Today a bunch of the filings from the Viacom/Google/Youtube lawsuit were made public today.  Here is a techcrunch link to all the goodies if you would like to read them.

Lots of folks have commented about the comments and responses from both the Google and Viacom sides. Each basically said the other side was wrong. No surprises there.

What has surprised me is that Google/Youtube didnt deny any of what I thought was the important stuff.  Then again, Viacom, from what i read (and i admit i didnt read every word) didnt make a big deal of what I thought was the biggest deal.

What was the big deal ?

In the DMCA it is clear that hosting companies are not supposed to know what is on their sites.  The logic in the DMCA was: If you dont know what is on the site, you can’t be responsible for policing it. That is up to the people who upload and who own the copyrighted content. Youtube knew what was on their site.

What caught my eye as “game over” material in the quotes from Youtube founder emails was the constant decision making process over what videos should stay and what should be removed.  They talked in one case about a guy uploading a ton of Family Guy videos and what they should do about it. Another stated “if we reject this we need to reject all the copyrighted ones”. Another asked “cant we keep it up a little longer”.

No question they monitored the site and knew what content  was on the site. They knew what was attracting users. They knew what would grow the site so they could be acquired.

They monitored the site and they  made decisions based on financial gain.

Game over.

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I had a very enjoyable debate with Avner Rosen of Boxee yesterday at SXSW.  We tended to go around in circles defending our positions. His (to paraphase): the internet will do what cable and satellite do, but it will do it better. That MicroSoft and Apple among others will in the future come up with new ways to do it all better than we can now.

Mine: Of course the internet can support video, but it cant do it as well as the current digital cable and satellite distributors can, nor is there a profit model that would ever incent content providers to switch their content from the internet to TV.

I wont rehash it all here, but the most salient comment came from the audience when someone asked “Whats the difference if the gatekeeper MicroSoft/Google/Apple rather than Comcast/Time Warner/Directv/Dish ?”

Of course the questioner was right.

Bits are bits . The economics of content are going to search for the best place to be monetized, regardless of the delivery platform.  I think the current model will be the place content finds, Avner seemed to feel it would be some future internet.

It shouldn’t matter.

We both seemed to agree that one of the biggest future changes for the internet will be an increase in bandwidth. The question the needs to be answered is “how will all the new bandwidth, both on the backbone and in the last mile be used ?”

Will it be used for digital video content, ie, TV ? Why would we want it to be used for TV ?

The internet has the opportunity to continue to be transformative. There are applications out there that can change the quality of our lives.  Im not talking about the ability to update your facebook, or check out what where everyone is at on 4Square and twitpic what is happening to your friends and followers. Social Media is one more amazing communication platform that is impacting our lives. But its not tranformative.

There will be transformative applications that need all the bandwidth they can get. Medical, Transportation, Defense, Gaming, Simulations and who knows what. As computers become more powerful, we need to be able to send more data to the cloud where they can crunch data and return it to us.

That is the value of an open internet. The things we cant imagine today. The applications that are just dreams because  they dont have enough horsepower and bandwidth to work today. I want the internet to be a platform for amazing. Not Gilligan’s Island reruns.

I recognize that with openness comes the risk of the least common denominator dominating.  Porn has just as much right to dominate the net as any other app. But should it ?

Yes it should. The lesson of TV over the internet vs TV over digital cable or satellite isnt about openness. Its about the value of Application Specific Networks. DIgital CAble is an application specific network. Its only job is to serve up content and it works very well.

The FCC needs to recognize this and start working with internet broadband providers to define tunnels,  Private Virtual Networks  or just plain reserved bandwidth that are saved for future applications. When a transformative application presents itself, there should be an opportunity to define the network to optimize that application.

In the event some form of ubiquitous entertainment comes first ,  takes over the net and saturates it, how is the FCC going to solve the bandwidth traffic jam ? They wont ever be able to put the bandwidth genie back in the bottle. Screaming at broadband providers to spend the money wont work any better than screaming to expand highways helps to alleviate rush hour traffic

The FCC wants Internet 2 at universities to flourish and develop new things. But where are they going to roll them out to if all of our bandwidth to the home is being used for some new form of 3D virtual fantasy sports?

I just dont think these things will just manage to take care of themselves.  The reality is that when we run into future internet application roadblocks our politicians will jump in the mix and attempt to “solve” the problems. You know where that will get us.

We need to start the process now of putting some bandwidth to the home away for a rainy day. Not only do we need to preserve bandwidth in the last mile, but the FCC also needs to  figure out a way to create a transparent market or exchange that allows competing applications a means of knowing how and when they will have access to bandwidth when, not if,  it becomes constrained.

And if you really want to make things interesting, the company that is doing the most work on realtime markets and competing for resources that i know of ? ….. Google.

Deal with it today or struggle with it in the future.

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As best I can tell, Health Insurance for the average family costs about 13k per year. For individuals, its about $6k per year. For some, employers pay a big chuck of that. For others, the deductibles and other charges are super high so that the monthly premium is lower.  For many,  its a health arbitrage. You pray you don’t get sick while you can’t afford the insurance.

What we have is a product, health insurance, that everyone seems to need. And if you pay attention to the political world, its a product that our government wants everyone to have.  Which got me thinking.

$500 per month per person. $1,200 per month per family.  Where do we spend enough on products in competitive industries to warrant a business subsidizing  our health costs ?

Google subsidizes the cost of hosting our home and business videos in exchange for selling advertising around the content we upload. Our cellphone provider might cover a couple hundred dollars of the cost of our phone in exchange for a multiyear commitment to buy phone and data from them. What do we have to exchange in order for someone to cover all or part of our health care costs ?

Let me give you an example. Is it worth it for Walmart to add me to the self insured health plan that they offer employees in exchange for a commitment that I buy 100pct of any products Walmart sells from Walmart ?  If I promise to buy everything from toothpaste to celery to lightbulbs to underwear from them for the next 5 years, would the average person generate more than enough in net margin dollars to make it worth the incremental expense ? Remember, you have to build in the reduction in new customer acquisition costs as well. Is it worth it to Walmart ? What if my employer did the same type of deal. For the sake of example, what if the Dallas Mavericks promised to buy everything that we can from Walmart ? Would Walmart make us an affiliate for health insurance purposes and add Dallas Mavericks employees ?  Or could the program be simplified so that while Walmart wont commit to subsidizing all of the health care costs in their system, or require 100 pct of purchases, they could take a page from Visa and apply some percentage of purchases towards health care premiums for customers and allow them to participate in a Group Insurance program that Walmart , with their incredibly purchasing power set up.  Not surprisingly, this wouldn’t be a drastic step for a Walmart. They already offer special discounts to other self insured companies for the purchase of prescription drugs.

Here is the bottom line. Would consumers and businesses commit to do business with companies that offer incentives and subsidies built around health insurance coverage ? And what if health insurance became a value add rather than a primary product ? Would a service from companies that are big enough to self insure and add their customers to their corporate health care programs change the dynamics and economics of health care ? Would it create enough competition to force traditional insurance companies to change their ways ?

Maybe its already out there and I don’t know about.  Maybe its an opportunity.  But its certainly something I would like to see discussed more. If there is any way to bring back universal healthcare to the market, rather than the government, now is the time to talk about it

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According to the LA Times, “In written questions to Comcast and NBC Universal regarding their $30-billion proposed marriage, Sen. Franken — who has been one of the harshest critics of the deal — wants Comcast and NBC Universal to promise that it will put all its television shows online. He also wants assurances that shows that the companies put online be made available to every one and not just people who get their Internet service through Comcast.”

Also in the Times article: “As Franken notes in his questions to the two companies, “The Internet is the future of the media business.”"

Lets start with the first request that all NBC Universal/Comcast shows should be delivered over the internet.  Someone needs to explain to Sen. Franken that TV shows delivered over the internet consume bandwidth. A lot of bandwidth.  There are  reasons why Youtube limits the size of files that users can upload to it. The first is that video is the ultimate bandwidth pig.  The 2nd  reason is that bandwidth is not unlimited or elastic.  The more bandwidth that is consumed, the more bandwidth that must be added to maintain existing levels of service. That costs a lot of money.   Think that might push up internet rates to consumers ?

I get that no one really cares if Comcast has to spend money on capital improvements to add bandwidth to the home.  They should. Its pretty damn stupid to push consumption in a direction that will raise internet rates  to receive the same content for which there is already a phenomenal digital network in place to deliver that content.

Think about it for a minute Senator Franken. Comcast, and every large TV Provider has a digital network in place that can and does deliver gigabits of tv content perfectly,  every second of every day, to any TV set in any  home that is connected to their network. It works. Well.  What you are asking Sen Franken, is that Comcast duplicate the delivery of theirs and NBCUniversals shows on a network, the internet,  that is not, and has never been designed to handle the delivery of huge volumes of video and tv shows.

What you are forcing them to do is not only going to impact Comcast, its going to push ANY internet provider  on which NBCUniversal/Comcast owned shows are delivered to deal with the increased bandwidth needs your request requires. Increased bandwidth needs to the home means more money spent on infrastructure needed to support that delivery, which in turn is going to mean  HIGHER INTERNET RATES and/or caps on internet bandwidth consumption for consumers .   Did you even think through what would happen if NBCUniversal/Comcast was required to simulcast  the Olympics over the internet ?

Even if shows are only required to be placed online after the fact and offered on demand, even if we put aside the cost issues, you then have to answer a bunch of expensive questions. Which video format?  Flash ? Great, except that it wont work on most mobile devices. Flash and Mpeg2 or the Google owned On2 format ? And should the ondemand tv shows be streamed or progressive download ? Streaming is more expensive, but progressive download leaves a copy on the destination device, which is going to create huge issues for copyright owners. Does this apply to shows that NBC licenses or just the shows it and Comcast produce and own ? Try explaining the difference to your voters. And what timing? Do they have to post the shows immediately after they air, or is ok to have them post the shows 1, 2 or 3 days or weeks after the show airs ?   Right now these are questions that the market defines. If you require delivery online in order to make your constituents happy, will you try to  make all of them happy ?

Let’ me try rephrasing all of this in a different manner.  Google can’t make money delivering video content that costs them NOTHING over the net for free, what do you think will happen to internet rates when you REQUIRE NBCUniversal/Comcast  to deliver content that costs millions of dollars per hour for free ?

I understand that you just want to make sure that people who are getting shows online now continue to get them.  What you don’t understand is that the vast majority of shows online are library shows that weren’t generating much, if any revenue for their producers, so any advertising revenue they could get by placing the shows online was found money.  Established shows  that are currently on air are either not online or are delayed. Now that producers are recognizing that the advertising dollars generated by current shows is of marginal value at best, you will see more and more shows put behind paywalls available only to subscribers. Try to regulate  these market driven decisions and you will certainly find the law of unintended consequences biting you in the ass.

But wait there’s more. The hardest and most expensive part of delivering all of this content to the home isn’t even what the TV Providers have to do. Its what has to happen in the home.  Senator Franken, did you install your own wireless router in your home ?  Ever try to put in a 2nd one to make sure you can get a signal that is strong enough to carry the video you want to watch into the other rooms ?  Ever experience a slowdown  in that wireless network at your place ? Ever get annoyed that video you were watching buffered and you couldnt figure out why ? Ever try connecting them to your TV ?  Who is going to solve these issues for people who think its their right to watch their TV over the internet ? Who is going to pay for it ?

Finally, lets get to your statement “The Internet is the future of the media business”. Dead Wrong. Not even close.

Let me explain to you the future of the internet.  We all are becoming more and more dependent on our handheld devices which  are becoming more and more powerful and an expanding part of our daily lives.  For many, the mobile device never leaves their side.  This increasing dependence on mobile  is slowly but surely weening us off our desktops and laptops.  As the capabilities of mobile devices and their apps increase, so will our transition away from traditional computers. Soon we will rely exclusively on our mobile devices or  be able to tether the mobile device to the screens and keyboards we use at home. Over the next few years we wont sit down and fire up the laptop or desktop. We will place our mobile device next to the screen and keyboard we have on our desk or pulled out of our briefcase.  For those of us who need always on internet for family members or business, we will consider replacing our land internet lines with  a 4G access device that is part of our mobile account. Combined with all the advances in cloud computing, it should be a simple and very compelling option.

At that point people will ask why they pay for both fixed internet and mobile internet .  Just as people are dumping land phone lines for mobile, they will dump fixed internet lines. Not everyone of course. Not even most. But like phonelines, enough will leave their fixed internet lines behind to change the economics of the internet.  How does that affect the future of media ? Mobile internet is different than  landline internet.  We wont look to replicate the experience we got from internet landlines, we will expect new and different experiences that play to the strengths  of the device and delivery platform. And we will still get our TV the old fashioned way on those new 60 inch big screens we just upgraded to  for $499 dollars. Moores law applied everywhere.

Let me translate all of this for you Senator Franken.  If you get what you ask for, by the time you are done answering the complaints of why didn’t you realize that your request would jack up everyone’s internet bill. put caps on usage and negatively impact the performance of your constituents home internet,  you just might be the former Senator from Minnesota.

How you view the Comcast/NBC merger is up to you. But before you go off on an internet rampage, please get a different side of the technology story

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I wrote a post a while back about How to Get Rich.  The no shortcuts version. It is posted below. I wanted to repost it because its been so popular in the archives. Plus, with the advent of some new banking laws, I wanted to update it with a quick note.

On July 1, laws for banks change so that they can not charge you overdraft fees UNLESS YOU OPT – IN. In other words, if you want your bank to give you cash at an ATM, or cover a debit charge on your debit card when there isn’t enough money in your account to cover it, you have to give the bank permission to do so. When you give that permission, you also give them permission to charge you HUGE amounts of money in the form of an Overdraft Charge. When I say HUGE, I mean HUGE. To the impact of 10s of Billions of Dollars per year in revenue for banks.

If you want to get rich, one of the first steps you need to take is NOT OPT IN. No matter how the banks package and market the benefits and wonders of overdrafts at the ATM or on your debit card, don’t fall for it !

Thats the How to get Rich lesson for the day. Dont be an overdraft sucker !

And here is a repost of my How to Get Rich post from 2008

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Is it possible that the future economics of the NFL could be influenced by the FCC ? Absolutely.  Does the NFL and all professional sports leagues have something in common with the Sub Prime mortgage mess and the collapse of home prices. Absolutely.   Could both of these, along with the recession impact whether or not you will be able to watch your favorite professional sport in 2011 ? Absolutely.

Sports fans probably are not paying attention to what is happening with broadcast television.  The over the air broadcast networks, all of which are the biggest customers of the NFL (CBS, NBC, Fox and ABC/ESPN) are now pushing TV Providers (cable, telco and satellite), to pay retransmission fees. In other words, the broadcast networks want to be paid for every TV Provider subscriber, just like cable networks get paid.  It’s a reasonable request in many ways. But there is a flip-side.

The ability to send their network signal over the air to TVs (to be received without paying a TV Provider) is a right that is regulated by the FCC. The FCC is also in charge of the Broadband Initiative in the US.  Whats the connection ?  The same spectrum that the broadcast networks use to send their digital tv signal over the air to TVs could be re-allocated to the broadband initiative.  Which is more important to US Citizens, over the air TV stations or more wireless broadband bandwidth  ?  Its a simple question with no simple answer.  What is absolutely certain is that a very convincing argument could be made that wireless bandwidth is more important than over the air TV.

If this argument wins, the amount of spectrum to TV stations could be minimally cut, impacting the picture quality of their signal. It could be reduced substantially, severely impacting the quality, leaving just enough for a basic Standard Definition quality signal, or it could be cut 100pct with a subsidy being provided so that that the formerly over the air signals could be received over the broadband bandwidth or from an existing TV Provider. In any of these scenarios. it could be a big problem for the NFL. All NFL regular and post season games are currently broadcast on over the air stations.  If the business and delivery of those over the air stations changes substantially, the economics of the NFL could change substantially.

Do you think the NFL and the NFL Players Association are building this scenario into their models as they negotiate their new CBA (collective bargaining agreement) ? They should, it has a far better than zero chance of occuring in the next 5 years.

Which leads us to the most prolific problem that all professional sports leagues currently have, they are HORRIBLE when it comes to managing risk.

Lets continue with the NFL.  The hardest job in professional sports is the assessment of  player skill. The second hardest job is determining how to allocate salary to players in a manner that builds a  championship team. The difficulty of talent assessment and salary is amplified for rookies.  No professional sports league has been smart enough to negotiate the ability to work out and play potential rookies against existing league players. Why not ?

In the case of the NFL rookie draft pick salaries and bonuses are basically a function of what was paid for the same draft position in previous years.  Thats stupid. Rookie signings are 100pct risk, yet their guaranteed salaries are often higher than established all stars at the same position. Even worse, much of that amount is paid up front in the form of a bonus.   Again, poor risk management by the league when they negotiated their Collective Bargaining Agreement.

I have written in the past about the  significant problems inherent with the CAP based system that the pro sports leagues use.  Its a killer for small and medium sized markets. Combine the problems of a CAP system with the significant risk of rookie and overall player evaluation and salaries and pro sports leagues actually face a better than zero chance of having teams go out of business. We have seen bankruptcies in the NHL. If pro sports leagues don’t do a better job of risk management, it could get worse.

What about the players side ?  They have kicked ownership’s ass in every league. Contrary to what some agents have said, professional athletes have taken advantage of leagues inability to manage risk and their desire to win.  Agents like to argue that pro sports should be an open market like the film industry. Well guess what, it is.  Im sure players would love it if all the agents in pro sports pooled the money they made from the players and started their own pro leagues.  If the economics were great and players were underpriced, in any league,  how fast would savvy businesspeople rush out to start new leagues and pay the star attractions of every league more ?

Instead, when leagues like the UFL start, they work to complement the NFL by taking players that are no longer in the league or trying to get there.  Basketball and hockey leagues arent formed in the US to compete, they survive overseas where a significant source of revenue and profits is in selling players to pro sports leagues here in the US. Again, another example of the inefficiency of how players are paid and how risk is assigned in professional sports in the US.

The same could be said about buying a team. You dont see agents buying teams in cap driven leagues.

If you want to understand more about value and athletes, look no further than Mixed Martial Arts.  I met with a lot of people who repeatedly told me that the UFC underpaid their athletes.  That by paying the best fighters more,  you could draw the same size crowds to arenas and buyers to PPV. It was an expensive lesson to learn how wrong they were.  Pro sports are just one of an unlimited number of entertainment options.  To get MMA fans to pay to watch a fight or to get them to the arena  is not just about having the best fighters, its about great marketing. Its about making a very significant investment in brand building and showmanship. Its about understanding how to connect to fans.  Its a lesson in recognizing that while the leagues or in this case the UFC enable their best to become big stars, they recognize that the business behind the stars must be vibrant and profitable before anyone can be successful.  The same can be applied to the big 4 professional sports.  Unfortunately it doesn’t appear that many in the big 4 sports leagues, whether agent, player, management or owner have come to recognize this fact.

A word of caution to  NFL players and their agents as they negotiate a new CBA. As I wrote about 5 years ago, up till the current recession, the only time I had seen a group self inflict a loss of  more than 1 Billion Dollars was when NHL players locked out of an entire season and lost more than that in salaries and benefits. Money they will never , ever get back.  The amounts of money at risk for players this time around will be far greater.  Ownership may lose some money in a lockout. Players lose all their earnings.  As owners in the NFL and NHL recognize that they have taken on too much risk in the past, the likelihood of a lockout increases. Players and their agents should be very careful how they balance the risks and rewards they ask for in a new deal.

Which makes all of this analogous to the Sub Prime Mortgage mess that helped put us in this Great Recession.

There was so much money being made in banking and syndicating loans that everyone who had money at stake ignored the risk involved.  They modeled their finances thinking that there was no way housing prices could drop 30pct. They modeled their businesses thinking there was no way 10pct or more of the loans they bought could default.  They bought bonds in companies they thought could never go out of business.

All of these things that never happened until they did,  in hindsight,  were not complete surprises. The surprise was that the ratings agencies, the bankers, the brokers, the mortgage syndicators, every one involved with the buying and selling of money ignored things they never should have ignored.

That is what the NFL and other pro leagues need to remember. You cant ignore risk. Nor can you assume 100pct of the risk and hope the real bad stuff never happens.  The NFL and its owners, since we are using them in our example, are assuming 100pct of the risk of the economy falling again. They are assuming 100pct risk of their bigggest TV customers having their primary delivery systems eliminated. They are assuming 100pct of the risk of trying to convey money from big markets to small markets to try to compensate for an irrational cap system. They are assuming 10opct risk on the capital invested in their franchises, PLUS capital they may have to add to cover any losses.

The players side ? While individual NFL players take on significant risk, the players as a whole take on ZERO risk.  If their membership just shows up for games, 53 guys on each team are getting paid.  They never have to give the money back or  contribute capital to make up losses.

The solution ? Its a system where risks and rewards are allocated properly. Owners should take on more risk than players because they have more upside from franchise appreciation. They shouldnt take on all the risk. Nor should players be excluded from sharing in the upside of equity appreciation. Im not saying that for example players earn a share of the sale price when an NFL franchise is sold. There are a variety of ways to track or index appreciation of franchises that rewards players that can work better and more efficiently.  When the index appreciates the economics available to players appreciate. When the index depreciates, the amount available to players should be reduced as well.

The bottom line of the bottom line is that its time for a new model for professional sports.  Merely changing the values of the current model is a recipe for potential disaster.  Black Swan events happen in professional sports and always will.

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I was really surprised to see an entry in my icerocket.com feed from Seth Godin saying that “

Mark Cuban Is Completely Wrong About Aggregators

I was particularly surprised because I am in the middle of reading his new book LinchPin which actually makes my point about why its a poor business move for newspapers and many others to be indexed by Google.

Read your book Seth .  Being algorithmic output is not being indispensable nor does it reflect amazing.

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Sometimes its hard to tell if people are trying to be funny, mean, interesting, provocative or are just plain stupid or completely out of touch with reality.  I know I get accused of being all of the above all the time.

The other day in New York I gave a speech at the AlwaysOn Conference which AdWeek summarized nicely here.  The audience was primarily newspapers and people related to their business. So as I do when I speak to a group like this, rather than just shilling a product, service or position as many, if not most keynote speakers do, I try to put myself in the business shoes of the audience. Then I discuss what I would do if I owned, ran or invested in their business, and the approach  I would take to some of the strategic issues of the day.

The concept of directing comments to a vertical segment of a market is nothing new. I have been doing it for more than 20 years. Yet for some reason, based on comments from a few folks over the past couple days, there are some relatively high profile people in the internet business that have a tough time grasping that concept.  Tech Crunch - a site I love. SearchEngineLand – Run by  Danny Sullivan, I think he Danny  likes to banter to create traffic, smart on his part. But I also think he doesn’t fully understand all the business elements on some of the topics he has challenged me on.  Then there is Jeff Jarvis who always like to slam me. Which is ok by me. I just consider the source. As Jeff describes himself  ”Most of my holdings today are in mutual funds because I’m a lousy investor.” Which tells me all I need to know about his business knowledge.

While its fun to make a list of those who have criticized me, the criticism is incredibly valuable.  As a businessperson and one who tries to stay ahead of the technology and business curve, even when it means taking a position that is far from popular, critics serve the purpose of always “making you check your hole card” . In other words, the more a position I take gets challenged, the smarter I get on the position. So the criticism is welcome.

Of course the criticism can be fun for me to challenge and also wrong. Which much of the criticism of my Newspaper Industry speech is.

Danny Sullivan thought he had caught in some hypocritical act because I am an investor in Mahalo, a human powered search engine that leverages SEO techniques to increase traffic and revenue. First of all, I invested in Mahalo in 2006 . Not yesterday as Danny would seem to imply. Nor am I involved in the day to day management of the company.  Im always available to answer questions when they ask. Which they do every so often.

Second, EVERY presentation or discussion of actions I thought the newspaper industry should take ALWAYS had the qualifier that the newspaper had significant amounts of unsold inventory.  My point being that if the traffic Google was sending you was not being monetized and you didn’t see a way to monetize the traffic, it was time to make a business decision reconsidering the value equation of traffic coming from Google or Google News vs the strategic implications of staying in their index and offerings. Topics I discussed in my last blog post.   I also discussed in a prior blog post, but unfortunately didnt have time to cover in my 12 minute keynote at Always On, that twitter and facebook were becoming significant sources of traffic to newspaper sites. A fact  that should be considered in the value equation and which in the long run  could become a threat to Google’s Search and News . (a point Im sure Google has also taken note of )

We increasingly look to friends and/or our social networks as a trusted source for information, and because that information is broadcast to us rather than us having to go find it, and because Twitter and Facebook updates are not going to be competitive threats to the newspaper business,  leaving Google is no longer unimaginable for Newspapers.  In the case of Mahalo, unlike newspapers, they are making good money from Google traffic. No reason to stop doing that.  On the flipside however, its fair to point out that Mahalo does use some newspapers content to support their content.  If a newspaper would ask me if they should block Mahalo, the fair answer would be that there is no reason not to. Like Google, the traffic from Mahalo would not justify the value Mahalo gets from their content.  If the CEO of Mahalo were to ask me how Mahalo should deal with newspapers, I would tell him he should work out a licensing deal with the newspapers. That it would be found money for newspapers, so he could most likely get some level of exclusivity on their content in exchange for a minimal amount of money that would be in the form of an advertising revenue share from  pages that host their content. It would be a simple revenue arbitrage for him while also giving him a nice differentiator that would allow him to promote being an exclusive source of content from companies he worked out deals with.

Moving on to TechCrunch, Michael Arrington asks the question of why I could be so enthusiastic about Techmeme, a site that I use regularly and to which I point to from my blogroll. I think his point is that its an aggregator and as such, shouldn’t I be cautioning newspapers about Techmeme and warning them to opt out of it ?  In response I will refer back to my references about monetizing and leveraging Google  traffic. My rule for ANY site receiving traffic from an aggregator of ANY kind is: If you believe you can create more value from the traffic you receive than potential negative branding implications plus the cost of supporting a potential competitor, then continue with the aggregator. If not, block the aggregator. In the case of techmeme, I dont see it ever originating content from the site. So I would strike the competitive aspect of it.  Nor does Techmeme attempt to index the entire internet looking for sources. Instead, if i understand it correctly, Gabe Rivera, the guru behind techmeme personally cultivates the sources he includes in the techmeme index. Because this is purely a tech driven site, and given that participating sites must be “selected”, I would argue that there actually is brand enhancement to being identified as a source on techmeme.  That said, in the event you think that techmeme is gaining more value from your site, than your site is from techmeme, Gabe offers a “leaderboard” where you can check to see just how important you are to the site.  I am sure that Gabe would be happy to exclude you from the site if that is your conclusion.

The same applies to one of my other investments, icerocket.com .  Icerocket was formed in 2004 to be a real-time search engine.  I wanted to be able to search blogs for information that I thought was important and also have those search results continuously available to me through RSS feeds.  It was and is the most expedient manner to keep up with what the blogosphere is saying about a topic. Icerocket’s strength has always been its ability to exclude spam.  To this day it does a better job than Google or any other search engine that includes blogs at finding and giving you real results. When twitter hit the seen, it was a natural to include twitter results as well.  IMHO, and in the opinion of others, Icerocket is as good or better than any other real time search engine out there.  Should your site stay in the Icerocket index ? That is up to you. If you would like to see your blog posts or tweets gain more visibility, then Icerocket will help you.  We aren’t the biggest, but our real-time search is growing very, very quickly.

Which gets me to the necessary conclusion.   The reality of today’s business world is that there are no absolutes. If I invest in a search index or aggregator, that doesn’t mean I believe every website in the world should be in the index. It means I believe that the business can offer enough value to those it has a relationship with to make that relationship win-win.  Nor does it mean that a company is “evil” or that I don’t like it.  Its real world that you will compete with companies that you do business with.  Superfeedr.com is a business I have invested in for realtime push of information that works with information aggregators and content creators of all types that compete with other businesses I own. So does SMASH , which does cookies for Text Messaging.  So what.

Every business has its own decision making critical path that must be re-evaluated daily. For some reason, many of the internet persuasion seem to think that 2010 is the same as 2009, which is the same as 2008, etc, etc. Its not. Things change. Every business must re-examine the variables that impact their current and future profitability. Your relationships with Google, Mahalo, Icerocket, in 2010 may need to be different than they were in 2006.   This seems like an  obvious conclusion to me, but it apparently isn’t to some.

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One of the key core competencies of a publication is the process of selecting “all the news thats fit to print”.

No one can read every news story.  Instead of even trying to consume everything, we all have a process we go through for discovery of news, information and topics of interest to us.  We have sources we trust for our news and information. It may be a printed paper or magazine, a website, tv news, facebook or twitter updates, or some combination of everything we have access to.

No matter how we get information there is one certainty, there is a finite number of sources we will use.

When someone selects google news as their destination for news discovery it is probably at the expense of another destination or product who aspires to be a “discovery destination”.  But lets pretend it is just an incremental source.  That for a while at least a consumer will both go to Google News and to the website of their local paper.  What is the branding message the consumer is receiving ?

When that newspaper allows itself to be included in Google News it becomes a de facto endorsement of Google News as an acceptable and probably preferable “discovery destination” . The branding message to the consumer is “I dont need to go to the newspaper homepage. Everything the newspaper has  is referenced  here in Google News. So if there is something of interest to me from the local paper, Google News will send me to their site.  I don’t need to go to both sites any longer. I can just go to Google News.

Thats not good for the publication brand and business. They just lost their position as a trusted source where real people make decisions on what content they think their readers will want to discover – to an algorithm.

But wait it gets worse.

When that consumer goes to Google News, it lists the number of sources. You immediately become one of 2,172 articles.   It is never good for a brand to be considered one of 2,000 plus sources. Ever. That makes you a commodity. All that promotion you did saying how good your reporters are ? On its way to becoming worthless. To the consumer there are 2,000 other people able to do the same thing (even though there really arent 2k sources, thats not what the branding message they get from Google)

And the bad news will keep on coming.

As a newspaper or other information source, you can never discount  the very real possibility that Google starts becoming a content creator. Why couldn’t they hire reporters ? Why couldn’t they give their content priority over all others ? More importantly, why wouldn’t they ?

Never happen you say ? See AOL. See Yahoo. Both are now creating original content in huge quantities. I promise you, someday there will be a bunch of Googlers sitting in a meeting  discussing how they can generate enough revenue and profits to increase earnings per share by a penny.  You can bet someone will pull up a spreadsheet showing the increase in CPMs for original content with the trusted Google News brand on it. It will show that by simply hiring a bunch of reporters to create news, with Google’s traffic and the higher CPMs of original content, we can make a lot of money for our shareholders. You are in denial if you think this will never happen.

It was smart to ride the Google wave of traffic when you were able to sell it all.  Things change. Now you can’t sell all your organic traffic, let alone the traffic you get from  Google.  Now the value equation has shifted.  You are endorsing Google News as a discovery destination making their brand stronger by the day.  Google News’ brand value will increase fast enough on its own. There is no sane reason to allow them to co-opt your brand and use it to accelerate the growth of a business, Google News that will very likely be your biggest online competitor

Update: I want to put a qualifier here because some people think this applies to any or all media companies. It doesn’t. This is meant for media companies that have established brands and brand equity. If you are a startup, you should use Google for everything its worth. It can be very valuable.  If you are trying to create or establish a brand, you should use Google.Google News. If you have no revenue, you should probably rethink your choice of professions and /or business, but Google traffic can only help.

For you, every visitor is a good thing and an opportunity to convert that user and build your brand image.

On the flipside if your company name is one of multiple choices that comes to people’s mind when they need the type of information/news/info you provide, then you need to think through just what impact Google.GoogleNews has on your business today and in the future.

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The simplest way to create more jobs is to allow small business and entrepreneurs  to  spend less time and money on lawyers and accountants and redirect that intellectual and financial capital to the core competencies of their business.

Any new government policy that requires the hiring of lawyers and accountants will not lead to new jobs, it will lead to time and money being wasted and fewer jobs being created.

Like the administration before it, the current administration seems to have no concept of what it takes to start, run and grow a small business. None.

Here is a hint. If you want to see more jobs created by Small Businesses and entrepreneurs REDUCE the amount of paperwork required. Dramatically simplify the tax code. In other words, if you REDUCE THE OVERHEAD of small business, you effectively create capital for them through reduced costs. Not only do you improve their financial position, but you reduce that great big time suck known as dealing with your accountants and lawyers. The more time wasted with “professional services”, the less time spent doing your job. This seems to be a concept lost on government.

One last thing. It appears to be a goal of the administration to free up loans to small businesses. For the sake of this comment, let me re-define Small Business as those companies with fewer than 20 employees. There are exceptions, but more often than not, the stupidest thing a business of this size can do is borrow money. Its stressful enough for a small business in these times to be profitable. Add to that stress the need to repay a loan and success becomes far more difficult.

If we want to accelerate the formation and growth of these small businesses we need to first reduce the costs imposed on them by the government (at all levels) and then  simplify and reduce the costs of raising capital.  Forget government loan guarantees.  Make capital gains on investments up to $1mm in small companies tax free. Make this process paperwork free for the small business and a 1 page form for the investor.

Thats how we will see economic and job growth in this country

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