The Latest from TechCrunch

The End Of Hand Crafted Content
A VC’s Advice On How To Pitch VCs
Can Anyone Help Crowdsourcing Startup crowdSPRING Get Their Site Back Up?
MySpace Loses Tim Schulz
Nexus One, The Google Phone, Captured In The Wild (Picture)
Best Man Rigs Newlyweds’ Bed To Tweet During Sex. Not Kidding.
Venture Capitalists Ron Conway And Sean Parker Battle For Charity
TEDxSV: Reid Hoffman On Philanthropic Movements On The Web
WordPress Makes Blogging On The Fly Easier, Integrates With Twitter API
The Google Phone, Unlocked (Confirmed And More Details)
The Medium Is No Longer The Message, . . . You Are

Posted: 13 Dec 2009 07:13 AM PST

Old media loves nothing quite so much as writing about their own impending death. And we always enjoy adding our own two cents – the AP not knowing what YouTube is, the NYTimes guys reading TechCrunch every day, etc.

Speaking broadly, I like what Reuters, Rupert Murdoch and Eric Schmidt are saying: the industry is in crisis, and the daring innovators will prevail. Personally, I still think the best way forward for the best journalists, if not the brands they currently work for, is to leave those brands and do their own thing.

But as one of the innovators in the last go round, I think there’s a much bigger problem lurking on the horizon than a bunch of blogs and aggregators disrupting old media business models that needed disrupting anyway. The rise of fast food content is upon us, and it’s going to get ugly.

Old media frets over blogs and aggregators that summarize content and link back to the original source. They can’t make a business in that world, they say, so they run the other way and try to find a way to protect and charge for content.

These are the cavemen, or whoever, who were afraid of fire when it was discovered because it burned, or was too technologically advanced to really understand. The smart guys used it to cook their meat and keep them warm, and multiplied.

For our part, we throw a party when someone “steals” our content and links back to us. High fives all around the office. At least there’s some small nod in our direction. And the aggregators like TechMeme can figure out who broke the news. Page views are lost, but reputation is gained.

But for every link there are dozens of sites that outright steal our content with no attribution. Not just spam blogs, even the NYTimes does it. This isn’t a copyright issue – the stories are rewritten by actual people. But it’s far cheaper to simply take the news and rewrite it – if you can get away with it – than to hire people who do actual journalism. Over time, it becomes a competitive tax that is difficult to bear.

But even then, companies like ours can find a way to compete.

So what really scares me? It’s the rise of fast food content that will surely, over time, destroy the mom and pop operations that hand craft their content today. It’s the rise of cheap, disposable content on a mass scale, force fed to us by the portals and search engines.

On one end you have AOL and their Toyota Strategy of building thousand of niche content sites via the work of cast-offs from old media. That leads to a whole lot of really, really crappy content being highlighted right on the massive AOL home page. This article, for example, is just horrendous. One of AOL’s own blogs trashes the company’s spinoff, rambles for miles without any real point, and adds a huge factual error to top things off (”the company is losing money”). Hiring a bunch of people who couldn’t keep their old media jobs and don’t have the stomach to go out on their own and then slapping little or no editorial oversight onto these masses of sub-par journalists leads to an inevitable conclusion – cheap, crappy content. And that crappy content is given a massive audience on the AOL portal.

On the other end you have Demand Media and companies like it. See Wired’s “Demand Media and the Fast, Disposable, and Profitable as Hell Media Model.” The company is paying bottom dollar to create “4,000 videos and articles” a day, based only on what’s hot on search engines. They push SEO juice to this content, which is made as quickly and cheaply as possible, and pray for traffic. It works like a charm, apparently.

These models create a race to the bottom situation, where anyone who spend time and effort on their content is pushed out of business.

We’re not there yet, but I see it coming. And just as old media is complaining about us, look for us to start complaining about the new jerks.

My advice to readers is just this – get ready for it, because you’ll be reading McDonalds five times a day in the near future. My advice to content creators is more subtle. Figure out an even more disruptive way to win, or die. Or just give up on making money doing what you do. If you write for passion, not dollars, you’ll still have fun. Even if everything you write is immediately ripped off without attribution, and the search engines don’t give you the attention they used to. You may have to continue your hobby in the evening and get a real job, of course. But everyone has to face reality sometimes.

Forget fair and unfair, right and wrong. This is simply happening. The disruptors are getting disrupted, and everyone has to adapt to it or face the consequences. Hand crafted content is dead. Long live fast food content, it’s here to stay.

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A VC’s Advice On How To Pitch VCs

Posted: 13 Dec 2009 07:08 AM PST

Editor’s Note: In this guest post, Raj Kapoor gives entreprenuers advice on how to pitch VCs. Kapoor knows both sides of the equation. For the past five years, he’s been a VC at the Mayfield Fund. Before that he founded the photo site Snapfish, which he sold to Hewlett-Packard.

Its been almost five years now that I’ve been in venture capital. I finally know what i don’t know.

The one thing I do know is how to give better advice on pitching VCs now that I’ve sat through hundreds of pitches and made 8 investments. I gave some advice in an earlier post—this one builds on it at a deeper level (three years later)

I’ve mentioned in the past that there are some key things you should include in your presentation when you are pitching a VC. David Cowan’s post on what to include is a great starting point. I thought I would expand on this and add some of the nuances within each section. This may not apply to all types of companies but I think it works for internet-related businesses.

Also, I've found that if all the informoation below is addressed succinctly in an executive summary or first pitch deck, it can help us make a much faster decision —which is what the entrepreneur wants and so do we. If we believe the story is lacking in too many areas, sometimes we just pass as there is too much else going on. At the same time, providing too much information is a problem as, like you, we are time-strapped and attention-starved. I think most of the points below can be addressed in a few compelling sentences or slides.

What Do You Do? The first thing we want to understand is what you do, very simply. What’s the problem/solution or what’s the new experience that you think is exciting? Why is this important to your customers? For mass-market internet businesses we want to understand if this appeals to a wide or narrow audience and if it's a frequent (daily) habit or something done once in a while (which is tougher to build a brand in the consumers mind). Don't talk vision or market at this point. Zero in on what you are about.
Reveal Your End Game. VCs typically don’t invest in just the first product or service being the end game or in a company’s whose biggest goal in life is to be a feature of a platform or “add-on” acquisition. We want to understand that your product has really big potential and could be a platform possibly for others—like Facebook or Twitter. Don’t be afraid to dream a bit. Here's an example from one of my companies - “Rubicon Project will start solving the sharp pain point of optimizing ad networks for publishers and will leverage this position to be the trusted platform to help monetize all inventory for a publisher – the Control HQ for all revenue for web publishers”. You won’t be penalized for having audacious goals.
What Is The True Size Of Your Market? No, Really. The important point here is whether it’s a big enough market to be interesting to a VC. Too often entrepreneurs simply state the size of the online ad market for an internet content business or the size of a retail category for e-commerce sectors. We’re less interested in the top down market sizing and more focused on your Total Addressable Market (TAM). If you sell widgets, how many customers are really out there that are interested in your widget (segment the market) times what price you get for your widget. The more thoughtful and realistic you are about how you define the customer set, the faster we can make a decision. We don’t mind getting surprised on the upside later on.
The Secret Ingredient Is People. Teams are critical and too little time is spent on them in pitches. Don’t just include where you’ve worked but include in your slide or exec summary why this team is the best for this opportunity. In many businesses, domain expertise matters a lot, so highlight that. In some consumer businesses, its less about experience and more about product insight and relentless execution—highlight why you have that. In other words, figure out what’s most important to the task at hand and make sure to tell us how each person will help accomplish that—not just where everyone worked and went to school. In an early stage deal, Team and Market are the most important factors as everything else will change and a great team with wind at their backs will make it happen. Also, be upfront about your holes/weaknesses in the team (and your own weaknesses) and if and when you believe you will need a new CEO. Self awareness is one of the most important traits we look for in leaders.
Go-To-Market Strategy. This is often ignored or not given enough thought. What is the path of least resistance that you can take in terms of customers (be specific here), channels, and initial product focus. Your go-to-market strategy should ideally be in your control (versus reliant on big, unproven partnerships) and take as much risk off the table as possible in the least amount of time. You need to go through customer acquisition economics if you pay for customers (lifetime value vs CPA) and why you will spread for free if you don't require marketing. Address how you will make it as painless as possible for consumers to adopt the solution and how you will build on top of that. Also, your go-to-market focus should not force you into a niche that’s hard to maneuver out of.
Be Honest About What Stage You Are At. We need to understand what stage your company is at. Are you at the idea stage or pre-traction in terms of customers and momentum? Do you have momentum but are still working out the business model? Or do you have both momentum and a solid understanding and proof behind the model. The clearer you are about where you are, the faster we can make a decision. Be upfront and honest on the risks and how you will deal with them. If you have momentum, show graphs of key metrics over time (not just a snapshot of where you are)—we want to understand the shape of your growth curves and how your key metrics are performing against your expectations.
Your Real Competitive Advantage is Being Different In The Long Term. On the internet, there are at least 25 companies that are or can compete with you on almost anything you do. Often times, it's all about execution but we want to see if there are fundamental factors which will help you outdo your competition—very hard technology/IP, network effects in your business that will make it hard for others to catch up (such as with Wikipedia, Google AdSense, Facebook, Twitter) or a fundamentally different business model that will be hard for an incumbent to change (for instance, it wouldn’t be easy for Electronic Arts to cannibalize its retail games with free to play online versions). While we want you to list all your competitors (be exhaustive otherwise we won't have confidence you know your business and have done your homework), its not useful to only show a chart of your competitors comparing features or positioning on a 2×2 chart. That is a very static view and any competitor worth their salt will morph and/or expand features to keep up with competition. If its all about execution and there are no fundamental advantages, then you should focus on why your team will out-execute all the others (a tougher sell but possible).
Product, Product, Product. If it's a live pitch, a demo is really key—but keep it short and to the point. Don't go into all the cool features—we are most focused on how its simple, intuitive, solves the problem and how well built it is and frictionless from a user experience point of view. You can talk about some of the cool new features but the first meeting isn't about going through your product requirements. If it's part of an executive summary or deck, this is harder but at least a few screenshots of the key experience flow are helpful.
Plausible Financials. It’s tough to create believable projections for an early stage company. I suggest showing what it takes to get to $50M or $100M of revenue in terms of customers, products, pricing, and so forth, as that's what we are focused on. Show a simple table of key assumptions to get there and speak to why its believable. We also want to know how much capital you think you will consume to get sustainably cash flow positive so the nitty gritty forecasts do matter—but be able to explain the key drivers and why its capital efficient (profitable under $5-10M of investment) or requires significant investment.
The Ask. Make sure to put down how much you want to raise. Often a range is a good strategy as it usually depends on the valuation/dilution. But there should be a minimum amount that makes sense to significantly reduce the risks in the business. Importantly, highlight what risks you will remove and what momentum you expect to have about 6 months before you run out of cash. We are very focused on whether we will be able to successfully raise a round at a higher valuation, so tell us what you think it will take to do that.

I hope this helps. If you can nail the points above, it can be a 30-45 minute meeting and I think you'll get a quicker and more definitive answer from a VC. Good luck with your pitch!

Photo credit: Flickr/Adam Bales

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Can Anyone Help Crowdsourcing Startup crowdSPRING Get Their Site Back Up?

Posted: 13 Dec 2009 04:53 AM PST

It’s not a relaxing weekend for the people over at crowdSPRING, a startup that since March 2008 has been offering an online environment where creative people can come to collaborate on and contribute new design ideas.

A couple of days ago, the company set out to improve the performance of both the hardware and software that powers their website. Instead, the site update knocked the website down cold, and they’ve been having trouble getting it back online ever since.

When you go to the crowdsourcing startup’s website now, you’ll be forwarded to a message hosted on subdomain apology.crowdspring.com that reads:

In an effort to improve speed and stability, we began pushing a site update this morning at 9am CST. Unfortunately, this means that we needed to bring the site offline and this process may take as long as 24 hours (although we swear to all things good and holy that we hope it takes less).

We truly, truly apologize for the inconvenience but we also truly, truly hope that you’ll find the site much more well behaved after this update. If you have a project that will be affected by this, or if you have any questions at all, please don’t hesitate to contact us and we’ll do absolutely anything we can to help. We’ll be more than happy to extend any project affected by this outage or find other creative solutions to minimize the impact on you, so don’t hesitate to ask.

It has taken way more than 24 hours, though. The latest update posted on their Twitter account mentioned that they’ll be back in business on Sunday after getting some rest.

Downtime’s never fun, and it happens to the best of us, but posting an update that you’re tired and going to sleep before doing some final site testing is simply unprofessional.

Maybe they should have crowdsourced for some help while they were going to bed.

(Thanks for the tip, Brandon)

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MySpace Loses Tim Schulz

Posted: 13 Dec 2009 04:17 AM PST

Tim Schulz has resigned from his role as Senior Product Manager at MySpace, he confirmed a couple of hours ago on Twitter. Schulz let the MySpace executive team know that he was leaving the social networking company on Friday, and he informed us that starting January 2010, he’ll be running products as part of the general management team at e-commerce startup Magento.

Schulz was hired in the Fall of 2008 to work for MySpace International, and later moved to a senior role in the Product Strategy team together with Todd Leeloy (former VP of International Product and now VP, Strategy under Jason Hirschhorn). Schulz focused a lot on the realtime web.

He said he had a terrific time working at MySpace but decided that the Magento gig was a better fit considering his background as consultant at Sapient, and was excited to join a fledgling but fast-growing company that operates on the intersection of B2B and B2C.

His tenure at MySpace was surprisingly short though, so I suspect there were other things at play too, but we’ll give Schulz the benefit of the doubt because he sings nothing but praise for the company and its executive team.

Schulz also recently launched a tech blog dubbed TrendSlate, which he hopes will compete with TechCrunch some day.

What can we say, Tim? We hope Magento keeps you super busy.

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Nexus One, The Google Phone, Captured In The Wild (Picture)

Posted: 12 Dec 2009 10:59 PM PST

Apparently, Googlers aren’t supposed to be tweeting the details of the Google Phone, but they have no problem tweeting about how awesome it is. And they also apparently have no problem showing it off. And not surprisingly, pictures of the device are starting to hit the web. Without further ado, this is it.

Cory O’Brien, a San Francisco-based blogger, got his hands on one tonight and tweeted out that picture. He also notes that, “Google Phone = iPhone + a little extra screen and a scroll wheel. Great touch screen, and Android.”

As you can see, the Google Phone, which is apparently being called the “Nexus One” (for more on that, see here), does look exactly like the HTC Passion, which everyone was including in their posts earlier. You’ll also notice that there’s a key difference: It’s not HTC-branded at all.

[thanks Alberto]

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Best Man Rigs Newlyweds’ Bed To Tweet During Sex. Not Kidding.

Posted: 12 Dec 2009 08:54 PM PST

master bed by pnoeric When a man in the UK was asked to be the best man at his friend’s wedding, he was touched. So touched, that he promised not to pull any pranks before or during the wedding. After the wedding though, that’s another story.

This man, who is choosing to stay anonymous, has set up this Twitter account for the sole purpose of automatically tweeting when the newlyweds are having sex. I’m not kidding. Read the entire tweet stream from the bottom up if you want the full story. But basically, this guy was watching his friend’s house while they went on their honeymoon and he placed a device under their mattress. This device, which is similar to the one found here, is a pressure-sensitive pad that tweets out when sexual activity starts, when it ends, the force of the “action,” and a “frenzy” rating.

December 9 saw the first such action. This is the first report:

They're on the job! #1 – Action commenced at 12.21GMT. Weight: 84KG.

And then it was over — 3 minutes later:

They're off the job! #1 – Action concluded at 12.24GMT. Duration: 3 m.15 s. Frenzy Index: 8 (scary). Judge's Comment: “Is that it?”

But alas, that was just a test of the guy jumping on the bed to make sure it would work. It did. So the real first action is as follows:

They're on the job! #2 – Action commenced at 15.50GMT. Weight: 151KG.

22 minutes later:

They're off the job! #2 – Action concluded at 16.12GMT. Duration: 22 m.05 s. Frenzy Index: 4 (easy listening). Judge's Comment: “Good work!”

Before everyone goes crazy over this, remember that all of this is being done anonymously. Neither the friend nor the couple are known. In fact, who knows if this is even real, and who cares, it’s hilarious. Still, the man claims he will let his friend in on the fun soon. “What you will NEVER know is who they are. Or who I am.I figure I'll tell my mate in due course that he's had an audience.So spread the word!,” writes the anonymous man. Consider it spread.

So why’s he doing this? “BTW – he stitched me up something rotten when he was my best man so I reckon this is reasonable payback ,” he tweets.

Oh Twitter, the joys never end. What will they think of next?

Screen shot 2009-12-12 at 8.44.53 PM

[photo: twitter/pnoeric]

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Venture Capitalists Ron Conway And Sean Parker Battle For Charity

Posted: 12 Dec 2009 04:25 PM PST

Sean Parker (Founders Fund, Facebook, Plaxo, Napster) and angel investor Ron Conway are doing a little smack talking over who’ll raise the most money for charity. Conway is raising for the UCSF Foundation, and Parker is fighting Malaria through Malaria No More.

So far Parker is in the lead, with more than $15,000 raised (he’s tying it to his 30th birthday party tonight). Conway, who started later, has nearly $7,500. They’re both using Causes on Facebook, one of Parker’s companies, to raise the money.

Causes cofounder Joe Green answered our question on who he thinks will win: “Luckily because it’s for charity, with 2 great causes: Malaria No More and UCSF Child Life Services, they both win. And that is what Sean and I are after in creating Causes, getting people involved where everyone wins. This is an epic showdown between Sean, a pioneer in social networking, and Ron, the “Godfather of Silicon Valley.” This is pretty closely matched, but Vegas has Ron as a 3:2 favorite. Though it’s usually not a good idea to bet against that Parker kid.”

We’re not picking sides, and both are very worthy causes. Donate early and often. And consider asking friends to donate instead of giving holiday gifts.

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TEDxSV: Reid Hoffman On Philanthropic Movements On The Web

Posted: 12 Dec 2009 11:09 AM PST

We’re at TEDxSV, a Silicon Valley outpost of TED’s conferences on innovation, which is taking place today at Stanford University. First up is LinkedIn founder and angel investor Reid Hoffman, who is addressing the concept of iMovements on the web. I’ll be live-blogging his remarks.

Hoffman says that one of his ambitions is to be a public intellectual, to be able to influence millions of people with innovations and change. Hoffman thinks that the internet, which is scalable and low-cost, is the optimal platform for cause-based organizations. The web is more about people than technology, Hoffman asserts.

When Hoffman invests in a startup, he looks at three things: scalability, margins and the structure. These three attributes are the same things that make web-based causes or philanthropic movements more effective. Three types of cause-based organizations have developed on the web because of this potential, which are non-profits (Hoffman highlights micro-lending platform Kiva.org as an example of this), hybrid infrastructure organizations such as Mozilla or Creative Commons, and companies developing their own cause-based movements on the web.

One of the things that Hoffman finds interesting is that corporations, because they have the reach of millions of people, they can make cause-based initiatives part of their web based platform. This is exemplified by Facebook’s Causes application.

The causes that success capitalize on the internet “peer play” says Hoffman. So how do you coordinate the actions of millions of people in the world to make social change? Hoffman says that micro-groups on the internet can help organize these causes effectively.

The key part of the future of cause-based movements will be the boiling up of problems and issue and the coordinated intelligence and collective ideation on how to tackle these problems. There is a value in the crowdsourcing of ideas to help make social change, concluded Hoffman.

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WordPress Makes Blogging On The Fly Easier, Integrates With Twitter API

Posted: 12 Dec 2009 10:32 AM PST

This morning, a blogging platform and a microblogging platform have become more symbiotic. WordPress has enabled posting and reading the blogs the platform powers via the Twitter API.

This means any Twitter app that supports a custom API URL can be used to either post updates to your WordPress.com blog, or to read updates from blogs you’ve subscribed to. Tweetie 2, an iPhone and desktop Twitter client, will be one of the first third party apps to implement this.

As Twitter’s traffic continue to grow, WordPress sees its growth also rising. It makes sense to become more symbiotic with the Twitter ecosystem, considering the rapid growth of the use of third party applications. In fact, WordPress founder Matt Mullenweg told ReadWriteWeb recently that WordPress was trying to develop more ways for Twitter and its platform to overlap.

The integration of WordPress functionality with Tweetie is actually pretty cool. All you need to do is add your WordPress account to Tweetie’s settings and you will then be able to post a status update to your WordPress.com blog and also have it displayed in the blog reading view. You can also enable geotagging to show the location of your status update.

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The Google Phone, Unlocked (Confirmed And More Details)

Posted: 12 Dec 2009 09:47 AM PST

Last night, we started seeing some Tweets from Google employees and others about a new Android-powered Google phone that was apparently handed out at an “all hands” meeting. Now Google is confirming that it is indeed “dogfood” testing a new Android device with employees around the world.

But this isn’t just another Android phone. Very trustworthy sources who have seen the phone say that it is the Google Phone we first wrote about last month (despite the uninformed saying we were dreaming). It will be branded Google and sold by Google as an unlocked phone, which could change everything. As we wrote in our original post:

Google is building their own branded phone that they'll sell directly and through retailers. They were long planning to have the phone be available by the holidays, but it has now slipped to early 2010. The phone will be produced by a major phone manufacturer but will only have Google branding (Microsoft did the same thing with their first Zunes, which were built by Toshiba).

There won't be any negotiation or compromise over the phone's design of features – Google is dictating every last piece of it. No splintering of the Android OS that makes some applications unusable. Like the iPhone for Apple, this phone will be Google's pure vision of what a phone should be.

The phone itself is being built by HTC, with a lot of input from Google. It seems to be a tailored version of the HTC Passion or the related HD2 (Unlocker scored some leaked pictures back in October which are of the same phone). Update: Here is a more recent picture.

Here are the details we know so far about the phone: It will be called the Google Phone (update the official name is “Nexus One”) and will launch in early January, 2010. It won’t be sold by any one carrier, but instead will be an unlocked GSM phone. In the U.S., that means T-Mobile and possibly AT&T, whose exclusivity deal with the iPhone is about to run out. It will be running Android 2.1

The phone is “really, really fast,” says someone who has seen one in action. It runs on a Snapdragon chip, has a super high-resolution OLED touchscreen, is thinner than the iPhone, has no keyboard, and two mics. The mic on the back of the phone helps eliminate background noise, and it also has a “weirdly” large camera for a phone. And if you don’t like the touchscreen keyboard, a voice-to-text feature is supposed to let you dictate emails and notes by speaking directly into the phone.

CrunchBase Information

Google

Android

Information provided by CrunchBase

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The Medium Is No Longer The Message, . . . You Are

Posted: 12 Dec 2009 09:34 AM PST

Editor’s note: This guest post is written by Seth Goldstein (@seth), the Co-Founder of socialmedia.com, which is building the first ad server based on people not pages. Its platform provides authoring, serving and reporting across different types of social media. All of its ads are real messages from real people. Seth is also the Co-Chairman of the IAB’s Social Media Committee.

Social Media and Identity

We are witnessing a profound change in the media and advertising industries due to the emergence of social media. Companies that did not exist ten years ago, like Facebook and Twitter, have captured significant share of the attention economy from traditional publishers. Underscoring this trend is the fact that at the same time that Businessweek was selling for less than $5 million (plus assumption of debts) to Bloomberg, Foursquare's pretty cousin Gowalla drove up Sand Hill road and collected $8.4 million for a minority stake.

Amidst this disruption, media companies are chasing after "their" audience in order to continue to broker the attention of that audience to marketers. But just at the moment that media has mastered the art of blogging, search engine optimization and CPM yield management, they are now faced with a new set of consumer behaviors that elude their programming faculties: mobile devices, location-based services and the social graph.

Driving this change in consumer behavior is the emergence of social media as a means of content production. Social media started more than ten years ago with online personal communications tools such as Evite, Shutterfly and Blue Mountain Arts. Since that time, systems have been built to support broader and more subtle social interactions. This has been achieved primarily by the introduction of new creative formats that make it easy for individuals to express information about themselves (such as status updates, tweets and check-ins) and new distribution models that enable this personal information to be shared easily among friends and followers.

Social media's ascent has led to an Internet experience based less on pages and more on people. As a corollary to this (and counter to Marshall McLuhan's thesis), the medium is no longer just the message. The permanence of words and images and their meaning in context has long been promoted as a foundation of media theory. In an increasingly real-time environment, however, content gives way to identity, and traditional contextual analysis gives way to dynamic social interactions.

The medium is the message . . . is the member. This is why there can be no discussion of social media without a simultaneous discussion of identity, and why the growth of social networks such as Facebook and Twitter are one and the same with the growth of identity systems online. There are a number of technology and business trends that are converging around this thesis.

Here are some that seem to be of particular importance as we head into 2010:

The only check and balance for Facebook is Twitter. Twitter is significantly smaller than Facebook in terms of users, and its social graph is asymmetrical and therefore looser. But what it lacks in terms of the size of its contributors, it makes up by offering a broadcast media model. Celebrities find it easier to reach large audiences directly by using Twitter. Even though Twitter follows far more of a media model than Facebook, it too is being pulled into the identity space by Google who is unlikely to integrate Facebook Connect under any condition. Google is bringing the Twitter API to the fight (while Yahoo and MySpace drop their identity ambitions and happily incorporate Facebook Connect). The interesting question here is Microsoft. Although it is impossible to imagine Microsoft siding with Google on anything these days, integrating Facebook Connect may end up doing to Windows what Microsoft itself did to IBM many years ago.
Agencies are tired of being treated like commodity procurement organizations. They want to increase their margins through the application of data to media and become demand side platforms (DSPs). This is the strategy of IPG's Cadreon unit and Vivaki's "audience on demand network" which both look to add proprietary data from sources such as cookie exchanges and re-targeting databases. In addition to leveraging new data to better target existing creative assets, agencies wish to also transcend the one-off "give me a big campaign idea" business. Consumers will increasingly ignore the high-bandwidth, homepage-takeover distraction tactics of traditional online marketing. The average social media users have trained themselves to focus on real messages from real people. Agencies will need to learn how to produce low bandwidth advertising content that can be shared and distributed in lots of different ways by lots of different social groups, all the while preserving some underlying essential brand equity.

Publishers don’t want their quality audiences sold cheaply outside of their sites. Their expensive sales organizations have no chance of maintaining high CPM rates from an agency that can offer the same audience to its client at a fraction of the price by sprinkling some cookie data on top of a remnant ad network buy. This will embolden premium (top 100) publishers to align themselves with consumer advocacy groups looking to erase cookies and anonymize users. ESPN and the WSJ would love it if all of their readers were rendered anonymous as soon as they clicked away. This echoes Murdoch's supposed interest in removing his content from Google's search engine index. The value of "free" distribution is materially impacted when the distributor is able to separate a user's identity from the context of his consumption.

Advertisers will recognize that they have a fiduciary responsibility to maintain their own social graph. Until now social media has been an ROI-free playground for brands looking to experiment with new formats. Marketers have built Facebook and iPhone apps, only to learn that distribution is not free. Now they are managing Twitter accounts and Facebook brand pages that deliver more scale, but still with limited insights that they can own and apply to the rest of their marketing initiatives. Consumers, meanwhile, are constantly talking about brands within their communities and are expressing their affinities for commercial products and services. Advertisers can no longer afford to cede knowledge about these interactions to the social networks within which they are occurring. Inevitably, companies will require their own social graph data that includes all mentions of their brands and information about the identity of users (and their friends) discussing them.

So what are media companies and advertisers to do as the former audience use their social identity as a fulcrum for content creation? To prepare for this change in the media economy, companies need to establish an identity framework that integrates Facebook Connect and/or the Twitter API. And in order to profit economically, startups might want to address one of the agency, publisher or advertiser challenges listed above.

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