Daily Archives: October 18, 2010

Boxed in

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Dave Winer had to read eight speeches by steam media big shots explaining their strategy for dealing with the online world. His typically thoughtful summary of what he found reads:

For Jay’s [Jay Rosen, NYU] class, our assignment is to figure out how these guys are trying to adapt.

Here’s how I visualize how they’re doing it. Imagine a box made of cardboard. It’s big, but it’s light. Pick the box up and move it from one place to another. When it gets to the new spot, it’s still a big cardboard box. It still can contain the same stuff as the box did when it was in the old place.

That’s the transition each of these execs feel they have to make. The stuff in the box are news stories. The box is their editorial structure. The old place is print. The new place is the Internet.

Spot on. But it’s not just media moguls who don’t get it. Academia can be just as obtuse.

The Facebook Money Machine

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Interesting insight, as usual, from Frédéric Filloux on Monday Note.

This year, Facebook will make about $1.5bn in advertising revenue. On average, this is about three dollars per registered user, a figure that is significantly higher for the 50% of the social network’s population that logs in at least once a day. How does Facebook achieve such numbers? Last week, we looked at the architecture Facebook is building as a kind of internet overlay. Now, let’s take a closer look at the money side.

If Google is a one-cent-at-a-time advertising machine, Facebook is a one-user-at-a-time engine. The social network is putting the highest possible value on two things: a) user data, b) the social graph, e.g. the connections between users.

For a European or American media, one user in, say, Turkey (23m Facebook users) carries little or no value as far as advertising is concerned. To Facebook, this person’s connections will be the key metric of his/her value. Especially if she is connected to others living outside Turkey. According to Justin Smith from the research firm Inside Facebook, in any given new market, the social network’s membership really takes off once the number of connections to the outside world exceeds domestic-only connections. A Turkish person whose contacts are solely located within the country is less valuable than an educated individual chatting with people abroad; the latter is expected to travel, has a significant purchasing power and carries a serious consumer influence over her network. As a result, Facebook extracts much more value from a remote consumer than any other type of media does.

The tablet future?

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The Register reports on a recent Gartner forecast which predicts astonishing sales for the iPad.

Tablet sales will more than double in the next year, with general-purpose machines taking business from mini notebooks and single-function tablets such as Amazon’s Kindle.

The iPad will drive sales of media tablets in 2011, with 54.8 million units projected to ship worldwide according to Gartner compared to 19.5 million tablets this year.

North America will account for more than half of media tablet sales this year, but as they become available elsewhere, this proportion will drop to 43 per cent by 2014.

Gartner vice president of research Carolina Milanesi said in a statement that all-in-one tablets will cannibalize sales of e-readers, gaming devices and media players.

“Mini notebooks will suffer from the strongest cannibalization threat as media tablet average selling prices (ASPs) drop below $300 over the next two years,” Milanesi said.

Gartner didn’t use the phrase, but it probably meant netbooks.