Here’s a terrific piece by Harry McCracken over at Technologizer asking “Whatever Happened to the Top 15 Web Properties of April, 1999?” McCracken goes through the hottest web properties of April 1999 and asks, “How many of 1999’s Web giants remain gigantic today — assuming they still exist at all?” Instead of reproducing his entire list here, I’ll just encourage you to go over to Technologizer and check it out for yourself, especially because McCracken also compares the old list to today’s top 15 Web properties. Anyway, here’s the key takeaway from his piece:
to summarize, four of April 1999’s top Web properties remain in the top fifteen (plus AltaVista, Excite, and GeoCities, which are extant and part of top-10 properties). Four more are in the top 50, or are part of properties that are. Two exist but have fallen out of the top 50. And two (Xoom and Snap) no longer exist. Bottom line: If you were one of the Web’s biggest properties a decade ago, chances are high that you remain in business in some form in 2009… but you probably aren’t still a giant.
In other words, it’s a dynamic marketplace with a lot of churn and creative destruction. Sure, some big dogs from the late 90s remain (Microsoft, AOL, Yahoo, and CNet). But they have all been humbled to some extent. Moreover, lots and lots of other players were driven from the top ranks or disappeared altogether. (GeoCities, Lycos, Excite, AltaVista, Xoom, Snap). And there have been new technologies, platforms, and players that have come out of nowhere in a very short time to become the household names of 2009 (Google, Facebook, MySpace, Wikipedia). But, as McCracken points out, it’s anyone’s guess which of today’s top Web properties will still be booming in 2019. Anyway, I encourage you to check out McCracken’s very interesting essay, and if you find this sort of restrospective piece interesting, you might also want to check out my essay from earlier this year, “10 Years Ago Today… Thinking About Technological Progress“.
On the problems with the newspaper industry, Michael Kinsley writes in the Washington Post:
You may love the morning ritual of the paper and coffee, as I do, but do you seriously think that this deserves a subsidy? Sorry, but people who have grown up around computers find reading the news on paper just as annoying as you find reading it on a screen. (All that ink on your hands and clothes.) If your concern is grander – that if we don’t save traditional newspapers we will lose information vital to democracy – you are saying that people should get this information whether or not they want it. That’s an unattractive argument: shoving information down people’s throats in the name of democracy.
I rarely say it, but the whole thing is worth reading.
Leave it to the English—famous for their superior fluency in the language that bears their name—to reach unparalleled heights of hysteria in the war of words being waged against Google. The Guardian’s Henry Porter claims that “Google is just an amoral menace: The ever-growing empire produces nothing but seems determined to control everything.”
Porter declares that Google is the world’s “most prominent WWM,” his acronym for the “worldwide monopolies that sweep all before them with exuberant contempt for people’s rights, their property and the past.”
Google is in the final analysis a parasite that creates nothing, merely offering little aggregation, lists and the ordering of information generated by people who have invested their capital, skill and time. On the back of the labour of others it makes vast advertising revenues – in the final quarter of last year its revenues were $5.7bn, and it currently sits on a cash pile of $8.6bn.
Let’s review Google’s 2008 Annual Report. Of Google’s 2008 Revenue ($21.78 billion), two-thirds ($14.41 billion) came from advertising on Google sites and just under one-third ($6.71 billion) came from advertising on Google Content Network (GCN) web sites (made up of publishers that sell their ad space to advertisers through Google AdSense). On this revenue, Google made a net profit of $4.2 billion after taxes. To put these numbers in context, Microsoft (Google’s closest peer) earned three times ($60.42 billion) Google’s revenue and produced 4.21 times ($17.68 billion) Google’s profit. Google’s revenue was just 0.1528% of 2008 U.S. GDP and its net income, 0.0294%.
So what does Google actually create with all that revenue? The answer is free content and services.
First, Google cross-subsidizes dozens of its own free services—starting with its search engine but also including email, a free browser, YouTube, a word processing suite, IM, maps, news, and much more.
Second, as the world’s leading ad network, Google supports a significant percentage of the free content and services offered by others. In 2008, Google paid out $5.28 billion (24.22% of revenue) to GCN publishers—significantly more than the $4.2 billion Google earned in net income (19.3% of revenue). Continue reading →
Better not be offering incentives!
As I previously reported, the DC Circuit recently upheld a decision by the FCC to forbid customer retention practices used by Verizon to incentivize its customers to stay with the carrier rather than leaving for a VOIP provider. In the earlier post, I analyzed the bad economics of the FCC’s ban. In this post, as promised, I go into greater detail on the court’s decision affirming the FCC.
The latest issue of the Center for Internet and Society’s publication, Packets, has arrived and with it my summary of the case. The Packets piece provides a more neutral (but detailed) summary of the DC Circuit’s decision, without much analysis.
The big question before the court was whether what the FCC did was really pursuant to the Telecommunications Act, which forbids a telco “that receives or obtains proprietary information from another carrier for purposes of providing any telecommunications service” from using the information for a marketing purpose. If not, then essentially the FCC just went AWOL; instead of enforcing the law, as it is supposed to, it simply made its own law.
Indeed, that is exactly what happened here. The natural reading of the language, as the court admits, is contrary to the FCC’s ruling. To use an example employed by the court, when one says “Joe received information from Mary for purposes of drafting a brief,” the court reasoned, “it is overwhelmingly likely that the speaker expects Joe to do the drafting.” But Verizon is getting the information from other telcos not in order to provide their customers with phone service, but to cut off service. It is the competitors who are using the information to provide phone service. Mary is drafting the brief, so the statute doesn’t apply! The court never fully explains why it refuses to limit the statutory language to its natural meaning – saying only that one could grammatically read it the other way. Continue reading →
Google’s new “Interest Based Advertising” (IBA) program represents the company’s first foray into what is generally called “Online Behavioral Advertising” (OBA): In order to deliver more relevant advertising, Google will begin tailoring ads delivered through AdSense on the Google Content Network (GCN) and YouTube.com (but not Google.com). This tailoring will be based on a profile of each user’s interests created by tracking their browsing activity across sites that use AdSense-but not search queries or other user information. Until now, (i) AdSense has delivered essentially “contextual” advertising by choosing which ad to display on a page based on an algorithmic analysis of keywords on that page; and (ii) Google has tracked users’ browsing only for analytics purposes-to limit the number of times a user sees a particular ad (to prevent overexposure) and to allow sequencing of ads in campaigns where one ad must follow another.
Google is sure to be attacked for crossing a “line in the sand” drawn by some privacy advocates between contextual and behavioral advertising-even though Google’s closest competitor, Yahoo!, already offers a similar program, and the concept in general is hardly new. Google’s position as the leading search engine and third party ad-delivery network will no doubt cause paroxysms of privacy hysteria among those who consider targeted advertising inherently invasive, unfair or manipulative.
But those whose first priority is advancing consumer privacy, not advancing a political or regulatory agenda, should applaud Google for excluding sensitive categories and for putting the new Ad Preference Manager at the core of the company’s new IBA program. The Ad Preference Manager sets a new “gold standard” for implementing the principles of Notice and Choice, which have formed the core of both OBA industry self-regulation and the various regulatory proposals made in recent years. Indeed, Google has done precisely what Adam Thierer and I have called for: giving consumers more granular control over their own privacy preferences by developing better tools.
Continue reading →
Even an economy in shambles shall not sway the elevation to Federal Trade Commission chairmanship of Jon Leibowitz, an interventionist-minded commissioner who, like all planners, knows better than others how markets should be structured.
In several important areas, his inclinations (judging from the cheers emanating from interest groups like PIRG and Center for Digital Democracy) lean toward substituting political “discipline” for what competitive markets offer.
He supports “opt-in” with respect to behavioral advertising, which we’ve often described as not-necessarily good for a lot of reasons. We’ll come back to this later.
He supports antitrust intervention with respect to firms like Intel (and watch out, Google), and favors destructive “conditions” on mergers. Nineteenth-century, smokestack-era antitrust, rather than withering, now seems dedicated to exploiting and hobbling large-scale transactions in ways that end up creating entities that would not emerge in free markets. Several mergers lately have resulted in such artificially constrained frankensteins, or suffered catastrophic delays. Thus “competition policy” (ha!) neuters the healthy competitive response to them that could have come about. (See my FCC comment on XM/Sirius in that regard.)
On “net neutrality,” we leap beyond whether markets are adequate to discipline errant behavior; here the starting point is the nominee’s doubt that even antitrust intervention is necessarily “adequate to the task”; thus the implication that new laws may be in order.
Let’s just take net neutrality for now. There are plenty reasons I think it’s an outrage to regulate price and access on networks and infrastructure; but just for the moment, the entire concept rests upon numerous (I often feel deliberate, in my less-charitable moods) misperceptions or misrepresentations about competitive markets and capitalism. These include but are not limited to the following: (Adapted from an FCC filing I made).
Continue reading →
It’s good to see Google and Microsoft playing nice (for once):
Microsoft has licensed the Exchange ActiveSync protocol to several other mobile communications players, including Apple. Horacio Gutierrez, a top Microsoft intellectual property and licensing executive, said in a statement that Google’s licensing of the patents related to the protocol “is a clear acknowledgement of the innovation taking place at Microsoft.”
He said it also exemplifies the company’s “openness to generally license our patents under fair and reasonable terms so long as licensees respect Microsoft intellectual property.”
Check out Google’s new service.
Over the summer, I blogged about an FCC decision to ban Verizon’s practice of offering incentives to departing customers to get them to stay. Yesterday, the DC Circuit upheld that bad decision. When a customer of Verizon’s phone service decides to leave for a VOIP company, Verizon gets a notice that the number is being ported. When Verizon got notified that the customer was trying to leave, the company would offer her incentives such as “discounts and American Express reward cards” to stay.
This worked well for the customers, who got discounts if they stayed. It also worked well for Verizon, for whom it costs much more to find a replacement customer than to keep the current one. And it was really the best way to do so. If Verizon had given the incentives any time a customer threatened to leave, but didn’t start the process of doing so, then customers would just bluff to get the incentives. Verizon instead looked for a costly signal from the customer. And if Verizon had waited until after the port was already completed, it would cost the customer, Verizon, and the new carrier a lot of effort to switch back.
But the FCC banned Verizon’s efforts and yesterday the DC Circuit affirmed the Commission. I will follow with more details, once my summary of the case comes out in the March issue of Packets, the Center for Internet and Society’s publication summarizing important new internet cases. But for now, I should just note that the court hinted that the FCC’s reading of the statute it relied upon was a bit counterintuitive, but was compelled by Chevron v. NRDC to give the administrative agency great deference in its bad reading of the law. The court even noted that Verizon offered uncontroverted evidence “that continuation of its marketing program would generate $75–79 million in benefits for telephone customers over a five-year period.” Further, the court rejected Verizon’s First Amendment challenge, because the lower standard for commercial speech compelled the conclusion that Verizon’s sound marketing efforts didn’t deserve protection.
These precedents need to be revoked, or the growing administrative state will keep swallowing up more and more of our most important freedoms while preventing sensible and beneficial policies.
Sirius XM Satellite Radio—the company born from the merger of Sirius Satelllite Radio and XM Satellite Radio—has “been working with advisers to prepare for a possible bankruptcy filing,” according to the New York Times.
Some may say that Sirius XM was never a fit business to begin with—many of their new subscribers came from the bundling of subscriptions into the sale of new automobiles—but it’s hard to say what might have been had federal regulators not delayed the merger for 18 months and then added insult to injury by subjecting them to seemingly arbitrary restrictions.
My colleagues Wayne Crews and Ryan Young wrote about this last year at Real Clear Markets noting the conditions that the merged company had to adhere to:
One condition of appeasement for the Sirius-XM merger is that they hand over 8 percent of their channels to noncommercial and “public service” programming. Internet radio does not face this requirement.
Another condition is that they freeze their prices for three years. Meanwhile, their competitors are still free to set their own prices to reflect changing market conditions.
A third condition is that XM-Sirius must introduce á-la-carte subscription models. If this were economical, they would have done this already.
The motivation for these conditions was just as absurd as the conditions themselves—regulators worried that the combined company might overcharge and otherwise abuse consumers. That’s right, regulators actually believed that consumers would just pay and pay for satellite radio if the prices were raised, rather than abandon the fledgling technology for competing technologies. Regulators thought this despite the fact that we have no shortage of alternatives. Traditional radio, iPods, streaming music on our cell phones, Pandora, Last.fm, CDs, MP3s, and the hundreds of other ways that music and talk entertainment can enter our ears.
Continue reading →
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