Future Moocher - UK Web 2.0 & Internet Trends

The net has gone crazy this week with hype about Google Talk, Google's newly announced and released Instant Messenging / Voice over IP product. But some big implications have not been picked up widely: open IM networks and pay-per-call voice advertising.

Yes, Google wants to compete with the hype that is Skype. Yes, it is making a direct competitive play with MSN, Yahoo and AOL's millions of installed instant messenging customers. And in both segments, it's coming from behind. Yes, it can sell ads on Google talk. But this is all "me too".

Voice over IP is the future. In fact, it's pretty much here now. The problem is, there's not much cash in these consumer-to-consumer calls: worldwide prices are falling anyway, and while the pure-plays can beat British Telecom on cost structure, at the end of the day it's a commodity product. Although it would be kind of cool / scary to be able to Google search your phone calls ;-)

The first really interesting implication for me is around open networks - Google is using XMPP, an open source, XML-based protocol which could in theory open up the various instant messenging networks to each other, something that Yahoo/MSN/AOL have resisted. Whether it will succeed in getting these opened remains to be seen.

The second is around advertising and in particular pay-per-call. The reason that Google and Overture exist as businesses is performance-based, pay-per click online advertising. I pay you to deliver a customer to my site. But still 90% of businesses would pay more for a phone call than a click. As an estate agent, car dealer or plumber, do I really care about clicks? Calls are much more valuable, and I'll pay more for them. Although it's early days and the business models are still evolving, start-ups like Ingenio and eStara are proving this. Try a search for "mortgage california" on AOLsearch and look at the Ernest Loans ad that comes up from Ingenio to see what I mean.

Google or Skype's voice network and millions of voice users, could be a huge strategic asset in pay-per-call for the next wave of online advertising, integrating web and voice.

Yahoo has announced that it has just started trialling eStara's pay-per-call solution on Yahoo cars UK and soon on Kelkoo too. This one slipped by with little notice, but is almost as significant in showing how the next leap in advertising's getting closer.

Is Google becoming evil? Maybe. Are they scatterbraining into lots of random industry areas without any strategic sense? In this case, probably not.

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The net, peer to peer technologies like Napster and BitTorrent, social networking, blogging, podcasting, eBay, classifieds, zopa. They don't just destroy old industries and ways of doing things from a commercial perspective, they break down the controlled, centralised 1950s ways of thinking. This culture has been dominated in the last 50 years by (in most western countries) a national media lacking in diversity, an apathetic and materialistic middle class and governments often more beholden to corporations and political donors than voters.

But the net starts to break this down. Witness the rumblings about the wars in Iraq and Afghanistan or US elections. Witness the breadth of "news media" replacement perspectives on the London bombings reported in blogs and through passers-by taking pictures on their mobile phones.

In this vein, I was struck how some of what Noam Chomsky had to say on propaganda and the limits of freedom of expression in the west could apply to the (past, present and) future of the net, while reading some of his old essays on the plane while on vacation. This stuff was written in 1970, much of it in response to the Cold War, but is just as true today:

"We have, perhaps, reached a point in history when it is possible to think seriously about a society in which freely constituted social bonds replace the fetters of autocratic institutions ...

Predatory capitalism created a complex industrial system and an advanced technology; it permitted a considerable extension of democratic practice and fostered certain liberal values, but within limits that are now being pressed and must be overcome. It is not a fit system for the mid-twentieth century. It is incapable of meeting human needs that can be expressed only in collective terms, and its concept of a competitive man who seeks only to maximize wealth and power, who subjects himself to market relationships, to exploitation and external authority, is antihuman and intolerable in the deepest sense.

An autocratic state is no acceptable substitute; nor can the militarized state capitalism evolving in the United States or the bureaucratized, centralized welfare state be accepted as the goal of human existence ...

Modern science and technology can relieve people of the necessity for specialized, imbecile labor. They may, in principle, provide the basis for a rational social order based on free association and democratic control, if we have the will to create it."
Language and Freedom, 1970

You have to remember that I was in rainy Iceland, denied pretty much all access to the net and therefore forced to read a real book for a change: very productive! Maybe this should happen more often.

A philosophical grounding for web 2.0? Viva the revolution (or is it the evolution)!

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Rightmove, the UK property classifieds site is getting ready for an IPO, and today news broke that they've appointed UBS to advise them.

A few weeks back, it was reported that rightmove had hired Scott Forbes, former European MD of Cendant, as Chairman to help them get ready to list.

The valuation being bandied about is £150 Million. Pretty steep for a company with only around £9M in 2004 turnover and £3M in earnings, although some have been muttering things about £10M in earnings this year.

Rightmove is owned by a bunch of the entrenched estate agency chains: Countrywide owns 30 per cent of Rightmove. HBOS, the banking group that owns the Halifax mortgage lender, and Connells, part-owned by the Skipton Building Society, also own 30 per cent stakes. The remaining 10 per cent is held by Royal & Sun Alliance.

Rightmove is worth more than Countrywide, in fact, Countrywide's 30% stake may be worth more than the rest of its business. This is the future of estate agency, the crown jewels. So why sell? Maybe the partners can't get along. Maybe they're hungry for short-term cash. Maybe they believe the business is worth more without them. Maybe they don't have much confidence in the future.

Rightmove has bet around £15M of investment in Home Information Packs, which the government's been trying to bring in to get buyers and sellers to agree things more quickly with less costs. But there's a lot of objections to these, and it's by no means sure they'll happen or that Rightmove are the people to facilitate. There are plenty of companies already looking at HIPs - try a Google search if you don't believe me.

Rightmove is "number one", with around 70% of all properties for sale listed on their site. But if you look at their web traffic, site speed / usability and local regions, the picture is not so rosy. Rentals is by no means their sole domain, their site is very poorly optimised for Search Engines, while Findaproperty is becoming the default site in the important London market. Vertical search aggregators like Wheresmyproperty and local classifieds like Gumtree could be a nasty threat.

It's a competitive business, and their ability to get thousands of agents, many of which are owned by their parents, to pay a mere £130 per month each to list all their properties (compared to the thousands being spent on local newspapers) is a nice start but they are by no means sure winners in this space nor immune to price competition.

Watch out for a fun IPO, though, it's nice to see British dotcoms in fashion again!

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New York Times announced today an investment in indeed.com, in my opinion the very best of the vertical search players, an aggregator of job listings. Very timely given our post on this subject on Sunday.

Founded in 2004 by Paul Forster and Rony Kahan, Indeed crawls listings from job sites as well as classifieds and returns the results in a Google-style simple search; you then click through from the listings to the original site. They've raised $5M from The New York Times Company, Union Square Ventures and Allen & Company. Where's the return gonna come from? Pay-per-click or even the advent of the pay-per-CV model!?

Fascinating insight into the investment and where it came from in VC Fred Wilson's blog here

NYT has spotted an opportunity to capture back some of the ground lost to online job sites like Monster. If was monster and hotjobs, careerbuilder I'd be worried indeed.

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Meetroduction, Chicago social networking start-up with only 2000 users, looks set to be bought by Google according to reports. Meetro makes local community connections through location-based Instant Messenging applications. Lucky millionaires-to-be if true are game programmer Paul Bragiel and Wendell Davis.

Meetroduction looks like a pretty teensy Chicago start-up, founded in Oct 2004 by 2 guys with some cool tech. It describes itself as "a gathering of visionaries, programmers and status-quo-upsetters who have their collective eyes on the next generation (and the next, and the next) of communications software" See more here.

If true, this would be Google's first foray into instant messenging, but they've been rumoured to be heading that way for a while, and the mind goboggles at the theoretical applications if you connect this with maps, blogger, my Google etc etc

I'm not so sure whether IM and social networking are yet core to Google's strategy. AOL, MSN and Yahoo do IM pretty well. del.icio.us and friendster amongst thousands of others (and blogs) do social networking pretty well. But Meet sounds like a funky application and Google has the traffic and reputation to make it happen if they focus on it.

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I was lucky enough to have lunch on Friday with an old mate of mine who's over visiting from California where he works for Electronic Arts making cool games. We went to a nice Thai place in Richmond. OK, OK, get to the point Dougall.

It turns out that his brother runs a UK real estate search site called wheresmyproperty.com. He spiders all the real estate content out there, tags it and aggregates it in once place. So instead of searching say findaproperty, primelocation and rightmove, you can get it all in one place, then click through for more details.

This is a big trend. In the US, indeed.com is doing this amazingly well in jobs, as well as simplyhired who just raised another VC round. Using RSS and spidering, people are aggregating content from lots of providers. Not only is all the info in one place, the tagging process can improve the speed of search and the attributes available; I find it easier to search monster's listings through indeed than i do on monster itself.

Oodle.com is another US example, but pulling together several verticals in a local model (an aggregated gumtree or craigslist).

With the right tagging, the right search experience for your vertical and the right search engine optimisation to get masses of traffic, these sites could well become destinations in their own right.

Although the wave has started with sites like wheresmyproperty in real estate and clickajob in jobs, this market's still wide open in the UK.

The big questions ahead are:

1) Is this spidering and feed aggregation currently / in future open to legal challenge, for example under copyright law?
2) Can / will the Monsters of the world stop their content from being syndicated / aggregated (or do they need the traffic too much)?
3) How does it all get monetised and how does the revenue get shared?

What d'ya think?

Imitation is the sincerest form of flattery.

Have you seen this fun Google-font add-on? You can make "Google" say whatever you want in the google font at Logogle...

Doing the rounds from some Asian blogs to Europe and US, this just shows how hot Google is right now. Simple interface, monster advertising model and revenue growth. Google Earth's hot too.

Everyone's scared of Froogle, payments, maps, classifieds, browser etc etc. They've stolen top talent from all over Silicon Valley. An amazing young innovative company, but they will hit bumps soon. Times will change methinks.

Google

This is my first post to this new space. Woo hoo.

Here I'll share a few of my moochings on the future of the net, community, why cats always land on their feet and whatever else seems cool.

I've worked on various consumer / community websites for the last 6 years or so, including moneybags.co.uk (now defunct) and eBay.co.uk. I now help run a local community classifieds site called gumtree. Many Londoners may know it already, if you don't check it out and tell your friends. You can find all sorts of useful and weird stuff on there.

I like to edit the wikipedia every now and then, and have a few favourite blogs like Tony Gentile's Buzzhit and the Internet Stock Blog. Hoping to find a few more future-moochers in the UK so tell me if you spot some.

I'm a Londoner by heart and soul and am back there now though have lived in variously Manchester, Bath, Cambridge, Sydney, Chicago, Redhill over the last 10 years and loved em all.

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