blaster attack), it could become one. What if someone managed to put a file on the Microsoft update queue that contained a virus or trojan. Granted, Microsoft’s reputation would be severely tarnished by such an incident but the bigger problem would be in how to recover from such an infestation.

Now combine the two scenarios I’ve highlighted above and you get something even more worrisome. You end up with a virus programmer exploiting the automatic update feature of Microsoft to use it as a way to carry a payload that is then used to create an attack on the rest of the net. First, windows machines get infected. Then windows machines get used to take out the rest of the net, impeding everyone.

I’ve talked about this with a few fellow geeks and many tell me that, in theory, all of it is doable now. However, no one managed to point me to a way to avoid such a problem in the future. Remove windows? That’s the answer many in the anti-Microsoft camp would give but it is not a realistic one in a world where millions of machines are installed. Avoid automatic updates? Then the smaller viruses and trojans get through and scenario one can still be accomplished. What is the answer? If you know, contact me and I’ll post a list of answers.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title The Coming Plague. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

I’d like to add a few points to Paul’s discussion on this, however. Unlike other great forms of art, great programming is more appreciated for its risk taking at the time at which it happens. For example, if you visit the Musee D’Orsay, which covers the full range of 19th century art, you come to realize that the paintings that received the most prizes in art competitions were not the ones that took the most risks. They were generally more bland and the more daring pieces were often the cause of much controversy and shunned by the “people who mattered”. In the same fashion, some of the greatest books in history have had very rough beginning, often being recognized as masterpieces only years after their author’s death.

In the programming world, however, a great piece of code is highly praised for its ingenuity and its risk taking. Large leaps have been made over the past decades by people who essentially figured that working within the system might only achieve incremental improvement but working outside of it could generate something much more interesting. If you look at the development of the commercial Internet (and of the open source movement), it is this “let’s try to do something more” that has engendered some of the biggest leaps.

The 90s were an interesting time in that people looked at the Internet and essentially allowed for day jobs to be created so that people could explore possibilities. While much money was tossed at people trying to do things that wouldn’t work (pets.com, anyone), the truly innovative companies (Amazon, Ebay, Paypal) took large leaps of faith and were rewarded for them.

While the leap of faith in terms of the idea is prized, some other parts are not. In my early days as a hacker (and by hacker, I mean someone who toys around with code, not someone trying to break into systems), tight code was the norm. A large part of the reason for this was the limited amount of space we have to play with. As a kid in the early 80s, I was playing with computers where RAM was calculated in Kilobytes, not Megabytes or Gigabytes and, as a result, my friends and I were always trying to get more out of each byte of code. As memory availability increased, it seems that people became more careless in their programming, often wasting useful resources in terms of CPU space and memory space. This skill, nowadays, does not seem as prized as it used to be. The same is happening in terms of web development, where sloppy usage of XHTML is forcing us down a path of more bandwidth for the bang. To me, the real beauty of a lot of code lies in the fact that more can be done with less. This, however, seems to be a lesson that many have not learned.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title The Elegant Hack. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

Sizing up the businesses

Ebay is primarily in the auction business. Everyday, millions of people buy and sell products through the service. Ebay does not hold any of the inventory and focuses primarily on providing a marketplace for exchange.

In parallel, Paypal provides a service that allows people to send money electronically by tying credit card numbers to email addresses. 60% of Paypal’s business comes from people who are using Ebay for auction and Ebay tried to compete with Paypal through its own service called Billpoint. The only problem was that Billpoint never received the kind of support Paypal enjoyed.

While other offerings (Yahoo PayDirect, Citibank’s C2It, Western Union’s MoneyZap) tried to go after the same market, Paypal established an early lead and hung on to it.

Furthermore, Paypal has worked hard to work with multiple credit card providers, and has established signification relationships with companies like UPS to create a system that allows for end to end processing of transaction.

Opportunities

At the same time, Ebay has been moving closer to a fixed price model since the acquisition of Half.com and has expanded into providing other services for sellers. Combining the services Ebay and Paypal have been offering will mean providing an end-to-end solution for anybody interested in selling goods online.

This puts Ebay on a collision course with Amazon.com, which is trying to attack the same problem from the large provider end.

What’s Next?

Once the merger has been completed, expect Ebay to integrate Paypal as part of its complete offering and get rid of Billpoint. Once that is done, Ebay will collect fees on listing goods, transacting the business, receiving the money, and delivering the goods. This is a great model as it puts Ebay clearly in the lead in terms of offering a complete solution for online retailers.

Once it’s managed to do so for small retailers (as it does on Half.com and Ebay “Buy it Now” sellers), expect Ebay to start going after larger and larger customers. In the long run, I would not be surprised to see Ebay and Amazon bid on some of the same contracts, with Amazon showcasing its warehousing capabilities as a plus, while Ebay would present its complete platform as the solution of choice (let’s not forget that Ebay now has a complete API already working, which makes it easier to integrate its services into other platforms.

Since both companies offer capabilities for online selling, I would expect them to fight it out on new features, with Amazon eventually suing Ebay over 1-click functionality and, after a settlement is reached, both companies looking at the possibility of a merger.

It looks like such a thing would make sense as both companies have managed to amass large quantities of customers and both are striking out in similar fields. Whereas Amazon focused on becoming a host to large companies like Target and Toys R Us, Ebay has focused on small retailers. Together, they could become the biggest host of online stores on the whole Internet.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title Ebay to Acquire PayPal. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

Priced at $300 for the modem and a $40 monthly rate for unlimited access, the service is still not cheap but it is starting to approach the reasonable area once you realize how much you can do with it.

The basic software package comes with some of the same clips that are available on the Palm VII and a few extra programs like a full mail package which allows you to connect to your POP3 server. However, I decided to get rid of that piece of software once I discovered Ptelnet, a small telnet client for the palm. This allows me to access a Unix server on which I not only have an email client but also a Usenet client, as well as a web browser (lynx) and an FTP client.

As a result, this telnet client works as the perfect on the road kit.

For more graphically oriented pages, I use Proxiweb, a full web browser that allows me to surf web pages directly from my pilot. The proxinet server converts the pages in a format that is easily readable by the pilot.

Of course, one of the main attraction of a wireless pilot is quick access to relevant information. Using Palm computing’s proprietary tools, several companies have developed PQAs that allow users to quickly check certain pages. Amazon.com, for example, allows you to order directly from your pilot, Ebay allows you to track your auctions in progress, and Etrade allows you to trade stocks. However, those are not the applications I found myself using the most.

I’ve discovered that the most interesting ones tend to be the information PQAs. For example, I can now check flight delays at the airport (perfect for travelers), track FedEx packages, get directions using mapquest, or grab headlines from a variety of sources including the New York Times, the Wall Street Journal, and USA Today.

On the more techno-centric end, one can also grab headlines from Slashdot, news.com, and ZDNN. I find myself reading from my connected Palm when I am waiting for a meeting, in transit in a cab, or waiting for a plane at the airport. It’s the perfect way to stay productive wherever I am.

Palm computing knows that in order to keep its lead, it needs to offer tools for developers. As a result, they have introduced a small program that allows developers to create PQAs. The process is relatively quick (put together a few small HTML pages, trim a few images, check your links to make sure that they show up properly on the Palm.) However, one tricky part is creating web server pages that will display properly on the Palm.

I’d like to urge developers to do as much as possible to separate content from presentation when they create pages. In the case of TNL.net, the site is templatize according to one’s browser. So if someone comes in with a Palm (the user agent tag includes the word Elaine so you can clearly get it filtered), I serve up a less graphic intensive template.

This has allowed me to develop a little application allowing people to read this newsletter from their wireless Palm.

As an increasing amount of wireless device start to pop up, separating content and presentation will be increasingly important. The sites that do so already will gain an essential edge in this next section of the market while others will remain far far behind, stuck in legacy HTML code. If you don’t do that separation right now, you will find yourself in tougher and tougher a situation as the amount of content on your site keeps increasing.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title Going wireless with the Palm V. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

Yes, absolutely free. How much for that domain name in the window? Nada, zilch, nothing.

But for a lot of people, it seemed too good to be true. And for a lot of people, it just didn’t happen. At about 9:01pm, the site started to experience VERY sluggish response times. First, they claimed the NSI registry stopped answering.… Then their nameserver crashed… Then the web server crashed. Then, hopeful registrants around the Internet started talking.. and talking… and talking…

It’s Scalability, Stupid!

In the end, the issue came down to one simple overlooked issue: Yes, you guessed it.

It’s give me an S…
give me a C…
give me an A…
give me an L…
give me another A…
tired yet?
give me a B…
give me an I…
and another L…
and another I…
and a T…
and finally a Y!

What does that spell.… SCALABILITY!

While they were expecting under 500,000 unique visitors, they logged over 2 million attempts to enter the site and in the end under 10000 names were registered.

As a result, RegisterFree went from being the new kid going against Network Solutions to joining the ranks of Victoria’s Secrets and ABC in the annals of sites that failed to scale to demand.

By 12:10am tonight, RegisterFree issued the following statement: Ladies and Gentlemen:
This was truly awesome. We never expected ANYTHING like the AMAZING response we
received to our RegisterFREE Free Hour Promotion. At certain times over the course of the evening, the NSI registry (the universal database which provides domain name availability checks) was unable to process requests for those domain name availability checks. As a result, traffic was significantly slowed at times, and some people were unable to register their domain name. We hope to receive better support from NSI Registry during our next promotion, which will be coming up very shortly. We can safely say that hundreds of thousands of people came to RegisterFREE.com tonight, and thousands were able to register their domain name for free. At this point, we ask all those who were unable to register a domain name to send an email to cs@registerfree.com and let us know, so we can deal with each query personally. Congratulations to all of those customers who did get through and were able to submit their registration request. RegisterFREE.com STRONGLY believes that Domain Name Registration should be 100% free, and we will have this promotion again very soon. Again, thank you for your continued patience and support as we try to make all domain names 100% free. The RegisterFREE team.

Now I can hear many of you scoff at the fact that they couldn’t scale.

Yes, it’s true, they mis-planned but how many of us plan for such traffic surges? And how do you plan for something like that. Do you overbuild and hope that people will come? What is the factor by which you have to multiply your expectations and get an appropriate number. Last summer, drugstore.com went down on its first day, deluged by over 1 million requests. Should we use 1 million as the magic number?

Many large web sites have been designed with little attention paid to scalability and every time one of them fails, we all look bad. Why? Simply because the Internet is considered as unreliable when that happens and THAT scares away potential customers.

Don’t believe me? Try asking my 82-years-old neighbor! When Yahoo! and Ebay were taken down, she was so scared by the negative press that she told me she wouldn’t shop online because hackers would steal her credit card and overcharge it. After explaining to her that she was only liable for $50 maximum and that incidents like this were rare on the Internet, I think I managed to rescue one more customer on the Internet.

But enough negative publicity along the lines of what I expect to see in tomorrow morning’s newspaper (especially considering the great coverage RegisterFree managed to get BEFORE the event) is undermining consumer confidence in the Internet and that is what I worry about.

But Wait! It Gets Better!

More troubling was the fact that they were blaming it onNSI. While I don’t particularly like NSI, I have to say that their whois was working tonight. I spent all evening checking domain names in the NSI whois while I was trying to get into registerfree.com. It worked fine for me, actually working faster than it usually does. I even ended up registering domain names from there. RegisterFree.com pointed out that someone at NSI decided to take the “registry processing systems offline for an indeterminate amount of time” but other registrars were fine. After the promotion ended, RegisterFree was still the subject of some discussion regarding ethical issues. It may be just a technicality but other registrars like Bulk Register and Enom (just to take a couple of names from the ICANN accredited list) are cheaper.

So can registerfree be trusted? I just provide the links. You make the call.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title Trouble in RegistrarLand. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

I had just moved to New York city the previous fall and was caught into the glory of Gotham. In the process, I had managed to start making friends in the online community there. This was the year Mosaic had been born and the first year of the modern net, as far as I see it. People outside of universities were starting to connect to BBSes that were connected to the Internet all the time (this was relatively new, as most BBSes used to be one or two modem systems, allowing only a couple of users to connect simultaneously) and a few enterprising souls had set out to create a global event: first night in cyberspace. Half international friendship fest, half educational effort, our goal was to teach the world about the Internet and meet some of the people we had exchanged flurries of emails with and chatted with online. In New York, ECHO (the East Coast Hangout) and the Dorsai Embassy had partnered to hook up Grand Central terminal with 5 computers. ECHO brought the in-crowd, a mix of artists, and online aficionados who created one of the top online communities in the world and Dorsai brought the geeks, people like myself who felt that spending a weekend installing in-house networks and debugging lines of a new OS called Linux was a worthy cause.

We were high on life and high on the possibilities of the Internet, eager to show the world that they too could join people from places as remote as London and San Francisco in the first global party. Stuck in a little corner, we had 5 computers (generally lent by ECHO users) and a mission: to change the world.

We did not know how much we would end up doing in the process. Meanwhile, in some dark recesses of Silicon Valley, the small group of programmers who had brought us Mosaic were working furiously on putting the finishing touch on a new version that would be even better. A few days before they had posted the first beta of the program.

The name of the company was Mosaic Communications. The new product was a faster web browser called Netscape. And everyone on the net could email marca@mcom.com, who probably didn’t expect he would be on the cover of Time magazine less than 24 months later.

As the event went on, tens of thousands of people logged on to celebrate together. At the time, the net was only a couple of million people worldwide.

Back then, I didn’t know that this night would change a lot of things for me. Back then, I was desperately trying to find a job that was somewhat related to the Internet but there just weren’t that many. That night, all that changed. I’ve been thinking back to the day when my career went into high speed and I got caught into the Internet wave. That night was the beginning as far as I am concerned.

I had made a reputation earlier that year by starting to get involved in a Usenet newsgroup called alt.internet.media-coverage. It was a place where anyone on the Internet could go and talk about coverage of the net in the media. In those days, that coverage was so scarce that we spent our time dissecting the few stories that were printed about the net.

Unbeknownst to me at the time, a lot of people in that group were also working reporters. One of those reporters was my friend Angela Gunn, whom I first met face to face on December 31st, 1993. She was at the event and our meeting ended up not only getting me my first legitimate magazine writing gig (for Web Week) but also my second job in the Internet industry and the one that eventually ended up in my helming internet.com and kick started my career.

Angela and I talked through the night about how the net was going to change everything. I think it would be honest to say that even we underestimated how sweeping a change it would end up being.

Fast forward to today. It’s only 6 years later and over half of the American population is now online. Abroad, the net is starting to catch up and massive amounts of people are starting to join in. Email addresses are as common as phone numbers, and E-commerce (a word that didn’t even exist 6 years ago) is redefining the way people buy and sell everything. Every business has a website or is considering getting one, from multinational corporations (who now have entire departments tending to their Internet and Intranet sites) to the guy around the corner.

Jeff Bezos, of Amazon.com (two names that were unknown to most people only a few years ago), is 1999 Time magazine man of the Year, and every other ad on TV is for a .company. Millions of new jobs have been created and the next great Internet business plan and the next great Internet IPO have become the new American obsession.

Back in 1994, there was no such thing as Amazon.com or Ebay. If you wanted to check out commerce on the web, you could buy hot sauce from HotHotHot (the site is still around at its original URL). Short of that, you were just out of luck.

Back then, you were lucky if you had a high-speed 28.8k modem. 56k was far down the road, DSL or cable modems just didn’t exist. Back then, to connect to the net required a fair amount of technical savvy as one had to configure their computer and make a number of different software packages work together since there was no drop-in-the-CD-and-follow-a-simple-set-of-instructions to get on the net kit and the concept of having and Internet-ready computer was unheard of.

Back then, if you told someone at a party that you worked in the Internet industry, you would have met blank stares and proceeded to explain what the Internet was, how it worked, and generally boring people in the process.

Back then, my parents were suspicious of what I was doing especially when I was explaining to them that companies would put their content on the Internet for free for everyone to read and that somehow, we would find a way to make it work economically but we were really quite sure how.

Back then, when I suggested to people at CNN that they should enhance their broadcast with extra content online and post the full transcripts of their broadcast on the Internet for free, I was pretty much laughed out of the place.

Back then, the only threat to Microsoft was Macintosh and the Mac had a much easier to use interface since Windows 95 was more vaporware than reality, having been delayed for the better part of a year. Linux was known to only a few people who had dared download it from some obscure server in Finland and had installed it on their 386s or 486s. The big advantage over windows 3.1 was not that it had a better interface but that you could telnet into it, just like you would into any regular Internet server… and it was Unix… and it was free. I personally had gotten exposed to it because a Dorsai user named Bob Young was specializing in selling CDs that had stuff you could download off the Internet on them. The big advantage of those CDs was that you could get a CD with a complete archive instead of spending hours or days downloading the same software. The name of the company was Red Hat and they were based in Westport, CT. A morning in 1995, that fact became very important to me personally: one of the machines at Internet.com was running off Linux and we needed to rebuild the whole system. I called Bob up and we drove over to his office to get a copy of the latest version of Linux he had received. He burned it on the CD right in front of us and saved the day for us. At the time, none of us realized that Linux was going to become the new threat to Microsoft and that Bob was going to become a billionaire on paper in the process.

Back then you could surf the whole web in a few days since there were less than 10,000 web sites. Yahoo didn’t yet have its own domain name and was sitting on Jerry Yang’s personal workstation at http://akebono.stanford.edu.

Back then, domain names were free. It would take another year before InterNIC started to charge $50 per year to own a domain and most were worth about that much. It would take until 1995 for the first sale of a domain name from one party to another, when Cnet bought TV.com for $15,000.

Back then, the net was still relatively quiet. Streaming media was still a thing of the future (RealAudio would debut streaming audio in 1995 and a small Israeli company called VDOnet would launch streaming video a few months later), as were Java, JavaScript, Shockwave, Flash, VBScript, and XML.

Back then, the most traffic the Internet was seeing was FTP data, and the web was still in fourth place as the most used application on the net, behind FTP, Email and Usenet. Also, spam didn’t exist yet. It would take a few extra months for two Arizona lawyers (Canter & Siegel a.k.a. “The Green Card Lawyers”) to spam Usenet.

The top online service in the country was CompuServe, followed by Prodigy, Genie, and AOL. None of them were connected to the Internet and all of them were expected to die off. While this was the case, other services were not connected to the net: we didn’t have Internet banking (although online banking was possible by using proprietary software the bank would give you) nor was there any online trading going on.

All this in 6 years. Oh my, how far we’ve gone. So with this in mind, I’d like to thank all of you for a wonderful six years and take this time to remind you that we still have a lot to do. After all, together, we are still working on creating the building blocks and moving them around.

Let’s see if we can do as much in the next 6 years as we have in the past ones.

We may have made a lot of money in the process. We may have made a lot of changes in the process. We definitely changed the world in the process.

But let’s not forget what we set out to do: to build something new, something that we could leave behind and proudly look at when we’re older.

I would like to challenge everyone on this list to come up with a way to give back to the community that has given us so much. Whether it is by spending a little time teaching a net beginner how to move around this world we created, help a school or non-profit organization to get online, or help make more data accessible through the net, please take some time off your busy schedule and go out and make a difference. We did in the last 6 years: why should we stop now.

As the year 2000 approaches, please do make that pledge to yourself and together, we’ll help this grow a little further.

That’s about it for my little sermon. As a closing note on this year, I’d like to renew my thanks to everyone I’ve worked or exchanged ideas with in the past year and I hope we’ll do some more of that. So have a great New Year’s eve celebration and I’ll see you on the other side of the calendar, the one that starts with a 2.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title 1994–2000: How Things Have Changed. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

The concept is fairly simple when when you think about it: Creating groups to get volume discounts on products. A single product was up for sale (3Com’s Palm V, which they offered for $350 to the first 50 buyers to come in) but the concept makes sense. If you’ve ever been into a Price Club or Costco store, you’ll understand it fairly quickly: the more people agree to buy the product at its current price, the lower the price gets. The buyer is guaranteed to get the product they want at the price they entered in OR LOWER.

Think Ebay in reverse… Imagine being able to go out and say “I’m willing to pay $2000 for this computer,” put in your order, wait a couple of days, and see that price drop to $1500. You net the saving, Accompany gets a transaction fee and everyone is happy.

As we all know by now, Amazon.com figured out that consumers wanted to be able to have an easy shopping experience online; Ebay figured out that people were willing to pay more for scarce good.

Accompany will most probably be remembered as the first company that went out and said “let’s get volume discounts.” Now, I’m not sure that they will be successful in the long run (their business model is based on a lot of people paying them commission fees on those sales) but I believe that the business model is one that will stick around and one that could revolutionize the way people buy products online.

This volume discount approach might also represent an interesting move in the buyer/seller relationship, moving the power directly into the buyer’s hands. Large corporations are usually wined and dined by big computer manufacturers, for example. Imagine now that this online volume buys model takes off and is coupled with something like a shopping bot and you have a veritable revolution in the shopping space, where complete disintermediation of everyone including the Amazon.com’s of this world is a possibility.

Why go to Amazon.com or Barnes and Nobles, when you can be part of a group of people that goes directly to the publisher and gets a huge discount as a result? What is the value add that a bookstore like Amazon provides?

Those are only a few of the questions Accompany’s new business model are raising.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title Volume, Volume, Volume. You can follow him on twitter here or receive his weekly newsletter by subscribing here.