The Pizza Paradigm

I was reading a newspaper article the other day about enhanced directory assistance services. The writer had conducted a bake-off between the various services to determine which one could most quickly, easily and dependably connect her with a pizza.

It seems the pizza paradigm is alive and well. Over the years it seems every time some new search technology is unveiled, its proof of concept is illustrated by using the example of ordering a pizza. Yellow pages conferences were particularly notorious for this. You could leave some of these conferences convinced that all of America spends its entire waking day in search of its next pizza.

Humorous? Yes. Harmless? Perhaps not. What has always bothered me about the pizza paradigm is that it's a very poor example, and when your thinking is shaped by a poor example, you overlook a lot of potential issues.The reason many cling to the pizza paradigm is because pizza is ubiquitous and commoditized. Everyone knows what a pizza is, thus freeing the new technology from the complexities of illustrating it (a real issue for mobile devices). As a commoditized product, its price doesn't vary too much, freeing the new technology from having to offer price comparisons, or worse, having to gather price information from thousands of pizzerias. As a product that isn't as heavily branded as many others, the technology is free to assume that proximity to a pizzeria matters most to consumers. This allows developers to showcase gee-whiz location technology using the dubious assumption that all consumers view all pizzerias as equally good. Pizza is also largely free of value-added content opportunities. Not too many pizzerias are rated or reviewed, so there's no need to offer this information. In short, pizza is easy.

As you can see, the pizza paradigm allows technologists and yellow pages publishers to convince themselves that cool new software can improve a poor underlying dataset. I pick on technologists and yellow pages publishers because both groups have a long history of viewing databases as a necessary evil rather than an asset. One great example of this is the many online yellow pages that offer interactive maps and detailed driving instructions. Nine times out of ten they can't tell you if the business in question has what you need, but boy can they tell you everything about how to get there!

My point is simple: always push past lowest-common-denominator, simple illustrations to determine if there is a real value-add being discussed. More times than not, you'll find you are looking at a technology in search of an application, or great technology being driven by a thin dataset. Technology by itself is rarely the whole solution to a problem in the wonderful world of content.

LoopNet Files For Initial Public Offering

LoopNet, Inc. announced that it has filed a registration statement with the Securities and Exchange Commission relating to a proposed initial public offering of its common stock. The shares in the offering will be offered by LoopNet and certain selling stockholders. The number of shares to be offered and the price range for the offering has not been determined.

Credit Suisse Securities (USA) LLC will serve as the sole book-running manager for the offering, with Thomas Weisel Partners LLC, Pacific Crest Securities Inc., and Pacific Growth Equities, LLC acting as co-managers.

LoopNet is the leading online marketplace for commercial real estate in the United States, based on the number of commercial property listings and registered members. Our online marketplace, available at www.LoopNet.com, enables commercial real estate agents, working on behalf of property owners and landlords, to list properties for sale or for lease by submitting detailed property listing information in order to find a buyer or tenant. Commercial real estate brokers, agents, buyers and tenants use the LoopNet online marketplace to search for available property listings that meet their commercial real estate criteria. By connecting the sources of commercial real estate supply and demand in an efficient manner, we believe that LoopNet enables commercial real estate participants to initiate and complete more transactions more cost-effectively than through other means. LoopNet also delivers technology and information services to commercial real estate organizations to manage their online listing presence and optimize property marketing.

Advice and Prosper

A press release crossed my desk today from New York 411, a database of entertainment industry resources, and a sister publication to the well-known LA 411 guide. They're both part of the Variety Group at Reed Business Information.The subject of the press release was that New York 411 had held its first-ever advisory board meeting. This being the entertainment industry, the meeting didn't take place in some windowless conference room, but rather at New York's trendy W Hotel. Ah, Hollywood!

What's significant, however, is not the venue, but the fact that it represents a refreshing new emphasis on the time-honored notion of the advisory board to help publishers stay closer to their markets while garnering valuable ideas and insights from industry leaders. The publisher of New York 411, Kevin Davis, perfectly described the power of the advisory board when he noted, "The New York 411 Advisory Board is part of a continuing effort to create a sense of connection among community members and to keep 411's finger on the pulse of what is happening today in the New York production world."

While many data publishers maintain advisory boards of one type or another, most are little more than "masthead enhancers" with many publishers regarding them as purely cosmetic. Relatively few publishers maximize them for what they really can be: dream focus groups that you'd never be able to assemble if you called them focus groups.

An advisory group is a publisher's opportunity to assemble prominent leaders from the markets they serve in one place and pick their brains and get their ideas on how to evolve their products, and better respond to emerging market needs. An advisory board can also provide an early warning system in terms of new competitors as well as new opportunities. By the way, the more you engage your advisory board and make them feel that they are really influencing and shaping your product, the more likely they will say positive things about your product to others in the industry -- adding real buzz you couldn't buy to the focus group you couldn't buy.

Advisory boards are just one of a number of ways you should be actively engaging with your market, but they are an important one, and inexpensive to boot. If you haven't done so already, take a fresh look at this often under-utilized asset. These days, you really need to become one with your market. And hold that thought. We'll pick it up and amplify it at InfoCommerce 2006 October 10-12 in Philadelphia where becoming one with your market will provide the central theme. Join us and be prepared to be challenged and inspired to rethink not only your how you publish, but what it means to be a publisher today.

Getting Rich With Data

For as long as I have been in this business, industry magazines and business databases have been largely separate worlds. Sure, there are lots of big publishers that have both strong trade magazines and strong industry databases, but because they are under common ownership hardly means they work together. Indeed, many of these "sister" properties couldn't be further apart.

There are a number of reasons for this. First, the big B2B publishers have typically tended to organize themselves by media: magazines over here, data products over there. Even when these publishers try to organize themselves by market, you just get a variant on the same result: automotive industry magazines over here, automotive data products over there. This works to create walls.

Second, there have been myriad cultural issues. Trade magazines may not be too exciting, but they're downright glamorous compared to trade data products, so it was the rare magazine editor who expressed any interest in data. On the advertising side, the big, quick dollars have always been in selling magazine space, relegating data products to "filler" status, if they weren't ignored totally.

Third and most importantly, while a magazine and data product might track the same market, they were rarely integrated internally, meaning there was no content leverage occurring, and this further exacerbated the cultural issues.

The bottom line on all of this is that for a long time, magazines were a flourishing business, and could make publishers lots of money, relatively quickly and dependably, making it hard to get excited about dependable, but typically much smaller, data products.

Magazine publishers are just coming out of one of the worst slumps ever. Yet there is a palpable sense in the industry that the heyday of B2B magazines has passed.

That's why magazine publishers are turning to data products. They've created a name for this new-found attraction: "rich data." With the proposition that data products may be their most significant new growth opportunity, publishers are showing a lot of new-found respect for data products. But the learning curve is amazingly steep and there are other hurdles as well.

Some publishers have so eviscerated their publishing franchises through aggressive cost cutting that there isn't enough of a platform left to build leveraged data products. Some are candid that as much as they want to move into rich data, they can't -- or won't -- make a major investment in it. Most stunning of all are those publishers whose parent companies already own impressive rich data products they could harness immediately -- but don't recognize them or don't know how to leverage them.

Prognosis? I am among those who believe that magazine and data businesses can work spectacularly well if put together properly with all points of leverage exploited. I also believe that the magazine industry urgently needs a diversification strategy to maintain its growth and even to hold onto its existing market franchises. How will it play out? I think increasingly we are seeing magazines moving into partnerships and alliances with data publishers, and there will be frenzied bidding for those few remaining database properties that haven't already been acquired. This is good news for our industry, but it's also the right course for magazine publishers. There's room for us all to get rich with data.

Monetizing the Mailbox

Well here's something I never thought I would see: Yahoo and AOL are going to try to implement a program to charge companies for assured delivery of email to their base of email users. How dumb is this? Let us count the ways.

First, it's intrusive. Yahoo and AOL are telling their customers that they are going to monetize their mailboxes by selling access to them; pay your money and you're in. In effect, they are telling email users they no longer have control of this tool they use for their personal communications ... it's been turned into just another advertising billboard. Okay, Yahoo email accounts are free, so maybe like Gmail, looking at advertising is the price you pay. But AOL?

Second, since AOL and Yahoo can't totally restrict access to user email accounts, the offer is being positioned as "pay us for assured delivery or take your chances with our spam filters." Has there ever been a stronger financial incentive to make spam filters even tougher and more stringent? I see a ticking time bomb here, especially at AOL, which has a long history of choosing quick cash over customer satisfaction.

Third, to draw a highway analogy, this plan would be like setting up a toll-booth for the express lane only, leaving the local lanes free of charge. As you will instinctively see, this is not something likely to improve the overall flow of traffic.

Fourth, AOL and Yahoo are saying this new program will help root out scammers and phishers from user mailboxes. In fact, all the program will do is highlight ads from trusted senders. Other spam email will look just like it did before this program. Presumably there will be no "trusted" mail from deposed Nigerian oil ministers needing to borrow a bank account to temporarily park their millions. Yet the nature of many of these scams depends on the messages not looking like they were sent in bulk, so lack of certification may actually make some of them seem more legitimate.

Fifth, what if this program actually works? If users start trusting these trusted offers, the incentive to hack the system will be huge. And the first time that happens, Yahoo and AOL will quickly find themselves knee-deep in lawsuits.

Sixth, AOL and Yahoo are wrapping themselves in the flag, suggesting this program might somehow reduce spam overall. Nonsense. You don't deal a death blow to spam by imposing a fee on legitimate emailers. And as everyone knowledgeable about the issue knows, the only way to truly address spam is to address it at the point of origin, not its destination. This is nothing but a quick grab for cash.

I could go on, but I think you see my point. These companies may be big, but the Internet is much, much bigger. And as the now time-tested saying goes, "don't bet against the Net."

Update: This story is moving in Internet time. After a large outcry, AOL has now announced that while it isn't abandoning this new program, it has agreed to maintain its free white list for mailers as well as its free "enhanced" white list, both of which allow trusted companies access to AOL subscriber mailboxes. But as with most things AOL, while it's giving you something with one hand, the other hand is grabbing for your wallet. It seems that the free white list program actually doesn't assure delivery of messages, making it only slightly better than useless. Further, the free "enhanced" white list program isn't something you can apply for; AOL decides who participates in this exclusive club. The good news? If you're willing to pay to have your mail delivered, you, too, can enjoy all the benefits of club membership.