Why Have So Many Internet People Lost Touch With Reality ?

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.

33 thoughts on “Why Have So Many Internet People Lost Touch With Reality ?

  1. Say what you will about Mark, but he is always candid. Those comments about newspapers and maholo are pretty golden.

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  5. Mr. Cuban, how do you think a startup’s relationship with Google and Twitter will change from say 2009 to 2010? Best wishes

    Comment by beevok -

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  7. Self interest is a funny thing. It is no surprise that many want content to always be free or argue that if you can’t monetize traffic it’s your own fault. What is forgotten though is that it should be your own choice. If cutting off traffic makes economic sense for any given company then they should cut off traffic. If they are wrong then somebody else will benefit. If they are right I will certainly be disappointed, but if it involves a quality product that I actually value and need I’ll cough up the cash.

    Problem for the news folks is there are still probably too many writers running after too few stories. Either have to slice and dice the pie or kill off a few competitors before paying for content will probably work.

    Comment by Fred H Schlegel -


    Comment by andrew2514 -

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  10. It’s all or nothing on the internet. You have to take extreme positions to get attention or page views. There’s no intelligent middle ground.

    And don’t forget, the internets always wins.

    Comment by trip1ex -

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  13. Why is it that your ideas always lead to making things less convenient for consumers? Delist from search engines so that consumers have to make a choice of who they get their news from. I believe that businesses who are successful in the long run are the ones who cater to customers and look to make their experience easy and open. This lock-in approach is exactly what is wrong with old media and why it is rapidly dying.

    The person who finds a great way to make news content on the internet different from any other type of news content on any other medium, is the person who’s going to become absurdly rich. But they aren’t going to do it by forcing consumers to chose teams.

    Comment by mateo2 -

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  15. Danny, my mistake lumping your article in with the others. Yours was very informative as usual. You took the time to get the screenshots that support your words. Very professional.

    DJ, I have known Danny since 1998 when I was director of engineering at AltaVista. You are right, he is the real deal, the person who understands this better than most.

    I know Mark pretty well too, and I knew exactly what he was doing. I don’t have any problem with that. He was giving constructive advice to the newspaper industry. They need it.

    I know Jason Calacanis (Mahalo) very well too, and consider him a friend. I have been to the Mahalo offices many times and know exactly what they do. It is much tougher than it looks, and they create useful pages that help people find the best information.

    The newspaper guys aren’t stupid either. They are caught between a rock and a hard place with very few viable options. They are constrained by unions and work rules that limit what they can do. Witness the Boston Globe. They have lost the very lucrative classified ads to Monster, craigslist, eBay, and other online portals. They have been through the worst economic recession in recent memory, a time when advertising is the first expense that gets cut. Newspapers have to balance their existing revenues and cost structures against the new opportunities. It is not easy. This isn’t an intellectual debate for them…it is life and death.

    Danny is right. There are smart people on all sides of this debate, and we should be a little more civil in our comments. I have been the target of some pretty nasty anonymous comments on various blogs and news sites. We all have. These nameless cowards are pretty bold hiding behind the anonimity of the Internet. We need to stay above that.

    Don Dodge

    Comment by dondodge -

  16. Mark,
    all the comments above are prior to reading Danny’s Article…

    but… he is 100% correct… go back and read what he wrote.. he offers valuble advice..

    p.s. Mahalo is kinda spammy once you look at his article.. i see it as VERY similar to a SPLOG… yeah u made that term up.. and u were right.. 100%


    Comment by djpaisley -

  17. Mark, you’re giving directions to the captain of a sinking ship.

    Newspapers are going down no matter what direction they go in because their only value add is trust and aggregation and someone will create an algorithm for both. Then a server can replace everyone between writer and reader. Everyone else is completely unnecessary.

    Comment by Neil Durbin -

  18. Mark,
    you know me… so take what i say from me.

    Danny IS NOT someone to go after… he IS THE.. yes i said “THE” person who would be the ORACLE (as in Delphi) of search… you should make him an ally.. he IS good people.. and as far as credibility in the search space there is NO ONE PERSON who is more credible. period..

    Mark is a great guy… i’ve known him since AudioNet before u got bought by Meckler Media, etc.. (time reference may be close)..
    sure he owns the Mavs, has big bucks and whines and complains alot.. (because he can and should – thanks Mark)

    Don Dodge – Danny doesn’t need to create controversy… please don’t group him with the FAR LESS CREDIBLE (ex. TechCrunch) people you have above.. HE IS THE SOLE DEFINITIVE EXPERT in the field of SEARCH, period.
    and has far more readers than Mark does in the first place.

    c’mon guys… hug it out..

    Dear Danny and Mark.. two people i respect greatly could work together and change the world…


    Comment by djpaisley -

  19. Don, I wasn’t using Mark’s name to attract page views and attention and controversy. I was dead serious what I said at the end of my post, that I’m tired of all the rhetoric. I’m tired of all the lines being drawn and the same things being said again and again with no progress.

    Let’s flip it around. Mark made a bunch of highly charged accusations against Google, search engines and aggregators. He could have easily offered solutions to the newspapers without employing vampire and zombie metaphors — and I’m dumbfounded how anyone would see those metaphors as “rather tame.” Doing so isn’t trying to strike a dialog. It’s just more drawing lines. And advising to cut a paper off from Google is as creative as saying you should block your door to customers.

    There are plenty of ways for newspapers to be creative with converting visitors from search, from custom landing pages, to custom ads, to going subscription only & STILL being listed in Google. I’ve raised these in the past. Mark’s rejected them. Doesn’t feel creative at all.

    Comment by Danny Sullivan -

  20. Mark, I knew exactly what you were doing in your speech…trying to help the newspapers think creatively about possible solutions. They need someone like you who can think outside the box. I like your ideas. They will work for some newspapers, and not for others. But you gave them plenty of options to try.

    I know what Mike Arrington, Mathew Ingram, and Danny Sullivan were doing too. They need to create controversy to get attention and page views. Including your name in a post is sure to attract attention. I know all these guys and respect them.

    We all use provocative words and headlines to attract attention. Calling Google a Vampire is actually rather tame, but the press will run with a quote like that. I don’t agree with the press interpretation of that statement, but I know how you meant it.

    As I commented on GigaOm, you don’t have a dog in this fight, you are just putting yourself in their shoes and offering advice on what you would do. I don’t see any hypocracy in that. Investments are based on ROI, not conformance to statements made in speeches.

    Thank you for sharing your insights on this and many other topics. I don’t know any other billionaires who will take the time to share their ideas so openly. You give back in so many ways.

    Don Dodge

    Comment by dondodge -

  21. Mark, Trae, yes I am a businessman. I’ve run news content sites that have paid themselves for over a decade. I’ve come through to major economic downturns now with news content.

    If you want to understand that better, I added a postscript about this specifically in response to some of the issues Mark raised about me here:


    Comment by Danny Sullivan -

  22. I agree some of the attempts to call you out as hypocritical are a stretch. At the same time, demonizing Google rather than highlighting the inherent weakness of the current newspaper business model is putting the cart before the horse. If a newspaper CEO claims they can’t compete with a 30-word snippet on Google News or that their business would be fine if only Google would be nice enough to give them a revenue share, that’s a red flag for me because it means they just don’t have a viable business strategy. The news industry should be focused on developing unique content that people will pay for (i.e., if Google News shows your headline next to a link that says “all 3,339 news articles,” you’re on the wrong track) and on consolidating like crazy. With digital distribution, there is massive overcapacity and redundancy in news, and people haven’t come to terms with that yet. The news industry complaining about Google is like complaining about a mosquito bite while you’re losing blood from a severed limb. You might have a point, but it’s irrelevant compared to your real problems.

    BTW, have you considered investing in a proofreading company? Now there’s a product you could use every day. 😉

    Comment by Greg -

  23. Always enjoy the blog and links to expand and contribute more information to ideas you have. Regarding your second half about trusting people we know, or think we know, I wrote this piece about Heather Armstrong and the role I think she will play in the new web advertising.

    Comment by MIKE -

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  25. Rupert Murdoch has made the same decision (http://mashable.com/2009/11/09/rupert-murdoch-google/). The issue many have with his approach is the extraordinary cost associated with the “good content” he charges for on WJS.com. And what about original content-driven sites such as HuffingtonPost? Rather than Atlantic Monthly or the LA Times driving a stake through GoogleNews, they (huffpost) have simply poached some great writers – and new writers – and driven huge traffic to their site.

    Q: Is “freemium” model working for journalism or not?

    My favorite blog (GigaOm.com) has a new Pro section with some very in-depth news and analysis. It has the quick-read, news in the normal site, but the longer content elsewhere. I don’t know if that’s working well or not – it’s rather new – but this model, and the pricing for it, works for some.

    Comment by spassmeister -

  26. @trae — “Well said Mark, and what I think people always seem to miss is that Google News offers full/partial reads of the content itself which is (of course) leaching away some of the purpose of the publisher’s post to begin with.”

    I’m on Google News right now. Please show me a full or partial read, I do always seem to miss them. I see about 30 words for each one.

    If what these content providers have that’s valuable is 30 words, if that is anything other than a hook to the value, then they are offering nothing of value in the first place.

    Comment by uweblab -

  27. Well said Mark, and what I think people always seem to miss is that Google News offers full/partial reads of the content itself which is (of course) leaching away some of the purpose of the publisher’s post to begin with. Jarvis/Arrington/Sullivan bother me because I feel like they’ve so invested themselves into things that go counter to the desires of publishers that they begin to champion the direction they wish things would go. Like many political pundits these days, if they want to push public opinion about a topic they will. These guys are no different, just a different topic.

    It’s true that a Google “index” of the news sites for standard search is probably still value added for all content publishers (outside a possible content agreement). But Google News siphons the content and essentially republishes in many cases. Calacanis’s Mahalo uses it for sources of original material which I think still differs from the siphoning like Google News.

    These “analysts” are not businessmen. They try, but they aren’t.

    Comment by Trae -

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  29. I don’t think they’ve lost touch with reality. I think some people just keep touch with a slightly different reality. With regards to your recent thoughts on content… I think value happens at the intersection of these qualities

    (a) timely, intelligent, reliable content
    (b) thoughtful management of that content
    (c) structure that is helpful, useful and functional
    (d) interested users (information consumers)
    (e) unique elements

    Because of the near extinction of interesting, deep thought in people who can eloquently communicate – that intersection is difficult to find. So – the winning formula is to find a way that information consumers can reliably find useful, functional, intelligent unique content when they need it.

    That is an issue where serious money will come from creating the better mousetrap…

    Comment by johnakerson -

  30. laughable — that content creators aren’t able to monetize the traffic that Google sends them, for free, hardly qualifies Google News as a “vampire”. It just says something about the ability of the news orgs to monetize their traffic when there is so much content out there.

    there is a problem with paywalls and such as it relates to user experience, the internet needs an identity and payment system that can be used across multiple sites. Who is best set up to provide the solution to that? Not the content creators, they are helpless there. Google is the single best partner for them to ask for help. And Google continues to offer to work with them on that service. Rather than spending time demonizing your potentially most valuable and capable online partner, try working with them to solve your biggest problem — that sort of problem is exactly their specialty.

    Comment by uweblab -

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  32. In reality Mark people talk and bash you because they arent you. Ya your a little weird and have made some dubious decisions, mainly on the hardwood, but your obviously not hurting. I would hope CEO’s of this level like TechCrunch wouldnt waste time discussing hypocritical business decisions without knowing 100% behind the cover. Cuban- you help motivate and give people just the right amount of insight to make the reader feel like he/she has a chance to make something big without sugar-coating and being a candy-ass.

    I leave with a sports reference that serves well in business. You will understand this if 1. You have knowledge of the game of basketball 2. Have a killer edge/mentality in business:

    There is a 50/50 loose ball, your opponent is the same distance

    X X

    Instead of taking a direct line to the ball/goal/money, take the angle

    Comment by rivalroo -

  33. Mark,
    People still don’t understand the internet “IS” the real world..

    for example TechCrunch who i used to value as a credible source and have now moved to #NOrttechCrunch due to what is in my opinion “lack of credibility” – several “linkbait” type articles like you think @dannysullivan does… the posted of twitter’s stolen info online is a perfect example… if i walked into your office grabbed some of your PRIVATE documents then ran out and gave them to the observer, etc… but hey it’s the internet… a french hacker can hack into someone’s wife’s email accts and it’s ok to publish them BECAUSE “IT’S the internet”…. hey, they chose a stupid password so why shouldn’t TechCrunch be able to post that info.. right??

    reality check, someone?

    Comment by djpaisley -

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