Todays news: Google vs government

Putting Google’s business model at risk by forcing publishers to collect fees, makes the long term outcome of the new Spanish Google-tax highly unpredictable.

Network effects

On January 01, 2015 a new Spanish law comes into effect forcing search engines and third party news aggregates to compensate publishers for linking to their content. The new law, directed primarily at Google is often dubbed the Google tax, so mid December it pulled the plug on its Spanish News service, citing the service did not make any money and therefore it was unreasonable to ask for compensation. In 2008 Marissa Mayer claimed Google News was worth $100 million. Google is a business that wants to make money, not a charity so the service itself does not need to make any money to be valuable as long as it generates traffic for other parts of Google that sell advertisements. The service also increases brand awareness and creates goodwill which Google highly values. Without it, revenues from Google’s other services would probably be lower and leave more room for competition.

Been there done that

There have been several unsuccessful previous attempts to make Google pay for linking to publishers contents in Belgium and Germany but the new Spanish law is different because it makes it mandatory for publishers to collect fees from Google, creating a level playing field of sorts. Publishers worldwide can opt out from being indexed by Google News but for an individual publisher this amounts to suicide, Google will serve users the same information by providing a link to the story written by another newspaper.
Google’s dominant position is a near-monopoly, which allows it to pull its Spanish news service, knowing very well the pain it inflicts on Spanish publications. The only thing it has to do is sit it out. Were there ten competing news services it would not have this luxury and sharing the profits from linking to news stories would have become common practice years ago. Spanish publishers know they are cornered and in their desperation now have turned to a novel and bizarre idea by asking the government and the EU to force Google to keep its news service open. In doing so the publishers admit the old model where people read one newspaper is no more, just like people buying individual music tracks rather than full albums. No matter how the new law works out, publishers better hurry and start thinking how to adapt to this new reality where people consume snippets of news from multiple source. Building another news app for you paper probably won’t do it unless you enjoy the prestige of the New York Times. Engaging in a race to the bottom, writing infotainment stories not even worthy of the term pulp, rather than news people want to read and pay for, did not help either. In many European countries publishers have long enjoyed a sheltered existence because the local language served as a barrier to entry. They carved up the market among them and did not innovate. That era is over.

Staring contest?

The new law is a frontal assault on the fundamentals of Google’s business model and Google will never give in because once it does, other countries will follow and before you know it, governments, always desperate for other people’s cash, will start to tax other Google services. But what if the Spanish government does not give in either and a staring contest begins or even worse get the law implemented throughout the European Union to adopt the law?

Governments are justifiably worried about the decline of their newspaper industry. Forcing the right to be forgotten upon Google perhaps emboldened the Spanish government to take the next step. If a vacuum exists for long enough, somebody will step in. As long as the Spanish government is willing to let its newspapers suffer for a while by denying them access to Google News, there is a chance that some start-up will fill the gap, preferably a home grown one. This law is different, it is compulsory for all Spanish publishers, there is no opt in or opt out. Maybe the Spanish government is not as naive as people claim and is prepared to sacrifice some publishers to claim another victory over Google, a lifetime achievement for any politician. What politician doesn’t dream of bending the almighty Google to his or her will? Until that happens Spanish newsreaders will still be able to read the news, with a bit of extra effort.

Not everything is what it seems

Google is a near-monopolist whose vast power until now have allowed it to dictate terms and giving it a huge edge over its business partners. In no other part of the economy can a company apply its leverage to create a situation where using another company’s intellectual property for free is the best outcome the copyright owner can hope for. That is just one of the reasons the assaults on Google will continue and at some point some law or start-up will begin breaking the strangle hold of Google. That is the greatest threat to Google. It is not just the Spanish publishers who are under attack, Google is too. In the end it does not matter who wins, we consumers will pay for it, the only question is who gets our advertising euro’s.

Backdoor advertising or how not to improve your product

In a rather curious article Nieman Lab wonders why users do not like Context, Evernote’s new research feature. Hidden in the article lies the answer. Context is advertising cleverly disguised as generic search results.

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Evernote is an app for digital note taking, that synchronizes itself between your various gadgets. For most people Evernote is a product you either love or hate. I do not like it, but use it for my Saturday shopping list because it synchronizes without hassle between my pc and mobile phone and I am too lazy to look for an alternative.

Chaos and data insecurity

Distractions seems to be Evernote’s unique selling point. The app’s interface on my phone differs from the one on my desktop but both are equally chaotic. The dominant colour is bright – in your face – green, most likely designed to keep your eyes away from your notes. The various areas and buttons feel random, making sure you never find what you need where you expect it. The coup de

All of that would be acceptable if the app gave you full control over your information. Unfortunately the software does the exact opposite, which is unacceptable. It has a lot of built in intelligence doing all kinds of smart things you neither want nor need, but are unable to understand or turn off. It rather annoying by default automatically copies from your clipboard, adds all kinds of unwanted data if you do a manual copy paste and is an overall nightmare. I simply do not trust it with sensitive information.

Reinventing the wheel

Evernote also has a premium version without adds for which they now have developed a research tool called Context. Read the newspaper and stumble upon advertisements, thinly disguised as partner content. In a way the research suggestions are partner content from publishers who signed up with Evernote to promote their content. Basically what Evernote has done is create a search engine a la Google, the difference being that some content is available from behind a pay wall you cannot access through a search engine. That advantage quickly disappears once you realize that access to a few newspaper archives is no match for all the information out there on the internet. Add to that the fact that suggestions are backward looking – based on what you type – rather than what you want to know. Not surprisingly many users compare the new feature to an advertisement, which, of course, it is. Without realising Evernote basically admits as much:

“Unfortunately, ads take so many forms these days there’s no way to design a space that could not be perceived as an ad,”

The word perceived may tell more about the companies intentions than it would like to. Context was added to Evernote without the ability to turn the feature off, a quality it shares with most advertising. In what reads like partner content Nieman Lab pitches the product. Publishers get access to and audience that is otherwise hard to reach and the near geniuses at Evernote optimize the user experience bringing it to dizzying new heights.

“For publishers, Context is a unique, if niche, way to get their content in front of engaged, professional eyeballs. What Evernote hopes to offer those users attached to those eyeballs is a productive, predictive way to work the likes of which they’ve never experienced before.”

Yet in its subtitle the author started out wondering why people do not like it. Perhaps because it is superfluous feature that does not deliver. A search engine is still the most effective way if you are looking for information. Many business users, for instance bankers, have lots of paid databases at their disposal with all kinds of information. You can only add so many bells and whistles to a program before it looses all sense of direction, a risk not uncommon to journalism either.

Over-innovation limits Facebook’s future

Facebook has an innovation problem for which it compensates by “over-innovation” of existing products. That strategy backfires, hurting the company’s reputation, making it hard to expand into business software with its recently announced Facebook@Work, a tool for messaging and collaboration,

The company is successful because of its first mover advantage, networking effects and the backing of Silicon Valley’s venture capital community. Somebody had to create a global digital community after the novelty of the internet wore of. It turned out to be Mark Zuckerberg, but what qualifies Facebook to make the same inroads in other areas? It is just one of many companies trying to influence and predict what the future will look like, but changes often come from a direction nobody expects. That is why established companies buy start-ups when they miss a trend. Unfortunately it is often done without a clear sense of direction or good fit with the overall strategy.

We have to do something. Anything!

Facebook’s problem is over-innovation. Just take Whatsapp. It is huge in Europe. Nobody texts any more. Facebook paid 19 billion for it. Other than a pre-emptive strike to keep Whatsapp out of the hands of its competitors at any price that is a lot of money Mr Zuckerberg spent without a clear idea of how to recoup it.

When management is cornered there is always that burning desire to do something, anything, it does not matter what (other than think harder). For Mark Zuckerberg being so succesful at a young age that pressure is many times of what other CEO’s experience. He has to prove he is not a one hit wonder. His legacy is already at stake.

Often doing something means tweaking an existing product. That feels good. At least you have done something. Unfortunately “doing something” often means a step back from the user’s perspective. Extra bells and whistles, just for the extra bells and whistles, may make management feel like they tried but what they really did is annoy users by complicating and cluttering a product with unwanted or even outright annoying features. The original Whatsapp is a point in case. It is a good product, not to complicated, people love it and it works well. A few days ago in true Facebook style, its engineers pushed the blue ticks, probably to see what happened. People did not like it so they partially reversed it. At least management did something but at a cost. Those annoying minor “upgrades” do not add value nor do they help Facebook make money of its investment. The real risk is people switching apps in a heartbeat. Especially young people are not exactly known to be a captive audience.
Perhaps their experience in pushing the boundaries of of privacy – try first ask later – let them to believe this strategy might work. Changing the small print does not change the user experience but bells and whistles do.

Daddy CEO

Now move on to that CEO in the market for some new communication system. While reading an ugly letter from some vulture capitalist complaining about his companies’ under performing share price, his daughter sends him a picture using Whatsapp. A cute kitten, can she adopt her? “Please daddy, please.” He reads the message and the ticks turn blue so his daughter knows he read it. Nine year olds are not known for their patience. Daddy read my message 10 minutes ago but he doesn’t answer, nor does he in 30 minutes. After an hour the bomb bursts. “You do not love me daddy, you do not answer me. Why can I not have that kitten, she is so sweet. I’ll name her after grandma.”
She uses all the tricks in the book and finally daddy types back “OK”, just to have some peace and quiet. The next day he reads how Whatsapp partially reverses those blue ticks and he gets cross. Not much of a cat lover, a bit allergic to those fury hairballs, he regrets his decision for a long time to come, all because of Facebook had a hit and miss.

Out of its league

IT software in a corporate environment is very different from a free app or Facebook account. Software implementation in large companies run often over budget, are high risk and they are  complicated projects, whole graveyards are filled with managers who fell on their sword promising to deliver the impossible. Switching costs are high so basically you buy yourself a ball and chain. Facebook’s reputation for “see what happens, we can always roll it back” will make it a hard sell to convince businesses to use their product. Facebook needs to start focussing on customer needs rather than its own. The company misses a proven track record to convince corporations to use its messaging tool.
In the post Edward Snowden era corporate security has become a major factor in decision making. For non-US companies buying IT systems from an American company bound by numerous known and unknown laws to hand over information is a risk. not only for Facebook, but all American companies. That will add to the challenge as well.

Perhaps taking a clue from the Google play book, Facebook should bring in an external CEO to guide Facebook through its next growth phase, redesigning its reputation while Mark Zuckerberg redesigns his wardrobe, starting with shedding his hoodie.

Uber is not a tech startup

Bloomberg columnist Katie Brenner wonders “what happens when you’re pushed out of the tech startup club”, but Uber, a smartphone app to order a taxi, is just another 21th century company.

Is Uber a tech startup or is it a company that acts as intermediary between passengers and drivers, using custom software to take their ideas from the drawing board to their users? Software these days is just another tool for business. Just because Uber (kind of) created a hype around its product does not make it special. Barriers to entry are pretty low, Uber’s vicious attacks on competitor Lyft illustrate just that. What if Uber wasn’t an app for taxi’s but restaurants? Would that generate the same kind of publicity and valuation or is it the underlying mall-functioning taxi market that causes it? Don’t believe the hype, it is a bubble.

The folly that is listicles

Stephanie Denning writes in Forbes why millennial love listicles, articles in the form of a list.  Like most modern journalism the headline at best partially covers what follows.

Listicles are snacks from a user’s perspective and fillers from an editor’s perspective. Cheap to make with lots of nice pictures, no need for people who can write, my guess they will be computer generated within a few years. The fact that they are easy to share does not mean people actually read them. In fact most things that people share they did not read before they shared the social media button.

Even listicles require minimum standards, they compete with Snapchat and Instagram for screen time. Some publications can get away with listicles, think of “5 ways to turn a bad hair day into a good one” but when it comes to actual information rather than entertainment most people prefer an article written by someone who knows what they’re talking about rather than some list. An article reads easier and a well written article has a summary at the beginning so the reader can asses if the article is of potential interest to him.

An editor who clearly is not a millennial (but neither am I) invites one to write about how a younger generation thinks about the important phenomena of listicles only to explain in the comments what the author really means: “Stephanie is, I think, suggesting…” Yes Dad.

There is this whole silly notion that sharing is the new content but what actually happens is that all those magazines and websites are bleeding red ink because they have been reduced to content provider to fill the framework that is social media. In a desperate attempt to escape the clutches from this James Bond 2.0 type of villain they suggest “now read this next” at the end of the article (if you are lucky) which does not work because the reader only has a casual interest in any particular publication.

Clicks do not make money, nor do shares. Good journalism costs money but do not worry if Forbes is to perish no doubt some one will create a listicle of all the things management could have done to prevent it.