Hammer Time

Who can resist the opportunity to talk about the new search engine venture announced yesterday by of all people the rapper M.C. Hammer?

 There are so many ways to come at this announcement, most of them humorous and pun-laden. Indeed, the announcement seems to have been more interesting to the entertainment press than the tech press.

 The details are sketchy, and the site itself is "pre-beta" (which may or may not be the same as "post-alpha"). We do know the site is named WireDoo (which my spell checker wants to correct to "weirdo") and its tag line is "search once, see what relates."

 WireDoo is described alternatively as "deep search" and "relationship search." The goal, apparently, is to provide sort of a split-screen search results page: traditional links on the right, and content that is related, but that wouldn't normally come up in a search of the word or phrase being searched on the left. Sounds intriguing, especially since so much of this related content seems to be data-oriented: percentages, statistics, ratings, lists, etc. A search for "car," for example, might pull back related data on operating costs, MPG, insurance costs, unit sales, etc.

 It's an interesting if not entirely novel concept, where success lies in execution. If Mr. Hammer can pull this off, I think he's entitled to crow, "U Can't Touch This," because this type of automated curation has inherent value in providing context and, if you remember the early days of search, you'll remember this term: serendipity.

 Intriguingly, most of the other search engines launches (DuckDuckGo, Blekko) employ a reductive strategy designed to filter and focus search results. Mr. Hammer arguably looks to expand search results, but with a high degree of relevance.

 M.C. Hammer joins the growing list of celebrities (think Ashton Kutcher and Justin Timberlake) who are investing in technology, a sure sign to some that we are in the late stages of a tech bubble. That view is only reinforced when Mr. Hammer, when asked why he is investing in a new search engine of all things, replied "Why not swing for the fences...no one is playing for singles in the Valley anymore."

 New search engines, tech bubbles, celebrities ... mix it all together and you get one thing for sure: complexity. And it's exactly this complexity we'll be tackling head-on at DataContent 2011 -- just two weeks away. Don't miss this unique opportunity to sharpen your understanding of where things are headed --register today!

If You Compile It, They Will Come

Can a website offering 1,300 reviews have any hope of competing against a website with over 50 million reviews? Possibly. It's all how you go about it, and it speaks to some larger themes in the industry. Luckily, we have a real-life example to examine.

You likely know about travel industry review behemoth TripAdvisor.com. It recently celebrated reaching its 50 millionth crowd-sourced review, largely of hotels. There's little question that TripAdvisor is the place to go if you want the real story on a planned hotel stay. Or is it?

In reality, TripAdvisor has lots of issues surrounding it. First, while everyone in the reviews game believes more is better, I'd suggest TripAdvisor has reached a point where it has a "big data" problem of its own: more information than can be usefully processed or analyzed by the user. My TripAdvisor experiences have always been the same: lots of reviews available, with half of them extremely positive and half of them extremely negative. I leave every TripAdvisor session paralyzed by indecision: the hotel could be great or it could be horrible. In short, I generally leave feeling more worried than informed.

Layer on top of that increasingly vocal complaints about hotels gaming TripAdvisor, and fraudulent reviews (both good and bad). There have been news stories suggesting a whole cottage industry has sprung up to post fake positive reviews (for your hotel) or fake negative reviews (for your competitors). Indeed, one reputation management firm is now publicly claiming that as many as 10 million of TripAdvisor’s 50 million reviews may be fraudulent.

Finally, TripAdivsor has adopted a number of opaque processes to fight false reviews with automated tools. As a consequence, many of the reviews submitted never appear online at all. Presumably these are false reviews, but who knows for sure? The deeper you dig, the more the wisdom of crowds seems to be more like a Tower of Babel.

The fix to what ails TripAdvisor may be an entirely different approach. Enter plucky star-up Oyster.com that supplies one review per hotel -- its own. It sends its own people undercover to the hotel, and they write detailed reviews documented with candid photos. Oyster.com currently has only 1,300 reviews (perhaps 1% of all hotels worldwide), but its reviews are detailed, unbiased and unambiguous. It's not a new idea; a service like this has been available to travel agents for years. But this is a consumer play, one that's going toe-to-toe with one of the biggest review sites on the web.

Do they stand a chance? Well, it's inherently fraud-free, it provides detailed and comparable information, it makes it easy for me to reach a conclusion ... in short, what's not to like? Obviously, it's got to scale its coverage quickly, and that's not easy or cheap, but the content is compelling, trustworthy, definitive and let's not forget, proprietary. Monetization? Through hotel bookings tightly integrated with the content.

With all the focus on crowdsourcing and automation technology, maybe there is a place for good, old-fashioned human writing and editing after all!

Evidence-Based Selling

Rumors abound that Indian outsourcing giant Infosys is close
to a deal to acquire the healthcare information business of Thomson Reuters. If
the deal is in the $700+ million range as reported, it would be the largest
acquisition made to date by Infosys.

Has Infosys gotten religion about the content industry? It's
possible, but it seems to be the most immediate gain to Infosys would be a huge
boost to selling its existing services to healthcare organizations, primarily
in the United States.

I realize this may seem to be an odd stance for me to take.
After all, I have been one of the loudest proponents of the power of software
tools to increase the value of content, particularly data content. Indeed, many
of the most successful data publishers today are so successful because of their
strong and early embrace of integrated software tools. Yet as I think about it,
I see an interesting asymmetry: while data content companies clearly strengthen
themselves by developing software tools, it is not so clear that software
companies strengthen themselves by developing or acquiring data content.

Yes, Infosys can certainly boil some of the IT and editorial
costs out of the Thomson Reuters healthcare business, but that's hardly enough
reason to make such a large acquisition outside of its core competency.
Similarly, Infosys could arguably help the healthcare business get to market
faster with new platforms and new products. But if IT investment was truly all
that was holding back the healthcare group from certain growth, Thomson Reuters
is more than capable of making such investment.

What seems more likely is that Infosys wants to be a major player in the U.S. healthcare
industry, and the Thomson Reuters healthcare business buys it strong market presence,
entree and gravitas. With a mass of respected healthcare data and analysis,
Infosys will be in a position to not only identify problems, but solve them ...
and get paid for doing both.

Moreover, Infosys buys deep and trusted relationships within
the domestic healthcare industry, the ability to sell based on proprietary
knowledge, and at least some opportunity to bundle its data with the systems it
develops. It's all good for the goal of advancing the business of Infosys, but
it's not clearly so good for the goal of advancing its new healthcare data
business.

I say this because when Infosys gets into the healthcare
data business, that data business loses one of its key intangible strengths:
neutrality. Will the business be able to credibly continue its respected Top
100 Hospitals awards when Infosys is seeking multi-million contracts from these
same hospitals? Awkward. Can the healthcare business fairly evaluate electronic
health records systems when Infosys is developing same? Will analytical reports
citing various trends in healthcare start to be perceived as sales collateral
for Infosys? Indeed, can the healthcare business maintain a position of thought
leadership when its parent is actively selling big-ticket projects into the
same market?

Assuming this deal happens, maybe Infosys can pull it off
and make it work. But the path to accomplishing this means lots of independence
for the healthcare business, and the greater the independence, the less the
leverage for Infosys. We'll see how it plays out, but I think I am right in
saying that as a general rule, software sells data, but data doesn't sell
software.

Rating the Zagat Deal

When first I heard that Google had acquired Zagat Guides, I thought I would need some time to ponder the merits of this acquisition. I've changed my mind. A deal this patently harebrained doesn't require deep reflection. A few thoughts for your consideration:

• Let's start with the optics. Google, long tagged with the cutesy "frenemy" label by content providers, has maintained peaceful co-existence with the content industry by repeatedly claiming it had no desire to become a content provider itself. What's the best way to shatter this convenient fiction? How about a nine-figure acquisition of a high profile content company?
• There's no scale in the Zagat content set. Zagat doesn't even have coverage of all major cities. The only way to fix this is with a huge investment in editorial (anathema to Google's "untouched by human hands" model) or to go heavy on user-generated content for Zagat, killing its distinctive voice and curated content in the process. Face it, Google should have paid up and bought Yelp. That is a deal that would have made sense.
• Zagat has a paid content model, not exactly a core competency at Google. More significantly, Zagat hasn't even figured out this model itself, having recently re-launched itself because too much was behind the firewall. El predicto: Zagat becomes a free site sooner rather than later. If Google does choose to stay with the paid model, the temptation to favor Zagat in search results will be overwhelming, and that's a direction Google goes at its own peril.
• Zagat (little birdies tell us), makes a big chunk of its profit from selling its print guides with corporate logos on them for gift-giving. Yes, Google appears to have paid a stiff premium for a print publisher.
• The Zagat model is extensible. Consider Zagat's move into rating physicians. Well, that's unfortunate timing for Google, which just recently quietly shuttered its Google Health initiative.
• There's an e-commerce play here. Sure there is. And it's not a new idea. Zagat actually made a minority investment in OpenTable way back in 2000. But Google claimed in its much larger deal with airline schedule data company ITA that it wouldn't be selling tickets. So why would it now want to book restaurant reservations? And, as noted above, once you start looking for transactional revenues, you will inevitably start favoring your own listings, and there's just no hope for a biased search engine.
• Zagat will help Google finally crack the local business market. This is intriguing since Zagat doesn't have a field sales force, which makes sense since Zagat doesn't sell its listings to local businesses. Of course, Google could leverage the Zagat brand with its own local sales force ... if only it had one.
• Keep in mind too that Google runs Google Places, a giant user-generated reviews site. It seems inevitable that Zagat will ultimately and uncomfortably reside here ... free restaurant reviews alongside paid restaurant reviews ... now that's compelling merchandising, and more reason for me to suspect that Zagat will ultimately be made free and dumped into Google Places to augment its content.

I could continue to pile on, noting Google's stellar track record with its acquisitions, all of which had more compatible corporate cultures than Zagat. Humorously and perhaps ominously, Marissa Meyer of Google is quoted as referring to the Zagat editing process as "snippetizing." Perhaps there's an app for that?

And in perhaps the most telling quote of all, Tim Zagat, when asked of Google's plans for the Zagat business said, "I think Marissa needs a little time to think about it."

Influence Peddling

I am working on a white paper that describes how
subscription-based information publishers have responded to the Internet, and
what the future is likely to hold. And guess what (spoiler alert):
subscription-based information publishers charged for their content in the
past, charge for it now, and will charge for it in the future. So why is there
so much angst about charging for content online?

Consider all the ink and pixels that have been expended
discussing the New York Times and its new paywall. The New York Times provides
original, timely and valuable reporting on important topics. Why should it give
that information away for free? Charge for it (it was never free in print) and
be done with it. But, of course, it's more complicated than that.

For the many big media companies that put previously paid
content online for free in the early, innocent days of the web, trying to
charge now is akin to getting the genie back in the bottle. These companies are
now dependent on online advertising, which only generates real money if you
have huge traffic to your site. And these media companies get that traffic by
piling on even more free online content. Putting up a paywall means fewer
eyeballs, meaning less advertising revenue, coupled with great uncertainty as
to how many people will actually pay for online access.

But beyond the revenue aspect of paywalls, there is another
less-discussed issue lurking: almost as much as losing revenue, these media
outlets risk losing their influence. I read the New York Times because it is
influential; the stories it reports drive the national debate. What makes the
New York Times influential is that a lot of people read it. Damage that dynamic
and the publication quickly spirals into irrelevancy. That's why, whenever a
big media outlet breaks a story, it can't give it away fast enough. When
Rolling Stone published its expensively-produced take-down of Goldman Sachs,
for example, it didn't hold the story behind a paywall for the benefit of its
paid subscribers. Instead, it put the author on a media tour to discuss every
aspect of the article, while posting the full-text of the article on its
website for free. Rolling Stone wants paid subscribers, but it needs visibility
and influence to stay relevant and viable. This is a tough, possibly unwinnable
set of circumstances.

Interestingly and thankfully, subscription information
products function differently. In the majority of cases, they aren't chasing
the mass market, but rather a specific niche market. Often, they are the sole
source of information on a specific topic. Most subscription-based products
never carried much if any advertising, so audience size was never a
consideration. Perhaps most importantly, while many subscription information
products are influential, few actually seek to be influential.

Subscription information publishers may have limited
opportunity because of relatively small markets, but in this case, what limits
also protects. That's why they've ridden peacefully through so much of the
turmoil wrought by the Internet: there is simply far less pressure on their
business model.