The big news this week is Facebook’s announcement that it would take the company public, in one of the largest offering in history, raising an expected US$5 billion in the process. As this is the largest tech IPO since Google, it is time to run the number and assess whether similarities or difference exist when it comes to base numbers. What appears there seems to justify the $75–100 billion valuation some see the company getting at IPO while providing a few points of concerns about the future growth of the company.

The topline numbers

The first numbers everyone is looking at are how much the  company is raising, how much it’s making and what its profitability look like. If we compare the 12 months preceding the offering for Google and Facebook, the picture looks like this (all figures are in thousands of dollars, unless otherwise stated):

Looking at those numbers, the Facebook IPO seems relatively cheap compared to the amount of money Google was looking to rise when it went public. However, since we don’t know how many shares Facebook is looking to sell for those US$5 billion, it is impossible to assess how much the company should be priced at.

Using Google’s market cap at its strike price and at the close of its first day, we could look at the multipliers for revenue and net income as possible hints as to how much Facebook could be valued at on its first day:

So if revenue and income were to be considered as the only indicators for what value to give Facebook, the valuation range of US$75–100 billion for the company doesn’t seem totally incredible. However, one would have to consider whether Facebook could grow its revenue at the same rate as Google did. While it starts from a substantially higher number, it also means that the company is probably in a more mature stage and may not be able to grow its revenue at the same speed as it has in the past.

Revenue

While Facebook’s revenues are impressive, we should see how they break down in order to get a better sense as to whether a comparison to Google makes sense. Digging into the S-1, we find interesting numbers such as the percentage of revenue that comes from advertising, the percentage change from the prior year’s ad revenue (and from the year before that, giving us a sense of what growth looks like) and highlights as to the percentage of revenue coming from significant external parties. I’ve summarize this data in the table below (dollar values are in thousands):

While Facebook’s ad revenue are substantially larger than Google’s were at IPO time, its reliance on advertising is 10%, showing that the company may be more successful as diversifying its revenue base. This appears to be a good thing as the last 2 years of ad revenue growth seem to have been slower than what Google was experiencing when it went public. Another sign that we may be dealing with a more mature growth curve when it comes to the company’s ad revenue is the fact that it seems to have already been fairly successful in ensuring that its revenue base was no longer just a US one, with only 56% of its ad revenue coming from the US, while Google was deriving 74% of its advertising revenue from the US when it went public.

Much has been made about the mention in Facebook’s offering that it derived 12% of its revenue from deals with Zynga, the company that has successfully provided a number of games for the Facebook platform. However, one must realize that such reliance on an external party is not so unusual and that Google was warning that 21% of its ad revenue were generated by managing the ad inventory of external partners.

So all and all, the revenue picture for Facebook looks pretty strong but advertising revenue may be decelerating, with question as to whether the other sources of revenue are growing at high enough a speed to counter that deceleration.

Costs

On the other side of the financial register, one has to look at whether Facebook is as efficient on managing costs as Google was when it went public. Fortunately, here again, the S-1 filings provide us with usable data (all dollar figures in thousands):

The first thing that jumps out when looking at those numbers is that Facebook seems to pay substantially more for its revenue than Google does. In fact, if you look at the multipliers on cost of revenue (7.06 times) and actual revenue (3.86 times), it seems that it takes almost twice as much for Facebook to make a dollar as it did for Google when it went public. Some of this has to do with R&D costs, which are substantially higher as a function of revenue than the ones Google had at IPO time. Sales and market and overall costs and expenses seem to be lower, as a function of revenue, than Google’s were at the time of its offering. This may be a sign of an organization with more mature cost control metrics.

Keeping an eye on the cost of revenue may be an important factor in assessing where Facebook is heading revenue wise. If that number keeps rising, the company’s margin may erode, making it a less attractive business. In its offering document, the company is reporting a US$.43 net income per diluted share: this is slightly better but mostly comparable to the US$.41 per share Google had reported in its offering documents.

How much revenue per employee?

Both filings provide information as to the number of employees each company had. When it filed to go public, Google had 1907 employees; by comparison, Facebook had 3200 as of its filing. This is a useful number as it allows us to compute revenue per employee, a common measure of how effective a company is. When it filed, Google was making US$504,391 per employee; by comparison, Facebook is making US$1,159,688 per employee.

This is pretty significant as Facebook appears to be making twice as much revenue per employee as Google does. But how profitable are each employee?

Using the same approach, we can find out that Google made US$55,400 in net income per employee when it filed while Facebook makes US$312,500 in net income per employee as of this filing. This is a pretty impressive number but it is in league with what Google makes today (US$336,297 as of a year ago) and ahead of the rest of the computer industry, with the exception of Apple and Google.

If we were to look at Facebook by this measure, it most definitely earns a spot in the US$100 billion market-cap club.

Methodology

For the purpose of getting this data, I pulled all the numbers from the respective S-1 documents for Facebook and Google. Because the numbers in Google’s S-1 were in thousands and the numbers in Facebook’s S-1 were in millions, I have normalized all numbers to be in  thousands. All numbers were pulled directly from the respective S-1 filings or computed from the numbers I’ve exposed.

Conclusion

I’ve looked at a number of ways to quantify how big Facebook is from a financial standpoint and compare it to what was the last IPO of this scale in the tech world. The Google IPO was the launch of a company that had been dominating a large part of the discussion in tech circles over the previous 5 years. The same is true of Facebook, which has managed to grow from a project in a Harvard dorm room into a company that is serving around 800 million people. From a metrics standpoints, this company also appears to have a very strong business that compares favorably with other tech giants and the numbers bandied about in terms of valuation do not seem to be particularly outrageous when put in the greater context of the rest of the industry.

Of course, this does not mean that it is a business that is guaranteed success in the future. Some questions still remain around the cost of its revenue and the company’s ability to continue on the same growth curve as it has in recent years.

If you were to ask me if the Facebook IPO represents a new level of froth in our industry, I would be tempted to say that, based on the core numbers, that does not appear to be the case.

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

With a new year kicking in, it’s time for a new batch of predictions.

Business

One of the easiest predictions to make is that Facebook will go public this year, and it will manage to do so in a very successful IPO. I suspect that this may actually be the high watermark for the current boom cycle as Facebook is the most successful of the companies that were born of the Web 2.0 cycle. In a fashion similar to what happened with the Netscape IPO in 1995, the Facebook IPO may create a small window of opportunity for many other companies to go public.

On the private end of the spectrum, I think we will see the following companies see some form of liquidity event via either acquisition or IPO: Twitter has a strong chance of being acquired by Apple, which will quickly merge the offering into all of its products; Another possibility is that Twitter and Tumblr merge to create a mico-blogging powerhouse spanning both ends of the country. Meanwhile, Foursquare will either IPO or be acquired by Facebook or GroupOn in a share-only deal. Meetup will go public, creating another great story for the New York technology scene.

When it comes to Google, we will see the company continue its integration of Google+ into everything it does, with the biggest impact being the move to migrate all Orkut users to the new service. This will create an outcry in countries like India and Brazil, where Orkut has been popular but will leave many in the American media to wonder what the big deal is as Us customers have mostly left already.

Meanwhile, a lot of the companies that went public in 2011 will meet some strong headwinds as the rigor of the public market make it much more difficult for them to maneuver. Expect some changes at GroupOn and Zynga, with many people questioning their business models and long term viability.

Media

For a couple of years, there’s been a slow ramp up to the integration of the Internet with television. The rise (and to some extent fall) of Netflix, along with the entrance of new players like Hulu and Amazon, have made video distribution on the big screen one of the areas where the Internet and television have already intersected.

However, other areas of interaction have, so far, not been quite as successful. Apple is still treating AppleTV as a hobby, Google has mostly failed so far with GoogleTV, and other players like Roku and Boxee have, to date, been only adopted on the fringe.

In 2012 all that changes as the TV screen takes center stage in a way that a new generation of smart phones arose after the 2007 iPhone announcement. First of all, we will see some increased standardization around how to deliver content to TV screens, with agreements from TV set manufacturers like Samsung, Panasonic, Sony, and Vizio agreeing to some level of standardization. Apple will also announce a large screen product it will position in the TV market: The set will have AppleTV’s technology built-in, be accessible over WiFi, and connect directly to the iTunes store as well as integrate with the iPhone and iPad and other Airplay compatible devices. The set will run iOS and will be managed by a remote that runs on iPod touch, iPhones and iPads.

Meanwhile, cable companies will start opening up their platforms with some software development kits allowing to access content on the set top boxes they use. Once the Motorola acquisition is completed, Google will start transitioning the Motorola set-top boxes, which are a large part of the cableTV market, to GoogleTV, increasing the footprint of the service in the marketplace. Along the way, we will also see GoogleTV become more streamlined and less ambitious, focusing on delivering Android apps to the big screen instead of trying to rebuild the whole TV industry.

The concept of cord-cutting will continue to gain support but will not yet jump into the mainstream consciousness. With shows now being available exclusively on the likes of Netflix, we might see some interesting positioning whereas some TV carrier will offer Netflix as a premium service.

Politics

Social media will dominate the political cycle in 2012, with Twitter, Facebook, YouTube, Tumblr, and Meetup becoming part of the political operative tool belt. However, traditional electoral models will continue to be disrupted by the rise of distributed networked organizations like Occupy Wall Street, Wikileaks, or Anonymous. Except those players and new ones built on a similar model to have a substantial impact in terms of registering new voters and getting those voters to the polls in elections in Europe, the Middle East, and the United States.

In the US, the 2012 electoral cycle will see Republicans select Mitt Romney, a candidate most of their electorate is not very excited about, to run against Barack Obama. With the unexpected support of Occupy Wall Street and its splinter organization, Obama will win re-election as issues around economic disparities and job creation continue to be big topics of discussion.

In Europe, expect to see incumbents toppled in many countries: with major elections coming up in France, Spain, Russia, and Finland, it is possible that we will see a major change in political alignments across most of Europe, along with an increase chance of protest in those different countries. In Russia, in particular, we may see the internet play a crucial role in organizing protest if there are questions regarding voting irregularities.

The continuing protests in the middle east region may also lead to substantial changes in governance in several countries including Bahrain, Syria, and Saudi Arabia. During the presidential elections in Iran, we will see increasing clampdowns on internet sites as the government tries to shut any means of communication available to large groups of protesters.

… and of course, the easiest prediction to make is that the media industry will continue to push for more restrictions on the Internet, leading to more activists pushing back.

Technology

2012 is going to be an explosive year for technology.

First of all, we will see HTML5 roaring back, as many companies realize that it is cheaper to build in HTML5 and that the gap between platform specific code and HTML5 is shrinking. The introduction of WebGL, and proper implementation of geolocation and caching within mobile devices will give developers the ability to develop applications in HTML5 that can rival some of the offerings of native code. This is a move that will be resisted by platform makers like Apple and Google as it will loosen their stranglehold on their respective platforms; however, the split side of this is that effort is that some large companies will look to free themselves from said control by creating HTML5 instances of their own products.

On the mobile end, the Microsoft/Nokia will get some real traction with Windows Phone becoming a strong third player in the mobile market. Apple and Android will continue dominating the market with Microsoft still being a distant third. RIM’s position in the market will substantially worsen and will either be sold or go into bankruptcy.

Enterprise cloud strategies will continue to grow, leading to a growing divide between companies that can get efficiencies through the use of cloud computing and companies that are kept by different regulatory frameworks from being able to realize the financial gains offered by such model.

3D will be a hot buzzword, with the introduction of consumer-oriented 3D scanners and 3D printers that will push the idea of scanning and printing your own plastic parts. This will lead to some controversy around the concept of 3D objects piracy popping up in the media, with little actual evidence to back those fears. On the 3D projection end, we will see the rise of designer 3D glasses and the first glasses-free 3D television hitting the market, as we as a few consumer-grade 3D cameras. At the same time, we will see more and more technology to upscale 2D to 3D, in an attempt to develop a larger consumer market for 3D technology.

On the PC end, netbooks will disappear as a category and the hot new trend will be to offer thinbooks that mirror much of what Apple is offering with the Macbook Air product line.  Solid State Drive will aso increasingly become standard on new computers and we will see Apple actually announce they are getting rid of traditional hard-drive in all their product offerings. This will lead to their being able to announce that all their hardware can now run for at least 7 hours on a single charge.

Any which way, we will be revisiting those predictions at the end of the year and see how well (or badly) I did. I wish you, dear reader, a very happy new year and look forward to a continued dialogue in 2012.

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 2012 Crystal ball. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

A small christmas diversion (sang to the tune of “The 12 days of Christmas”):

On the first day of Christmas
my social web gave to me
A like and a retweet too

On the second day of Christmas
my social web gave to me
two instagrams
and a like and retweet too

On the third day of Christmas
my social web gave to me
three vimeos
two instagrams
and a like and retweet too

On the fourth day of Christmas
my social web gave to me
four tumblr links
three vimeos
two instagrams
and a like and retweet too

On the fifth day of Christmas
my social web gave to me
five foursquare badges
four tumblr links
three vimeos
two instagrams
and a like and retweet too

On the sixth day of Christmas
my social web gave to me
six klout perks
five foursquare badges
four tumblr links
three vimeos
two instagrams
and a like and retweet too

On the seventh day of Christmas
my social web gave to me
seven HN upvotes
six klout perks
five foursquare badges
four tumblr links
three vimeos
two instagrams
and a like and retweet too

On the eighth day of Christmas
my social web gave to me
eight reddit comments
seven HN upvotes
six klout perks
five foursquare badges
four tumblr links
three vimeos
two instagrams
and a like and retweet too

On the ninth day of Christmas
my social web gave to me
nine quora thanks
eight reddit comments
seven HN upvotes
six klout perks
five foursquare badges
four tumblr links
three vimeos
two instagrams
and a like and retweet too

On the tenth day of Christmas
my social web gave to me
ten wordpress entries
nine quora thanks
eight reddit comments
seven HN upvotes
six klout perks
five foursquare badges
four tumblr links
three vimeos
two instagrams
and a like and retweet too

On the eleventh day of Christmas
my social web gave to me
eleven google +1s
ten wordpress entries
nine quora thanks
eight reddit comments
seven HN upvotes
six klout perks
five foursquare badges
four tumblr links
three vimeos
two instagrams
and a like and retweet too

On the twelfth day of Christmas
my social web gave to me
twelve youtube videos
eleven google +1s
ten wordpress entries
nine quora thanks
eight reddit comments
seven HN upvotes
six klout perks
five foursquare badges
four tumblr links
three vimeos
two instagrams
and a like and retweet too

Happy holidays.

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 12 days of Social. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

Every year, I make a set of predictions as to what the new year is going to bring. At the end of year, I also review how close or far off the mark I’ve come. It is now time to review the 2011 edition of predictions, which I made on the 3rd of January of this year.

Politics

Last year’s leading internet political story was the rise of wikileaks and, as such, my views were impacted by it. Surprisingly, there has not been that many wikileaks-like organizations arising on the internet. This may be due to the fact that there just aren’t that many people leaking information.

The power of wikileaks, however, could not be denied, and my predictions of protests arising out of cablegate were right on the mark. This year, cablegate highlighted some of the abuse of governments in Tunisia and Egypt and some of that evidence was part (but only part) of what led to radical changes in those northern African countries.

On the regulation end, the FCC has indeed gotten more aggressive, with its more visible move being its attempt to block the acquisition of T-mobile by AT&T. However, to my surprise, there hasn’t been that much complaining from either political party about this rejuvenated enforcement effort.

Meanwhile, the rise of SOPA is clearly in line with the prediction that the entertainment industry will push for more internet regulation.  However, it is relatively easy to predict such thing as it appears the entertainment industry is forever locked into the concept of a more regulated internet. They basically see the internet as competition and would love nothing more than to strangle it to death.

So looking at the political end of the spectrum, I’ll give myself points for good prognostication.

Business

In that category, I decided to stick my neck out on the concept of a public-less IPO and while it was essentially something that happened with Facebook, the concept did not really take off for other companies as they decided to go the public route instead. My expectations were really that IPOs would not come until very late into the year and I was surprised by the likes of LinkedIn, GroupOn, and Zynga managing to get into the market relatively early.

Furthermore, I was pretty much off the mark when it came to NFC. NFC is (and has been) a promising technology but 2011 was not a breakout year for the technology. At this point, only a few select Android models seem to support it and there seems to be little traction from the market around it. While Intel invested in NFC, it may be a technology that grows into usage without having a particular breakout year.

The rise of cord-cutters did happen but not in as large an amount as I suspected. While this is a trend that continue to grow, it is still sitting on the edge and hasn’t gone mainstream yet. However, its a trend I will continue to monitor closely as I suspect this will move to the mainstream in relatively short order.

All and all, my predictions on business were off the mark. Maybe I’ll do better next year.

Technology

Gamification continues to grow but did not really have the big breakout year I expected. While more and more companies are continuing to integrate game-like behavior in their applications and workflows, we are starting to experience a period of consolidation in the space, with bunchball being one of the larger players. This seems to highlight that this space is one where only a couple of major players will arise and smaller players are already running out of steam. The focus around developing gamification models for computer-based applications may be part of the reason for this failing to move forward as the trend is increasingly to more and more applications moving to a mobile-first model.

The scan and shoot revolution I predicted quietly made its ways into the mainstream, with smart phones being the new weapon in every shoppers’ belt this christmas season. It’s one of those quiet revolution that arrived in 2011.

And finally, the big bet I had made on a Microsoft Nokia partnership came in mid-february, when Nokia announced that it would focus all its efforts on developing exclusively for the Microsoft platform.

The internet backlash I was expecting for this year did not come to pass. There may yet be more power in the current positive cycle that has been covering our industry and, as such, it appears that the possibility of a backlash against our industry remains a remote but slim possibility at this time.

So all and all, I’d get a barely pass on the technology side.

Arts and Entertainment

The recent multi-billion contract extensions for NFL broadcast rights are in line with my prediction that big event entertainment is becoming the core focus of the broadcast entertainment world. The continuing effort to support the existing model will increase this trend, giving more and more power to producers of real-time events.

Remixing, and Danish coolness, did not come of age in the past year, however. While groundbreaking on Bjarke Ingels first American project happened in New York, Danes haven’t really moved to the center of popular consciousness. The same is true of remixing: while supercuts are still making their way through youtube but, as a whole, remixing is still not something that has made it into the mainstream.

Maybe I should keep to the margins when it comes to making big predictions around arts and entertainment.

All and all, for this year, my performance at predictions has been average. I will try to do better for the 2012 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 2011 Predictions: The scorecard. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

The Open Graph

Before we look at the winners and losers, let’s recap where Facebook is going. A couple of years ago, the company unveiled the “Open Graph API”, which gave external sites the ability to add “like” buttons to their sites, and in the process allow end-users to things they like into their facebook stream, where they would be shared with their friends. This mean that a user could implicitly publish information to Facebook by just clicking a button. At that point, two things really happened:

• First, Facebook created a system that allowed it to better understand what people were reading because every time a like button is pulled down, Facebook can keep track of it and associate the information with the account of a Facebook user.
• Secondly, Facebook offered publishers a way to generate more traffic to their site by publishing content on Facebook that would return users back to their site.

This was a little creepy because it gave Facebook a tremendous amount of power but, in exchange, the company gave publishers access to more traffic so the agreement seemed balanced to everyone but the end users (which doesn’t matter, as we all know that “if you’re not paying for it, you’re not the customer; you’re the product being sold.”)

But it seems having access to that data is not enough for Facebook; now it wants more data so it can build better electronic profiles of its users. So this year, the company has decided that “Like” was not enough and they wanted to get users to give them access to anything they read on a particular site. So the company unveiled actions like “read, watch, listen” which allow developers to share all action data from a user after a one-time sign-up to the Open Graph API.

Mining the web… but not giving back

This time, the company is mining the web but the main beneficiary of those actions seems to be Facebook, which gets a better understanding of where users are when they are not on Facebook and what they are looking at. If we assume (and I am willing to take the bet that this will be the case) that most mainstream sites will start offering the new verbs, then Facebook will have one of the most complete understanding of a user’s demographic and psychographic profile. In other words, the data it will get access to is the holy grail of online marketing: users that can be tailored to based on extremely granular preferences.

That data can then be used to send ads that resonate with the user in the channels the user accesses most. Think this is crazy? Well, wait ’til next year’s F8, when Facebook unveils a tool to help external sites monetize their traffic better by targeting advertising based on users’ preferences. If this sounds suspiciously like AdSense from Google, it’s because it is part of the end-game. Facebook is no longer happy to have the largest site in the world, now it wants to have access to people when they are not on Facebook.

What’s fascinating here is that the data goes into Facebook but there is precious little information as to how to get it back out, making the word “open” a headscratcher as it is unclear how Facebook defines openness. To the Palo Alto company, it appears that openness is a one-way street: you open up your data to Facebook and in return Facebook “simplifies” the online experience by keeping your app on its platform. This is somewhat similar to the app store model offered by Apple and Google, where it’s OK to play as long as it is within their rules. Facebook is doing to the open web what Apple and Google have often been accused of doing, sticking another knife into its imminent demise.

Also of note is the fact that Facebook’s approach to getting all this data makes it impossible for anyone to create valid HTML5 pages as the Facebook code does not validate under this framework. So Facebook is also hampering the future of the web by making it nearly impossible to live by the ideal of the new web standards if you want to play in the facebook arena. This seems to shape up another fight between Facebook and the open web.

Another company has had similar ambition and it staked its approach first on offering superior search products and then on using the search data to target advertising on partner sites and eventually offer such capabilities to anyone who was willing to give them a percentage cut of ad revenue. That company, Google, has realized the limitations of its model and is busy trying to ensure it can get more data by building up offerings for ways in which people access the internet: so they’re pushing Android for mobile phones and Google Chrome as a better web browser because they want to be able to access data relating to where people are on the web, data that can then be used to create more customized ads.

Facebook at $150 billion?

This week, Google’s valuation sits around $150 and the highest Facebook has ever been rumored to be worth is $100 billion. I’d venture that people are selling the company short and that it is worth something on par with Google. It has masterfully played fears from online publishers and other sites and parlayed that in a potential position of power in the online marketing world.

The only thing that could make it more powerful than it is about to be is if it were to pair up its data with Google’s. A merger of the two of them would create an unparalleled database of internet users, containing just about anything about people’s intents (from Google’s search), their interests (from Facebook’s data), the amount of time they spend on certain properties over others (from either Facebook or Google’s data), and what they liked enough that they would share it with people their know (from Facebook’s data).

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 “Open” Graph. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

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.

Privately held companies numbers

For this exercise, I focused on the three largest privately held social media properties. This was largely to ensure that the companies I’m comparing are closer to maturity (and thus somewhat more similar to publicly traded ones) than other companies one could look at.

I’ve also decided to focus on the same numbers as I did in the previous post to ensure some level of consistency. The data was pulled from public sources.

Looking at this data, it may be clear that we are dealing with 3 companies at different levels of revenue maturity.

If the revenue projects for Facebook are correct, the business may be at a point where it is extracting more value per user across a wider base of users than some publicly traded companies (or companies that have filed to go public). This could make for an exciting IPO when the company does decide to go public.

Twitter and Foursquare, on the other hand, are still working on a model that is early in terms of revenue generations. The two companies are still working on figuring out how to turn their products into money-generating offerings and have yet to really turn on their revenue engines.

Comparing to publicly traded companies

The data becomes a lot more interesting when you put it next to similar data for publicly held (or soon to IPO) companies:

What is most interesting here is is that publicly held companies seem to put a higher premium on per user valuation and average revenue per user.

The later is easy to expect (one would assume that, as a company matures, it is able to attract a higher amount of dollars per user) but the user valuation is interesting, at least to me, because I would have expected it to be more constant from one funding event to another. It seems that private investors see a lower lifetime value on a user that public ones (in facts, the number almost doubles from private to public markets).

When I first ran the numbers, I thought I would end up with a higher valuation on the front end (lower revenue but still strong valuations) but it seems that private investors smartly look to other factors than just users. However, the data may also serve as a note of caution to investors in public companies: focus on the revenue and a company’s ability on deriving good revenue from its user base and spend less time thinking about the overall number of users.

After all, which might be better to you: a company that get $10 per user on 10 million users or one that gets $1 per user on 99 million users?

I know which one I’d bet on. What about you?

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

Google vs. Twitter

With 750 million users, most of Facebook’s time is supposedly spent on pictures and games. In its initial iteration, Google+ does not seem to support those core components of the platform, which may make one wonder if Facebook really is the target. What it does support today, however, is a better version of Twitter, complete with specific status updates. So, in its current iteration, I would venture that the target for Google+ is Twitter.

Which may lead one to wonder why Google is so aggressively going after Twitter. I believe it is doing so because Twitter search may be starting to steal traffic, and potentially revenue from Google search. In a somewhat unsurprising move, Google decided to not renew its revenue agreement to get access to the Twitter stream. I would venture that this is an attempt to kneecap Twitter and ensure it doesn’t become a serious threat when it comes to advertising revenue.

While the company is generally considered as one that tries to do no evil, Google is also keenly aware that its success relies largely on two near monopolies: search and online advertising. With Twitter emerging as the first serious competitor in the space in a long time, rumored to be racking in $60–70 million a year in advertising revenue that could easily be targeted based on tweets, Google is seeing red and acting accordingly against the threat.

Google vs. Facebook

Meanwhile, there is the fight against Facebook. Facebook presents a different problem for Google in that it has taken an increasing share of online users time and put it in their walled garden, away from the web that Google mines for revenue. This trend is largely built on the back of games and photos so Google+ will try to tackle those things next.

While it is clear that, within the code, are hooks that will allow for games to be hosted on the platform, it is unclear whether that strategy can succeed. The main challenge they will encounter is that, as the owners of slide, Google is not just a provider of platform for online gaming but also a major player in the space. As such, some of the smaller players may be worried that the platform could sway in ways that me be less than beneficial to them. Zynga, because it needs to get rid of its current dependency on Facebook will probably hedge by putting some of their games on the platform but it is unclear as to whether other companies might join in.

On the picture end of things, Google is leveraging its Picasa offering, however, it is clear that it could do more by integrating it better in the + platform.  The mobile integration is a nice piece and may actually do collateral damage to a number of mobile photo hosting applications link instagram, for example.

But the picture offering is not enough. A proper merging of YouTube in the offering might give it some extra power by leveraging their strong presence in the video space to offer something that doesn’t yet seem to exist on Facebook.

Google vs. Apple

Apple integrated the new version of iOS with Twitter, basically matching one feature that has existed on many Android phone for a few years. They have yet to integrate with Facebook but I would not be totally surprised if they were to do so in future versions of their device. Android already supports both Facebook and Twitter integration and is supporting Google+ through an added application.

In order for this integration to work, Google will have to integrate Google+ at a much deeper level than it does today. However, with a social network and a mobile offering, Google is in the interesting position of being able to become the social network for mobile devices. On the other hand, the approach they have taken to date leaves much to be desired. By installing two different apps on the device, the experience feels tacked on rather than integrated. The Android team has to do some serious work to really rethink things over and tightly integrate Google+ into the OS, making the experience seamless.

The acquisition game

With a rumored 4–5 million new users in the past couple of weeks, Google is off to a good start with Google+ but still only reaching one percent of the Facebook world. Building on the back of Gmail may be a solid strategic move at this time, as Gmail can get Google to roughly 200 million users. What what about the more than tripling of that number required to get to parity with Facebook? For that, Google is going to have to do a lot of hard work and it’s unclear how they will go about acquiring more accounts going forward.

It may just be that Google will try to require every user of every service they provide to create a Google profile account moving forward. Today, Android users are required to create a gmail (or google apps) account to sync up their device. This represents one acquisition channel that none of the other players in the social media space have and could be one big area for growth.

Another area for potential growth is in the enterprise space: looking at the Google hangout feature, it seems to me that circles could become a useful way to organize a company and get quick online meetings. In fact, it may be more useful as a working tool than as a merely social one.

Still, at this time, it is hard to see a case where Google could topple Facebook. But the history of social networks is riddled with the bodies of players that were once at the top and eventually superseded by new entrants (think Friendster and MySpace) so it is not totally impossible that Facebook could find itself in hot competitive waters.

What about reputation rating systems?

Last but not least is the question around reputation rating systems like Klout or Peerindex. Those companies have built their model on the back of Twitter and Facebook and must urgently adapt to include Google+. With many early adopters spending more time on Gooogle’s property, the reputation rating game has a new entry point that will need to be urgently included in their calculations if they want to continue being relevant. When I first mentioned this, many people replied that those services are just not good enough as is and it seems that they have yet another challenge to deal with if they want to establish themselves as relevant in the future.

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

The following are based on observations of how people I know have handled the issues around content ownership and online presence. I’m not going to endorse any of them in particular as I think that those type of things differ based on many social factors, including but not limited to your work situation (some people may, by law, not have a choice), your age (it appears to me that, the younger you are, the more comfortable you are with disclosing more), the country you live in (my European and Asian friends tend to be more reserved).

So, without further ado, here are five ways I’ve witnessed people and companies using to manage their online presence:

1. Obscurity: No participation is a form of management
2. Controlled: Heavy use of controlling mechanism to parse communication.
3. Broadcasting: Mainly using the services as tools to market one’s content in other areas.
4. Additive: Sharing content on social networks that is not shared in other realms.
5. All-in: Abandoning other forms of media distribution and exclusively leveraging social networks

Obscurity

We are now roughly half a decade to a decade into the social web phenomenon so few people or companies can claim to not have heard of the phenomenon. And yet, some do not appear on social networks. In my discussion with people or companies that do not participate, it seems that many people are simply choosing to not participate. In some cases, it is because they do not see the value: for example, Tina Fey recently explained that she’s not using Twitter by saying “I guess I feel if I had any jokes, I would just hold them”.

So the people who are not present on social network by choice often decide on that lack of presence for economic reason (figuring they may not want to share their content with the services’ owners).

Others have decided on obscurity as a way to avoid dealing with any issue that could arise out of conflicts due to their social media presence. This category of people may actually create more problems for themselves as they let others define them in the online social realm.

Last but not least is the pseudo-obscurity used by some, for example hiding their identity behind a pseudonym or something that does not link them to the non-online world. Many teens, for example, no longer use their real names on the likes of Facebook, for fear that college admission bureaus or potential employers could find them. This group is acutely aware of the fact that online records tend to be pretty permanents and that whatever is posted online by or about them can have a long term impact. This sub-group is an interesting one to observe because it shows a high level of engagement with social media while maintaining a similarly high level of anonymity.

Controlled

This category of users tend to be more sophisticated when it comes to articulating arguments about their handling of social media. Some define broad categories and associated rules based on the services they use (for example, one may consider that LinkedIn is for work only but refuse to “friend” co-workers on Facebook or follow them on Twitter). A lot of teenagers also fall in that category, using finely tuned privacy controls on facebook, for example, to decide on who does and doesn’t see what they are up to.

This group of people is acutely aware of the image they want to project in the online world and works hard on sculpting a presence that is finely tuned to each of the micro-audiences they are trying to reach, whether they are friends, colleagues, schoolmates, or other communities of interest.

The level to which one does or does not exert that level of control over their online persona is often hard to discern as people who claim to belong to one of the other categories may actually be sculpting an image of themselves that mirrors the attributes of that category.

Broadcasting

In the real world, one might called this persona a self-promoter. Any information they publish is related to themselves or their own product: come see my presentation, test out my product, buy my book, read my blog entry, vote for me in such and such poll, etc…

This also appears to be the model generally taken on by a lot of established corporation. The engagement here is not engagement but marketing, spewing out messages that barely differ from the type of marketing one might do with a billboard or a TV commercial (but, as some of the proponents of this approach would say, social media is cheaper than those other forms).

Sometimes, this behavior is merely the first sign of a beginner, trying to figure out the new medium but clinging to old models. Over time, one hopes, this persona can abandon the relentless me-me-me focus of their offerings and start participating in conversations with other actors in the space, while at the same time providing information from other sources in the community.

Additive

This persona tries to extend their offering by leveraging social media in a brand new way. For example, Andy Carvin appears to be pioneering a new form of journalism through Twitter, less based on his own reporting and more focused on curating and aggregating topic-specific content (in his case, the current uprisings in the middle east).

In the past, such a persona may have written pieces on blogs that would present a rounded view of a day’s event but now, thanks to services like Twitter or the Facebook status stream, providing pointers to content has become easier than ever.

In other cases, the social media services become a way to share things that may not fit anywhere else, maybe because they are not organized in a particular way or they are too small to share in a different forum.

For example, in my own use, a lot of what I initially posted on Twitter was links to stories or blog posts I had found interesting. Because I have a wide number of things I’m interested in, there is no overriding organizing principles to those links beyond the fact that I found them interesting. This can be frustrating to some of the people who try to follow as the lack of correlation may make the content unclear.

All-in

Think of this persona as the social media equivalent of Tourette syndrome. The idea here is that this persona engages in radical transparency by sharing everything, from where they are at any given time (using Foursquare and the likes), to what they’re eating, to how their bodily functions are doing. People in this category are often seen as oversharing by some of their readers.

One question that I have is whether this category truly exist or whether it is not more of a subset of a controlled experience. For example, it is fascinating to see how people who claim to be part of that category bristle at the idea of sharing some particular details of their lives: everyone has a line they will not cross when it comes to transparency. For some, it is about money; for others, it is about sex; for yet another group, it is about certain friends.

I’d venture that the all-in persona is mostly an invented one, pretending to create a high level of intimacy with followers/friends (fofriends?) in order to extract financial value out of that pseudo-intimacy. It is the kind of things that allows media stars to entertain their fans and retain them in the period between two revenue generating events, whether they are talks, conferences, concerts, books, movies, or other. It gives the fans a sense of closeness to the stars, while keeping them well at a distance.

Bonus category: Mixed

Ultimately, I suspect that a lot of people end up in a space that is actually a mix of the different personas I’ve highlighted above. For example, I’ve seen some people who are opting for obscurity in certain realms become broadcasters in others. And I’ve seen people pretending to be all-in pull back when it comes to certain subjects.

I suspect that there will be a continued discussion in the online space for the next decade at least as more people trying to define and understand what online personas are and where they would like to stand when it comes to their own persona in the online realm.

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

Twitter and your content

Twitter, one of the most popular social services today, has one of the most enlightened Terms of services: They try hard to give you as many rights as possible and to take as few things as possible for themselves… and yet, you find things like this (emphasis is mine):

By submitting, posting or displaying Content on or through the Services, you grant us a worldwide, non-exclusive, royalty-free license (with the right to sublicense) to use, copy, reproduce, process, adapt, modify, publish, transmit, display and distribute such Content in any and all media or distribution methods (now known or later developed).

So, if Twitter decides, in the future that all private tweets are now public, they can legally do so. Or if they want to compile a book of your tweets and sell it without giving you a dime, you’ve granted them those rights too. And then (emphasis mine again)…

You agree that this license includes the right for Twitter to make such Content available to other companies, organizations or individuals who partner with Twitter for the syndication, broadcast, distribution or publication of such Content on other media and services, subject to our terms and conditions for such Content use.

So if you said you liked a particular product on Twitter, the company can then partner with the maker of that product to use your endorsement in their ads, once again without giving you anything for is. In fact, the matter of compensation is clearly stated in that TOS:

You agree that this license includes the right for Twitter to make such Content available to other companies, organizations or individuals who partner with Twitter for the syndication, broadcast, distribution or publication of such Content on other media and services, subject to our terms and conditions for such Content use.

… and of course, Twitter is making sure that anything they’ve given you can be taken back:

We reserve the right at all times (but will not have an obligation) to remove or refuse to distribute any Content on the Services and to terminate users or reclaim usernames

… and all this from one of the friendlier services out there (for the record, I picked Twitter because it’s often been painted as a friendly service compared to Facebook.

Did Facebook become the good guy?

So this brings up to the big difference between Twitter and Facebook. Many have decried Facebook’s push to shatter privacy settings for users of the service. So let’s take a look at their TOS.

Facebook initially seems to point to a policy that seems to give you more control of your content until you re-read the statement (emphasis mine):

For content that is covered by intellectual property rights, like photos and videos (“IP content”), you specifically give us the following permission, subject to your privacy and application settings: you grant us a non-exclusive, transferable, sub-licensable, royalty-free, worldwide license to use any IP content that you post on or in connection with Facebook (“IP License”). This IP License ends when you delete your IP content or your account unless your content has been shared with others, and they have not deleted it.

First of all, I want to say thank you to Facebook for limiting their rights to the current times and not getting rights for method of distribution that could be created in the future. However, this portion about “unless your content has been shared with others” destroys the rest of the argument: one posts content to Facebook to share it with others so what you seem to be saying here is that if it’s been on Facebook, we can use it.

The rest of the contract actually seems to offer friendlier terms than Twitter does and of course, highlights that they can turn your access to service off at any time (once again, emphasis is mine):

If you violate the letter or spirit of this Statement, or otherwise create risk or possible legal exposure for us, we can stop providing all or part of Facebook to you

Any lawyer will tell you that possible legal exposure can be created in a lot of cases, so this seems to give an almost blank check to Facebook to turn off your access.

Compare and Contrast

What was most interesting to me, in reading the terms of both Facebook and Twitter is that it seems we, as users, are giving up more rights when we are using Twitter than when we are using Facebook. Whether this is a function of Facebook having been at the center of a few firestorms regarding user rights and therefore forced to change its terms to make them friendlier to users or some other factor regarding corporate culture is not something I can assess. All I can tell is that it seems that one gives up more by publishing content on Twitter than they do by doing so on Facebook.

Does that mean that Facebook should get a free pass? Absolutely not. The pressures consumers have exercised on the service have probably had some impact. What it does mean, however, is that Twitter may have been getting by with an easier treatment than Facebook and I suspect that, as its user-base grows and its impact increases, the service may find itself forced to revise some of the terms of its services.

I am no lawyer but I suspect there is wording that could be friendlier to users of the service and I would encourage the company to look at that wording before it becomes a firestorm.

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

Five years ago, people worried that the acquisition of YouTube by Google for a staggering 1.65 billion dollars was the first sign of a bubble inflating. At the time, I looked at the M&A activities and showed that the YouTube deal appeared to be an outlier.

This year, worries are popping up again, this time due to the kind of valuations many of the leaders in the space are getting. As my friends Jon Battelle and Fred Wilson point out, there is a substantial gap between what happened during the dotcom era and what is happening today.

As someone who believed the same thing, I decided to do a little research to get a sense of what valuation, revenue lines, and user base looked like. I did research on Google to get the valuation, revenue, and number of users of the most talked about companies. And it looked like this:

The first thing that becomes apparent here is that, outside of Twitter and Foursquare, we’re dealing with companies with strong revenue flows. But does that justify their valuation? Let’s take the data and look at what else we can learn from it:

All and all, the valuation themselves actually look quite low when you look at them through the lens of revenue (once again, I’m making exception here for Twitter and Foursquare, which are both still working on developing their revenue models — and I hear that the current valuation of Twitter in this round is dependent on their publishing a revenue model).

The other thing to look at is potential. GroupOn has outstanding revenue per user (more than twice the amount that Google gets for its users) so it seems that its ability to get more users would allow it to become as big, if not bigger than Google if it can maintain this average. Facebook, on the other hand, has a lot of growth opportunity in its average revenue per user. As one of the largest internet companies in the world, even something as simple as a couple of extra dollars in average revenue per user could generate billions in extra revenue.

But how do those compare to existing publicly traded internet companies. Thankfully, some of that data is available (Apple data is here):

So is there a bubble? I would say that if those companies are representative of the rest of the industry, there isn’t.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title Doesn’t feel like a bubble. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

Over the last couple of decades, we’ve seen technology have a major impact on all aspects of our society and I’ve tried to chronicle some of those impacts. This year, I’m starting something new by trying to classify the trends I’m looking at and attach them to the broader categories of interest.

So without further ado, here are some of my predictions for this coming year.

Politics

Wikileaks, the phenomenon

Last year, Wikileaks showed that governments may now have to find new, and more transparent, ways to operate in the age of the internet. However, long-time internet observers may have noticed that the US efforts to shut Wikileaks down seem very similar to the RIAA’s efforts to shut Napster down exactly a decade ago. I suspect that the net impact will be similar, with more Wikileaks-like organizations arising left and right.

Meanwhile, the cablegate scandal will continue to reverberate as more revelations from the cables will lead to details about the inner working of governments around the world. This will eventually lead to internet-organized protests making it into the real world, probably starting first outside the US and eventually making their ways around the globe. The protests outside the US will lead to the toppling of at least one government either in the middle east, Africa or South America.

Internet regulation at a crossroad

This year will be a year marked by several fights over internet legislation. I suspect that the US will see increasing clashes between Republicans and Democrats over the level of control the FCC has the right to assert on the Internet and over how much the government can force companies to maintain a level playing field on internet lines. Along the way, we will see a more aggressive and active FCC, making many heads turn as it starts becoming a stronger enforcer.

In several countries, we will see discussion of regulations trying to patch legislative holes created by the rise of Wikileaks and there may be some renewed attempt to increase the control of government over press organizations as a result of these regulations.

The fight over online piracy will also extend from discussions of music piracy to increasing movies, television, e-books, and e-magazine piracy. This will be the start of a new push by the entertainment industry to regulate the internet further.

Business

The public-less IPO

With last-year’s announcement of large-sized funding rounds by the likes of Groupon and Twitter has shown that there may be a different way for early investors to get some cash out of a company than a sale or Initial Public Offering. I suspect that it’s only a question of time before someone creates a Special Investment Vehicle (SIV) that allows for a private investors to invest in private companies like Facebook, Zynga, Twitter, GroupOn, etc… Along with the rise of secondmarket, I believe that 2011 will see large privately-held companies offer stock to investors through means other than a public offering or a sale.

Update: I wasn’t finished writing this entry that Goldman Sachs announced a Special Purpose Vehicle to allow some of its clients to invest in Facebook.

NFC payments come of age

It’s been many years in the making but I suspect that 2011 will finally be the year of touch-payments via Near Field Communication devices (NFC). A few years ago, I was involved in an effort to bring NFC, the little key-fob or specialized payment cards, to the New York taxis. Similar trials have happened in the New York subway system, and in some point of sale systems but, over the last few years, people have often asked me about my key fob payment tag as it appeared I was the first user they witnessed using one.

With NFC chips slated to be put into the next generation of iPhones, Android phones, and Blackberry phones, 2011 may finally be the year when the potential of NFC commerce is enabled.

A dent in ownership

Netflix and Redbox have almost destroyed the concept of owning DVD disks. Pandora has lowered the need to buy music.  Zipcar has made not owning a car possible for a lot of urbanites. The real estate crisis has made owning your own place seem less cool.

All and all, it seems the trend is moving, to a large extent, away from physical ownership of goods and towards either sharing models or outright rentals. We will see this trend continue to grow over the coming year. Some of the things to watch out for are the rise of the cord-cutters, where people replace their cable TV offering with an online only offering because of the a-la-carte pricing nature of online efforts. Another trend to look at is e-book lending with the initial efforts or the Nook and Kindle readers offering sharing capabilities on select titles.

Technology

Gamification

This, in my view, is part of a larger megatrend I highlighted a few weeks ago. I believe that 2011 will mark the beginning of a very large trend in technology to make every application more like a game. Individual user acceptance has ingrained itself in our society and we will now see this phenomenon starting to take place in the enterprise space. Expect much talk of enterprise application developing game-like features this year but real implementations will only see the light of day towards the end of the year at best, with more of the serious implementations happening in 2012.

The mobile revolution continues

The introduction of the iPhone 3 years ago shifted the whole online landscape to mobile devices. Yet, for all the discussion of mobile, it still has been a phenomenon sitting on the edge, as smart-phones were on the more expensive side of the price spectrum. Except all this to change this year, with many Android-based phones being available for free or almost free, putting any feature phone at a substantial disadvantage.

At the same time, get ready for the shoot-and-learn revolution as QR-codes, tagged objects, and smart tools like Google Goggles gain more mainstream acceptance. People will increasingly scan or shoot to learn more about or compare a physical good to information available online.

Last but not least in this is that I suspect Microsoft will make a major move in the space by either acquiring or teaming up with Nokia for its partnership and distribution footprint, making Windows Phone 7 the only OS running on Nokia phones.

Internet Backlash

The internet industry has benefited from a great amount of support over the last 2–3 years. Companies like Facebook, GroupOn, Zynga, and Google have been able to move along with high levels of consumer acceptance. I suspect that this year, we may start seeing more people rethinking some of their web 2.0 choices, disclosing a little less information on Facebook, or becoming more wary of the power of Google. We will also see the rise of digital-free zones, where people agree that the use of mobile devices or computers is not allowed.

We will also see many people questioning the validity of many of those internet companies and bringing up the specter of another financial bubble. Much of this talk will focus around internet companies that are looking to go public towards the end of the year.

As more people get impact by the stress that can be caused by our always-on culture, we might also see the rise of interest in digital down-time, time set aside to go offline and recharge before the next session.

Arts and Entertainment

Big event entertainment

There will be two major trends in fighting the continuing fragmentation of the media landscape. On the one hand, large media companies will continue to flock to the tried-and-true, remaking or making sequels to movies and TV shows that have been successful. Formula-based entertainment will continue to be produced but with an ever-decreasing return on investments.

On the other side of the spectrum is the rise of what I would dub “big event entertainment”, where media companies will attempt to build up their media product as an cultural event. In the US, the launch of the Oprah Women Network will be such an event. Other forms of media will try to build up those events through time-based models, creating sport-like offerings (think American Idol) through all forms of media.

Those efforts are all attempts at keeping the old system of release windows in place so that existing revenue streams are not threatened by the ubiquity of the internet access.

Remixing comes of age

Remixing has been common in music, and video remixing has been a largely underground phenomenon on the internet. 2011 will be a banner year for video remixing as the likes of Pogo will start entering the mainstream. I suspect that mainstream artists will start leveraging some of the same techniques in their efforts, bringing video remixing to the masses this year.

As the 2012 US presidential primaries get underway, we will also see an increasing amount of online remixing of politicians speech, sometimes misrepresenting their positions.

Danish cool

This is kind of my bleeding edge prediction but I believe that 2011 will be a big year for Denmark. Copenhagen-based architect Bjarke Ingels has recently opened a new office in New York. Meanwhile, Noma, a Copenhagen-based restaurant, was recently named as one of the top restaurants in the world. And many cities look to Copenhagen as an example of how to organize large-scale projects for public transportation (one third of the people in Copenhagen ride bicycle to commute).  And Denmark has established itself as a leader in the wind-generation and green technology space. So I think all this will add up to Denmark being seen under a new lens and may even be considered cool in 2011.

We’ll see at the end of the year how well I did on all those predictions. in the meantime, feel free to chime in in the comments or on twitter (use the #tnlpredicts hashtag so I can track things).

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title 11 Predictions for 2011. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

An abbreviated history of storage

Anyone who has used a computer has found themselves in the same situation: at some point, they have needed to take information off the computer in order to share it on another computer.

In the old days, this was done via diskettes, which were replaced by CDs, and eventually CDs were displaced by recordable DVDs and USB solid-state drives.

In the corporate (or prosumer) market, larger data needs led to the use of ZipDisk, Syquest drives, and eventually file servers.

As household increased their expertise in the tech space, we’ve seen the rise of Network Accessible Storage (NAS) devices for home use (for example, the popular Apple Time Capsule or the WD MyBook series).

Devices vs. Desktops

But over the last few years, the storage landscape has grown more complicated. As more consumers carry smartphones, portable media players, digital cameras, and camcorders, or play digital content downloaded for their televisions, the computer is loosing its dominance on usage of digital media. And, along the way, the computer is no longer the hub of everything digital in the household.

Digital content is now spread across that wide array of devices and will become increasingly untethered from the computer to the point where some household may remain heavy consumer of digital media without even owning a computer.

Meanwhile, in the business world, content sitting on employees’ computers is hard to find and harder to control. Laptops can walk away from a company with crucial company content on their hard drives so there’s an increase push to get users to save their information on centralized servers.

Enters the cloud

However, along with the spread of devices, there has been a growing spread in available bandwidth at higher speed. A decade ago, the majority of internet users were accessing it at speed of about 56kbps. Today, that number has gone up 100-fold and will continue to go up (by some estimate, the 100Mbps mark will be standard by 2020.)

With extra bandwidth to spare, data can now be stored more efficiently on remote servers.

In the consumer space, people are increasingly storing their videos on YouTube or Flickr, their images on Flickr and Facebook, and other files on the likes of Google Docs. Social networks are becoming a large repository of backup data that can be shared with friends or locked away.

And today, some solutions are allowing for such things to happen automatically from the devices to the web. For example, I use Eye.fi cards in most of my cameras, which dynamically upload the content of the camera to the online service(s) of my choice. They also have software based solutions that run on the iPhone and Android devices. Pixelpipe, one of their competitors, is software based only.

In the enterprise space, companies like dropbox, drop.io, and box.net provide solutions that store the files on their servers and allow end-users to access them from any computer or mobile devices.

Creation, Distribution, Consumption

Up until recently, I was pretty opposed to the iPad as a device, seeing it as a consumption only device. Over the last few months, as more tools have become available, we’ve seen a slew of tools allowing people to use the iPad in creative ways. My blind spot was to equal storage with creation and assuming that content was not stored locally, it would be issue from a creation standpoint.

But I was wrong.

In today’s world, content that sits locally is pretty much as good as dead. It is not distributed and thus is not consumed. This epiphany came to me not as a result of using an ipad but while authoring a story for my site. I realized that I was opening up my browser and launching a web app to do so. The same had been true for most of my week and I often can go days without opening a desktop app other than my browser. As a result, I’ve concluded that local storage is becoming increasingly irrelevant.

What is still relevant, though, is the existence of some form of local storage. In the future, local storage will be used primarily to hold content and application on a temporary basis before said content and app return to the cloud. The reason for such an approach is that running application locally will always be more efficient than running them over a network link.

Impact on consumer electronic

Probably more important is the final impact on digital media. The iPod was revolutionary in that it did away with the standard model of distribution for music: CDs are increasingly getting replaced by digital distribution and may continue to exist as a specialized domain (much like there are still some LP record purchasers today.)

The Kindle (and its competitors in the e-reader category) are starting to do the same thing to magazines, newspapers and books.

The iPad takes music, books, magazines, newspapers, TV shows, and other video content and runs them through a single device.

The same thing is about to happen to all video content. Today, companies like Netflix shuffle a lot of plastic back and forth so the plastic piece can be played on a specialized device (either a DVD or BluRay player) and then returned. Netflix has seen the writing on the wall and is increasingly trying to push its users (and providers) to move to a plastic-free world by streaming the media directly to the device of their choice. Much like kids today may not really understand the concept of rewinding a video tape, the kids of tomorrow will not understand the idea of putting something into a machine in order to play it.

As streaming distribution becomes more common, attitudes towards the disks will change so that such things are only catering to a much smaller audience.

My five-year-old son looks at DVDs as something you can decorate in art projects, not something you can play. His view is that everything is available on demand either via my computer, smartphone, or our connected TV (Try explaining to a 5-year-old that Wall-E is not available because it’s outside the release window set by the studios). With the advent of Apple TV and Google TV, his experience is about to become more common.

He’s the consumer of tomorrow and his view is that storage is something that happens in the cloud. In his teenage years, he might end up looking at USB drives with the same disdain as we look at videotapes.

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 end of local storage. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

For most of my life, I’ve seen movies that have presented computer geeks as remote people, capable of great feats but incapable of relating to common folks. This phenomenon is hardly new and generally captures the anguish of the masses when it comes to technology: Whether it is Mary Shelley’s Frankenstein, Fritz Lang’s Metropolis, Ridley Scott’s Blade Runner, or David Fincher’s The Social Network, media treatments of technological developments generally paint their creators as scary individuals manipulating dehumanizing forces.

But why is that?

Do those pieces represent the truth about technology? Or do they make things worth for technologists?

Having grown up through the 80s and 90s, I’ve seen a couple of cycles of computer folks being seen alternatively as geniuses and mad scientists. The 80s marked a time of wonder with people like Steve Jobs and Bill Gates seen as the leaders of a new world. The 90s saw that optimism about technology magnified through the dotcom era when the word internet was a virtual philosopher’s stone, turning everything that it touched to gold. That optimism turned into a long period of pessimism as the dotcom bubble turned into a dotcom crash.

But lately, the phoenix-like rise of the technology space in the public consciousness, which seems to have paralleled the crash in a lot of other economic sector (finance and the car industry come to mind) seem to have given geeks a new street cred. And so, geeks are cool again but not so cool that they can be accepted by all.

I suspect that the fears people have of our industry have to do with the concerns they have with technology: they are both fascinated and repelled by technology.

On the one hand, people see the things we create as elements of good, as they get to use them and reconnect with friends, or save time by getting rid of tasks that used to be hard to do. They see a cornucopia of new entertainment devices and are excited by the potential of the new products we create.

But on the other, they worry about the things they fail to understand. They see our technology as not only foreign but, by extension, they see us as foreign and get suspicious about our motives. They worry about what we know about them and about what the computer knows.

Our job is now to educate those people about what we do and how we do it. For the first time, we are entering an age where the software we create needs the willing participation of people in order to be successful: social media is social and thus needs people to work (and not in the Soylent Green sense). As a result, it presents us with a unique opportunity to re-introduce the technology world to people and show them that computers are just tools, not magic boxes, and that the magic is in what humans do with it, humans who are not just locked into their office but also people who are out there, socializing and having friends.

So join me in reaching out to all the non-geeks out there and showing them that the magic of what we do is not dark magic and maybe some of those people will join us in making the world a better place through technology.

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

The Pusher: Facebook

Facebook is no stranger to controversy around privacy. I would even venture to say that no company has gone further to force the discussion about what privacy means in the internet age. However, this doesn’t mean that it did so in a way that left everyone happy.

Facebook’s attitude when it comes to privacy is one of finding the edge and then going substantially beyond it. As one would expect, this substantial over-reach generally results in as large a pushback but, when all is said and done, Facebook always ends up having moved the edge a little further, creating a world where the definition of privacy ends up a little more relaxed.

In 2007, Facebook pushed the edge of online advertising by unveiling the facebook beacon, a program where facebook published data from external sites into its user feeds. The program was extremely controversial at the time, resulting in a class action lawsuit and the eventual closing of facebook beacons in 2009.

Since then, Facebook has introduced Facebook connect, which does basically the same thing, but the reaction, this time around, has been largely positive. With the approach now validated and users apparently accepting it, Facebook decided to drop the connect moniker altogether and just merge it back into the existing facebook brand.

Move the marker

A successful pusher creates new product features by moving the marker in terms of what is considered acceptable behavior. In most cases, such a move creates controversy.

Dennis Crowley can be as another pusher. Back in the early part of the last decade, he created Dodgeball, a company that allowed users to broadcast where they were to their friends. At the time, some people had concern about the privacy issues relating to location data, especially after Dodgeball was acquired by Google.

In 2009, Crowley, having left Google, launched Foursquare, a product that looks and feels like a modern version of Dodgeball. This time, there hasn’t been as much controversy but the relentless effort of Crowley in the mobile location space has created a whole new sector, with competitors and innovators now trying to compete.

In this case, Crowley has, as an individual across three different companies,  moved the marker around how acceptable it is to broadcast location data.

A pusher pushes the envelope and one could argue that this category represents the closest thing to revolutionary developers. Without pushers, major leaps cannot be made.

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

• The attacher is generally a company with a successful product. The company then tries to attach everything it does to that product, eventually losing out as the market evolves.
• The pusher finds the edge, goes beyond it and, when the inevitable push-back happens, pulls back a little. Having pushed beyond the edge, it starts the cycle again.
• The tinkerer creates products through extensive user testing and trust the data religiously, tinkering with the product based on what the data says.
• The refiner looks at a product category and offers an improved product by cutting back instead of adding.

Each of these models provides value to the market but ultimately, the best companies might be the ones that are willing to take on all of those features depending on time and context. In the following entries, I will go into details as to each of those models, providing example of leaders and startups that follow them.

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

The Cultural Impact Cycle

Most successful companies go through a 6 steps cycle where their cultural impact on society as a whole can be felt. For my purpose, I call it the mindset cycle and it works as shown in the figure below:

Alphaworld

In Alphaword, the first step, a few early adopters are aware of the company and its products and test them out. This is generally a stage most companies do not get out of.

There are many reason for companies not getting out of this space. Their product could be bad; their product could be targeted at the wrong market; their product could be too early in the market; the company might have failed to explain its relevance to users; etc…

Ultimately, the main reason a company gets out of this stage is that its team has done a very good job executing on the implementation of a product and company strategy, creating value for its investors, and delivering even more value to its users.

Those that make it out will be prosperous and those that don’t will die.

The Land of Mass Adoption

The land of mass adoption then represent a steep climb as a company starts getting noticed by people outside of the technology world and non-technologists start using the application.

The majority of companies that made it out of alphaworld spend a very long time in that area and can profit by targeting niches without having to move on to the next stage.

The land of mass adoption is an area where companies are forced to shed some of their more technical attributes (or hide them away) in order to appeal to a mass audience. The mass audience is not as forgiving as people in alphaworld so the company has to properly adapt to the market. It’s a great balancing act where the company has to show early adopters that it can continue delivering cutting edge for them while talking to the mainstream and figuring out the right timing and hand-holding to get mainstream users to start using some of those new attributes.

Mainstream Mountain

Mainstream mountain is where most companies want to be. At that point, a company achieves great economic success and is at close to the peak of its cultural relevance, impacting not only its own product but the industry it’s in. Very few companies achieve that stage and even fewer stay there for a long time. The great majority of people look to the company as the main provider of direction and believe it can do no wrong.

In the 80s, IBM was there with its personal computers. In the 90s, Microsoft was there with its Windows operating system and Office Suite. In the first decade of the 21st century, the spot was held by Google with its dominant search engine, online advertising model and YouTube video site.

Apple is currently at the apex of mainstream mountain, having redefined the PC industry (computers as consumption), the music industry (digital as default) and the telecom industry (phones as computers). Facebook, with its social network is currently climbing that mountain, having become the largest site in the world, built solely on the back of relationships.

Unfortunately, it is almost impossible to stay in that arena and the fall seems to eventually come for most companies.

Disgruntled Hills

In the disgruntled hills, the public perception of a company starts to turn. What was one seen as a benevolent force for good is now being questioned. People start questioning whether the company is holding too much power and the mention of anti-trust comes up more often. Early adopters start looking for alternative providers and any misstep by the company is seen as a major example of how flawed the company is. Over time, the mass start turning their back on the company, reluctantly using its products but no longer imbuing them with the kind of magic attributes they granted to the company.

At this point, it seems the company starts having problems pleasing customers. No matter what it does, the public looks to the company as only protecting its own interest and not those of its customers. The company can claim that it loves its customers but suspicion seeps in and people get cynical about such claims.

I would venture that Google is currently in that stage as people start worrying about its dominance in the search space while making fun of its attempt at trying to get more social so it can go back to mainstreaming mountain. Questions around its privacy practices, mentions of antitrust around search and advertising, and other negatives seem to be applied to it with increasing frequency.

Canyons of Cultural Irrelevance

Of course, Google doesn’t have to worry as much as Microsoft, a company now steeply going down the hill of cultural irrelevance. At that stage, a company’s product are no longer seen as relevant to large swath of people.

Companies that reach this stage were once seen as the most important companies in the world. Oftentimes, such companies also suffered legal setback as they were taken to court and found guilty of monopolistic practices. Such was the case for IBM in the 80s and Microsoft in the 90s.

To say that a company is in that space is not the same as saying the company cannot be profitable. In fact, Microsoft an IBM are still very large players with established customer bases and diversified product portfolios. But their impact on the industry is mainly felt when they acquire a company positioned in one of the earlier mindset stages. Their ability to deliver internally-created product to an audience that finds a particular attachment to such products seems hindered and the companies take a cautious approach, offering product that attempt to mirror features created by other players (eg. Zune v. iPod, Windows phones vs. iPhones, Microsoft Kinect vs. Wii).

This stage can last decades or even centuries but, at that point, the company is no longer having a significant impact on consumers’ mindsets.

Plains of Corporate Death

In some cases, a company can flash through a lot of the earlier stages, be seen as extremely relevant for a while and then disappear because their products and ideas are no longer valid in the marketplace at all.

This is a case where companies have cash or assets that are no longer valuable in any ways (eg. Buggy Whip manufacturers) and, in those cases, companies completely fold and return money to their shareholders, stopping to exist due to cultural irrelevance.

Few companies enter that stage as the previous one allows them to morph into something different (eg. Nokia comes to mind, changing from being a fishing boots manufacturer to a phone company; or WPP going from being a wire and plastics company to one of the largest advertising groups in the world).

Takeaway

There are many stages in the cultural impact of successful companies but ultimately, every large tech company has found itself displaced and replaced. Today, Apple sits at the apex of the tech industry, having achieved economic and cultural dominance, but the Antennagate brouhaha (around claimed issues that the iPhone 4 antenna fails when the phone is held without a bumper) and the gizmodo incident seems to point to some anxiety within the early adopter community. Perception of the company appears to be turning and, for the first time since Steve Jobs came back to Apple, there seems to be some level of unhappiness with its products. Will the release of free bumpers help the situation? Only time will tell.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title 6 Stages of Cultural Impact. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

INTERNET — The open web, which allowed an explosion of creativity and befuddled many corporations and governments died at 12 a.m. on the morning of March 1, 2020. It was just short of its 30th anniversary.

The cause was cancer, according to open standards advocates. While it suffered from failing health since the introduction of the iPhone, and the success of closed systems like Facebook or Twitter.

The offspring of Tim Berners-Lee and Robert Cailliau, the open web showed early promise by simplifying how content on the internet could be accessed. Its birth heralded an explosion of creativity that democratized content distribution and allowed large amounts of people to share their knowledge and interest with like-minded individuals.

In the 1990s, the open web experiences a turn as rock star as it helped create millions of new jobs and generated new wealth for many individuals.

But two recessions took their toll. It was blamed for the first one and forced to go mostly into hiding for a large part of the first decade of the 21st century. During that time, the open web reformed itself, focusing on making itself even easier to use, and birthing blogging, podcasting, video and photo sharing. These concepts and sites related to them allowed millions of people to post content ranging from the inane to the highly intellectual.

The second recession, however, helped improved the open web’s reputation as people realized that speculators were the guilty parties in both recessions. With its reputation rehabilitated, the open web started flourishing again in the late 2010s.

Unbeknown to it, enemies of the open web were gathering strength and planning its demise.

In 2008, Apple introduced the iPhone app store, providing a sanitized sub-set of the content available on the internet. Through 2010, Apple would continue its attack on the open web, highlighting that iPhone apps were a better way to consume content on the internet, while keeping those apps under tight control through an opaque approval process. While many open web advocates screamed, the general public seemed perfectly content with the more restricted approach.

Meanwhile, companies like Twitter and Facebook created walled gardens on top of web technology, closing up access to content that was created or used on their services. Centralized on their own platforms, the services allowed to “simplify” user interaction with the internet, while requiring registration and tightening control as to what users could and couldn’t do with those services.

For the next decade, the number of walled gardens increased and the web became increasingly balkanized. By 2020, the open web was limited to a group of roughly 1,000 web sites that were not accessible to the majority of internet users.

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 Open Web (1990–2020). You can follow him on twitter here or receive his weekly newsletter by subscribing here.

It has a relatively low but highly dedicated audience and is garnering good press both in the blogging community and the mainstream media.

The service is suffering from growth related issues which force it to be down at unexpected times but users put up with it because of its supposed transformational nature.

The service allows people to build things on top of it, offering external parties a greater chance to generate revenue than the company providing the service.

And, establishing further proof that service is going to be important in the future, a lot of mainstream stars are establishing presence quickly, only to slowly abandon those points of presence after a while.

But those stars are no different from most of the service’s users, which tend to abandon it only a month of two after trying it out.

What is that service called?

If you said Twitter, you are clearly reading this in 2009. But, only two years ago, the answer would have been Second Life (something I learned first hand, having been part of the hype around it back then).

of course, I have no doubt that this post will probably receive a high amount of flames because supporters will tell me how Twitter is different. But is it?

The Coral Reef

I’ve always had an affinity for Dave Winer’s Coral Reef analogy. However, even the coral reef analogy seems to eventually break down, leaving people like Winer to think of ways to move out (in a way, Winer fell into the same trap with Twitter as Scoble did with Friendfeed).

The issue here is that a lot of energy gets poured by developers into supporting an ultimately closed system. While artificial coral reefs exists, they are generally part of the larger ocean and tend to be pushed into creation by sinking boats or subway trains. But an important distinction is that the creator of an artificial reef is generally present at the creation but then lets the ecosystem take over and doesn’t try to control anything.

In the tech field, the best analogy for an artificial coral reef would be opening sourcing an important source of code (for example, the apache web server) or making a set of protocols or ideas open to all (eg. HTML or RSS) without requiring that the implementor cede any control to the party which made the code or idea available. Today, you can fok the httpd server if you feel like it or you can adapt parts of HTML or RSS to your heart’s content.

Fauxpenness

But there’s a different set of ecosystems out there that becomes more of a venus flytrap of technology. I would describe this as fauxpenness:

Fauxpenness: Calling a system or platform open while it is, when more closely scrutinized, under the tight control of its provider.

Fauxpen system (or fauxpen platform): a system or platform that claims to be open but, upon closer examination, isn’t.

It’s the kind of approach that pretends to be open but provides some level of lock-in.

In 2006–2007, we saw that happen with SecondLife, as many developers (myself included) built software code that could run within the SecondLife world but was ultimately stuck there because you could not run it outside that world and/or run SecondLife servers on your own machines.

in 2007–2008, we saw that happen with the F8 Facebook platform, which locks your applications inside of Facebook and, while many developers have pushed to force the company to open up, tends to stay there. In 2007-today, we’re seeing the same thing with Twitter, which allows you to build whatever you want on top of it but doesn’t decentralize their approach, leaving developers potential slaves to the whims of the company. The same is true of the iPhone, which provides unusual access to the phone operating system and allows to develop interesting software on top of it but still keep developers away from being able to access basic things like calendar information via an SDK.

The endless cycle

Interestingly enough, it’s not an unusual phenomenon in the technology world. It works like this:

It happened with SecondLife; it happened with F8; it will happen with Twitter and it will happen with the iPhone at some point. It appears that the natural course of locked API is to get to a point where the developers get so annoyed that they decide to go look somewhere else.

But there’s hope.

Breaking Free of Fauxpenness

Because of the lock-in, it is possible for companies to break free of the cycle. In order to do so, two things need to happen:

• First, the company needs to find a way to establish a business model that does not require lock-in
• Then, the company needs to start removing the lock-in components it offers.

I’m not saying that either of those step is an easy one. In fact, few companies have successfully managed them and, even when they do, the developer community will keep asking for more.

For example, Microsoft’s history is one of establishing initial lock-ins, weeding out the competition and, when its lead is established enough, relaxing the choke-hold it has on the developer community and playing a little nicer until it tries to enter another market. That was the case with Windows; it was the case with Office; and it is the case with IE today.

IBM also took the same approach, initially being a provider of proprietary systems and slowly, over the last 15–20 years, moving to become one of the largest supporters of the open source movement.

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