All entries for Saturday 29 December 2007
December 29, 2007
Kaneva : A Different Approach to Virtual Worlds?
Kaneva, a virtual world that launched this year, is the brainchild of Chris Klaus, who developed it after he sold his internet security company to IBM.....
....Kaneva encourages the use of true identities and personal information to help people interact. He says virtual interaction is much more immediate than in real life. “It’s much easier to read your profile in the virtual world and see you have the same friends and interests and, all of a sudden, you have those connections. (Financial Times Nuttall October 26 2007)
Kaneva, which comes from the Latin word for a blank canvas, has been in development since 2004 and is the pet project of Chris Klaus, the former chief executive of internet security company ISS, sold to IBM last year for $1.3bn. As a dumbed down version of Second Life / Sims there is an emphasis on trying to attract an audience which is out for entertainment rather than creating their own world from scratch. It will be a place to chat with your mates in 3D but easy to access:
Many people were put off by the degree of difficulty in navigating Second Life and building their characters, he said. Kaneva’s avatars are as simple to construct as a Sims person and they will find it hard to get lost – they are restricted to going home to their apartments or teleporting to friends’, wandering around a mall or playing paintball in a jungle. (FT Tech Blog)
Business Week There are several stories here about the potential development of Virtual Worlds.
Redfaced Face Book in climbdown over Beacon Advertising Technology
Below I take a look at the ill fated initial attempt by Facebook to install an intrusive Advertising programme called Beacon onto its platform in a clear breach of privacy. From the examples below it seems clear that users of social networking sites will have to remain very vigilant if they are not to be exploited by the provider.
Beacon Advertising Technology
Mark Zuckerberg the 23-year-old founder of Facebook, said the company had “made a lot of mistakes” in building its new Beacon technology. The Beacon technology sends messages when a Facebook user makes purchases on outside websites.
Beacon has proved the most controversial of several new money-making technologies launched by the social network site last month. Facebook has come under pressure to perfect a revenue model after a recent Microsoft investment valued the company at $15bn. (FT Kevin Allison December 6 2007)
In its original version the Beacon software would broadcast a message to a user’s friends automatically unless the user elected, within a certain amount of time, not to broadcast it.
Friends of a Facebook user who buys a book on Amazon.com, for example, may see a message about the purchase when they log onto Facebook. (FT Kevin Allison November 30 2007)
In the face of 50,000 complaints and the beginnings of a Move on campaign (details here) Facebook backed down . Mr Zuckerberg said Facebook would further tighten Beacon’s privacy controls by allowing users to opt out of the service altogether. Last year, users protested about breaches of privacyafter it introduced “News Feed”. This was a piece of software which allowed users to keep track of their friends’ actions on the site. Google became the next company to fall foul of user wrath at breaches of privacy:
On December 14, Google’s RSS (Really Simple Syndication) feed reader application, Google Reader, introduced a new feature that lets you share posts with anyone in your Gmail or Gtalk contact list. The problem is that you don’t want to share some of these posts with your boss or maybe with your mother, or anyone in your list that you hardly speak to. And as if this is not enough, Google Reader provides no way to opt out of the feature short or deleting every item you’ve ever shared. (E Flux Media)
Google responded in the following way on December 26:
We'd hoped that making it easier to share with the people you chat with often would be useful and interesting, but we underestimated the number of users who were using the Share button to send stories to a limited number of people," said the blog. (ibid).
It is clear from these examples that users of social networking sites do have the power to change the way in which the institution concerned delivers its services. This is clear difference to the days of the centralised models of mass media which delivered products to audiences who had little or no interconnectivity with each other. In this sense those companies seeking to ride the wave of Web 2.0 are required to be very responsive to their audiences stated needs otherwise they can easily evaporate into cyberspace.
In the EU we seem to have more protection from this sort of thing than in the US through a privacy directive:
The Directive is Directive 95/46/EC (as in the European Commission). The precedent is the “Safe Harbour” Agreement. This privacy Directive was meant to standardize the exchange of private information within the EU Member States. A significant aspect of the common market is the capacity of consumers to shop and purchase in other Member States. The need to permit private information to flow freely prompted the creation of the Directive, which set rather high (in the mind of a USA-based marketer) standards for the use of private information. (EU for US Blog)
Facebook Still in the News
Facebook’s transformation from a quirky internet start-up into one of the most talked-about companies in Silicon Valley is sure to be remembered as one of 2007’s biggest technology stories.(Kevin Allison: FT
December 28 2007)
In May 2007 Facebook announced that it would allow outside developers to develop applications for Facebook such as games and slide-shows for use in the site. This gained a very favourable response as Facebook has a large and growing market. As the Money Programme puts it below, however it asks searching questions which are related to to any media company either on or offline. How has it outstripped the opposition and will the audience remaion for as every media company knows audiences are fickle:
Facebook seemed to come from nowhere to everywhere in 2007.
One person in eight in the UK has become a registered member.Why has Facebook been so successful against stiff competition from other social network sites?And as the company tries to turn its popularity into profits, will its millions of members stay faithful? (Facehooked BBC Money Programme)
Comscore an organisation which tracks webtraffic estimed that Facebook received over 92 million unique visitors in November 2007. This compares with 104 million unique visitors for MySpace in the same period which is a far more established company. The rate of growth for Facebook since November 2006 has been an impressive 400% compared to MySpace's 26%. Whilst an impressive rate of growth from a relatively low base is easier to achieve in a short time clearly if these figures were to continue Rupert Murdoch's MySpace as the foremost social networking site is under threat.
Business interst in Facebook is underpinning this growth and gaining widespread interst amongst the business community. Given that Facebook's audience is amongst university students soon to be embarking upon successful careers the potential for longer term audience retention and the possible growth in advertising revenues can hardly be ignored. As reported in a previous posting Microsoft made an initial investment buying up 1.6% of the company. This was closely followed by Li Kashing a Hong Kong businessman of $60 million.
Above Comscore chart of Facebook usage pattern from Aug 05 - Aug 06. Unsurprisingly for a site devoted to university students usage goes down in the holidays. Roll on more wireless internet laptops under the sun umbrellas!
Overall these deals value Facebook at $15 billion. This can be compared to the price Google paid for YouTube of around $1.65 billion overall. In general terms then social networking sites with an established audience are becoming increasingly valuable. These figures also help to put the value of Linden Labs Second Life in perspective. currently the number of residents of about 11 million with aroud 38,000 online at any one time is still not attracting the bigger players. Microsoft is clearly intersted in audiences numbering tens of millions.
Allison analyses the three constituent groups who comprise the audience and instituional combination which defines the media equation of the site but who have competing desires:
- The users whose social connections power the site
- The developers whose applicationskeep people interested
- The advertisers upon whom Facebook is reliant for making money
“Facebook has these three constituent groups and it’s a really difficult balancing act, especially when you are trying to be innovative,” says Jeremiah Owyang, an analyst at Forrester Research (Cited Allison ibid)
Two groups have been frustrated over the past year. Users have become concerned over privacy issues - to be dealt with later- whilst software developers have found the frequent changes to the site's software through tweaking awkward to deal with requiring immediate tweaks of their own. Currently the situation is very fluid as the key perspective from the viewpoint of Media institutions is how to monetise the assetts of social networking:
“We are in an early stage in trying to monetise social media,” says Jeremy Liew of Lightspeed Venture Partners, a venture capital group that is an investor in RockYou, one of the leading makers of Facebook applications. Speaking of Facebook’s trouble with Beacon, Mr Liew says, “there are bound to be mistakes made” as social networks experiment with new advertising models.(Allison ibid)
Social Networking and Advertising Futures
Liew is confident that in the medium term a stable model of advertising driven social networking sites will emerge and that looking between 5 or 10 years this will have happened however over the coming few months there is still likely to be a lot of experimentation. Unlike audiences who may be preparedto put up with a few issues if they are changed rapidly in response to audience feedback marketers who are putting the money up front are unlikely to be so tolerant.
What does seem certain is that social networking is going to become a massive creator of adertising revenue. The content will be user generated but oiled by useful and entertaining applications. Rupert Murdoch renowned for being media-savvy and being able to develop and influence trends was certainly perceptive to invest in MySpace. The fact that Microsoft has made a move into this niche market after years of experience in networking with MSN shows that this is likely to be the fastest growing area of advertising revenue in the coming years. As Gabriel
Ready from the Open University has commented there is no such thing as a free web-trip or (lunch in cyberspace):
As Facebook founder Mark Zuckerberg explained, quite simply, these sites are based on a business model of selling targeted advertisements. Targeted advertisements, unlike traditional broadcast adverts, rely on information about their targets. And we--the users--are the targets. It's inevitable that companies like Facebook will want to gather more and more information about us as users, because it is that rich mine of data about us that advertisers are willing to pay for. (My emphasis, Ready: OU Open2.Net)