To be free we need to break free of web 2.0 thinking

Freedom

You’re meeting someone at a party for the first time. He introduces himself to you.

“Hi. I’m Tim Eastwood. I’m 29 years old, live in San Francisco. I’m married to Laura, have 3 children Joe, James, and Jenny.”

During the conversation you have with Tim you learn that he votes Republican, that he isn’t a religious person, that his wife and him got into several near-break up fights in the past. That he got fired recently and is now looking for a job. Yesterday he was at the Starbucks at 1390 Market Street. He loved the cappuccino but didn’t like the sandwich. His best friend Joe is gay, Tim is ok with that. Tim’s e-mail address is tim.eastwood@gmail.com, he has a bank account with the Bank of America, and uses as Visa credit card which he happened to use yesterday when he bought the book “The Bush tragedy” at Amazon. You’ve seen ton’s of pictures of Tim, his wife, and their three children. You know what schools the children visit, and what movies they like to watch. That is just for starters. Before you know it, all of Tim’s friends pass by with descriptions, believes, quotes, photos, things they are doing right now.

Triggered by his enthusiasm you tell  Tim a lot about yourself too. You are engaging in an open conversation and it feels great.

While you are talking, you begin to notice that people surrounding you have stopped their conversations and are clearly listening in to your conversation with Tim. To make matters worse, you then realize that the host of the party is filming the entire conversation, projecting it on a big screen.

Sounds crazy? It’s exactly what we are doing right now on the web. In real life we would never disclose so much about ourselves, family, friends, believes etc. to someone we just met.  In the real world repercussions of disclosing personal information tends to be contained within the group of people listening in and gossiping about it. Online things are different. Once recorded, it never disappears. And yet when we get online we disclose it all.

It’s a topic that keeps fascinating me. It’s hard to understand why people tend to feel that their online lives somehow are disconnected from real-life. Almost to a point that their online profile or identity is an alter ego, it feels like someone else. While we may pretend that when we go online it isn’t really us, the reality is that our identity, interactions and data are collected, stored, and commercially exploited. Do we know? Do we care? Hard to say. All we know is that there are hundreds of millions of people joining in this ‘global conversation’ via social networks like Facebook, Twitter, MySpace etc.

Facebook revenues

There is a clear responsibility for a user to stay in control of his privacy, but at the same time we can safely say that most are lured into this conversation by companies that offer substantial benefits without disclosing what the user is giving up for it in return. Facebook takes privacy seriously, it provides the user complex and hard to use privacy settings. While this sounds great, it’s a hoax. When Facebook talks about privacy it means the privacy of the user towards other users. It doesn’t talk about the privacy of the user with respect to Facebook and it’s business model. Facebook doesn’t provide the user with a switch that prevents Facebook itself from exploiting the user commercially. And it provides 3rd parties simple means to extract your entire profile without consent.

This schizophrenic behavior is caused by the underlying business model. Web 2.0 is driven by the network effect. Value is created by those that own the largest networks (social graphs) and hog the most data. Data is the currency on the web. Evangelists like Tim O’Reilly have been telling us this for a long time now. In my opinion the biggest tragedy of the success of web 2.0 is its failure to put the user in control of his identity and privacy.

[update] TechCrunch writes about the latest Facebook plans. It’s consistent with their strategy of becoming the de facto social web. And the Next web talks about plans of Facebook to share your e-mail address with 3rd party developers. These are again not user-driven but network driven plans.

Don’t get me wrong. I do not object by default to commercial exploitation of user data. I do object to the fact that a user isn’t opting in on it and that he really has no control over his privacy or identity whatsoever. Robert Scoble has said many times he doesn’t mind giving up privacy because he gets more value in return. The upside of talking in public about a disease might be that you will find others in the same position sharing their experiences with you. The downside may be that you won’t be hired for a next job because the company has access to your medical condition. How many of those hundreds of millions have made that same conscious choice? Do people really understand that when they join a service like Facebook they are exposing themselves, their children, their family and friends to a company that exploits their interactions?

A new balancing act

There is only one way out of this. We need to get out of this confining web 2.0 definition and build new business models. Business models that are not based upon network effects and hogging user data. We need user-centric business models. And with that we will see user-centric services appear. Services that have a clear and transparent business model. Services that generate revenue by delivering user value. Services that do not depend on customer lock-in but on user freedom. Services in which the balance of power has shifted from the company that exploits to the user that receives value. A new balancing act.

In the ecology that is build around the user-value principle users can manage their online identity and privacy tools. And they can make a conscious decision to share relevant personal information in return for value. The big difference is that the user will be in control. And that may very well be the scariest thing for companies to get used to.

If we want to be free, we need to break free of web 2.0 thinking.

A User-Centric Web needs brand agnostic service providers

You are the most important brand

A User-Centric web is by design a brand agnostic web when it comes to identity. There is only one brand, and that is you.

The current web causes different types of problems that can be lead to possibly 2 design flaws. The first one is that it is a document-centric web. Read this excellent post by Chris Messina and Jyri Engström here.  The second one, maybe caused by the first flaw, is that business models evolved and became network-centric. In other words current business models enforce that services focus on scale before user-value. Traffic, usage and numbers are more important than individual user value.

As a result we get customer lock-in (which idiot came up with that term), walled gardens, an unhealthy attention to scale and growth, identity wars (who gets to own you), data lock-in, social graph ownership (Facebook owns your relationships and interactions), etc., etc. It’s a slippery slope we can’t get off easily. There are patches to this mess (e.g. OpenID), but that’s all they are right now. OpenID doesn’t fundamentally change the web, unless it becomes embedded in a User-Centric web.

OpenID provides us convenience. We can now register/login to services using existing accounts we have at Facebook, Gmail, Twitter and so on. OpenID in that sense patches the problem of having multiple identities/profiles across different services. The problem with that patch however is that it still locks me into one of those main services (Gmail, Facebook, Twitter).  There lies a danger with OpenID. Even though it is set up with the right intentions, it might end up keeping the current web alive, instead of helping us move to a User-Centric web. If my identity becomes my Facebook account, I’m not very likely to leave that service. For OpenID to help us move to a User-Centric Web we will need independent identity providers.

If we were to design a User-Centric web, then I would prefer that the “user” part is separated from the “services” part. In other words, my identity, my home base, my relationships, the data that flows through that. It should all be under my own control. To accomplish that we would either set that up ourselves, or for those that don’t know how, create service providers that can take care of that for us. These service or identity providers would have one purpose only, to serve me and my data. Think of it as a bank where I store my online presence safely. They would only have one business model. Provide me service and I would pay for that value. They would only compete with other identity service provides in that user value. We can’t let companies like Facebook or Google take care of our identity, as they are in the business of making money off of my identity and interactions.

Once that is take care of, I can join services, meet friends, interact, do all the things I can do now, but I would be in control of my own online identity. I can decide how much of me a service, or a friend can see. I could lock it down like fort Knox, or open it up like the biggest Social Media fan. There are no portability issues, I can’t get locked into a service anymore. As my online presence is separated from the actual service, I can simply move to another service and have all my friends (data) available there. A service becomes a possible channel through which I can interact. Companies will become true service providers, instead of traps I can fall into. The would compete on user value instead of network value. There is certainly demand for such a setup.

It’s a simple idea, turning things inside out. It isn’t simple to get there though. As long as we keep ourselves trapped in the current web business models we will never reach a tipping point. All we do is dig a hole and lock ourselves in beautiful walled gardens with cute “openX” patches while Facebook, Google and other big companies keep exploiting our online identities and interactions commercially.

Building a People-Centric web is a fight for a lost cause

Don Quixote, Image taken from Wikipedia

A number of posts drew my attention this week. First, 2 respectable media outlets explain us that the Facebook exodus has started. While I am not a big fan of Facebook (its their business model I don’t like), both the NY Times and the Guardian are writing sensational yet unfounded stories about the start of the downfall of Facebook. From the NY Times:

Things fall apart; the center cannot hold. Facebook, the online social grid, could not command loyalty forever. If you ask around, as I did, you’ll find quitters. One person shut down her account because she disliked how nosy it made her. Another thought the scene had turned desperate. A third feared stalkers. A fourth believed his privacy was compromised. A fifth disappeared without a word.

Based upon the evidence of five people leaving Facebook the exodus has started? In the very next paragraph the author already kills his own headline:

The exodus is not evident from the site’s overall numbers. According to comScore, Facebook attracted 87.7 million unique visitors in the United States in July. But while people are still joining Facebook and compulsively visiting the site, a small but noticeable group are fleeing — some of them ostentatiously.

A Facebook exodus is a slight overstatement, especially now that Mark Zuckerberg announced that Facebook has passed the 300Mn active users and is now free cash flow positive.

Granted, I’ve predicted a few times that Facebook usage would decline myself, and I was wrong too. My assumption, that the Facebook business model stands in the way of your online friendships, turns out to be incorrect. While I’m worried about the network-centric approach that sites like Facebook take, putting the value of the network growth over the value that an individual user gets, the user doesn’t care. They play around, have a great time, and as a byproduct ensure that the different advertisement schemes and virtual goods that Marks sells them make Facebook a cool $ 500+ Mn a year.

It’s something that I find hard to accept. To me, online relationships are no different from real life relationships when it concerns friends and people I have met in real life. We would never accept Mark Zuckerberg holding up billboard displays of hot and sexy girls in our face, while we are having a good time at a friends house. Yet that is exactly what Facebook can do online. It’s called targeted advertisement. I tend to think that’s BS. Sex sells, but there is nothing targeted about that.

What I find more disturbing is that the Facebook business model forces them to exploit our profiles, our friends, and our interactions commercially. We get a free service, and in return we get Big Brother watching us every day. Facebook has great privacy preferences (hidden away carefully), but even the ultimate guide to Facebook privacy can’t tell me where that one switch is that protects me from Facebook.

But why am I complaining. 300Mn people beg to differ. They don’t care about all of that. I may think that we are losing something precious here, our individuality and a personal control over our own online lives. That we are locking ourselves in and don’t care about it. Human nature at its best. The rest of the word just doesn’t care.

Chris Messina and Jyri Engström have written a great post on the People-Centric Web (I have always called it a User-Centric web). But it’s fighting for a lost cause. It’s Don Quixote and Sancho Panza fighting windmills. The dominant web business models are based upon the exploitation of our data, our interactions. And unless that changes, unless users are willing to pay for the value they get, that business model will remain to be dominant. Having People-centric technology and services isn’t good enough. They are useless without People-centric business models. Mark Zuckerberg proves that. Sadly, that also means that we will never be truly free or in control of our own doings on the web. But who gives a shit about that?

The difference between a good and a great entrepreneur

Michael Arrington provides good insight into a current dilemma for Twitter. Should Twitter turn revenues on or keep them off? The dilemma being that a revenue-less but growing company will lead to speculative valuation and therefore possibly a high acquisition price. A company with revenue however will be valued on an X-factor related to the revenue being generated.

While it may be a real dilemma for Twitter I feel it is precisely this attitude which makes Silicon Valley sometimes look like a big bubble of nothingness. We’ve heard this story so many times. Entrepreneurs or investors answering questions about revenue for a web company with “we don’t know yet”, or “we are still thinking about it”. Companies being successful because they show incredible growth, instead of sustainable profits. It’s unbelievable that so much money is invested into companies that (seem) to have the arrogance to assume that growth can come first, and thinking about revenue later.

Don’t get me wrong, there is nothing wrong with thinking about, or even discovering revenue streams, while you are building and growing the service. And I obviously do not know if Twitter is not thinking about revenues every day. But I do object to the attitude that anything that grows can be turned into revenue, or that thinking about revenue can be done later. What’s your business model? “Eh, well, we are still thinking about it, but we are probably worth millions if you want to buy us!”

Growing a company is the easy part, especially with all the web 2.0 tools that are available now. There are countless ways of driving traffic to your service. If you are able to provide value, then you can be sure that you can also grow your service. But growth in itself is no reason to assume that sustainable profitability is also within reach. They are entirely separate challenges, only bound by the one common denominator that drives both, user value. Should Twitter do advertisement, subscriptions, API fees, mobile? These are questions the company should be asking itself every day. Growth is not a business model, getting acquired isn’t one either.

Silicon Valley thrives partially because of its opportunistic nature. It’s a great strength but also a big weakness. If a company is created with the sole purpose of getting acquired, then there isn’t really any value creation. Unfortunately it still seems to be the most common ‘business model’ in the online world. All it really does is move investment money around. It doesn’t add any money to the ecology, there is only losses to be made. There is no value creation, merely destruction.

Unfortunately there is always an old-school ‘wanna be cool’ company that is willing to acquire and pay for the mess. Everyone happy, even the acquirer, until he finds out that the economic rules that he has to live by in the real-world also apply in the online world. If you want to be profitable you need sustainable revenues.

If you own a grocery store you may think about opening another store. I’m guessing you will calculate, look at growth and profit, and after countless of days without a lot of sleep take the decision to do it. But not some of our cool web entrepreneur with enough money made in earlier ventures. They just start something for the sake of it. Let it grow for a while, and see where it goes. If it fails, no big deal, just try something else, or even better, sell it to the next sucker that wants to give it a shot. BTW, I’m obviously not talking about you, but about that other guy.

Trying  many different ventures, or creating growth without sustainable profit doesn’t make you a great entrepreneur. It’s your ability to grow something into sustainable profitability that makes the difference. Because that is the real hard part. The rest is just play.

Growth and traffic are no guarantee for a profitable online business

Side effects of using steroids

37Signals has a great post up, entitled “The bar for success in our industry is too low”. The author, Jason, takes several examples where respectable media (NY Times, GigaOM) take a story of a web company showing growth, traffic, and revenue and present it as a success. A quote from his post:

Let’s erase one claim right off the bat. The headline, “Using ‘Free’ to Turn a Profit”, is misleading and downright false as it relates to the subject of the story. Near the end of the piece Phil Libin, the chief executive of Evernote, says they are generating about $79,000/month in revenue. Then the article goes on to say “By January 2011, Mr. Libin projects, the company will break even.”

$79,000/month and they won’t break even until January 2011. So every day they’re losing money until 2011. And the title of the piece is “Using ‘Free’ to Turn a Profit”. What? How can the Times let a headline like this slide?

Jason points out something I’ve always disliked about current web practice. There is too much attention on growth, and too little on revenues. A company that shows impressive growth rates is successful, a company that doesn’t is a loser. Traffic and eyeballs, it’s so web 1.0. I thought we passed that phase, but when measuring the success of a company, or by just following the money that gets invested, I bet that a large fraction is still invested in growth. Iow in a future perspective of revenue. Jason:

This pattern — “success” based on forecasted future success instead of current success — shows up all over the tech-business press. Instead of metrics like “they make more money than they spend” we see stuff like “user count growth” and “followers” and “impressions” and “friends” and “visits” qualify success. Whenever you see someone piling big numbers into made up metrics, it’s a diversion. They want you to think that this time it’s different. But like Judge Judy says, “If it doesn’t make sense it isn’t true.”

Growth is necessary for any business to be sustainable. Web 2.0 and social media technology are steroids for growth. Connecting one big network to another, creating a third. It’s dead simple.

This relentless focus on growth masks the one thing that is important for any business. It’s web 2.0’s biggest tragedy. Do you provide enough value to turn that value into revenue? It’s easy to generate growth using web 2.0 social media technology. Everybody does it. But while the whole world is chit-chatting and sharing away with each other on all these networks, there are very few companies that are able to turn that into a profit. A total waste of resources, energy and focus. Enough talk already, we need to focus on value! What is more valuable? A company with millions of users, strong growth rates, but no revenue? Or a company like SmugMug, that doesn’t have millions of users, but a couple of hundred thousands of real fans. Each of which is a paying customer, turning it into a very profitable company?

This is something I struggle with every day (as CEO of Glubble). We are a small company. We do not have the industry standard impressive growth figures the way big social networks like Twitter have (although we are quite satisfied with our current growth rate). But we wonder every day how we can provide users value and turn that into a sustainable revenue stream. Instead of growth first, we focus on value first.

Is that a better strategy? We believe so. We are generating sustainable revenue now, we are showing good growth in revenue too. But we are not profitable yet. And we are aware of that every day we go to work. We have investors that help us reach that phase. But the trick is that no investor can really do that for you. It’s your own users that help you become profitable. Your product or service needs to be providing so much value that a user is actually willing to pay for it.

Growth fetishists never discuss this openly. They focus on growth and constantly give us impressive stats. There is a whole industry that ironically makes a profit by stilling our hunger for growth figures of other web companies.

All this does is take away attention from the hard part of the online business, generating sustainable and profitable revenue through user value. We don’t see revenue reporting in the online business. The reason isn’t secrecy. It’s simply because most companies do not generate enough revenue to be profitable (makes you look like a loser right?).

We haven’t implemented Facebook connect yet, we do not have connections to 50 other networks. Because it wouldn’t help us. We need do the hard part first. We need to get our service right. Our users are enjoying it, but we know we can do better.  We are now relentlessly focusing on improving the user experience and the value we provide. When we reach a point where we, and our customers, can feel really proud about the service, we will turn on some of these growth machines. But we will know that it will then lead to sustainable growth, both in users and revenue, instead of an impressive nr of page views.

About leveraging the Facebook platform successfully for your business

Push vs pull

Yesterday I read a post by Jesse Stay entitled “Hey businesses, you’re using Facebook wrong”.  Let me start off by saying I have a lot of respect for the author. I think Jesse is right about the power that Facebook can bring in the interaction between your brand and a customer. However, I don’t agree with the ‘reasons why’ provided.

Let’s look at some quotes (I’ll provide my own thoughts below):

Now, let’s get a little deeper.  Facebook Connect, with the help and just a few hours time of one of your own coders, can take your existing database of users and find out how many of them are already Facebook users.  My bet is most of them are (remember, there are near 300 million Facebook users on the planet!).  Now you can prompt those users to begin telling their friends about your brand to their closest friends and relatives, using just the tools Facebook provides, ALL ON YOUR OWN WEBSITE. Oh, and even better – unlike Twitter, your users never, ever, leave your website when authenticating with Facebook. You simply won’t get that intimacy between your brand and customers on Twitter.

I reread this part a few times in order to see if I understood it correctly. I read “Brand intimacy is defined by people never, ever leaving your website.  Your ability to prompt them to start discussing your brand with their closest friends, ALL ON YOUR OWN WEBSITE”. While the mechanics may be correct (you can get access to lots of relevant user data), the brand intimacy part feels all wrong (see below).

Twitter pales in comparison to what Facebook can do for businesses. The majority of businesses are just using Facebook wrong.  If you manage a business’s marketing or brand management campaign and only have a Facebook Page, YOU’RE DOING IT WRONG.  The power of Facebook isn’t about Facebook itself, but about the vast set of APIs Facebook is providing to you and your business to get your brand into the most valuable place of all – that intimate setting between a customer and their close friends and family.  You can’t do that with Twitter.  You can with Facebook.  This is why if Twitter is worth $5 billion, Facebook is worth at least 2 or 3 or more times that. Your business needs to get in and use Facebook right if you’re going to stay ahead of the game.

The essential message seems to be “The power of Facebook, [... stuff deleted...] , is providing to you and your business  to get your brand into the most valuable place of all – that intimate setting between a customer and their close friends and family”. This is definitely a marketers wet dream. However, if executed poorly I fail to see how forcing your brand into that relation is worth anything. It would backfire and create damage that cannot be restored easily.

There are a lot of comments on the post, here is a reply that the author writes to one of the comments. I isolated this comment because I don’t agree with the observation it starts with:

John, Businesses don’t care about clutter. They care about what makes them money. The fact is the intimate connections Facebook Connect fosters when compared to Twitters are a far cry from the connections that can be facilitated through Twitter. If you know how to hit that sweet spot through Facebook, you’ll make much more than you do on Twitter. I speak through experience, with proven results. Twitter has its place, but as far as revenue goes, you’ll have far greater success on Facebook for pure revenue, so long as you do it the right way, which includes a proper utilization of Facebook Connect.

After reading the entire post I ended up feeling that Jesse is mixing up mechanics and opportunity (leveraging the Facebook platform) with execution (being successful). I could very well misinterpret what he meant. My personal view is that brand intimacy isn’t reached by locking in your users. It isn’t reached by prompting your customers to discuss you brand with their friends. Positioning your brand between a customer and their close family and friends is putting a very larger commercial burden on the most important relationship in life,  family and friends.

It’s true that Facebook has your customer’s social graph. It can open this (privacy sensitive) information to 3rd parties. Just because you can get your hands on that information doesn’t imply that you can leverage that to your advantage.  The fact that Facebook provides the infrastructure and data doesn’t make your instantly successful towards those that visit your site, or their family and friends.

Before you can create a sustainable revenue-generating business you need to focus on user value first. Make sure the users that visit you and your site receive so much value that they will voluntarily return. Wouldn’t that be more powerful than locking them in? Make them love your service or product. If you can do that, then connecting that experience to Facebook makes sense.

But then that experience will be user-driven, adding value for the user. You won’t push your brand into a customer’s intimate network of family and friends. They will voluntarily pull your brand into their network. It’s the difference between web 1.0 and web 2.0, walled gardens and open networks, brand display and brand engagement, customer lock-in and customer freedom, push instead of pull.

Maybe that is what the original post was really about. I would have agreed in full then. Brands do not dominate communities because they force their way in. Brands dominate because they get pulled into that community. And Facebook can help strengthen that pull effect, once it is there. But somehow that message got lost for me in the “leverage the Facebook platform to grow and make revenues” message.

Important characteristics for a social operating system

A Borg cube (image taken from www.startrek.com)

Facebook is quickly making moves to become a web platform, a social operating system if you will. This is not something unexpected. Already in 2007 there were people thinking about a social operating system (see here, here, here).

Nova Spivack wrote a good post, entitled “The Rise of the Social Operating System”, and specified what he felt a social operating system should contain:

• Identity management (open portable identity, personal profiles, privacy control)
• Relationship management (directory and lookup services, social networking, spam control)
• Communication (person to person, group, synchronous, asynchronous)
• Social Content distribution (personal publishing, public content distribution)
• Social Coordination (event management, calendaring)
• Social Collaboration (file sharing, document collaboration etc)
• Commerce (classified ads, auctions, shopping)

It’s a good list. And it is obvious that Facebook is trying to encompass most of this list so that they can become the de facto social operating system on the web.  Facebook started as a directory lookup service and added social networking and communication features from the start. They added identity management and privacy controls (although I can never find the one switch that protects me from Facebook itself). Facebook users upload a staggering amount of photos and video’s and with the acquisition of Friendfeed Facebook intents to play a huge role in real-time search and social content aggregation/distribution. Using Facebook connect users can now get access to thousands of web sites using their Facebook identity. And the phenomenal growth of Facebook is taking it to the regions of mass communication portals.

It looks like Facebook holds the best cards to become the social operating system on the web. In its current form I think this would be disastrous for the web and its users. My biggest objection to this is the fact that Facebook currently exploits a business model that prevents them from becoming a great social operating system. Facebook’s business model is advertisement based, and that is a recipe for customer lock-in. It prevents them from becoming truly user-centric. Or as Doc Searl puts it, Facebook is the Borg.

A social operating system not only needs to encompass the specs that Nova describes, but imo it also needs other important characteristics:

• It needs to be distributed, and it should be open source. This has numerous advantages. It make the purpose of the operating system verifiable, allows for community and 3rd party development. And it makes the operating system less vulnerable for massive security (phishing, identity, data) attacks.
• It needs to be User-Centric, the sole purpose for the Social Operating System is to be just that. An operating system serving its users and their social needs.
• It’s underlying business model needs to be User-Centric too. In other words, the business model should be based upon delivering user value, nothing else (e.g. advertisement based models). Monetization should take place on top of the operating system, not within.  This separates the need to create revenues from the need to build the best social operating system possible. It also ensures the user and his data are safely under the user’s own control.
• The user needs to be in control of his data (follows from the system being user-centric) and his identity. Privacy controls should be implement in a virtual bank-like structure where only the user has access. The user then gets to decide what others can see and what not.  This would create a much more balanced demand – supply relationship between users and 3rd parties.

I’m interested to hear your opinion on this. What characteristics do you think a social operating system should have?

The difficulty I have with privacy controls on Facebook

I’m not a regular user of Facebook. I’ve joined a long time ago, have given it a few tries and then stopped using it. There are many reasons I don’t use it. I’ve written a post a long time ago and provided 5 reasons why I felt Facebook sucks. I’m about to add a few new reasons to that.

6. I’m getting spammed by 3rd party apps, and can’t get rid of it easily

In my attempts to get back into Facebook I noticed that the nr of requests from 3rd party applications vastly outnumbered the nr of friend requests. One could argue that I simply do not have a lot of friends, but I am inclined to observe that a lot of the traffic Facebook generates comes from users installing 3rd party applications not realizing they are spamming their friends at the same time.

I figured I’d take a look at my own settings today. To my surprise I had several applications running I wasn’t aware of:

Applications I seem to have authorized on Facebook

The only applications I recall installing are photos, videos and a game called Packrat. Now I may very well have forgotten I also allowed Ads & Pages, Gifts, Slide funspace, but I sure has hell haven’t used these apps in the past month (wasn’t logged in), even though Facebook tells me I did.

I seem to have used Gifts the last month even though I barely logged into Facebook

In my quest to disable all applications I ran into several problems. I first couldn’t understand where to do this.

Deleting apps from Facebook?

I ended up opening the applications that I seem to have added to my profile. In that overview there are little crosses I can press and I assume it means the application is then removed from my profile. Notice how Slide Funspace is greyed out, suggesting I successfully removed it. However, a page refresh brings it back alive again? Another attempt then. I open the view that shows the apps I am supposed to have been using in the past month. I press the little cross there and there I seem to have more luck:

Removing an app from my Facebook profile

Finally, it's gone

Removing apps from my “Apps used in the last month” view is a bit complicated to say the least.But that isn’t all. I go back to another view, called ‘Allowed to Post’:

Why can Gifts post to my profile and that of my friends?

Huh? It took me 10min to figure out how to remove Gifts from my apps, and now I see that it actually is still appearing in this view. Gifts can still post to my newsfeed and even worse, it can post to my friends newsfeed too? Notice that there is no cross available for me to remove this, and worse there seems to be no way for me to get rid of Gifts? This is getting really annoying now. I do not want to receive or send out electronic gift to anyone, and I can’t figure out how to get rid of it.

7. Privacy settings are in sight (good), difficult to use (not good) and the ones that matter are buried deep and default to the wrong behavior (evil)

On to my privacy settings next. I like the fact that Facebook gives Privacy settings a prominent place in the interface and doesn’t bury them somewhere deep in a menu structure. My initial enthusiasm disappears quite fast as I dive into them. The settings may be there, but they are by no means easy to use. Instead of providing me 1 view of every privacy setting there is, I get a menu structure and worse, tabs within that menu structure (didn’t even see them at first).

In my newsfeed settings there turns out to be the setting I was looking for. Facebook, by default, seems to be using my profile picture to appear in ‘Social Advertisement’. I seem to be endorsing ads to my friends and I didn’t know about that. Facebook immediately provides me a popup explaining that it isn’t Facebook that is doing that. It is the fault of 3rd party apps. Sorry guys, you can’t put responsibility away like that. The user is naive (yes, I am too), and 3rd parties are evil, but if you take privacy serious, then you can’t blame anyone else for this.

Facebook struggling with Social Advertisement

Advertisement needs to be opt-in, a conscious decision, not a side-effect of installing an app or even joining Facebook in the first place. It turns out that Facebook by default uses me and my information for advertisement purposes to my friends. Worse, there seems to be no way for me to stop Facebook from doing that.

Facebook Social Advertisement defaults to friends only

I don’t want to be part of ‘Social Advertisement’ and I sure as hell don’t want my friends to see that either.  Facebook explains how my information is used for advertisement purposes towards friends, but I cannot turn that off (evil). Notice the big warning at the bottom that frees Facebook from all responsibility when it comes to 3rd party app behavior. I still do not know if I will now never appear in any advertisement, whether it is Facebook or a 3rd party app?

8. I have no control over advertisement on Facebook (evil) and Facebook does a poor job displaying relevant ads (bad)

Here is my profile, the way others can see it:

What is the relevancy of the ads on the right?

Notice the advertisement on the right side. Facebook knows everything about me and my friends. They track us down, store every little detail about us and our interactions and what do they come up with? A ‘Strategic Marketing’ ad, a ‘Dating’ ad, and a ‘Business card’ ad! WTF? After all this big brother data crunching, these are the most relevant ads you can show? The friend that is looking at my profile is married and has 2 kids (I’m married too, have 4 kids, but I haven’t told Facebook that). A $15 Bln valuation and 5 years of user data harvesting, and all Facebook comes up with is these ads? I’m offended by the fact that Facebook finds it relevant to show dating ads next to my profile, but I’m even more shocked by the fact that they seem to be unable to show anything really relevant, given the fact that they know all about us.

After writing this I noticed another post of someone with very similar experiences.  Facebook may take privacy seriously but their business model forces them continuously to cross a thin line from protecting the user to protecting their advertisement scheme.

Freemium and the art of letting it sink in for a few weeks

There is so much to read, so much to say, and no time to do all of that. This week several interesting posts about my favorite business model, Freemium appeared. All of them triggered by Chris Anderson’s new book, “Free”.

Posts you should be reading about this are:

A skeptic post by FT.com, and a followup questions and answers post series between the author and Chris Anderson himself.

Mark Cuban with a post explaining that anyone using Free will die by Free. My initial take is that is makes very broad claimes but doesn’t tie it very wel into the ‘free’ aspect.

And Fred Wilson, who I always find has a very good view when it comes to Freemium.

I have lots of thoughts about all of this, and no time to write them down. Sorry about this link post only, that is usually not my style. But hey, now you can make up your own mind about all of this, instead of having to read through mine . I do know that my company has chosen to move forward with the Freemium business model, so I’ll be trying to avoid all pitfalls. I’ll be gone for 2 weeks for yet another great vacation in Greece, Korinthos. I might try to experiment with iPhone blog posting, but don’t count on it

See you in 2 weeks!

Alexander

Why the iPhone will never be the biggest money generating platform

The iPhone will not generate significant mobile revenues

Tomi Ahonen has written a very long post about the history of mobile phone development  in Europe and the United States. Tomi is a well known authority in the Mobile space and is the author of the well known Communities dominate brand book.

His post contains a number of provocative and thoughtful observations. The post itself is as long as an e-book, but I urge you to read it all the way. It’s excellent.

In his post Tomi argues that even though the iPhone has brought a revolution in smart phones it will not dominate mobile revenues with its current offering. the bulk of mobile revenues are not in App stores or the real Internet. Apple’s iPhone represents less than 1% of the mobile market, and it’s revenue generation is infinitely small compared to current real mobile Internet revenues. A quote from Tomi’s post:

So we come down to the applications. Tomi, its a smartphone. By definition, a phone that can accept applications? Why aren’t you talking about the Apple iPhone Apps Store. Yeah, sure, its important for us nerds and geeks, the early adopters of new technology, who have been envisioning a pocketable PC that could be perfect for the gadget freak. Yes, the Apps store is wonderful. A billion downloads, yeah. Except that the mass market consumer, your mother, your father, your sister and your brother, are not like you and me at this blog. They will not madly download tons of apps to any smartphone. The theory of “Crossing the Chasm” has been explained by Geoffrey Moore a decade ago and is not disputed. Techie-geeky appeal of ultra high tech does not translate to the mass markets, in fact in most cases what geeks want and mass markets want are diametrically opposed.

No matter what stats you see for Apple iPhone Apps Store success, whatever the stats, the total market share of Apple is 1% of the phone market. It is exactly at the pointed end of that Crossing the Chasm theory that Moore talked about. This is NOT a mass market, and CANNOT BECOME one if the same model is repeated. Understand what I say. Even if you are able to make a success out of your app in the Apps Store today, it CANNOT translate to a mass market success, using that same model. its not my theory, Moore’s theory holds near unanimous agreement by all technology marketing gurus. Do not kid yourself.

The problem with the iPhone is that it has been developed with a pc in mind. It is a pc device that can also call. This is exactly why I wrote a post about a year ago explaining why the iPhone is probably one of the worst mobile phones I have ever used. It comes with downloadable applications that let the user customize his device. But that is exactly why it will not be adopted by the mass market.

Yes there is a big opportunity for apps to be sold to smartphones. Yes, it is a very significant market, when viewed from the angle of the software applications industry. But it will always be – always be – only a niche. Do not allow yourself to be delusional about this. We do not buy – and the mass market will not ever buy – smartphones so that they could install some apps to it. The vast majority of users will be contented with the apps that come pre-loaded, and then they go to web based services to get their additional benefits.

The real value (in terms of revenues) lies in the mobile web. This is not the real web displayed on a high end handheld like the iPhone. Instead it is the ‘walled-garden’ Internet that is build and maintained by the mobile carriers. Sounds totally unbelievable right? The facts and figures however are indisputable. Again, a quote from Tomi:

That is where the big opportunity is. Not apps that we install onto a smartphone, but the services that we deliver via the network. Mobile premium services, what could be called “mobile internet” and by this I mean a superior, better, money-making internet than the old legacy dumb internet we have on the PCs. So I explicitly do not mean “the real internet” onto the phones. That is as dumb as putting a real horse to power your car! We have a BETTER engine in the car. And now, yes, please understand, the “mobile internet” is the far better internet than that horrid old creaky stupid cheap “advertising-led” “get-me-more-eyeballs” internet which we all use today. The internet is for good reason called the 6th mass media channel and obviously mobile is the newer, 7th mass medium.

No, while that will be there, and yes, there will be millions and millions of users on “the real internet” on our smartphones, that is peanuts. PEANUTS. The far bigger opportunity in mobile is in the 7th mass media type of mobile internet, the better, smarter and richer money-making and magical mobile internet. That is where the opportunity is. To see how vibrant and lucrative it can be, one need not look further than this decade and Japan and South Korea, where the mobile internet really thrives already. Application developers have a hard time making money selling 1 dollar apps on the Apple iPhone Apps Store. You have to be very lucky to make the top 100 apps listing to have any chance of recovering your development costs. A very risky development path.

But in Japan, they offer the service on the mobile internet, take a subscription of one dollar per month (100 yen) and pay 10% to the carriers/operators and the service provider gets to keep 90%. Rather than one dollar from one customer once, the customer is charged 12 months, 12 times per year. 12 dollars, and the content owner gets to keep 10 dollars and 80 cents of it. Which is better? A dollar or ten? I rest my case, milad.

Worldwide the mobile data market is a much bigger opportunity than pc based Internet. There are more users, more devices, payment is integrated on every device (no need for credit cards). In another great and long post Tomi estimates these markets:

The total mobile premium content industry is worth 71 billion dollars and the mobile messaging industry adds another 130 billion, giving the total moblie phone based data services industry a size of 200 billion dollars for 2008. Now, consider the internet. Even as we add not only all content revenues, and all advertising revenues on the internet, but also the access revenues for broadband and dial-up narrowband internet access, the overall size of the internet business is about.. 200 billion dollars. In half the time, mobile has grown to same size.

Mobile is the bigger internet. Mobile is the stronger internet. Mobile is the money internet. Mobile is the faster-growing internet.

It sounds counter intuitive to us geeks, but the smart phone market is a niche market. No matter how sexy and cool we think it is. The SMS market alone is bigger than the current pc based Internet content market. Premium mobile data services add extra growth that can’t be matched by the web. On the web we are stuck with inefficient, crappy old-fashioned web 1.0 based business models. In the mobile data market every bit transferred represents real revenue. Twitter could have done it, but they didn’t pursue the biggest revenue generator.

Facebook missed that one too.In 2007 I wrote a post entitled “Mark Zuckerberg, when in doubt, follow the money”. I said then:

But there are 2 aspects to a mobile phone that are of huge importance when thinking about next generation web services:

1. The mobile phone platform has billing capabilities
2. The mobile phone user pays to interact with others

Think of the US on-line advertisement spent 2006 ($16 Bln) as a small hill,

think of the worldwide spent on SMS as the Mount Everest (btoh images taken from Wikipedia). It is estimated that the SMS market alone will be $ 67Bln in 2012 (or 3.7 trillion messages a year!) .That is excluding Mobile Internet services. In Japan alone more than $ 1 Bln revenues are generated from mobile data services. So stop thinking ads and start thinking payed services.

The mobile business model is the most User-Centric I can think of. It provides user value and the user pays directly for that value. There is nothing more powerful than that.

Everybody loses in the battle over our online identity

A beautiful bird cage

Facebook announces user names. It generates a lot of buzz on Techmeme. TechCrunch reports the obvious (vanity), but Chris Messina is the only one that is actually analyzing what Facebook is doing and what impact it can have on our online lives. In a post he entitles “Facebook usernames and the digital battle over your identity” he goes into the underlying strategy of this move and the effect it has on your online identity.

Arguing that Facebook shouldn’t get into the vanity URL business, I still think that they had it right the first time around. Digital identity should change the adapt to humans; not force humans to refer to each other in more computer-friendly ways. But the allure is simply too great. I also can’t say that I blame them, even though I think it’s a distraction along the way towards more widespread real identity (and thereby reputability) online.

Chris goes on and hits the one thing that s relevant about this move by Facebook. the online battle to own your identity, profile and interactions:

So, this is happening, and companies are racing to achieve namespace dominance over your online profile. This is what Tim O’Reilly warned about in his definition of Web 2.0. He said that one of the new kinds of lock-in in the era of [cloud computing] will be owning a namespace. There you have it — who are you going to trust to own yours?

I suggest you read the article in full, it’s an excellent read.

Chris hits on a nerve I’ve always felt was important. While web 2.0 has brought us a lot of great things it also provides service providers more opportunities for user lock-in. User lock-in is a term invented by marketeers (they are all idiots you know). Customer lock-in is in essence a protective measure, hence the “lock-in” part. Marketeers will obviously never say that. They brainwash themselves and their company by arguing that achieving customer lock-in is done by excellent service, providing the user with value and more of that. They are wrong of course. Customer lock-in is achieved by simpler things. The inability for a user to leave a service, to hide customer help behind layers of customer service, 23 pages of legal gibberish called terms of service, the impossibility to switch to other providers, downgrade services etc.

In the online world customer lock-in is even worse. Here is where Tim O’Reily’s definition of Web 2.0 lacks a user dimension. Tim says:

Web 2.0 is the business revolution in the computer industry caused by the move to the Internet as platform, and an attempt to understand the rules for success on that new platform. Chief among those rules is this: Build applications that harness network effects to get better the more people use them.

The problem I have with this definition, even though it adequately describes what we refer to as web 2.0, is that it doesn’t address the user and the value he should receive. What we often fail to realize is that the network effect Tim talks about is not only the best thing that web 2.0 has brought us, it is also its biggest tragedy. The network effect forces service providers to concentrate on the size of the network, instead of a primary focus on user value. The Internet is not seen as a platform at all. The service provider sees his own platform as the Internet! And to make matters worse, web 2.0 is governed by old-fashioned web 1.0 business models that leverage that network value, instead of user value.

The network effect and the failure of online business models to evolve with the technological evolution leads to unwanted effects such as customer lock-in, the network value being more important than individual user value, Twitter spam, walled gardens, the total lack of data portability, lack of privacy control,  the battle over your online identity, profile and interactions. And now the battle over name space. In effect, it cages us, instead of setting us free. It takes away our ability to be in control of our own profile, our data and our interactions.

And there is nothing we can do about it as individual users are either unaware or unable to generate enough counter force to balance the power on the web. This fight to control you on the web can only be halted if we evolve online business models to a point where revenue and competition are based upon user value instead of network value. If service providers generate revenue buy providing user value they will achieve the exact same effect as they try to reach ow. Users will be committed to user their service. Not because they can’t leave, but because they choose so. All it requires for service providers is to let go, to turn the relationship with the user inside out. Now that would be a revolution.

I’m with Chris here. He sums it all up in one little hidden line in his post:

It’s remarkable how cheap we’ll sell out our identity these days.

The question is, are we seriously going to put up with this? Will we allow Facebook, or any other service provider dictate that their platform is our Internet? That is the ultimate user lock-in.  A shiny, gold-plated bird cage.

That is not a future I would feel comfortable with. It’s time we redefine online business models. It may be our only way out of this lock-in to a web that is user-centric instead of network centric.

The potential power of Google Wave is far bigger than its demo

I was just reading this CNET post on wave. Rafe Needleman and Stephen Shankland (both working for CNET) answer questions about Google Wave in an attempt to explain what it is.

Sadly, they don’t really get past the Google Wave demo itself. In my opinion, the demo itself, although remarkable, is not very important. Google Wave isn’t impressive because Google build a cool demo. There are 10 other reasons why Google Wave is more important than that. Google set a vision that will change the way we will communicate online.

What I find remarkable about this vision is that Google is breaking through some existing boundaries that hold web 2.0 progress back so far. I could repeat my 10 points made earlier, but I would like to focus on a subset.

Google has not only unified different types of online communication (e-mail, instant messaging, SMS) into one paradigm (wave), but they have also ensured that it can run fully distributed and can integrate with most of the things we have. To understand what that means I urge you not to see Google Wave as a new service, but as a new service layer.

Whereas services like e-mail, instant messaging and social networks always have been build on the premise of a walled garden business model, Google Wave can become the new communication structure services can develop upon. It is set up from the start as an open source project with a clear focus on development API’s. I’m sure that Google will launch a Google Wave service at some point that will attract many users. But it also allows any other service to use that same paradigm to implement unified online communication.

Google has not only spent time and energy making sure Wave can suck content into the platform, it has spent as much time and energy making sure it can get out too! Farewell destination based business models. Farewell walled gardens. If Wave gets adapted, it will put the user in control, and that is exactly what we need to do to break out of our current web 2.0 boundaries. That is what makes this development so remarkable.

Google just did some major plumbing on the web, and honestly, they were probably the only ones that could do this. They, unlike other companies, do not need walled gardens to make lots of revenues. After all, their walled garden is the entire web, and beyond

Shifting the balance of power inside out solves many web 2.0 issues

Image taken from: http://www.pinkfloyd.co.uk/insideOut/

What are the most important aspects for a User-Centric web to me? In a User-Centric web:

• I get to own my data and my interactions
• I control my privacy
• Services travel along with me, instead of me traveling to those services
• I do not perceive walled gardens, I can take my data with me and (re-)use it wherever I want
• Services connect to me in a standard manner, allowing me to (re-) use my data (think friend list, unified messaging, interaction, privacy control etc here)
• Services read my privacy policy and terms of use, and agree to my terms when connecting

It basically changes the balance of power inside out. Instead of putting control at the web service, control should be with the individual user. If we switch to this perspective you will find that a lot of the issues we currently see on the web would be solved quite naturally. We would not need destination-based business models (with complementary user-lock-in and walled gardens). It would solve the biggest web 2.0 tragedy as service providers would have to compete on user value, instead on network value. And privacy, or the lack of control, of it, would be solved automatically, as the user decides what to do himself. that doesn’t imply that everything will be locked down. It just implies the user explicitly can decide what to do, including the option to share everything.

The problem with this concept is that it takes plumbers to realize it. You need development effort to focus on the core aspects of the way the web works. It isn’t about creating a new Facebook or Twitter. There is no glorious, unique business model available to make this happen. It really isn’t even about technology. we already have the technological capability to make it happen. The real issue is revenue. Unless we figure out a way to generate revenue  in this User-Centric web, we won’t see it happen easily. There are movements working on this.  OpenID is a great example. But we will need commercial companies to embrace this concept and bring it to life. Unless there is a revenue generating perspective they simply will not do this.

The exception is obviously Google. Google is not only the largest revenue generating machine on the web, they are by far the biggest plumber too. Their recently announced Google Wave is a typical example of this. They have just provided us the mean to re-invent the way online communication works. This is going to have a huge impact on existing communication and social networking services if adopted. Google wave to me is one of the first initiatives that will allow us to develop User-Centric services.

Maybe we should simply revert to a very old business model, even older than the current web 1.0 models we upgraded to web 2.0. Maybe we should ask users to pay for the value they receive?

An important revolution in the web can’t be driven by technology

Who am I?

Yesterday I tried logging into a service I hadn’t visited in a while. I couldn’t remember my user name or password. After a few frustrating and unsuccessful attempts I gave up. Recognize this? Happens to me all the time. Currently, my best bet is to search my mailbox to see if I can find the information I need to get access to services.

It is a problem we all face. For safety and security reasons we need to have unique ID’s and hard to remember passwords. But humanly it is nearly impossible to remember all these combinations. There are tools out there that help your resolve this issue (take 1password as an example). But the tools mask the underlying problem. Why do I need a new online identity for each new service I sign up for?

OpenID addresses this problem. It let’s you sign in to different services using one identity. Several big sites, including Facebook, now support OpenID. You can now, for example, use your mail account to get access to Facebook.

To me, OpenID only solves the initial problem that I described above. It provides me a simple way to get access to different services, without the need for me to remember user names or passwords. But I would like to take it a few steps further. If I can have one identity, securely stored, and usable across different services, then why not store my online profile there as well?

Every service I sign up for requires me to reveal some aspects about myself. It could be anything ranging from name, address, phone, gender, birth date, icons, preferences for movies, books, friends. It could be information linked to my profession, to my free time. I need to set preferences. How open do I want my data to be? There is privacy settings to consider, e-mail addresses to be filled in. The list is endless. The problem is that this information doesn’t change all that often. I might decide that I want to reveal more or less of myself but all this information is stored (in my head, my computer, my address book etc).

But each of these services force me to enter this information in order to serve me a better experience. It’s no fun on Facebook if you do not indicate who your friends are. At the same time, the fight over data has become an important economic factor. Services exist and have economic viability if they can ‘own’ my data. This economic force creates the boundaries often referred to as walled gardens. By locking in users, services can fire up their economic engine. By locking in more users and more data the engine continues to run. While it seems to make perfect sense to have one identity and profile across different services we have to understand that the economic reality of today is that there is no business model available that supports such a radical change. In other words, companies like Facebook will have a hard time justifying their economic value if they didn’t lock in users and own their data.

Technically, by swapping the current balance of power from the service provider to the user we could easily solve this one identity – one profile issue.The Diso project, started by Chris Messina, tries to address these issues. However, this balance of power can’t be swapped until someone figures out a way to make it economically justifiable to do so. I’m sure service providers are willing to do the right thing, but only if it positively affects their bottom line. It is my believe that we need to solve this economic problem first, before we can solve the one identity -  one profile problem. A User-Centric web will only be conceived if it is accompanied by business models allowing service providers to generate revenues without being in control of the user’s data.

The value for the user is evident. Instead of monetizing networks, the service provider needs to monetize user value. Instead of focus on growth, there will be focus on user value. Service providers wont be competing on ‘who is the biggest’ but they will have to compete on delivering value. I’ve been complaining a lot about service providers locking users in, about not respecting privacy, or control over user data. But I’ve come to realise that it isn’t fair to be complaining about this, if we don’t address the economic issue at the same time. If we can develop business models that facilitate a User-Centric web, we will have optimal conditions to make it happen. This is a case where economic innovation needs to proceed technological innovation. Forget about technology for now. We already have the technological capabilities to make it happen. We need smart people to focus on defining the business models that will enable this transition to happen.

The Open, Social web needs plumbers

Chris Messina has a long and good post up about the open Social Web. He hits on a topic I have written about many times as well:

Moreover, by commoditizing certain fundamental features, service providers will move to compete on the level of user experience and service, rather than on lock-in alone. And in the distributed social model of the web, there is nothing more fundamental than establishing a means of expressing durable, cross-site identity.

It is my contention that the individual is the basic atomic unit of society, and without society you can’t get to acting on the “social” layer. And since change only can begin at the scale of the individual, OpenID must occupy a cornerstone of the open, social web.

The commoditizing fundamental features Chris talks about are identity, discovery and access control, contacts and friends, activity streams, messaging, groupings and shared spaces. I read his post and ended up posting a comment on a Friendfeed discussion in which I said:

I guess it all boils down to the point that most initiatives are not willing to work on the plumbing of the web. Everyone wants to build the house and contain people within it. The irony of course is that if you build the plumbing smart you would be part of everything, instead of “owning” a small piece of the web trying to lock users in (And I thought my posts were long )

It reminded me of an old post Rolf Skyberg once wrote about the plumbing on the web. In a post called 98%, or even 100%-open, not enough in social networks he writes:

Unfortunately, this pattern all points into an area where few large companies want to compete: commodity services. To those with dollar signs singing in their sleep, “commodity” is a painful, dirty word where products must compete both on their merits and consumer whimsy. Even if you’re the best, you are forced to walk that careful line between technological prowess and merchantability. It also shines bright lights into the cobwebs of your code; ruthlessly ferreting out weakness.

I’ve written about my view of a User-Centric web (although I was told I should be calling it the User Driven Web).  It’s what Chris calls the Open Social Web. In this web the user is the most important actor. The problem of getting to this type of a web is that we need these commoditizing features in place first. The question is, what is withholding this plumbing? They are not brilliant new insights (brilliant, but not new ). It isn’t that no one before Chris, Rolf, Doc Searl, myself or others have thought about the need of having this plumbing taken care of. It seems common knowledge, yet it hasn’t been sufficiently addressed or implemented.

I can think of only one reason. There hasn’t been a commercial incentive to make the User-Centric Web happen. There is no money to be made in plumbing, given the current state of web business models. We are still ruled by old-fashioned web 1.0 business models, and they prevent us taking the leap to a fully open, social  web. We need to break free from Tim O’Reilly’s definition of web 2.0 and move beyond that. Until someone figures out how to create revenues by setting up the plumbing , there will be slow progress towards solving it. There are many initiatives, many projects. But turning the web inside out, making the user the center of it, won’t happen until we break through the glass ceiling of current traffic and destination oriented web business models. We need less focus on steroid growth and more on basic infrastructure.

Not only is it more sexy to build a new Facebook, or Twitter, but it is also more lucrative. It’s hard to get investors to line up for basic plumbing. It is hard to convince people that you may earn a decent living by delivering commodity. It is extremely hard to come up with a revenue model for commodity. And until we solve that problem, we won’t easily be able to make the User-Centric web happen.

Who is willing to take care of the plumbing?

The fundamental problem of ‘owning’ user data

Who is on control now?

I do not often agree with Facebook, but I do agree with their decision to make privacy settings of their users more important than opening up the vast amount of data they track to 3rd party developers. Marshall Kirkpatrick writes about that decision and points out that Facebook isn’t opening up everything:

Facebook holds a mind-blowing amount of conversational data. The company is analyzing it extensively and it has an omniscient view of conversations across all the networks of friends and privacy restrictions. It uses that aggregate data analysis to make business decisions and to sell advertisements. The rest of us are only allowed to give Facebook more data and to get back a sliver per user that will facilitate more user-level participation in amassing more data at Facebook.

He continues and decides that the value of the data is too big to be held by one company alone:

The data that Facebook controls, conversations and social connections, could be used for analysis of real-time social patterns which could lead to world-shaking new insights. Do we get access to that data? No.

Why not? We don’t get that access because Facebook was built on a fundamental promise of privacy and a complex system of privacy controls. Privacy is good, it’s very good. But, the census gathers and exposes personal data without violating privacy. Lots of systems do.

[stuff deleted...]

The data the network controls is just too valuable to keep locked up for only the company’s own analysis.

Marshall asks an interesting question and provides a provocative answer for it. Is the ability to innovate with user data fundamentally more important than the right of a user to keep his data (interactions)  private?

It is tempting to answer this question with a ‘yes’. Many web advocates will explain that by giving up privacy they get value. That the free flow of data has lead to new interaction possibilities that were impossible before (web 2.0). We’ve made our progress because everything is set free. Data that is free can be mashed up and provide new value, unprecedented.

While we all benefit from these effects, we should not lightly dismiss this as a simple case of ‘collateral damage’. Marshall touches a fundamental dilemma. What is more important, the rights of the mass, or the rights of the individual. In the western world we tend to assume an inverse relationship between individual rights and social control. More social control leads to less individual rights and vice versa. Marshall suggests that individual rights may be less important than the ‘greater cause’ of being able to provide more value to users if data is freely accessible. The obvious question to ask when resented with this view is “where do you set the boundary?”  In other words, what violation of individual rights is still acceptable for the greater cause of innovation?

But to me, there is a more fundamental flaw underneath. Individuals do not really have the means to protect their rights in the first place. Even with every privacy setting Facebook offers a user, there isn’t a single setting that protects the user’s rights from Facebook itself! There is only one way a user can be in control of his own rights. The user can decide not to participate. The web gave us value, and in return it forced us to give up our most important right. The right of the individual. Everything is free and accessible for all. But in return we have to accept that there is no way for us to control what these companies know or do with the data they collect. No matter how honorable Facebook is, they have a disproportional power that allows them to crush individual user rights. Currently, 3rd party developers complain they can’t store Facebook data because of privacy settings, but Facebook itself doesn’t have that limitation. Teh user doens’t own his data, Facebook does.

I realise that these views aren’t popular. That many already (un-)consciously made the decision to participate. We are accepting a world in which the balance is in favor of the companies that develop services. That it is ok that I have to accept a Privacy Policy and Terms of Use of a company, but that that same company doesn’t commit itself to my individual rights. I do not mind data being set free, but I do mind that I do not really have the means to decide for myself what the tradeoff is. It’s all or nothing. Join the party or stay home. And while we might see the benefit of more value now, this is a decision that can’t be undone easily.

Don’t get me wrong. I totally agree with Marshall that the innovation over user data can lead to incredible value. I’m fine with sharing my data in order to have access to that value. What bugs me is that I do not have control over that decision or that balance. We are scared to give that fundamental right back to the individual. It might break all web business models. But I am an optimist. I think we would be surprised to see how many people would be quite willing to share data in return for value. The difference is that in this new situation they would be able to make a conscious decision. The user would be in control. He would join a service like Facebook and consciously deciding the best trade off between sharing information and obtaining value from the service. And that conscious act would provide us all more value than the current situation in which we are  hijacked.

The only way this can be solved is by putting the user in control. Turn the entire model inside out Privacy/accessibility settings should not be set per service, but set by the user. The user shouldn’t have a fragmented profile across every service, but instead have one profile that can connect to any service. He should not have to find friends across many services, but have his friends within his profile, accessible to him across any service he wishes to use. The user can be in control of what his profile would look like per service, who his friends are, what data he is willing to share. The user should own his data. If that would be the case then we would have balance between user and service provider. If the user has control over the decision to share, then there can be a much more effective exchange of data for value. A service provider wanting access to some of that data will have to agree to the individual’s privacy policy and terms of use. We would not need a new developer’s APIs for every service, but we would need one standard API that allows users to connect to services.  In many ways, putting the user in control would simplify technology and our ability to mash up data in order to create new value. It enforces a more natural cooperation between service provider and user.

The real innovation of the web would be to restore balance and put the individual user in control again.

Questions

Networks and destinations

1. If everything becomes open and connected, what will happen to the big destinations?

2. Why is the web rapidly evolving into uncountable databases with connections, instead of one database where everything connects?

3. If all services and destinations become open, then what is the point in being a destination site in the first place?

4. Why are we creating webs within webs, instead of one network that connects it all?

Personality and identity

5. Why am I forced to be fragmented across the web, instead of having one presence that can connect anywhere?

6. Why do I need to get my friends to use the social services I’m on, instead of having my friends with me no matter what service I use?

7. What is or defines my online identity? Am I my profile, my interactions, my data?

8. What defines my presence on the web? Is it the fact that I can be found, or that I can interact anywhere?

Data

9. Why is ‘having data about me’ more important than ‘serving me the right data’?

10. Why is real-time data more important than serving the right data at the right time?

11. Can data lead to demand, or does it only take care of supply?

12. Why does a company have control over all data, instead of letting the user be in control of his own data?

Privacy

13. Why does every service need a TOS and a Privacy Policy, but at the same time the users that are exploited don’t have a TOS or personal Privacy Policy?

14. Why does every service have to implement privacy controls for the user, while we could implement 1 set of privacy controls that the user can control across all services?

Business models

15. Why is the economic model on the web broken for most companies?

16. Why do most companies work with advertisement models while clearly few manage to be  sustainably profitable?

17. When does the network effect diminish in web business models and thinking?

Behavior

18. Why can we now publicly rant about anything or anyone, without really being held accountable for our actions?

19. Why do we expect everything to be free, and then have high demands and complain about service?

20. Why would we want to have thousands of friends and interact everywhere?

21. Will we continue to increase interaction or are we reaching saturation?

22. Why do we spend more and more time online while real life passes by so quickly?

Just a few questions that I have. How about you? Do you have any?

Anyone have some answers?

Status update: the future of the web is here!

We're all idiots

/rant on

I read a number of posts in the last week that seem unrelated but ended up making me think about this social media circus we are in. Unless you are deaf, blind, and have been sitting on a deserted island the past weeks you must have noticed the hype the media are now creating around Twitter. Respectable media like the NY Times are running Twitter stories almost on a daily basis. We now know how it was thought out, that investors think loads of money will be made on search, that they turned down an offer by Facebook, and especially that it is now going mainstream. We’ve had a few terrible accidents and disasters and Twitter users were able to beat “old-media” bringing the news. As a result every respectable reporter now turns to Twitter not only hoping to pick up some early scoops as well, but more importantly look really cool at the same time too. And don’t forget about real-time search on Twitter, the next Google killer (yeah right).

Personally, I think it is a load of crap. Twitter is currently flooded by people and organizations “playing the system”. Twitter has embraced the hailed network effect of web 2.0, and that is also it’s biggest tragedy. Twitter has become an eyeballs game, just like any other service that shows unhealthy growth. Twitter isn’t growing with twitter users, it is flooded with bots and spam playing with the weakness in the system and its management. Sorry , if management wanted, they could get rid of the spam and bot excesses easily. But since they are addicted to web 2.0 growth steroids there is no compelling reason to help users not get harassed by spam and bots. Why? Because removing it would also ensure that Twitter shows less growth than expected. Making the “mainstream” bubble pop. So instead of doing what is right for its users, Twitter not only lets bots and spam free but even plays its own game with handpicked suggested users for you to follow.

Then there was this post by the BBC in which they interview smart people from the industry that claim that social networks are the “new e-mail”.  Yes, they did call it e-mail 2.0, because that makes it sound even cooler. Digging into the article we find little treasures like one from the founder of Yammer:

Mr Sacks said: “What people want to do on social network these days is post status updates. We think it’s all people want to do.”

Paul Buchheit is quoted:

“I think it’s a new form of communication; not quite e-mail, more lightweight and more real time, often with little bit of a publishing flavour to it,” said Paul Buchheit, founder of FriendFeed, and the creator and lead developer of GMail, while at Google.

And there is this engineer from Facebook that takes it one step further:

Ari Steinberg, an engineering manager at the firm, told BBC News: “It’s been interesting to see the way people change the way they communicate. “You used to e-mail content to people and you had to choose who you wanted to e-mail it to and you didn’t know if your friends even wanted to see it. “Now you can passively put something out there and let people engage with it.”

Notice how each of them highlights their own service strength in these pearls of wisdom that provide insight into our future. Our online future seems to be driven by status updates and passively watching others interact with that. The growth of Facebook, is unprecedented, but as Ari tells us, it’s mostly about status updates. Research from the  Facebook data team suggests that we may have loads of friends on Facebook, we interact with only a few of them. The rest are passive relationships.

I’ve always wondered if my personal experience with Facebook is very different from others. There is the first excitement of joining, getting new (and old) friends. But after a while the excitement wears down and I’m left with a service I can’t get any value from, no matter how hard I try. I can’t explain it any better than this hilarious and ironic article written by Matt Labash in the weekly standard:

One by one, my non-joiner friends have succumbed. As one reluctantly joined the world of “poking” and getting “poked” by people he already talked to, people he had no interest in talking to, or people he didn’t know at all–all conducted under the suspect rubric of “friendship” so that they can look at each other’s photos and write dreary “status updates” on their “walls” (brief squibs about what you are doing at that exact moment, usually with emoticons and inappropriate quotation marks: “Matt Labash is wondering how long to marinate human flesh to get out that ‘gamey taste’ “)–he was almost apologetic about it. Within two days of his birth on Facebook, he said, “I have 198 friends. I have never heard of most of them. This is so dorky, I hate myself for doing it.”

Being a true friend, I didn’t allay his guilt. I told him he was a very sad man, that collecting Facebook friends is the equivalent of being a catlady, collecting numerous Himalayans, which you have neither the time nor the inclination to feed. “You have obviously never been on Facebook,” he said. “It’s so much worse than collecting cats.” By this week, however, he’d lost all ironic distance. When I told him that he now took it all way too seriously, that I liked the old, conflicted him better, and that he should take a hard look at himself, he sloughed me off. He was now just another friend-whore: “I don’t need to look at myself. I have 614 Facebook friends to do the looking for me.”

We're a bunch of Chimpanzees

A new generation is learning that the best the web has brought us is the status update. That friends are measured in terms of quantity, and that interaction can be done passively. We need pokens to connect (my brain just melted by this infantile invention). If that is the future of the web, then you can count me out. I spend the last week without any social media tools and concentrated on real-life relations in both my private and working life. There is no online experience that can remotely match those interactions. We are all sitting behind our screens like a bunch of dressed up monkeys, confusing status updates with real interactions, and failing to see the wonders of life as it passes by. It’s pathetic.

What is the root cause of this idiocy? I firmly believe it has to do with the way business models evolved on the web. When eyeballs, page views, CPM, unique visitors, traffic, and network became more important than individual users we took a wrong turn. We let the web evolve into into a big market place where “Advanced Ads Targeting Features” have become more important than individual value. The web has become a marketing play, instead of a place where we get real value when connecting online.

I’m with 37Signals here who openly wonder why the web lost faith into charging for stuff? Our online future is reduced to a status message and a million marketeers are making plans to exploit that nonsense. I can understand that. Marketeers can’t help it, they are just idiots. But to hear the Web finest entrepreneurs reduce the web’s future to status updates and refer to this as email 2.0 is more than idiocy. It’s mediocre. And it is scary to think that all our creativity, technological progress, and plain smartness has lead to this ultimate achievement of mankind.

It is time to end this madness and start charging people for the value that they get. Sure, you will lose eyeballs, traffic, status and all those other destructive measures the web currently brings us. But you will gain something too. You will get happy customers and you will deliver user value instead of network value. You will have fans instead of statistics. There are plenty of reasons to start today with a user centric, or user-driven business model. The question is, are you brave enough to deal with that possibility?

/rant off

The network effect in web 2.0 is also its biggest tragedy

Side effects of using steroids

Robert Scoble, nicely served by his friend Loic Le Meur, started a discussion on Friendfeed in which he states that Twitter is broken and that unfollowing everyone might be the only solution. You can find it right here. The story got picked up immediately. Loic triggered this because he unfollowed everyone in Twitter and then build up a much smaller list of friends.  Loic has a good post up about his reasons for unfollowing everyone and starting with a clean slate.  Valid arguments and Loic states to have improved his Twitter experience tremendously.

I’m going to ignore thoughts about Robert and Loic following thousands of people themselves and using the strength of Twitter for their own needs as well. Following people by default leads to exposure to spam. I won’t discuss the topic of everything getting posted on 20 different places thus leading to a whole lot of duplication and pretty much useless aggregation. It is sufficient to say that this duplication increases the perceived growth of a service and it fuels our attention on size and growth.

Diving a bit deeper into what is going on leads to another discussion on Frienfeed, where we can read that Twitter itself is playing a questionable role in the way they have implemented a friend recommendation scheme. From that it seems that Twitter hasn’t put a lot of effort in getting rid of the bots populating the service right now. The underlying reason seems simple enough. Spam is profitable and the metrics we use to measure web service successes are flaky.

What are the most important external measures to determine the growth and success of web services? Things like traffic, page views, unique visitors, registered users. As a result, the more spam bots Twitter has in its network, the higher each of these measured variables. Getting rid of spam bots equals value destruction for them. Can you imagine a headline at the major tech blogs  stating Twitter traffic drops dramatically, only to find out this has happened because Twitter did its community a service by removing spammers. It’s not going to happen. And that is where Twitter and the rest of this web ecology are taking a wrong turn.

We're a bunch of Chimpanzees

The constant pressure to perform towards the outside world, the Tech blogging community, investors, traditional media, is caused by this stupid growth rat race. Fueled by the initial successes of companies harnessing the network effect, we are now all drilled as a bunch of chimpanzees to measure the success of a web service by its millions of page views, visitors, registrations. Every month the major tech blogs give us the ‘Compete’ or ‘Comscore’ benchmark. Are you in or out? Who has the biggest …(you can fill that in yourself). You do not have millions of visits daily? Fail! Web 2.0 on steroids.

It is sick. I can’t think of a better way of expressing this. This whole rat race towards world domination is one of the worst aspects of the network effect. We like to think of the network effect in a positive way. A service gets better as more people use it. There is a major downside to it that we seem to ignore. The network effect causes the network to be more important than the users in it. It is more important to acquire and lock in new users than it is to keep existing users happy and satisfied. Users have become statistics in Google Analytics. Our performance dashboards for the valuation of companies do not include anything other than growth figures. Installations, registrations, page views, visitors, bounce rates, uninstalls etc.  And that sucks, big time.

I do not want to be reduced to a number, a statistical value. I want service providers to care about me. I want them to spend more time on keeping me satisfied in their service than spending time on getting more users in the network. I want large companies to act small and personal. I want the growth of a service to be truly organic, instead of getting ‘orchestrated’. I want investors and entrepreneurs to stop feeding web companies steroids to grow big. I want them to start holding companies accountable for generating revenues. I want people to stop caring too much about what TechhCrunch, Compete, Comscore or anyone else has to say about the growth of web services because it only keeps this rat race going. I want CEO’s and journalists/bloggers to start talking about customers instead of taking about the growth of their network (check a few interviews and you’ll see what I mean). I want the web to be the place where user value is more important  than network value.

I realize I am an idealist in many ways. I’m fine with that. But I have enough experience to know that focus on user value delivers the best type of business and revenues. All it takes is a bit of courage and to stop ‘competing’ on growth and world domination. Focus on users and give them the best experience you can deliver. If Twitter would be doing that these spam bots would be gone in days. But Twitter is trapped in this steroid growth race. So they won’t be doing that. See how this leads to wrong decisions? Value destruction instead of creation.

If you deliver user value, you can scale using the opportunites the web brings you. If your strategy is ‘growth first’, then user value can never be added later. And don’t think focus on user value can’t be combined with growth! There are enough good examples of that. Amazon can do it. And so can you.

The praised network effect is also web 2.o’s  biggest tragedy.

On Google’s Innovator’s Dilemma

Every once in a while a new product or service appears that is immediately labeled as the new ‘Google’ killer. Usually by the major tech blogs who need to say something smart to get the traffic going to their site. Sometimes by the product company itself who might think that that any publicity is good publicity. I rarely read those posts. The idea itself makes me smile a bit as I personally believe that anyone boasting about such a possibility  rarely really understands the nature of the power that Google has build up in the past years.

The nature of the strength of Google can be derived from their mission  “to organize the world’s information and make it universally accessible and useful”

The first thing that comes to mind when reading that is their audacity to think beyond reasonable boundaries. Google doesn’t want to organise a specific set of information, they want to organise all information. I do not know a single company that publicly dares to think this big. The consequence of dreaming this big is that you have to act upon in. And that brings us to another strength of Google. If you wan tot organise the world’s information you need unprecedented data storage and manipulation capabilities.

Many people will recall the search engine when thinking about Google. Others might think about Google maps, GMail, Google Earth,  Adwords, or other remarkable services Google provides. I tend to think about the infrastructure that is needed to accomplish the daunting task of organizing all of our worlds information. The infrastructure of Google i s as immense as their mission. They own huge server parks, run some of the largest infrastructures in the world and own probably the largest and most important glass fiber backbone infrastructures in the world. It is nearly impossible for a piece of data traveling the world not to pass Google infrastructure. And they are extending their reach into all networks, including the mobile network.

Imagine the sheer computational capabilities, the ability to store endless amounts of data, the ability to transport unlimited amounts of data, and you are slowly getting the picture that competing with Google isn’t about a product or a service. You are competing with bricks and mortar, with iron, and motherboards, with glass fiber and server parks. The investments needed to overcome that are beyond any ones reach at this moment.

Does that mean that Google can’t be beaten? I doubt it. History learns that all empires that rise up at some point will come down again. But what is Google’s Innovator’s dilemma? Where will a disruption come from that can overthrow what Google brings on the table right now? I honestly don’t know. But with their ability to diversify, their incredible computational power and infrastructure, their current money generating platforms it has to be something that hurts them in their core. Forget about individual services, walled gardens, huge traffic drivers like Facebook or MySpace. Google’s walled garden is the entire planet. Who has the audacity to think big enough and overthrow that?