BuzzMachine

Steve Baker’s book, The Numerati, is about tracking and predicting people’s behavior based on their data, and so he and his publisher are taking a page from the book to try to target advertising for it.

Somewhat related: I recommend Cory Doctorow’s new short story, The Things that Make Me Weak and Strange Get Engineered Away, an allegory for the age of tracking our data.

For those who were interested in this post asking about sponsorship for my book, please see the discussion there and Rick Smolan’s answers to some of their questions and concerns.

I was talking with a media exec who started a blog ad network — bless him — but who I thought was taking too high a share of the revenue: at least half. That’s a natural reflex, perfectly understandable: Get what you can. Other networks do that. But the problem for me is that by taking too much, he excluded me from the network — I’m sticking with BlogAds, which takes only 20 percent — and the problem for him, then, is that this slows the growth of his network and a smaller network is a less valuable network. He understands this will because he’s a smart media guy. He wants a large network.

I was actually just trying to channel the network wisdom of Yochai Benkler, author of The Wealth of Networks, and Tom Evslin, who had talked about how to grow networks at a Union Square roundtable about collaborative production more than a year ago. I wasn’t sure I was getting it right, so I went to Evslin’s blog and asked him for a reprise, which he has just provided, brilliantly. I’ll summarize:

The first counterintuitive lesson: Companies that build large networks on the web don’t charge users what the market would bear; they charge as little as they could bear. That is how they maximize growth and value for everyone in the network on top of the platforms they provide.

In his blog post, Evslin takes this a step farther, pointing out that if you run a network that depends on scale, such as an ad network, then the more pages you have to sell, the bigger and better advertisers you can attract and the more you can charge. So if you take a smaller commission for each ad in the network, more sites will join it with more pages, which can now be sold at a higher value.

It gets even more head-scratching: Evslin argues that if you are too profitable, then you will attract competitors who will undercut you and steal market share. “If you’re doing well but running at or close to breakeven,” he explained, “you’ve made it impossible for anybody to undercut you without running at a deficit, which is hard to get funding for.”

So, to sum up: Take the minimum value out of the network to make it grow to maximum size to enable its members to charge more for their value while keeping costs and margins low to block competitors.

That’s not how old networks operate. Cable companies wrap their wires around you and squeeze maximum fees out of you. Ditto phone companies, newspapers, and retailers. But they all face competition from next-generation networks.

craigslist is the Evslin poster child. It foregoes revenue for most listings in most markets—charging just for job ads and for real estate in a few markets—and that turned it into the critical-mass marketplace for most listings. “If Craig now attempted to maximize revenue by charging for a substantially higher percentage of ads, a door would be cracked open for competition,” Evslin writes. “There is no chance at current rates for a competitor to steal Craig’s listings (and readers) by charging less.”

I’m writing about the network model in the book and this will also be a key topic of discussion in our event at CUNY on new business models for news; that’s why I’m talking about it.

A few fascinating tidbits from Jim Cramer’s interview with Google’s Eric Schmidt today:

* Google accounts for 0.7 percent of GDP, according to Goldman Sachs.
* Cramer says the ad market is $600 billion and asks whether Google could get 10 percent of that. Schmid says, “Well, we could,” and then corrects him: It’s a trillion-dollar market globally.
* Schmidt says Google will make more on mobile than on desktops because mobile is more targeted and Google targets.
* GMail outage? “Taht was a screw up. We fixed that. We’re not perfect.”
* What would Google make by adding sponsorship to its home page? “Some number of billions od dollars.” Why not do it? “People wouldn’t like it. We prioritize the end-user over the advertiser… We’re not going to sell it.”
* Google is 52 percent international revenue; Schmidt thinks it will go to 65-35.
* About getting too big: “How do we behave? Not the way Microsoft did. I would never do that.
* “I never worry about Microsoft.”

I sent the last of my first draft of the book to my editor last night. I believe the saying is, woot. I’m headed in this morning to go over it with him for my first revision. We’re on a fast track (for book publishing): It will be out in January.

As I near the end of writing my book, one lesson that has struck me is about the will of most people to create, and the new possibilities the Google age brings us.

One survey I quote says that 81 percent of us say we have a book in us. Another survey says that a coincidental 81 percent of young people think they have a business in them. We make tens of millions of blogs. We take hundreds of millions of Flickr photos. A few hundred thousand people write applications for Facebook. Paulo Coelho (see the post below) asks his readers to make a movie of his book and they eagerly do so. Stephen Colbert challenges his viewers to remix John McCain and they do. Howard Stern doesn’t even ask his listeners and they produce no end of song parodies and anthems to Baba Booey. The art and entertainment of Lonely Girl 15 becomes not just the videos they make but the videos viewers make. Every minute, 10 hours of video are uploaded to YouTube. People create T-shirt designs on Threadless and sneaker designs on Ryz and things of all descriptions on Etsy. BMW invites drivers to color a car and 9,000 people do. And on and on.

This has surely always been the case. The internet doesn’t make us more creative, I don’t think. But it does enable what we create to be seen, heard, and used. It enables every creator to find a public, the public he or she merits. And that takes creation out of the proprietary hands of the supposed creative class.

Internet curmudgeons argue that Google et al are bringing society to ruin precisely because they rob the creative class of its financial support and exclusivity: its pedestal. But internet triumphalists, like me, argue that the internet opens up creativity past one-size-fits-all mass measurements and priestly definitions and lets us not only find what we like but find people who like what we do. The internet kills the mass, once and for all. With it comes the death of mass economics and mass media, but I don’t lament that, not for a moment.

The curmudgeons also argue that this level playing field is flooded with crap: a loss of taste and discrimination. I’ll argue just the opposite: Only the playing field is flat and to stand out one must now do so on merit - as defined by the public rather than the priests - which will be rewarded with links and attention. This is our link economy, our culture of links. It is a meritocracy, only now there are many definitions of merit and each must be earned.

We have believed - I have been taught - that there are two scarcities in society: talent and attention. There are only so many people with talent and we give their talent only so much attention - not enough of either.

But we are shifting, too, from a culture of scarcity to one of abundance. That is the essence of the Google worldview: managing abundance. So let’s assume that instead of a scarcity there is an abundance of talent and a limitless will to create but it has been tamped down by an educational system that insists on sameness; starved by a mass economic system that rewarded only a few giants; and discouraged by a critical system that anointed a closed, small creative class. Now talent of many descriptions and levels can express itself and grow. We want to create and we want to be generous with our creations. And we will get the attention we deserve. That means that crap will be ignored. It just depends on your definition of crap.

This link ecology does potentially change the nature of creativity. It makes it more collaborative, not just in the act but in the inspiration. Coelho’s Witch of Portobello is the spark that leads to a movie made by its readers. Same with Stern, LonelyGirl, Colbert. Perhaps the role of the creative class is not so much to make finished products but to inspire more to be made. It is the flint of creativity. It’s the internet - Google, Flickr, YouTube, and old, mass media as their accessories - that bring flint and spark together.

I’ve long disagreed with those who say that copyright kills creativity, for I do believe that there is no scarcity of inspiration. But I now understand their position better. I also have learned that when creations are restricted it is the creator who suffers more because his creation won’t find its full and true public, its spark finds no kindling, and the fire dies. The creative class, copyright, mass media, and curmudgeonly critics stop what should be a continuing process of creation; like reverse alchemists, they turn abundance into scarcity, gold into lead.

When we talk about the Google age, then, we do talk about a new society and the rules I explore in my book are the rules of that society, built on connections, links, transparency, openness, publicness, listening, trust, wisdom, generosity, efficiency, markets, niches, platforms, networks, speed, and abundance.

I start by talking about business: how all this affects company, industries, and then institutions and how to react and find advantage in this change. But it will also affect life, and that is what I am writing in the last section of the book. I’m doing that starting today so, as always, I’d be grateful for your generous, wise, open, and abundant thoughts on the topic. Thanks.

: Other categories of ideas I think I’m dealing with in this ending on the impact of Google on society: its impact on our relations; on our attitudes, ethics, and skills; on our institutions and organization.

: LATER: In the comments, Sean says I should link to Richard Florida’s books on the creative class. I have to confess that I bought one of them but never got through it. Books are such an echo chamber.

Here is the bookend to my Guardian column about Paulo Coelho, Googley author. He writes in The New Statesman about his journey online. Snippets:

So I’ve spent a lot of time on my website, knowing that it is one of the rare public platforms, besides the traditional book signing, open to me. Yet, despite the success of the site and newsletter, I felt that more could be done - but what? The answer is the result of ten years’ fascination with the medium. . . .

I knew from previous experience that the free-sharing of my book over the internet would increase its visibility, so I didn’t hesitate to post it on peer-to-peer websites and on my blog.

The more I’ve ventured into the virtual world, the more I have realised that the internet has a logic of its own and its credo is: share everything freely.

When I was with Coelho, I asked him whether he’d ever write a book about the internet. He said no. I still won’t bet against it. He sees as only he can a mystical world in those wires and tubes. It’s a magic land, the internet.

My Guardian column this week is an interview with the Googliest author I know, Paulo Coelho about the power of free and friendships online. The lede:

Paulo Coelho certainly has nothing against selling books. He has sold an astounding 100m copies of his novels. But he also believes in giving them away. He is a pirate. . . .

I’m writing the section of my book about publishing and exploring new models. Would love, as always, to get your thoughts on what I’m writing:

Rick Smolan has found another way to support his gorgeous and thus expensive collaborative photography books: sponsorship. He is best known for producing America 24/7, a book chronicling one week in the life of the U.S. with 1,000 top photojournalists. More recently, he produced America at Home, with a companion for the U.K., and it was underwritten by an obvious sponsor: Ikea. (He also had another innovative idea: You can pay to get the book with your photo on the cover.)

So here’s the question: Why shouldn’t books have ads to support them as TV, newspapers, magazines, and radio do? Ads in books would be less irritating than commercials interrupting shows or banners blinking at you on a web page. Would it be any more corrupting to have ads in this book than next to a story I write in Business Week? Well, you’d have to tell me. If I were to have had a sponsor or two for this book, who would it have been and what would you have thought of my work as a result? If Dell bought an ad—because, after all, I now have nice things to say about them—would you have wondered whether I’d sold out to them? I would fear you’d think that. What about Google itself? Obviously, that wouldn’t work. Yahoo? Ha! Who might want to talk to you and associate themselves with the thinking in this book while also helping to support it? I’m not sure. Let’s discuss that for the paperback I hope gets published. Come to my blog and tell me what you think.

….So that’s what I wrote in the manuscript. But, of course, we can discuss this now. Do you think I should take a sponsor or two for the book (I’m not saying it’s an option; this is a discussion)? If so, who would make a good sponsor? Who wouldn’t? Would it affect your thinking if a sponsored book cost less? Should I then wish for a sponsor not only because it reduces the risk for the publisher and me but because it means more books could be sold at a lower price spreading the ideas in the book farther?

Thoughts?

: If we had any guts - and we likely don’t - we could auction a sponsor position on eBay. How’s this for a model: The sponsor, like a publisher, pays an advance but commits to pay a CPM based on copies sold but on a scale that’s reverse that of publisher commissions (the more copies that are sold, the lower the CPM goes).

Maybe that could be a model for news sponsorship, too: Sponsor a story and the more links it get, the more audience you get, the more you pay at a lower rate.

: LATER: Rick Smolan asked that I add this note from him responding to some of the comments:

1) I completely understand the skepticism many of your readers expressed at the mental image of a sponsored book - what comes to mind is a product dripping with logos and not so subtle product placement - an annual report disguised as journalism.

2) The truth of the matter, at least as it pertains to the books that we produce, couldn’t be further from that. Don’t think advertising - think PBS Special: “The Following program is made possible through a generous grant from X Corporation”. That’s it. Period.

3) As far as logos and credits for sponsors, if you look at AMERICA AT HOME or any one of the other books we’ve produced, the first page of the book carries the logos of the sponsors and at the end of the book is a page explaining their contribution to the project. That’s it.

4) Because of the support of our sponsors (which include Apple, Google, Ikea, HP, Fedex, Kodak, Adobe, and dozens of other Fortune 500 companies) more than five million copies of our books adorn peoples coffee tables around the world.

5) Every single book we’ve produced for the past 25 years has been sponsored. Why? Because no publisher would publish our first book, “A Day in the Life of Australia” we went to the business community in Australia and self-published the book - it went on to become the #1 book in Australia and sold 200,000 copies (in a market where 10,000 was a best seller).

6) After that first success we certainly had publishers interested in being our publisher but our projects (which usually include not only a large format illustrated book, but also a TV show, website, exhibits and worldwide PR) cost millions of dollars each to produce and no publisher is willing to risk such large amounts on a single title.

7) In terms of journalistic integrity, our agreement with sponsors is that they get no editorial rights of censorship or input. In order to be able to engage the talents of photographers and editors from Time, Newsweek, Fortune, Forbes, The New York Times, National Geographic, The Washington Post, etc we have to ensure this editorial independence.

The fact that Time, Newsweek, Fortune and US News regularly feature our books on their covers (and even mention the role of the sponsors as part of the story) speaks volumes.

9) In addition to the funding our sponsors also run full fledged marketing campaigns to promote their sponsorship. Kodak for example has run full page ads in the Wall Street Journal promoting the fact that they were the sponsor. Nikon ran full page ads in Newsweek. Apple created promotional videos.

10) Ironically, a company has a much greater chance of having its products featured in one of our books if they AREN’T a sponsor. That’s because we actually remove any photo that contains a sponsors products to avoid the impression that we are doing product placement. Our current book AMERICA AT HOME is a perfect example - it was sponsored by IKEA yet there isn’t a single photo of an IKEA product in the book.

The one nod to IKEA is that when book buyers order a customized book featuring their own family or home on the cover those personalized covers carry the IKEA name (note: about 21% of the people who purchase this book are actually customizing it - an amazing trend in publishing). Not a single person has complained about this - probably because people seem to have a great deal of affection for IKEA.

Just listened to another great episode of Peter Day’s BBC business show, this with Ashraf Ghani, former finance minister of Afghanistan, who said that when he came in, the entire country had 100 cell phones. Today there are 4 million. The telecom industry is the No. 1 producer of tax revenue in the country. It has enabled open markets where buyers and sellers can avoid middlemen, as elsewhere in the developing world. When there was a possible stalemate in constitutional discussions a few years ago, Ghani said constituents used their phones to call their representatives to make it clear they wanted a deal done and he believes this political connectivity helped bring it to pass. And he said that people are simply more efficient because they no longer need to journey three days to go find out whether Mom is fine; they can now just phone home. Connectivity is a platform for society. (If only our phone and cable companies saw it that way.)

Bob Garfield declares victory against Comcast from his ComcastMustDie shock & awe. What, so he installed Verizon?

No, he points to stories in the Times and Post about the new Comcast attitude and praises Comcast for having…

…institutionalized the practice of listening, in live forums around the country but especially on the internet, to resolve individual problems and learn about the (many, gaping) holes in its customer-service operations.

Does this solve the biggest part of their structural problems? No, not by a long shot. They acquired cable systems too fast and have been inexcusably slow in building network-wide infrastructures for installation, repair and the most rudimentary customer-relations management. In short, they still totally suck. (As Comcast quality czar Rick Germano euphemistically frames the situation, “There’s a lot of upside for us.”) But they are investing a lot of money to build those very structures, and have turned a corner in corporate culture.

Glad he pointed that out. The only real solution to bad customer-service and public-relations problem is to have a great product and service. No — no — cable company is there yet because I argue that they are still built around telling us what we cannot do (no, you can’t watch what you’ve bought whenever and wherever and on whatever you want; no, you can’t just plug in your expensive and sophisticated TV but you have to put this clunky, stupid box inbetween you and the world of possible entertainment and information; no, you can’t host anything to the world because we don’t think you’re creative; no, you can’t download that much; no, you can’t upload that much; no, you don’t have a life and so you have to wait all day for the cable guy). Cable companies are still built on fucking us. But at least now they’re grinning while they do it.

Nonetheless, give credit where it is due: Comcast has made a number of important changes in its relationship with its now-empowered customers and, like Dell, it has benefitted as a result. They also vow to take a next step and within a year play host to a ComcastMustDie on their own. But why wait a year? In the spirit of cooperation, I’ll suggest that they can do it now with GetSatisfaction.com — which they apparently are using, with Comcast employees interacting there — and with an equivalent of MyStarbucksIdea and Dell IdeaStorm — where people can make real suggestions.

In any case, the cause of vendor relations management marches on.

I’m a little stuck on teh chapter I’m writing for my book now: Googlewood, how movies, TV, and entertainment will change thanks to Google. I have plenty to say but I need one of those great surprising insights you all have (flattery will get me everywhere). So if you don’t mind, please help and share how entertainment can and will change in the Google age. As always, thanks!