Archive for January, 2007

Money for Content and your Clicks for Free

Monday, January 29th, 2007

Web authors have long dreamed of making money from nothing, or in this case, the content they generate.  It’s rare to make a living from your articles; face it, most stuff isn’t very good.  Popular websites, like YouTube, MySpace, Wikipedia and eHow.com, have so far relied on freely-donated content generated by their users.  But as these sites gain in popularity and value, will users continue to donate their content for free?  How much did contributors gain from YouTube’s $1.65 BILLION purchase from Google?

In the past couple years, niche website owners and bloggers have taken advantage of Google’s AdSense program, which places ads on their website based on the text articles displayed, and then pays the website owner a split of the advertising revenues.  But in reality, most websites do not garner enough traffic to generate substantial revenues.  And video websites have had no such arrangement, except for www.Revver.com, which has not gained the traction of YouTube.

The tide may be changing.  YouTube’s co-founder announced Saturday (at the World Economic Forum in Davos, no less) that YouTube would soon share revenue with the contributors of the 70 million videos viewed daily.  This makes sense, given Google owns YouTube, that they would figure out a way to track both impressions, clicks and ads spread across thousands of videos contributed by thousands of amateur contributors. 

It’ll be interesting to see how the details shake out.  If I “copy” a segment of a TV show, and post it on YouTube, can I earn fees during the period before they take it down for copyright violation?  If I make a video and set it to music of an established artist, do I have to share my revenue with the artist?  If my kid uploads a funny video of himself and his buddies, does he have to pay income taxes on that revenue?

I predict that YouTube will open a real can of worms, once real money gets passed back to contributors — since tv, movie and record companies will definitely try to get a piece of that cashflow!

More interesting to me is Demand Media, a start-up Internet media company founded by Richard Rosenblatt (former CEO of MySpace/Intermix) and funded with $220m by VC’s.  Richard spoke at a panel discussion “The Changing Face of the Media Business” at a USC-sponsored LA County Tech Week event last week.

Richard revealed that Demand Media plans to announce revenue-sharing arrangements for content producers of their niche websites.  Given that Demand Media operates quietly, and very little is revealed publicly, this was quite a revelation.  Richard is a super-smart guy, and he was a sharp panelist.  Demand’s content strategy seems to be to start a large number of niche-oriented websites (say, for bird watchers), try out a number of revenue models (subscription, advertising, e-commerce), and then see which ones stick and gain user traction.

He announced that contributors would be paid on a yet-to-be determined formula based on page views, keywords and “other factors”.  Usually, advertising networks like Google AdSense will not reveal how much revenue a given article/page on a website generates, but if you’re large enough, says Richard, you can get that data.  Well, $220m in start-up funding should get Google’s attention.

I think the effect of these moves will be to enable better contributors to bubble up to the top, and soon there will be a number of major websites which will facilitate that movement.  Conceivably, good “amateur” content producers will give the “pros” a run for their money.

The rest of us will always be free to generate our own content, we just (still…) won’t get paid for it!

Posted in Internet, Rumors | 1 Comment »

LA Tech Week at USC – and Google’s Opportunity

Monday, January 29th, 2007

Had a chance to tour USC’s Integrated Media Systems Center (IMSC) as part of the LA County Technology Week.  Saw demos of some spectacular 3D imaging systems which make today’s Google Maps seem rather “flat”.  Two striking observations:  foreign nationals (primarily Asian) are doing the cutting edge research, and I predict Google will benefit hugely by this – but will the rest of us?

Established 10 years ago, IMSC is part of University of Southern California’s Viterbi School of Engineering and has the motto “Sensing the Edge – Serving a Need.”  They do graduate research in the areas of immersive sound, user interfaces, peer-to-peer video, virtual environments, etc.

The demo I witnessed was of the “Augmented Virtual Environment” (AVE), which combines 3D mapping data of a location, say, a city block, with real-time video images seamlessly superimposed across a large scene, say, people walking down the block.  If you’ve watched “24″, you’ll recognize this technology.  Absolutely awesome, technically.  A bit scary, if you’re nervous about “Big Brother”…

What struck me, in particular after asking around, was that 70-80% of the researchers in this graduate school are foreign nationals.  They are the brightest technically-minded people on the planet, and they have come to LA to do their work.  This is apparently not unusual at other American research schools.  Why is it that American citizens (even of Asian ancestory, for example), are not doing this research?  Are they not smart enough?  I hope not.  Do schools systematically favor foreigners?  I doubt it.  Is the work too difficult, and Americans would rather do marketing and business subjects?  This is my guess.

Now, I’m an internationalist, almost by definition, having lived abroad 13 years and in fact studied abroad.  So I’m actually quite proud that these young researchers believe that they can do their best work in the US, and ultimately, the world will benefit from their inventions.  I would hope that they in fact remain in the US, so that our economy can benefit from the fruits of their labors.  And we can learn from them.  If they move back to their home countries and work for a foreign company, all the expenses and profits of their future ventures will be spent abroad; not much direct gain to our economy.

Although perhaps their employers won’t be foreign.  Interestingly, Google has partly funded the AVE project with no strings attached.  This could have great commercial benefit for Google to learn about new technologies, even though the company has no prior claim to these, and the dollar amounts are pretty small. 

My assertion is that Google is essentially tapping into the well of the smartest people in the world.  Google needs to make sure they attract the best and remain the hippest place to work for the smartest people.  Much like Microsoft was through the 80’s and 90’s.  I believe Google funds research projects to hire future employees.  I even feel sorry for Microsoft…

Of course, other companies have done this for years, and even today, companies like Honeywell and Chevron fund projects at IMSC.  But none of them are as “sexy” as Google.  Google will be poised to profit from these smart employees, no matter where they choose to live.  So if they don’t remain in the USA, at least the rest of us can own Google stock and reap some benefit of their work.

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